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April 18, 2019

KP’s Bank of Khyber facing financial crisis

Top Story

April 18, 2019

PESHAWAR: Khyber Pakhtunkhwa’s official bank, the Bank of Khyber, is facing financial crunch due to the prevailing economic crisis in the country. Official documents say the bank’s performance was disappointing in 2018.

There is a 9 per cent reduction in the bank’s assets and a 7 per cent raise in its expenditures. In 2018, the bank earned a meagre Rs 466 million profit and Rs 0.46 per share profit was announced.

The bank has refused to pay annual profit to shareholders and included Rs 466 million in its equity. There is also an 8 per cent reduction in the profit rates. There was no permanent managing director of the bank from October 2017 to November 2018 and Shahbaz Jameel was working as acting MD.

An audit firm report says there is no financial expert in the bank audit committee. In its 2018 report, the bank has told its shareholders that the bank is facing problems like other banks due to hike in interest and dollar rates and prevailing inflation.

According to the annual report, there was a 9 per cent reduction in the bank assets in 2018. In 2017, the total assets of the bank were worth Rs 245132 which reduced to Rs 223095 in 2018. As a result, there was a reduction of Rs 22037 million in the bank assets.

The report says there is also a considerable decrease in the bank investment. In 2017, the bank’s total investment wasRs 140474 million which reduced to Rs 94233 million. There was a reduction of Rs 46241 million in the bank investment last year. In 2017, the capital/reserve was Rs 14943 million which reduced to Rs 13809 million in 2018. As a result, there was a reduction of Rs 1134 million in the bank capital.

According to the report, the total profit of the bank was Rs 795.2 million which reduced to Rs 707 million in 2018. There was a reduction of Rs 2088 in the total profit. However, after paying the government taxes, the net profit was Rs 466 million. In 2017, the bank’s net profit was Rs 1790 million. As a result, there was a reduction of one billion thirty two crore and 40 rupees in the net profit.

The shareholders have been told that in 2017, the per share profit was Rs 79.1 which reduced to Rs 0.47 in 2018. On the other hand, the bank equity has reduced from 12 per cent to 4 per cent in a year. The total advance amount of the bank witnessed a raise of 13 per cent, which was Rs 87673 million in 2017. In 2018, it is Rs 99166 million. There was a 7 per cent raise in the bank deposit and the amount was Rs 171168 million in 2018.

When contacted, Bank of Khyber MD Saiful Islam said the year 2018 was very difficult for the banking sector due to microeconomic instability, political uncertainty and other dangers. There was an improvement in the situation after the general elections, but the hike in the interest rate, devaluation of rupee and inflation affected the bank.

Investors didn’t take loans from the bank due to financial crunch and inflation. He said the bank made investments on 8 per cent in the past, whereas now the profit is being given on 10.75 per cent, He said the reduction in profit is also because of the decrease in the bank investment. In 2017, there was an investment of Rs 140473783, whereas in the last year, it was only Rs 94233239. In 2017, the bank equity was Rs 15398119 which reduced in 2018 to Rs 11704584 million. He said the situation is improving and the bank would perform better in 2019.

According to Bank of Khyber Auditor Grant Thornton, there is no woman director in the bank and the bank board has not approved any honorarium for the members. The board chairman has not issued any appointment notification explaining responsibilities, authority, honorarium and other facilities.

The director who is included in the bank board has not undergone any course about the bank rules and regulations. According to the auditor’s report, there is no financial expert in the Bank Audit Committee.

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