Friday, September 11, 2009

LAHORE - The Punjab government has ample sugar stock but it is, on the one hand, farmers, millers, stockists, dealers and shopkeepers who are hell bent on fleecing money while on the other, panic buying among consumers putting a damper on efforts to stabilise sugar price and streamline the supplies. These were the views of members of inspection teams deployed to raid Sasta Ramazan Bazaars in the City on Wednesday.

Tehsildar Assad Butt while in surprise raid in Shalamar Sasta Ramazan Bazaar found many people carrying more than allotted quota of sugar. He himself has taken back sugar bags of one kilo from many consumers who were found possessing with more than allotted sugar. He said after the fresh instructions of Punjab Chief Minister Mian Shahbaz Sharif, only one kilo sugar is being sold to all individuals after punching their respective newly Identity Cards but people use to come out with all their family members to purchase sugar. He said earlier, chemical ink was used on sugar purchaser s thumb but few minutes after they came back after removing the ink. Now government has given us instruction to punch cards, he added.

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Tuesday, September 08, 2009

Karachi Electric Supply Company (KESC) has paid Rs1.34 billion to Sui Southern Gas Company (SSGC), out of the total amount of Rs4 billion of the monthly bill charged for the month of August. The outstanding dues of Rs13.65 billion has yet to be paid by the KESC to SSGC, the source disclosed. “The KESC has the monthly gas bill of around Rs3 to Rs4 billion that is separate from the sum accumulated as liabilities, which is Rs13.65 billion.

During the month of August, the KESC has made payments twice, one on August 15 and the other on August 26. Nothing has been paid for the month of September, it was decided between the two utilities that the KESC will pay Rs550 million from the arrears along with the current bill. But the payments made in August are apt to explain the situation,” said the source. He added that the company understands that the KESC is facing financial crisis but at the same time it should be kept in mind that SSGC is also a utility, and if payments are not made on time, SSGC will also face financial problem. “The claim that the gas pressure is low is incorrect. SSGC has agreed to supply 256 MMCFD of gas to the KESC, but on Friday when the three units of Bin Qasim Power Plant and Korangi Thermal Power Plant went off, SSGC was supplying 270 MMCFD of natural gas. After those units were closed for maintenance, KESC is now receiving 235 MMCFD of gas for power generation. The SSGC is facilitating KESC as much as possible but the utility should also realize the situation,” he further added.

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Tuesday, September 08, 2009

India has exited from a gas pipeline deal it earlier planned with Iran and Pakistan, Mehr news agency reported citing Pakistani diplomat. “India has definitely quitted the IPI (India-Pakistan-Iran) gas pipeline deal,” the report said Sunday citing Pakistani ambassador to Iran, Muhammad Bux Abbasi. Iranian officials, however, said India has not yet officially declared its intention. In May this year, Tehran and Islamabad signed a $7.5-billion deal for supply of gas from Iran to Pakistan. As per the deal, Iran will initially supply 30 million cubic meters of gas per day to Pakistan which would be later increased to 60 million cubic meters per day. Iran, Pakistan and India had conceptualised the project in 1990s to help boost peace and security in the region, besides mitigating the power crisis. India stopped negotiations on the project due to tension with Pakistan, although Iran repeatedly encouraged New Delhi to rejoin the process, according to the report. The pipeline will run 2,775 km when linked with the three countries. The project would have greatly benefited India, which lacks sufficient natural gas to meet its rapidly increasing domestic requirements. Pakistan has been facing electricity shortfall of more than 3,000 megawatts and plans to generate 4,600 megawatts from Iranian gas. Islamabad has also been under pressure from Washington to abandon the deal.

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Tuesday, September 08, 2009

LONDON: Gold held broadly steady on Monday just shy of $995 per ounce, consolidating stellar gains last week that took it tantalisingly close to the $1,000 psychological level, with buyers encouraged by dollar weakness. Investment in palladium continued to jump, sending prices close to highs for the year, with fund holdings swelling on expectations depressed auto demand would pick up. Spot gold stood at $994.70 per ounce by 1348 GMT, broadly steady from $993.40 quoted late in New York last Friday. The price rose as far as $997.20 last week, its highest since February, when it briefly topped $1,000. Gold found support at lower levels but trading ranges were narrow and volumes were said to be thinner, with investors restraining themselves due to Monday’s US public holiday. A confluence of dollar weakness, making the metal more attractive to non-US investors, and doubt about the sustainability of global economic recovery prompted a spate of investors to seek refuge in gold last week, as prices hit six-month highs. Analysts said a run to $1,000 was inevitable. “It will have a go, we are within reach,” said Ole Hansen, senior manager at Saxo Bank. “Within the first few days of this week we should have an attempt.”

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Monday, September 07, 2009

ISLAMABAD: Prime Minister Syed Yusuf Raza Gilani on Sunday said the United States should channelise disbursement of its financial assistance to Pakistan through the existing mechanism of the government of Pakistan. He underlined the fact that disbursement through NGOs involves out of proportion administrative expenses, sometimes to the extant of 35 - 40% and hence, actual amount spent on the welfare of the public gets drastically reduced. The Prime Minister was talking to the US Deputy Secretary of State for Resources and Management, Jacob J. Lew who accompanied by the Acting Administrator of USAID, Alouso L. Fulgham called on him here at the PM House on Sunday evening. Prime Minister Gilani suggested that the US Deputy Secretary of State should have detailed meetings with the Minister and the Secretary of Finance to work out mutually agreed modalities on the procedure of financial assistance. He pointed out that the Benazir Income Support Programme, Higher Education Commission, the existing basic education and the basic health units in Pakistan should be considered for the US assistance for education, health and poverty alleviation sectors.

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Monday, September 07, 2009


GILGIT : The Federal Government would spend Rs 6.5 million on socio-economic uplift of region as it has approved Annual Development Plan (ADP) for 2009-2010, Senior officials of the administration said. The ADP 2009-2010 was approved by the Chairman Gilgit-Baltistan Qamar Zaman Kaira and accordingly the plan was circulated among all government departments, Secretary Planning and Development, Abdus Sattar told APP by phone. He disclosed some 767 development schemes would be executed this year and out of them 94 were new projects in the ADP. The government is specially focusing on power sector so that the huge water potential is harnessed for the energy production.

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Monday, September 07, 2009

KARACHI: The sugar mills owners have expressed their inability to pay off/retire Rs 40 billion loans and advances that they owed to State Bank of Pakistan (SBP) due to ongoing crackdown against the millers by the government. Talking to Chairman Pakistan Sugar Mills Association (PSMA) Iskandar Khan said due to the crackdown of law enforcement agencies

on the directives of government against sugar mills, the industry became bankrupt and it is impossible to retire the huge amount till October 31. The PSMA chairman said the government had opened tenders for the import of expensive sugar from international market by neglecting the local industry due to which the millers could not sold their sugar stocks in the market. Currently, the sugar mills have a stock of 1.3 million tons of sugar, but the government has started crackdown against the sugar mills to recover the stock under the cover of hoarding. The sugar mills owners have decided to close their factories and stop supply of white refined sugar to the wholesale market until the operation against the millers is stopped, he added.

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Monday, September 07, 2009

ISLAMABAD: The National Finance Commission (NFC) Technical Committee on Saturday decided that vertical distribution of resources between center and provinces would be determined in the light of their expenditures benchmark. The first meeting of the committee was presided over by Secretary Finance Salman Siddique here at the Ministry of Finance and was attended by the Finance Secretaries of the provinces.

The macroeconomic framework for expenditures between the federation and provinces would also be determined for the next five years along with the NFC award. It is learnt that the meeting discussed growth rate for the future expansion of expenditures as well as vertical distribution formula between the federation and the provinces.

The new macroeconomic framework of provinces for five years would be based on the economic reports of the provinces and their future expenditures would be calculated on these grounds.

Secretary Finance Salman Siddique later talking to media on the sidelines of the launching of World Bank Pakistan Tax Policy Report, said that once the benchmarking of federal and provincial expenditures is completed, a clear macroeconomic picture would be available for determination of federal and provincial governments shares in federal revenues.

The issues before the technical committee are to determine federal and provincial expenditures, Gross Domestic Product (GDP) growth rates to be achieved in next five years and as to what should be the base for vertical distribution of resource between federal government and four provinces.

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Saturday, September 05, 2009

KARACHI: Persisting demand for dollars did not allow the rupee to shed its losses against the greenback on the currency market on Friday, dealers said. On the interbank market, the rupee shed five paisa against dollar for buying and selling at 82.90 and 82.95, they said. Market sources said that the weaker rupee is good to attract the buyers in the international market, in the meantime, they said that the rupee may trim its losses as a result of easy supply of the US currency.

During the final Asian session dollar held steady above this week's seven-week low against yen and kept a firmer tone against euro as investors hunkered down to await US non-farm payrolls later in the day. The market is uncertain how dollar will react to the August non-farm payrolls report due at 1230 GMT, after it lost its toehold above 93.00 yen at the start of this week and hit its lowest since mid-July just above 91.90 on Thursday.

OPEN MARKET RATES: The rupee retained its levels against dollar for the second day for buying and selling at 82.70 and 82.80, dealers said. Meanwhile the rupee gained 20 paisa in terms of euro for buying and selling at Rs 117.55 and Rs 118.05, they said.

Open Buying Rs 82.70 Open Selling Rs 82.80

Interbank Closing Rates: Interbank Closing Rates For Dollar On Friday.

Buying Rs 82.90 Selling Rs 82.95

(BRecorder)

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Saturday, September 05, 2009

ISLAMABAD: The World Bank believes that the absence of conditions from donors in the last few years has paved the way for Islamabad not to hike electricity tariff in accordance with the generation cost, leading to creation of the monster of circular debt that compromised country s ability to provide uninterrupted power to its consumers. When there were no conditions, the pricing formula to adjust electricity tariff simply disappeared, WB Senior Energy Specialist Rashid Aziz said while expressing his views in a panel discussion organised by the Pakistan Institute of Development Economics (PIDE) on the impact of circular debt at the Auditorium of Planning Commission on Friday. Member Planning Commission Shaukat Hameed pointed out that the tariff of power generation from Basha dam was proposed at 10 to 12 cents in the PC-1 so cheap electricity would not be available now. He criticised the IPPs, saying that the government guaranteed in 1996 to get electricity at 18 cents. It was also pointed out that the issue of circular debt could not be solved by injecting Rs200 billion through loans from the ADB or launching securitisation bond for overseas Pakistanis. Our banking system is not in position to arrange financing of Rs200 billion, so it requires tackling the issue, Federal Secretary Ministry of Textile Dr Waqar Masood said. Referring to an IMF document, he said the tariff is still short by 21 to 41 per cent in accordance with various estimates. The WB expert on energy, citing an example, said it is quite clear that when you go to market for purchasing a dozen eggs with a price of Rs50 but if you pay Rs30 it will not be possible to get a dozen eggs. But the same is not the case in the power sector. When asked to comment on increased level of electricity after installing of expensive Rental Power Plants (RPPs), he said that there was no gas available to fully utilise avenues of power generation.

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Saturday, September 05, 2009

KARACHI: The National Investment Trust (NIT), a leading mutual fund company being managed by the government, formally announced plans on Friday to diversify its product base from a single equity fund to a bond and income fund. According to NIT Chairman and MD Tariq Iqbal Khan, the Trust was going to introduce two new mutual funds, but these would not be belonging to the equity segment this time. One of these would be a bond category fund while the other would be an income fund, he said. The difference among above mentioned three categories of funds is that the received money from unit holders in the equity fund is invested in the stock market; the bond funds are invested in bond markets, while income funds are invested in some fixed-income schemes. All the three categories have different level of risk and reward as well. Talking to a group of reporters in his office, Khan said the Securities & Exchange Commission of Pakistan (SECP) has given go-ahead single to the Trust to launch its bond fund, the NIT Government Bond Fund (NIT-GBF). Today in the afternoon, we are going to register NIT-GBF with the registrar and its Initial Public Offering (IPO) is expected to take place sometime after Eid. We, therefore, are trying our best to bring its prospectus in the market before Eid, he explained. As far as the introduction of another fund in the income segment i.e. NIT Income Fund (NIT-IF) is concerned, work on this product is also under way simultaneously and approval for the fund has also been sought from the SECP, which is expected any moment, he said. Since NIT was subject to be sold into the private sector in the near past so that it was not striving to expand operations at that juncture of business.

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Saturday, September 05, 2009

KARACHI - State Bank of Pakistan on Friday announced a new financing facilities scheme for cotton ginners with a view to modernize their factories to produce quality ginned cotton for the textile value chain and to minimize electricity consumption. This scheme is only available for SME borrowers, as defined in Prudential Regulations for SMEs. This scheme has been effective from September 04, 2009 (Friday) and shall remain valid only up to December 31, 2010 on first come first served basis and subject to availability of funds under the Scheme. In a circular issued by central bank, it was stated that financing under the scheme would be available for a maximum period of seven years including a maximum grace period of six months. Financing facilities under the scheme shall be provided through all commercial banks and Development Finance Institutions (DFIs). According to SBP, financing shall be available only for Balancing, Modernization and Replacement (BMR) of Cotton Ginning Factories. SBP further said cotton seeds crushing machinery installed in the premises of ginning factories shall also be eligible to avail financing facilities under the scheme. Financing shall be available for purchase of only new locally manufactured plant, machinery & equipment. Financing for purchase of new generators up-to a maximum capacity of 500 KVA shall also be eligible. The capacity of generator shall, however, not be in excess of the ginning factory s in-house energy requirements or upto 500 KVA, whichever is less. As per details, SBP announced different mark-up rates for different periods for financing this scheme, for instance, for the tenure of 3 years, banks will charge 6 per cent rate of refinance, 2 per cent spread with 8 per cent end users rate while over 3 years and up-to 7 years period, this facility will be available on paying 6.50 per cent rate of refinance, 2.5 per cent bank spread and 9 per cent end user rate from the borrowers. Over 5 years and up-to 7 years rate of refinance will be 7 per cent, spread 3 per cent and 10 per cent end users rate respectively. It is important t note that financing rates shall be revised on annual basis effective from July each year and mark-up shall be paid on quarterly basis.

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Thursday, September 03, 2009

KARACHI - The fiscal and budget deficit target set by Ministry of Finance for the year 2009-10 could face some slippages and fail to materialize if the government is proved unsuccessful to tackle the issues of tax administration and electricity subsidies, an analyst showed this concern on Wednesday. Muzzammil Aslam, Head of Research at JS Global, said that IMF would strictly follow the deadlines of performance criteria set in its latest review especially related to taxation and electricity tariffs with an aim to re-balance budgetary deficit. He further said the government has also committed to fulfil the new structural conditionalities within a certain time framework given by IMF however, any difference in real and estimated cost of budget deficit is unlikely to strain IMF program, as Finance Ministry has already taken the performance waiver from IMF in the second review. He also mentioned that the related program commitments have been converted into structural benchmarks for the third review. IMF has further asked Pakistani authorities to introduce a broad-based VAT to correct the structural shortcomings in Pakistan s tax system, which relies on a very narrow tax base. The introduction of a broad-based VAT in mid-2010 is a key pillar of their fiscal strategy.
The fiscal deficit target was missed by 90bps for FY09 if compared to IMF projection, the analyst added.
It is important to mention that the government has estimated budget and fiscal deficits to be stayed at 4.6 per cent and 7.6 per cent of GDP respectively for the current financial year.

It must be recalled that the government has amended by a Presidential Ordinance of the NEPRA Act to ensure monthly determination by NEPRA of the fuel adjustment surcharge in line with international fuel prices, quarterly determination of overall electricity tariffs by NEPRA and notification of the adjusted tariffs within 15 days. Later, by September 15 government s has to take approval for making regulations to form new occupational groups within the FBR and revision of the structure of Regional Tax payer offices and submission of the VAT law to Parliament by end of 2009.Both conditionalities have macroeconomic relevance as in the absence of a de-politicized mechanism for regular electricity tariff adjustments, sizable financial imbalances in the electricity sector are likely to resurface. The adoption of a broad-based VAT is the cornerstone of the revenue effort over the medium term, and a crucial component of the authorities strategy to finance the needed increase in public investment without recourse to external borrowing or crowding out domestic private investment. imilarly, the government has reached a revised agreement with World Bank and ADB staff on a schedule for tariff increases that postpones the elimination of tariff differential subsidies to 2010/11. The budget deficit for the fiscal year 2008/09 (July-June) was 5.2 per cent of gross domestic product (GDP), higher than the government target. The deficit for fiscal year 2008/09 was targeted at 4.3 percent of GDP and was 3.0 percent for the first nine months ending March 31. According to the FY09 fiscal accounts that were released by the Ministry of Finance (MoF), MoF reported a deficit of 2.2 per cent of GDP in the 4QFY09 alone. The extra-ordinary deficit for the last quarter was led by aggressive development spending of Rs 210 billion, as a result of which, the total expenditure came in at Rs455bn in FY09.

Overall, the financing mix of the deficit was tilted in the favour of domestic (internal) financing, led by Rs 251 billion investment in NSS scheme and Rs 260 billion investments by banks. In revenue, last year will be remembered as the most volatile year in the recent past, as oil prices remained volatile; making an all time high of $147/bbl in July 2008 and a low of $32 in February 2009. While the former has impacted the expenditure side led by huge subsidies and the latter affected the overall FBR tax collection ability. Overall, tax revenue target was missed by fair margin and came in at Rs1.2 trillion (up 14.6 per cent) or 9.2 per cent of GDP. Direct tax collection growth remained dismal and came in at 13 per cent compared to sales tax and excise duty. Both were up 17.3 per cent and 38 per cent respectively. The performance of non-tax revenue sector remained robust and depicted a growth of 44 per cent led by SBP profits and defence income. While the current expenditure rose by 9 per cent and development expenditure remained at Rs 455 billion, lower than the target of 550 billion. The fundamental reason for the containment of current expenditure was the pass down of fuel price subsidy and partly electricity subsidy. However, interest payment has slightly inched up to 637 billion or 4.9 per cent of GDP. The budget deficit for the full-year came in at Rs 680 billion or 5.2 per cent of GDP. Similar to FY08, the bulk of the financing was done through domestic sources. Though the external gross receipts remained higher but the higher re-payment of external debt kept the share of external sources subdued. The majority of the domestic funding came through investments in saving schemes and bank investment in Treasury bill.

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Thursday, September 03, 2009

ISLAMABAD: Pakistan's economy is showing signs of recover - its remittances are up despite global downturn, local economy is stabilising and global trends are showing signs of improvement, foreign portfolio investment is improving and electricity problems would be mostly over by next year, said an IMF official in an exclusive interview with a leading Pakistani Financial daily.

"Pakistan's inflation rate came from 25 percent to 11 percent, its forex reserves position is better and fiscal side is also somewhat stable, despite challenges," said Adnan Mazarei, Assistant Director, Middle East and Central Asia Department of the IMF, who also heads the IMF review missions. Pakistan remittances were 19.13 percent in July at $747.22 million and maintained a similar trend in last few months.

Pakistan received $22.6 million in July in foreign private investment from developed countries though $26 million were repatriated by Developing Asia. The IMF in its report has envisaged a growth rate of 3 percent for the current year, which was at 2 percent in 2008-09. Foreign portfolio investment is a sign of sentiments while FDI is more important but this improvement signals somewhat betterment in sentiment of investors towards Pakistan.

However, Adnan did not shy away from counting challenges the country is facing now - revenue mobilisation, the key issue for the country which also creates room for social sector spending which is badly hurt in the country, believed probably the most optimistic observer of Pakistan economy in the IMF. "Pakistan's tax revenues are among the lowest in the world right now and any improvement in it will allow spending on health, education and infrastructure," said Adnan.

(BRecorder)

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Thursday, September 03, 2009

KARACHI: British Deputy High Commissioner, Robert W Gibson has said that British companies working in Pakistan were having continued interest to work as well as looking forward to expand their business in future. Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI) on Wednesday, he said that 100 British companies with an investment portfolio of 1.7 billion dollars are operational in Pakistan over the last many years.

He said that Pakistan, with a population of 170 million, is a market with huge potential and the UK is keen to invest further here. He said the Pakistan was the most business-friendly country in Asia, as lots of opportunities are here to attract the foreign investors.

The country is quite different from what it was painted by TV and other media. Karachi, Lahore and Islamabad are quite safe places, he added. British Deputy High Commissioner pointed out that two way trade has increased by 12 percent per annum whereas last year British investors have made huge investment in Pakistan.

(BRecorder)

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Wednesday, September 02, 2009

KARACHI - Out of 112 commodities in the Consumer Price Index (CPI) food group, the prices of 74 items increased from 10 to 93 per cent, 17 items recorded 0-10 per cent increase while 18 commodities showed decline in the value in July 2009. The prices of most of the food items had started surging two to three weeks ahead of the holy month of Ramazan. One food item, coffee, witnessed 100 percent price change (YoY) in July this year. In terms of weighted contribution, seven out of top ten commodities were from CPI food group during July 2009, i.e., fresh milk, wheat flour, meat, sugar, vegetables, readymade food and tomatoes.

State Bank of Pakistan s Inflation Monitor for July 2009 points out that the weighted contribution of these seven food commodities in the overall CPI inflation was 37.6 percent with 20.4 percent weight. Within food group, just five items, i.e., wheat flour, fresh milk, meat, sugar and vegetables contributed 73.8 percent with 45.3 percent weight to YoY food inflation. CPI food inflation month-on-month (MoM) basis showed significant increase during July 2009 compared to the previous month. CPI food inflation (MoM) was 3.0pc during the month under review compared to 2.8pc during July 2008 and 1.0pc during the previous month. Detailed item-wise analysis of CPI food basket on MoM basis showed that 11 items including onion, pulse mash, eggs, potatoes, tomatoes, garlic, etc. showed double digit price change during July 2009, whereas prices of 16 items including arvi , ghee, mustard oil, chilies green, red chillies, etc. declined. Within food group, further segregation (of 40 composite food items in the CPI basket) can be made on the basis of perishable and non-perishable commodities.

Inflation (YoY) in the perishable group witnessed increase and was recorded at 26.6 percent during July 2009 compared to 22.9 percent in July 2008 and 22.8 percent during the preceding month. Prices of perishable commodities are often volatile and this is reflected in the inflation (MoM) which reached 14.7 percent during July 2009 compared to 11.3 percent in the same month last year and 3.6 percent during June 2009. Inflation (YoY) in non-perishable group declined during the month under review and reached 8.6 percent compared to 35.4 percent during the corresponding month last year and 9.0 percent in June 2009. On MoM basis inflation in non-perishable group was 1.5pc during July 2009 compared to 1.8 percent in July 2008 and 0.7pc during June 2009.Overview The current fiscal year commenced with ease in headline CPI inflation (YoY) compared to the same month of previous fiscal year. Consumer price inflation year-on-year basis was 11.2 percent during July 2009 as against 24.3 percent in July 2008 and 13.1 percent in the previous month. Significant decline was witnessed in both food and non-food group s inflation (YoY) during July 2009 as compared to the same month last year. Contrary to YoY inflation, CPI inflation (MoM) increased during July 2009 and was recorded at 1.5 percent compared to 1.0 percent in June 2009. CPI food group showed significant increase in inflation (MoM) during July 2009, whereas non-food group showed a decline of 0.7 percentage points. Ease in inflationary pressures can also be seen in both measures of core inflation, i.e., non-food non-energy (NFNE) and 20% trimmed mean during July 2009. Both NFNE and 20% trimmed mean showed decline during July 2009 as compared to the same month last year and the previous month.

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Wednesday, September 02, 2009

KARACHI: The Karachi Stock Exchange Index (KSE) has crossed the level of 8,900 after more then eight months whereas yesterday, foreign investors made buying of $24, million, the highest during last 17 months.

The trading started with increment of 76 points, however, KSE-100 Index soon cross the level of 8,900 with the increment of 200 points. Last time, such activity was witnessed in December 15, 2008 when KSE-100 Index reached at 8817 points level. Most of the buying of shares occurred in the sectors of oil and gas, banking, telecom, cement and transport.

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Tuesday, September 01, 2009

KARACHI: The rupee trimmed its loses against dollar on the currency market on Monday, experts said. On the interbank market the rupee gained 8 paisa versus the US currency for buying and selling at 83.02 and 83.07, dealers said.

In the First Asian trading yen rose to its highest in seven weeks against dollar, boosted by the end of election uncertainty following a thumping win for the opposition Democratic Party of Japan (DPJ) and then by dollar sell orders. The yen edged up after the landslide election victory on Sunday and then gathered pace as automatic dollar sell orders were triggered close to 93.00 yen per dollar, traders said.

OPEN MARKET RATES: The rupee inched up with a rise of five paisa in relation to dollar for buying and selling at 82.95 and 83.05 in process of trading, dealers said. The rupee also rose by 50 paisa in terms of euro for buying and selling at Rs 117.30 and Rs 117.80, they said.

Open Buying Rs 82.95

Open Selling Rs 83.05

Interbank Closing Rates: Interbank Closing Rates For Dollar On Monday.

Buying Rs.83.02

Selling Rs.83.07

(BRecorder)

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Tuesday, September 01, 2009

KARACHI - Commercial banks earnings and profitability has sharply declined to Rs 26.7 billion during first half of calendar year 2009 as against earnings of Rs 38.8 billion in the corresponding period of last year. In terms of growth, the sector s profitability has seen a decline of 31 per cent during Jan-June 2009. This contraction attributed to higher provisions for Non Performing loans (NPLs) and higher impairment provisioning. After a depressing 1Q2009, earnings of listed commercial banks continued to remain depressed in 2Q2009 as well. However, the sector deposits and advances growth is projected to be around 7 per cent and 5pc respectively for the entire year of 2009. Despite improved NPL trend, analysts still expect 2009 to be a difficult year for the sector with earnings likely to decline by 8 per cent. It is important to note that since the last week of July, major listed banking companies have started to announce their 1H2009 financial results, according to which, commercial banks Net Interest Income (NII) increased by 19 per cent while Non Interest Income depicted sluggish trend during Jan-June this year. JS Research compiled this consolidated figure of sector profitability while taking up 24 banks, out of 25 banks listed at Karachi Stock Exchange for its analysis. BOP has been excluded as the bank is yet to declare its 1H2009 results.

According to JS Research, as of March 2009, sample banks represent more than 95 per cent of the total listed sector s deposits and assets.JS said that the decline in earnings was primarily driven by heavy provisioning for NPLs and higher impairment provisioning as total provisions for NPLs surged to Rs 35.0 billion (US$435million) as against Rs 20.2 billion (US$313 million) in 1H2008, an astounding growth of 74 per cent largely due to slowdown in economic growth. Moreover, stock market crash in the second half of 2008 resulted in impairment loss of Rs 4.2 billion as against only Rs 357 million recognized in 1H2008. Moreover, amid sharp decline in KIBOR, 2Q2009 has seen pressure on spread and resultantly NII. On a positive note, however, there seems to relative easing on the quantum of NPL acceleration as reflected by 45 per cent on quarter-on-quarter basis decline in incremental NPLs in 2Q2009. While profits remained subdued due to high provisions, Net interest income (NII) continued to post decent growth rising by 19 per cent to Rs 122.8 billion, amid higher spreads (7.6 per cent in 1H2009). In contrast, relatively week equity market conditions kept non interest income largely in check as it was recorded at Rs 40.7b similar to 1H2008. Fee income the largest component in non interest income recorded a growth of 9 per cent and stood at Rs 20.4b.

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Tuesday, September 01, 2009

LAHORE - Public and private sector LPG producers in Pakistan are likely to increase prices by up to 15 percent for September, said the LPG Association of Pakistan (LPGAP) on Monday. Local LPG producer prices are likely to increase by $75/MT with effect from September 3 based on the increase in the Saudi CP, said an LPGAP spokesman. The Saudi Aramco Contract Price, which is the ceiling price for local LPG producers, has increased from $508/MT in August to $583/MT for September. This translates into an ex-producer plant price increase of Rs 7,221/MT or Rs 85 per 11.8kg cylinder or Rs 7.2 per kg. The spokesman said LPG prices have remained reasonable during Ramzan and well within the limits prescribed by the Oil and Gas Regulatory Authority.
LPGAP requests all LPG producers to keep price increases to a minimum during the month of Ramzan, said the spokesman. We have also requested LPG marketing companies and LPG distributors to price product within reasonable limits in order to benefit the general public. The spokesman said all stakeholders must work in concert to ensure prices remain stable. He said pricing information would continue to be provided by LPGAP for the information and benefit of the consumer and general public. The spokesman said record imports have been made in Pakistan during the current calendar year. With the import of 7,500 metric tonnes expected in the first half of September, sea-borne imports will have reached 57,616 metric tonnes which is an increase of 140 percent over the previous year, he added.

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