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Huge scope of consumer financing exists in house financing

Published on 7th Mar, Edition 10- 2016


Interview with Mr Sirajuddin Aziz — CEO & President HabibMetro Bank
Country faces shortage of 8-10 million new housing units


Sirajuddin Aziz is a professionally qualified and experienced banker who has worked for different organizations in Pakistan, China, Hong Kong, UK, Nigeria and UAE. He is currently the President & Chief Executive Officer at HabibMetro Bank. Prior to this, he has served as the Chief Executive Officer of Bank Alfalah from 2007-2011.

By virtue of being a senior member of banks’ Management Teams/Committees, he has been actively involved in overseeing the entire spectrum of banking operations of various banks for over 15 years.

Mr. Aziz is a Fellow of Institute of Bankers Pakistan and a Member of Pakistan Institute of International Affairs. He is a regular speaker at the Institute of Bankers Pakistan (IBP) and other prestigious education institutes and universities, where he speaks on a diverse range of subjects comprising credit, trade & foreign exchange, code of governance, economy, professional etiquettes and personal development sessions. He also participates in televised discussions on finance & economy and speaks at professional forums on banking related subjects.

Mr. Aziz is a regular contributor to national and international dailies, journals and magazines. He is a an author, with published works comprising ‘The Quest of Mirage’, ‘Saurab Ki Talaash Main’, ‘Bitter & Sweet’ and ‘The Essence of Islam’.


Pakistan has reached at a point from where we can march on the road of progress and prosperity, as under the initiatives and policies of the present government the country is at the entrance essentially required for growth and development, said Sirajuddin Aziz in an interview on the performance of banking industry and lowest interest rate in the history of Pakistan.

At the moment the inflation at 2 percent, and interest rate are at historic low, the discount rate of the State Bank of Pakistan at 42 years low, the country was confronted with security issues which are almost resolved and over 90 percent of the security issues have been addressed under the concerted efforts of the democratic and Army leadership. Energy shortfall was yet another major irritant in the way of economic growth which also seems well under control as the public and private sector both are doing extremely well in developing and setting up new power generating units across the country and as soon as these power units are on line, the issue of energy shortage is bound to vanish from our economic and national scene.

In his opinion, Pakistan has arrived at a stage of kick start of the economy provided we did not play our cards carelessly and the negative elements should not be allowed to trifle with the emergence of the strong economic structure we have succeeded to build up.

Consumer banking

PAGE: The interest rate is 42-year low at present in Pakistan, how do you see this low interest rate for economic growth in Pakistan?

Sirajuddin Aziz: We have seen the glory of consumer banking during 2003-2007 when we were at peak in consumer finance which is unlikely to be repeated this time despite extremely low interest because during that period the growth was not reflective of our real economic conditions in 2003-27, which was a balloon and false growth of consumer financing. For instance there were bank financing from three banks for one car due to lack of transparency, centralization of bank credit information, which is no more possible in the presence of present information technology applications.

However growth will come but in a stable manner.

Housing finance

PAGE: The present low interest rate can help to overcome the acute shortage of new housing units due to population growth rate in Pakistan, do you think present consumer finance segment can help addressing the issue of new housing units in Pakistan?

Sirajuddin Aziz: Consumer finance is actually needed in the housing sector where the country is facing acute shortage of housing units to the range of 8-10 million new housing units. The policy makers should focus on the housing sector as the lack of housing facilities cause emergence of slums especially in the urban areas and these slums become the factory of crimes and add to law and order situation in the country.

PAGE: What is the solution of providing homes to the shelterless in Pakistan?

Sirajuddin Aziz: Addressing the housing issue has become a hard nut to break because the prices of land have to sky and have gone beyond the reach of a person who honestly earns his bread and butter through legal means of earnings. For instance one graduate or MBA who gets a respectable job even in a bank which offers housing loans at an affordable mark up even then he cannot afford to buy an apartment in urban cities what to speak of others.

Now the ball is in the court of the government to provide land to the common man at an affordable price in a transparent manner to overcome the shortage of housing units because the private sector, which always go for its commercial interest would not play any role in resolving the housing issue in Pakistan.

It is unfortunate that the government land is grabbed by political and other influential lobbies crowding out the genuine common man to make his dreams of owning a house into reality. This can be done only by a welfare state give priority to the masses rather than obliging to construction of property tycoons.


Impact of low interest rate

PAGE: In your opinion whether the current low rate of interest will give the economic benefit or not?

Sirajuddin Aziz: The low interest rate culture can yield positive economic result provided we manage to build up the confidence of the private sector investors to put his money into project financing.

Under the present situation the investor can get the bank borrowing yet the bank equity ratio is the essentially needed element which can come into practice only after the investor has a capacity to respond to essentially required debt equity ratio. The investor will be required to satisfy to the banking industry that he has the potential and capacity to meet the debt equity ratio! And this is the most important factor and I feel that so far that level of confidence of the entrepreneur is willing to put his equity despite the fact that debt is available at the extreme cheap price.

The equity available with the entrepreneurs have to be put forward to achieve the desired economic results, here comes the role of the investors to put his equity to win the confidence of the banking industry.

Although the big business houses are coming forward and participating in different projects especially in the energy sector, however, this response of the private sector should come in a wide spread manner whatever the private sector has responded to the projects is at a small scale, the economy requires more and more private sector equity in diversified projects and not in energy sector alone as focusing only one sector might prove counter productive because it may create a glut like situation at a time when all the projects come on production level.

In fact energy sector should not be yet another textile sector because there was a time that most of the private sector invested their money in textile sector while other sectors of the economy were ignored. As a result of that concentration on textile sector most of our exports were confined to textile industry only which contributes over 65 percent of our total exports. Such kind of mad rush for a single sector may not help the economy to grow we need to be very careful to diversify our economic resources.


Profile: Habib Metropolitan Bank Limited

Habib Metropolitan Bank was incorporated in Pakistan as a public listed company in 1992 under the name, Metropolitan Bank Limited.

The Bank commenced, duly licensed, full scheduled commercial-banking operations in October 1992.

Metropolitan Bank, from October 1992 to September 2006, remained a highly rated bank and, established as a distinguished provider of trade finance services. On October 26, 2006 Habib Bank AG Zurich Pakistan Operations merged into Metropolitan Bank Limited and the merged entity was named Habib Metropolitan Bank Limited.

Demonstrating a strong commitment to Pakistan economy, HBZ is the principal shareholder of HABIBMETRO.

With a branch network of 240branches/sub branches (including Islamic Banking branches), Bank provides full range of banking services including cash management services, e-salary services for corporate employees, on-line utility bills payment solutions on its ATMs and through our 24-hour call centre, on-line instant fund transfer facilities, SWIFT, teleinfo, web-info and mobile banking alerts (GSM) to the customers. The Bank plans to open more branches during the year and continue with its program for upgrading existing branches to provide better services.

Despite challenging conditions, by the Grace of Allah, HABIBMETRO exhibited a resilient performance. HabibMetro’s deposit base and advances stood at Rs315 billion and Rs122 billion respectively.

Assets increased to Rs432 billion as against Rs397 billion at the previous year-end, while investments have increased to Rs272 billion at the end of current period.

The Bank posted a Profit Before Tax (PBT) of Rs2,185 million for the quarter ended March 31, 2015 as compared to Rs1,396 million in the same period last year with post-tax earnings per share of Rs1.35. At end of current period, the Bank’s net equity stands at Rs28.977 billion with a comfortable 18.29 percent capital adequacy level (Basel III) against the required 10 percent.

HABIBMETRO operates in all major cities of the country. The Bank ranks within top 10 in Pakistan with a strong vision to be the most respected Financial Institution. HABIBMETRO has its primary focus on retail banking and trade finance and also offers highly innovative e-banking solutions and consumer banking to its customers. The Bank’s Islamic banking division is fully capable of catering to customers seeking Shariah-compliant products.

The HBZ Group is heir to a rich tradition of banking and commerce dating back to more than 160 years. Habib Bank AG Zurich entered Top 1000 World Banks list in the year 2000 when it was ranked 862.

Its ranking has continued to improve steadily over the years and as per latest issue of the “The Banker: July 2014” Habib Bank AG Zurich’s world ranking is now 603. Whereas, in soundness, the Bank is ranked as 126st Soundest Bank of the world.

With Headquarters in Switzerland, the HBZ Group also operates in Hong Kong, Singapore, United Arab Emirates, Kenya, South Africa, United Kingdom and North America. Habib Bank AG Zurich maintains BIS Capital Ratio of 21.02 percent against required of 11.2 percent for our Bank.

The Bank continues to enjoy AA+ (Double A Plus) ratings for long term and A1+ (A one plus) ratings for short term by the Pakistan Credit Rating Agency Limited (PACRA) for the 15th consecutive year.

The review was undertaken by PACRA in the second quarter of this year. These ratings denote a very high credit quality, a very low expectation of credit risk and a very strong capacity for timely payment of financial commitments.


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