Latest news with #Rs282
Express Tribune
5 days ago
- Business
- Express Tribune
Banks delay import payments
The price of local currency has started increasing gradually in both open and interbank markets Listen to article Commercial banks have once again started delaying import-related payments due to the limited availability of foreign currency, caused by major foreign debt repayments due before the end of June and the need to meet the reserves-related condition set by the International Monetary Fund (IMF). The situation warrants that the central bank either completely stop purchasing foreign currency from the markets or drastically reduce it to improve the supply of dollars, according to background discussions with multiple bankers. The State Bank of Pakistan (SBP) on Saturday did not provide an official version on the matter. Banking and market sources told The Express Tribune that some major and small banks were delaying import-related payments by two to three weeks, particularly in cases of open-account and contractual imports. The banks were also providing dollars for the clearance of letters of credit (LCs) to some major importers at rates higher than the interbank rate, they added. Because of the situation, the spread between the interbank and open market has started widening, and a few banks have again been compelled to ration the provisioning of dollars. The interbank rate was over Rs282 to a dollar, while in the open market the dollar was available close to Rs285, said banking and currency market sources. The situation is not as bad as the 2022 crisis, and it is high time that the central bank took notice to avoid any speculation in the market, said a senior executive of a private bank whose institution was also facing the challenge of ensuring sufficient dollar provision for import payments. Concerned authorities said on condition of anonymity that the local currency did come under pressure in both open and interbank markets. However, they said that it was a temporary phenomenon and would end soon. Pakistan State Oil (PSO) and Pak Arab Refinery Limited (PARCO) were also facing issues in getting the right price of the dollar for making payments against their imports. The sources said that PSO paid about Rs3 higher for its latest import payment compared to the previous contract. This would translate into a higher petrol price for consumers. Pakistan is scheduled to make $2.4 billion in foreign commercial debt repayments to China next month, in addition to payments to some other multilateral lenders. The foreign exchange reserves stand at $11.5 billion, which is not enough to make these payments and at the same time retain reserves in double digits. The IMF has also further tightened the end-June Net International Reserves (NIR) target to negative $7.5 billiona further tightening of $1.1 billion compared to the target agreed upon in September last year. To meet these targets and foreign debt repayments, the central bank is still purchasing dollars from the market. The end-March negative NIR target was $10.2 billion, which means the central bank needs an additional $2.7 billion cushion just to meet the end-June target, according to the IMF report. Another senior executive at a bank said that export and remittance proceeds were sufficient to cover imports, but the challenge lay with the financial account, which was putting pressure on the exchange rate. He said the central bank should refrain from buying dollars for a few weeks to ease market conditions. Representatives of the banking industry have already brought the issue of the emerging shortage of foreign currency to the attention of the central bank, according to those privy to the discussions. Despite the IMF programme, Pakistan has not received enough foreign loans this time. Central Bank Governor Jameel Ahmad said a few months ago that the SBP had bought over $9 billion from the local market in 2024 to build reserves. The SBP spokesperson did not respond to questions about the reasons behind the recent pressure on the rupee-dollar parity, or whether there was a backlog of about $1 billion in deferred import-related payments due to the dollar shortage. He also did not respond to questions regarding the increasing spread between the interbank and open market rates or the strategy the central bank is adopting to address the situation. The buying of dollars from the market has helped reduce foreign debt by $800 million during the first nine months of this fiscal year. A stable rupee has also played a major role in bringing down the inflation rate to low single digits. However, exporters complain that tight control over the dollar price is eroding their competitive edge, and they argue that market forces should be allowed to play their role. There is also a seasonal increase in demand for foreign currency due to Hajj, which central bank authorities expect will now subside.
Business Recorder
23-04-2025
- Business
- Business Recorder
MCB: Back to bonds
The banking results season has kicked off right on cue. MCB Bank reported a 10 percent year-on-year dip in pretax profits for 1QCY25, while staying true to its reputation as a dividend-friendly stock, announcing a Rs9/share first interim payout. Yet, it's the balance sheet that grabs attention—just two quarters apart, but seemingly from two different banking eras, as the industry has decisively returned to its old habit: ditching private credit for government securities. After the ADR sprint of 4QCY24, where banks scrambled to dodge penal taxation, 1QCY25 brought a quick relapse. MCB's ADR tumbled from 54 percent to the 30s, comfortably settling back into familiar territory. It's not that the asset mix was ever skewed in favour of advances—but the speed of investment build-up was striking. From the sharpest quarter-on-quarter rise in ADR last quarter to one of the steepest declines this time—the ephemeral nature of credit growth has rarely been more evident. MCB's investment portfolio surged by Rs650 billion (56 percent) over the previous quarter, pushing the IDR to a record 87 percent. Advances, on the other hand, shrank by Rs282 billion or 27 percent, taking the outstanding book to Rs760 billion—levels last seen at the close of 2022. Unsurprisingly, the ADR collapsed to 36 percent. The retreat in advances is not MCB-specific—it's an industry-wide phenomenon. Total advances for the banking sector dipped 15 percent over December 2024 to settle at Rs15 trillion. Interestingly, NBFIs, which account for just 8 percent of the banking sector's loan book, contributed to a third of the Rs2.4 trillion quarterly decline, thanks to the temporary lending surge in the ADR-fuelled dash last quarter. On the liabilities side, MCB made up for the Rs140 billion deposit outflow seen in 4QCY24, recovering to the same level as end-3QCY24. Deposits grew by 9 percent over December 2024, outpacing the industry's 4 percent growth during the period. The significant shift in the interest rate outlook played a role in the drop in markup income. On the non-markup front, a modest uptick was seen, with fee, dividend, commission, and FX income contributing the bulk. However, administrative expenses rose sharply, outpacing headline inflation and pressuring the cost-to-income ratio, which fell over 8 percentage points year-on-year. With inflation cooling and the external account holding steady, interest rate cut expectations have returned to the chatter. Yet, industrial output remains sluggish, and the farm economy is sending mixed signals, leaving little hope for a significant revival in private sector credit appetite in the near term.
Express Tribune
16-03-2025
- Business
- Express Tribune
PSL planned for expansion with hefty price tags for new teams in 2026
HBL Pakistan Super League (PSL) is set to expand in 2026, with two new teams expected to fetch between $7 million and $10 million each, as the Pakistan Cricket Board (PCB) seeks to capitalise on the league's growing value, Express News reported on Sunday. The league currently comprises six franchises under a 10-year agreement, which is set for renewal after the upcoming 10th season. The PCB is preparing to revise franchise fees, allowing existing team owners to either retain their rights or opt out. However, all current franchises have indicated their intent to continue. To determine the revised franchise fees, an independent audit firm will assess the league's valuation. The PCB had previously fixed the exchange rate at Rs170 per dollar for team payments, but with the rupee depreciating to Rs282 per dollar, a significant fee adjustment is expected. Multan Sultans, the most expensive team, currently pays Rs1.08 billion ($6.3 million) annually, while other franchises were sold at varying rates, ranging from $1.1 million to $2.6 million. With the addition of two new teams, the PCB anticipates selling each for up to Rs 2.5 billion ($10 million). Several entities have shown interest in acquiring a franchise, including a major corporate player in Pakistan and a Grade Two cricket institution. Additionally, PCB officials recently met potential investors in the United States and the United Kingdom. Despite the excitement surrounding expansion, existing franchise owners fear a reduction in their central revenue share. Currently, all teams receive an equal share from the league's central revenue pool, regardless of their franchise fees. The PCB, however, has assured them that upcoming sponsorship and broadcasting deals will increase overall revenues. Some analysts question the financial viability of new franchises, citing past struggles faced by team owners. Multan Sultans, for example, incurred heavy losses despite paying a relatively lower fee. In 2018, its previous owner, Schon Group, backed out due to financial difficulties. Experts suggest that the PCB should prioritise financially robust buyers to avoid similar issues. With growing investor interest and a lucrative broadcasting market, the PCB aims to finalise the expansion process well before the 11th PSL season in 2026.
