Innovation of local banks leading to withdrawal of foreign banks in Pakistan
Foreign banks are increasingly withdrawing from Pakistan, a trend driven by
the country’s deteriorating credit profile and the rising competitiveness of
local banks, which have gained strength following the privatization of several
institutions, according to industry experts.
Speaking at the Future Summit 2024, which wrapped up on Thursday, Ahmed Khan of Citi Pakistan explained that local banks have significantly improved their competitiveness, which has made it challenging for foreign banks to remain viable in the market.
As the last American bank operating in Pakistan, Citi continues to focus on
attracting foreign investment, supporting multinational companies, and
facilitating the global expansion of Pakistani businesses, particularly into
emerging markets like Vietnam. The summit, which focused on financial innovation
and inclusion, featured key insights from banking leaders about the evolving
landscape of Pakistan’s financial sector.
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Zafar Masud, Chairman of the Pakistan Banks' Association and President &
CEO of The Bank of Punjab, addressed concerns over banking sector taxation,
urging the Federal Board of Revenue (FBR) to refrain from interfering with bank
balance sheets. “Banks are covering nearly 86% of the fiscal deficit, so the
government should be grateful for the relief they are providing,” Masud stated.
Atif, representing Al Baraka Bank, discussed the unique challenges faced by
smaller banks with limited branch networks. He highlighted Al Baraka’s focus on
digital transformation, including the creation of an inter-franchise trade
portal designed to connect Pakistani exporters with non-traditional markets. He
also pointed out that webinars have introduced Pakistani exporters to buyers in
regions like South Africa and Bahrain.
Rehmat Hasnie, President of the National Bank of Pakistan, emphasized the
bank’s efforts to support small and medium-sized enterprises (SMEs) and
agricultural financing, which play a vital role in Pakistan’s economy.
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Javed Ghulam Mohammad, Group Managing Director and CEO of Martin Dow Group,
drew attention to the disparities in Pakistan’s healthcare system. He
contrasted Pakistan’s $3 billion pharmaceutical market with the $6-8 billion
markets in countries like the Philippines and Vietnam, arguing that the
Pakistani government has largely neglected the healthcare and education sectors.
“NGOs manage most hospitals and healthcare facilities in large cities like
Karachi,” he noted.
In his keynote address, Minister for Energy (Petroleum Division) Musadik
Malik stressed the critical role of education in Pakistan’s future development.
He stated, “Without education, we have no future. We need to track school
enrollment rates, monitor dropout figures, and assess the quality of higher
education. Education is the key to national progress.”
Dr. Ishrat Husain, former federal minister and ex-governor of the St
ate Bank
of Pakistan, commented on the growing complexity of forecasting Pakistan’s future,
pointing not only to rapid technological changes but also to unresolved
national challenges.
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The summit offered a platform for diverse voices within the banking and
business communities to discuss the evolving financial environment, innovations
in sector support, and the challenges and opportunities facing Pakistan’s
economy.
Source: Profit Pakistan