Atif Bajwa, president Bank Alfalah shared his views on range of issues in an interview with The News.

Q: Analysts believe CPEC would have a positive impact on the banking industry. What is your opinion?

A: The China–Pakistan Economic Corridor is a major project for the country. With the kind of investment envisioned, CPEC will bring new opportunities within the project and beyond. How banks can participate in and benefit from CPEC itself is something the industry has been working on.

To me, what’s as important as CPEC itself is the spillover effects that it will bring. Beyond CPEC, there will be local investors taking advantage of infrastructure development in the country. Investments in cement, steel, contracting etc. will prove lucrative as these are the industries that make CPEC’s execution possible. Therefore, in my opinion, banks must opt for financing these supporting industries to cash in on CPEC’s spillover effects which are set to become a major contributor to the country’s economy.

But, for most local banks, this will not be easy. A lot of financing requirements for projects under CPEC are in foreign currency which places limitations on Pakistani banks. This points to the urgent need to develop more financing instruments on the debt side as well as on the equity side.

Liquidity is not that big an issue but banks will have to strengthen capital to meet adequacy requirements.

Q: BAFL is the country’s fifth largest private bank by assets and deposits. Are you planning to expand your presence in other foreign financial markets?


A: The larger banks have had relationships in China through representative and liaison offices for many years and are now opening branches. We do not have such arrangements as of now, but are not particularly disadvantaged as trade flows still take place without difficulty. So, currently, we plan on resuming our participation in goods trade through correspondent banks.

But, in the long run, we do have certain foreign markets in mind where we would like to create physical presence and China is certainly one of them.  Essentially, we are looking for markets where we have trade relationships and significant trade volumes, as well as places of strategic interest for Pakistan such as the Middle East, parts of Africa and China.

Establishing international presence, however, doesn’t come without challenges. There are certain capital and licensing requirements that Pakistani financial institutions have to fulfill if they want to set up international branches. And while the idea of opening branches outside Pakistan sounds exciting, it doesn’t necessarily promise encouraging returns. You can’t build a big business in a foreign market with a few branches.

At Bank Alfalah, our strategy is to focus on local business before expanding into international markets. We will continue to add capital in the Pakistani market and build our business while contributing to the country’s economy.


Q: Any updates on the plans of establishing Bank Alfalah’s separate Islamic banking subsidiary? What are your future plans?


A: Over the years, Pakistan has seen growth in the Islamic Banking sector. Many people now prefer to borrow or invest through Islamic financial instruments as they are more comfortable with these products.

However, the demand for Shariah-compliant lending products has been relatively low due to lack of assets. Banks are finding it difficult to acquire Islamic assets. This is where we need the government’s help in issuing Sukuks.

Presently, we are assessing capital implications of creating an Islamic Banking subsidiary. We have an extremely successful Islamic Banking business. However, we do need to consider whether this is the right time to launch a subsidiary.


Q: What are the other sectors where your bank senses financing opportunities?

A: Mining (of coal, metals and precious stones) is one of the sectors that has significant potential in Pakistan but is grossly underdeveloped. Moreover, sectors like small hydel IPPs, and infrastructure and construction materials (Cement and Steel) are other important sectors that we are keenly following, given that developmental activities have recently picked up in Pakistan.


Q: Why banks aren’t keen to extend loans to the commodity sector in Pakistan?

A: Bank Alfalah is presently working with a few of its steel clients to finance their expansion projects. Therefore, it may not be entirely accurate to say that banks are not willing to take commodity exposure. However, it is a sector that we look at cautiously because players in the commodity space do not have pricing power and often find themselves at the mercy of international prices, which may leave them vulnerable to economic cycles. Banks are also actively lending in perishable commodities mostly in the form of GoP guaranteed exposure.


Q: Any new financing ventures in the pipeline?

A: Bank Alfalah is part of the recently closed R-LNG fired power project – the largest of its kind in Pakistan – and is also currently working on a combination of coal-fired and renewable energy opportunities that include, inter alia, hydel, wind and bagasse. Of late, the bank’s focus is also on sectors other than power including road infrastructure, hospitals and bus transit/metro projects.


Q: Do you think your investment on innovation, branding and expensive IT solutions have translated into good returns?  

A: Since its inception in 1997, Bank Alfalah has emerged as one of the country’s leading banks with a keen focus on entrepreneurship and innovation. We always try to seek out new ways of enabling our customers to succeed and we deem it our responsibility to bring the local financial industry on par with the best of our global counterparts.

Our new brand identity is a visual cue to reflect this change in direction and to communicate our role in life to our customers and employees in a way in which they can relate and respond. The scale on which the bank underwent its identity overhaul was carefully planned and rolled out and this is an on-going undertaking. In order to fully comply with our new tagline – The Way Forward – all business operations were realigned and strategies were put in place to seamlessly link business goals with communication models. The Bank’s portfolio increased and new products have been launched in line with these parameters. So far this has produced good results which we will continue to improve upon. Our growth, both in terms of our balance sheet and profitability, has already given us a competitive edge over our peer banks and we are now looking to increase this gap further.

Three years on, Bank Alfalah has emerged as a young, energetic, progressive, and innovative bank serving customers through next-generation financial products, employing and deploying cutting-edge technology and digital solutions and contributing toward financial inclusion in the country. We look forward to maintaining our position as Pakistan’s most innovative and progressive bank through our new vision, mission and values and with products and services that cater better to today’s tech savvy customers we are well poised to accomplish this.

Courtesy The News

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