State Bank earns record Rs204bn in 2008-09

KARACHI: The State Bank of Pakistan (SBP) appeared as the single largest revenue generating institution for the government as it earned a record profit of Rs204 billion in 2008-09 of which Rs155 billion were transferred to the federal government.

The central bank in its second annual report on banking performance, which was issued here on Monday, disclosed that it had earned record net profit of Rs204.2 billion compared with Rs164.7 billion earned in 2007-08, an increase of 24 per cent.

The SBP said the main factors contributing the increase in profitability include increase in discount rates on Market Treasury Bills (MTBs) with marginal increase in volumes of the MTBs.

The SBP also witnessed increase in commission income and dividend income, however, exchange gains on foreign currency assets and liabilities declined as compared to the previous year.

‘The interest or discount income on domestic assets increased by 152 per cent which was offset by decrease in income on SBP’s foreign assets by 70 per cent over the previous year,’ said the report.

The central bank earned a net discount or interest income of Rs175 billion, which is 73 per cent higher than the income of Rs101 billion the previous year.

The sharp rise in interest or discount income on domestic assets is mainly attributable to increase in average discount rates on MTBs coupled with a marginal increase in volume of these MTBs.

The discount rates on MTBs remained in the band of 11.47 per cent to 14.01 per cent as compared to the range of 9.26 per cent to 11.9 per cent during the previous financial year.

The income through exchange gain declined by 44 per cent over the previous year which amounted to Rs34.7 billion during the year under review compared with Rs62 billion in the previous year.

The decline in exchange income is mainly attributable to the net exchange loss witnessed on liabilities pertaining to ‘Payable to International Monetary Fund (IMF)’ and SDRs (Special Drawing Rights), which amounted to Rs33.37 billion compared to Rs14.37 billion during the previous year.

The discount income of the State Bank is derived from the holdings of MTBs and the interest or markup, and return is earned on the foreign and domestic assets held by the central bank.