Ok I understand now Khanzada sorry am new to this stockmarket business!
CHP: Union Bank is doing well because your ex boss is working in it now 
Shaukat Tarin and Zubyr Soomro turned Habib and UBL Bank around. Sadly probably the least successful one ended up Governor of Sind and now Chairman Senate
link
Interview: ‘Banks will not see double-digit profit growth in 2004 and 2005’
KARACHI: The banking sector is going through an intense process of both consolidation and growth as smaller concerns are snapped up by bigger players and every bank struggles to cope with low interest rates and ample liquidity. Daily Times’ Faisal A. Khan talks to Shaukat Tarin, chairman, Pakistan Banks Association, and president and group CEO, Union Bank, about the issues the sector faces and how it is likely to fare. Excerpts:
Daily Times: What growth do you see in the profit and earnings of banks in the current low interest rate scenario?
Shaukat Tarin: For the banking sector 2004, and maybe 2005, will be a bit difficult. Banks do have a momentum, their cost of funds is low, hence they will be able to ride out of these couple of years. They will not see spectacular increase in profits in 2004 and 2005, but I think the profits will again pick up from 2006. It’s not that banks will lose money, but they certainly will not see double-digit growth in profits.
DT: How much further do you think the process of consolidation (mergers and acquisitions) in the financial sector has to go? By when will it complete and how many players does our country actually need?
ST: There are (at present) 30 plus players in the country, and my own sense is we need around 15. But it will take a little time, it will not happen overnight. Consolidations have already taken place, they are taking place, and will take place. Union Bank has itself acquired Bank of America, Emirates Bank, American Express cards. We already have three acquisitions, and other banks are doing the same thing. But I think over a period of time small banks will feel the pressure of bigger banks becoming more efficient, and I think that will happen when Habib Bank now starts to take strides towards modernisation and launching more products. UBL, which has already been privatised, is already investing heavily in new products and services, and I guess when Allied Bank is also passed around to some other bank or prospective buyer, then the smaller banks will feel the heat, and then consolidations [will take place]. So, I think in the next five to 10 years, you will see some reduction in number.
DT: Some analysts say that while the regulators are promoting the concept of financial conglomerates, many entities are becoming so large and unwieldy that the management and customer service is suffering. What are your views?
ST: I disagree with that. The large entities are inefficient in the first place not because of their size but because of the nature of their ownership. I think it is because they were in the public sector that the National Banks, the Habib Banks and the UBLs were inefficient. Look at MCB, it has been privatised for the last 12 years and is efficient. And I think as these entities get into the private sector, they will invest in technology, physical infrastructure, and people and products. Once they do that, you will see that their service levels will go up. Frankly, what is happening now is that the private local banks, around 12 of them here, are becoming so large. If you see the balance sheet of (Bank) Alfalah, it is close to a hundred billion. So whether it is Alfalah, Askari, or Unions of the kind, when they become bigger they will give a run to these large banks, and they will have to improve their services.
DT: How do banks propose to attract deposits at these low levels? Is NSS still the major competitor for public money?
ST: I think NSS is still at a competitive advantage. Even today, they are at seven, seven-and-a-half percent, when the banks are not even giving three-and-a-half, four percent. The fact is that banks will have to come up with alternative sources. Frankly, once the banks have started giving long-term loans, that is, the consumer loans - 15-year, 20-year 10-year loans, they will, and they are getting good returns. They will now have to get into longer tenor bonds and deposits. You cannot compare long-term deposits with short-term deposits, because the dynamics of both are different. So once the banks start going into longer-dated products, the rates will have to be higher. Secondly, banks will have to do some asset management, which means that using their mortgage portfolios, credit card portfolios, auto portfolios they will have to come up with some mutual funds, with higher kind of returns, which will then directly compete with the NSS. And because the banks will be a little more efficient and will provide better service than the NSS, we will be able to provide higher rates.
DT: Some experts say that the rates at which loans are being given, prudence is not being entirely followed. Some say non-performing loans will begin to rise in the next three to five years. What are your views?
ST: The State Bank of Pakistan is coming down heavily on the kind of risks the banks have taken. The kind of low rates that the banks are offering are on adjustable basis. If you compare some of these rates to the loans given to the corporate sector, they are still higher. I think banks are not being that callous. But over a period of time the wave will come when there will be some NPLs. And it is bound to happen, and is part of the model for consumer loans. So when the NPLs start rising, people should not think that the banking sector is going to the docks, because the very fact is that once you start giving consumer loans, it will always take between 18 to 24 months for the first wave of bad debt to hit. But the banks are, I think, on top of all this. They are very conservative, the State Bank is very conservative, and is watching us very closely. So, I don’t think you will see a disaster in this area.
DT: Banks are making major investments in the badla market. Isn’t this too risky?
ST: Banks should be very careful in this regard. But there are banks, which say that they have systems to manage it very well and properly. Some banks with a large capital base will take that risk because they have a cushion, so why not. But I would recommend to the banks that they have to be very prudent, they should know their strategy and then follow it. And I can also assure that the central bank watches some of these banks or activities very closely, and if the banks are still doing, it means the State Bank must be satisfied.
DT: How have banks performed in 2003 on account of fee-based income and do you see this head growing in 2004? And how much?
ST: Fee-based income has gone down, because every bank’s first reaction was to go into the corporate area, because their consumer side was not ready. The corporate sector and the trade finance sector took advantage of this, and it became a buyers’ market. So the rates on exchange income and business went down, and I think you will see that most of the banks’ fee-based income on account of trade finance and guarantees really went down. Now some of the banks have started earning fee-based income on account of consumer assets, like auto, you have a fee over there, and mortgages. And some of the banks have started earning fee-based income on some of the advisories, and as mergers and acquisitions start taking place, this will start moving up. But there will be a lot of pressure on fee-based income on account of trade finance and corporate business. *
Shaukat Tarin and Zubyr Soomro turned Habib and UBL Bank around. Sadly probably the least successful one ended up Governor of Sind and now Chairman Senate 
i put in 4 applications 
