Growth positive outlook for 2021

Khaleej Times recently interviewed Arif Usmani, President, National Bank of Pakistan. Here are the excerpts from the interview

What is your view on the macroeconomic situation for the next fiscal year?

GDP is forecast to grow at around two per cent in FY21 and four per cent in FY2022 from -0.4 per cent in FY20. This is based on the expectation derived from current performance and favourable factors on the following fronts: increased local and foreign demand in the post-Covid-19 scenario, growth in large scale manufacturing (LSM) - industrial growth is expected to continue with low-cost loans, subsidies and amnesty schemes from the government. The textile industry is producing at near capacity with major expansions planned (TERF loans).  The construction industry is also on the path of recovery as evident from the rising steel and cement sales. Moreover, the recently launched Low-Cost Housing Scheme is expected to provide a boost to real estate and allied industries. Exports are expected to grow in FY2021 and FY2022 - the diversion of export orders from China and other regional competitors to Pakistan has benefitted the country. FDI is also expected to grow in FY2021 and FY2022. Stable FX reserves resulting from narrowing current account deficit due to deferment in repayment of foreign loans and support from G20 countries as well as rising levels of home remittances. Monetary policy in the near term is providing stability to the economy and ensuring controlled inflation which is expected to remain between 7 and 9 per cent in FY21 and FY22. Other government actions such as the national strategy on Covid-19 helped contain the pandemic with timely and well-calibrated support measures of the State Bank of Pakistan (SBP).

 

What is your vision for the National Bank of Pakistan (NBP) in the new post-Covid-19 normal?

Overall, Pakistan has come out reasonably unscathed in economic terms following the Covid-19 pandemic. There are prospects for considerable improvement in economic activity in the future years. However, the operating environment is challenging. Taking into account special ?nancing incentives and schemes of the SBP, it is expected that NBP like other banks in the year 2021 will witness considerable growth in advances. Structured lending under housing ?nances may increase due to the government initiatives under the 'Naya Pakistan Housing Scheme'. Deposits are also expected to grow considerably due to ongoing efforts for ?nancial inclusion, attracting FDI and some increase in interest rates improving marginal propensity to save. Banks will continue to invest in improving their technology infrastructure and branchless banking platforms for greater ?nancial inclusion, greater coverage, low transactional cost and better expense management.  The growth of physical branches will remain slow relative to banking through digital channels. We will continue investing in our business, our people, and our communities.

By recognising and tangibly responding to organisational and operating challenges, NBP has emerged as a stronger institution. The crisis will pass soon and we are con?dent that we will continue to grow our business in line with the country's economic progress.

 

What CSR initiatives does NBP support?

Corporate Social Responsibility (CSR) is about giving back to society. NBP being the nation's bank believes in supporting the communities where it operates. NBP's CSR activities are also aligned with the UN Sustainable Development Goals and related conventions and agreements, which reflect a global effort to create a society where living conditions and resources are used to continue to meet human needs without undermining the integrity and stability of the natural system.  In addition, the components and the factors that contribute to a country's ranking in the World Economic Forum's Inclusive Development Index are also elements, which provide the strategic direction for CSR initiatives at NBP. NBP's CSR activities are part of the Inclusive Development Group (IDG). The bank's policy reflects the emphasis it places on its CSR activities in such sectors, which are classified as 'priority sectors'.  NBP being a public sector organisation and leading bank of the country has always been conscious about its social responsibilities and has undertaken several CSR initiatives directed towards the promotion of healthcare, education, environment, women's empowerment, and improvement in the overall quality of life of underprivileged Pakistanis.

 

What are your views on the Roshan Digital Account initiative by the SBP? What numbers should Pakistan realistically expect by 2021?

I think the present government is focused on channelising foreign investment into the country to stabilise the economy and Roshan Digital Account is obviously one of the key initiatives by SBP to support this vision. The returns on investments are high and there are multiple opportunities for non-resident as well as resident Pakistanis such as investment in Naya Pakistan Certificates, the real estate sector, the stock market, investment in Euro and GBP bonds in addition to the US dollar and Pakistani Rupee, and above all, the investments are fully repatriable. So we can expect the number to reach somewhere around $1.5 billion by the end of 2021. 

 

Anything else you wish to highlight.

For 2021, besides the enhanced controls and governance, one key goal we have is to significantly improve the experience of our customers as they deal with NBP. This focus on positively impacting each 'customer's journey through NBP' is our objective. We should treat our customers the way we would like to be treated ourselves. Some of us serve internal customers only but ultimately we will only thrive if we make the experience of our external customers, delightful. Our customers must 'want' to deal with NBP rather than 'have' to deal with us. I want this transition from 'have to want' to be something we think about all the time as we move forward. Our customers have choices and with the digital revolution, the menu of their choices is expanding. If we don't keep the customer in our sights at all times, change our behaviour, invest in our digital capability to leapfrog our competition, we face the proverbial Kodak moment, i.e. material loss of market shares and ultimately our market-leading position.

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