Central bank transfers amount to federal government after paying Rs10m in dividends
The State Bank of Pakistan (SBP) made a ‘surplus profit’ of Rs397.7 billion in 2014-15, up a whopping 48% from the preceding year, according to its profit and loss statement released on Friday.
As the central monetary authority of Pakistan, the SBP transfers most of its surplus profit to the federal government every year.
The surplus profit is different from the central bank’s profit for the fiscal year, as the latter does not incorporate the loss on the re-measurement of defined retirement benefits.
The SBP’s profit for 2014-15 amounted to Rs401.7 billion, up 28.8% from a year ago.
Out of the total distributable profit of Rs397.7 billion, the SBP has paid out Rs10 million in dividends while the rest of the amount has been transferred to the federal government, the SBP spokesman told The Express Tribune.
Reason behind the increase
The SBP attributed the surge in the bottom line to three factors: huge gains on the sale of stakes the SBP held in Habib Bank (HBL) and Allied Bank (ABL), increase in exchange gains, and reduction in the loss on the re-measurement of defined retirement benefits.
The gain on the sale of shares in HBL and ABL amounted to Rs90.7 billion and Rs12.2 billion, respectively. The net exchange gains during the fiscal year were Rs36.4 billion as opposed to Rs11.4 billion a year ago.
The net exchange gain or loss arises on the SBP’s foreign currency assets and liabilities. The increase recorded in 2014-15 was because of a hefty appreciation of the rupee against the Special Drawing Rights (SDRs) during the year.
The reduction in the loss on the re-measurement of defined retirement benefits in 2014-15 was Rs4 billion, substantially lower than Rs43.2 billion recorded in the preceding fiscal year.
The central bank’s main source of income is the net discount/interest income. It earns discount income on its holdings of Market Related Treasury Bills (MRTBs) while interest is earned on the foreign and domestic financial assets held by the SBP.
The gross income of the SBP decreased 1% mainly because of a drop in the amount of government borrowings and decline in lending rates during the last fiscal year.
The SBP earned Rs15.4 billion as dividend income, which was up 27.2% from a year ago. It generated dividend income from its listed and non-listed equity investments in banks and financial institutions.
The expenditures of the SBP increased 9% to Rs38.6 billion in 2014-15. General administrative and other expenses formed the largest chunk of expenditures (Rs23.8 billion) in 2014-15. These include employees’ salaries, benefits, retirement benefits and other expenses.
Within this category, salaries and benefits of current employees fell almost 2% over the preceding year because of the lower salary bill of the SBP-Banking Services Corporation. The salary bill shrank due to the retirement of 293 employees, including 269 retired under an early retirement scheme. The SBP also spent Rs6.7 billion on printing banknotes, up 9% from a year ago.
The paid-up capital of the SBP consists of 1 million shares of Rs100 each. These shares are primarily held by the government of Pakistan and certain government-controlled entities.
However, 200 shares in the SBP are still owned by the Central Bank of India. However, they are held by the Deputy Custodian Enemy Property of the SBP’s Banking Policy and Regulations Department.
Another 500 shares in the SBP are held by the State of Hyderabad, according to the SBP’s consolidated financial statements.
SBP’s results at a glance
Gain on the sale of shares in HBL and ABL amounted to Rs90.7 billion and Rs12.2 billion, respectively
Net exchange gains were Rs36.4 billion as opposed to Rs11.4 billion a year ago
Reduction in the loss on the re-measurement of defined retirement benefits in 2014-15 was Rs4 billion
Gross income of the SBP decreased 1%
Expenditures increased 9% to
Rs38.6 billion in 2014-15
Rs6.7 billion was spent on printing
banknotes, up 9%
Published in The Express Tribune, October 31st, 2015.
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