KARACHI, November 1, 2018: The State Bank of Pakistan’s (SBP) posted a significant decline of some 26 percent during the last fiscal year (FY18) mainly due to rising foreign exchange losses.
The SBP on Thursday released its annual performance review for the last fiscal year, which revealed that Pakistan’s central bank’s profit for FY18 witnessed a significant decline of 26 percent over the last year’s profit. The SBP recorded a profit of Rs 175 billion in FY18 compared to Rs 23 billion in FY17, registering a decrease of Rs 62,391 million.
The decline is primarily attributed to exchange loss of Rs 72,280 million during the year as compared to exchange gain of Rs. 24,570 during the previous year, registering a substantial decline of Rs 96,850 million. The decrease was, however, partly offset by increase of Rs 50,263 million in the net interest income.
The lending to the Federal Government remained the major source of SBP’s profit followed by earnings on the OMO injections. The growth in expenses also witnessed a 15 percent increase during the year. The note printing charges, agency commission paid to agent commercial banks for undertaking government banking business on behalf of the Bank and General administrative and other expenses are the major expense heads.
The review said that, the interest / markup income increased b Rs 60,736 million to Rs 321,607 million, registering an increase over 23 percent. The borrowings by the Government from SBP during FY18 remained the major sources of income of the Bank during the year. The discount income earned on lending to the Federal Government increased by 22 percent and interest earned on lending to commercial banks through OMO injections increased by 17 percent due to larger volumes of reverse repurchases during the year.
The income on FCY assets registered 27 percent increase during the year. Although, foreign exchange reserves reduced significantly during the year however, the return on the reserves increase due to hike in the international interest rates.
The interest earned on Export Finance Facility (EFF) and other related refinance facilities increased to Rs 10,232 million in FY18 from Rs 6,400 million in FY17 primarily due to increase in the outstanding loans to banks under various refinance schemes.
The Bank incurs interest/ markup expense on FCY and domestic liabilities. FCY liabilities include deposits of international organizations and central banks, International Monetary Fund liabilities and currency swap arrangements. The domestic liabilities include repurchase transactions and Sukuk purchased under Bai Muajjal agreement and.
The interest/ markup expense witnessed a rise of Rs 10,474 million primarily due to rise in the interest rate and deprecation of PKR against SDR and CNY on IMF and CNY related liabilities respectively.