The document provides a history and analysis of the commercial banking sector in Pakistan from 1947 to the present. It summarizes the key periods of establishment from 1947-1974, nationalization from 1974-1979, and privatization from 1991-2000. It then analyzes the performance of the four main sectors (private, public, foreign, privatized) from 2011-2016 based on deposits, investments, interest income, and market share. Deteriorating economic conditions could negatively impact banks through lower investments, higher interest rates, inflation, and falling asset prices. The non-financial performance of some major banks is also summarized.

1. Commercial
Banks of
Pakistan
Presented by
• Sateesh Hotchandani
• Anjli Punjwani
• Sher Muhammad
• Nandini Veerwani
• Riaz Soomro

2. Topics
1. History of Banks
2. Current Situation
3. Sectors and Industry Analysis
4. Market Share
5. Effect of Rise of interest rates on Banks financial position
6. If economic conditions deteriorate
7. Non Financial performance

3. HISTORY
• Establishment of Commercial Banking
System (1947-1974)
• 1974-79 Nationalization of banks
• 80’s Post Nationalization
• Privatization & Deregulation process
(1991-2000)

4. Establishment of Commercial Banking System (1947-1974)
In May 1948 “Muhammad Ali Jinnah” immediately establish “State bank
of Pakistan”.
After one year in November 1949, national bank of Pakistan was established in
Dacca (East Pakistan).
The main purpose was to act as an agent of state bank of Pakistan. Numbers of
more banks were established according to the need of a country with passage of
time.

5. 1974-79 Nationalization of banks
The Nationalization Bank Act 1974.
At the time of Nationalization, there were following 14 Pakistani commercial
banks with 3323 offices allover Pakistan and 74 offices in foreign countries.
A Pakistani banking counsels was established.

6. Causes & Results of Nationalization
Causes:
Distribute equal amount of wealth b/w peoples of country.
To remove unhealthy competition among banks it was thought they created
financial and economic problems.
Results:
• The banking facilities expanded in the rural areas.
• Bank deposits rose very substantially during a period
• Emphasized lending policies, national building projects, and discouraged non-
productive and unhealthy activities like hoarding.
• Increase in the number of foreign branches of Pakistan.

7. Privatization & Deregulation process (1991-2000)
Causes of privatization:
The falling standard of banking services delay in home remittances, bad debts
of the banks.
Discourage entrepreneurial activities within the country, did not provide small
loans to small savers so living standard of people were decline.

8. Privatization & Deregulation process (1991-2000)
Result of privatization:
The number of bank branches were 3397 on Dec31, 1973, reached on 7661 by end
June.
Small loans for buy house, cars, land are provided to nation
Everyone can start business easily after showing their business plans.
More competition b/w Banks.

9. Current Situation
Foreign Banks
Participation
Increased
Competition
Micro Finance &
Islamic Banks
Different Perception for Islamic and
conventional Banking

10. Actual Project starts from here 

11. PRIVATIZED SECTOR ANALYSIS
FROM 2011 TO 2016
Increase
• Deposits 93%
• Investment 170%
• Net interest income 31.5%
COMPARISON TO INDUSTRY
• Best performing sector in the
industry
• 42% deposits,
• 50% investments and
• 0.456% market capitalization
respectively of industry.

12. Privatized Sector
-10
-5
0
5
10
15
20
25
2011 2012 2013 2014 2015 2016
CAGR of interest income of
Privatized banks
0
5
10
15
20
25
30
35
2011 2012 2013 2014 2015 2016
CAGR of Deposits of privatized
banks
31.17606334 30.28736601
27.94113971
31.82850846
17.98820961
0
5
10
15
20
25
30
35
2011 2012 2013 2014 2015 2016
investments

13. Contd.
BEST PERFORMING BANKS
• Muslim commercial bank (MCB)
• Habib bank limited (HBL)
• United bank limited (UBL)
WORST PERFORMING BANKS
• Allied bank limited (ABL)

14. FOREIGN SECTOR ANALYSIS
FROM 2011 TO 2016
• Deposits are increased by 91.5%
• Net interest income decreased by 16.4%
• Investment increased by 307.85%
COMPARISON TO INDUSTRY
• The 2nd best with respect to the
performance.
• Increasing growth in Pakistan
• Even the number of foreign banks is
not increasing with such a high
percentage,
• The sector performance has been good
over the periods and this has been
attractive
• For the foreign investors and banks to
invest in Pakistan

15. Foreign Sector
-1
-0.5
0
0.5
2012 2013 2014 2015 2016
Growth of interest
income
-0.2
-0.1
0
0.1
0.2
0.3
0.4
0.5
2012 2013 2014 2015 2016
CAGR of Deposites
-0.212644652
0.481155708
0.314665764
0.674417178
0.588754808
-0.4
-0.2
0
0.2
0.4
0.6
0.8
2012 2013 2014 2015 2016
CAGR of Investments

16. Contd.
BEST PERFORMING BANKS
• HSBC Bank
• Industrial & Commercial Bank
• Citi Bank
WORST PERFORMING BANKS
• Deutsche Bank

17. GOVERNMENT SECTOR ANALYSIS
FROM 2011 TO 2016
• Deposits increased by 87%
• Investment increased by almost 163%
• Net interest income increased by
60.2%
COMPARISON TO INDUSTRY
• 3rd best performing sector despite
having.
• Deposits 20% of the overall industry
• Investments 17% and
• Market capitalization being 14.49% of
the industry.

18. Contd.
BEST PERFORMING BANKS
• ZARAI Tarqiati Bank LTd
• National Bank of Pakistan
• First women development Bank
WORST PERFORMING BANKS
• Bank of Khyber
• Bank of Punjab

19. PRIVATE SECTOR ANALYSIS
FROM 2011 TO 2016
• Deposits increased by 72%
• Investment increased by 94%
• Net interest income increased by
31.64%
COMPARISON TO INDUSTRY
• Contain 18 banks out of 31 banks
• 4th one in Banking industry.
• Deposits being 36.2% of the total
banking industry
• Investments being 32.43% of the
industry
• Market capitalization being 84.68% of
the industry.

20. Private Sector
-150%
-100%
-50%
0%
50%
2011 2012 2013 2014 2015 2016
INTEREST INCOME
116% 115% 114% 116%
98%
0%0%
20%
40%
60%
80%
100%
120%
140%
2011 2012 2013 2014 2015 2016
DEPOSITS
0
0.5
1
1.5
2011 2012 2013 2014 2015 2016
INVESTMENT

21. Contd.
BEST PERFORMING BANKS
• Al Habib
• Faysal Bank
• Standard chartered bank limited
WORST PERFORMING BANKS
• NIB BANK
• AL BARAKA BANK LIMITED
• SUMMIT BANK

22. Industry Analysis
•As compared to
2011, in 2016, the
lending or
financing has
increased 77.2%
•The liquidity of
banking industry
on average is
42.9254% for 2016.
•Assets of banking
Sector has also
increased with the
average of 107%
•Deposits of
Banking Sector
have increased
with average
sectors 116.2375%
in the year of 2016
Deposits Assets
Liquidity
Credit
Risk

23. Market Share
42%
36%
21%
1%
Industry Share in Deposits
Privatized
Private
Public
Foreign
50%
44%
3%3%
industry share in Total
Asssets
Privatized Private Public Foreign

24. 46%
29%
23%
2%
Industry Share in Equity
Privatized Private Public Foreign
46%
32%
18%
4%
industry share investments
Privatized Private Public Foreign
MKT Cap. for banking
industry
Privatized Private Public Foreign

25. Contd.
BEST PERFORMING BANKS
• Habib Bank Limited (HBL),
• National Bank Limited (NBL),
• United Bank Limited (UBL),
• MCB Bank Limited,
• Allied Bank Limited (ABL) and
• Bank Alfala Limited.

26. Effect of Rise in Interest rate
Cash will earn higher
Returns
Longer dated bond
holding could be hurt
1.Stocks can continue to
gain, but investors may
need to be choosy
1.Borrowing costs will
rise.

27. If the economic conditions Deteriorate
Factors which deteriorate economy of country
1. Investments
2. Interest rate
3. Inflation
4. Assets prices

28. Industry Foreign sector 2016 private sector Govt sector Privatized
sector
Assets 382776586 5593081656 3118831867 6316659130
Decrease interest
and current
assets
(25672095.75) (262948458) (153070490.1625) (297339728.5)
Net assets (1815708) 321812800 193399785 310336009
Net assets in % -0.04% 5.75% 6.20% 4.912%

29. Non-financial performance
Bank Number of
ATMs
Number of
Debit Card
customer
Number of
credit card
customers
Number of
Branches
Number of
Mobile
banking
customers
HBL 2000 1731
UBL 1300 1341
ABL 1150 1148
MCB 1191 2135599 11060 1238 931965
Askari Bank 583 531
Soneri Bank 313 290 40500
Meezan 550 571
First women
Development
Bank
20 24 15
National
Bank of
Pakistan
1120 1498