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The establishment of this EC was approved by the Board of Directors of Bank AL Habib Limited through a circular resolution dated September 19, 2023. The authorized share capital for the EC is set at Rs1 billion ($5.6 million). However, the establishment is subject to approval and clearance by the State Bank of Pakistan (SBP) and completion of other regulatory compliance requirements.
This move follows similar announcements made by MCB Bank Limited, Meezan Bank Limited, and United Bank Limited (UBL), who have also declared their intentions to establish wholly-owned ECs. The decision comes in the wake of the SBP’s bid to strengthen controls amid a significant fall in the rupee’s value in the open market. As part of these structural reforms, leading banks actively engaged in foreign exchange business are encouraged to establish wholly-owned ECs.
The SBP has also raised the minimum capital requirement for ECs from Rs200 million to Rs500 million, effectively raising the barrier for private sector entry into this field.
Bank AL Habib’s announcement coincides with its recent financial results showing substantial growth in core earnings. The bank reported a 69% year-on-year increase in Profit Before Tax (PBT) for the half-year ending on June 30, 2023, which hit Rs31.14 billion. Profit After Tax (PAT) posted a growth of 90%, amounting to Rs18.2 billion; this translates into Earnings Per Share (EPS) of Rs16.39 compared to an EPS of Rs8.63 reported in the corresponding period of the previous year.
The establishment of the EC is seen as a strategic expansion for Bank AL Habib as it seeks to diversify its operations and services in the financial market. The EC, once established, will operate as a 100 percent owned subsidiary of Bank AL Habib Limited.
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