For the first time in almost four years, the Zarai Tarqiati Bank Limited (ZTBL) has shown quarterly profit before tax of Rs3 billion, raising bets that that the bank’s downward slide might finally stop and it can achieve breakeven by end of this year.

According to provisional unaudited figures, ZTBL’s profit before taxation stood at Rs2.95 billion for the April-June quarter ending on June 30. In the same quarter of last year, the bank incurred losses of Rs3.5 billion, showed the provisional unaudited financial statement.

It was for the first time in almost four years that the country’s only specialised agriculture bank reported profit in any quarter since September 2017. The Pakistan Tehreek-e-Insaf (PTI) government had appointed Shahbaz Jameel as president in November 2019 but it took almost three years to approve the bank’s board of directors that came in place only this year. There was 148% increase in gross mark-up income of the bank, which jumped for the quarter to Rs5.7 billion as compared to Rs2.3 billion in the second quarter of 2020. The bank’s annual year ends in December.

After paying for interest cost, the bank’s net mark-up income also stood at Rs3 billion against a loss of Rs759 million in the same quarter of the previous year.

“If the trend continued, we expect the bank will achieve breakeven by December this year,” said ZTBL President Shahbaz Jameel, while talking to The Express Tribune on Tuesday.

Jameel said that out of 484 branches now 279 branches are in profit as against 162 branches that were in profit last year. Similarly, as against 169,678 individuals who serviced their debt a year ago, this year 217,360 individuals paid their dues, which improved the bank’s balance sheet, said Jameel. After paying Rs2.33 billion in taxes in the second quarter, the bank’s profit-after-tax remained at Rs621 million as against the loss of Rs5 billion in the second quarter of the last year.

There were 11,283 new borrowers that the bank served this year, breaking a past practice of extending loan limits of the existing borrowers or rescheduling their loans, said the president. Third, there is a marked difference since the practice of adjustment lending has been discontinued, he added. In year 2021, only 193 persons got total enhancement of Rs890 million as against the year 2020 wherein 3,777 persons got total credit enhancement of Rs1.8 billion.

The practice of adjustment lending has been curbed and only genuine borrowers are getting credit enhancement, said Jameel.

The president said that the instance of same day rollover of loan has also been abolished. Now the mark- up and principal in full is adjusted and after a gap of one day, the principal is disbursed without limit enhancement.

In January this year, the government had included the ZTBL among the entities that it wants to privatise in the next phase – the only specialised bank lending money to the agriculture sector.

ZTBL is the third specialised bank that the PTI government has picked for privatisation after the Small and Medium Enterprise (SME) Bank and First Women Bank Limited (FWBL).

The bank’s affairs had remained haywire and incurred heavy losses quarter after quarter.

The cumulative results for the first half (January-June) showed that ZTBL incurred a loss of Rs1.1 billion this year. But it was nearly 88% less than the losses reported in the first half of the last year, suggesting the bank may soon become financially viable.

The president said that bank is nearing its journey towards annual breakeven point in a short period of time. In May 2020, Prime Minister, Imran Khan had appointed an advisory committee to help navigate and guide the reforms process at ZTBL, which proved to be a good experience, said Jameel.

The president said that there were three broad categories which can be attributed to turnaround during this second quarter of this year.

He said that the management tried to promote a culture of good governance and accountability. This includes following the established norms of banking in terms of imbedding controls and checks in processes. He said that team building also played an important role in the turnaround.

The bank’s revenues also improved through improved collections from the asset portfolio. From cash inflow point of view this is the single largest income driver of the change.

During the first half, the bank’s total recoveries increased to Rs54.8 billion – up from Rs35.1 billion. The recovery against bad loans during this period also stood at Rs2.97 billion as compared to Rs660 million in 2020.

About 210,000 borrowers – who had land holding on 12.5 acres or under – were given a mark-up subsidy under the Covid relief plan by the federal government. The amount utilised in the first six months of 2021 is Rs2.7 billion. The subsidy pays about 80% of the mark-up for these farmers and they paid the remaining 20%.

The president said that the bank was also adopting an austerity policy, which helped reduce its operating cost.

Published in The Express Tribune, August 11th, 2021.

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