atif bajwa interview

7/29/2019 atif bajwa interview

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Exclusive Interview with Mr Atif Bajwa, CEO Bank Alfalah

By:Erum Zaidi

From Print Edition

KARACHI: Atif Bajwa, CEO Bank Alfalah (BAFL) is a veteran banker withglobal professional experience of over three decades of serving severalinternational as well as local banks. He started his career with the Citibank in

1982 and assumed various roles with the bank for 11years across Karachi,Lahore, New York and Bahrain. He also worked in ABN AMRO and MCBBank. Following are excerpts from an exclusive interview.

Q. What are the major challenges and opportunities confronting banking sector in Pakistan?

A. The financial services sector has experienced a hard-hitting impact and there are severallessons to be learnt from the global meltdown. This backdrop coupled with the dismal localeconomic outlook exacerbates the challenges for the banking industry in Pakistan customers are not confident of countrys situation; foreign entities are apprehensive of theoperating risk. Moreover, whilst banks (including Bank Alfalah) continue to report strong

profits, there has been growing concern in the industrys rising trend of non-performingloans (NPLs), peaking at approximately 17 percent. Bank Alfalahs NPLs reflect a lowerposition vis--vis the industry, at less than 9 percent. However, greater focus andimprovements in risk management are required to create discipline and tackle this issue.

Second is the dependence of the sector on high spreads. Whilst the cause of significantspreads lies primarily in the countrys macroeconomic imbalances (manifested through alarge fiscal deficit leading to high government borrowing), the banking sector is both


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benefiting from it and being drugged into easy profits. This has created the industry into aprofitable one but is really like a plane flying on one engine. It is critical that diversificationof revenue sources is pursued.

The good news is the creation of an ecosystem that supports innovation throughtechnology, allowing for the banked and yet-to-be-banked to meet more of theirpayment/ financial needs through a convenient set

of products and services. As electronic solutions will encompass customer convenience andubiquity, branchless, mobile, online and digital banking, both for corporate and retailbanking, customers are also likely to revolutionise the financial services industry and BankAlfalah aims to be amongst the leaders of this transformation.

SME banking and agri-finance are also promising opportunities and address sectors that arethe backbone of our economy. Bank Alfalah aims to continue investing in these areasthrough tailored solutions for each segment, whilst remaining cognisant of and appropriatelymanaging the risks involved.

One other area of focus for us is the nascent capital market in Pakistan. It is critical that avibrant and broad based capital market be developed in order to support the financing needsof a growth economy. The existing short-term debt focused capital markets are woefullyinadequate to meet the requirements of industry and infrastructure if our economy is to shiftgear into higher growth rates. We believe we should be playing a leading role in helping tomobilise capital and to deploy it effectively.

Q. What potential do you think the SME sector has to flourish in Pakistan? Can youdescribe BAFLs performance in this area?

A. Today, in Pakistan, the SME sector contributes 30 percent towards the countrys GDP,employs more than 70 percent of the non-agricultural workforce, accounts for 35 percent ofthe value added in the manufacturing industry, and generates 25 percent of export earnings.However, SME lending constitutes only 16 percent of total lending and only 4 percent oftotal banking customers.

The sector has huge potential to generate employment opportunities and play a role inalleviating poverty.

The sustained and long-term growth of the SME sector in Pakistan faces several challengeson both the demand and supply side. Most SMEs are sole proprietorships or family

businesses that are managed rather informally and therefore face issues such as lack offormal business management skills, poor maintenance of accounts and lack of businessplanning amongst others.

They often do not have adequate collateral to meet the minimum criteria of banks and havelittle awareness about the financing options available. While access to capital is invariably anissue, more pressing needs are non-lending.


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We are currently undertaking a pilot project, in collaboration with the International FinanceCorporation (IFC), to remodel our SME strategy and better cater to this niche segment. Weare optimistic that this endeavor will allow us to better assess and understand the specificneeds of SME businesses and enable us to offer a holistic yet bespoke SME-centric businessmanagement platform. Such an offering shall not only support the borrowing requirementsof SMEs but will also offer products and services to support their transactional and advisoryrequirements.

Q. What product launches do you have in the pipeline?

A. We see convenience and ubiquitous access to financial services as vital requirementstoday. To this end, we are investing in our technology platform and will be launchingbranchless banking, mobile and internet banking services in the near future this year.Through electronic solutions, clients will be able to make utility bill payments and fundtransfers and buy airtime and conduct several financial transactions at their own time andconvenience. On the deposits front, we hope to enhance our portfolio with segmentedproducts for salaried individuals, kids, senior citizens and women. We are also looking to

introduce a chip-based credit card soon.

For protection products, we are linking up with more insurance partners to enhance ourbancassurance suite with unique, customized offerings. We are also simultaneously workingon developing a fully integrated cash management collection/payment suite for ourinstitutional clients.

Q. How did Bank Alfalah perform during 2012?

A. The year 2012 has been an evolving, transformative but most importantly productive yearfor the bank. The bank has outpaced the industry in terms of private sector lending. As part

of our branch expansion plan, we have added 65 new branches to our already vast branchnetwork during 2012.

This year, we intend to further expand our footprint in the country. We have also introducedrelevant management changes and reassessed our operating priorities, while ensuring thatour overall growth trajectory sustains its momentum. Due to the efforts of our entire team, Iam pleased to report that our deposits, advances and profitability have all witnessedsignificant growth over 2012.

Q. How does BAFL distinguish itself from its competitors?

A. Bank Alfalah started out with a footprint of 3 branches. Over the last 15 years, ourgrowth story in Pakistan has been significant. We have closed last year with a networkspanning 471 branches across 163 cities and an overseas presence in Afghanistan,Bangladesh and Bahrain. We are well aware that a one-size fits all approach does not workeffectively to this end we have segmented our product offering so as to ensure a uniquestrategy for each requirement.


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We have implemented new procedures and systems at all our conventional branches and inthe upcoming months. Our Islamic branches will follow suit. Transactional services willbecome faster as a consequence of this change and hence customer interface should be moreefficient.

Amongst other priorities, as mentioned above, we are also keen to work on developingneed-based, customised financial solutions with a view to introducing a larger proportion ofthe unbanked population into the formal fold.

Our bricks-and-mortar banking model coupled with our branchless banking services shouldbolster our efforts on this front. With the shift of wealth from big cities to smaller towns andrural areas, there is an appetite in these markets and so it makes sense to open smallerbranches to tap the potential there.

Moreover, our Islamic banking also sets us apart the banks Islamic arm is a vibrantidentity offering an innovative range of Shariah compliant products and services customisedto cater to the individual needs of our customers. We are the no.2 Islamic bank in Pakistan

with new branches being added to our network of 86 Islamic banking branches as we speak.

The bank aims to invest in its core strengths to provide best in class products and serviceson the consumer and corporate side, whilst also further exploring opportunities in SME andagri-finance.

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atif bajwa interview