BAJK from Emergence to Path of Growth

Abdul Basit Alvi

Bank of AJK started its operations as a commercial bank on November 1, 2006. During one and a half decade of its operation, it could not make the progress as visualized despite having robust network of branches. This was a major concern for all its stakeholders which needed immediate attention to take the necessary steps to putting the bank on the track of growth and development. The worsening position can be gauged through the fact that its operating profit as on December 30, 2019 stood at nominal figure of Rs. 139 Million despite the sizable network of 70 branches. In this backdrop, Mr Khawar Saeed present President/CEO of BAJK took over the charge on December, 2019 with a formidable task of transforming the bank into viable institution.  He analyzed the causes of declining business before taking appropriate remedial measures. After threadbare analysis of the prevailing business scenario, the following factors were revealed which were hindering the business of the bank.

•       Dependence on high cost public sector deposits.

•       Less emphasis on procuring private deposits which are considered as core deposits for any commercial bank.

•       Weak IT structure.

•       No strategy to procure ancillary business such as Foreign Inward Home Remittances and BANCA Insurance etc.

•       Imprudent lending.

•       Low ADR ratio and high reliance on placing funds with other banks at marginal available yield.

•       Absence of merit based culture.

•       Untrained human capital.

•       Weak internal controls, absence of effective Compliance environment and outdated manuals and policies.

Mr. Khawar Saeed took revolutionary steps on war footing basis to convert the bank into a sustainable Profit earning business institution. Some of the key initiatives taken by him are listed below;

•       The limit of Advance Salary Loan was enhanced from Rs. 01 Million to Rs. 02 Million which resulted in substantial increase in lending portfolio and revenue generation.

•       Auto financing (Commercial & Private).

•       Lending against security of gold /gold ornaments.

•       Various types of business finance.

•       Staff Motivation, Reward and Compensation initiatives.

•       Negotiated an Agreement with M/S Data Check Private Limited (Licensed by State Bank of Pakistan) to avail their services for tracking and sharing the Credit History of potential borrowers to determine their credit worthiness for ensuring quality of lending.

•       Agreement was signed with Jubilee Life Insurance to enhance Non-fund-based income through marketing of bancassurance among BAJK Customers.

•       Agreement with JS Bank was executed to increase the Home Remittances.

The year, 2020 was not productive for economies and it was seen as really a hard time due to spread of COVID-19. Many businesses faced disruption and went into losses due to sluggish economic activities caused by the pandemic. In spite of wide spread prevalent unfavorable economic conditions, the Bank of AJK showed phenomenal results in the year 2020. Performance of the bank which was continuously declining gained a boost and produced remarkable achievements in the year. 

The key performance indicators of the bank are self-explanatory and proves the commitment and enthusiasm of leadership and field functionaries. Below are some of the significant achievements witnessed in the year ending on December, 2020:

Profit of the Bank jumped from Rs. 139 Million to Rs. 301 Million reflecting ever highest growth rate of 117%. The Bank has also registered tremendous growth in other key areas of business such as deposits, financing & lending and Home Remittances which may be termed as iconic business performance in respective areas. The deposits increased from Rs. 11.87 Billion to Rs. 18 Billion. Similarly the lending & financing portfolio depicted significant growth of 11% over the corresponding last year 2019.

Another area where the bank has reflected significant growth pertains to Global Home Remittances both in terms of number of transactions and amount of revenue generated as fee based business. Here, 231% unbelievable growth was recorded. Earning Per Share (EPS) which was Rs. 0.65 in 2019 almost doubled to triggering figure of Rs. 1.27. Equity of the bank also increased from Rs. 1.227 Billion in December, 2019 to staggering amount of Rs. 2.384 Billion by December 31, 2020.

The President/CEO and his team is constantly working hard to penetrate deep in the market to fetch due share of business for the Bank. To achieve this objective the president has instilled motivation among the staff through introducing reward policies which proved as catalyst for growth in CASA deposits, increase in quality lending with minimal default risk factors. 06 new locations for opening branches have been identified, out of which 03 branches have already been opened and rest 03 will be established shortly.

In order to show continuity in performance and further progress, the bank is working to increase CASA deposits and its lending portfolios which are considered essential for increasing profitability and growth of any banking institution. Commercial and Retail banking division which remained dormant for years was re-activated to implement the business strategies and to provide timely support to the field. Good portion of non-performing loans were recovered which remained unattended in the past. Many branches were renovated to give them impressive look to attract potential customers.

The management is also equally focusing on the critical areas of Human Resource Development to improve employees performance and their capacity building to successfully meet the challenges of time and to avail the market opportunities. Therefore, management is not only working on their welfare but also to provide them opportunities for Trainings & Development.

The Bank is paying attention to enhance its IT capabilities. Additional branches are being converted from manual to online operations. Delivery of quality service to the customer is another priority of the management, therefore the bank has planned to make huge investment to acquire appropriate IT platforms in coming years which is envisaged to bring the bank at par with other banks in term of providing digital banking facilities to customers. The bank is also working on designing customized liability and asset products to meet the financial needs of all segments of the society.

The Bank of Azad Jammu & Kashmir has a bright future and moving forward to take a quantum jump to achieve excellence under the dynamic leadership of its present President/CEO, Mr. Khawar Saeed who is a career banker and held several key positions at National Bank of Pakistan prior to assumption of his charge in the Bank of AJK. He holds excellent business and banking related qualifications. His past diversified national and international banking experiences, strong academic and professional credentials, high level of commitment, enthusiasm and vision is steering the Bank to new horizons. He with his Team is optimistic and confident to produce the yet better results in future and to make the bank as ‘Bank of choice’ as well as a visible active financial player in the market. Under his guidance the bank is gaining new momentum in growth in all areas of banking. Once the aforesaid initiatives are implemented, the bank will take off to enter in new era of its operations and will become a credible major domestic financial entity.

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