Islamabad: National Bank of Pakistan, the lender with the highest loan delinquency ratio in the nation, plans to boost profit by recovering more funds from borrowers as an economic slowdown and terror attacks damp growth prospects.
"Our non-performing loans are a war chest for our investors," Chief Executive Officer Syed Ali Raza, 59, said in an interview at his Karachi head office.
"We always had a very passive approach to recoveries, of depending only on the courts; now we have a menu of solutions. Recoveries are our No. 1 priority."
Raza aims to meet or exceed the bank's 2009 profit by pursuing court cases to bolster loan repayments, deploying more branch staff for recoveries and restructuring loans at lower interest rates as power outages, a terrorist insurgency and an economic slowdown curb demand for new loans. Pakistani lenders' bad debt has more than doubled in the last five years.
"The banks have to find a remedy to reduce non-performing loans, since the slowdown in the economy especially tough times for the textile sector may keep the pressure on profitability," said Khalid Iqbal Seddiqi, head of research at Invest & Finance Securities in Karachi, who has a "sell" recommendation on the stock.
Non-performing loans in the banking system rose to Rs446.1 billion (Dh19 billion) as of December 31, compared with Rs210 billion in 2004, according to the central bank.
