In an ever challenging environment for small to midsized Banks, Burj Bank has consistently improved its position year on year. Since the beginning of 2015, the reduction in discount rate by a cumulative 350 bps since November 2014 has significantly reduced spreads for the banking sector. On the other hand, due to regulatory enforcement of the CAR floor/ CAR cap, the Bank took strenuous measures to improve the balance sheet spreads, rationalise deposits, improve financing mix and reduce operating cost. Since bank's bitter experiences with legacy clientele prior to current management, the Bank seems to have much stricter compliance and focus on stringent controls in place, as a result of which they enjoy one of the lowest NPL rates in the industry.
The bank has successfully focused on building CASA & bringing the CoF down while instituting stronger control and compliance frameworks to avoid any issues. The Bank reduced cost of deposits by 206 basis points over a period of 12 months despite the competitive pressures. In order to improve spreads, the Bank replaced high cost deposits and yet managed to close the deposit book at a reasonable size of around PKR 27bn where CASA deposits constitute over 62% of total deposit size. The Bank strategically grew its consumer asset portfolio on the back of strong underwriting capabilities and risk infrastructure. Over the past two years the Bank has successfully built a widely recognised brand, built technology platforms and achieved scale through solid expansion. The relentless focus on customer service is what helped the bank to survive during toughest times in the financial market.
Burj has also been in the news for attracting investor attention. As per market intelligence, the Bank is expected to resolve its capital issue through a capital injection from a potential investor. As per the reports, all due processes and documentation have been completed and it is now awaiting SBP's (State Bank of Pakistan) nod. Once the regulator approves the transaction, the Bank will have one of the richest investor portfolio in the industry. Already the Bank enjoys strategic sponsorship of ICD - Jeddah (Private Sector Investment Arm of IDB, Islamic Development Bank), Bank AlKhair - Bahrain & Gargash Enterprise.
In the wake of challenges Burj Bank has always shown an iron will; with the winds now moving in favour of the Bank - based on the strong fundamentals on which it currently stands, it can soon become a leading contender in the Islamic Banking sphere.