KARACHI: The State Bank of Pakistan (SBP) once again proved to be a dependable earning hand for the government as it turned in a huge profit of Rs268 billion during the previous fiscal year.

The SBP on Friday issued Annual Performance Review on the working of the bank and its subsidiaries for FY14.

The balance sheet of the central bank shows that it earned a profit of Rs311.8bn. No single business or industrial unit earns such a large profit. However, the massive increase was offset by the accumulated loss on re-measurement of defined retirement benefits (due to revision in international accounting standards).

The profit of Rs268.6bn has been transferred to the federal government. The amount was fairly higher compared to last year’s Rs235bn.

The State Bank said its profit increased by 14 per cent compared to the last year. The increase is mainly attributable to higher discount, interest and return earned, and rise in other operating income.

The bank earns discount income on its holdings of Market Treasury Bills (MTBs), whereas interest, mark-up and return are derived on the foreign and domestic financial assets held by the bank.

Expenditure under the head of interest expenses increased by 100pc compared to previous year due to increase in borrowings under currency swap arrangements and expense on securities sold under agreement to repurchase.

The net exchange gains amounted to Rs14.1bn during FY14 as against Rs6.7bn during FY13, an increase of Rs7.4bn. The increase was mainly due to decline in exchange loss payable to the International Monetary Fund (IMF) amounting to Rs10.3bn and SDR (special drawing rights) amounting to Rs1.1bn due to strengthening of the rupee in relation to SDR. The exchange gain mainly arises due to depreciation of the rupee in relation to foreign currencies, particularly the US dollar and SDR.

The dividend income of the SBP decreased by Rs4.3bn, or 26pc, during 2013-14. The bank holds the equity investments in banks and financial institutions.

During the year under review, a gain of Rs28.5bn was recorded under other operating income against the loss of Rs1bn in the previous financial year. The main reason for the rise was the gain of Rs31.186bn on sale of UBL shares.

The gross income rose by Rs55.28bn, an increase of 22pc over last year, due mainly to rise in quantum of lending.

The State Bank spent Rs6.14bn for printing of notes and Rs6.4bn was paid to the National Bank of Pakistan as agency commission.

The State Bank spent Rs22.9bn as general administrative and other expenses.

Published in Dawn, November 1st, 2014