CEOs of 20 out of 32 banks that operated in Pakistan in 2013 saw their paycheques become fatter, even though the combined bottom line of all these banks shrank during the year. PHOTO: FILE
Many boards of directors prefer to hold off the annual increase in the CEO remuneration during an industry-wide slowdown in business. The banking sector, however, seems to be an exception.
While the overall banking sector’s pre-tax profits plunged by 8.3% in 2013, the latest year for which complete data is available, the annual remuneration of a majority of bank CEOs went up nonetheless.
CEOs of 20 out of 32 banks that operated in Pakistan in 2013 saw their paycheques become fatter, even though the combined bottom line of all these banks shrank during the year with their average spread reducing to 6.2% from 7% in 2012.
About one-third of all banks operating in Pakistan decreased the remuneration of their CEOs while one bank kept it flat during 2013.
Interestingly, CEOs of four of the six largest commercial banks operating in Pakistan actually received a pay cut in 2013. On a year-on-year basis, the remuneration of the CEOs of Habib Bank (HBL), National Bank (NBP), MCB Bank and Allied Bank (ABL) went down in 2013.
The largest cut was in the paycheque of the MCB CEO, whose yearly remuneration was down 34.7% last year to Rs54.3 million from Rs83.1 million in 2012. This was despite the fact that MCB managed to post a nominal increase of 2.7% in its pre-tax profit in 2013.
The annual remuneration of the NBP CEO decreased 7.4% to Rs46.1 million in 2013, although the bank’s pre-tax profit nosedived (down 68.3%) in the same year.
The CEO of UBL received the highest increase in his remuneration last year, which stood at Rs138.3 million after rising by 41.3% over the preceding year. However, the increase in UBL’s pre-tax profit in the same year was only 2.3%.
Other than UBL, the only entity among the six largest banks whose CEO’s remuneration increased in 2013 was Bank Alfalah. The annual remuneration of its CEO increased 6.1% to Rs87.1 million last year.
As for the 12 medium size banks, each having total assets of more than Rs100 billion and less than Rs500 billion, CEOs of as many as eight banks had their yearly remuneration go up in 2013. While Askari Bank posted a loss of Rs8.3 billion in 2013 compared to a pre-tax profit of Rs1.7 billion in the preceding year, its CEO’s remuneration increased nevertheless to Rs48.4 million, up almost 42% on an annual basis.
Similarly, the pre-tax profit of Bank Al Habib dropped 15.5% in 2013, but its CEO’s remuneration went up 48.5% to Rs37.6 million last year.
The highest paid bank CEO in Pakistan last year sat at the helm of NIB Bank. His annual remuneration clocked up at Rs184.6 million, up 147.8% from the preceding year. The increase looks justifiable given that the bank’s pre-tax profit increased 380% to Rs2.1 billion in 2013 from Rs440 million in the preceding year.
The CEO of Standard Chartered Bank (SCB) received a cut in his remuneration in 2013. It clocked up at Rs125.2 million last year, down 12.7% from 2012 when it amounted to Rs143.5 million. In spite of the salary cut, the SCB CEO was the third-highest paid head of a banking institution in Pakistan during 2013.
Out of the 14 small banks, with each having total assets of less than Rs100 billion, the remuneration of nine CEOs increased during 2013 while that of four CEOs went down. The remuneration of Deutsche Bank AG CEO saw no change in 2013.
Among small banks, CEOs of BankIslami Pakistan, Burj Bank and Samba Bank received the steepest hike in their remuneration in 2013 with an increase of 138.9%, 73.1% and 52%, respectively.
Published in The Express Tribune, June 23rd, 2014.
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