Inner Pages fixed - Afghanistan Banks Association Report, 2014.pdf · 02 ABA Annual Report 2014 ......

ContentsContents

Afghanistan Banks Association

ABA Annual Report 2014

Acronyms:

Board of Directors:

ABA Members Banks:

About ABA

Summary of Main Achievement:

Advocay and Promotion

Strengthening Afghanistan Banking Sector

Research and Analysis:

Future Plan:

1

4

5

8

10

15

18

21

21

ABA Organogram 7

Institution Building 19

AcronymsAcronyms


01ABA Annual Report 2014

Message From ChairpersonMessage From Chairperson Of The Board

Khalil Sediq

Chairman


02 ABA Annual Report 2014

Dear Stakeholders:

It is my honor to present to you Afghanistan Banks Association (ABA)

annual report for the year 2014. The Afghanistan banking system

grew by 8 percent in 2014, while total deposits increased 9%. Non-

performing loans continued their upward trend, however at a slower

rate, and we closed the year with an NPA ratio of 8.01% percent.

Despite the sluggish economic growth, the system remained liquid

and well Capitalized at 73%.

There is a general feeling that the worst might be over. The country

successfully completed the presidential election process after a run off.

There is tremendous hope that the new government will pay special

attention to the further improvement of the financial sector.

Moreover, the Anti Maney Laundering (AML) and Combating Financial

Terrorism (CFT) laws were approved, which instilled confidence in the

banking sector, both domestically and internationally.

ABA performed admirably in 2014. It participated with its member banks in the annual SWIFT

international banking operations seminar, it signed an Memorandum of Understanding (MOU) with

the British Afghan Chamber of Commerce and Industries(BACCI), it developed a corporate scorecard

and conducted an assessment regarding bank corporate governance, it organized access-to-finance

and business-to-bank roundtables, to mention but a few of its accomplishments.

In closing, as the chairman of ABA, I would like to thank members of the board of directors ABA's

management and staff, as well as our donor, USAID's FAIDA project, for their support and

contributions.


Message From The ExeMessage From The Deputy Executive Director

Najibullah Amiri,

Deputy Executive Director


For the past 11 years, the Afghanistan Banks Association (ABA) has

served as the “Voice of the Banks.” The year 2014 was full of challenges

for Afghan Economy. However, ABA has tried to focus on ensuring a

strong and healthy environment for banking industry in Afghanistan, as

well as enhancing Afghanistan-operating banks' access to the global

network.

In September 2014, Afghanistan Banks Association (ABA) participated in

SWIFT International Banking Operations Seminar (SIBOS) at Boston

Convention and Exhibition Center (BCEC) at Boston, Massachusetts, USA.

Over 100 representatives from various banks, financial institutions and

financial services providers from different countries visited the ABA

stand to discuss business relations with ABA and its member banks. ABA

was active in exploring correspondent banking relations. At the ABA

SIBOS stand, many of the strong US and European banks were able to

understand the Afghan market more deeply, which will ultimately help

restore and establish business relations with the ABA member banks.

ABA focuses on strengthening the Afghan banking community and serves the financial sector of

Afghanistan. ABA looks forward to a sound and well-developed banking and financial sector that will

contribute immensely to the economic and social growth of the Afghan citizens.

Board of DirectorsBoard of Directors

Mr. Khalil SediqChairman of Afghanistan Banks Association (ABA) and Chief Executive Officer (CEO) of the

Afghanistan International Bank

Mr Khalil Sediq has 30 years of experience as a central and commercial banker in Afghanistan and in

the United States (US). He served as the Governor of Da Afghanistan Bank during 1990-1991.

He holds a Bachelor degree in Macro Economics from the Kabul University.

Mr. Masood Khan Musa Ghazi

ABA Board Member and Chief Executive Officer (CEO) of the New Kabul Bank

Mr.Musa Ghazi has over 12 years of experience in central and commercial banking in Afghanistan.

Mr. Ghazi holds a Master degree in Commerce, and is a PhD candidate of the Faculty of Economic Development and Muamalat Administration in Universiti Sains Islam Malaysia (USIM).

Mr. Muhibullah Safi

Mr. Safi has a master degree in Computer Science from Punjab University.

Mr. Safi has extensive experience in the banking industry. He joined Da Afghanistan Bank as

Deputy Director General for Monetary Policy. In this capacity, he worked closely with the

IMF on the SMP and PRGF programs.

Mr. Liaqat Ali

Mr. Liaqat Ali is an ABA Board Member and the Country Manager of Habib Bank Ltd (HBL) of

Pakistan in Afghanistan.

Mr. Liaqat has over 15 years of experience in commercial and central banking in Pakistan. He

has worked as Regional General Manager for five years, overseeing more than 100 branches

of HBL.

He has MBA degree in Banking & Finance, as well as an MA in Islamic Studies from Institute

of Bankers in Pakistan.



Mr. Ashokkumar Valechha

Vice Chairman and Chief Executive Officer (CEO) of the First Microfinance Bank of

Afghanistan: Mr Valechha has over 33 years of banking industry experience. His areas of

expertise include credit, audit, and project Management. He has served as CEO AND CIA in

Bakhtar and Azizi banks.

He holds BSc, India, CIA - USA, CISA - USA, CFE - USA, CAIIB - Institute of Bankers, India.

ABA Member BanksABA Member Banks

Foreign Banks

1. Bank Alfalah limited

2. Habib Bank Ltd

3. National bank of Pakistan

State owned Banks

1. Bank-E-Millie Afghan

2. New Kabul Bank

3. Pashtany Bank

Private commercial bank

1. Afghan United Bank

2. Afghanistan Commercial Bank

3. Afghanistan International Bank

4. Arian Bank

5. Azizi Bank

6. Bakhtar Bank

7. Ghazanfar Bank

8. Maiwand Bank

9. The First Micro Finance Bank

Associate 1. Afghanistan Institute of Banking and Finance



ABA Donors:

United States Agency for International Development (USAID)

New Market Development (NMD)

ABA Associate Member

ABA Donors



The Organogram of The Organogram of Afghanistan Banks Association

ABA has a Very Lean Structure, as is Evidenced by the Following Organogram:

General Assembly

Board

ManagementCommittee

Executive Director-tbd

Manager Of Finance& Administration

Accountant Other Administration

Director Of

Economic Research

Research Analyst

Advisory



Date: 12 Dec 2014

IntroductionIntroduction



Mission StatementMission Statement



Summary of Main Summary of Main Achievement in 2014



Banking Sector UpdatesBanking Sector Updates

Da Afghanistan Bank (DAB) and Harakat launched the Shariah Compliant Project on May 6, 2014.

Harakat provided DAB with a $1,175,600 grant to implement the Shariah Compliant Project for SMEs

Access to Finance projects during April 2014 – March 2015 aiming to tackle challenges of the Islamic

Banking.

On June 20, 2013, Afghanistan became a full member of the Economic Cooperation Organization

(ECO) Trade and Development Bank after the Board of Governors of the ECO Trade and Development

Bank (ETDB) discussed the membership of Afghanistan in its thirteenth meeting.

H.E. Hamid Karzai, former President of the Government of Islamic Republic of Afghanistan (GIRoA),

approved the Anti-Money Laundering (AML) Law on June 26, 2014 and the Combating Financing of

Terrorism (CFT) Law on July 3, 2014.

On October 1, 2014, Parliamentary lawmakers, during the plenary session, discussed the proposed

Banking Law and raised series comments and suggestions in this regard. Mr. Khan Afzal Hadawal, the

First Deputy Governor of DAB submitted information about the mentioned law draft to the lawmakers.

R e f : o f O c t o b e r 1 , 2 0 1 4 a n d h t t p : / / w j . p a r l i a m e n t . a f / e n g l i s h . a s p x

http://www.wolesi.com/pve/showdoc.aspx?Id=2613

During October 12-17, 2014, the newly elected President, Mohammad Ashraf Ghani, met with each of

the 16 member banks of Afghanistan Bank Association (ABA) individually to discuss recent

developments in Afghanistan's banking sector. On October 19, 2014, H.E Dr. Abdullah Abdullah, the

CEO of GIRoA met Mr. Khan Afzal Hadawal, the Acting Governor and First Deputy Governor of DAB and

CEOs of 13 ABA member banks and discussed Afghanistan's banking sector's challenges,

opportunities and threats.

Following President Ghani's decree for reopening of the Kabul Bank corruption case, Mr. Mohebullah

Safi, the Head of BMA and Mr. Masood Musa Ghazai, the CEO of NKB have left the country in October

2014 under the pretense of work leave. According to the Attorney General's Office. Ref:

http://www.tolonews.com/en/afghanistan/16766-finance-ministry-bailed-out-kabul-bank-officials-

now-abroad rdThe 3 Annual Access-to-Finance (A2F) Exhibition scheduled for October 2014 has been postponed to

first quarter of 2015, because of the security and political situations in the country.

Punjab National Bank (PNB) decided to close its operations in Afghanistan and transfer the business to

Azizi Bank. PNB and Azizi Bank have entered into an MOU based on which, Azizi Bank took over all the

business/customer accounts of PNB. It is understood that PNB decided to close its operations due to

DAB's circular on paid-up capital conversion from foreign currency to local currency.



http://wj.parliament.af/english.aspx

http://www.wolesi.com/pve/showdoc.aspx?Id=2613

http://www.tolonews.com/en/afghanistan/16766-finance-ministry-bailed-out-kabul-bank-officials-now-abroad

http://www.tolonews.com/en/afghanistan/16766-finance-ministry-bailed-out-kabul-bank-officials-now-abroad

On December 1, 2014, the Ministry of Finance (MoF) proposed to the Presidential Office the merger of

the three state-owned banks of Afghanistan (BMA, NKB and Pashtany Bank) to form one stronger

national bank. The Presidential Palace approved the proposal and the final decision is expected to be

announced soon. A committee composed of MoF, DAB, BMA, NKB and Pashtany Bank is to be formed

to explore the feasibility of merger.

On December 6, 2014, H.E. Mr. Noorullah Delawari, the Governor of DAB, mentioned his resignation on

Tolo TV. On December 15, 2014, in presence of media, Mr. Delawari officially handed over his charge as

the Governor to Mr. Khan Afzal Hadawal, the First Deputy Governor of DAB. Mr. Hadawal is expected to

continue as Acting Governor of DAB until a new Governor is appointed and obtains the vote of

confidence from the Afghanistan Parliament.



Financial Status Financial Status of the Sector

Indicators

Deposits

Loans

Depositors

Borrowers

Assets

Capital

Capital Adequacy Ratio

Liquidity (Median)

Return On Assets

Return On Equity

NPA (%Age)

Q4 2013

207,822

46,941

2,695,139

64,549

245,751

28,309

26.20

67.93

0.61

8.18

5.10

Q4 2014

218,917

43,233

3,134,754

54,217

256,926

30,250

26.78

73.60

0.90

7.35

8.09

Absolute

11,095

(3,707)

439,615

(10,332)

11,175

1,941

1

6

0

(1)

3

% change Q-o-Q

5%

-8%

16%

-16%

5%

7%

2%

8%

48%

-10%

59%

The banking sector has experienced mixed growth. Positive growth indicators include: (i.) total deposits

increased by 5 percent:(ii.) number of depositors increased considerably by 16%; (iii.) Asset and Capital

categories saw moderate increases of 5 percent and 7 percent, respectively; (iv.) Capital Adequacy

Ratio, Median Liquidity and Return on Assets increased 2 percent, 8 percent and 48 percent,

respectively.

Negative growth indicators were: (i.) NPA reached their peak of 8.09 percent at the end of fourth

quarter with an increase of 59 percent; (ii.) loan portfolio also witnessed a decrease of 8 percent; and

(iii.) the total number of borrowers also sharply decreased by16 percent



ABA Progress ABA Progress Overview



Event: Swift International Banking Operation Seminar (SIBOS)

Date: September 29th - 2nd October 2014

Venue: SIBOS, Boston, USA





Strengthening AfghaStrengthening Afghanistan Banking Sector



Institution Building Institution Building



Chemonics International:

Event:MOU signing by ABA andAfghan British Chamber of

Commerce

Date:November 18, 2014

Venue :ABA Conference Room



Research and AnalysisResearch and Analysis

In 2014, ABA published a paper on economic trends and their impact on Afghanistan's banking sector. ABA also

published 6 E-Newsletters, 3 Quarterly Newsletters, and 8 articles in various magazines.

ABA published articles

1. Afghanistan Hails its Bright Banking Sector Future

2. Role of the Banking Sector in the Economy

3. Exchange Rate Developments in Afghanistan

4. Macroeconomic Developments in Afghanistan

5. Corporate Governance in the Banking Sector

6. Global Macroeconomic and Finance trends

7. Financial Action Task Force (FATF) Recommendations

8. Afghanistan Ensures its Bright Banking Future through Strong Risk Management and Banking Practices

Future PlanFuture Plan



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