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Auction: Bid Pattern

September 23, 2020 (MLN): The State Bank of Pakistan released the Bid Pattern for today's MTB Auction.

Auction target is Rs.450.00 billion against a maturing amount of Rs.603.90 billion, showing a net retirement of Rs.153.90 Billion.

Link to Full Bid Pattern

In the previous auction cut off yield for 3, 6 and 12 months was 7.1399, 7.18 and 7.3 percent.

SBP also released the Bid pattern for today's PIB (Floating Rate) Auction.

Auction Target is Rs.110.00 Billion for 3, 5 and 10 year Bonds, which will be the re-opening of June 18, 2020 issue.

Coupon Rates for are 8.2670, 8.3070 and 8.5170 percent for 3, 5 and 10 years.

Link to Full Bid Pattern


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Pakistani Rupee holds its ground

September 23, 2020 (MLN): Pakistani rupee (PKR) closed today's trading session relatively unchanged against the USD with the rate remained stable at PKR 166.23

The rupee traded within a very narrow range of 15 paisa per USD showing an intraday high bid of 166.22 and an intraday Low offer of 166.15.

Within the Open Market, PKR was traded at 165.80/166.80 per USD.

Meanwhile, the currency gained 1.9 rupees against the Pound Sterling as the day's closing quote stood at PKR 211.06 per GBP, while the previous session closed at PKR 212.92 per GBP.

Similarly, PKR's value strengthened by 78 paisa against EUR which closed at PKR 194.38 at the interbank today.

On another note, within the money market, the overnight repo rate towards close of the session was 6.50/6.75 percent, whereas the 1-week rate was 6.75/6.95 percent.

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Analyst Briefing: FCEPL attributes recovery in earnings to increase...

September 23, 2020 (MLN): FrieslandCampina Engro Pakistan Limited (FCEPL) held its analyst briefing session yesterday, wherein the management of the company shed light on the latest financial performance as well as the ongoing endeavors and prospects.

For the uninitiated, the company had reported profits of Rs 292 million for the half-year ended on June 30, 2020 against the net losses of Rs 238 million of the corresponding period last year.

While commenting on the performance, the management of the company credited the increase in prices for UHT milk, increase in the market share for Olpers and decline in the distribution costs to the recovery in company’s earnings. The increase in the number of customers switching from loose milk towards packaged milk also contributed to the FCEPL’s profits.

Similarly, the increase in sales revenue by 8.6% was attributed to higher dairy segment sales, especially in the second quarter. However, the company did suffer substantial declines in the sale of ice-creams due to the imposition of lockdown, which caused closures of schools (major market for Omore) across the country for a prolonged period.

The improvement in the gross profits by 18.51% was the courtesy of higher selling price and lower cost of raw material. Meanwhile, the finance cost surged by 39% to clock in at Rs 765 million owing to higher interest rates as well as rise in the levels of debt.

While discussing the impact of COVID-19 on the overall performance, the management said that the decline in sales from corporate clients was compensated by higher demand from household segment due to supply disruption of raw milk and increased preference towards packaged milk on the back of precautionary measures amid outbreak of COVID-19, a report by Foundation Securities said.

To ensure minimal impact of COVID-19 on the business operations, the company has taken several steps such as initiating home delivery services, launching Olpers mart and focusing more on e-commerce selling.

Regarding the future endeavors, the management said it is gearing up for the launch of Olpers flavoured milk as well as new flavors in the ice cream category. The short-term prospects for the company also seem favorable due to the precautionary behavior of consumers, as well as the decline in duty on import of skimmed powdered milk. However, in the long-run, it will have to battle several challenges given slow conversion of consumer preferences from loose milk to packaged milk products amid economic slowdown and rising cost of living, the report added.

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Banking sector spread shrinks to 4.88% in August

September 23, 2020 (MLN): The Banking sector spread for August 2020 depressed by 12 basis points (bps) over the month which brings its latest value to 4.88% as compared to prior month's spread of 5%. Similarly, the spread has contracted by 102 bps as compared to the same period last year.

The decrease in banking spread was led by relatively higher decline in lending rates as according to the State Bank of Pakistan's monthly data released on Weighted Average Lending & Deposit Rates, the lending rate for all banks (inclusive of zero markup) depressed by 22 bps to stand at 8.72%. Meanwhile, the deposit rate contracted by 10 bps over month, thus bringing the latest rate to 3.84%.

As per the report by Sherman Securities, banking spread has room for slight decline of 15-20bps, as delayed impact of policy rate cut on lending rates is largely incorporated.

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Eurozone business growth stagnates as virus resurges

September 23, 2020: Eurozone economic activity stagnated in September as a summer recovery faltered because of a resurgence in the spread of the coronavirus, IHS Markit said Friday.

The firm's closely watched PMI index fell to 50.1 points from 51.9 points in August, just barely above the key 50-point level which indicates growth.

"A two-speed economy is evident, with factories reporting that production growth was buoyed by rising demand" while the service sectors were hard hit, said Chris Williamson, chief economist at IHS Markit.

The data provider said that Germany, the eurozone's biggest economy, continued to lead the recovery, though at a slower rate than previously.

France, where services are key, saw business activity "deteriorate" for the first time in fourth months.

The rest of the eurozone -- which includes Spain and Italy -- suffered a more rapid slowdown, IHS Markit said, noting that staff was being cut across the continent, though at a slower pace.

Williamson saw encouragement "from a further improvement in companies' expectations for the year ahead, but this optimism often rests on (Covid-19) infection rates falling, which remains far from guaranteed for the coming months."

Jessica Hinds of Capital Economics warned that the data "suggest that the recovery is grinding to a halt, at least outside the German manufacturing sector."


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