PESHAWAR: The Khyber Pakhtunkhwa (KP) government has ousted Ali Gulfarz, the Managing Director (MD) of the provincial government-owned Bank of Khyber (BoK). The move comes at the tail end of a year in which the bank has seen dwindling profits and management struggles.
The decision, reached after a board meeting, cites various reasons, including alleged conflicts within the board, unsatisfactory profits, the appointment of retired employees from other banks to senior positions, and purported failure to implement recommendations from the State Bank of Pakistan and other inspection reports.
According to sources within the bank, Gulfarz faced frequent disagreements with private members of the board, resulting in a division within the board. Private members reportedly expressed their criticism of Gulfarz in a letter to the former chief minister. The sources also claimed that despite repeated requests, Gulfarz’s performance report was never presented to the board of directors.
Back in September, Profit had reported that a power struggle between the board of directors and the managing director of Bank of Khyber (BoK) has allegedly impacting the bank’s performance over the past two years.
The Bank of Khyber (BOK) had set an impressive financial milestone in the first half of 2023, recording a noteworthy profit after tax of nearly Rs 169 crores. This achievement marks a remarkable fourfold increase compared to the same period last year. However, despite this substantial growth, it’s worth noting that BOK’s net profit margin currently stands at a modest 6%, which is considerably lower than the industry average of approximately 200%. Operating expenses stood at Rs 373.6 crore in June 2023 as compared to Rs 307.6 crore in June 2022.
According to sources, BoK’s half-year accounts recorded profit of Rs 169 crores was not due to the bank’s performance but due to the booking of Rs 100 crores income as a penalty for early encashment of government deposits by the provincial government and Rs 60 crores from foreign exchange business. Otherwise, the bank had a loss of Rs 20 crores in the half-year.
Gulfarz’s appointment as Managing Director was marred by controversy and made this dire situation worse. Objections were raised by several institutions and board members concerning his alleged lack of experience in commercial banking. The government has yet to announce the appointment of an acting MD.
Board officials have confirmed Gulfarz’s removal from his position, saying that he is leaving from today [Friday]. Despite attempts to reach them, Gulfarz and the bank’s media focal person, Fouzia Mahmood, remained unresponsive to requests for comment.