Commercial Banks: MEEZAN BANK LIMITED - Six Months Ended June 30, 2006 (Un-audited)
Meezan Bank Limited (Meezan Bank) was incorporated in Pakistan on January 27, 1997 as a public limited company under the Companies Ordinance, 1984.
Meezan Bank was registered as an 'Investment Finance Company' on august 8, 1997 and carried on the business of investment banking as permitted under SRO 585 (1)/87 dated July 13, 1987 in accordance and in conformity with the principles of Islamic Shariah. It was granted full-fledged Islamic Commercial Banking licence on January 31, 2002 and formally commenced operations on March 20, 2002.
Meezan Bank is engaged in commercial, consumer and investment banking activities through its 36 branches as on June 30, 2006 (December 31, 2005: 28 branches and 786 employees). The bank is said to be continuing its branch expansion policy and plans to increase the total number to at least 60 branches by December 31, 2006. JCR-VIS has graded Meezan Bank's long term entity rating at "A+" (Single A Plus) while the short term rating is "A-1". The bank shares are quoted on the Karachi Stock Exchange. Al Meezan Investment Management Limited is a subsidiary of Meezan Bank; however, the Overview hereunder is that of the bank alone without consolidation with its subsidiary.
Authorised capital of the bank as on June 30, 2006 was Rs 4 billion (December 31, 2005: Rs 3 billion) of which paid up capital is Rs 2.362 billion. According to the Directors Review, the Board of Directors has declared 10% bonus shares and 50% right issue at par. As a result, the paid-up capital of Meezan Bank will rise to Rs 3.8 billion.
Total assets of Meezan Bank increased by 14% to Rs 35 billion on June 30, 2006 compared to Rs 31 billion on December 31, 2005. The increase has been largely financed through 15% increase in Deposits to Rs 26 billion (75% of Total Assets) as on June 30, 2006 (December 31, 2005: Rs 23 billion) and through increase in equity. As on June 30, 2006 Investments increased by 68% to Rs 2.69 billion (8% of TA) compared to Rs 1.606 billion (5% of TA) as on December 31, 2005. Nearly one-third of the total investment has been made in associated companies and a subsidiary company.
Meezan Bank's Financings as on June 30, 2006 were Rs 22.666 billion (65% of TA), registering 15% increase over December 31, 2005 Financings at Rs 19.741 billion (64% of TA). NPLs on June 30, 2006 are nearly 1% at Rs 259 million (December 31, 2005: Rs 183 million) of total Financing. Meezan Bank has made full provision against gross NPLs according to the SBP criteria. However, as some doubtful loans have the tendency to stay undiscovered for sometime due to different reasons, a prudent policy would be that the management remains extra vigilant in the appraisal and monitoring activities.
Total revenues of Meezan Bank for the six months ended June 30, 2006 increased by 125% to Rs 1.216 billion compared to Rs 542 million for the corresponding six months of previous year. Total mark up expensed for the six months under review represents 47 % of total mark up income (corresponding six months of 2005: 50%). Against expectations, there has been decline during the six months ended June 30, 2006 in the payout to the Depositors. Meezan Bank's net spread after provisions for six months ended June 30, 2006 increased by 157% to Rs 580 million from Rs 226 million for the corresponding six months of 2005. Non mark up income for six months under review was Rs 261 million as against Rs 271 million for the corresponding six months last year.
For the six months ending June 30, 2006, the bank's profit after tax has more than doubled to Rs 317 million as compared to Rs 150 million for the corresponding period last year. ROE for the six months is 9.6% (corresponding six months of 2005: 5.0%). Performance statistics are given below. The bank appears to be poised for better performance in the coming years.
As per the Review Report of the Auditors to the Members, Meezan Bank has, as stated in notes 5.1 and 5.2 to the financial statements, changed its accounting policies in respect of recording of murabaha transactions and recognition of dividends declared and transfers from profit available for appropriations to reserves. Note 5.1 pertains to changes due to Islamic Financial Accounting Standard 1 - Murabaha, issued by the Institute of the Chartered Accountants of Pakistan, while note 5.2 deals with change in dividend policy in view of the SBP- BSD Circular No 4, dated February 17, 2006 regarding revision in the forms of the financial statements.
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Performance Statistics (Rs million)
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Balance Sheet (Un-audited) As December 31
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As on June 30, 2006 2005
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Total Assets: 34,928 30,676
Cash & banks: 7,608 6,813
Lending to fin. Institutions: 0 0
Investments-Net: 2,692 1,606
Financings: 22,666 19,741
Borrowing fm. fin. Institutions: 3,077 2,982
Deposits, other accounts: 26,220 22,769
Total Liabilities: 31,617 27,651
Net Assets: 3,311 3,025
Share Capital: 2,362 2,037
Reserves, Unapprop. Profit: 926 934
Total Equity: 3,288 2,971
Advance for Right shares: 0 0
Surplus on Revalue, Assets: 23 54
Equity incl. Revalue Surplus: 3,311 3,025
Subordinated Loan: 0 0
Equity and Sub. Loans: 3,311 3,025
Financings-Gross: 22,842 19,858
Gross NPLs: 259 183
Total Provision: 176 117
Conting. & Commitments: 42,283 32,469
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Ratios:
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Cash & bank/Total Assets: 22% 22%
Investments/Total Assets: 8% 5%
Financings/Total Assets: 65% 64%
NPLs/Financings-Gross: 1.1% 0.9%
NPLs / Total Equity 8% 6%
NPLs Provisions/Financings: 0.8% 0.6%
Deposits/Total Assets: 75% 74%
Total Liabilities/Total Assets: 91% 90%
Total Equity/Total Assets: 9.5% 9.9%
Equity & S.Loans/Total Assets: 9.5% 9.9%
Deposits/Equity-Times: 7.9 7.5
Financings/Deposits: 86% 87%
Investments/Deposits: 10% 7%
Contin.& Comm./Equity-Times: 12.77 10.73
Book Value Per Share: 14.02 14.85
Quoted Price (18-08-06) - Rs: 23.00 -
Price/Book Value Ratio: 1.64 -
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Income Statement (6M, June 30) 2006 2005
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Profit, return earned: 1,216 541
Return on deposits expensed: 576 272
Net spread earned: 640 269
Provisions and write offs: 60 43
Net spread after provisions: 580 226
Total other income: 261 272
Income before Admn. Exp.: 841 498
Admin Expenses, etc: 435 287
Profit before Taxation: 406 211
Current & deferred tax: 89 61
Profit after taxation: 317 150
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Ratios: (6 Months Basis)
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Profit, return earned/Total Assets: 3.5% 1.8%
Net spread earned/TA: 1.8% 0.9%
Net spread (aft. Prov.)/TA: 1.7% 0.7%
Total non-markup Income/TA: 0.7% 0.9%
Income before AE/TA: 2.4% 1.6%
Admin Expenses/TA: 1.2% 0.9%
Profit before Taxation/TA: 1.2% 0.7%
Profit after taxation/TA: 0.9% 0.5%
Profit after tax/Total Equity: 9.6% 5.0%
EPS-(year-end paid up) - Rs: 1.34 0.74
Price/Earnings Ratio: 17.14 -
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Cash flow Summary (6Months) 2006 2005
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Net Cash flow, Operations: 1,968 954
Net Cash flow, Investing: -1,172 -42
Net Cash flow, financing: 0 159
Change in Net Liquidity: 796 1,071
Net Liquidity at beginning: 6,812 4,375
Net Liquidity at end: 7,608 5,446
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COMPANY INFORMATION: Chairman: H.E. Sheikh Ebrahim bin Khalifa Al-Khalifa; Director: Rana Ahmed Humayun; President and CEO: Irfan Siddiqui; Company Secretary/Chief Financial Officer: Shabbir Hamza Khandwala; Legal Advisors: Rizvi, Isa, Afridi & Angell; Shariah Advisor: Dr Muhammad Imran Usmani; Chief Operating Officer: Ariful Islam; Head/Registered Office: 3rd Floor, PNSC Building, M.T. Khan Road, Karachi; Auditors: A.F. Ferguson & Co, Chartered Accountant; Web Address: www.meezanbank.com
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