Investment Banks/Investment Companies: FIRST INTERNATIONAL INVESTMENT BANK LIMITED - Year Ended June 30, 2006 (Audited)
First International Investment Bank Limited (InterBank) is a public limited company incorporated in Pakistan on February 7, 1990 under the Companies Ordinance, 1984.
InterBanks's shares are quoted on Karachi and Lahore Stock Exchanges and it is licensed to carry out all investment finance activities and leasing operations. In addition, InterBank also offers brokerage services to retail and institutional clients. PACRA has maintained InterBank's long term credit rating at "A" (Single A) and short term rating at "A1". Number of InterBank employees as on June 30, 2006 was 140 (2005: 89). InterBank has offices in Karachi, Lahore, Islamabad, Faisalabad and Sialkot.
IGI Funds Limited (formerly First International Capital Management Limited) and Finex Securities Limited are related parties due to InterBank holding 100% shares in these companies. IGI Funds is an asset management company duly licensed by SECP to undertake asset management and investment advisory services.
Finex Securities is a full service equity, money market and foreign exchange brokerage house, having membership of the Karachi Stock Exchange. The Overview hereunder, however, is that of InterBank alone, without consolidation with its subsidiaries.
As against authorised capital of Rs 1,000 million, InterBank's paid up capital as on June 30, 2006 was Rs 419.175 million which was held by 1,481 shareholders, of which 1,404 individuals held over 34% shares. Shareholders holding more than 10 % voting interest included: American Express Bank Limited (14.513%); International Finance Corporation (10.812%), International General Insurance Company of Pakistan Limited (10.477%) and Syed Babar Ali (10.434%). The rest of the shares were held by corporate entities including banks and DFIs.
The Directors in their Report state that subsequent to the year end, American Express Bank has divested its shareholding in InterBank and the same has been taken over by International General Insurance Company of Pakistan Limited, taking its total shareholding in InterBank to 24.99%. The Packages Group in total owns about 55% voting interest. In the Extra Ordinary General Meeting held on September 22, 2006, the shareholders of InterBank approved the change of name from First International Investment Bank Limited to IGI Investment Bank Limited.
The company has maintained steady growth in its assets base. Total assets that stood at Rs 4,409 million on June 30, 2005 have seen 20% growth to Rs 5,292 million as on June 30, 2006. Finances, both short term and long term, investment in lease finance and funds placements have shown rising trend.
CURRENT RATIO HAS BEEN ABOVE ONE THROUGHOUT BUT DEBT: quity has deteriorated to 74:26 on June 30, 2006 compared to 65:35 as on June 30, 2005. Increased volume of operations has been financed largely by borrowings, particularly Pre-IPO subscription towards issue of TFCs and the Certificates of Deposits. In the meantime, shareholders' equity has not shown any increase.
InterBank saw 47% increase in total income for the year ended June 30, 2006 to Rs 522 million as compared to Rs 355 million for the previous year. Total income for FY2006 was somewhat subdued due to bigger loss on disposal of Government securities at Rs 46 million (FY2005: Loss on disposal of Government securities at Rs 14 million).
The company has well diversified operations as is evident from operating revenue data for FY2006 and FY2005 given below:
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Operating Revenue 2006 2005
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Income from Investments: 16% 22%
Income from leasing operations: 34% 33%
Income from finances: 17% 14%
Income from fund placement: 27% 26%
Income from brokerage: 5% 4%
Other income: 1% 1%
Total Income: 100% 100%
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The total financial charges and administration expenses saw 82% increase from Rs 267 million for FY2005 to Rs 486 million for FY2006. This adversely affected the operating profit margins which were reduced for FY2006 to only 7% of total income compared to 25% of total income for FY2005.
The profit before tax for the year ended June 30, 2006 was Rs 28.787 million as compared to Rs 80.866 million for the year ended June 30, 2005. Due to adjustment for deferred tax, profit after tax was at Rs 37.310 million for FY2006 compared with profit after tax of Rs74.695 million for FY2005. ROE for FY2006 works out to 6% (FY2005: 11%). The company proposed stock dividend at 10% for FY2006 as against cash dividend at 14% for FY2005. InterBank shares these days are quoted around Rs 13.00 as against book value of Rs 15.38 as on June 30, 2006. Comparative performance statistics are given below.
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Performance Statistics (Audited) (Rs, 000)
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Balance Sheet (On June 30) 2006 2005
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Total current assets: 3,411,778 2,941,022
Total non current assets: 1,880,764 1,468,673
Total assets: 5,292,542 4,409,695
Total Current Liabilities: 2,916,116 2,595,907
Total capital employed: 2,376,426 1,813,788
Non current Liabilities: 1,760,788 1,180,121
Net assets: 615,638 633,667
Share capital: 419,175 419,175
Reserves: 225,392 246,767
Equity: 644,567 665,942
Surplus on revaluation-invest: -28,929 -32,275
Total equity & Revalue Surplus: 615,638 633,667
Total Liabilities and Equity: 5,292,542 4,409,695
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Ratios:
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Current Ratio: 1.17:1 1.13:1
Debt/Equity ratio: 74:26 65:35
Total Investment/Equity-X: 1.46 1.44
Total Finances/Equity-X: 1.00 0.64
Net Invest. in Leases/Equity-X: 1.91 1.74
Total Deposits/Equity-X: 3.10 1.94
Total Liabilities/Equity-X: 7.26 5.67
Book Value Per Share- Rs: 15.38 15.89
Market Value/share (10-11-06)- Rs: 13.00 -
Price/Book Value per share-X: 0.85 -
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Income State (Y ended June 30) 2006 2005
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Income from Investments: 81,199 78,351
Income from leasing operations: 176,253 118,359
Income from finances: 90,999 50,266
Income from fund placement: 140,867 90,495
Income from brokerage: 27,184 14,944
Other income: 5,692 2,419
Total Income: 522,194 354,834
Financial & Admn. Expenses: 485,701 266,831
Operating profit before provisions: 36,493 88,003
Provisions for doubtful advances: 7,706 7,137
Profit before Taxation: 28,787 80,866
Taxation: -8,523 6,171
Profit after taxation: 37,310 74,695
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Ratios: 2006 2005
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Stock Dividend: 10% 0%
Cash Dividend: 0% 14%
EPS (end of period capital)- Rs: 0.89 1.78
Operating profit/Total income: 7% 25%
Pre-tax profit/Total income: 6% 23%
After tax profit/Total income: 7% 21%
Return on Equity: 6% 11%
ROA: 1% 2%
ROCE: 2% 4%
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Cash Flow Summary (Full Year) 2006 2005
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Net Cash flow-Operating: -52,747 -259,624
Net Cash Flow-Investing: -233,441 -41,210
Net Cash Flow-Financing: 586,266 178,543
Change in net liquidity: 300,078 -122,291
Net liquidity at beginning: -103329 18879
Effect of exchange rate change: -8 83
Net liquidity at end: 196,741 -103,329
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COMPANY INFORMATION: Chairman: Syed Babar Ali; Managing Director & CEO: Samir Ahmed; Director: Towfiq H. Chinoy; Company Secretary: Muhammad Usman Amjad
Auditors: M/s A.F. Ferguson & Co, Chartered Accountants; Legal Advisors: 1- M/s Hassan & Hassan, Advocates, 2- M/s Mohsin Tayebally & Co, Advocate & Legal Consultant, and 3- M/s Orr, Dignam & Co, Advocates; Registered Office: 5 F. C. C., Ground Floor, Syed Maratib Ali Road, Gulberg, Lahore; Karachi Office: 7th Floor, Shaheen Commercial Complex, Dr Ziauddin Ahmed Road, Karachi; Web Address: www.interbank.com.pk
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