Commercial Banks: ATLAS BANK LIMITED - (Formerly Dawood Bank Limited) Year Ended December 31, 2006 (Audited)
Atlas Bank Limited (formerly Dawood Bank Limited) was incorporated in Pakistan on July 17, 2003 as a public limited company (unlisted) under the Companies Ordinance.
Ordinance 1984 pursuant to the joint venture agreement dated March 17, 2003 between Dawood Group and the Bank of Ceylon (BOC), Colombo whereby the business of BOC Pakistan operations was amalgamated into Dawood Bank which commenced commercial operations effective March 25, 2004. During the year 2005, the majority shareholding of the bank held by Dawood Group was acquired by Shirazi Investments (Private) Limited, a company of the Atlas Group, with the consent of the State Bank of Pakistan (SBP).
The bank's name was changed to Atlas Bank Limited on March 6, 2006. Effective October 16, 2006, Atlas Bank has been listed at the Karachi, Lahore and Islamabad stock exchanges.
With effect from July 29, 2006 Atlas Investment Bank Limited (AIB), a public listed company engaged in business of investment, finance services and leasing, has been amalgamated into Atlas Bank in accordance with the scheme of amalgamation as sanctioned by the SBP.
Earlier on March 8, 2006 the brokerage segment of AIB inclusive of all assets, licenses and liabilities was transferred to a wholly owned subsidiary of AIB- Atlas Capital Markets (Private) Limited (ACM). Consequent to amalgamation of AIB with Atlas Bank, ACM became a wholly-owned subsidiary of Atlas Bank. The Overview hereunder, however, is that of Atlas Bank alone, without consolidation with its subsidiary.
At the time of its acquisition by Atlas Group in December 2005, Dawood Bank had 11 branches. Now Atlas Bank is operating with 20 branches. Total staff strength as on December 31, 2006 was 247 including 26 temporary/on contractual basis (2005: 152 including 27 temporary/on contractual basis). The bank plans to expand the network to 120 branches by 2013.
According to the directors, the merger of AIB has added value and financial strength to the bank and also supplemented range of its products and services. The directors report that based on the rating process completed immediately after the merger of AIB with the bank, Pacra has upgraded the bank's long term credit rating to "A-" (Single A Minus) and short term rating to A2 (A Two).
On December 31, 2006 the authorised capital of Atlas Bank stood at Rs 5 billion, comprising 500 million shares of Rs 10/- each. There is a proposal in the next AGM of the bank to raise the authorised capital to Rs 7 billion. During the year under review, as consideration of the amalgamation, the shareholders of AIB were issued over 158 million shares of Rs 10/- each in the ratio of 3.14 ordinary shares of Atlas Bank for each share of AIB.
As on December 31, 2006 the paid up capital of Rs 3.126 billion is held by 2,952 shareholders, of which 2,884 individuals (general public) hold over 34% shares. Shirazi Investments (Pvt.) Limited along with Atlas Insurance Co Limited, Atlas Foundation and Batool Benefit Trust own 47.94% of the total capital. The directors, CEO, their spouse & minor children hold over 9% voting interest. The rest of the shares are distributed among a number of corporate entities including banks and DFIs.
Atlas Bank saw over 100% increase in its Total Assets to Rs 17 billion as on December 31, 2006 compared to Rs 8 billion on December 31, 2005. During the period under review, Advances increased by 8 times to Rs 7.8 billion (December 31, 2005: Rs 0.799 billion) whereas Investments more than doubled to Rs 3.6 billion (December 31, 2005: Rs 1.73 billion). Deposits have also increased three times to Rs 8.8 billion (2005: Rs 2.2 billion). The increases in assets and liabilities are partly due to amalgamation with AIB.
Atlas Bank's Advances as on December 31, 2006 at Rs 7.8 billion are 46% of Total Assets (2005: 10% of TA). As on December 31, 2006, gross NPLs are Rs 494 million (2005: Rs 13 million). In percentage terms gross NPLs on December 31, 2006 are 6.0% of gross Advances (2005: 1.6% of GA). Provision has been made as required.
According to note 37 to the financial statements, Capital Adequacy Ratio of the bank as on December 31, 2006 was 15.79% (2005: 44.97%) as against prescribed minimum equivalent to 8% of the risk weighted assets of the banking company.
Total mark up income of Atlas Bank for the year ended December 31, 2006 increased by 135% to Rs 892 million compared to Rs 380 million for the previous year. However, mark up expense for the period more than doubled and represented 86% of total mark up income for 2006 (2005: 64%). Moreover higher provision was made this year for doubtful loans. Therefore, net mark up income (after mark up expensed and provisions) for the year under review decreased by 47% to Rs 71 million.
Administrative expenses saw over 100% increase during the year under review. The bank had pre-tax loss of Rs 141 million (2005: Pre tax profit Rs 10 million). However, due to adjustments in income tax for prior years and deferred tax, the year 2006 was closed with After-tax Profit at Rs 9 million (2005: After tax profit Rs 4 million). ROE for the year 2006 was below 1%. Performance statistics are given below.
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Performance Statistics (Audited)
(Rs Million)
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Balance Sheet (As on Dec. 31) 2006 2005
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Total Assets: 17,021 7,952
Cash, balances with banks: 793 233
Investments-Net: 3,645 1,735
Advances-Net: 7,834 799
Borrowing from fin. Institutions: 4,026 4,097
Deposits, other accounts: 8,843 2,186
Total Liabilities: 14,023 6,423
Net Assets: 2,998 1,529
Share Capital: 3,126 1,537
Reserves & Un-app. Profit: -10 -18
Equity: 3,116 1,519
Surplus on Revalue, Assets: -118 10
Equity incl. Revalue Surplus: 2,998 1,529
Advances-Gross: 8,199 812
Gross NPLs: 494 13
Total Provision: 365 13
Conting. & Commitments: 3,479 297
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Ratios:
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Cash & bank/Total Assets: 5% 3%
Investments/Total Assets: 21% 22%
Advance-Net/Total Assets: 46% 10%
NPLs/Advances-Gross: 6.0% 1.6%
Provisions./Advances-Gross: 4.5% 1.6%
Deposits/Total Assets: 52% 27%
Total Liabilities/Total Assets: 82% 81%
Total Liabilities/Total Equity-X: 4.7 4.2
Total Equity/Total Assets: 17.6% 19.2%
Deposits/Equity-Times: 2.9 1.4
Advances/Deposits: 89% 37%
Investments/Deposits: 41% 79%
Conting. & Comm./Equity-Times: 1.16 0.19
Book Value Per Share: 9.59 9.95
Quoted share price (9-04-07) - Rs: 13.70 -
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Income Statement 2006 2005
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Markup-interest earned: 892 380
Markup-interest expensed: 763 242
Net Markup-interest income: 129 138
Provisions and write offs: 58 3
Net mark up income (aft. Prov.): 71 135
Total non-markup income: 97 11
Income bef. Admn. Exp.: 168 146
Admin Expenses, etc: 309 136
Profit before Taxation: -141 10
Current & deferred tax: -150 6
Profit after taxation: 9 4
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Ratios: (Annual Basis)
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Markup earned/Total Assets: 5.2% 4.8%
Net Markup Income/TA: 0.8% 1.7%
Net markup (aft. Prov.)/TA: 0.4% 1.7%
Non-Markup Income/TA: 0.6% 0.1%
Income before Admn. Exp./TA: 1.0% 1.8%
Admin Expenses/TA: 1.8% 1.7%
Profit before Taxation/TA: -0.8% 0.1%
Profit after Taxation/TA: 0.1% 0.1%
Profit after Tax/Total Equity: 0.3% 0.3%
EPS- (year-end paid up)-Rs: 0.03 0.03
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Cash flow Summary 2006 2005
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Net Cash flow, Operations: 252 508
Net Cash flow, Investing: 19 -820
Net Cash flow, financing: 0 477
Change in Net Liquidity: 271 165
Net Liquidity at beginning*: 522 68
Net Liquidity at end: 793 233
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(* includes Rs 289 million cash, acquired on amalgamation):
COMPANY INFORMATION: : Chairman: Yusuf H. Shirazi; President & CEO: Abdul Aziz Rajkotwala; Director: Frahim Ali Khan; Company Secretary: Irfan Ibrahim Bhaiyat; Auditors: Ford Rhodes Sidat Hyder & Co, Chartered Accountants; Legal Advisors: Mohsin Tayebally & Co; Registered & Head Office: 3rd Floor, Federation House, Shahrea Firdousi, Clifton, Karachi; Web Address: www.atlasbank.com.pk
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