BankIslami, one of the two Shariah-compliant banks listed at the local bourse, was the last one in the banking sector to announce its results for June 2013. Maybe, the bank took time to concede at a huge bottom line slide.
Just like its other listed Islamic counterparts, BankIslami more than offset the negative effect of discount rate cuts by an impressive growth of 24 percent and 72 percent in its investments and financing, respectively.
However, what didn’t work out well for BIPL was the deposit growth as it mainly came on the heels of the costly fixed deposits. This drove up the bank’s mark-up expenses squeezing its spread ratio to 40 percent in 1H CY13 from 43 percent in the corresponding period of last year.
A glimpse at the bank’s advances over the years shows that the bank has started lending aggressively to the private sector off-late. As is said “private sector lending is hardly a scot-free exercise”, the same went true for BIPL. During 1H CY13, the non-performing loans (NPLs) swelled by 31 percent year on year. Resultantly, provisioning expenses mushroomed by more than four times in 1H CY13.
Besides NPLs, the inadequate provisioning of late (46 percent on an average since 2008 vis-à-vis 88 percent for Meezan Bank over the similar period) might also have propelled the BIPL to pull up its socks by extensively booking provisioning expenses.
Besides, the bank has been working aggressively to enhance its branch network having ambitious plans to add 60 branches by the end of 2013. This piled up bank’s non-mark-up expenses, adding further woes to the bottom line.
The non-funded income tried to save the sinking boat but failed to do so amid negativities coming in from other heads. Non-funded income boasted a 55 percent year-on-year growth that was largely propelled by “Fee, commission and brokerage” income which perhaps bears testament to the bank’s strong Bancassurance business.
The bottom line ended up recording a slide of 75 percent year on year but still remains in the profit zone as opposed to the losses predicted by the banking analyst community at large.
Although, BIPL couldn’t impress much in the second quarter, the trend is expected to reverse soon at the back of strong fundamentals. While the rate hike might not be exciting for the conventional banks after SBP’s directive linking minimum deposit rate (MDR) with SBP repo rate, Islamic banks will likely enjoy the upward ride of discount rates.
Whether or not, BIPL enjoys the discount rate hikes will largely depend on how it works on is to improve its CASA (low-cost deposits) and curb its surging NPLs.
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BANKISLAMI PAKISTAN LIMITED
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Rs (mn) 1HCY13 1HCY12 Chg
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Return on financing, investment, placements 2,988 2,972 1%
Expense on deposits and other dues 1,790 1,683 6%
Net spread earned 1,198 1,289 -7%
Provisioning / (Reveral) 74 17 335%
Net spread after provisions 1,124 1,272 -12%
Other Income 229 148 55%
Operating Revenues 1,353 1,420 -5%
Other Expenses 1,270 1,082 17%
Profit / (Loss) Before Taxation 83 339 -75%
Taxation 25 109 -77%
Profit/ (Loss) After Taxation 58 229 -75%
EPS (Rs.) 0.110 0.434 -75%
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Source: Company Accounts
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Other corporate results
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MACPAC FILMS LIMITED
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Rs (mn) FY13 FY12 Chg
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Sales - net 1462 1195 22%
Cost of sales 1204 906 33%
Gross profit 258 289 -11%
Operating profit 206 258 -20%
Other income 127 41 209%
Profit before tax 294 270 9%
Profit after tax 209 258 -19%
EPS (Rs) - basic 5.37 6.64
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Source: KSE notice
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AISHA STEEL MILLS LIMITED
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Rs (mn) FY13 FY12 Chg
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Sales - net 4341
Cost of sales 4409
Gross profit / (loss) -68
Other income 19 40 -54%
Profit / (loss) before tax -1115 -132 742%
Profit / (loss) after tax -746 -86 766%
EPS (Rs) - basic -3.15 -0.82
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Source: KSE notice
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PAKISTAN SERVICES LIMITED
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Rs (mn) FY13 FY12 Chg
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Sales & services - net 6801 5761 18%
Cost of sales 3853 3293 17%
Gross profit 2948 2468 19%
Other income 369 339 9%
Profit before tax 1259 1156 9%
Profit after tax 887 784 13%
EPS (Rs) - basic 27.28 24.10
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Source: KSE notice
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CRESCENT FIBRES LIMITED
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Rs (mn) FY13 FY12 Chg
Sales - net 3144 2790 13%
Cost of sales 2699 2515 7%
Gross profit 444 275 61%
Other income 18 16 12%
Operating profit 356 206 73%
Profit before tax 285 109 162%
Profit after tax 244 76 222%
EPS (Rs) - basic 19.62 5.93
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Source: KSE notice
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GHAZI FABRICS INTERNATIONAL LIMITED
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Rs (mn) FY13 FY12 Chg
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Sales - net 5382 4848 11%
Cost of sales 4853 4556 7%
Gross profit 519 292 78%
Operating profit 196 15 1202%
Profit before tax 57 -113 -150%
Profit after tax 56 -161 -134%
EPS (Rs) - basic 1.71 -4.95
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Source: KSE notice
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TOWELLERS LIMITED
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Rs (mn) FY13 FY12 Chg
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Sales - net 2682 3317 -19%
Cost of sales 2380 3060 -22%
Gross profit / (loss) 302 -162 -287%
Operating profit / (loss) 4 -625
Other income 70 51
Profit / (loss) before tax 74 -574
Profit / (loss) after tax 41 -603
EPS (Rs) - basic 2.43 -35.49
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Source: KSE notice
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INTERNATIONAL KNITWEAR LIMITED
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Rs (mn) FY13 FY12 Chg
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Sales - net 105 64 66%
Cost of sales 84 52 61%
Gross profit 17 12 44%
Operating profit 10 9 8%
Profit before tax 8 8 6%
Profit after tax 8 7 3%
EPS (Rs) - basic 2.35 2.28
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Source: KSE notice
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