Commercial Banks: PICIC COMMERCIAL BANK LIMITED - Year Ended 31-12-2003

The bank's paid-up capital is Rs 1.073 billion and the board of directors of the bank has resolved to issue 30% Bonus Shares and 40% Right Shares which will further increase the capital.
The total assets of the bank increased from Rs 27.982 billion at the end of 2002 to Rs 40.133 billion as at December 31, 2003 showing increase of 43.4%.
Total Investments increased to Rs 21.737 billion from Rs 10,306.32 billion depicting increase of 111% over last year's. Further monitoring, restricted the administrative expenses to a bare minimum.
The directors emphasised that all budget targets during the year under review were surpassed. Deposits soared to Rs 32.50 billion on December 31, 2003 by 54% from Rs 21.155 billion in December 31, 2002.
The Advances have shown an overall increase of 32% over last year's. During the second half July-December 2003 the bank launched new consumer products namely Easy Pick Financing, Sweet Home Financing, Car Financing and upgraded Sahulat Loan.
PICIC Commercial Bank Ltd was incorporated in Pakistan on December 27, 1993 as a public limited company and received license from the State Bank of Pakistan to undertake and carry on the business of banking in Pakistan on April 3, 1994.
The bank's registered office and principal office are both situated at Schon Centre I.I. Chundrigar Road Karachi.
The bank is engaged in commercial banking and related services. The bank operates 68 (2002: 42) branches inside Pakistan and has been granted permission by State Bank of Pakistan to open additional 31 branches during the year 2004.
During the year under review, PICIC Commercial Bank launched 20 ATMs all over the country, connected to the 1 Link Switch.
This will facilitate the bank's customers to use 200 ATMs connected to the 1 Link Switch. The bank has also provided for online banking across the branch network along-with up-gradation of the software to produce comprehensive and detailed MIS for effective DSS (Decision Support System).
Taking full advantage of ATMs, the debit card feature has also been introduced in the ATM Card itself. It is the enabling feature in the ATM Card to be utilised as Debit Card at nearly 1500 Orix POS (Points of Sales) terminals installed at various merchants.
The bank is listed at Karachi and Lahore Stock Exchanges. At present the market value of its share is Rs 40.60 which is 4 times of the par value of Rs 10 per share.
During the last one year the price of the share recorded sharp appreciation from Rs 16.70 to Rs 53.20 per share which shows increasing confidence of the investors in the enterprise.
This substantial rise in the share price is a manifestation of the bull run at the stock exchange, as well as its improved financial fundamentals and above all agreement to the Total Quality Management by its top class financial services providers.
Since the acquisition of the bank by PICIC in February 2001 the pace of progress has been maintained by the bank.
The bank's size of the balance sheet has crossed the Rs 40 billion threshold and the increase over previous year is Rs 13.15 billion which is quite an impressive performance.
Foreign Trade business handled by the bank increased by Rs 7.27 billion to Rs 38.11 billion from Rs 30.84 billion transacted in the preceding year, 2002.
Total Income was recorded at Rs 1,389.46 million (2000: Rs 835.91 million) exhibiting increase by Rs 553.55 million ie 66.2% over the preceding year's.
Despite surplus liquidity, declining interest rate and several other pressures of the market forces the bank's pre-tax profit zoomed to Rs 825.07 million by 62.07% from Rs 509.07 million in 2002.
The growth in net mark-up and interest income after provisions was even higher by 86.75% from Rs 950.74 million from Rs 509.10 million in the preceding year. The interest margin (interest spread) improved to 40.89% from Rs 26.98%.
This shows the magnitude of endeavour undertaken to improve interest spread despite declining interest in the banking sector.
Non mark-up and interest income amounted to Rs 438.72 million from Rs 326.39 million registering 34.4% growth. The growth rate is highly commendable although less than growth of Net Mark-up Interest Income after provisions.
The Board of PICIC Commercial Bank Ltd has recommended the issuance of 40% Rights Shares at a premium of Rs 15 per share to give full advantage to the shareholders, who can reap the benefit of share market. The Board also recommended issuance of 30% bonus shares.
The customer deposits and advances have grown by 54% and 33% respectively over last year.

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Performance Statistics                (Million Rupees)

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December 31                          2003         2002

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Share Capital-Paid-up:           1,072.50       825.00

Reserves & Profit:                 711.28       498.24

Shareholders Equity:             1,783.78     1,323.24

Surplus on Revaluation

 of Securities (Net of Tax):       435.49       978.71

Liabilities

Bills Payable:                     556.48       569.84

Borrowings From

 Financial Institutions:         4,371.61     2,834.23

Deposits & Other Accounts:      32,499.77    21,154.93

Liability Against Assets

 Subject To Finance Lease:          60.99        36.27

Other Liabilities:                 425.73       553.05

Deferred Tax Liabilities:             -         531.92

Total Liabilities:              37,914.58    25,680.24

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Assets

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Cash & Balances Treasury Bank:   2,335.29     1,817.43

Balances With Other Banks:         487.48       275.38

Lending To Financial Institutions: 106.25     3,824.14

Investments:                    21,736.95    10,306.32

Advances:                       14,316.83    10,876.33

Other Assets:                      751.29       628.36

Operating Fixed Assets:            350.80       254.23

Deferred Tax Assets:                48.96            -

Total Assets:                   40,133.85    27,982.19

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Revenue, Profit & Pay Out

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Net Mark-up/Interest

 Income After Provisions:          950.74       509.10

Non Mark-Up/Interest Income

Fees, Commission &

 Brokerage Income:                 151.16       105.79

Dividend Income:                   142.49        65.85

Share of Profit/(Loss) in

 Subsidiary Company:                (0.47)           -

Income From Dealing

 in Foreign Currencies:             95.85       120.34

Other Income:                       49.69        34.41

Total Non Mark-Up/

 Interest Income:                  438.72       326.39

Total Income:                    1,389.46       835.49

Non Mark-Up/Interest (Expenses):   564.39       326.42

Profit Before Taxation:            825.07       509.07

Profit After Taxation:             621.41       319.25

Capital (Reserve)

 For Bonus Issue:                 (321.75)    (247.50)

Interim (Dividend) Cash

 @ Rs 1.50 (2000 Nil) Per Share:  (160.87)           -

Earnings Per Share (Rs):             5.79         3.23

Share Price (Rs)

 Dated 07.04.2004:                  40.60            -

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Financial Ratios

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Price/Earning Ratio:                 7.01            -

Book Value Per Share:               16.63        16.03

Interest Margin (%):                40.89        26.98

Net Profit Margin (%):              44.72        38.21

Advances/Deposit Ratio (%):         44.05        51.41

R.O.E (%):                          34.84        24.13

R.O.A (%):                           1.54         1.14

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