Investment Banks/Investments Co: PAKISTAN INDUSTRIAL CREDIT & INVESTMENT CORPORATION LIMITED - Year Ended 31-12-2004

During FY-04, the corporation generated net mark-up interest income after provisions at Rs 726.07 million as against Rs 230.11 million posted for eighteen months ended 2003 registering 215.5% increase. This was because of higher interest margin at 51.21% as against 25.98% in eighteen months ended 2003 and at the same time because of favourable reversal of provisions. On the other hand total non mark-up interest income increased by Rs 109.49 million to Rs 1,708.33 million from Rs 1,598.84 million in the previous eighteen months.
Admin expenses and other charges were much lower pre tax profit zoomed to Rs 1.902 billion as against Rs 0.962 billion in the previous year (12 months) showing increase by Rs 0.940 billion.
In spite of higher provisioning of deferred taxation the net profit after taxation at Rs 1,636 million showed increase by Rs 734 million over the preceding year (12 months) amount of Rs 902 million. The corporation wiped out its accumulated loss and announced dividend at 25% as against 12.5% in 2003 and proposed bonus issue at 30%.
Pakistan Industrial Credit and Investment Corporation Ltd (PICIC) is a public limited company incorporated in Pakistan having its registered office located in the province of Sindh at Karachi. It is listed on all the stock exchanges of the country.
PICIC, a pioneer development finance institution, was established in the year 1957 by the Pakistani and foreign investors with the help of the World Bank. The company has made stellar contribution in the industrialisation of Pakistan as it financed more than 1300 industrial projects across the country in almost all industrial sectors. Its gross financial assistance has reached Rs 38.501 billion.
The corporation rightly claims as the "Financial Supermarket" as it has fully diversified in most of the financing segments. It is currently engaged in term financing for industrial and commercial activities, merchant banking, capital market operations, funds management, leasing and consumer financing.
Its subsidiary companies are PICIC Commercial Bank Ltd PICIC Asset Management Company Ltd and PICIC Insurance Ltd PACRA has upgraded PICIC's long-term rating to 'AA' (Double A) from AA- (Double A minus) while the short term rating has been maintained A1+ (A one plus).
The improved rating has found immense support from exploiting the opportunities in the capital market and diversification in various segments as well as combating the threats of chronic default cases.
PICIC has always recruited top class professionals and several alumni of the corporation got higher positions in the World Bank. Several employees were handpicked from IBA Karachi based on their top academic performance.
The corporation ensures an effective information system strategy which is being monitored by an IT committee.
Resources of PICIC mainly consist of its share capital, reserves lines of credit from lending agencies/government refinance facility for locally manufactured machinery (LMM) from State Bank of Pakistan, deposits through various schemes.
During the period under review FY-04 PICIC opened 10 new branches five at Karachi, two at Lahore and one each at Islamabad and Sheikhupura thus increasing the branch network to 31.
PICIC's core business of development banking remains a vital financing element especially in the contest of the national agenda. Its diversification process accelerated with the commencement of leasing business in the year 2000, acquisition of commercial bank in 2001, entry into asset management and insurance business.
PICIC is now concentrating on retail banking by concentrating on long and medium asset creation in the form of homes, automobile and machinery/equipment. At this point it may be pertinent to probe into the corporation's role in financing SME's and Islamic mode of financing.
Because this could lead to its participation in the gigantic efforts to reduce poverty increase employment and improve risk management as small lot of credit has minimal chances of default.
There is a large segment of potential borrowers who prefer Islamic finance because of their strong preferences for riba free finances. With the expertise and reservoir of wisdom and knowledge stored in this enterprise, this great institution can make revolutionary contribution in financing SME's and providing Islamic finance. Now even foreign banks have started doing the business of financing based on Sharia'a.

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Performance Statistics                (Million Rupees)

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December 31                          2004         2003

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Share Capital-Paid-up:           2,104.35     1,154.65

Reserves:                        4,584.99     2,885.95

Unappropriated Profit

(Accumulated Loss):                 12.51     (767.65)

Shareholders Equity:             6,701.85     3,272.95

Surplus on Revaluation of

Securities-Net of Tax:           1,036.78     2,238.46

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Liabilities

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Borrowings From

 Financial Institutions:         6,742.37     6,330.68

Deposits & Other Accounts:      16,251.58    11,150.83

Other Liabilities:               1,021.83     1,376.40

Total Liabilities:              24,015.78    18,857.91

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Assets

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Cash & Balances Treasury Banks:    150.23        88.19

Balances With Other Banks:       1,679.40     1,342.90

Lending to Financial Institutions: 375.00            -

Investments:                    13,694.16    11,137.76

Advances:                       13,468.53     8,194.71

Other Assets:                    1,486.29     2,549.93

Operating Fixed Assets:            222.32       176.63

Deferred Tax Assets:               678.48       879.20

Total Assets:                   31,754.41    24,369.32

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Profit & Loss Account           12 Months    18 Months

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Net Mark-up/Interest

Income After Provisions:           726.07       230.12

Total Non-Mark-up/

 Interest Income:                1,708.34     1,598.84

Net Income:                      2,434.41     1,828.96

Non Mark-up/Interest (Expenses):  (532.73)    (386.32)

Profit Before Taxation:          1,901.68     1,442.64

Profit After Taxation:           1,636.31     1,353.18

Dividend Cash 25% (2003: 12.5%):   389.69       125.50

Reserve For Bonus Issue:           315.65       554.73

Earning Per Share (Rs):              8.83         7.75

Share Price (Rs) on 25-4-05:        80.50            -

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Financial Ratios

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Price/Earning Ratio:                 9.12            -

Interest Margin:                    51.21        25.98

Net Profit Margin (%):              67.22        73.99

Advances/Deposit Ratio (%):         82.87        73.49

R.O.E. (%):                         24.41        41.34

R.O.A. (%):                          5.15         5.55

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