Commercial Banks: METROPOLITAN BANK LIMITED - Year Ended December 31, 2005 (Audited)
Metropolitan Bank Limited (Metro Bank) was incorporated in Pakistan on August 3, 1992 as a public limited company, under the Companies Ordinance, 1984. Metro Bank commenced its banking operations from October 21, 1992, with primary focus on retail banking and trade finance.
With time, other financing products were added including launching of consumer financing in 2005. The bank is listed on all three stock exchanges in the country. The Board of the bank is a blend of experienced bankers, industrialists and businessmen.
The number of bank employees on December 31, 2005 was 1,143 (2004; 1,045). The bank continues to enjoy "AA+" (Double A Plus) credit rating for long term and "A1+" (A One Plus) rating for short term, assigned by Pacra.
Metro Bank operates 51 branches (2004: 47 branches) including an Islamic Banking Branch in 14 major cities of the country. The Islamic Banking branch is said to be fully capable of catering the customers seeking Sha'ria compliant products.
The key financial figures of the Islamic Banking Branch as on December 31, 2005 are: Islamic Banking Fund Rs 50 million, Deposits Rs 290 million, Ijarah financing Rs 244 million, Murabaha financing Rs 161 million, Profit before taxation Rs 8.1 million, and Contingent liabilities Rs 84 million.
The authorised capital of Metro Bank is Rs 2 billion, comprising 200 million shares of Rs 10 each. Increase in the authorised capital to Rs 6 billion is one of the items of the next AGM. As on December 31, 2005 the paid up capital was Rs 1.560 billion held by 2,033 shareholders, of which 1,927 individuals hold nearly 22% shares.
National Investment Trust owns nearly 20% shares. Twenty six foreign investors own nearly 43% of the shares. The rest of the shares are distributed among a number of corporate entities including banks and DFIs.
For the year under review, the issuing of bonus shares in the ratio of one share for every three shares held has been recommended by the Board, for consideration in the next AGM. If approved, the paid up capital will be increased by Rs 520 million to Rs 2.080 billion.
Total assets of Metro Bank increased by 17% to Rs 79.6 billion on December 31, 2005 compared to Rs 67.9 billion on December 31, 2004. Investments increased by 47% to Rs 22.8 billion (29% of Total Assets) compared to Rs 15.5 billion (23% of TA) as on December 31, 2004.
The proportion of Investments is relatively high in this bank. Of the total, Metro Bank has rather high investments in Available for Sale Securities 77% (2004: 73%). Advances as on December 31, 2005 were Rs 43.4 billion (55% of TA), registering 17% increase over previous year Advances at Rs 40.1 billion (59% of TA).
On December 31, 2005, of the total Advances 88% (2004: 93%) are in local currency, while 93% (2004: 98%) of the total Advances are for short term. Very low long term Advances perhaps is one of the reasons for very low NPLs at the bank.
Major exposure of the bank by way of Advances is in Textiles (56%), Individuals (0.97%), Chemicals (1.24%), Electronics (1.44%), Automotive & Transport (1.75%), Energy (0.85%) and Others (34%). Regarding high exposure in Textiles, it has been stated in the notes to the financial statements that the management has ensured diversification within the sector.
Metro Bank's equity as on December 31, 2005 stands at Rs 5.03 billion (6% of Total Assets) whereas gross NPLs on this date were Rs 0.089 billion (0.2% of Gross Advances). Besides, there is Asset Revaluation Surplus of Rs 0.626 billion, thus raising equity stake to Rs 5.659 billion (7.1% of TA).
Moreover, it may be noted that Metro Bank has made full provision (Rs 0.078 billion) against Gross NPLs according to the SBP criteria applicable on December 31, 2005. Very low level of NPLs could only be the result of Metro Bank's prudent strategy to lend to the right type of customers.
However, as some doubtful loans have the tendency to stay under cover for sometime due to different reasons, a prudent policy for Metro Bank would be that the management remains extra vigilant in the appraisal and monitoring of all loans.
Metro Bank achieved 80% increase in its profit after tax for the year ended December 31, 2005 to Rs 1.465 billion as compared to Rs 0.816 billion for the last year. This has been made possible due to 45% increase in the net mark up income after provisions to Rs 2.082 billion (2004: Rs 1.438 billion) coupled with 23% increase in non-mark up income comprising fees, commissions, etc.
ROE at 29% for the year is very attractive (2004: 23%). Metro Bank shares are currently traded at the stock exchanges at prices, over three times of the book value as on December 31, 2005. Performance statistics are given below.
==========================================================
Performance Statistics
==========================================================
Balance Sheet (Audited) (Rs million)
As on Dec. 31, 2005 2004
==========================================================
Total Assets: 79,666 67,891
Cash, balances with banks: 6,264 7,007
Lending to fin. Institutions: 5,463 4,132
Investments-Net: 22,809 15,560
Advances-Net: 43,463 40,122
Borrowing from fin. Institutions: 14,429 12,327
Deposits, other accounts: 56,713 48,596
Total Liabilities: 74,007 63,627
Net Assets: 5,659 4,264
Share Capital: 1,560 1,200
Reserves, Un-app. Profit: 3,473 2,368
Total Equity: 5,033 3,568
Surplus on Revalue, Assets: 626 696
Equity incl. Revalue Surplus: 5,659 4,264
Equity and Sub. Loans: 5,659 4,264
Advances-Gross: 43,983 40,600
Gross NPLs: 89 90
Total Provision: 520 478
Conting. & Commitments: 43,104 29,530
----------------------------------------------------------
Ratios:
----------------------------------------------------------
Cash and bank/Total Assets: 8% 10%
Investments/Total Assets: 29% 23%
Advance-Net/Total Assets: 55% 59%
NPLs/Advances-Gross: 0.2% 0.2%
NPLs/Total Equity: 2% 3%
NPLs Provision/Advances-G.: 1.2% 1.2%
Deposits/Total Assets: 71% 72%
Total Liabilities/Total Assets: 93% 94%
Total Equity/Total Assets: 7.1% 6.3%
Equity & S.Loans/TA: 7.1% 6.3%
Deposits/Equity-Times: 11.3 13.6
Advances/Deposits: 77% 83%
Investments/Deposits: 40% 32%
Contin.& Com./Equity -Times: 8.56 8.28
Book Value per Share: 32.26 29.73
Quoted Price (24-03-06) - Rs: 111.60 -
Price/Book Value Ratio: 3.46 -
----------------------------------------------------------
Income Statement 2005 2004
----------------------------------------------------------
Markup- interest earned: 4,359 2,784
Markup- interest expensed: 2,225 1,261
Net Markup- interest income: 2,134 1,523
Provisions and write offs: 52 84
Net mark up after provisions: 2,082 1,439
Total non-markup income: 927 754
Total Income before AE: 3,009 2,193
Admin Expenses, etc: 977 815
Profit before Taxation: 2,032 1,378
Current & deferred tax: 567 562
Profit after taxation: 1,465 816
----------------------------------------------------------
Ratios: (Annual Basis)
----------------------------------------------------------
Markup earned/Total Assets: 5.5% 4.1%
Net Markup Income/TA: 2.7% 2.2%
Net markup inc. (Prov.)/TA: 2.6% 2.1%
Non-Markup Income/TA: 1.2% 1.1%
Total Income before AE/TA: 3.8% 3.2%
Admin Expenses/TA: 1.2% 1.2%
Profit before Taxation/TA: 2.6% 2.0%
Profit after taxation/TA: 1.8% 1.2%
Profit after tax/Total Equity: 29.1% 22.9%
EPS- (year-end paid up) - Rs: 9.39 6.80
Price/Earnings Ratio: 11.88 -
Cash Dividend: 0% 0%
Bonus Shares: 33% 30%
----------------------------------------------------------
Cash flow Summary 2005 2004
----------------------------------------------------------
Net Cash flow, Operations: 6,764 1,419
Net Cash flow, Investing: -7,507 1,687
Net Cash flow, financing: 0 -1
Change in Net Liquidity: -743 3,105
Net Liquidity at beginning: 7,007 3,902
Net Liquidity at end: 6,264 7,007
==========================================================
COMPANY INFORMATION: Chairman: Anwar H. Japanwala; President & CEO: Kassim Parekh; Director: Mohamedali R. Habib; Company Secretary: Fuzail Abbas; Auditors: Hyder Bhimji & Co, Chartered Accountants; Registered Office: 14th Floor, Saima Trade Towers 'A', I. I. Chundrigar Road, Karachi-74200; Head Office: Ground Floor, Spenser's Building, I. I. Chundrigar Road, Karachi-74200; Web Address: www.metrobank.com.pk
Comments
Comments are closed.