Commercial Banks: SONERI BANK LIMITED - Year Ended December 31, 2005 (Audited)
The essence of Soneri Bank Limited (Soneri Bank) business philosophy is to cater to the banking requirements of small and medium sized entrepreneurs, providing them qualitative and competitive services with emphasis on encouraging exports.
According to the bank, nearly 40 percent of its credit portfolio is related to export financing and it claims that credit decisions are taken within 48 hours. The number of bank employees on December 31, 2005 was 1,132 (2004: 937). The bank continues to enjoy "AA-" (Double A Minus) credit rating for long term and "A1+" (A One Plus) rating for short term, assigned by Pacra.
Soneri Bank was incorporated in Pakistan on September 28, 1991 as a public limited company, under the Companies Ordinance, 1984, with registered office in Lahore, Punjab. The first branch of Soneri Bank formally opened doors for operations in Lahore on April 16, 1992 followed by Karachi Branch on May 09, 1992.
The bank now operates with 60 branches including one Islamic branch (2004: 52 branches including one Islamic branch) spread all over Pakistan including the Northern Areas of the country where no other private bank has reportedly ventured so far. The bank is listed on all three stock exchanges in the country.
The authorised capital of Soneri Bank is Rs 3 billion, comprising 300 million shares of Rs 10 each. In the next AGM, the authorised capital is proposed to be raised to Rs 5 billion. As on December 31, 2005 the paid up capital was Rs 1.653 billion, which is held by 7,526 shareholders, of which 7,390 local and foreign individuals hold nearly 17% shares.
NIT and ICP own 23% shares. The financial statements do not provide names of the shareholders holding 10% and above shares. Such shareholders own over 43% 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 at 30% has been recommended by the Board, for consideration in the next AGM. If approved, the paid up capital will be increased by Rs 496 million to Rs 2.149 billion.
Total assets of Soneri Bank increased by 27% to Rs 63 billion on December 31, 2005 compared to Rs 50 billion on December 31, 2004. Increase in assets has been largely financed through increase in Deposits and by retention of profits. As on December 31, 2005 Investments increased by 17% to Rs 16 billion (26% of Total Assets) compared to Rs 14 billion (28% of TA) as on December 31, 2004. Of the total, Soneri Bank has rather high investments in Held to Maturity Securities 75% (2004: 66%).
Soneri Bank Advances as on December 31, 2005 were Rs 32 billion (51% of Total Assets), registering 31% increase over previous year Advances at Rs 32 billion (49% of TA). All the advances of the bank are to the private sector. On December 31, 2005, of the total Advances 81% (2004: 86%) are in local currency, while 81% (2004: 83%) of the total Advances are for short term. Major exposure of the bank by way of Advances is in Textiles (46%), Food and Allied (10%) and Others (44%- all business classes reportedly are less than 10% of the total exposure).
Soneri Bank's equity as on December 31, 2005 stands at Rs 3.636 billion (6% of Total Assets) whereas gross NPLs on this date are Rs 0.350 billion (1.1% of Gross Advances). Besides, there is Asset Revaluation Surplus of Rs 0.588 billion, thus raising equity stake to Rs 4.224 billion (6.7% of TA). Presently there are no Subordinated Loans. It may be noted that Soneri Bank has made full provision against Gross NPLs according to the SBP criteria. Very low level of NPLs as shown above could be the result of Soneri 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 Soneri Bank would be that the management remains extra vigilant in the appraisal and monitoring of all loans.
Soneri Bank achieved 42% increase in its profit after tax for the year ended December 31, 2005 to Rs 0.920 billion as compared to Rs 0.648 billion for the last year. This has been achieved despite lower relative contribution of net mark up income this year. For 2005 it was only 45% of total mark up income compared to 61% for the previous year. ROE at 25.3% for the year is more attractive than the last year performance (2004: 22.5%). Soneri Bank shares are currently traded at the stock exchanges at prices, more than twice the book value as on December 31, 2005. Performance statistics are given below.
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Performance Statistics -
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Balance Sheet (Audited) (Rs million)
As on December 31, 2005 2004
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Total Assets: 63,345 49,852
Cash, balances with banks: 6,807 6,421
Lending to financial institutions: 4,846 3,585
Investments-Net: 16,391 13,983
Advances-Net: 32,052 24,376
Borrowing from fin. Institutions: 8,243 7,957
Deposits, other accounts: 47,605 37,384
Total Liabilities: 59,121 46,809
Net Assets: 4,224 3,043
Share Capital: 1,653 1,272
Reserves, Un-app. Profit: 1,983 1,607
Total Equity: 3,636 2,879
Surplus on Revalue, Assets: 588 164
Equity incl. Revalue Surplus: 4,224 3,043
Subordinated Loan: 1,200 0
Equity and Sub. Loans: 5,424 3,043
Advances-Gross: 32,446 24,701
Gross NPLs: 350 262
Total Provision: 394 325
Conting. & and Commitments: 42,428 25,010
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Ratios:
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Cash and bank/Total Assets: 11% 13%
Investments/Total Assets: 26% 28%
Advance-Net/Total Assets: 51% 49%
Gross NPLs/Advances-Gross: 1.1% 1.1%
NPLs/Total Equity: 10% 9%
NPLs Prov./Advances-Gross: 1.2% 1.3%
Deposits/Total Assets: 75% 75%
Total Liabilities/Total Assets: 93% 94%
Total Equity/Total Assets: 6.7% 6.1%
Equity & S.Loans/Total Assets: 8.6% 6.1%
Deposits/Equity-Times: 13.1 13.0
Advances/Deposits: 67% 65%
Investments/Deposits: 34% 37%
Contin.& Comm./Equity-Times: 11.67 8.69
Book Value Per Share: 22.00 22.63
Quoted Price (14-04-06) - Rs: 49.10 -
Price/Book Value Ratio: 2.23 -
Income Statement 2005 2004
Markup-interest earned: 3,681 1,947
Markup-interest expensed: 2,014 752
Net Markup- interest income: 1,667 1,195
Provisions and write offs: 76 -15
Net mark up after provisions: 1,591 1,210
Total non-markup income: 611 480
Income before Admn. Exp.: 2,202 1,690
Admin Expenses, etc: 802 644
Profit before Taxation: 1,400 1,046
Current & deferred tax: 480 398
Profit after taxation: 920 648
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Ratios: (Annual Basis)
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Markup earned/Total Assets: 5.8% 3.9%
Net Markup Income/T. Assets: 2.6% 2.4%
Net markup (aft. Prov.)/TA: 2.5% 2.4%
Non-Markup Income/TA: 1.0% 1.0%
Income before AE/TA: 3.5% 3.4%
Admin Expenses/TA: 1.3% 1.3%
Profit before Taxation/TA: 2.2% 2.1%
Profit after taxation/TA: 1.5% 1.3%
Profit after tax/Total Equity: 25.3% 22.5%
EPS- (year-end paid up) - Rs: 5.57 5.09
Price/Earnings Ratio: 8.82 -
Cash Dividend: 10% 0%
Bonus Shares: 30% 30%
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Cash flow Summary 2005 2004
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Net Cash flow, Operations: 2,041 5,271
Net Cash flow, Investing: -2,855 -2,726
Net Cash flow, financing: 1,200 -3
Change in Net Liquidity: 386 2,542
Net Liquidity at beginning: 6,421 3,879
Net Liquidity at end: 6,807 6,421
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COMPANY INFORMATION: Chairman: Alauddin Feerasta; President & CEO: Safar Ali K. Lakhani; Director: Noor Feerasta; Company Secretary: Abdul Hayee; Auditors: A. F. Ferguson & Co, Chartered Accountants; Legal Advisors: Tahir Ali Tayebi & Co, Advocates; Registered Office: 4th Floor, IEP Building, 97-B/D-1, Gulberg III, Lahore; Head Office: 87, Shahrah-e-Quaid-e-Azam, P.O. Box No 49, Lahore; Web Address: www.soneribank.com
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