Commercial Banks: THE BANK OF KHYBER - Half Year Ended June 30, 2006 (Unaudited)
The Bank of Khyber (Khyber Bank), established under "The Bank of Khyber Act 1991" for conducting banking business within NWFP, was formally launched on November 1, 1991.
Khyber Bank was given by the State Bank of Pakistan the status of a schedule bank in 1994, which enabled it to open branches outside NWFP, become a member of the clearing house, and to engage in trade finance activities directly throughout the country. It is principally engaged in the business of commercial, investment and development banking. It is listed on the Karachi Stock Exchange.
The number of Khyber Bank branches as at June 30, 2006 was 29 branches (December 31, 2005: 29 branches) including Islamic Banking branches. According to the Directors' Review the bank is moving towards conversion into an Islamic bank. The Review states; "By the grace of Almighty Allah, as per our mission and the requirements of 'The Bank of Khyber Act 1991' we are successfully moving towards our goals and will be able to convert our bank in an Islamic Bank in near future".
The NWFP government originally controlled 87 % of shares, the remaining 13 % shares were owned by a German institution, DEG. The bank was provisionally listed on the Karachi Stock Exchange (KSE) following the issuance of a prospectus on December 30, 2005 for public subscription of shares. The bank offered 41.1 million shares to public at a price of Rs 15/- per share inclusive of Rs 5/- as share premium on January 25-27, 2006.
The shares were oversubscribed by more than seven times.
As on June 30, 2006, authorised capital of Khyber Bank was Rs 3 billion, comprising 300 million shares of Rs 10 each, of which paid up capital is Rs 2.002 billion. According to the Direcors' Review, they have planned to go side by side as per instructions of the SBP to meet minimum capital requirement.
The balances of the Islamic Banking Division as at June 30, 2006 were: (i) Islamic Banking Fund Rs 150 million; (ii) Financing Rs 1,550 million; (iii) Deposits Rs 1,751 million; and (iv) Investments Rs 112 million.
Khyber Bank saw 6% increase in its Total Assets to Rs 26.7 billion as on June 30, 2006 compared to Rs 2.5 billion on December 31, 2005. Increases are seen in Cash and Lending to Financial Institutions. This increase in Total Assets has been managed largely through increase in Deposits and Paid up Capital. Of the total, Khyber Bank had 80% investments in Available for Sale Securities (2005: 72%).
Khyber Bank's Advances as on June 30, 2006 were at Rs 10.509 billion (43% of Total Assets) compared to Rs 10.708 billion (39% of TA) as on December 31, 2005. The Advances include Rs 1.1116 billion Murabaha Financing (December 31, 2005: Rs 1.846 billion). As on June 30, 2006, gross NPLs were Rs 3.249 billion (December 31, 2005: Rs 2.869 billion). In percentage terms gross NPLs on June 30, 2006 are 27% of gross Advances (2005: 24% of GA). On Net basis, NPLs are 16% of Advances (2005: 12% of Advances). On this basis it can be concluded that Khyber Bank has to take urgent measures for the management of credit risk.
Total mark up income of Khyber Bank for the first six months of 2006 increased by 41% to Rs 927 million compared to Rs 659 million for the corresponding six months of the previous year. Net mark up income (after mark up expensed and provisions) for the six months period under review increased by 72% to Rs 309 million (corresponding six months of 2005: Rs 180 million). Total mark up-interest expense represented 65 % of total mark up income for six months ended June 30, 2006, compared to 55% for the corresponding six months of 2005. The payout to the Depositors has slightly improved.
Non-mark up income of the bank for the six months ending June 30, 2006 was 27% lower at Rs 125 million as against Rs 172 million for the corresponding six months of 2005. The decline was mainly due to lower Gain on Sale of Investments. The six months under review were closed with After-tax Profit at Rs 178 million (corresponding six months of 2005: Rs 170 million), registering an increase of 4%. ROE for the six months at 6.1% (corresponding six months of 2005: 8%) is marginal and the management might consider steps to improve profitability. Khyber Bank shares these days are trading on KSE at around Rs 16.75 per share, at 1.15 times of the book value of Rs 14.54 per share as on June 30, 2006. Performance statistics are given below.
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Performance Statistics (Un-audited) (Rs, million)
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Balance Sheet As June 30, As Dec. 31,
2006 2005
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Total Assets: 26,712 25,097
Cash, balances with banks: 5,038 4,129
Lending to financial institutions: 2,270 1,552
Investments-Net: 7,491 7,623
Advances-Net: 10,510 10,709
Borrowing from fin. Institutions: 3,017 4,374
Deposits, other accounts: 19,806 17,452
Total Liabilities: 23,627 22,577
Net Assets: 3,085 2,520
Share Capital: 2,002 1,231
Reserves & Un-app. Profit: 908 884
Sub total-Equity: 2,910 2,115
Surplus on Revalue, Assets: 175 405
Equity incl. Revalue Surplus: 3,085 2,520
Subordinated Loan: 0 0
Equity & Sub. Loans: 3,085 2,520
Advances-Gross: 12,064 12,252
Gross NPLs: 3,250 2,869
Total Provision: 1,554 1,543
Conting. & Commitments: 6,151 6,151
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Ratios:
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Cash & bank/Total Assets: 19% 16%
Investments/Total Assets: 28% 30%
Advance-Net/Total Assets: 39% 43%
Gross NPLs/Advances-Gross: 27% 24%
Net NPLs/Advances-Net: 16% 12%
Gross NPLs/Total Equity: 112% 136%
Provision/Advances-Gross: 13% 13%
Deposits/Total Assets: 74% 70%
Total Liabilities/Total Assets: 88% 90%
Total Equity/Total Assets: 10.9% 8.4%
Equity, R-Surplus & S-Loans/TA: 11.5% 10.0%
Deposits/Equity-Times: 6.8 8.3
Advances/Deposits (ADR): 53% 61%
Investments/Deposits: 38% 44%
Conting.& Comm./Equity-Times: 2.11 2.91
Book Value Per Share: 14.54 17.18
Quoted Price (13-10-06) - Rs: 16.75 -
Price/Book Value Ratio: 1.15 -
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Income Statement (six months) 2006 2005
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Markup-interest earned: 927 659
Markup-interest expensed: 605 360
Net Markup- interest income: 322 299
Provisions and write offs: 12 119
Net mark up income (aft. Prov.): 310 180
Total non-markup income: 125 172
Income bef. Admn. Exp.: 435 352
Admin Expenses, etc: 210 165
Profit before Taxation: 235 196
Current & deferred tax: 57 26
Profit after taxation: 178 170
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Ratios: (6-Month Basis)
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Markup earned/Total Assets: 3.5% 2.6%
Net Markup Income/TA: 1.2% 1.2%
Net markup (aft. Prov.)/TA: 1.2% 0.7%
Non-Markup Income/TA: 0.5% 0.7%
Income before AE/TA: 1.6% 1.4%
Admin Expenses/TA: 0.8% 0.7%
Profit before Taxation/TA: 0.9% 0.8%
Profit after taxation/TA: 0.7% 0.7%
Profit after tax/Total Equity: 6.1% 8.0%
EPS- (Period-end paid up) - Rs: 0.89 1.38
Price/Earnings Ratio: 18.84 -
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Cash flow Summary (6M) 2006 2005
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Net Cash flow, Operations: 264 1,988
Net Cash flow, Investing: -101 -1,835
Net Cash flow, financing: 616 0
Change in Net Liquidity: 779 153
Net Liquidity at beginning: 5,489 5,256
Net Liquidity at end: 6,268 5,409
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COMPANY INFORMATION: Chairman: Ghulam Dastagir Akhtar; Managing Director & CEO: Syed Ahmed Iqbal Ashraf; Director: Etrat H. Rizvi; EVP/Head RRMC&R/Marketing: Qazi Munir Ul Haq; Company Secretary & CFO: Abdul Majid Alvi; Auditors: Ford Rhodes Sidat Hyder & Co, Chartered Accountants; Legal Advisors: 1- Nisar Ahmad Khan, Advocate, Peshawar; 2- M/s Mohsin Tayebaly & Co Karachi; Head Office: 24-The Mall, Peshawar Cantt., NWFP, Pakistan; Web Address: www.bok.com.pk
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