Commercial Banks: NIB BANK LIMITED - (Formerly NDLC-IFIC Bank Limited) Half Year Ended June 30, 2006 (Un-audited)
NIB Bank Limited (formerly NDLC-IFIC Bank Limited), a scheduled commercial bank, incorporated in Pakistan is listed on all the stock exchanges in the country.
NIB Bank is a subsidiary of Bugis Investments which is a wholly owned subsidiary of Asia Financial Holdings Pte. Limited which in turn is a wholly owned subsidiary of Temasek Holdings, an investment arm of the Government of Singapore.
NIB Bank has 27 operating branches (2005: 27 branches). Pacra has maintained its rating at "A+" (A Plus) for the long term and "A1" for the short term. The bank has 30% interest in an associated undertaking, National Fullerton Asset Management Limited (NAFA), incorporated in Pakistan.
The authorised capital of the bank is Rs 4.5 billion, comprising 450 million shares of Rs 10 each. As on December 31, 2005 the paid up capital was Rs 3.361 billion, which was held by 4,165 shareholders, of which 3,959 individuals held nearly 7% shares.
Bugis Investments held 239.9 million shares (71% of total) while IFIC Bank Limited owned 24.6 million shares (7% of total). The rest of the shares were distributed among a number of corporate entities including banks and DFIs. The level of share capital as on June 30, 2006 stands at 8% of Total Assets.
NIB Bank saw 25% increase in its Total Assets to Rs 40 billion as on June 30, 2006 compared to Rs 32 billion on December 31, 2005. Large increases are seen in Lending to Financial Institutions and in Advances. The increase in Total Assets has been managed largely through additional Borrowings from Financial Institutions and in through Deposits.
Growth in Total Assets has not been achieved through corresponding increase in Equity, which as a percentage of Total Assets has reduced to 10.5% (December 31, 2005: 13.2%). Of the total, NIB Bank has 45% Investments in Available-for-Sale Securities while 52 % are in Held-to-Maturity Securities.
NIB Bank's Advances as on June 30, 2006 are at Rs 26 billion (65% of Total Assets), showing 33% increase over Rs 20 billion Advances on December 31, 2005 (61% of TA). As on June 30, 2006, gross NPLs are Rs 0.784 billion (December 31, 2005: Rs 0.699 billion). In percentage terms gross NPLs on June 30, 2006 are 3% of gross Advances (2005: 3% of GA). On net basis, NPLs are 1% of Advances (2005: 1% of Advances).
Very low level of NPLs as shown above could be the result of NIB 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 NIB Bank would be that the management remains extra vigilant in the appraisal and monitoring of all loans.
Total mark up income of NIB Bank for the first six months of 2006 increased by 64% to Rs 1,465 million compared to Rs 646 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 78% to Rs 360 million (corresponding six months of 2005: Rs 202 million).
Total mark up-interest expense represented 74 % of total mark up income for six months ended June 30, 2006, compared to 66% for the corresponding six months of 2005. This is due largely to the bank's more reliance for expansion of operations on Borrowings from Financial Institutions. The average payout to the Depositors may also have slightly increased.
Non-mark up income of the bank for the six months ending June 30, 2006 was 155% higher at Rs 214 million as against Rs 84 million for the corresponding six months of 2005. The six months under review were closed with After-tax Profit at Rs 13 million (corresponding six months of 2005: Rs 42 million), registering a sharp decrease of 69%.
ROE for the six months is at 0.3% (corresponding six months of 2005: 1%). High cost of funds and administrative expenses are considered partly responsible for the situation. NIB Bank shares these days are trading on KSE at around Rs 22.90 per share, at 1.8 times of the book value of Rs 12.69 per share as on June 30, 2006. Performance statistics are given below.
The Directors in their Review state that the bank is committed to attaining competitive size within the shortest time possible. For this reason, the bank continued to invest in people, premises and technology aimed at implementing its customer-centric business models.
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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: 40,106 32,019
Cash, balances with banks: 3,603 4,051
Lending to financial institutions: 4,480 2,270
Investments-Net: 4,748 5,129
Advances-Net: 26,046 19,623
Borrowing from fin. Institutions: 7,876 4,547
Deposits, other accounts: 25,647 21,124
Total Liabilities: 35,898 27,806
Net Assets: 4,208 4,213
Share Capital: 3,362 3,362
Reserves & Un-app. Profit: 905 892
Sub total-Equity: 4,267 4,254
Surplus on Revalue, Assets: -59 -41
Equity incl. Revalue Surplus: 4,208 4,213
Subordinated Loan: 0 0
Equity & Sub. Loans: 4,208 4,213
Advances-Gross: 26,623 20,181
Gross NPLs: 784 699
Total Provision: 577 558
Conting. & Commitments: 27,129 31,239
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Ratios:
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Cash & bank/Total Assets: 9% 13%
Investments/Total Assets: 12% 16%
Advance-Net/Total Assets: 65% 61%
Gross NPLs/Advances-Gross: 3% 3%
Net NPLs/Advances-Net: 1% 1%
Gross NPLs/Total Equity: 18% 16%
Provision/Advances-Gross: 2% 3%
Deposits/Total Assets: 64% 66%
Total Liabilities/Total Assets: 90% 87%
Total Equity/Total Assets: 10.6% 13.3%
Equity, Surplus & S-Loans/TA: 10.5% 13.2%
Deposits/Equity-Times: 6.0 5.0
Advances/Deposits (ADR): 102% 93%
Investments/Deposits: 19% 24%
Conting.& Comm./Equity-X: 6.36 7.34
Book Value Per Share: 12.69 12.65
Quoted Price (20-10-06) - Rs: 22.90 -
Price/Book Value Ratio: 1.80 -
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Income Statement (6M) 2006 2005
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Markup-interest earned: 1,465 646
Markup-interest expensed: 1,086 426
Net Markup-interest income: 379 220
Provisions and write offs: 19 18
Net mark up income (aft. Prov.): 360 202
Total non-markup income: 214 84
Income bef. Admn. Exp.: 574 286
Admin Expenses, etc: 559 279
Profit before Taxation: 15 7
Current & deferred tax: 2 -35
Profit after taxation: 13 42
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Ratios: (6-Month Basis)
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Markup earned/Total Assets: 3.7% 2.0%
Net Markup Income/TA: 0.9% 0.7%
Net markup (aft. Prov.)/TA: 0.9% 0.6%
Non-Markup Income/TA: 0.5% 0.3%
Income before AE/TA: 1.4% 0.9%
Admin Expenses/TA: 1.4% 0.9%
Profit before Taxation/TA: 0.04% 0.02%
Profit after taxation/TA: 0.03% 0.13%
Profit after tax/Total Equity: 0.3% 1.0%
EPS- (Period-end paid-up) - Rs: 0.04 0.12
Price/Earnings Ratio: 592.23 -
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Cash flow Summary (6M) 2006 2005
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Net Cash flow, Operations: -683 908
Net Cash flow, Investing: 235 -3,492
Net Cash flow, financing: 0 2,772
Change in Net Liquidity: -448 188
Net Liquidity at beginning: 4,051 1,288
Net Liquidity at end: 3,603 1,476
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COMPANY INFORMATION: Chairman: Francis Andrew Rozario; President and CEO: Khawaja Iqbal Hassan; Director: S.M. Saleem; Company Secretary: Athar Zaheer Rizvi; Legal Advisors: Rizvi, Isa, Afridi & Angell, Advocates and Corporate Counsellors; Auditors: M. Yousuf Adil Saleem & Co, Chartered Accountants; Registered Office: Muhammadi House, I.I. Chundrigar Road, Karachi; Head Office: National Insurance Building, Korangi Road, Karachi; Web Address: www.nibpk.com
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