Commercial Banks Habib: METROPOLITAN BANK LIMITED (FORMERLY METROPOLITAN BANK LIMITED) - Year Ended December 31, 2006 (Audited)
Habib Metropolitan Bank Limited (Habib-Metro Bank) was incorporated in Pakistan on August 3, 1992 as a public limited company, under the Companies Ordinance, 1984. Habib-Metro Bank commenced banking operations from October 21, 1992, with primary focus on retail banking, trade finance, consumer financing and other banking services.
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 bank is a subsidiary of Habib Bank AG Zurich which is incorporated in Switzerland. For the sixth consecutive year, Habib-Metro 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.
Consequent to the amalgamation of the Habib Bank AG Zurich Pakistan Operations (HBZ) with and into Metropolitan Bank Limited, the profit and loss account for the current year includes the results of the combined entity with effect from October 26, 2006 and the balance sheet figures of 2006 includes assets and liabilities of the combined entity. The name of the bank has been changed to Habib Metropolitan Bank Limited with effect from October 26, 2006 after completing necessary formalities and the approval from the SBP.
Habib-Metro Bank operates 82 branches (December 2005: 51 branches) including four Islamic banking branches in Pakistan. Staff strength of the bank on December 31, 2006 stood at 1,963 employees including 402 outsourced employees (2005: 1,143 including 219 outsourced employees).
The key financial figures of the Islamic Banking Branch as on December 31, 2006 were: Islamic Banking Fund Rs 435 million, Deposits Rs 3,817 million, Ijarah financing Rs 1,392 million, Murabaha financing Rs 1,308 million, Total Liabilities Rs 4,155 million, and Total Assets Rs 4,590 million.
The authorised capital of Habib-Metro Bank is Rs 6 billion, comprising 600 million shares of Rs 10 each. As on December 31, 2006 the paid up capital was Rs 3.005 billion, held by 2,358 shareholders, of which 2,200 individuals held over 14% shares. NIT/ ICP/ NBP Trustee Department owned nearly 14% shares. Habib Bank AG Zurich, Zurich Switzerland owns 51% of the total shares.
The Directors, CEO, and their spouse and minor children own over 3% shares. The rest of the shares were distributed among a number of corporate entities including banks and DFIs. Habib-Metro Bank saw 87% increase in its total assets to Rs 138 billion as on December 31, 2006 compared to Rs 74 billion as on December 31, 2005. Increases are seen in Investments (73%) and Advances (91%).
This increase in Total Assets has been managed largely through 81% increase in Deposits and over 100% increase in the Borrowings from Financial Institutions. Of the total, the bank has 90% investments in Available for Sale Securities (2005: 73%). Major reason for the increases is the merger of Metropolitan Bank Limited with the Pakistan Operations of Habib Bank AG Zurich.
Habib-Metro Bank's Advances as on December 31, 2006 were at Rs 83 billion (56% of Total Assets) compared to Rs 43.519 billion (55% of TA) as on December 31, 2005. As on December 31, 2006, gross NPLs are only Rs 443 million (December 31, 2005: Rs 89 million).
In percentage terms gross NPLs on December 31, 2006 were 0.5% of gross Advances (2005: 0.1% of GA). On this basis it is concluded that Habib-Metro Bank has excellent control on credit risk. It may be noted that the bank has made full provision against NPLs according to the SBP criteria.
According to note 39 to the financial statements, Capital Adequacy Ratio of the bank as on December 31, 2006 was 11.88% (2005: 10.74%) as against prescribed minimum equivalent to 8% of the risk weighted assets of the banking company.
Total mark up income of Habib-Metro Bank for the year ended December 31, 2006 increased by 67% to Rs 7.289 billion compared to Rs 4.359 billion for the previous year. Net mark up income (after mark up expensed and provisions) for the year under review increased by 35% to Rs 2.764 billion (2005: Rs 2.082 billion).
Total mark up/interest expense represented 61 % of total mark up income for the year ended December 31, 2006, compared to 51% for 2005. Merger of the two banks has also contributed to the increase in income and expense volumes.
Non-mark up income of the bank for the year ended December 31, 2006 was 38% higher at Rs 1.729 billion as against Rs 0.993 billion for the previous year. The year under review was closed with After-tax Profit at Rs 2.096 billion (2005: Rs 1.506 billion), registering an increase of 39%. ROE for the year under review at 19.7% (2005: 29.6%) is considered highly satisfactory. Performance statistics are given below.
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Performance Statistics (Audited)
(Rs, million)
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Balance Sheet (As on Dec, 31,) 2006 2005
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Total Assets: 148,668 79,564
Cash, balances with banks: 17,645 6,269
Lending to financial institutions: 5,447 5,463
Investments-Net: 39,556 22,804
Advances-Net: 83,324 43,519
Borrowing from fin. Institutions: 29,518 14,429
Deposits, other accounts: 102,493 56,713
Total Liabilities: 137,800 73,970
Net Assets: 10,868 5,594
Share Capital: 3,005 1,560
Reserves & Un-app. Profit: 7,660 3,533
Sub total-Equity: 10,665 5,093
Surplus on Revalue, Assets: 203 501
Equity incl. Revalue Surplus: 10,868 5,594
Subordinated Loan: 0 0
Equity & Sub. Loans: 10,868 5,594
Advances-Gross: 84,142 44,039
Gross NPLs: 443 89
Total Provision (spec. & Gen): 818 520
Conting. & Commitments: 74,381 42,871
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Ratios: 2006 2005
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Cash & bank/Total Assets: 12% 8%
Investments/Total Assets: 27% 29%
Advance-Net/Total Assets: 56% 55%
Gross NPLs/Advances-Gross: 0.5% 0.1%
Net NPLs/Advances-Net: 0.17% 0.03%
Gross NPLs/Total Equity: 4% 2%
Total Provision/Advances-Gross: 0.4% 0.2%
Deposits/Total Assets: 69% 71%
Total Liabilities/Total Assets: 93% 93%
Total Equity/Total Assets: 7.2% 6.4%
Equity, R-Surplus & S-Loans/TA: 7.3% 7.0%
Deposits/Equity-Times: 9.6 11.1
Advances/Deposits (ADR): 81% 77%
Investments/Deposits: 39% 40%
Conting.& Comm./Equity-Times: 6.97 8.42
Book Value Per Share: 35.49 32.65
Quoted Price (18-05-07) - Rs: 79.05 -
Price/Book Value Ratio: 2.23 -
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Income Statement (12 months) 2006 2005
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Markup-interest earned: 7,289 4,359
Markup-interest expensed: 4,417 2,225
Net Markup-interest income: 2,872 2,134
Provisions and write offs: 108 52
Net mark up income (aft. Prov.): 2,764 2,082
Total non-markup income: 1,729 993
Income bef. Admn. Exp.: 4,493 3,075
Admin Expenses, etc: 1,350 977
Profit before Taxation: 3,143 2,098
Current & deferred tax: 1,047 592
Profit after taxation: 2,096 1,506
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Ratios: (Annual Basis)
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Markup earned/Total Assets: 4.9% 5.5%
Net Markup Income/TA: 1.9% 2.7%
Net markup (aft. Prov.)/TA: 1.9% 2.6%
Non-Markup Income/TA: 1.2% 1.2%
Income before AE/TA: 3.0% 3.9%
Admin Expenses/TA: 0.9% 1.2%
Profit before Taxation/TA: 2.1% 2.6%
Profit after taxation/TA: 1.4% 1.9%
Profit after tax/Total Equity: 19.7% 29.6%
EPS-(Year-end paid up) - Rs: 6.98 9.65
Price/Earnings Ratio: 11.33 -
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Cash flow Summary (12 months) 2006 2005
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Net Cash flow, Operations: 25,200 6,746
Net Cash flow, Investing: -17,296 -7,552
Net Cash flow, financing: 3,476 0
Change in Net Liquidity: 11,380 -806
Net Liquidity at beginning: 5,927 6,733
Net Liquidity at end: 17,307 5,927
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COMPANY INFORMATION: Chairman: Anwar H. Japanwala; President & CEO: Kassim Parekh; Executive Director: Mohamedali R. Habib; Company Secretary: Fuzail Abbas; Auditors: Ford Rhodes Sidat Hyder & Co, Chartered Accountants; Registered Office: Spencer's Building, I.I. Chundrigar Road, Karachi-74200; Head office: 14th Floor, Saima Trade Towers 'A', I.I. Chundrigar Road, Karachi- 74200, Pakistan; Web Address: www.hmb.com.pk
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