Commercial Banks: Bank AL-Habib Limited - Year Ended December 31, 2006 (Audited)
Bank AL-Habib Limited (Bank AL-Habib) has the distinction of having its registered office in Multan, where it has a number of branches including the Main Branch. Bank AL-Habib was incorporated in Pakistan on October 15, 1991 as a public limited company under the Companies Ordinance, 1984 and its shares are listed on all the stock exchanges of Pakistan.
Pacra has assigned to the bank a long term rating of "AA" (Double A) and short term rating of "A1+" (A One Plus). The bank has one 66.67% owned subsidiary - AL-Habib Capital Markets (Pvt) Limited. However, the Overview hereunder is that of the bank alone, without consolidation with its subsidiary. Habib Sugar Mills Limited and Habib Asset Management Limited are its associated companies.
Bank AL-Habib is principally engaged in the business of commercial banking with a network of 152 branches (2005: 100 branches), including an Offshore Banking Unit (OBU) in the Kingdom of Bahrain and a branch in Karachi Export Processing Zone and three Islamic Banking branches. Total staff strength as on December 31, 2006 was 2,896 including 488 outsourced employees (2005: 2,182 including 373 outsourced employees).
On December 31, 2006 the authorised capital of Bank AL-Habib stood at Rs 5 billion, comprising 500 million shares of Rs 10/- each. As on December 31, 2006 the paid up capital of Rs 2.629 billion was held by 6,013 shareholders, of which 5,866 individuals owned 134.98 million shares (51% of total paid up). Habib Sugar Mills Limited owns 4.37 million shares (2% of total paid up). NIT/National Bank of Pakistan (Trustee Department) own 46.12 million shares (18% of total paid up).
The directors, CEO, their spouse and minor children hold over 29 million shares (11% voting interest). The rest of the shares are distributed among a number of corporate entities including banks and DFIs.
According to the notes to the financial statements, after December 31, 2006, the Board of Directors in respect of year 2006 proposed cash dividend at 15% and bonus issue at four shares for 10 shares held (40% stock dividend). This bonus issue would increase the paid up capital of Bank AL-Habib to Rs 3.681 billion in compliance with the BSD Circular No 12 dated August 25, 2004 of the State Bank of Pakistan, which has reportedly granted extension to increase the paid up capital by March 31, 2007.
Total assets of Bank AL-Habib as on December 31, 2006 saw 26% increase to Rs 115 billion compared to Rs 91.5 billion as on December 31, 2005. On December 31, 2006 Investments show 6% increase to Rs 21 billion (18% of Total Assets) compared to Rs 19.7 billion (22% of TA) as on December 31, 2005. Of the total, the bank has 83% Investments on June 30, 2006 in Available for Sale Securities (2005: 38%).
The bank's Advances as on December 31, 2006 were Rs 71 billion (62% of Total Assets), registering 28% increase over 2005 Advances at Rs 55 billion (60% of TA).
On December 31, 2006, 84% Advances (2005: 87%) were in local currency, while 81% (2005: 81%) of the total Advances were for short term. Major exposure of the bank on December 31, 2006 was in Textile (43%), Commerce and Trade (10%), Chemicals and Pharmaceutical (2%), Agribusiness (1%), Cement (2%), Public Sector (4%), Individuals (2%) and others (7%).
As on December 31, 2006 gross NPLs were Rs 388 million (2005: Rs 383 million). In percentage terms gross NPLs on December 31, 2006 were only 0.5% of gross Advances (2005: 0.7% of GA). For the year 2006, Bank AL-Habib has made full provision against NPLs according to the SBP criteria. However, as some doubtful loans remain un-discovered at least for sometime due to different reasons, a prudent policy for the bank would be extra vigilance in the appraisal and monitoring of all loans.
Total Equity as percentage of Total Assets as on December 31, 2006 was 5.7% (2005: 5.7%) whereas the Deposits on this date were 79% of Total Assets (2005: 83% of TA). Also, Total Equity including the Subordinated Loan as percentage of Total Assets as on December 31, 2006 works out at 7.49% (2005: 7.21%), which is also on the low side. There appears a need to inject fresh cash equity to improve the situation.
As per note 40 to the financial statements, Bank AL-Habib has a Capital Adequacy Ratio on December 31, 2006 at 9.66% (2005: 8.64%) against prescribed minimum equivalent to 8% of the risk weighted assets of the banking company.
Total mark up income of Bank AL-Habib for 2006 saw 59% increase to Rs 7.858 billion compared to Rs 4.936 billion for the previous year. Net interest income (after provisions) for 2006 experienced 38% increase to Rs 3.759 billion (2005: Rs 2.717 billion).
Total average mark up-interest expense represented 52% of total mark up income for 2006, compared to 43% average mark up expense for 2005. Non-mark up income of the bank for 2006 was 32% higher at Rs 1.363 billion as against Rs 1.036 billion for 2005. The bank's Profit after Tax for 2006 rose by 41% to Rs 1.761 billion compared to Rs 1.464 billion for the previous year. ROE for the year is very attractive at 27% (2005: 27.9%). Performance statistics are given below.
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Performance Statistics
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Balance Sheet (Audited) (Rs million)
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As on December 31, 2006 2005
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Total Assets: 114,998 91,502
Cash, balances with banks: 10,579 8,672
Investments-Net: 21,023 19,758
Advances-Net: 70,796 55,304
Borrowing from fin. Institution 10,789 6,276
Deposits, other accounts: 91,420 75,796
Total Liabilities: 108,476 86,256
Net Assets: 6,522 5,246
Share Capital: 2,629 2,191
Reserves & Un-app. Profit: 3,557 2,555
Equity: 6,186 4,746
Surplus on Revalue, Assets: 336 500
Equity incl. Revalue Surplus: 6,522 5,246
Advances-Gross: 71,036 55,526
Gross NPLs: 388 383
Total Provision: 240 222
Conting. & Commitments: 42,366 35,765
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Ratios: 2006 2,005
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Cash & bank/Total Assets: 9% 9%
Investments/Total Assets: 18% 22%
Advance-Net/Total Assets: 62% 60%
NPLs/Advances-Gross: 0.5% 0.7%
NPLs Prov./Advances-Gross: 0.3% 0.4%
Deposits/Total Assets: 79% 83%
Total Liabilities/Total Assets 94% 94%
Total Equity/Total Assets: 5.7% 5.7%
Deposits/Equity-Times: 14.0 14.4
Advances/Deposits: 77% 73%
Investments/Deposits: 23% 26%
Conting.& Comm./Equity-Times: 6.50 6.82
Book Value Per Share: 24.81 23.94
KSE Price/Share ( 01-06-07) Rs 64.00 -
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Income Statement 2006 2005
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Markup-interest earned: 7,858 4,936
Markup-interest expensed: 4,078 2,144
Net Markup-interest income: 3,780 2,792
Provisions and write offs: -21 -75
Net mark up income (aft. Prov. 3,759 2,717
Total non-markup income: 1,363 1,036
Income bef. Admn. Exp.: 5,122 3,753
Admin Expenses, etc: 2,433 1,731
Profit before Taxation: 2,689 2,022
Current & deferred tax: 928 558
Profit after taxation: 1,761 1,464
Ratios: (Annual Basis) 2006 2005
Markup earned/Total Assets: 6.8% 5.4%
Net Markup Income/TA: 3.3% 3.1%
Net markup (aft. Prov.)/TA: 3.3% 3.0%
Non-Markup Income /TA: 1.2% 1.1%
Income before AE/TA: 4.5% 4.1%
Admin Expenses/TA: 2.1% 1.9%
Profit before Taxation/TA: 2.3% 2.2%
Profit after taxation/TA: 1.5% 1.6%
Profit after tax/Total Equity: 27.0% 27.9%
EPS-(year-end paid up) - Rs: 6.70 6.68
Price/Earning Ratio: 9.55 -
Cash flow Summary 2006 2005
Net Cash flow, Operations: 4,204 4,467
Net Cash flow, Investing: -2,510 -6,258
Net Cash flow, financing: 213 -64
Change in Net Liquidity: 1,907 -1,855
Net Liquidity at beginning: 8,672 10,527
Net Liquidity at end: 10,579 8,672
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COMPANY INFORMATION: Chairman: Ali Raza D. Habib; Chief Executive & Managing Director: Abbas D. Habib; Executive Director: Qumail R. Habib; Director: Imtiaz Alam Hanfi; Company Secretary: Mahmood S. Allarakhia; Auditors: KPMG Taseer Hadi & Co, Chartered Accountants; Legal Advisors: Liaquat Merchant Associates, Advocates & Corporate Legal Consultants; Registered Office: 126-C, Old Bahawalpur Road, Multan, Pakistan; Principal Office: 2nd Floor, Mackinnons Building, I.I. Chundrigar Road, Karachi; Web Address: www.bankalhabib.com.pk
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