Modaraba: FIRST NATIONAL BANK MODARABA - Half Year Ended December 31 2006

This is also a multipurpose, perpetual, multidimensional Modaraba and currently engaged in various Islamic modes of financing and business including Ijarah, Musharaka and Murabaha arrangements.
First National Bank Modaraba is managed by National Bank Modaraba Management Company Ltd, a wholly owned subsidiary of National Bank of Pakistan. During the six months period under review (HYD 06-07) the Modaraba maintained the momentary of growth while Modaraba's total assets base remained around Rs 2 billion.
As regards market value of its 10-rupee certificate on June 19, 2007, the closing price of the certificate was recorded at Rs 8.65 per certificate at 13.5% discounts to its par value. During the last 52 weeks market value of its certificate remained below par value between Rs 7 and Rs 9 per certificate.
From the business point of view, the main focus of the Modaraba remained on lease finance. Net investment in lease finance increased by 11.6% from Rs 1.192 billion as on June 30, 2006 to Rs 1.330 billion as on December 31 2006.
The short-term Morabaha investments however reduced by 18% from Rs 535 million to Rs 438.756 million and reduction was strategic decision. From the financial statements, particularly its profit and loss account it can be seen that most of the components of income went up during the six months ended December 31, 2006 (HYD 06-07). The growth components were profit from Ijarah, Morabaha and Musharaka investments.
But profit related to short term investments were lower compared to the corresponding period last year as dividend income and gain on sale of short-term investments went down. However diminution in value of short-term investments were less.
Despite higher income, the same could not be translated to better net profit for the period because of corresponding increase in the borrowing cost and low returns on the capital market operations. The directors stated that the Modaraba is making efforts to mobilize some funds through issuance of certificate of Musharaka to reduce cost of funds.

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Performance Statistics                           (Million Rupees)

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Balance Sheet                                             -As At-

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                                        December 31       June 30

                                               2006          2006

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                                         Un-audited       Audited

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Certificate Capital Paid-up:                 250.00        250.00

Reserves:                                     35.42         45.36

Certificate Holders' Equity:                 285.42        295.36

L.T. Debts:                                  578.00        792.50

L.T. Security Deposits:                      147.12        118.17

Current Liabilities:                       1,005.29        840.33

Fixed Assets:                                  1.04          1.27

Net Investment in Ijarah:                    913.39        837.16

L.T. Morabaha Investment:                     25.00         25.52

L.T. Loans & Deposits:                         0.92          0.81

Deferred Cost:                                 3.84          4.84

Current Assets:                            1,071.64      1,176.76

Total Assets:                              2,015.83      2,046.36

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Profit & Loss A/c for Half Year Ended               -December 31-

                                               2006          2005

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Revenue

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Income from Ijarah:                           67.85         43.17

Profit on Morabaha Investments:               32.73         18.96

Profit on Musharaka Investments:               2.78          1.07

Profit on Bank Deposits:                       0.05          0.13

Dividend Income:                               1.22          1.75

Gain on sale of S.T. Investment:               0.33          4.54

Other Income:                                  0.23          0.16

Total Income:                                105.19         69.78

Finance (Cost):                             (78.13)       (42.40)

Operating (Expenses):                        (7.54)        (6.29)

(Diminution) in Value of S.T. Investment:    (0.94)        (1.14)

Total (Expenses):                           (86.61)         49.83

Modaraba CO's Management (Fee):              (1.86)        (2.00)

Profit for the Period:                        16.72         17.95

Earnings Per 10-Rupee Certificate (Rs)         0.67          0.72

Certificate Price (Rs) on 19/06/07:            8.65             -

Price/Earning Ratio:                          12.91             -

Debt/Equity Ratio:                            67:33         73:27

Current Ratio:                                 1.07          1.40

Lease/Total Income Ratio (%):                 64.50         61.87

Net Profit/Total Income Ratio (%):            15.89         25.72

R.O.A. (%):                                    0.83          0.87

R.O.E. (%):                                    5.85          6.08

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