Commercial Banks: NIB BANK LIMITED - (Formerly NDLC-IFIC Bank Limited) Year Ended December 31, 2005 (Audited)

01 Jun, 2006

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 commenced banking and related operations on October 3, 2003, as a result of amalgamation of the former National Development Leasing Corporation Limited (NDLC) and the former Pakistan Branches of International Finance Investment and Commerce Bank Limited (IFIC). Further, the SBP had in early 2004 sanctioned a scheme of amalgamation by virtue of which Pakistan branches of Credit Agricole Indosuez (CAI) were amalgamated with and into NIB Bank.
The bank has 30% interest in the associated undertaking, National Fullerton Asset Management Limited, incorporated in Pakistan. During the year ended December 31, 2005, Bugis Investments (Mauritius) Pte Limited was allotted over 213 million ordinary shares of Rs 10 each at a premium of Rs 3 per share by virtue of which the NIB Bank has become 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.
The number of employees of NIB Bank at the end of 2005 was 593 (2004: 403 employees). The bank has 27 operating branches (2004: 10 branches). In June 2005, Pacra rating for the bank improved from "A-" (A Minus) to "A+" (A Plus) for the long term and from "A2" to "A1" for the short term. 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 is held by 4,165 shareholders, of which 3,959 individuals hold nearly 7% shares. Bugis Investments holds 239.9 million shares (71% of total) while IFIC Bank Limited owns 24.6 million shares (7% of total). The rest of the shares are distributed among a number of corporate entities including banks and DFIs.
The level of share capital as on December 31, 2005 at 11% of Total Assets places NIB Bank among one of the well-capitalised banks in the country. Total assets of NIB Bank increased by 93% to Rs 32 billion on December 31, 2005 compared to Rs 16.5 billion on December 31, 2004.
Increase in assets has been largely financed through 112% increase in Deposits to Rs 22.5 billion (70% of Total Assets) as on December 31, 2005 (2004: 10.6 billion) as well as through increase in paid up capital. As on December 31, 2005 Investments increased three-fold to Rs 5.1 billion (16% of TA) compared to Rs 1.2 billion (7% of TA) as on December 31, 2004. Of the total, NIB Bank has rather 57% investments in Held to Maturity Securities (2004: 92%).
NIB Bank's Advances as on December 31, 2005 were Rs 19.6 billion (61% of Total Assets), registering 67% increase over previous year Advances at Rs 11.7 billion (71% of TA). On December 31, 2005, of the total Advances 86% (2004: 97%) are in local currency, while 71% (2004: 68%) of the total Advances are for short term. Major exposure of the bank by way of Advances is in Textiles (37%), Individuals (20%), Financial (8%), Trade (7%), Transport (5%), Media & Service (3%) and others (20%). NIB Bank's equity as on December 31, 2005 stood at Rs 4.2 billion (13% of Total Assets) whereas gross NPLs on this date are Rs 0.699 billion (2004: Rs 1.464 billion).
In percentage terms gross NPLs for 2005 were 3.5% of gross Advances (2004: 11.9% of GA). NIB Bank has made full provision against Gross NPLs according to the SBP criteria. Relatively low level of NPLs as shown above for 2005 could be the result of bank's 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 revenues of NIB Bank for 2005 increased by 113% to Rs 1.953 billion compared to Rs 0.915 billion for the previous year.
Net interest income after provisions increased by 59% from Rs 0.318 billion to Rs 0.507 billion. Non-mark up income for 2005 was Rs 0.236 billion as against Rs 0.111 billion for the previous year. NIB Bank's non-funded to funded income ratio improved from 26% in 2004 to 32% in 2005. The increase in income before administration expenses during 2005 was absorbed by more than proportionate increase in non-mark up expenses/Administration expenses.
The year 2005 was closed with a small pre-tax profit of Rs 27 million (2004: Rs 31 million). Due to adjustment in the deferred taxation, NIB Bank closed 2005 with after tax profit of Rs 104 million (2004: Rs 123 million). ROE for the year is 2.4% (2004: 8.9%). NIB Bank is presently showing relatively low profitability due to large expenses associated with opening of new branches, branch expansion, people and technology. The bank is poised for better performance in the coming years. 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, 2005 2004
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Total Assets: 32,019 16,557
Cash, balances with banks: 4,051 1,284
Lending to financial institutions: 2,270 1,813
Investments-Net: 5,129 1,188
Advances-Net: 19,623 11,737
Borrowing from fin. Institutions: 4,547 4,159
Deposits, other accounts: 22,554 10,648
Total Liabilities: 27,806 15,193
Net Assets: 4,213 1,364
Share Capital: 3,362 1,229
Reserves, Un-app. Profit: 892 149
Total Equity: 4,254 1,378
Surplus on Revalue, Assets: -41 -14
Equity incl. Revalue Surplus: 4,213 1,364
Subordinated Loan: 0 0
Equity and Sub. Loans: 4,213 1,364
Advances-Gross: 20,181 12,349
Gross NPLs: 699 1,464
Total Provision: 558 612
Conting. & Commitments: 31,239 14,931
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Ratios:
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Cash and bank/Total Assets: 13% 8%
Investments/Total Assets: 16% 7%
Advance-Net/Total Assets: 61% 71%
Gross NPLs/Advances-Gross: 3.5% 11.9%
NPLs/Total Equity: 16% 106%
NPLs Prov./Advances-Gross: 2.8% 5.0%
Deposits/Total Assets: 70% 64%
Total Liabilities/Total Assets: 87% 92%
Total Equity/Total Assets: 13.2% 8.2%
Equity & S. loans/Total Assets: 13.2% 8.2%
Deposits/Equity-Times: 5.3 7.7
Advances/Deposits: 87% 110%
Investments/Deposits: 23% 11%
Contin.& Comm./Equity-Times: 7.34 10.84
Book Value Per Share: 12.65 11.21
Quoted Price (24-04-06) - Rs: 29.25 -
Price/Book Value Ratio: 2.31 -
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Income Statement 2005 2004
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Markup-interest earned: 1,717 804
Markup-interest expensed: 1,119 413
Net Markup-interest income: 598 391
Provisions and write offs: 91 73
Net mark up after provisions: 507 318
Total non-markup income: 236 111
Income before Admn. Exp.: 743 429
Admin Expenses, etc: 713 398
Profit before Taxation: 27 31
Current & deferred tax: 77 92
Profit after taxation: 104 123
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Ratios: (Annual Basis)
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Markup earned/Total Assets: 5.4% 4.9%
Net Markup Income/T. Assets: 1.9% 2.4%
Net markup (aft. Prov.)/TA: 1.6% 1.9%
Non-Markup Income/TA: 0.7% 0.7%
Income before AE/TA: 2.3% 2.6%
Admin Expenses/TA: 2.2% 2.4%
Profit before Taxation/TA: 0.1% 0.2%
Profit after taxation/TA: 0.3% 0.7%
Profit after tax/Total Equity: 2.4% 8.9%
EPS-(year-end paid up) - Rs: 0.31 1.00
Price/Earnings Ratio: 94.56 -
Cash Dividend: 0% 0%
Bonus Shares: 0% 0%
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Cash flow Summary 2005 2004
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Net Cash flow, Operations: 4,200 -338
Net Cash flow, Investing: -4,205 1,445
Net Cash flow, financing: 2,772 -167
Change in Net Liquidity: 2,767 940
Net Liquidity at beginning: 1,288 348
Net Liquidity at end: 4,055 1,288
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COMPANY INFORMATION: Chairman: Francis Andrew Rozario; President and CEO: Khawaja Iqbal Hassan; Director: S.M. Saleem; 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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