Security Investment Bank Limited (SIBL) was incorporated as an Investment Finance Company on May 23, 1991 in pursuance of the permission granted by the Federal Government.
SIBL is a public limited company, listed on all the stock exchanges of the country. Now that the SECP has regulatory supervision over the investment banks, SIBL has been granted the license by the SECP to carry out business of investment finance services as a Non-Banking Finance Company under section 282C of the Companies Ordinance, 1984 and the NBFC (Est. & Reg.) Rules, 2003 issued by the SECP (previously this was covered under SRO 585(1)/87 dated July 13, 1987, issued by the Ministry of Finance).
SIBL is a small (30 employees at end of 2005) but apparently effective outfit. It is active in money market activities such as making short-term investments in government securities, shares, lending, borrowing, placements, promissory notes, bankers acceptance and other money market instruments acting as a broker or acting on its own account.
Based on SIBL's financial results for the year ended December 31, 2005, JCR - VIS has given medium to long-term rating at 'A' (Single A) with stable outlook and the short-term rating at 'A-1' (A one).
SIBL has a wholly owned subsidiary, SIBL Exchange Company (Private) Limited, which was incorporated on December 16, 2004 and has its registered office at 6th Floor, Madina City Mall, Abdullah Haroon Road, Karachi, where as it has a branch at Ground Floor, Al-Rahim Tower, I.I. Chundrigar Road, Karachi. The subsidiary company has commenced its operation from February 28, 2006. The Overview hereunder is that of SIBL alone, without consolidation with its subsidiary company.
Authorised capital of SIBL is Rs 500 million, comprising 50 million ordinary shares of Rs 10 each. As on December 31, 2005 the paid up capital was Rs 372.707 million, which had been contributed by 2,489 shareholders, of which 2,435 shareholders owned 84% of the shares. Shareholders holding more than 10% or more voting interest were H.A.R with 4.72 million shares (13% of total) and Ms. Amina Bano with 5.29 million shares (14% of total). The rest of the shares were distributed among a number of corporate entities including banks and DFIs. As on June 30, 2006 the paid up capital was Rs 428.613 million, raised to this level through issue of bonus shares.
Surprisingly, Total Assets of SIBL as on June 30, 2006 decreased by 29% to Rs 1,753 million as compared to Rs 2,456 million on December 31, 2005. Major decrease was seen in long term Investments and short term Placements though there was some increase in short tem Investments. This overall decrease helped SIBL to rationalise and reduce short term Deposits and Borrowings. Shareholders' equity improved to 34 % of Total Assets (June 30, 2005: 25%). Of the total assets on June 30, 2006, 89% comprise current assets (June 30, 2005: 79%) while 11% have been classified as non-current assets (June 30, 2005: 21%). The current ratio has improved considerably. There are no long term debts.
On June 30, 2006, SIBL had deployed more of its resources in short term Financing (Rs 202 million), Placements (Rs 646 million) and Investments (Short term Rs 577 million and long term Rs 151 million) as in the past. Together with Gain on Shares, these three activities are main source of its earnings.
During the six months ended June 30, 2006, SIBL managed to earn gross income of Rs 125 million as compared to Rs 88 million for the corresponding six months of 2005, showing an increase of 42%. Major source contributing towards gross income was income on Financing and Placements which constituted more than 50% of the income earned. SIBL maintained its revenue growth by making Rs 62 million operating profit, an increase of 25% over the profit earned during corresponding six months of 2005. The increase was, however, modest due to 86% increase in cost of deposits and borrowings over that of the corresponding period last year. Return paid on Deposits and Borrowings during the period under review was 41% of Total Income (corresponding six months of 2005: 31% of Total Income).
The half year ending June 30, 2006 was closed with After-tax Profit of Rs 52 million (corresponding half year of 2005: Rs 41 million). ROE for the half year is 8%, slightly higher over profit of the corresponding half year of 2005 at 7%. Performance statistics are given below.
According to the Directors' Report, recently the State Bank of Pakistan revised its discount rate by 50 basis points to 9.5%. Therefore, the Directors feel that SIBL may see some pressure on its cost of funds to some extent in future.
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Performance Statistics (Un-audited) (Rs in 000)
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On June 30, On Dec. 31,
Balance Sheet 2006 2005
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Total current assets: 1,553,819 1,940,672
Total non current assets: 199,672 515,593
Total assets: 1,753,491 2,456,265
Total Current Liabilities: 1,160,157 1,839,919
Total capital employed: 593,334 616,346
Deferred Liabilities: 3,503 4,002
Net assets: 589,831 612,344
Share capital: 428,613 372,707
Reserves: 188,088 228,926
Total Equity: 616,701 601,633
Surplus on revaluation-invest:. -26,870 10,711
Equity & Revalue Surplus: 589,831 612,344
Total Liabilities and Equity: 1,753,491 2,456,265
Conting. & Commitments: 47,570 25,729
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Ratios 2006 2005
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Current Ratio: 1.34:1 1.05:1
Debt/Equity ratio: No Debt No Debt
Book Value Per Share-Rs: 14.39 16.14
Market Val/share (05-10-06)- Rs: 12.05 -
Price/Book Value Per Share-X: 0.84 -
Conting.& Comm./Equity-X: 0.08 0.04
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Income Statement (6M) 2006 2005
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Return in fin./placements: 67,410 49,530
Return on investments: 26,022 24,956
Gain on sale of shares: 30,554 13,227
Profit on deposits with banks: 1,292 181
Other income: 115 305
Total Income: 125,393 88,199
Financial & Admn. Expenses: 63,055 38,285
Operating profit: 62,338 49,914
Profit before Taxation: 62,338 49,914
Taxation: 10,000 9,000
Profit after taxation: 52,338 40,914
Ratios: 2,006 2,005
Stock Dividend: 0% 15%
Cash Dividend: 0% 10%
EPS (end of period capital)-Rs: 1.22 1.10
Operating profit/Total income: 50% 57%
Pre-tax profit/Total income: 50% 57%
After tax profit/Total income: 42% 46%
Return on Equity: 8% 7%
ROA: 3% 2%
ROCE: 9% 7%
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Cash Flow Summary (6M) 2006 2005
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Net Cash flow-Operations: -218,467 227,574
Net Cash Flow-Investing: 20,826 -224,214
Net Cash Flow- Financing: 0 0
Change in net liquidity: -197,641 3,360
Net liquidity at beginning: 257,699 65,070
Net liquidity at end: 60,058 68,430
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