MCB is among the oldest banks of Pakistan. It was incorporated in 1947. It was among those private banks that were nationalised in 1974. Nationalisation had drastically impacted its performance as it affected the quality of loan portfolio and services. Eventually, it was privatised in 1991 and is currently owned by the Mansha group. Post privatisation, MCBs focus has been on aggressive cost reduction.
MCB has a network of over 1000 branches across Pakistan, of which, around 750 are automated. The bank offers various services to its consumers, including personal banking, corporate banking, virtual banking, Islamic banking and other services. In this rapid expanding banking sector, MCB has been performing well to compete with its rivals. MCB has won the "Best Bank of Pakistan" award for the 5th time from 2001 to 2006.
THE BANKING INDUSTRY IN FY08
In the last quarter, the banking system successfully weathered a liquidity stress. The stress emerged in usual timeframe, ie, Eid-ul-Fitr deposit withdrawal and a number of global, domestic and industry specific factors further compounded it. Major dampening factors like global financial turmoil, economic slowdown and contractionary monetary policy were compounded by an unusual liquidity stress during October-November 2008. The current account deficit was quite high and the real exchange rate had significantly appreciated to unsustainable levels, which ultimately put pressure on rupee/dollar exchange rate and led to capital outflows. On top of it, breakdown of capital market in Pakistan and the series of news on the financial meltdown in advanced markets raised general public doubts about the financial strength of some Pakistani banks. By this time, due to relatively higher growth in advances, the liquidity profiles of the banks had already been burdened. In this backdrop, the usual post-Eid liquidity pressure in interbank market led to rumour-mongering about the banks. The impact was severe in some banks especially the small banks with the constrained liquidity profile in terms of ADR.
The reduction in Cash Reserve Requirements (CRR) and Statutory Liquidity Requirements (SLR) in early weeks of October 2008 to manage the liquidity stress resulted in a significant decline in cash and treasury bank balances by the end of December-08 quarter, thus releasing funds for financing the growth of advances.
However, strong capacity developed by the banks and regulators over the years and the offsetting measures taken by the State Bank of Pakistan (SBP) enabled the system to avert this transitory stress from converting into a financial crisis.
INVESTMENTS
The investments, especially the government papers, which declined in both absolute rupee terms as well as a proportion of total assets during the first nine months of CY08, registered a slight increase during the last quarter. Actually, the heightened credit risk on account of deterioration in macroeconomic fundamentals and already constrained liquidity profile induced the banks to shift their preference towards risk-free Market Treasury Bills (MTBs).
The banking system is marked with a high concentration as a few number of banks hold a major share of the systems total assets and deposits. This concentration has been following an overall declining trend as the medium sized banks gradually gained market share. However, due to unusual liquidity stress that affected mainly the small and medium sized banks, the market share of five large banks inched up to 52.4 percent (51.3 percent in Sep-08).
DEPOSITS
The deposit component, which used to witness a strong growth in last quarter, registered a slow growth of Rs 153 billion (3.8 percent) this year. Incidentally, foreign remittances, a key factor behind the recent years strong growth in deposits, maintained the momentum and grew by 17 percent over CY08.
The industry has been witnessing a gradual shift in deposits from savings to term deposits for quite some time. This trend emerged largely in response to SBPs policy incentives to encourage the mobilisation of long term deposit so as to reduce the maturity mismatches. Consequently, the fixed deposits gained a significant share of savings deposits since 2004. However, the SBPs policy drive to increase the CRR and SLR in last week of Jun-08 and exemption of long-term deposits also from SLR requirements during the last quarter seem to have considerably invigorated this trend (other factors like general rise in interest rates and innovative deposits scheme have also augmented depositors preference for terms deposits).
ADVANCES
During the quarter under review, advances witnessed a significant slowdown in sharp contrast to industrys established patterns for the last quarter. The worsening business and economic environment somewhat increased the credit risk, which compelled the banks to adopt cautious lending strategy, particularly in consumer sector where the advances have been decreasing since the start of CY08. Some new loans have been issued, of which, a significant portion disbursed to public sector enterprises (PSEs).
CY08 however, observed a deviation in the growth pattern of advances. Slackness in the demand for bank credit during CY07 coupled with slowdown in economic activities and tightening of the monetary regime, forced the banks to reposition their lending strategy and asset profile. The asset mix of the banking system gradually shifted from lending to investments during the first three quarters of CY07.
PROFITABILITY
Currently, the cumulative profit of 22 listed commercial banks has declined by 21% to Rs 50.3 billion in 2008 as compared to Rs 63.6 billion earned in the same period in 2007, mainly due to higher provisions for non-performing loans (NPLs) and impairment loss.
The full year profits of CY08 were however lower than profits for the last couple of years but still it remained profitable. The overall profitability was neutralising due to more than proportionate increase in operating expenses and provisioning for loan losses. In absolute terms, expenses increased by 33.4 percent to Rs235.8 billion in CY08, which affected the overall profitability of the system. In addition to higher provisions, enhanced branch network with increased human resource base has been soared the expense of the system during the last quarter under review. Moreover, stock market crash in the second half of 2008 resulted in bank recognising impairment loss of Rs 12 billion as against only Rs 287 million recognised in 2007.
High spreads of 7.29% in 2008 and strong advances growth of 19% supported the net interest income, while non-interest income increased by 11% on the back of surge in exchange gain as rupee remained volatile against the dollar. The annual audited results of the top five banks for the year 2008 show that their profitability on average has remained at the previous years level. The assets distribution on the basis of ROA shows that 16 banks, holding 67.9 percent market share, have ROA of one percent and below.
The banking sector in Pakistan has remained somewhat insulated from the global financial turmoil and has maintained its profitability albeit the slower growth. The prevailing global economic downturn nevertheless has the potential to impair corporate and business profitability that may ultimately heighten the credit risk and may affect the earnings of the banking sector in the quarters ahead.
NPLS
This rise in NPLs observed across all the banking groups except specialised banks, where NPLs have actually decreased. NPLs have been on the rise mainly due to poor economic performance of the economy and the FSV benefit therefore resulting in worsening of asset quality ratios.
Total provisions for NPLs surged to Rs 53 billion in 2008 as against Rs 42 billion in 2007, an astounding growth of 27% largely due to slowdown in economic growth. The composition of segment wise NPLs of the banking system shows that infection ratio of all the segments except agriculture have increased. The infection ratio of consumer finance portfolio increased in CY08 (2.3 percent over the year). Rising inflation and contained disposable incomes coupled with increasing lending rate have reduced consumers appetite for credit as well as their repayment capacity, resulting in increasing defaults rate in the consumer finance. Interestingly, in the wake of economic slowdown, banks seem to facilitate the businesses through rescheduling/restructuring of loans, the textile sector being the major beneficiary. Latest banking industry numbers show an effort to keep balance sheets clear of NPLs by recognising and providing for NPLs on criteria that are more stringent. This approach might look costly in the meantime but in the long run it will definitely benefit banks by providing a cushion to withstand losses.
RECENT PERFORMANCE
The bank realised an income of after tax Rs 15.374 billion, which inched up by 0.7% as compared to last years profits. In a careful analysis, we see that bank has been able to withstand economic lows while still maintaining its profitability. The profit before tax showed a growth of 2.6% to an amount of Rs 21.867 billion. The profits translate into Rs 24.47 earnings per share.
The net interest income grew by 19.1% to Rs 28.483 billion as compared to FY07 of Rs 23.921 billion. The interest earned in this year was 26% higher than previous years but it was matched by more than proportionate increase in interest expense by 47%. The main reason for the higher costs of funds is due to increase in the minimum rates of 5% return on deposits. Previously banks have saved a lot due to no protection of consumers on the returns. Furthermore, the returns on NSS (National Savings Scheme) have also increased as part of tight monetary policy. These higher rates on NSS gave strong competition to deposits and also huge drains from the system. Provisions against non-performing loans were high by 31%. Details are discussed later.
The non-interest income fell by 3.7%. Major decreases were seen in dividend income and gain on sale of securities. In most part of the last quarter the stock markets were closed due to shortage of liquidity and lack of investor confidence. These resulted in losses in values of securities and eventually the trade gains vanished due to collapse of stock markets. Fee, commission and income from foreign currency dealings were on the steep. Fee income increased by 9% while a very marginal increase of 5% is seen currency trade though the industry made larger gains comparatively. To match this revenue, the non-mark-up expenses were up by 50%, ie, Rs 5.791 billion revenues were to cover Rs 8.3 billion. So all in all, the non-mark-up activities wore away profits. Wages, part of non-mark-up expense was 50% higher due to inflation in this year for the common reasons of fuel, power and food price hikes.
Return on assets ratio stood at 3.5%, which is not in line with what industry has to offer. Industry average (top 5 banks) ROA was close to 2.1% implying that the ROE of the bank was 26.4% this year as compared to 20.6% of industry average. This implies that the asset and equity utilisation was high which is a positive sign for MCB its shareholders. ROD (return on deposits) show a decreased as the deposits grew by 13 thus due to the base effect the ROD ratio fell this year.
Total assets grew by 8% contributed by lending to financial institutions and Advances. Lendings to financial institutions showed a three-fold growth (290%). It includes all the repurchase agreement lendings based on Market T-Bills and PIBs. Advances grew by 20%. An increase of Rs 40 billion can be observed in advance mostly consisting of long term, advances showing the banks change strategy.
Along with advances comes the concern for NPLs. MCBs growth in NPLs have been 70%, which is the highest ever in industry topping the NPLs figure to Rs 54.462 billion. The industry average was 34%. This is a matter of concern in the short term but in the long term it would definitely help to strengthen the assets base and quality. Due to rising NPLs banks have been cautious in lending and therefore a small increase in advances growth is seen this year as compared to previous years. Another considerable fact over here is that industry wide many banks have helped the troubled borrowers by rescheduling the loans in order to avoid Non-performing loans so this can also be reflection of this practice. Earning assets formed 81% of the assets, which is exactly in line industry averages.
Under the liabilities the borrowings from the financial institutions fell by a massive 42.5% due to major reduction in repurchase agreement borrowings (payable latest by January 2009). The deposits, main concern for the industry, have been growing at rates in neighbourhood of 13%. The composition of the deposits has changed since FY07. The fixed deposits swelled up by 92% thus taking up larger share from 11.4% in 2007 to 19.2% in 2008 of the total deposits. In the last year banks have put an effort to bring in new innovative long-term deposits schemes in order to avert any liquidity-related risks. This was also in instructed by the SBP in order to avoid mismatch of maturities of different funds borrowed by the bank. But still it has to be borne in mind that most of the funds are provided by current and checking accounts, which are further utilised by the banks.
FINANCIAL PERFORMANCE (FY03-FY07)
MCB Bank Limited posted profit after tax of Rs 15.26bn with an earnings per share of Rs 24.30 in FY07 as compared to profit after tax of Rs 12.14bn with an earnings per share of Rs 19.33 in FY06, depicting a significant growth of 26.0% during the year.
Following the industry trend, one witnessed a growth in net interest income of the bank by Rs 2.7bn during FY07, reaching at Rs 23.9bn as compared to Rs 21.2bn in FY06. However, considering the size and operations of the bank, this is not a significant growth. An upsurge of 92% in the interest earned on the investments in available for sale securities and a 15% increase on the interest earned on the customers loans were the major drivers behind the said growth.
Non-interest income also supported the bottom line growing by 20.4% to Rs 6.0bn in FY07 from Rs4.9bn in FY06 on the back of capital gain received from sale of securities. Major contribution also came from a 14% surge in fee commission and brokerage income.
Overall, the MCBs profitability has been on a rise after 2004. The banks profitability was low in 2004 as can be seen from the dip in the ratios. However, in 2005 the PAT shot up by 267% rising to Rs 8.92bn. The growth momentum continued till the end of FY07 when PAT crossed the 15 billion mark with a 3 and 4-year CAGRs of 23% and 84% respectively. This bottom line growth of MCB over the last couple of years, along with other banks, is due to high spreads of the banking system. It is worth mentioning that MCB enjoys one of the widest spreads and highest margins in the industry, backed by its low deposit rates.
The interest rate spread on outstanding loans and deposits had been hovering around 7.2 to 7.1 percent during FY07. However, the spread on gross disbursements and fresh deposits remained lower, in the range of 5.1 to 6.5 percent. The squeezed spread in the later case mainly owed to shift in deposit structure with growing share of fixed deposits and relatively increasing pressure on interest rates on all deposits categories.
Deposit base of MCB increased by 13.45% from Rs292bn in Dec07 over Rs257bn in Dec06, on the back of strong branch franchise. However, MCB lags behind the industry with a growth of 19%. The outer deposit circle (FY07) and inner circle (FY06) shows that the deposits largely comprise of low cost (CASA) savings deposits (54%) and current deposits (32-34%). Long-term deposits form 88% of the entire customer deposits indicating the banks efficiency in maintaining the costs of funds on lower side.
Fixed deposits have shown a decline by 2% in FY07. Hence, there has been a shift in the deposits structure of the banking system where the banks are attracting longer-term deposits by offering higher returns, mainly due to CRR being zero-rated for time deposits. Deposits by financial institutions have risen but they still only form 3% of the entire deposits. ROD has increased from 3.14% to 5.2% from 2003 to 2007 as the profitability of the bank has improved significantly from effective utilisation of the money deposited.
The assets base of the bank has been expanding rising from Rs 342.8bn (2006) to Rs 410.5bn (2007). Unlike FY06 when growth in lending to financial institutions, advances and balances with other banks were responsible for the expanding asset base of the bank, a phenomenal increase has been witnessed in the investment portfolio of the bank, which enhanced by Rs50bn to Rs113bn in Dec07 from Rs63.48bn in Dec06. This is line with overall banking industry where the assets mix has shifted more towards investments than lending to FIs. MCB has major investments on government securities followed by shares in listed companies and TFCs and debentures.
The highly productive earning assets of the bank coupled with robust profitability resulted in the ROA to increase to 3.72% in 2007 (2006: 3.5%). Compared to the ROA of the banking sector of 2% this is very healthy and indicates the strength that MCB possesses is generating strong returns.
The banks equity base has been strengthening over the years, enhancing its per party lending limit. It registered an increase of 72.1% in 2006 because of increase in bank reserves. The banks equity was Rs40.8bn in 2006. The reserves grew by a startling 172.4% to Rs 24 billion in 2006. Since 2003, the bank has raised Rs 2.9 billion through the issue of new shares. The ROE of MCB has dipped in the FY07 to 27.7 (2006: 29.7%) largely because of greater reserves and fresh capital injections. However, in comparison to the banking sector average ROE of 27.7% MCB is still better off.
On evaluating, the performance of MCBs earning assets we see that yield (mark-up or Net interest income as a % of earning assets) has shown on overall rising trend. A kink in the upward sloping graph is seen in the year 2007 which is due to a more than proportionate increase in earning assets (an 18% increase as compared to 2006) while net interest income grew by only 13% so overall net interest ratio fell. But in FY08, this growth is again in line with an upward sloping trend.
Moreover, Cost of Funding Earning Assets has also posted an increasing trend due to which the cost to income ratio has risen in recent years. Yet it is still lowest in the industry. This ratio is showing a constant upward slope because in last few months the SBP has made it mandatory for every bank to pay a minimum deposit of 5%, this has added more to costs of funds. A slight increase in cost of assets coupled with returning higher profits is a good sign for any business and signifies its potential to produce/earn in future.
Post privatisation, MCBs focus has been on expense reduction and sought for aggressive cost efficiency. It is also evident by a rising interest margin of MCB since markup/return/interest expensed has fallen more rapidly than the markup/return/interest income. Yields for FY06 and FY07 indicate that the returns would continue the upward march. However, average deposit rates are also expected to increase which might impact MCBs high margins by eroding its low cost funding sources. Future expansion through low cost funding sources would be difficult resulting in declining spreads.
Over the years we see a change in the composition of advances. Long-term advances are taking up more of the total share. One reason is the efforts made by the banks to mobilise long term funds to match the maturities of different funds. Another apparent reason from current trend is that due to higher NPLs the banks are helping the borrowers by rescheduling the advances to longer terms which might turnaround the debt servicing ability in the longer term.
Advances have seen a growth of 225% since 2003 with a 4-year CAGR of 22.5%. The banks advances mainly are comprised of short-term loans, which ensure a smooth liquidity position maintained by the bank. Analysis of the banks advances portfolio reveals that the bank has diversified and expanded strategically with consumer portfolio being the lead driver behind the total advances growth of 10.5% to Rs219bn in Dec07 over Rs198bn in Dec06. However, this growth lagged the overall deposit growth, due to overall slow down in industry advances. As a result the ADR of the bank depressed marginally to 76% in Dec07 from 77.0% in Dec06.
The serious concern for the industry in general and MCB in particular is the increasing number of its non-performing loans (NPLs), which resulted in the high provisioning against it. During FY07 the banks total provisioning increased phenomenally by 192% to around Rs3bn against Rs1.1bn in the corresponding period last year. MCB has been able to contain credit risk despite aggressive growth in advances to consumer and private sectors (forming around 95% of NPLs). This is further evident by the flat trend in provisions o NPLs ratio. On the flip side, one can witness a surge in NPLs as a percentage of advances in FY07, due to changes in Risk Management policies of recognising NPLs on obligor basis. Hence, change in the Prudential Regulations by SBP regarding the removal of FSV benefit will not have a very significant impact on MCB due to its own stringent and conservative policies.
According to state banks locally incorporated banks are required to raise MCR (minimum paid up capital) to Rs 23 billion. This has to be done in phases, so by the end of FY08, MCB had Rs 6.2 billion as compared to the requirement of Rs 5 billion. In addition the banks are also required to maintain a minimum capital adequacy ratio (CAR) (it is the amount of risk-based capital as a percent of risk-weighted assets) of 9% of the risk weighted exposure. The banks CAR as at December 31, 2008 was 15.99% of its risk weighted exposure implying an ample provision to cover risk.
We can see that the bank has made an extraordinary effort to reduce its dependence on debt, as a source of finance. Debt management figures reveal that the bank has 96% of its assets financed by debt in 2003. However, it had reached a very high level and there is always a potential to fall back from heights, it has been the case with MCB as it had to reduce its dependence on heavy debts. Furthermore, debt to equity ratio suggests a tremendous recovery by MCB to improve its credit rating up to AA+ in long term and A1+ in short term. Moreover, growth in profits and higher capital injections as well as the imposition of the enhanced Minimum Capital Requirement (MCR) has directed to equity-based source of financing in later years. Declining deposit times capital till FY06 is indicative of the increasing capital of MCB, whereas a slight increase in FY07 is attributed to 13.45% increase in deposits vis-à-vis a meager 2% surge in capital base (average).
The solvency situation for the industry as a whole has shown marked improvement in recent years caused by increasing profitability and fresh inflows of capital. In MCBs case, was a slight deterioration in the solvency position in 2004 was due to extremely high growth in deposits (105%). This situation, has been improving since then on the back of substantial increase in equity mainly attributed to compliance with the MCR under the Basel II accord and for growth purposes. MCB complies with its MCR requirement with Rs 6.2 billion paid-up capital at the end of FY07 only, against that of FY09 required by SBP. Capital adequacy ratio of MCB stands at 17.88% in 2007 (2006: 18.65%) against the SBPs minimum requirement of 8% of the risk-weighted exposure.
Rising equity base of the bank has resulted in the book value of MCB to climb to Rs 87.73 in 2007 (2006: Rs 74.8), enhancing it per party lending limit. Nevertheless, it has been matched by share price increase and in the year 2007 price was 3.8x the BV.
The market price of MCB averaged around Rs 337 per share from a close to 400 per share. This does not reflect any of the managements roles in the lower price rather it shows the poor stock markets condition in the last quarter of FY08. The price of MCBs share has fluctuated between Rs 247 to Rs 367 in the year 2007. The average price of MCB shared hovered around the Rs 43 mark in 2003 but the phenomenal success of the bank over the years has led investors to invest heavily in MCBs shares and as a result, the yearly average for 2006 was Rs 332. This has caused the share of MCB to operate at a high P/E multiple of 13.7 even though the bank recorded a high EPS of 24.3 in 2007. The same trend has continued in the FY08 with a small increase to 13.77 times owing to increase in Average price per share to Rs 337 from Rs 333( FY07). It has to be kept in mind that in last quarter the stock market remained closed so the price does not reflect the market price. It might be misleading to rely on the P/E ratio. In FY07, MCB has also issued GDR due to which it has to maintain strict policies of Accountability and Accountancy, which also plays a key role in investors confidence. On comparison with KSE 100 index we see that it has not outperformed the index yet almost rose to the index level by the end of FY07.
The bank has a very open dividend policy. In FY08, the bank gave Rs 9.834 billion as compared to Rs 4.728 billion in FY07. Its worth mentioning that total after tax profits grew marginally by 0.7% while the bank declared even higher dividends this year. This works as an incentive for the investors and therefore develops confidence in the shares for long term investors. In 2005, it gave a 42.5% cash dividend worth Rs 1.71 billion. A dividend of Rs 3.96 billion was also paid in 2006 (32.6%). However, DPS of the bank has inclined sharply. The bank has announced a final cash dividend of Rs 5.0 per share in FY07. This makes the total payout of Rs 12.5 per share for FY07 vis-à-vis Rs 6.52 adjusted cash dividend declared in FY06.
MCB has generally attracted investors due to its strong fundamentals, which have caused its share price to incline sharply. These cause a falling dividend yield till FY06. However, the yield again rose in FY07 on the back of higher DPS. The bank had retained greater profits in 2006, which promises future growth prospects. This has resulted in low dividend coverage in 2006, as high profits have not been passed onto the investors. The overall payout has increased in FY07, as evident by declining dividend coverage.
BUDGETARY IMPACT
Availability of Government Commercial Paper for maturities of 3 months, 6 months and 1 year, from commercial banks along with 2% upward adjustment and quarterly revision in NSS rates shall further increase the attractiveness of these competing instruments and could significantly enhance competitive pressures and suck liquidity from the banking system. It might result in disintermediation of resources by attracting low cost current and savings deposits. It will drive up yield on short-term saving account deposits. It could also cause shifting of current deposits to savings deposits, especially if yields get very attractive. The burgeoning competition would further result in narrowing spreads and slower deposit growth.
Tax treatment of provisions for classified advances and off balance sheet items, allowing deduction on account of NPLs as per prudential regulation shall induce banks to either improve their recovery process or write-off the NPLs. Though the said change wont impact accounting earnings, it shall increase the cash taxation of banks from next calendar year.
The enhanced rate of FED from 5% to 10% on banks fee-based services is largely neutral as the same shall be passed on to the end-customers. Similarly, WHT on cash withdrawal from banks enhanced from 0.2% to 0.3% is likely to have a neutral impact.
FUTURE OUTLOOK
The global financial crisis has its effects trickling down to our banking systems. The financial sector is facing its lows but still on a comparative basis its better than other neighbouring countries owing to regulations and the role of SBP to take timely corrective measures. Measures include relaxation of CRR and SLR in phases. The banking sectors spread continues its rising trend after witnessing a dip to the level of 6.78% in June 2008 that has being taken as an after effect of minimum profit payment of 5% on saving accounts. The profits show that long term investment in Pakistani banking system will be lucrative, as the assets quality is quite satisfactory.
As against the world-wide trend of low interest rates even zero-rated, Pakistan continued to follow stance of tightening of the monetary policy using the high interest rate as a tool to contain inflationary pressures at the cost of stalled economic activities. It can be noted that SBP already charging lower mark-up rate from exporters against export refinance facility under EFS in order to enable them to become competitive in the international market. The trade and industry however feels in order to ignite a spark in the dull and dreary economic conditions and to come out of the persisting recession the incentive of low interest should have been given to all stakeholders across the board to achieve the desired results.
Some of the market expectations are that current discount rate at 15% is likely to be on a slope by at most 400bps (basis points). In fact, the cut in the interest rate was long overdue as done by other economies elsewhere as well as in the face of stability returned into macro situation under the IMF programme. Trade experts feel that in current times, low cost credit is vital to stimulate the economy and international trade. Pakistan exports have a combination which can be well suited to the current world economic situation, ie, low value added goods have income elasticity and are least likely to be affected by the economic slowdown.
Challenges faced by the economy, in general, and the banking sector, in specific, include restrained liquidity, slowdown of economic activity, and high inflation. Despite these issues, MCB has been able to maintain its profitability and only concern is of higher NPLs, which have to be checked as it has surpassed to alarming levels. Besides this, the bank is equipped to face challenges with its dynamic management and trained workforce.
=========================================================================================================================================
MCB FINANCIALS
=========================================================================================================================================
BALANCE SHEET FY 03 FY 04 FY 05 FY 06 FY 07 FY 08
=========================================================================================================================================
Cash and Balances with treasury banks 24,053,669 23,833,253 23,665,549 32,465,976 34,405,452 39,631,172
Balances with other banks 1,302,682 5,708,323 1,466,045 6,577,017 4,210,982 4,043,100
Lending to Financial Institutions 10,130,450 10,965,297 9,998,828 21,081,800 2,913,274 4,100,079
Investments 128,276,812 67,194,971 69,481,487 63,486,316 123,318,412 96,256,874
Advances 97,200,179 137,317,773 180,322,753 198,239,155 190,524,312 262,510,470
TOTAL ASSETS 272,323,619 259,173,808 298,780,780 342,108,243 382,593,513 443,615,904
Bills Payable 8,396,320 7,566,684 8,536,674 7,089,679 9,109,923 10,551,468
Borrowings from Financial Institutions 32,627,951 7,590,864 27,377,502 23,943,476 23,569,661 22,663,840
Deposits and Other Acounts 211,511,393 221,069,158 229,341,890 257,461,838 287,921,856 330,274,155
sub-ordinated loans 1,599,360 1,598,720 1,598,080 1,597,440 479,232 -
Liabilities against assets subject to financial lease 0 0 - -
TOTAL LIABILITIES 261,214,926 244,620,924 275,046,484 301,263,929 334,464,322 385,179,850
Share Capital 3,065,273 3,371,800 4,265,327 5,463,276 6,282,768 6,282,768
Reserves 4,379,255 5,661,553 9,054,940 24,662,426 30,555,925 36,768,765
Unappropriated Profit(Ret. Earnings) 281,636 165,208 4,990,260 5,530,973 6,081,280 9,193,332
Dividend Paid 818,306 1,545,483 3,122,510 -
INCOME STATEMENT FY 03 FY 04 FY 05 FY 06 FY 07 FY 08
Mark-up / Return/ Interest earned 10,369,994 9,083,863 17,756,232 25,778,061 23,689,445 40,043,824
Mark-up / Return/ Interest expensed 2,932,693 2,057,640 2,781,468 4,525,359 5,750,881 11,560,740
Net Mark-up / Interest Income 7,437,301 7,026,223 14,974,764 21,252,702 17,938,564 28,483,084
Provisions 781,081 279,690 1,144,355 1,182,737 1,572,825 4,019,121
Net mark-up/ return / interest income after provisions 6,656,220 6,746,533 13,830,409 20,069,965 16,365,739 24,463,963
Total non mark-up / return / interest income 0 4,232,988 5,753,669 4,991,416 4,743,692 5,791,440
Total Non mark-up Interest expenses 0 7,435,657 6,565,591 6,560,711 4,728,467 8,387,837
PROFIT BEFORE TAXATION 6,656,220 4,057,716 13,018,487 18,500,670 16,380,964 21,867,566
PROFIT AFTER TAXATION 6,656,220 2,431,532 8,922,415 12,142,398 11,247,380 15,374,600
Basic Earnings per Share 6.61 5.99 17.43 23.4 17.9 24.5
Diluted Earnings per Share 6.61 5.99 17.43 23.4 17.9 24.5
-----------------------------------------------------------------------------------------------------------------------------------------
LIQUIDITY FY 03 FY 04 FY 05 FY 06 FY 07 FY 08
-----------------------------------------------------------------------------------------------------------------------------------------
Earnings Assets to Assets 86.52% 84.87% 85.18% 84.67% 82.73% 81.5%
Yield on earning assets 4.40% 4.31% 5.65% 8.02% 8.25% 10.3%
Advance to deposits 45.96% 54.21% 70.52% 77.76% 71.28% 77.4%
Cost of Funding earning assets 1.24% 0.91% 1.17% 1.67% 1.92% 3.3%
Interest Margin 28.28% 22.65% 15.66% 17.56% 24.28% 7.8%
-----------------------------------------------------------------------------------------------------------------------------------------
SOLVENCY FY 03 FY 04 FY 05 FY 06 FY 07 FY 08
-----------------------------------------------------------------------------------------------------------------------------------------
Equity to Assets 4.08% 4.83% 6.86% 10.08% 12.28% 13.3%
Equity to Deposits 5.25% 5.93% 8.50% 13.27% 16.31% 18.2%
Earning Assets to Deposits 111.39% 97.47% 113.28% 109.84% 110.01% 109.9%
-----------------------------------------------------------------------------------------------------------------------------------------
DIVIDEND PAYOUT FY 03 FY 04 FY 05 FY 06 FY 07 FY 08
-----------------------------------------------------------------------------------------------------------------------------------------
Dividend Coverage 2.1 2.4 4.3 3.2 4.2 1.96
DPS 3.2 2.5 4 7.2 4.3 12.5
Dividend Yield 0.073 0.045 0.036 0.022 0.013
Dividend 983,457 843,000 1,715,000 3,960,000 2,702,776
-----------------------------------------------------------------------------------------------------------------------------------------
EARNING FY 03 FY 04 FY 05 FY 06 FY 07 FY 08
-----------------------------------------------------------------------------------------------------------------------------------------
Return on Assets 2.40% 0.90% 3.00% 3.50% 2.90% 3.5%
Return on Equity 59.90% 16.70% 37.60% 29.70% 23.40% 26.3%
Return on Deposits 3.10% 1.10% 3.90% 4.70% 3.90% 4.7%
-----------------------------------------------------------------------------------------------------------------------------------------
Asset Quality FY 03 FY 04 FY 05 FY 06 FY 07 FY 08
-----------------------------------------------------------------------------------------------------------------------------------------
Non-Performing loans to Advances 11.32% 6.44% 4.66% 4.32% 5.01% 7.0%
Provisions to Non-Performing Loans 0.6 0.8 0.9 1 1 0.59
-----------------------------------------------------------------------------------------------------------------------------------------
MARKET VALUE RATIO FY 03 FY 04 FY 05 FY 06 FY 07 FY 08
-----------------------------------------------------------------------------------------------------------------------------------------
BV 36.24 43.161 55.645 74.762 76.605 93.01
Price-Earnings ratio 6.63 9.21 6.48 13.87 18.33 0%
Market-Book value ratio 1.21 1.278 2.031 4.342 4.282 0%
Average price per share 43.85 55.18 113 324.6 328.05 -
-----------------------------------------------------------------------------------------------------------------------------------------
DEBT MANAGEMENT FY 03 FY 04 FY 05 FY 06 FY 07 FY 08
-----------------------------------------------------------------------------------------------------------------------------------------
Debt to Equity 23.5 19.7 13.6 8.1 7.4 6.45
Debt to Asset 96% 95% 93% 89% 88% 87%
Deposits time Capital 19.04 17.23 11.98 6.85 7.05 5.99
Capital avg of asset and liabilities) 11,108,693.00 12,830,788.50 19,143,590.00 37,569,267.00 40,844,314.00 -
=========================================================================================================================================