Monday August 31, 2009

KARACHI - NIB Bank and Bank Alfalah have announced their financial results for the first half of 2009 (1HCY09), whereas, National Bank of Pakistan is expected to its results for 1HCY09 on Saturday (today). According to the results, NIB has declared consolidated profit before tax of Rs1.5b, while Bank Alfalah posted a significant decline of 39pc in its net earnings. On the other hand, NBP is likely to post profit after tax (PAT) of Rs7.1b (EPS Rs6.60). For the first half of 2009, NIB Bank earned a consolidated profit before tax of Rs1.5b and a consolidated profit after tax of Rs 1.04b. On a standalone basis, profit before tax was Rs1b and profit after tax was Rs 580m. Mark up earned by NIB Bank in the first six months of 2009 at Rs 9.4b was Rs 2.2b; higher than for the first six months of 2008. This was a result of a growth in the loan book of the bank as well higher loan yields. The bank also achieved an appreciable reduction in its cost of funds for the current financial year, which helped contain the increase in mark up expense to Rs 1.9b. Fee income in the first half of 2009 also increased by 9pc over the first half of 2008. While recording a strong growth in its balance sheet, the bank succeeded in reducing administrative expenses by 9pc in the first half of 2009 compared to the first half of 2008.

This was achieved despite high inflation and rising utilities costs, given the very strong focus placed by the Bank on improving operating efficiency. During the second quarter of 2009, the Bank commenced the rollout of its new Core Banking with 77 branches already converted and a plan to complete the migration to the new banking platform before the end of 2009. Similarly, Bank Al-Falah has announced its 1H2009 results. The bank posted a significant decline of 39pc in its net earnings at Rs1.1b (EPS Rs0.82) versus Rs1.8b (EPS Rs1.35) in the similar period of last year. Both net interest income (NII) and non-interest income remained lower at 1pc and 5pc respectively. Interestingly, non-interest income was higher than the expectations due to above anticipated income from dealing in foreign currency and capital gain income. Moreover, the bank s Net Interest Income (NII), during 1H2009 stood at Rs5.3b (1pc lower on YoY basis). In 2Q2009, NII dropped by 5pc over the same quarter of last year at Rs2.5b; mainly due to squeezing margins. The decline in NII is also evident on sequential quarter basis and 2Q2009 interest based income is 6pc lower than 1Q2009. The bank s non interest income also dropped by 5pc to Rs 2.7b. Decline is largely attributable to lower fees, commission and brokerage income; however, this is 15pc higher than our estimate of Rs 2.4b. In our opinion, the deviation in estimate is primarily due to higher income from dealing in foreign currencies and above than expected realized gain on sale of securities , said Kamran Rehmani at FCEL. Moreover, one of the leading blue-chip banks of Pakistan economy, National Bank of Pakistan Ltd (NBP) is scheduled to announce its results for 1HCY09 on Saturday (today) and the Board of Directors of the bank will be meeting today. NBP is expected to post a PAT of Rs7,105m (EPS Rs6.60), translating into a decline of 10pc on YoY basis.

Despite significant increase in fund cost, we expect bank s NII to grow by 6pc YoY on the back of 38pc YoY increase in interest income , said analyst Abdul Shakur at InvestCap Research. On QoQ basis, the bottomline is expected to decline by 31pc YoY to Rs2.89b (EPS Rs2.69) in 2QCY09. Provisions, which remain the concerning factor for NBP as being the public sector entity, are expected to increase by 12pc YoY with further deterioration in the asset quality. NPLs are expected to increase by 20pc in 1HCY09 (NPLs to loan ratio expected at 14.1pc). Moreover, provision for Dewan group would further suppress bank s bottomline as estimated exposure of Rs5bn of Dewan s group is expected to be provided going forward. Due to lower dividends and equity gains, the non interest income of the bank is expected to remain dry, to decline by 2pc YoY. Admin charges are expected to grow by 27pc YoY resulting in inflating cost to income ratio to 42pc compared to 30pc in 1QCY09. No cash of stock dividend with the result is expected according to the experts.

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Monday, August 31, 2009

SINGAPORE (AFP) - Assets held by the world s 100 biggest Islamic banks grew 66 percent in 2008 from the previous year despite the financial turmoil that clobbered mainstream lenders, a report said. The top 100 Islamic banks held assets totalling 580 billion US dollars last year, up from $350b in 2007, according to an annual report by The Asian Banker, a magazine for financial professionals. In the same period, Asia s 300 biggest banks saw their assets rise by a much slower 13.4 percent, it said. A financial storm sparked by a crisis in the US housing market swept across the world late last year. Its impact spilled over into the general economy and sent several countries into recession. Prominent US investment bank Lehman Brothers collapsed into bankruptcy, while several other major Western banks suffered massive losses. Despite the financial turmoil in late 2008 that crippled so many large Western institutions, Islamic banks have continued to grow in prominence and size, the magazine said in a press statement. Emmanuel Daniel, the magazine s president and chief executive, added: Islamic finance has seen an incredible surge in popularity, based on stronger regulatory regimes and a better international understanding of its dynamics.

Islamic banking fuses principles of sharia or Islamic law and modern banking. Islamic funds are banned from investing in cos associated with tobacco, alcohol or gambling. Iranian banks were the biggest players in the global Islamic banking sector, holding seven out of the top 10 rankings and 12 out of the 100, but Saudi Arabian lenders were more profitable, the report said. Saudi Arabia s Al Rajhi Bank had the highest net income of $1.74b, which is more than five times the earnings of Bank Tejarat, Iran s most profitable lender. Iranian banks also took up 40 percent of the total assets of the top 100 banks, with the UAE, Malaysia, Saudi Arabia and Kuwait accounting for a combined 40pc. Smaller banks in 10 other markets accounted for the rest. Outside of the Middle East, two Islamic banks in Britain made it to the top 100, according to the report. Asian and North African banks are still very small compared with the Middle Eastern players, it said, adding that only Malaysian and Bangladeshi Islamic banks have a significant amount of assets . Indonesia, the world s most populous Muslim nation, had only two banks on the list, Pakistan had three, while regional financial centre Singapore and the Malay Islamic kingdom of Brunei had one each.

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Wednesday, June 17, 2009

KARACHI: Atlas Bank has to finalise a merger with Silkbank by July 31 to shore up its capital which currently falls short of the central bank’s minimum capital requirement for banks, people involved in the deal said.

In a notice sent to the Karachi Stock Exchange on Tuesday, Atlas reaffirmed that the merger is on track and the swap ratio in the new entity will be discussed by its board of directors and shareholders once due diligence is completed. It did not say when the matter will be put before the board of directors. Atlas started talks with Silkbank, formerly Saudi Pak Commercial Bank, after its previous deal to merge with KASB Bank collapsed earlier in the year.

Both Atlas and KASB needed to raise their equity to at least Rs5 billion by the end of 2008. This was one of the main reasons behind the merger. While KASB succeeded by merging with its sister concern KASB Capital, a large part of Atlas’ equity was wiped off by its accumulated losses. By the end of first quarter in March, Atlas had equity of Rs3.4 billion.

Silkbank, which was acquired by a consortium of IFC, Bank Muscat, Nomura International and Sinthos Capital last year, also faces the dilemma of equity falling short of SBP’s minimum capital requirement (MCR) for 2008. At the end of first quarter of 2009, it had equity of Rs4bn.

The merger between Atlas and Silkbank will allow both banks to raise capital to over Rs6bn, which all banks must have by December 31, 2009.

Asked if a successful merger is possible, a senior executive involved in the deal said: “We can only hope that it happens because it is in the best interest of both the entities.” Merger of these two smaller banks would result in creation of a larger entity with a wider reach and sufficient capital to guarantee security to the depositors The SBP has been pushing for mergers and acquisitions to consolidate the banking industry. Another such deal, which included takeover of Arif Habib Bank by a consortium led Hussain Lawai is still not finalized.

Lawai’s consortium was supposed to increase authorized capital of the bank to Rs25 billion. Entire transaction was expected to be completed by Feb 28, 2009. After seeing that even the global banking system was in crisis, the SBP revised the MCR for banks in Pakistan.

Now banks are required to have MCR of Rs6bn by end 2009 and then they have to increase it by Rs1bn each year till 2013.


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