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REPORT OF THE
DIRECTORS & CHAIRMAN'S REVIEW The
Directors are pleased to present the Ninth Annual Report together with the
audited accounts of the Bank for the fiscal year ended June 30, 2004.
Dividend The
Directors propose a Cash Dividend of 10% and issue of Bonus Shares @ 10% i.e.
one share for every ten existing shares held. General The
economy continued to gather momentum during the year with further improvement
in the national economic indicators. The GDP growth rate for the year was 6.4
percent against 5.1 percent of last year and foreign exchange reserves exceeded
US $ 12 billion sufficient to cover imports for a year. Total investment rose
to 18.1 percent of GDP against last year's 16.7 percent and fixed investment to
16.4 percent of GDP from 14.8 percent. The private sector investment increased
from 11.2 percent to 11.7 percent of GDP and the public sector investment from
3.6 to 4.6 percent. The foundation for a stable macroeconomic environment,
thus, has been laid on prudent economic and fiscal policies. Company Performance The
Bank has recorded a 19.36% increase in its net profit despite stiffer
competition from commercial banks by widening the range of its activities and
making best use of the opportunities that came its way. The
pre-tax profit of the Bank has increased to Rs. 163.2 million from the previous
year's Rs. 145.2 million and the after tax profit to Rs. 115.8 million from Rs.
97.02 million. The gross revenues from loans and investments decreased from Rs.
313 million to Rs. 224 million because of the lower interest rates. This
decrease however was offset by a corresponding decrease in the borrowing cost
form Rs. 194 million to Rs. 97.5 million. The non-fund based revenues on the
other hand, increased from Rs. 36.34 million to Rs. 53.97 million. The
administrative expenses increased by 19% but the total costs declined by 35%
from the previous year. The
provision for losses on term finances made during the year is Rs. 3.4 million
compared to Rs. 25.5 million made in the previous year. At the balance sheet
date the Bank had a net deficit on revaluation of securities amounting to Rs.
12.9 million for which no provision is required. In view of the volatility of
the money market and stock exchanges, the management considered it appropriate
to set up a market fluctuation reserve to provide a buffer against abrupt price
fluctuations to safeguard the returns to the shareholders. Accordingly, an
amount of Rs. 15 million has been transferred from the current year's profit to
the said reserve. A
soft launch of the equity brokerage division was made on April 15, 2004. Full
fledged operations have yet to commence. This division is expected to go in
full swing during 2004-05 and contribute to the non-fund based revenues of the
Bank. REPORT OF THE
DIRECTORS & CHAIRMAN'S REVIEW Future Outlook The
economic outlook of the country promise higher rate of growth which should
bring more business to the Bank and larger returns to its shareholders. The
business plans are being continuously reviewed to make use of new opportunities
created by improved investment environment. Compliance with Code of Corporate
Governance As
required under the Code of Corporate Governance, the Board of Directors affirms
that: §
The Financial Statements present fairly the
state of affairs of the Company, the results of its operations, Cash Flow
Statement and Statement of Changes in Equity. §
Proper books of accounts of the company
have been maintained. §
Accounting policies as stated in the notes
to the accounts have been consistently applied in the preparation of financial
statements and accounting estimates are based on reasonable and prudent
judgment. §
International Accounting Standards, as
applicable in §
The system of internal control is sound in
design and has been effectively implemented and monitored. §
The company is financially sound and is a
going concern. §
There has been no material departure from
the best practices of corporate governance, as detailed in the listing
regulations. Board Meetings Four
Board meetings were held during 2003-2004. The overseas Directors who were
unable to attend all the meetings constantly followed the progress of the Bank
and the proceeding of the Board: Name of Director Meetings
attended 1.
Mr. Kunwar Idris 3 2.
Mr. Nagaaki Esaki 4 3.
Mr. Humayun Murad 4 4.
Mr. Muhammad Rashid Zahir 3 5.
Mr. S. Shahid Usman 4 6.
Mr. Naim Farooqui 4 REPORT OF THE
DIRECTORS & CHAIRMAN'S REVIEW Summarised Operating and Financial Data for
the last six years
Statement of Investments of Provident Fund The
Bank operates a contributory provident fund scheme covering all regular
employees. The investment balances are as follows:
Directors There
has been no change in the Board of Directors during the year 2004. Staff The
Board wishes to record its appreciation for the ingenuity and hard work of the
staff leading to expanded new business and higher profits. Credit Rating Based
on the results for the year ended June 30, 2003, the Pakistan Credit Rating
Agency (PACRA) has maintained the Company's long-term and short-term entity
ratings at 'A' (Single A) and 'A1' (A One) respectively. Auditors The
auditors, M/s Ford Rhodes Sidat Hyder & Co., Chartered Accountants, retire
and being eligible, offer themselves for reappointment. Pattern of Shareholding The
pattern of shareholding as on June 30, 2004 is shown on page 43. On
Behalf of the Board September
20, 2004 Chairman |
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