!logo.jpg (6328 bytes) . .


Trade opportunities
Investment opportunities
Capital market
Macro Economy



1999    1998    1997

Company's Annual
Report and Earnings 
Industry and Economy
Pak Development

Subscribe Now
Why Advertise
Guest Book
Feed Back
Contact Us 




bar.jpg (6247 bytes)

1_popup_home.gif (1391 bytes) market.gif (6606 bytes)


  1. The KASB review
  2. Finex week

An exclusive weekly Stock Market report for PAGE by Khadim Ali Shah Bukhari & Co.

Updated on August 09, 1999

Market Update

True to our expectations the KSE 100 witnessed a slight drop over the week. Closing at 1207.89, the KSE 100 went down by 43.9 points translating into a drop of 3.51 percent over the week. This change in fortunes was triggered by profit taking setting in. Our strategy of exiting at attractive levels and buying at dips again proved itself with the KSE 100 sentiments actually echoing this market strategy.

Hubco continued to dominate investor interest accounting for the better part of total market turnover. This increased interest which has spilled over from last week was rejuvenated with the arrival of the Chairman of Hub Power Company and the ensuing dialogue between Hubco and WAPDA.

With volumes still at relatively comfortable levels, the KSE 100 is likely to continue to face limited turbulence once profit taking starts to settle in. Due to this phenomena the KSE 100 is likely to continue to flounder at current levels with weakness causing it to slip further a peg or two.

For the coming week the KSE 100 is likely to see initial support at 1200 levels while initial resistance likely to appear around the 1220 levels with major resistance will be at the 1280 levels.

Sector Review

Banking Results: Faysal Commercial Bank Interim Results

We have focused repeatedly on banking in the light of changes introduced after the nuclear tests last May. The 2nd half of 1998 was a period of utter chaos, and hence was not suitable for judging any changes to the operating patterns of banks in Pakistan. This does not apply to the 1st half of 1999, and it will be useful to take a close look at interim results announced by banks to get a better idea of where the banking sector is headed. Faysal Bank, being one of the larger banks in the private sector provides a good idea of what to expect for banks that are not in prime health. A quick summary of interim results follows:

As is to be expected in an environment of falling interest rates and increasing competition for Rupee deposits, revenue for the bank have taken a hit. As a result, yields have declined as liquidity has increased with interest income remaining flat as a result. Stiff competition for Rupee funds forced cost of funds higher, putting pressure on gross spreads. Despite a difficult operating environment, the bank managed to maintain fund based income. In line with tough operating conditions, a tight check on operating costs shows up in a considerable drop in administrative expenses. We expect these trends to be present in results for other banks as welt Initially, spreads will be squeezed as yields fall faster than cost of funds, leading to a margin squeeze. Later, spreads are likely to recover as funding costs also decline, although overall margins are not expected to recover completely. Hence, banks with the capacity to grow the asset side of the balance sheet in the future will be best positioned to enhance profitability. Banks with existing problems in their loan books have little or no chance of earning meaningful returns for investors. Sadly, Faysal still falls in the category of banks with loan book problems, essentially compromising the advantage of a large equity base. We remain SELLers of Faysal for now.


Rs mn 1HY 99 1HY 98 2HY 98 y-o-y h-o-h
Mark Up Income 1,122 1,163 1,041 -3.5 7.8
Less: Cost of Funds 1,062 1,014 1,067 4.8 -0.4
Net Interest Income 60 149 -26 -59.9 327.7
Fees, Comm., & Brokerage 50 71 69 -29.2 -27.7
Profit from Investments 130 166 171 -21.6 -23.8
Other Operating Income 137 82 159 66.4 -13.6
Total Fee Based Income 317 319 399 -0.6 -20.4
Total Income 377 468 372 -19.4 1.3

Operating Expenses:

Loan Loss & Other Provisions 58 0 1,056 n/a -94.5
Administrative Expenses -170 208 221 -18.0 -22.9
Other Income 4 2 5 134.6 -21.2
Profit Before Tax 153 262 -899 -41.5 -117.0
Taxation 73 152 523 -52.1 -113.9
Profit After Tax 81 111 -377 -27.1 -121.4