May 20 -June 02, 2002
Saudi Pak Commercial Bank Limited announced
financial results for the quarter ended March 31, 2002 showing marked
improvement in its operations and key financial indicators since its
take over by the new management. The bank earned net profit of Rs.40.5
million in the said quarter as against the loss of Rs.25.7 million
incurred in the corresponding period of the previous year. Similarly
improvements are evident in the key areas like deposits and advances
of the bank. Originally the bank was incorporated in April 1994 under
the name of Prudential Commercial Bank Limited as a public limited
company and was taken over by Saudi Pak Industrial and Agricultural
Investment Company (Pvt) Limited and associates in September 2001 when
it was renamed as Saudi Pak Commercial Bank Limited.
The reopening of the bank was a big challenge for
the new management as the environment was not conducive because of
September 11 event in the US and its aftermath. The management,
realizing the gravity of the situation, took steps for image building
and succeeded in its smooth and safe reopening.
The new management devoted full attention to
address the non-performing loans portfolio and mobilize fresh
deposits. The non-performing loans were settled/reactivated on case to
case basis. Special efforts were made to attract reputable corporate
clients to strengthen the portfolio. The bank raised substantial
amount of new deposits and rationalized the rates of profit offered on
deposits of different types.
The organizational structure of the bank was
reviewed with a view to strengthening of internal control and improve
quality of service to clients. The number of regions was increased
from two to four and it was decided to relocate some of the branches.
Realizing the importance of IT the new management initiated a
comprehensive programme on revolutionary basis to expedite the process
of computerization in the bank. Plans are under way to bring all
branches of the bank on line through a network. In the first phase,
seven branches have been identified to be brought on line immediately.
The bank made efforts for the recruitment of
professionals and intensive training of existing personnel. The first
phase of the recruitment process was completed for filling key
positions both at the central office and the branches. The process
still continues with a view to meeting the requirement for
professional manpower. The bank is organizing training for its staff
to synergise change.
The new management strengthened the internal
controls and checks. The operations were made transparent and free of
ulterior influences. To install and monitor the system of checks and
balances, an Audit Committee was also constituted.
After introduction of remedial measures, the bank
showed marked improvement in its operations. The deposits surged up by
85% from Rs.3.3 billion as on Sept. 19, 2001 to over Rs.6.1 billion by
the end of April 2002. The pattern of growth of deposits has been
consistent. Advances also increased from Rs. 4.5 billion on September
19, 2001 to Rs.5.4 billion, an increase of 20%. The advances-deposit
ratio improved significantly over the period. The proportion of
performing component in the advances portfolio and the recoveries from
non-performing advances showed healthy trends. Wasteful expenditure
was eliminated and administrative expenses brought under budgetary
control.
The bank has since been carrying on the normal
banking activities. An overview of the key financial indicators of the
bank for the quarter ended March 31, 2002 is presented below:
|
Rs
in 000)
Operating Performance:
For the quarter ended |
|
|
31.03.2002 |
31.03.2001 |
|
o Mark up/Interest Earned |
149,609 |
222,812 |
|
o Cost/Return on
deposits/borrowing |
86,379 |
214,659 |
|
o Net Mark up Income |
63,230 |
8,153 |
|
o Non Mark up Income |
26,545 |
25,129 |
|
o Operating and Admin.
Expenses |
49,245 |
59,026 |
|
o Net Profit/(Loss) before
tax and provisions |
40,530 |
(25,744) |
The turn around in profitability is attributable to
two factors; first increase in gross margin by increasing the volume
and quality of business and secondly decrease in administrative cost
through effective controls.
The most remarkable service rendered by the new
management to the depositors was the payment of profit on deposits
even for the period of moratorium, although it was not obligatory
because the commercial operations of the bank remained suspended
during the period. The amount of profit on deposits for the period of
moratorium amounted to about Rs.100 million. This step enhanced the
confidence of the general public and the corporate sector in the new
management of the bank.
Saudi Pak Bank is poised firmly on the path of
recovery and sustained growth. The bank has successfully completed the
first six months since its takeover by the new management. The new
management has embarked on a landmark journey with the objective of
reshaping the bank on modern lines and converting it into a vibrant
service oriented banking institution. Appropriate strategies have been
formulated to accelerate the pace of its recovery and growth. The
envisaged action plans as part of these strategies include
organizational restructuring, strengthening internal control system,
syndication of loans to cater to the diverse financial needs of
customers by utilizing Saudi Pak network including Saudi Pak
Industrial and Agricultural Investment Company and Saudi Pak Leasing
Company, enhanced role in consumer financing, extensive use of
information technology to improve the quality of service and sustained
marketing campaign.
The bank has successfully passed through survival
stage and its management is making vigorous efforts to put the bank on
the fast track of growth and profitability for the benefit of all its
stake-holders.
|
