Consolidating its operations
and focusing on selective clientele
By SHABBIR H. KAZMI
May 20 -June 02, 2002
Notwithstanding the impact of September 11, 2001
incident and subsequent events, the Bank's profit after tax of Rs 231
million for the year ending December 31, 2001, was a one eighty degree
turn from loss after tax of Rs 157 million for the previous year. This
is particularly important since the sector went through a significant
reduction in mark-up and the resultant erosion of margins.
Etrat Rizvi was elected Chairman of the Board of
Directors in late year 2000. Under his able guidance the emphasis has
been on financial discipline with a focus on expense control and
financial risk. One of the reasons for posting loss last year was the
provision of Rs 310 million against non-performing advances. By making
such a provision, the Bank has cleaned its slate and the step would
augur well in the future performance.
One of the key factors responsible for the turnaround
was the control on mark-up/return/interest paid. Though there was a
marginal decline in mark-up/return/interest earned, reduction in expense
improved the net income from Rs 233.76 million to Rs 327.45 million. Non
mark-up/interest income also increased from Rs 129.35 million to Rs
149.32 million. All these efforts resulted in a complete turnaround from
loss before tax of Rs 156 million for the previous year to profit before
tax of about Rs 163 million for the year under review.
Deposits increased from Rs 12 billion to Rs 14
billion, a growth of 15 per cent. Advances increased by 21 per cent,
from Rs 5.7 billion to Rs 6.9 billion. There was 45 per cent increase in
business handled by international banking division, a jump from Rs 1.123
billion to Rs 1.629 billion. Total assets of the Bank also grew by 12
per cent, from Rs 15.356 billion to Rs 17.228 billion.
The Bank specializes in providing finances for small
and micro enterprises particularly in the NWFP province. The major
sectors covered by the Bank are agriculture, auto engineering,
furniture, leather, textile, tourism and trading. It is interesting to
note that the Bank enjoys credit lines from various international donors
for financing of small and micro enterprises.
The first ever facility to the Bank was extended by
International Finance Corporation (IFC) amounting to US$ 10 million.
However on September 15, 1998 the facility was cancelled with an
unutilized amount of US$ 8 million. The Bank was granted DM 0.878
million facility by DEG of Germany. The facility was fully availed upto
December 31, 1999. The KfW of Germany provided DM 5 million facility
which was fully availed upto December 31, 1999. A loan from Asian
Development Bank (ADB) has been obtained through the Government of NWFP
as a part of Barrani Area Development project. The total amount of
facility is US$ one million against which over Rs 50 million have been
received from the GoP upto December 31, 2001. The loan from IFAD has
been received through the Government of NWFP as part of the Dir Area
Support Project amounting to US$ 1.11 million. Rs 27.9 million have been
received from the GoP upto December 31, 2001. Another loan from ADB has
been obtained as part of the Malakand Rural Development Project. The
total amount of facility is in various currencies equivalent to Special
Drawing Rights against which Rs 14.72 million were received.
The other highlights of Bank's achievements are:
obtaining the membership of SWIFT for expeditious settlement of cross
border transactions and meeting Rs 750 million paid-up capital
requirement, with the support and release of Rs 250 million by the
Government of NWFP.
The bank is pursuing the policy of consolidation and
innovation in the existing network of 29 branches. The bank plans to
open another 12 new branches during the year 2002. The Bank has also
upgraded its computer network by installing the new software. The work
for introduction of on-line banking and ATMs at selected branches
covering important cities is in progress and efforts are being made to
achieve this as soon as possible.
The pledge of US$ 4.5 million in Tokyo conference for
reconstruction in Afghanistan is expected to generate business
opportunities for the NWFP and the Bank. The Bank is pursuing the
recently communicated NOC of the central bank for opening branches in
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