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Consolidating its operations and focusing on selective clientele

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 Afghanistan.

(Rs in millions) (Rs in millions) (Rs in millions)
1999 10,307 1999 5,760 1999 13,200
2000 12,332 2000 5,746 2000 15,356
2001 14,122 2001 6,925 2001 17,228