The KSE-100 index registered erratic movement during the week. It was not unexpected. The closer monitoring of capital adequacy helped in containing Badla volume as well as rate. The weaker holders were forced to liquidate their position. Not only the volume leaders came under pressure but second tire scrips registered substantial decline. Prices of scrips belonging to cement sector witnessed erosion in value.

During the next week market may move in either direction. However, some analysts forecast for bearish sentiments due to profit taking and enforcement of capital adequacy requirement.

The year ending December 31, 2001 was yet another year of achievements for the bank. The Board of Directors approved 12.5 per cent dividend making the total payout at 25 per cent. The bank posted Rs 4.3 billion operating profit (before provisions/write-offs). Profit before tax came to over Rs 2.1 billion, nearly 60 per cent growth over previous year. Earning per share (EPS) for the year 2001 works out to Rs 4.57 compared to Rs 3.03 for the previous year, an increase by 51 per cent. The year 2001 has been termed a period of economic slow down and declining interest rates. Despite this the bank managed to post better results. The positive news the banking sector was reduction in tax rate.

The biggest IPP of Pakistan has declared 40 per cent interim dividend for the six months period ending December 31, 2001, after receiving the approval from its lenders. This was a pleasant surprise, as equities analysts expected 30 per cent payout, at the best. The turnover for the period was Rs 8.4 billion and operating cost was Rs 4.1 billion, resulting in a gross profit of Rs 4.3 billion. These amounts were lower than previous year figures mainly because of the revised tariff charged under the Settlement Agreement. The working relationship between the biggest IPP and its sole customer have improved considerably and all outstanding issues have been resolved, reportedly. The high dividend payout by the company is a positive sign for investors and a clear demonstration of the improving fundamentals for the country.

Financial results for year ending June 30, 2001 show substantial improvement over the previous year. The modaraba posted Rs 7.3 million profit after tax compared to a loss after tax amounting to Rs 15.2 million for the year 2000. Revenue increased from Rs 95.8 million to Rs 115.5 million. Operating and financial costs also increased from Rs 92.4 million to Rs 95.8 million. The modaraba also made lower provision against lease loss, a reduction from Rs 10.7 million to Rs 4.8 million. Taking the advantage of higher profit, lease receivables amounting to Rs 6.88 million were also written off. The modaraba decided to distribute 5 per cent dividend among shareholders. No dividend was paid for the year 2000.

Operating income of the modaraba for the six months period ending December 31, 2001 increased but the advantage was eroded due to increase in operating expenses and financial charges. Operating income increased from Rs 487.9 million to Rs 517.7 million. Operating expenses went up from Rs 355 million to Rs 380 million and financial charges grew from Rs 54.73 million to 61.47 million. First Grindlays Modaraba is among the top few modarabas which has been declaring high dividend among its certificate holders.

The leasing company, a Crescent Group joint venture with Commonwealth Development Corporation, has posted an operating profit, before tax and provisions, amounting to Rs 29.33 million for the period ended December 31, 2001. Net profit increased by 11.38 per cent to Rs 20.216 million compared to Rs 18.149 million during corresponding period of year 2000. Creslease progress can be attributed to effective risk management strategy and diversified portfolio. The company is expanding its exposure in textile sector with emphasis on greater value addition. The focus on consumer and vehicle leases continues with an investment at 28 per cent of the net investment in these two areas. The company has a balance sheet footing of Rs 1.5 billion with an annualized earning per share (EPS) of Rs 2.01.

The investment bank has released its 18 months financial results for the period ending December 31, 2000 posting Rs 239.96 million loss after tax. While income amounted to Rs 203 million, expenditures exceeded Rs 335 million resulting in Rs 131.89 million loss before other provision and tax, provision of Rs 102 million added to loss. As at December 31, 2000 accumulated losses were above Rs 403 million. The financial results talks a lot about the way the investment bank is being managed. The regulators must respond to the prevailing situation. Not only that accumulated losses have completely eroded the capital but accounts are also being released very late.