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




o Mark up/Interest Earned



o Cost/Return on deposits/borrowing



o Net Mark up Income



o Non Mark up Income



o Operating and Admin. Expenses



o Net Profit/(Loss) before tax and provisions



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.