SAUDI PAK BANK BEST PERFORMANCE

The performance of the Bank during the first year under the new management is certainly impressive

By SYED M. ASLAM
Nov 18 - 24, 2002

Saudi Pak Commercial Bank Limited continued to register consistent growth during the third quarter ended September 30, which also marked the completion of the first year of the Bank's operations under the new management.

The new management has helped the Bank to make a turnaround from the near-collapse former Prudential Bank Limited which made the government to slap a moratorium on March 19, 2001 on the recommendation of the State Bank of Pakistan. The Bank has come a long way in last twenty months when the SBP also replaced the unscrupulous and unprofessional management and also monitored the Bank's operations. The business activities of the Bank remained suspended for whole six months of the moratorium which ended on September 15, 2001. On the same day Prudential was acquired by Saudi Pak Industrial and Agricultural Company (Pvt) Limited. The Company, a joint venture of Kingdom of Saudi Arabia and the Government of Pakistan, and was set up in 1981 and has since been engaged in the financing of industrial and agro-based projects in Pakistan.

The Bank has bettered its financial performance and continued to post consistent growth for the quarter ended September 30, 2002 and is on the road to total recovery if the results are any indication. The financial result shows that the bank earned pre-tax profit of Rs 11.946 million during the quarter under review compared to pre-tax loss of Rs 1.577 million during the comparative quarter last year.

Though the bank posted after-tax loss of Rs 13.763 million for the quarter under review nine times more than the Rs 1.577 million after-tax loss it suffered during the comparative quarter last year it managed to improve its overall performance. For the nine months ended September 30, the Bank managed to earn a pre-tax profit of Rs 14.070 million compared to pre-tax loss of Rs 64.621 million during the comparative period last year. It also earned a post-tax profit of Rs 48.566 million for the nine months ended September 30 compared to post-tax loss of Rs 66.421 million in the comparative period last year.

During the nine months ended September 30, 2002, the deposit base of Saudi Pak Bank increased from Rs 4,816 million to Rs 8,213 million a growth of 70.5 per cent. The advances increased by Rs 2,642 million or 52.8 per cent from Rs 5,000 million to Rs 7,642 million, including lending to financial institutions which increased by 57.7 per cent from Rs 2,787 million to Rs 4,397 million.

In addition, income from foreign currency dealings has grown from a loss of Rs 50.3 million to a gain of Rs 23.3 million during the period under review. This has resulted in pushing the non-interest income to Rs 124.7 million compared to a loss of Rs 17 million last year. This, in turn, has enabled the Bank to earn a pre-tax profit of Rs 14.070 million for nine months ended September 30 this year compared to a net loss of Rs 64.621 million during the comparative period last year.

The Bank has also made rigorous efforts to recover its classified loan portfolio the non-performing portfolio has shown improvement of Rs 215 million for the third quarter ended September 30 over December 31 last year. The classified portfolio has also improved to a small extent amounting to Rs 56 million due to improved valuation of certain mortgaged propeties.

The Bank has been successful in restoring the public confidence and strengthening its operations and it has helped it introduce a number of consumer services and products nationwide. It launched a Car financing scheme last month. The Bank also intends to launch a scheme to finance purchase of two-wheelers and plans to introduce marriage and educational loans are also in the pipeline.

The Bank also plans to extend its branch network from existing twenty to twenty-eight for which the State Bank of Pakistan has already given an approval. While eight of the Bank's branches already facilitate on-line transactions, the Bank is in the process of implementing centralized on-line banking facility and by June next year expects to have full online operations with nationwide ATM facility at all its branches. The Bank will also install its own ATMs next year in selected branches nationwide and envisages initiating Islamic Banking Operations at one of its branches this year.

Saudi Pak Commercial Bank has come a long way to restore the confidence of the depositors starting with the payment of profit to all eligible deposits for the entire period of the moratorium which lasted for full nine months last year. The move earned the Bank the confidence of the account holders as the new management decided to pay the profit totaling Rs 93 million although it was not obligatory because the commercial operations of the Bank remained suspended during the moratorium.

The performance of the Bank during the first year under the new management is certainly impressive.