IGI INVESTMENT BANK LIMITED

S.M.ABBAS ZAIDI,
(feedback@pgeconomist.com)
Research Analyst
, PAGE
Mar
8 - 14, 2010

IGI Investment Bank Limited was incorporated in 1990 as a joint venture of the Packages Group, American Express Bank and the International Finance Corporation (IFC).

In August 2006, IGI Insurance Limited took over the shareholding of American Express, thus becoming a major shareholder in IGI Investment Bank. IGI Investment Bank is licensed by SECP (Securities and Exchange Commission of Pakistan) to carry out and undertake investment finance services as NBFC. The bank is also listed on the Karachi, Lahore and Islamabad stock exchanges.

Operating in Karachi, Lahore, Islamabad, Faisalabad, Multan and Peshawar, IGI Investment Bank specializes in innovative solutions, drawing on expertise from across the full spectrum of products and services including portfolio management, mutual funds distribution, corporate finance & advisory and certificates of deposit.

IGI Investment Bank deals with a wide variety of clients, including homeowners, small businesses and many respected multinational corporations. Pakistan Credit Rating Agency (PACRA) has awarded IGI Investment Bank's long-term credit rating of 'A' and short-term rating of 'A1'. With this credibility, IGI today stands as the largest investment bank in Pakistan with a paid-up capital of PKR 2.1 billion, being one of the leading mutual funds distributor, as well as a trusted and credible advisor.

FINANCIAL PERFORMANCE

IGI bank has reported an after tax profit of Rs. 46.4 million for the half year ended December 31, 2009 as compared to a loss of Rs. 178.73 million in the corresponding period of last year. These half year results are also reflective of the strategy being adopted to improve the revenues and reduce the costs.

The bank's fund based income decreased from Rs. 424.63 million to Rs. 410.47 million and fund based cost decreased from Rs. 363.57 million to Rs. 323.93 million resultantly showing 41.72% increase in net fund based income. IGI bank has effectively controlled the administrative expenses that decreased 10.78% over the corresponding period of last year. The revenue generated from fee based lines of business i.e. brokerage, corporate finance and advisory & portfolio management decreased from Rs.21.07 million to Rs. 15.40 million due to the prevalent market situation.

FINANCIAL PERFORMANCE

.

DECEMBER 31, 2009

DECEMBER
31, 2008

INCREASE / (DECREASE)

.

RUPEES IN THOUSANDS

%
Income
Fund Based Income 410,471 424,634 (14,163) (3.33)
Fund Based Cost 323,929 363,569 (39,640) (10.90)
Net Fund Based Income 86,542 61,065 25,477 41.72
Fee Based Income 15,399 21,070 (5,671) (26.91)
Administrative & Operating Expenses 90,009 100,888 (10,879) (10.78)
.

DECEMBER
31, 2009

DECEMBER
31, 2008

Profit After Taxation (PAT) 46,403 (178,726)
Earning Per Share (EPS) 0.22 (0.84)

SECTOR ANALYSIS

The period of Jul-Dec 2009 was relatively a better period after the last financial year's crisis during which the global economy as well as national economy witnessed a very slow growth. The non-banking financial institutions in particular faced tremendous liquidity crunch and business meltdown. However, IGI was very fortunate to remain liquid during this crisis and fulfilled all its financial commitments on due dates. Now things are improving slowly & gradually. During the current period IGI investment bank has continued to emphasize on its strategic goals and focused its attention on increasing revenues and decreasing cost of funds as well as freezing administrative costs in order to recover losses incurred last year.

The banking sector in Pakistan is still not immune from potential slowdown due to deterioration in its assets quality and value of investments in equity share because of diverse factors particularly inflation, high interest rates and huge trade deficits. Revival of private sector credit is critical for facilitating increase in investment and capital formation in the economy. It is important that the development of domestic capital markets is accelerated. Not only will it reduce the government's need to borrow from the banking system, a vibrant debt market could help ease credit access concerns, increase efficiency of the banks and help foster savings.

CONCLUSION

IGI Investment Bank's nearly two decades of growth and broad market leadership was fueled by a balanced credit and risk management culture, product and portfolio diversification and specialization, a knowledgeable and experienced corporate management team and a firm focus on meeting client's needs. Multilateral agencies like the International Finance Corporation and the Asian Development Bank have granted long-term credit lines to IGI Investment Bank, confirming the financial strength and reputation of the Bank. IGI Investment Bank was the first investment bank authorized to engage in the business of leasing. It is hoped that 2010 will be a steady year for the financial sector and the national economy. Therefore the bank should explore new business opportunities such as wealth management and should continue to maintain its extra prudent stance towards financial management in order to remain Pakistan's premier investment bank.