Research Analyst
Jan 24 - 30, 2011

Summit Bank limited (SBL) (formerly Arif Habib Bank) is one of the fastest growing commercial banks of the country supported by Suroor Investments. The management intends to double the capital in a short period by injection of fresh capital, which will strengthen the bank further.


DEC 31, 2009
Pre tax loss for the period (551,091) (2,285,586)
Equity 3,752,846 4,065,941
Paid up capital 5,000,000 5,000,000
Deposits 31,136,654 31,307,488
Advances 21,032,810 18,503,815
Investments 11,735,222 12,446,033
Basic and diluted (loss) per share (Rs) (0.63) (4.13)

Summit bank's saving account is the most convenient way to manage the customers' savings in local and foreign currency. The bank's saving account has been designed to provide their customer with easy access as well as a higher rate of profit. The bank has an easy understanding range of home loans with something for everyone. The value and flexibility that Summit bank home finance offers are complemented by exceptionally personalized service. The Summit bank prepaid card is a stored value card that can be used for a wide range of payment purposes at all major merchant outlets across the city. Being equipped with convenient re-loadable features, this multi-purpose prepaid card is tantamount to carrying an electronic purse.

Prepaid cards will be issued against deposit accounts at Summit bank, through which the primary account holders can recharge their balances at any time of the day. The colorful and personalized look of the card makes it an excellent gift item - much more glamorous than impersonal envelopes of cash.

Moreover, while the prepaid card can be used by all household members, it carries special deals and privileges for the younger members, making it especially exciting for children and teenagers.

The bank has a network of 40 branches/sub branches. The branch network covers Sindh, Punjab, Khyber Pakhtunkhwa, Balochistan, and Azad Jammu and Kashmir. The bank plans to open more offices to cover better all four provinces within a short time span.

The bank has an authorized share capital of six billion rupees and paid-up share capital of five billion rupees.

More recently, the bank is making a plan to merge with Mybank Ltd. Mybank has approved the draft scheme of amalgamation with SBL.

The bank said that the board had also approved valuation and swap ratio for the issuance of 0.80 share of SBL for one share Mybank Ltd.

The SBP's approval has mandated Summit Bank to meet any shortfall in minimum capital requirement (MCR) which may arise during or after the merger. The additional funding will help the combined entity maintain its MCR and capital adequacy ratios.

In 2008, the State bank announced new MCR for next five years. In December 2008, the State bank required Rs5 billion, in December 2009 Rs6 billion, December 2010 Rs7 billion, December 2011 Rs8 billion, December 2012 Rs9 billion and December 2013 Rs10 billion.

Additionally, the SBP has also instructed Summit bank to submit a business plan for improving its financial position prior to the amalgamation.

The plan should lay down strategies for improving SBL's risk management function, liquidity management, compliance, credit management system, capital adequacy, level of non-performing assets and internal audits.

Earlier, shareholders of both banks had met in separate extraordinary general meetings in November, 2010 to seek the approval of stakeholders for the intended merger. The two banks had individually filed applications for approval from the central bank in November 2010.

While, during the period under review, the total assets of SBL grew by 8.4 per cent to Rs41.4 billion with advances (net of provisions) showing a growth of 13.7 per cent to Rs21 billion. Despite significant repayment of high cost money to the institutional depositors, with some roll-overs at lower rates, the bank was able to maintain its deposits base up till September 30, 2010. However, the bank was also able to reduce the cost of deposits from 9.9 per cent in December 2009 to 9.5 per cent for the nine months ended September 30, 2010.

During the nine months, the bank incurred a pre-tax loss of Rs551.1 million due to additional provisions of Rs568.9 million made against the NPLs, which were primarily due to the downgrading of existing NPLs and addition of a few more accounts as at September 30, 2010.

The bank has made concentrated efforts for recovery against the NPLs. There has been some success, and the current NPLs stand at Rs4,716.1 million as opposed to Rs5,016.8 million as at December 31, 2009. Despite some additions during the period, administration expenses increased by 19.2 per cent to Rs910.8 million as compared to the corresponding period of last year. This was mainly due to an increase in the branch network from 24 branches last year.


To facilitate the customers and enhance the presence in the market, the bank is planning to introduce asset and liability products with distinguishable features. The bank is looking towards strengthening the collection and recovery efforts to reshape the lending picture positively. The measures have already brought in encouraging results, which will be more evident in the near future when the historical impact will begin to trim down.