| Crescent Investment Bank Limited |
|
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|
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|
(Annual Report 1996) |
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|
Contents |
|
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|
| Company
Information |
|
2 |
|
| Board
of Directors |
|
3 |
|
| Director
Report and Chief Executive's Review |
4 |
|
| Form '34' |
|
|
9 |
|
| Auditor's
Report to the Members |
|
11 |
|
| Balance
Sheet |
|
12 |
|
| Profit
and Loss Account |
|
14 |
|
| Statement
of Sources and Application of Funds |
15 |
|
| Notes
to the Accounts |
|
17 |
|
| Investor
Information |
|
46 |
|
| Notice
of Annual General Meeting |
|
47 |
|
| Form
of Proxy |
|
49 |
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|
Company Information |
|
|
| Company
Secretaries |
|
| Zaheer
A. Shaikh |
|
| Rashid
Sadiq |
|
|
|
| Auditors |
|
| Riaz
Ahmad & Company |
|
| Chartered
Accountants |
|
|
|
| Legal
Advisors |
|
| Hassan
& Hassan Advocates |
|
|
| Bankers |
|
| Bank
of America NT & SA |
|
| CitiBank
N. A. |
|
| Faysal
Bank Limited |
|
| Habib
American Bank |
|
| Habib
Bank A. G. Zurich |
|
| Habib
Credit and Exchange Bank Limited |
|
| Industrial
Development Bank of Pakistan |
|
| Metropolitan
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| National
Development Finance Corporation |
|
| Societe
Generale - The French and International Bank |
|
| Soneri
Bank Limited |
|
| Standard
Chartered Bank PLC |
|
| The
Bank of Punjab |
|
|
|
| Registered
Office |
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| 83-Babar
Block, New Garden Town, Lahore. |
|
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|
Board of Directors |
|
| Muhammad
Rafi |
|
| Chairman |
|
|
|
|
| Nessar
Ahmed |
|
| Chief
Executive |
|
|
|
| Altaf
M. Saleem |
|
| Humayun
Mazhar |
|
| M.
Z. Hasan |
|
|
|
| Muhammad
Asif |
|
| Tariq
Shafi |
|
| Zahid
Bashir |
|
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|
Director's Report and |
|
|
Chief Executive's review |
|
| It
is our pleasure to present to you the seventh Annual Report of Crescent
Investment Bank Limited (CresBank). |
| The
report covers the eighteen months period ended June 30, 1996. The accounting
year was changed |
|
| in
view of the change in the income year-end brought about by an amendment in
the Income Tax Ordinance 1979. |
| A
brief review of the national economy during 1995-96 and of our operations is
given below. |
|
|
| The
economic indicators for 1995-96 reveal an improved performance by the
Pakistan economy. |
|
| The
GDP growth rate increased from 4.4 percent in 1994-95 to 6.1 percent in
1995-96. This GDP |
|
| growth
was a result of the growth in the commodity producing sector of 6.4 percent
(1994-95 4.7 |
|
| percent)
and the services sector of 5.8 percent (1994-95 4.2 percent). The
agricultural sector grew by |
|
| 6.7
percent (1994-95 5.9 percent) primarily due to a significant improvement in
the cotton crop and |
|
| record
production figures for rice and wheat. The manufacturing sector recorded a
growth of 4.8 |
|
| percent
(1994-95 2.91 percent) mainly due to improved productivity in the large scale
industry. This |
|
| was
due to increased industrial investment, provision of credit, reduction in
import tariffs and |
|
| liberalization
of imports of raw materials and capital goods. |
|
|
|
| Monetary
policy measures during 1995-96 met with relative success when compared with
last year. |
|
| The
annualized inflation rate depicted by the Consumer Price Index (CPI) was
estimated to be 10.5 |
|
| percent
as compared to 13 percent in 1994-95. Monetary expansion for 1995-96 was
projected at |
|
| around
12 percent as against 16.6 percent last year. Due to excessive government
borrowings domestic |
|
| credit
expanded by 19.6 percent compared with an expansion of 5.9 percent in the
same period last |
|
| year.
However, a sharp decline in the net foreign assets of the banking system
neutralized this |
|
| expansionary
impact. As a result of fiscal reforms, the budget deficit for 1995-96 was
curtailed to a |
|
| level
of around 5 percent of the GDP from 5.5 percent in 1994-95. |
|
|
|
| The
trade gap as at 1996 June end, amounted to over US Dollars 3 billion as a
result of increase in |
|
| imports
and fall in exports despite devaluation of the Rupee and offering of
incentive packages for |
|
| exports. |
|
|
|
| The
Capital Market witnessed bearish sentiments during the eighteen months
period, ended June |
|
| 30,
1996. The KSE 100 index declined from 2049 points as on December 29, 1994 to
1703 points as |
|
| on
June 30, 1996. Due to the depressed market conditions floatation of mutual
funds aggregating |
|
| approximately
Rs. 1.7 billion, which would have provided a fillip to the market, have been
put on |
|
| the
hold. Aggregate market capitalization as at June 30, 1996 was Rs. 371.32
billion as against Rs. |
|
| 340.87
billion as on December 29, 1994. The increase is due to capitalization added
as a result of |
|
| new
issues during the period. |
|
|
|
| During
1995-96, the State Bank of Pakistan (SBP) introduced certain regulatory
measures aimed at |
|
| curtailing
the activities of NBFIs (including Investment Banks). The significant ones
aim at restricting |
| the
minimum maturity period of foreign currency deposits to one year from three
months earlier; |
|
| prohibition
of government securities Repo transactions with commercial banks, enhancement
of |
|
| the
liquidity ratio and a new cash reserve requirement. SBP has however allowed a
phased |
|
| implementation
of the new rules related to maturity of foreign currency deposits and Repo |
|
| transactions. |
|
|
|
|
| OBJECTIVES
SET FOR THE PERIOD |
|
|
|
| Membership
of the Islamabad Stock Exchange (ISE) has been obtained. Office space for the
brokerage |
|
| division
has been acquired in the ISE premises and hiring of personnel is now in
process; |
|
|
|
| An
Advisory Services division is fully operational. The division is handling
corporate advisory, ~ |
|
| and
long-term local and foreign currency project financing; |
|
|
|
| The
Custodial and Trusteeship services department is now a significant
contributor to |
|
| revenues; |
|
|
|
| Floatation
of the Mutual Fund planned for 1995 has been deferred till improvement of the
market |
|
| conditions; |
|
|
|
| A
foreign currency credit line of US Dollars 20 million is now available to |
|
| International
Finance Corporation (IFC) for financing projects in the private |
|
| CresBank
is also an eligible PFI (Participating Financial Institution) in the Asian |
|
| (US
Dollars 100 million) and World Bank (US Dollars 200 million) lines for
financial sector |
|
| and
intermediation. |
|
|
| In
view of the adverse industry situation, the financing activities during the
period was mostly |
|
| done
against readily realizable/marketable securities. |
|
|
|
| The
issue of allowing provisions against loans and advances as a tax deductible
expense is still |
|
| pending
with the concerned authorities. |
|
|
|
| OPERATING
PERFORMANCE |
|
| Operating
performance comparisons are made for the eighteen months of 1995-96 (period
ended |
|
| June
30) and twelve months of 1994 (period ended December 31). |
|
|
| As
at June 30, 1996, CresBank had achieved a net worth base of Rs. 1,022
million, despite the fact |
|
| that
there was an erosion in equity as a result of stating equity investments at
their realizable value. |
|
|
| FINANCING
ACTIVITIES |
|
| Our
efforts during the year have again been directed towards maintaining a high
quality-low risk |
|
| portfolio.
Outstanding position of financial assistance as on June 30, 1996 is given
below:- |
|
|
|
|
1995-96 |
|
1994 |
|
Growth |
|
|
|
Rs. in million |
Rs. in million |
Over 1994 % |
|
|
|
|
|
| Funds
Based: |
|
6,293 |
4,609 |
|
36.5 |
|
| Commercial
Paper |
|
6,042 |
4,460 |
|
35.5 |
|
| Margin
Finance/Others |
251 |
149 |
|
68.5 |
|
|
|
|
|
|
| Non-Funds
Based: |
|
1,492 |
1,361 |
|
9.6 |
|
| Guarantees/Acceptances,
etc |
1,297 |
1,257 |
|
3.2 |
|
| Underwriting
Commitments |
195 |
104 |
|
87.5 |
|
|
|
|
|
| STOCK
MARKET OPERATIONS/INVESTMENTS |
|
| Keeping
in view the conditions in the capital market, performance of CresBank's
investment portfolio |
|
| has
been satisfactory with earnings through dividends/capital gains of Rs. 181.23
million as against |
|
| Rs.
157.13 million in 1994. As at June 30, 1996 there was a Rs. 165.25 million
deficit between the |
|
| aggregate
cost and market value of listed equities/certificates. This diminution is
considered to be |
|
| temporary
and expected to reverse in the near future. As a measure of prudence, the
carrying value |
|
| of
the investments have been reduced to their market value by making provisions.
However, the |
|
| quality
of our portfolio can be judged from the fact that the break-up value of most
of our quoted |
|
| shares/certificates
is greater than their current market value, and there is likely to be a
significant |
|
| rebound
once the economic outlook improves. |
|
|
|
| RESOURCE
MOBILIZATION |
|
|
| Deposits:
Under its foreign currency deposits scheme, CresBank has outstanding deposits
of around |
|
| US
Dollars 200 million (1994 - US Dollars 181 million) as at June 30, 1996. |
|
|
| Total
deposits as at June 30, 1996 were Rs. 7,488 million as against Rs. 5,893
million as at year-end |
|
| 1994
which is an increase of 27.1 percent. Composition of CresBank's deposits
portfolio as at June |
|
| 30,
1996, is shown in figure. |
|
|
| Borrowings: In addition to the existing ADB line (unutilized US Dollars 5.6
million), a foreign |
|
| currency
credit line of US Dollars 20 million is now also available to CresBank from
the International |
|
| Finance
Corporation (IFC). CresBank is also an eligible PFI (Participating Financial
Institution) in |
|
| the
Asian Development Bank (US Dollars 100 million) and World Bank (US Dollars
200 million) |
|
| lines.
In addition, CresBank also has at its disposal standby local currency credit
lines of Rs.170 |
|
| million. |
|
|
|
| BALANCE
SHEET & OPERATING RESULTS |
|
| Total
assets of the Bank increased by Rs. 1,646 million (23 percent) during 1995-96
to Rs. 8,852 milti6n. |
| 10
percent of this growth was utilized in shares investment and 89 percent in
financing and other |
|
| activities
(Commercial Paper etc). |
|
|
|
| The
Bank earned an after tax profit of Rs. 78.32 million during the period
(eighteen months) as |
|
| against
an after tax profit of Rs. 221.47 million last year. The reduction in the
after-tax profit is |
|
| mainly
due to a Rs. 165.25 million provision for diminution in value of investments
(1994 - Nil). |
|
| Composition
of the profit (after tax) and appropriation thereof is as follows: |
|
|
|
|
|
(Rupees in million) |
|
|
1995-96 |
1994 |
|
|
|
|
(Eighteen |
(Twelve |
|
|
|
|
months) |
months) |
|
|
|
|
|
|
| Profit/discount
income |
|
1,527.72 |
840.84 |
|
| Dividends/Capital
Gains |
|
181.23 |
157.13 |
|
| Fee,
commission etc. |
|
|
37.97 |
28.54 |
|
|
|
|
|
| TOTAL
INCOME |
|
|
1,746.92 |
1,026.51 |
|
|
|
|
| Profit
paid / other charges |
|
(1,379.98) |
(712.35) |
|
|
|
|
|
| GROSS
PROFIT |
|
|
366.94 |
314.16 |
|
|
|
| Administrative
& Other Operating expenses |
|
(93.82) |
(53.49) |
|
|
|
-------- |
-------- |
|
| PROFIT
BEFORE PROVISIONS FOR DIMINUTION |
|
| IN
VALUE OF INVESTMENTS AND TAXATION |
|
273.12 |
260.67 |
|
|
| Provision
for diminution in value of investments |
(165.25) |
- |
|
|
|
-------- |
-------- |
|
|
| PROFIT
BEFORE TAXATION |
|
107.87 |
260.67 |
|
| Provision
for taxation |
|
(29.55) |
(39.20) |
|
|
|
-------- |
-------- |
|
| PROFIT
AFTER TAXATION |
|
78.32 |
221.47 |
|
|
|
| Unappropriated
profit brought forward |
|
26.40 |
3.11 |
|
|
|
-------- |
-------- |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
104.72 |
224.58 |
|
|
|
| APPROPRIATIONS |
|
|
|
| Proposed
dividends |
|
- |
(58.31) |
|
| Reserve
for issue of bonus shares |
|
- |
(38.87) |
|
| Special
Reserve |
|
(11.40) |
(11.70) |
|
| General
Reserve |
|
- |
(45.00) |
|
| Reserve
for Contingencies |
|
(15.70) |
(44.30) |
|
|
-------- |
-------- |
|
| UNAPPROPRIATED
PROFIT |
|
77.62 |
26.40 |
|
| CARRIED
FORWARD |
|
======== |
======== |
|
|
|
|
|
|
OBJECTIVES FOR 1996-97 |
|
| The
following would be our objectives for the year 1996-97: |
|
|
|
| Brokerage
Division: A brokerage office has already been established
in the Islamabad Stock |
|
| Exchange.
Business activity would be started with improvement in the market conditions. |
|
|
| Floatation
of Mutual Fund: CresBank intends to float a close-ended
mutual fund, depending on |
|
| the
market situation, as a prelude to floatation of an open-ended mutual fund in
future. |
|
|
|
| Foreign
Currency Line of Credit: Efforts will be directed towards
early utilization of the foreign |
|
| currency
credit lines made available to CresBank by the International lending
agencies. |
|
|
|
| State
Bank of Pakistan financing for Locally Manufactured Machinery: CresBank fulfils the |
|
| eligibility
criteria for obtaining refinance against LMM financing provided to its
borrowers. It is |
|
| expected
that the State Bank would make available a credit line for the purpose. |
|
|
|
| Provisions
as tax deductible expense: The issue of allowing provisions against loans and
advances |
|
| as
a tax deductible expense would continue to be persued with the concerned
authorities through |
|
| the
forum of the Association of Investment Banks. |
|
|
|
| AUDITORS |
|
| The
Auditors Messrs. Riaz Ahmad & Company, Chartered Accountants, retire and
offer themselves |
|
| for
re-election. |
|
|
|
|
| In
the end, the Directors appreciate the dedication and hard work put in by the
officers and staff of |
|
| the Bank. |
|
|
| For
and on behalf of the Board of Directors. |
|
|
|
| Nessar
Ahmed |
|
| Chief
Executive |
|
Dated: August 27, 1996 |
|
|
|
|
|
Form '34' |
|
|
| Pattern
of Holding of Shares as at 30 June 1996 |
|
|
|
|
|
|
Shareholding |
|
| No.
of Shareholders From To Total Shares Held |
|
|
|
| 275 |
|
1 |
|
100 |
|
14092 |
|
| 443 |
|
101 |
|
500 |
|
112299 |
|
| 319 |
|
501 |
|
1000 |
|
222097 |
|
| 731 |
|
1001 |
|
5000 |
|
1519882 |
|
| 122 |
|
5001 |
|
10000 |
|
826861 |
|
| 41 |
|
10001 |
|
15000 |
|
506158 |
|
| 26 |
|
15001 |
|
20000 |
|
436576 |
|
| 24 |
|
20001 |
|
25000 |
|
528962 |
|
| 9 |
|
25001 |
|
30000 |
|
241703 |
|
| 15 |
|
30001 |
|
35000 |
|
477591 |
|
| 8 |
|
35001 |
|
40000 |
|
300195 |
|
| 3 |
|
40001 |
|
45000 |
|
125844 |
|
| 5 |
|
45001 |
|
50000 |
|
241290 |
|
| 3 |
|
50001 |
|
55000 |
|
159840 |
|
| 3 |
|
60001 |
|
65000 |
|
189369 |
|
| 4 |
|
70001 |
|
75000 |
|
287473 |
|
| 1 |
|
75001 |
|
80000 |
|
75135 |
|
| 1 |
|
80001 |
|
85000 |
|
81724 |
|
| 2 |
|
85001 |
|
90000 |
|
171028 |
|
| 2 |
|
95001 |
|
100000 |
|
199407 |
|
| 5 |
|
105001 |
|
110000 |
|
539279 |
|
| 3 |
|
115001 |
|
120000 |
|
352727 |
|
| 4 |
|
125001 |
|
130000 |
|
513022 |
|
| 2 |
|
135001 |
|
140000 |
|
274745 |
|
| 2 |
|
145001 |
|
150000 |
|
295537 |
|
| 2 |
|
155001 |
|
160000 |
|
316180 |
|
| 1 |
|
160001 |
|
165000 |
|
161962 |
|
| 1 |
|
175001 |
|
180000 |
|
177908 |
|
| 1 |
|
190001 |
|
195000 |
|
193327 |
|
| 1 |
|
200001 |
|
205000 |
|
202502 |
|
| 1 |
|
230001 |
|
235000 |
|
234597 |
|
| 2 |
|
235001 |
|
240000 |
|
471738 |
|
| 1 |
|
265001 |
|
270000 |
|
267850 |
|
| 1 |
|
295001 |
|
300000 |
|
299677 |
|
| 1 |
|
320001 |
|
325000 |
|
323268 |
|
| 1 |
|
440001 |
|
445000 |
|
441446 |
|
| 1 |
|
485001 |
|
490000 |
|
488416 |
|
| 1 |
|
655001 |
|
660000 |
|
656500 |
|
| 1 |
|
710001 |
|
715000 |
|
715000 |
|
| 1 |
|
750001 |
|
755000 |
|
753600 |
|
| 1 |
|
755001 |
|
760000 |
|
755855 |
|
| 3 |
|
820001 |
|
825000 |
|
2466750 |
|
| 1 |
|
890001 |
|
895000 |
|
894038 |
|
| 1 |
|
955001 |
|
960000 |
|
956864 |
|
| 1 |
|
1115001 |
|
1120000 |
|
1116745 |
|
| 1 |
|
1255001 |
|
1260000 |
|
1259500 |
|
| 1 |
|
1890001 |
|
1895000 |
|
1890350 |
|
| 1 |
|
2395001 |
|
2400000 |
|
2397306 |
|
| 1 |
|
2745001 |
|
2750000 |
|
2746915 |
|
| 1 |
|
2820001 |
|
2825000 |
|
2824658 |
|
| 1 |
|
4570001 |
|
4575000 |
|
4574999 |
|
| 1 |
|
6475001 |
|
6480000 |
|
6476213 |
|
| ------- |
|
--------- |
|
| 2084 |
|
|
42757000 |
|
| ======= |
|
|
========= |
|
|
|
|
Pattern of Holding of
Shares as at 30 June 1996 |
|
|
|
| Category
of Shareholders |
Number |
Shares held |
Percentage |
|
| ----------------------------------------------------------------- |
|
| Individuals |
|
1968 |
7617242 |
17.82 |
|
| Investment
Companies |
|
5 |
1140421 |
2.67 |
|
| Insurance
Companies |
|
8 |
1156346 |
2.70 |
|
| Joint
Stock Companies |
40 |
17895642 |
41.85 |
|
| Financial
Institutions |
25 |
10559578 |
24.70 |
|
| Others |
|
38 |
4387771 |
10.26 |
|
| ----------------------------------------------------------------- |
|
| Total |
|
2084 |
42757000 |
100.00 |
|
| ----------------------------------------------------------------- |
|
|
|
| Others |
|
|
|
|
|
| Modarabas |
|
|
21 |
672308 |
1.57 |
|
| Non
Residents |
|
16 |
3707730 |
8.67 |
|
| Trust |
|
1 |
7733 |
0.02 |
|
| ----------------------------------------------------------------- |
|
|
Total |
|
38 |
4387771 |
10.26 |
|
| ----------------------------------------------------------------- |
|
|
|
|
|
|
| Auditors'
Report to the Members |
|
| We
have audited the annexed balance sheet of CRESCENT INVESTMENT BANK LIMITED as |
|
| at
30 June 1996 and the related profit and loss account and statement of sources
and application |
|
| of
funds, together with the notes forming part thereof, for the period then
ended and we state that |
|
| we
have obtained all the information and explanations which to the best of our
knowledge and |
|
| belief
were necessary for the purposes of our audit and, after due verification
thereof, we |
|
| report
that: |
|
|
|
| (a)
in our opinion, proper books of account have been kept by the company as
required by |
|
| the
Companies Ordinance, 1984; |
|
|
| (b) in our opinion: |
|
|
|
| i)
the balance sheet and profit and loss account together with the notes thereon |
|
| have
been drawn up in conformity with the Companies Ordinance, 1984, and are |
|
| in
agreement with the books of account and are further in accordance with |
|
| accounting
policies consistently applied; |
|
|
|
| ii)
the expenditure incurred during the period was for the purpose of the
company's |
|
| business;
and |
|
|
|
| iii)
the business conducted, investments made and the expenditure incurred during |
|
| the
period were in accordance with objects of the company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations |
|
| given
to us, the balance sheet, profit and loss account and the statement of
sources and |
|
| application
of funds, together with the notes forming part thereof, give the information |
|
| required
by the Companies Ordinance, 1984, in the manner so required and respectively |
|
| give
a true and fair view of the state of the company's affairs as at 30 June,
1996 and of the |
|
| profit
and the changes in sources and application of funds for the period then
ended; |
|
| and |
|
|
|
| (d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 |
|
| was
deducted by the company and deposited in the Central Zakat Fund established |
|
| under
section 7 of that Ordinance. |
|
|
|
Balance Sheet |
|
|
NOTE |
(Rupees in thousand) |
|
|
|
30 June |
31 December |
|
|
|
1996 |
1994 |
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
|
|
| Authorised
capital |
|
| 50,000,000
ordinary shares |
|
| of
Rupees 10 each |
|
500 000 |
500 000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid |
|
|
|
| up
capital |
|
| 42
757 000 (1994:29 900 000) |
|
|
|
| ordinary
shares of Rupees 10 each |
3 |
427570 |
299 000 |
|
|
|
|
|
| Deposit
for shares |
|
- |
5 415 |
|
| Reserves
and surplus |
|
4 |
331 700 |
265 170 |
|
| Capital
reserves |
|
5 |
184 800 |
173 400 |
|
| Revenue
reserves |
|
77 622 |
26 404 |
|
| Unappropriated
profit |
|
---------- |
---------- |
|
|
|
594 122 |
464 974 |
|
|
|
---------- |
---------- |
|
|
1 021 692 |
769 389 |
|
|
|
| DEPOSITS
OF FIXED MATURITIES |
6 |
7 488 319 |
5 893 401 |
|
| BORROWINGS |
|
7 |
35 298 |
179 075 |
|
|
|
| OTHER
LIABILITIES AND |
|
|
|
| PROVISIONS |
|
|
|
| Liabilities
against assets |
|
| subject
to finance lease |
8 |
5 711 |
6 327 |
|
| Profit
accrued on deposits/ |
|
|
|
| borrowings |
|
|
196 628 |
131 184 |
|
| Accrued
and other liabilities |
9 |
104 304 |
168 665 |
|
| Dividend
payable |
|
- |
58 305 |
|
|
|
---------- |
---------- |
|
|
|
306 643 |
364 481 |
|
|
|
|
|
| COMMITMENTS
AND CONTINGENT |
|
|
| LIABILITIES |
|
10 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
8 851 952 |
7 206 346 |
|
|
|
|
========== |
