Habib Bank’s stellar growth of 31% took net profit to Rs22.33 billion in 2011, making it the most profitable bank of the industry.
The bank also declared 10% bonus shares and a final cash dividend of Rs4 per share alongside the results, taking the full-year dividend payout to Rs7 per ordinary share of Rs10.
The company’s result could not lift investor sentiments as the stock price fell Rs2.61 to close at Rs122.56 during trade at the Karachi Stock Exchange on Friday.
Net interest income rose 20% to Rs98.6 billion against Rs81.3 billion posted in the same period last year on the back of relatively higher lending yields, according to a Burj Capital research note.
Non-interest income rose by a relatively higher 16%, likely driven by strong foreign exchange income and gains on equity portfolio, adds the note. Meanwhile, the final quarter growth remained more subdued at 3% on a quarterly basis.
In line with the industry trend, provisioning expense declined by 14% to Rs6.68 billion in 2011.
Meanwhile, the bank also posted its highest quarterly earnings during the final quarter (October to December 2011) of Rs6.61 billion, showing signs of better days for the industry.
Pakistan State Oil, who has been in bad news for all the right reasons, is now facing another law suit in US Court.
According to Express Tribune Newspaper, ICC Chemical Corporation has filed a case against Pakistan State Oil (PSO) in a US court, alleging that PSO has caused losses to it by breaching a contract for import of base oil.
The case pertained to a contract for import of base oil won by ICC Chemical, but a complaint later from competitor H&H Trading House that PSO had suffered a loss of $2.7 million in the contract halted the whole process, forcing ICC Chemical to approach the court.
In a notice served on PSO, New York attorneys in the lawsuit filed in the Southern District of New York said ICC Chemical, headquartered in New York, had placed an order for 2,000 tons each of base oil group 11, N-150 and N-500 that was to be located at Taiwan in November 2011 and delivered in Karachi, Pakistan.
According to court documents, ICC Chemical said PSO was to produce an irrevocable letter of credit (LoC) to the plaintiff (ICC) at Habib American Bank in New York. PSO issued the LoC on October 26, 2011 in which it was provided that base oil would be located at Taiwan on or about November 15, 2011.
“There were numerous changes required to be made to the terms of the LoC and on October 26, 2011, the plaintiff made and discussed these changes with the defendant PSO which agreed that an amended LoC would be issued forthwith,” ICC said, adding because time was of the essence and a vessel needed to be secured, the plaintiff signed a charter party on October 28, 2011 for the vessel ‘Liquid’ which was to arrive at port on or about November 11, 2011 for loading.
“In spite of repeated reminders and assurances that LoC amendments would be made, the defendant PSO never made them and never produced the LoC,” ICC alleged.
As a result, ICC said it was forced to cancel the vessel charter and temporarily breach its contract with the supplier in Asia. The dead freight and detention charges of the vessel were $350,000 and the vessel owner threatened legal action against it.
“In addition, due to its breach of contract with the supplier, the plaintiff faces a potential liability of $1.4 million due to storage charges, financing and potential loss if the base oil was sold in the market as a distress sale,” ICC added.
Admitting that a suit has been filed, a PSO spokesperson said the company had filed its response and could not comment further as the matter was in the court.
It might be interesting to note that PSO is already facing financial troubles and reported a drop of 36% percent in profits in last announced results. Should this case result in a negative outcome for PSO, this might put further pressure on company’s profits and share price.
JS Investments Limited (JSIL) has announced the appointment of Maleeha Mimi Bangash as its chief strategy officer.
Bangash brings 16 years of international experience, mostly in investment management and finance, to the company.
She has a MBA degree from the Lahore University of Management Sciences, and a MBA Honors (Investment and Finance) degree from the University of Chicago, Booth School of Business.
She joins JSIL after a successful stint as chief strategy officer at a renowned asset management company, and has taken up the responsibilities of strategic planning, product development and channel/financial institutional relationships.
A consortium, led by United Bank Limited (UBL), has been selected for the acquisition of a majority stake in Khushhali Bank Limited (KBL).
According to a notice issued to the Karachi Stock Exchange, the consortium was selected as the highest bidder for a 67.4% shareholding – almost 115 million shares – in the microfinance institution.
The shares will be acquired for a total investment of Rs2.35 billion ($26 million) at an approximate price of Rs20.44 per share, according to Global Securities. The deal prices KBL as a whole at Rs3.48 billion.
The authority has been notified of the acquisition of KBL by a consortium comprising UBL, Incofin Investment Management, Shorecap II Limited, ASN-NOVIB Microkreditfonds and Credit Suisse Microfinance Fund.
According to AKD Securities analyst, Anum Dhedhi, UBL may be looking for synergies with its branchless banking operations with the acquisition, along the lines of Telenor Pakistan which owns a majority stake in Tameer Microfinance Bank.
In the first half of 2011, the State Bank of Pakistan had invited expressions of interest from strategic investors for the transfer of a 79.2 per cent stake in KBL along with management control.
Khushhali Bank Limited is the largest microfinance bank in Pakistan, with geographical outreach to over 90 districts through 109 branches.
Sanofi Aventis, one of the renowned figure of Pharma industry and whose plants are located in Karachi and Wah Cantt, posted a profit of Rs. 230 Million on sales revenues of Rs. 7.6 Billion, for fiscal year ending December 2011.
Company’s Operating profits were Rs. 536 Million, a little improvement of 1% from previous year’s operating profit. Earning per share was Rs 23.80, up from previous year’s 23.23.
Despite the increase in sales of almost 16% from Rs. 6 Billion to Rs. 7 Billion – Company could not manage to increase its operating profit because of a 40% increase in its distribution and marketing cost.
Company paid a total of Rs. 96 million in dividends to its shareholders. Sanofi’s share price stood stable at Rs. 148 with a negligible volume of business.
The country’s second largest automobile maker’s net profit stood at Rs2.74 billion compared with the preceding year’s Rs3.44 billion, according to a notice sent to the Karachi Stock Exchange on Wednesday.
Gross margins declined by 120 basis points to 6.6% from 7.8% in fiscal 2010 due to rupee depreciation against the Yen and dollar, said Topline Securities analyst Furqan Punjani.
The company’s net profit was much ahead of market expectation as analyst expected the bottom-line to stand, on average, around Rs2.1 billion.
The result was accompanied with a final cash dividend of Rs10 per ordinary share of Rs10, taking the total financial year 2011 payout to Rs15.
Other income fell 16 per cent to Rs1.51 billion mainly due to lower cash balance on the back of decline in advances from customers.
The company’s net sales increased by three per cent to Rs61.7 billion in the period under review due to higher prices and not increase in number of cars sold. Car prices increased on average by seven to eight per cent during financial year 2011.
Sales of Toyota Corolla – the highest selling car of the outgoing financial year – fell six per cent while sale of Cuore and Hilux witnessed a substantial rise of 13% and 44% during the period under review, respectively.
The company paid tax at an effective rate of 32% while company had paid tax at the rate of 34% last year.
As a part of its mandate to monitor the listed and unlisted companies to safeguard the investors’ interest, the Enforcement Department of the SECP has penalized a number of companies, their directors and statutory auditors for non-compliance with the corporate laws and applicable accounting standards in January.
Through its routine monitoring of financial statements has identified transactions in a listed company, where funds of the listed company were being diverted into the personal business of the directors.
The directors were thus using the money for their personal gains whereas no gains/profit was being paid to the listed company. The private company of the directors defaulted in repayments and these funds, subsequently, were invested into the equity of the same defaulter private company.
This fact was not disclosed to the shareholders and the SECP. The directors were penalized for their wrongdoings under the provisions of the Companies Ordinance, 1984, who preferred an appeal before the higher forum, however, the same has been set aside and the order was upheld.
Furthermore, penalties have been imposed on directors of two companies for making unauthorized investment to associated companies without following the legal requirements. In another case directors of a listed company were fined for making misstatement in annual audited financial statements.
In yet another case directors of listed company directors were given a stern warning for not making complete disclosures in the notice of general meeting to the shareholders. The proceedings against directors of seven non-listed companies for not filing their annual audited financial statements with the registrar of companies were also concluded.
Penalties to Auditors
The SECP has finalized the penal actions against the statutory auditors of two companies for their failure to act in conformity with the statutory requirements. The audit reports issued by them did not bring out material facts about the affairs of companies.
Besides imposing fines, the auditors were advised to discharge their responsibilities with due care and professionalism to give an independent and objective opinion on financial statements in future.
Companies Ordinance, 1984 in its Section 254 sets out the eligibility criteria for appointment as statutory auditors of companies. The SECP has observed that a number of non-listed companies have appointed unqualified persons as their statutory auditors. These cases were referred for initiating necessary penal proceedings besides their replacement appointment by qualified persons.
The SECP has also initiated proceedings against auditor of two listed companies who was not qualified for appointment in terms of the requirements of the Code of Corporate Governance (CCG).
The CCG requires that listed companies should appoint only those auditors, who have been given a satisfactory rating under the Quality Control Review Programme of Institute of Chartered Accountants of Pakistan. In the instant case the Quality Assurance Board of the ICAP has removed the name of the CA firm from the list of QCR rated auditors prior to its appointment as statutory auditor of the listed companies.
Pakistan State Oil (PSO), the country’s state-owned oil company and who took a dip in its profits recently, is actively involved in the import of inferior quality residual furnace oil (RFO) and low sulphur furnace oil (LSFO), oil which frequently chokes the pipeline which supplies fuel to HUBCO and damages chillers of both private power companies and state-run thermal power plants.
But this is a charge that the PSO strongly denies. A PSO spokesperson, when contacted, denied the allegation and claimed that PSO “never provided low-quality fuel to thermal plants.”
However investigations reveal that import of inferior petroleum products goes back to the 90s when the National Accountability Bureau (NAB) probed many cases of low quality oil which landed many petroleum ministry and PSO officials in jail. Sadly, the foreign supplier from a friendly Muslim country managed to stop investigations into the import of such oil to protect the network involved.
NAB’s retreat resulted in covering up an embezzlement of billions of dollars, besides encouraging officials to continue to make money through this scam. The network comprising senior PSO officials always manages to avoid punitive action. Interestingly, the number of reported cases surged between 2009 and 2011. Furnace oil import costs the national exchequer roughly $5 billion annually. Inferior quality oil import costs the national exchequer over $ 1 billion annually, sources said.
The correspondence of HUBCO and KAPCO on supply of inferior quality RFO and LSFO indicates that both companies raised the issue with PSO and rejected several shipments between 2009 and 2010. These bulk buyers repeatedly told PSO to stop supplying them inferior quality fuels but PSO did not oblige.
HUBCO warned PSO to stop supplying it inferior quality RFO in a series of letters. Messages from Mustafa Gilani (senior business manager from HUBCO) addressed to Zulfiqar Jaffery (general manager consumer business) stated:
“Despite your assurances, PSO failed to supply the approved quality of fuel in the right quantity.” Mustafa Gilani’s letters indicate that other than supplying low quality furnace oil, the quantities supplied were also lower than what was agreed.
Similarly, KAPCO’s letter of July 12, 2010 signed by Khalid Pervez Bajwa, (general manager engineering KAPCO) addressed to Jaffery said:
“We would like to raise our concern over sulpher content in LSFO (as high as 2.7 percent) ….against the specified rate of 1 per cent.”
The letter further said KAPCO could not accept deliveries of fuel oil that do not meet the specification in part-A of schedule 1 of the oil supply agreement.
Asia Petroleum Limited (APL), a subsidiary of the PSO in a letter of July 7, 2009, holds its parent company responsible for supply of extremely low-quality furnace oil. The letter stated that RFO provided to HUBCO could not be pumped because it choked the pipeline.
PSO accepted a shipment of 65,000 tons rejected by HUBCO for its low quality in 2010.
An inquiry report, a copy made available to the Express Investigative Cell (EIC), indicates that out of 65,000 tons rejected from the LSFO shipment, 2,282 metric tons was stolen from the Lalpir depot in 2010. At the time, PSO charge-sheeted a few junior employees for stealing the fuel.
Many in PSO believe that this was a deliberate attempt to protect seniors who accepted the rejected shipment of LSFO.
PSO officials allegedly collude with the supplier. It is further alleged that from surveyor to seniors, everybody in PSO has a fixed share in the kickbacks for accepting low-quality oil imports, sources said.
However a PSO spokesperson in a written statement sent to EIC said HUBCO never rejected any fuel consignment from PSO and the supply chain is in line with international quality control standards that includes monitoring and verification of fuel at each stage of the supply process, according to a company statement.
Assets of Bank of Khyber (BoK) reached Rs68 billion till December 31, 2011.
This was stated by BoK Managing Director Bilal Mustafa while inaugurating the annual managers conference-2012 at a local hotel here.
The annual managers conference 2012 was held to review operational activities and achievements of the bank during 2011 which also finalizes targets and a strategy for 2012.
Bilal Mustafa mentioned that the Bank of Khyber (BoK) would further increase its branch network in 2012 by adding 16 new branches to achieve desired goals. The growth in other operational areas will further be improved to achieve the annual business targets.
The managing director mentioned that the BoK’s operational results showed a tremendous growth in all key areas despite depressed economic situation. He specially emphasized on home remittances business and said the BoK procured over Rs 13 billion as home remittances in 2011 which was 28% higher than the corresponding period.
He informed that a number of dedicated payment centres were being established to facilitate home remittances beneficiaries. He said “We have already a plan to attract more exchange companies to cater the target.”
Meezan Bank, which was recently awarded as the best Islamic bank in Pakistan in 2011, by Islamic Finance News of REDmoney Group, Malaysia, is planning to take its branch number to 300 from currently 275.
“The branch network of the Meezan Bank Limited (MBL) in Pakistan would cross the figure of 300 by the end of March”, stated by the Chairman of the MBL Board, Sheikh Ebrahim Bin Khalifa Al-Khalifa while talking to media men at a local hotel on Monday.
Sheikh Ebrahim pointed out that the MBL’s current number of branches is 275 in 83 cities in Pakistan.
“We should Inshallah cross 300 branches by the end of this March and hopefully we would continue to expand accordingly”, he further remarked.
Sheikh Ebrahim stated that the MBL has a massive development in its IT sector and the `Shariah-based’ products.
He pointed out that the MBL has great confidence in the financial sector in Pakistan.
“We are keeping the capital adequacy ratio at the highest level so that we can accommodate the maximum deposit growth from our side”, the Chairman of MBL Board informed.