KARACHI, Aug 10: The financial results for the year ended June 30, 2004, released by Jahangir Siddiqui Investment Bank Limited (JSIBL) on Tuesday - the first by an investment bank this reporting season - could be a harbinger of good tidings for investment banks.

The bank posted a staggering 94 per cent growth in pretax profit to Rs447.7 million for the year ended June 30, 2004, from Rs229.1 million the previous year. After tax profit at JSIBL rose by 110 per cent to Rs440.7 million, from Rs209.5 million the previous year.

That worked out to earning per share (eps) of Rs19.37, up from the year ago eps at Rs9.21. In addition to the interim cash dividend already paid at Rs1.50 per share (15 per cent), the board on Tuesday recommended bonus shares at one-for-one (100 per cent).

This comes as a big boon for shareholders as the 10-rupee share in JSIBL currently trades at Rs143. The stock price of the bank has shot up steeply by 177 per cent from Rs51.60 on January 5, 2004, which quite comprehensively outperforms the KSE-100 index's gain of 20 per cent this year.

Annual accounts of other investment banks would be out shortly. But it has to be seen if all or most of them are able to post similar surge in profitability. On the basis of nine-months results (July-March 2003-2004) JSIBL had reported 94 per cent growth in earnings per share to Rs14.26, from Rs7.37 in the corresponding period of the previous year.

That was the highest amongst investment banks in the country. The bank that came closest on its heels was Atlas Investment Bank with 83 per cent growth in earnings to Rs5.08, from Rs2.77 in the first three quarters of the earlier year. On annualized basis, the Atlas eps works out at Rs6.77.

It would be worth watching if on the actual numbers, Atlas is able to post double digit rise in eps. The share in Atlas Investment Bank is quoted at Rs27.50 on the stock exchange.

But based on the three-quarter results, other investment banks lagged far behind. Escorts Investment Bank, reported 22 per cent increase in eps to Rs2.03, from Rs1.66 in the same period of the previous year.

Orix Investment Bank came next with 14 per cent increase in nine-months earnings to Rs2.73, from Rs2.41; Security Investment Bank reported third quarter growth at 4 per cent and First Dawood Investment Bank saw increase in eps by 1 per cent in three-quarters of the FY04.

The Annual Report 2003 of the Securities and Exchange Commission of Pakistan noted that on June 30, 2003, there were 13 NBFCs undertaking investment finance services, of which one was in voluntary liquidation.

The SECP observed that total assets of those investment banks amounted to Rs29.03 billion at end FY03 and added that Certificates of deposits, which had been a significant source of funding for investment banks, amounted to Rs10.66 billion, i.e. 37 per cent of total assets as on June 30, 2003. "During the year under review, investment banks focused mainly on capital and money market operations", the SECP annual report said.