KARACHI, May 28: The first quarter (Jan-March 2003) report and accounts of Crescent Investment Bank Limited (CresBank) confirmed that the event to celebrate was the merger with Mashreq Bank. “The sole effort of management was to achieve completion of amalgamation process with the commercial bank during the coming quarter”, President & CEO, Nessar Ahmed told the shareholders in his Q1 report.
CresBank is in the throes of amalgamation with Mashreq Bank — the foreign bank operating in Pakistan and the International Housing Finance Limited (IHFL). Shareholders had already approved the amalgamation process in the last Annual General Meeting held on March 15, 2003. The agreement stipulated that CresBank and IHFL would be amalgamated with Mashreq Bank, as joint venture partners. The arrangement would create a “locally incorporated banking company”, which would be a stock market listed entity.
CresBank was the first to appear on the investment banking scene way back in 1989. Being one of the major institutional players in the equities market, the bank’s fortunes have largely been tied to the ebb and flow of the stock market.
For first quarter 2003, the bank posted 84 per cent drop in pretax profit to Rs58.6 million, from Rs368.8 million in the corresponding period of the previous year. The decline in profit was attributable mainly to the 88 per cent decrease in gain on sales of investments (capital gains), which amounted to Rs52.2 million in the period under review, compared with Rs422.2 million in the similar six months of 2002. Directors contended that the stock market had remained volatile during the quarter under review. The KSE-100 index, which had witnessed the all time high of 2,955 points on January 17, 2003, went through a period of correction “due to excessive overbought positions and a low of 2,356 points was recorded on February 27, 2003”, directors said and added that the index had, however, closed at 2,716 points on March 31, 2003, posting “a marginal increase of 14 points over the position at the end of the year 2002”.
Total assets of CresBank at March 31, 2003 stood at Rs3,104 million, as against Rs3,481 million as on December 31, 2002. Directors stated: “Due to the probable amalgamation into a commercial bank, the management is following a conscious policy of shedding its excessive resources”.
Aggregate income for Jan-Mar 2003 quarter amounted to Rs113.3 million, representing 80 per cent slump from Rs555.7 million earned in the same period of 2002. Besides the decline in capital gains, dividend income also decreased to Rs11.5 million, from Rs29.9 million. Aggregate expenditure declined by 61 per cent to Rs67.6 million, from Rs176.0 million. The balance sheet carried deposits of fixed maturities in the sum of Rs1,218.2 million at end-March 2003, which was slightly lower than Rs1,246.0 million at December 31, 2002.
Total investment of CresBank stood at Rs1,198.5 million at end-March 2003. These included long-term investments-available for sale securities Rs522.5 million and short-term investments held for trading securities Rs229.8 million and short-term investments-available for sale securities Rs446.2 million.
Like the bank’s profitability, the price of the 10-rupee share in CresBank has continued to experience sharp volatility. The share traded between the high and low of Rs16.75 and Rs12.00 in the Jan-April 2003 with nearly 13 million shares changing hands. The stock is now priced at Rs15.75. For the year 2000, bank had disbursed cash dividend at 41 per cent, but skipped payout for 2001 and 2002. With paid-up capital at Rs500.3 million, capital reserves at Rs558.3 million and unappropriated profit amounting to Rs105.9 million, the break-up value of the share worked out at Rs23.28; including the surplus of Rs173.7 million on revaluation of fixed assets, the break-up value would be Rs24.91. Deficit on revaluation of securities amounted to Rs92.2 million, which was substantially higher than Rs51.2 million at December 31, 2002. The deficit had been in the tall sum of Rs114.7 million at end-June 2002 and Rs355.1 million at the close of the year before.
