Karachi December 20, 2021: Fatima Fertilizer Company Limited has notified to Pakistan Stock Exchange in a material notice filing that resolutions passed by the Board of Directors of Fatima Fertilizer Company Limited through circulation on December 20, 2021, the Board has accorded in-principle approval to the Company to evaluate and pursue (including as part of a consortium of parties) the potential acquisition of the majority shareholding (i.e. approximately 84.51%) of Samba Bank Limited proposed to be sold by Saudi National Bank.
Company will also conduct a due diligence of the Bank, subject to obtaining the requisite permission of the State Bank of Pakistan for the purposes of the same, appoint advisors and consultants, carry out necessary disclosures and regulatory steps / procedures, obtain regulatory approvals and carry out negotiations.
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Furthermore, the Board authorized persons to take necessary actions and steps prior to final approval of the Board for the proposed transaction.”
The Board has taken note of strategic review initiated by Bank’s parent, The Saudi National Bank (“SNB”). We understand, from correspondence with SNB’s management that SNB has decided to divest its shares in Samba Bank Limited (“SBL”), pursuant to which, the SNB will commence an orderly and well-managed divestment of SBL subject to final board evaluation of the offers received. In this regard, the SNB has appointed advisors to assist the SBL management with this process and as necessary, will provide consultancy to the management of the Bank on engagements with the regulators in Pakistan.
The Bank is working closely with the SNB’s management to develop action plan regarding the above noted strategic decision. The Board of Directors and senior management of SBL remain fully committed towards its shareholders, customers and employees. We believe that SBL is well placed to manage its business successfully and is expected to continue to generate positive results for the foreseeable future despite the possible changes in its majority shareholding.
Country’s trade performance remains fluctuating as imports continue to outpace exports by a wide margin resulting primarily from easing import policies after Covid lockdowns. According to the latest statistics, trade deficit for the first quarter (July-September) of fiscal year 2021-22 widened 100 percent to $11.66 billion from $5.81 billion in the same period of last fiscal year. The surge comes amid a booming demand due to import of machinery under TERF, while this gap could widen further in months ahead as the economy gradually recovers.
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Recent Increase in global oil prices, with Brent currently at $85 per barrel, is further expected to increase the import bill. During these three months, exports stood at $6.967 billion against $5.47 billion last year, showing a growth of 27.3%. Whereas, imports increased 65% to $18.63 billion, the imports were recorded at $11.286 billion same period last year. Economists believe that the current situation could increase pressure on the country’s BOP and exchange rate in the months to come.
The Bank has recorded a Profit Before Tax (PBT) of Rs. 601 million during the third quarter under review resulting in YTD PBT of Rs. 804 million and PAT of Rs. 478 million respectively despite taking a major hit one of the big corporates’ loss for the nine months’ ended September 30, 2021. This turn-around of bottom line within such short time span depicts managements’ effective business strategies and decision making under the guidance of the Board. Net markup income (NIM) for the nine months’ period under review increased by 12% over similar period last year.
Overall revenue earned during the period under review increased by 9.26% over similar period last year primarily due to higher NIM and higher fee and commission income generated through trade activities & credit related fees. Operating expenses increased by 13% from similar period last year which is in line with overall inflation & resumption of normal business after Covid-19 lockdowns.
The revenue growth coupled with control over operating expenses translated into operating profit of Rs. 1,863 million for the nine months’ period under review. All the business segments have posted robust performance and are expected to continue the growth momentum. The management is focused on strategically sizing the balance sheet with appropriate mix of earning assets vis-à-vis credit risk, low cost borrowings and deposits.
This has resulted in increase in the assets base of the Bank from PKR 158.99bn as at December 31, 2020 to PKR 203.48bn at September 30, 2021. Advances and Investments witnessed increase of PKR 12.88bln and 25.93bln, respectively over Dec’20 position. On the liabilities side, the Bank mobilized low cost & medium to small ticket deposits and managed to maintain overall deposit cost at 4.81% in line with the plan and closed its deposits book at PKR 86.76bln depicting an increase of 11% over Dec’20 position.
With a supportive FY22 budget and accommodative monetary policy demand indicators such as automobiles, POL (petroleum, oil and lubricants) sales, cement sales and electricity generation continue to depict robust growth. During FY22, GDP is expected to grow in the range of 4 to 5 percent, notwithstanding some greater uncertainty with respect to spillovers from the evolving situation in Afghanistan.
Looking ahead, the inflation outlook largely depends on the path of domestic demand and administered prices, notably fuel and electricity, as well as global commodity prices. It will be important to support tax revenue growth and carefully monitor outturns through the year to ensure the budget remains on track.
The Bank would continue to take effective measures for growth, keeping its core focus on steadily building up its earning assets; effectively managing the associated risks; and reduce its cost of funds through continued improvement in its deposit mix. This would be facilitated by delivery of world class banking services to the Bank’s valued customers
