Karachi December 28 2021: As at September 30, 2021, Summit Bank has deferred tax assets (net) of Rs. 15.25 billion, this has been recognized on
the basis of the management's best estimate that these would be realized against the future taxable profits.
Summit Bank had received a letter dated May 20, 2021 from H.E. Nasser Abdulla Hussain Lootah (The Investor) in which The Investor had communicated his intention to acquire at least controlling stake in the Bank by subscribing to fresh equity in the Bank.
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In compliance with the requirements of Securities Act, 2015 and Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2017 applicable to such transactions, this was
followed by a public announcement by The Investor of the intention to acquire at least 51% of the issued and paid up capital of the Bank together with the management control.
The Investor has now submitted his offer via a letter dated October 01, 2021, as per the Share Subscription Agreement (SSA) dated October 04, 2021 entered between the Bank and The Investor for the proposed
subscription of new ordinary shares in the Bank by way of fresh equity injection Without Rights Offering at a
discounted price of Rs. 2.51 per share. The Investor presented the offer as set out in the SSA which is duly approved by the Board of Directors. The Bank intends to issue a total of 5,976.096 million new ordinary shares.
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The Bank substantially reduced its total provisioning expense and recorded a reversal of Rs. 1.459 billion for the nine months’ period ended September 30, 2021 as against a total provision charge of Rs. 4.18 billion in the corresponding period last year. Reversal of provision against loans and advances during the current period was Rs. 845.52 million. Reversals in provisions for diminution in value of investments for the current period was recorded
at Rs. 740.23 million mainly due to equity scrip disposals.
The Bank continued the positive trend from June 2021 into September 2021 and reduced its loss before tax for the nine months’ period ended by more than 70% as compared to the same period last year. Simialarly, loss after tax for
the nine months’s period ended September 2021 was 71% less than September 2020. As a result, loss per share (LPS) was recorded at Re. 0.60 per share for the current reporting period, as compared to Rs. 2.09 per share for the comparative prior period.
Lower mark-up income on advances by Rs. 902.41 million is mainly attributable to volumetric reduction of net average loan portfolio amounting to Rs. 8.89 billion. However, lower yields on advances by 1.63% also impacted the interest income from advances as the gradual reduction in policy rates by the State Bank of Pakistan over the course of the last year took full effect this year. On a YoY comparison, yields on investments also remained lower, at 6.26% in 2021 from 7.89% in 2020. However, the volumetric increase in average investments by Rs. 7.36 billion kept the Bank’s income from investments intact at Rs. 1.66 billon during the current period.
The Bank’s interest expense registered a decrease of Rs. 1.31 billion over the corresponding period last year. Period end deposits amounted to Rs. 106.16 billion as at September 30, 2021. The average portfolio grew by Rs. 11.38 billion, or 12% as compared to September 2020. CASA to total deposit ratio was reported at 84.91%, improving by 3% from December 2020. The improvement in CASA mix resulted in the decline of cost of deposits to 3.92% for
the nine months’ period ended September 30, 2021 as against 5.78% for the corresponding period last year. On the borrowings side, the Bank’s average borrowings decreased by Rs. 2.58 billion, with cost…