MIRA INFORM REPORT

Report Date :

19.02.2011

IDENTIFICATION DETAILS

Correct Name :	NIB BANK LIMITED

Registered Office :	Muhammadi House, I.I. Chundrigar Road, Karachi

Country :	Pakistan

Year of Establishment :	2003

Com. Reg. No.:	0045037

Legal Form :	The Bank

Line of Business :	Engaged in Retail Banking, Corporate Banking and Treasury Related Activities

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory

Payment Behaviour :	No complaints

Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – June 30, 2010

Country Name

Previous Rating

(01.04.2010)

Current Rating

(30.06.2010)

Pakistan

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Company name

NIB BANK LIMITED

Company Address

Registered Address

Muhammadi House, I.I. Chundrigar Road, Karachi, Pakistan

Tel #	92 (21) 111-333-111, 32420333
Fax #	92 (21) 32472258
Website	www.nibpk.com

Short Description Of Business

Nature of Business

Principally engaged in retail banking, Corporate

banking and treasury related activities

Year Established

2003

Registration #

0045037

Branches

The bank has 223 branches (2008: 244 branches)

Auditors

KPMG Taseer Hadi & Co.

(Chartered Accountants)

Legal Status

NIB Bank Limited "the Bank" is incorporated in Pakistan and its registered office is situated at Muhammadi House, I.I. Chundrigar Road, Karachi in the province of Sindh. The Bank is listed on all the stock exchanges in Pakistan and has 223 branches (2008: 244 branches). The Bank is a scheduled commercial bank and is principally engaged in the business of banking as defined in the Banking Companies Ordinance, 1962. NIB Bank Limited is a subsidiary of Bugis Investments (Mauritius) Pte. Limited which is a wholly owned subsidiary of Fullerton Financial Holdings Pte. Limited which in turn is a wholly owned subsidiary of Temasek Holdings, an investment arm of the Government of Singapore.

Details of Directors

Names

Designation

Mr. Francis Andrew Rozario

Mr. Khawaja Iqbal Hassan

Mr. Syed Aamir Zahidi

Mr. Tejpal Singh Hora

Mr. Asif Jooma

Mr. Teo Cheng San Roland

Mr. Najmus Saquib Hameed

Mr. Muhammad Abdullah Yusuf

Chairman

President / Chief Executive Officer

Director

Categories of Shareholders

Shareholders

In Percentage (%)

Directors, Chief Executive Officer, and their spouse and minor children

Associated Companies, undertakings and related parties

NIT, ICP & IDBP / ICP

Banks, Development Financial Institutions, Non Banking Financial Institution

Insurance Companies

Modarabas & Mutual Funds

Public Sector Companies and Corporations

Executives

Foreign Companies

General Public

Others

0.40

74.69

1.03

2.77

0.18

0.05

6.00

0.02

0.35

11.12

3.39

Business Activities

Principally engaged in retail banking, corporate banking and treasury related activities.

Number of Employees

More than 500

Banking Sector

As a consequence of reducing inflation, the State Bank of Pakistan eased its monetary policy with a 250 bps lowering of the discount rate during 2009. Consequently market rates fell sharply during the first half of the year before stabilizing over the last six months. Liquidity is expected to remain tight with higher private sector credit offtake, continued borrowing by public sector enterprises, slower retirement of seasonal financing and delayed inflows from foreign sources and further interest rate cuts in the short term will depend on market liquidity and inflation. The nine month results of the banking sector showed a decline in profitability of 18% over 2008 driven mainly by higher provisioning expense. Non-performing loans for the system surged by 28% to over Rs 400 billion as most borrowers remained stressed due to the weak economic environment and stagnant industry growth resulting from the power crisis in the country. Consequently, provisions for the industry for the first nine months of 2009 increased by 25% compared to the same period in 2008. Total banking sector loans declined by 4% as most lenders adopted a cautious stance in the backdrop of rising credit costs. Deposits, after remaining stagnant for most of 2009, grew by over Rs 200 billion in the last quarter.

Operating Results

In 2009 NIB has declared a profit after tax of Rs 691 million on an unconsolidated basis, a significant improvement over 2008. This improvement is a reflection of the steps taken by the Bank in 2008 when it brought in additional capital of Rs 12 billion and took a conservative provisioning approach to safeguard against future economic volatility. These results have been achieved through better performance in all areas; loan and low cost deposit growth, reduction in cost of funds and tight control over provisions and operating expenses. On a consolidated basis, NIB delivered a profit after tax of Rs 1,494 million. The difference of Rs 800 million between the unconsolidated and consolidated results is primarily due to improvements in the value of the funds of PICIC Asset Management Company as a result of the recovery in the equity markets. NIB now has 223 branches in 60 cities across the country, serving over 600,000 customers. 222 branches are dedicated to the Bank’s Retail, SME and Small Businesses, in which 120,000 new customers were added and new loans worth nearly Rs 10 billion were disbursed during 2009. The Bank also increased its lending to top tier Corporate and Public Sector customers, to whom over Rs 11 bn of loans were disbursed. Consequently, loans in the Bank’s core segments grew by 24% over 2008. NIB succeeded in reducing its cost of funds by 266 bps over the year, by adding Rs 10 billion in current and savings accounts which now form 59% of the deposit base, up from 44% in 2008. At the same time, the Bank achieved a planned reduction of Rs 28 bn of expensive term deposits which it had taken at the end of 2008 and in early 2009. As a result, total deposits reduced by Rs 10 billion. The Bank continues to focus on generating lower cost deposits as a cornerstone of its strategy and plans to launch innovative deposit products in 2010. Net markup income in 2009 increased by 23% over 2008 as a result of better quality loan growth and improvement in spreads. The Bank achieved substantial capital gains in both the debt and equity markets through leveraging market opportunities; however these were offset by reduced foreign exchange income caused by higher premiums and lower market volatility. Non-markup income was thus maintained at the previous year’s levels excluding the impact of a 1-time dividend of Rs 750 million received from PICIC Asset Management Company in 2008. During the year NIB improved staff quality through hiring and more than 16,000 man days of training. The bank also upgraded infrastructure in most branches, and continued to make investments in technology that will benefit NIB’s customers. In 2009, NIB rolled out its new Core Banking system and converted all branches to the new, more efficient and flexible platform. Progress was also made towards the implementation of new HR and MIS systems. Despite these investments, the Bank was able to reduce its operating expenses by over 20% over 2008. This was achieved through a strong focus on improving operating efficiency. As a result, the Bank’s cost/income ratio reduced from 99% in 2008 to 74% in 2009. Although the recent uptick in inflation and rising utilities costs will exert pressure on expenses in 2010, the Bank remains committed to managing its expenses in the best interests of its shareholders and improving its efficiency ratios. The Bank focused on prudent customer selection, and rehabilitation of genuinely distressed customers in 2009. NIB also aggressively pursued recovery and litigation of defaulting customers which resulted in cash recoveries of over Rs 2 billion during the year. Consequently, net provisions reduced by more than 90% from 2008 levels. The Bank also appreciates the efforts made by the State Bank of Pakistan to encourage more realistic provisioning levels by restoring some of the benefit of Forced Sale Value of collateral.

Future Outlook

With a return to profitability in 2009 and an improving economic environment, NIB is positioned for stronger growth in the coming year. The Bank’s revenue and deposit base are on the right trajectory, and with credit conditions beginning to ease, the Bank expects to increase its lending activities in targeted segments. NIB continues to improve productivity and operating efficiencies by introducing greater automation and keeping a strong control over costs.

Credit Rating

Recognizing the progress that NIB has made and the strength of the Bank’s capital base, PACRA maintained NIB’s long term rating at AA- (Double A minus) and short term rating at A1+ (A one plus) in June 2009, even in this difficult environment. The rating on NIB’s term finance certificates issued in March 2008 was also maintained at A+ (A plus).

Foreign Exchange Rates

Currency	Unit	Pakistani Rupee
US Dollar	1	Rs. 85.40
UK Pound	1	Rs. 137.78
Euro	1	Rs. 116.12

Comments

NIB Bank Limited enjoys good reputation in Pakistan. Management comprises of professional experts and overall staff is highly skilled. Subject can be considered for moderate business engagements.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.45.18
UK Pound	1	Rs.73.04
Euro	1	Rs.61.43

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
----	NB	New Company	----

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.