PROJECT REPORT

ON

PICIC COMMERCIAL BANK

BY

UMAR HASSAN & HASSAAN KHAN

Department Of Business Management

Faculty Of Sciences
Faisalabad Institute Of Textile &Fashion Design
Faisalabad
PICIC Commercial Bank Ltd.

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PICIC Commercial Bank Ltd.

DECLARATION

THIS IS A PROJECT REPORT SUBMITTED TO SIR TAHIR SULEMAN

IN 2ND SMT AS THE REQUIREMENT IN COMPLETION OF BBA.

DEDICATION
TO MY PARENTS FOR THEIR LOVE AND SUPPORT
TO DEAR SIR MR TAHIR FOR THEIR COOPERATION AND
ASSISTANCE

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PICIC Commercial Bank Ltd.

TABLE OF CONTENTS

Sr # TOPIC PAGE
1 VISION 6
2 MISSION
7
3 INTRODUCTION
8
4 HISTORY
9
5 BOARD OF DIRECTORS
6 MANAGEMENT 10
7 SERVICES 14
8 DATA COLLECTION 15
9 PROGRESS OF PAST FIVE YEARS 17
10 ANALYSIS OF PAST AND CURRENT YEAR
19
PROFITIBALITY AND PERFORMANCE
MEASURES 20
11 INVESTMENT ANALYSIS 22
12 23
FINENCIAL ANALYSIS

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PICIC Commercial Bank Ltd.

Vision
To be
Recognized
And
Accepted
As
Pakistan's
Leading
Commercial
Bank

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PICIC Commercial Bank Ltd.

Mission
PICIC Commercial Bank’s
mission is:
■ To have a diversified and
satisfied customer base.
■ To serve the market through
innovative banking solutions.
■ To offer high rate of return to
shareholders.
■ To foster Pakistan's economic
prosperity.
■ To create a good work
environment for employees
and foster team work and
career development.
■ To operate ethically and
maintain transparency in
operations.

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PICIC Commercial Bank Ltd.

INTRODUCTION

PICIC Commercial Bank Limited was incorporated in 1993 as Schön Bank

Limited and commenced its business on 4th April 1994, with a paid-up
capital of Rs. 500 Million.

In 1997, Al-Ahlia Portfolio Securities Company, Sultanate of Oman acquired

the major shareholding and changed Bank’s name to Gulf Commercial
Bank. Thereafter, in February 2001, the Bank’s management again changed
when Pakistan Industrial Credit and Investment Corporation acquired 60%
controlling shares from Al-Ahlia and changed its name to PICIC
Commercial Bank in May 2001. Since acquisition, the Bank performance
has turned around and it's now the fastest growing private commercial bank
in Pakistan.

At the time of takeover by PICIC in February 2001, the Bank had only 15
branches. Now it is the 6th largest bank in Pakistan after 5 nationalized and
privatized banks.

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PICIC Commercial Bank Ltd.

HISTORY

PICIC Commercial Bank Limited was incorporated in 1993 as Schön Bank Limited and
commenced its business on 4th April 1994, with a paid-up capital of PKR 500 Million.

In 1997, Al Ahlia Portfolio Securities Company, Sultanate of Oman acquired the major
shareholding and changed Bank’s name to Gulf Commercial Bank. Thereafter, in
February 2001, the Bank’s management again changed when Pakistan Industrial Credit
and Investment Corporation acquired 60% controlling shares from Al-Ahlia and changed
its name to PICIC Commercial Bank in May 2001. Since acquisition, the Bank
performance has turned around and it's now the fastest growing private commercial bank
in Pakistan.

At the time of takeover by PICIC in February 2001, the Bank had only 15 branches. Now
it is the 6th largest bank in Pakistan.

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PICIC Commercial Bank Ltd.

Board of
Directors
Chairman
Mr. Muhammad Ali Khoja

Directors
Mr. Waseem Haqqie
Mr. Hasnain Nazim
Mr. Manzoor Ahmed
Mr. Ghulam Haider Choudhry
Mr. Ahmed Salahuddin
Mr. Rahat Saeed Khan

President &
Chief Executive Officer
Mr. Zafar H. Naqvi
Company Secretary
Mr. Rahat Saeed Khan
Chief Financial Officer
Mr. Akbar A. Ladak
Board Audit Committee
Mr. Hasnain Nazim
Chairman
Mr. Muhammad Ali Khoja
Member
Mr. Manzoor Ahmed
Member
Registered Office
2nd & 3rd Floors, Spencer Building
I.I. Chundrigar Road, Karachi.
Tel: (021) 111-566-566
Share Registrar
THK Associates (Pvt.) Limited
Ground Floor, State Life Building No. 3
Dr. Ziauddin Ahmed Road, Karachi.
Tel: (021) 111-000-322
Auditors
M/s. KPMG Taseer Hadi & Co.
Chartered Accountants
Legal Advisor
M/s. Mandviwalla & Zafar
Advocates

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PICIC Commercial Bank Ltd.

Management
Head Office
Mr. Zafar H. Naqvi
President & Chief Executive Officer
Mr. Rahat Saeed Khan
SEVP - Head of HR & Administration /
Company Secretary
Mr. Tauseef Ahmed
SEVP - Head of Information Technology
Mr. Mamoon H. Farooqi
SEVP - Credit Administration & Control
Mr. Akbar A. Ladak
EVP - Head of Finance & Planning
Mr. Hadi Ali Khan
EVP - Head of Financial Institutions
Mr. Tariq Ahsan
EVP - Head of Treasury
Mr. Manzoor Elahi
EVP - Head of Compliance
Mr. Aziz A. Lakhani
EVP - Head of Risk Management
Mr. Sadaqat Khan
SVP - Head of Special Assets Management /
Consumer Banking
Mr. Naveed Elahi Malik
SVP - Head of Audit & Inspection
Mr. Ghazanfar Ali Khan
SVP - Systems & Operations
Mr. Ather Ali Khan
SVP - Corporate Affairs / Shares

Regions
Mr. Akhtar Ali Khan
EVP / Officiating RGM, Southern Region,
Karachi.

Mr. Khalid Rashid

EVP / Officiating RGM, Central Region,
Lahore.
Mr. Rahmat Ali
EVP / Zonal Head, Lahore South.
Mr. Syed Imtiaz Bokhari
EVP / Zonal Head, Lahore North.
Mr. Zahid Hussain Qureshi
EVP / Zonal Head, Gujranwala.

Mr. Faqir Ejaz Asghar

SEVP / RGM, Northern Region, Islamabad.
Mr. Shah-e-Room Khan
EVP / Zonal Head, NWFP, Peshawar.
Mr. S. Tauqir Haider Rizvi
EVP / Zonal Head, Rawalpindi.

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PICIC Commercial Bank Ltd.

MESSAGE FROM THE CHAIRMAN

Dear Shareholders,
I am extremely pleased to present the 2006
annual report of PICIC Commercial Bank Limited
that continued its successful streak with more
achievements. By the grace of Allah the Almighty,
your Bank achieved new milestones during the
year.
A number of critical financial indicators depicted
impressive performance. Deposits grew by more
than 11% while Investments rose by 14.6% over
2005. Overall asset mix was sustained at the
same level with similar level of earning assets
ratio. The equity of the Bank also showed
improvement despite increasing interest rate
scenario that led to thinning of spread.
Your Bank was successfully able to cope with
the increasing interest rate scenario. The challenge
was met by passing on reasonable increase to
the borrowers while at the same time give
adequate returns to the depositors. Although this
led to a decrease in percentage Net Interest
Margin (spread), still the Bank maintained its
reputation as economical service provider. The
other satisfying aspect of our operations was the
continuous increase in total income. This showed
an improvement of about 21%; up from Rs. 5,120
million to Rs. 6,176 million.
This is not only reflective of the expanded branch
network throughout the country but also shows
our increased focus on the Bank’s core business.
It is expected that added focus on core operations
and the wide branch network will further boost
growth in the years to come.
The branch network was expanded to 136
including 7 collection booths by the end of the
year and the Bank has applied to SBP for opening
of 20 more branches during 2007. Of these, 60 branches have the facility of ATMs
available to our customers while
another 20 ATMs will be installed during 2007. On-line banking has also been introduced
in almost all the branches
throughout the country for the benefit of our customers. This extended reach is of great
importance in view of our
plans for expanding the consumer finance side of our business.
The shareholders’ equity stood at over Rs. 4.5 billion at the end of 2006 as compared to Rs
4.2 billion at the end
of the previous year. With the regular ploughing back of profits, your Bank is now in a
better position to initiate and

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PICIC Commercial Bank Ltd.

sustain complex and large transactions. The Bank was also successful in increasing its
Capital Adequacy Ratio (CAR)
from 9.42% in 2005 to 9.89% in 2006 thereby improving the cushion to safeguard against
various risk exposures.

Your Bank has shown progress over the last few years, and has consistently been amongst
good performers in its peer group. On the Human Resource side, the number of employees
went up from 273 in the year 2000 to 1,270 at the end of 2006.
I hope that the process of acquisition of PICIC by NIB Bank, which was initiated at the
end of last year, will soon
be concluded. Your Board is convinced of the synergies this will bring and the vibrant and
powerful organization
that will emerge.
During the year a number of directors left the Board to be replaced by new directors. I
would like to thank the outgoing directors for their valuable contributions to the working
of the Bank during their tenure and wish them success in their future endeavors. I also
welcome aboard new directors and expect that their presence will further strengthen the
Board. All the members of the Board have made excellent contributions and given
generously their time throughout their tenure. I would like to thank them for their
involvement.
I would also like to appreciate the services rendered by our Ex President/CEO Mr.
Muhammad Bilal Sheikh. The Bank reflected tremendous growth during his tenure and
achieved new milestones. I, on behalf of the Board, acknowledge his excellent services
that led to the current status of the Bank. My heartiest welcome to the new President/CEO,
Mr. Zafar H. Naqvi who is ably performing his duties since appointment. Mr. Naqvi is a
seasoned banker with decades of experience in banking. My Board joins me in wishing
him all the best for his future endeavors and assure him of our continued support.
I would like to express my appreciation on behalf of the Board for the hard work,
dedication and team work
demonstrated by all employees of the Bank and especially the Management team so ably
led by Mr. Zafar H. Naqvi.
I would also like to thank the regulatory authorities for providing useful guidance.
I am also thankful to our valued customers for banking relationship with us. It is only
because of their trust reposed in us that we continue to achieve milestones. We will try to
consistently anticipate and surpass their expectations of our services and offer them need
based products.

Muhammad Ali Khoja

Chairman

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PICIC Commercial Bank Ltd.

SERVICES

• Commercial Financing
• Home Financing
• Car Financing
• Home Financing
• Telebanking
• Mobile Banking
• Motorcycle Financing
• Islamic Banking
• Deposit & Saving Products

INTERNET BANKING

As technology advances, PICIC Commercial Bank is set to use it

and make the best of it. Now introducing for its customers, Online Banking solutions.
With that customers can access their accounts for deposits, withdrawals or inquiries from
any branch nationwide.

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PICIC Commercial Bank Ltd.

SOURCE OF DATA COLLECTION

THIS DATA IS COLLECTED FROM

WWW.PICICBANK.COM.PK

AND
PICIC ANNUAL REPORT OF 2006

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PICIC Commercial Bank Ltd.

PROGRESS SUMMARY OF
PAST FIVE YEARS

PROFIT BEFORE TAXATION

AMMOUNT IN THOUSANDS OF Rs
2001======= 295,837 2500
1905
2000
2002======= 509,067
1500 1279
1126
1000 825
2003======= 825,071 509
500 295

2004======= 1,126,385 0
2001 2002 2003 2004 2005 2006

2005======= 1,905,620

2006 ======= 1,279,215

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PICIC Commercial Bank Ltd.

PROFIT AFTER TAXATION

1600 1504
2001 ====== 111,560
1400
1200
968
1000 896
2002 ====== 319,248
800 621
600
319
2003 ====== 621,412 400
200 111
0
2004 ====== 896,322 2001 2002 2003 2004 2005 2006

2005 ====== 1,504,039

2006 ====== 968,841

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PICIC Commercial Bank Ltd.

ANALYSIS OF PAST AND CURRENT

YEAR

SALES ANALYSIS

7000
2005 ====== 4,171,890 5797
6000

2006 ====== 5,795,979 5000 4171

4000
3000
2000
1000
0
2005 2006

SALES HAS INCREASED THAN PAST YEAR. THE INTEREST EARNED HAS INCREASED THAN
PAST YEAR.WHICH IS THE THE SALES OF THE BANK.

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PICIC Commercial Bank Ltd.

PROFIT ANALYSIS
2300 2265
2005 ====== 2,110,001 2250

2200
2006 ====== 2,265,650
2150
2110
2100

2050

2000
2005 2006

AS SALES HAS INCREASED SO IT IS DEFINITE THAT PROFIT HAS ALSO

INCREASED .

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PICIC Commercial Bank Ltd.

PROFITIBALITY AND
PERFORMANCE MEASURES

GROSS PROFIT MARGIN:

GROSS PROFIT/SALES

2005 ====== 50.57% 60

50.57
50
2006 ====== 39.09% 39.09
40
30
20

10
0
2005 2006

AS THE SALES HAS INCREASED SO GP MARGIN HAS DECREASED.

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PICIC Commercial Bank Ltd.

NET PROFIT MARGIN :

NET PROFIT / SALES
2005 ====== 36.05%
40
2006 ====== 16.70% 35
30
25
20
15
10
5
0
2005 2006

NET PROFIT HAS DECREASED THAN PAST YEAR SO NET PROFIT MARGIN HAS
DECREASED

EARNING PER SHARE:

6

2005 ====== 5.50 5

4
2006 ====== 3.54
3

0
2005 2006

EARNING PER SHARE HAS DECREASED IN 2006 DUE TO LESS PROFIT .

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PICIC Commercial Bank Ltd.

INVESTMENT ANALYSIS

RETURN ON ASSETS:
OPERATING INCOME / TOTAL ASSETS

1.6
2005 ====== 1.47%
1.4
1.2
2006 ====== 1.21%
1
0.8
0.6
0.4
0.2
0
2005 2006

OPERATING INCOME HAS DECREASED IN 2006.

RETURN ON EQUITY:
NET INCOME – P.D / COMMON STOCK OUTSTANDING
16
2005 ======14.6%
14

2006 ======11.33% 12
10
8
6
4
2
0
2005 2006

DUE TO THE COMMON STOCK DECREASE IN 2006 THE RETURN ON EQUITY

HAS DECREASED.

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PICIC Commercial Bank Ltd.

FINENCIAL ANALYSIS
CURRENT RATIO:
CURRENT ASSETS / CURRENT LIABILITIES
28.5
2005 ====== 25.81 28
27.5
2006 ====== 28.05 27
26.5
26
25.5
25
24.5
2005 2006

CURRENT LIABILITIES HAS DECREASED THAN PAST YEAR

ASSET TEST RATIO:
QUICK ASSETS / CURRENT LIABILITIES

QUICK ASSETS=(CURRENT ASSETS - INVENTORY)

2005 ====== 0.11 0.2

0.15
2006 ====== 0.18
0.1

0.05

0
2005 2006

DUE TO DECREASE IN CURRENT LIABILITIES THAN PAST YEAR THE ASSET

TEAT RATIO HAS INCREASED THAN PAST YEAR.

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PICIC Commercial Bank Ltd.

DEBT RATIO:
TOTAL LIABILITIES / TOTAL ASSETS

2005 ====== 0.93 0.942

0.94
2006 ====== 0.94 0.938
0.936
0.934
0.932
0.93
0.928
0.926
0.924
2005 2006

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