An Eye On The Future!

Right from the day when I took charge of my present responsibilities as the
President & CEO of Escorts Investment Bank, on December 1, 2001, and together with my colleagues, launched our Five - Year Business Plan Escorts Beyond 2001,
I have believed that while we are engaged in creating Value for our Shareholders, Customers and Companies we do business with, we should avail of all occasions to communicate with them. This is one of those cherished moments again!

I am absolutely delighted to update you on the performance of Escorts Investment Bank Limited during the Financial Year July 2004 ~ June 2005:

Financial Highlights (As at June 30, 2005)

	Value Creation All our activities contributed significantly; either through direct revenue generation or toward achievement of our Broad Policy Objectives. As a result Gross Income grew by over 105 % from Rs 239 million to Rs. 489 million. Total Operating Profit (before provisions & tax) grew by 118 % to Rs.180 Million. Net After-Tax-Profit grew by 74 % to Rs.129 million. The significant increase in profit reflects the strength of our business. The Bank has been paying out consistent Cash Dividends at 15 % for the last three years (including the Interim Payout this year). Additionally the Board of Directors has recommended a Final Dividend in form of 5% Bonus shares i.e. one share for every twenty shares held.
	Sustainability through Diversification Business Diversity increases our stability, so as we grow, we are ensuring that our operations become more diverse, both in terms of Products and Geographical Diversification. In addition to our Investment Services (Brokerage) Centers (ISCs) at Karachi, Lahore and Islamabad another ISC has recently become operative at Faisalabad. All arrangements are also in place to start operations at our Investment Services (Brokerage) Center Sialkot, followed by Peshawar. The increase in Equity shall also enhance our ability to support new business initiatives and maintain good Credit Ratings. Moreover a simple look at the Financial Highlights of our accounts for the last four years would convince you of the Stability of our Operations and Sustainability of the Bank' growth under all heads.
	From Pseudo Commercial Banking to Investment Banking Our resolve to move on to sophisticated high-end Investment Banking Activities is amply reflected in the increase in our Fee and Commission Income, which grew by 342 % (over the last year) to Rs. 75 million. The share of Fee and Commission Income in Total Revenue increased more than two folds just within the year under review.
	High Asset Quality Prudent Asset Management Policies coupled with prompt and proactive remedial measures have kept delinquencies at their lowest thus ensuring the high quality of our Assets; total infected portfolio (net of provisions) is 0.74% of the total assets.
	Good Governance & Best Business Practices Practicing Governance means ensuring that we have a comprehensive set of ethical principles plus a team that is committed to ensure that all our business activities are conducted according to those principles. In other words we have to live up to high standards that are independently verifiable. We have a very capable Board of Directors that approves the bank's Strategic Plans and formulate Polices. Complete Operational Autonomy has been granted to the Executive Management to ensure that all transactions are at arms length, in the best interest of the company and its shareholders at large. An independent Head of the Internal Audit reports to the Audit Committee of the Board and the Board receives Quarterly Reviews on Internal Controls. The Compliance Department has been further strengthened to ensure competent and vigilant oversight of all operations.
	Professional Efficiency & Constant Improvement Our unique mix of skills, combined with our more streamlined structure, enable us to act quickly with greater cost efficiency. Cost efficiency is particularly relevant to our business as it becomes more and more competitive and where regulatory changes and a roller-coaster interest rate regime have put added pressure on cost margins. Continuing Cost Management Initiatives across the spectrum of our activities are evidenced by a gradual but constant decrease in the Expense to Income Ratio from 81.49% to 61.61%. Our lean model enables us to move quickly creating opportunities from changing market conditions.
	Three and a Half Years of Escorts Beyond 2001 As a result of successful implementation of the Five-Year Business Plan, Escorts Beyond 2001 starting January 2002, the Bank's Assets have grown by more than 5 times, Net Profit-after-Tax has shown an increase of 2785 %, EPS has moved from 46 Paisas to Rs. 4.31 per share while Net Asset Value per Share has increased from Rs. 10.78 to Rs. 15.14. The Shareholder's equity has more than doubled. Return on Capital Employed which was around 1 % is now 29.78 % and the Bank's Credit Rating has been upgraded three times by JCR-VIS to the present Rating of 'A' and 'A2' for long and short term, respectively.
	Future Outlook If the past is a precursor to the future, the contents of the preceding paragraph have already set the tone for the Future Outlook for Escorts Bank. We remain firmly committed to our present well-defined and focused strategy. Escorts Beyond 2001 has been a hugely successful Business Plan and we are very confident this will continue to serve as a road map for future. We are confident that our strategy will continue to reward shareholders with returns significantly above market. We have a number of strategic priorities over the next year. System and Process Improvement is of paramount importance and we have set strict targets for improvement in all our activity areas.

All our successes stem from one common root; the skills and expertise of our team fuelled by sheer commitment, dedication and hard work. I owe my sincere gratitude and appreciation to all of them. On our part, we are determined to provide a safe, rewarding and enjoyable, though at times demanding environment, to each member of the Escorts Team.

I take this opportunity to thank the Chairman and the Board of Directors of our Bank for their guidance and support, and the State Bank of Pakistan and Securities and Exchange Commission of Pakistan for their commitment to see the Reform Process through and for providing the necessary enabling environment.

Looking forward to your input and support!

September 21, 2005
Lahore