An Eye On The Future!

Our Strategy moves on…

It is a matter of great satisfaction for me to report that, once again, during the Quarter under review, considerable growth has been achieved under all the
heads viz. Share Holders Equity, Certificates of Investment (Deposits), Morabaha Financing, Investments and Total Assets.

The following table depicts the Quarter-on-Quarter comparison under different
areas of the operations of the Bank.

Financial Highlights (As at Sep. 30, 2004)

	The Profit-after-Tax for the last Financial Year was Rs. 73.62 million and the average Quarterly Profit-after- Tax last year was Rs.18.40 million. The Profit for the Quarter under review i.e. Rs.21 million is higher.
	Having achieved an increase in Net Profit of 383 % in the Financial Year 2002 ~ 2003 and 28 % in FY 2003 ~ 2004, the profitability of our Bank has reached above- market levels. It is but natural that the rate of growth will now settle down to lower but more sustainable levels.

	The First Quarter last year was an exceptionally good Quarter in the context of the prevailing market conditions. The Net Profit during that Quarter was substantially higher than the Quarters which followed.
	Conditions in the Stock Markets of the country remained generally depressed during the Quarter under review, with the volumes testing new lows. The bears remained in full control. The causes for this condition were specific to the Capital Markets, namely the announcement regarding the discontinuation of COT and imposition of taxes like CVT and WHT. The general increasing trend of the Interest Rates also added to the feelings of gloom. The Markets seem to have now absorbed the real or perceived threats of the aforementioned factors and an upturn has been witnessed.
	During the third and fourth quarter of last Financial Year our Bank made substantial fixed investments toward development of new Products and Services. These included activation of our Corporate Membership at the Karachi Stock Exchange and opening of new Investment Services Centers at the KSE Building Karachi, Davis Road Lahore and at Blue Area Islamabad. The benefits from these investments, in the shape of diversification of Revenue Streams and growth in Profitability, have just started to accrue and are likely to pick up in the very near future.

	In line with our resolve to shift from Pseudo Commercial Banking activities to genuine Investment Banking, we have been able to achieve very significant growth in our fee-based income (55% of our last year's fee-based Income has already been achieved in the first Quarter). Fee-based income now constitutes 13 % of the Bank's total income as compared to 7 % in the last year's revenues.
	The Balance Sheet size of the Bank increased by Rs. 378 million during the first Quarter.
	Total Investments have increased by Rs. 1 billion during the period under review.
	Total Deposits have shown a growth of Rs. 91 million during the Quarter. Moreover the Weightage Average Cost (WAC) of total deposits has gone down.
	The First Tranche of Rs. 275 million of our Privately Placed Term Finance Certificates has been fully subscribed.

Future Outlook

October 24, 2004
Lahore