NBFI, Modaraba sector posts Rs779m net profit

RECORDER REPORT

KARACHI: The country's NBFI and Modaraba sector has posted net profit of Rs 779 million in the year ended on June 30, 2011 as compared to a cumulative loss of Rs 261 million in the previous year.

Total assets of the sector stood at Rs 70,804 million and the total equity at Rs 18,391 million.

"Despite the challenging business environment, uncertain political situation and financial stress, the NBFI and Modaraba sector has shown better results during the year ended June 30, 2011, compared to the previous year", Basheer Chowdry Chairman of NBFI and Modaraba Association of Pakistan said this while speaking at the launching ceremony of Year Book 2011 of NBFI and Modaraba at a local hotel here on Monday.

Basheer Chowdry said that the Yearbook had become a well recognized publication to keep the constituents informed about the contribution of the NBFI & Modaraba sector towards the national economy and also provide an overview of the members' individual performance.

He said that the strenuous efforts made by the members to resolve the impact of 2008-2009 financial meltdown deserved due recognition and appreciation. Dealing with the performance of the Modarabas, he said that during the year 2011, 21 out of 26 Modarabas declared profit and 18 distributed cash dividends to their certificate holders between the ranges of 2 percent to 73 percent.

Continuing with the sector performance, he said the nine months' results up to March 2012 have shown mixed trends.

Leasing companies and investment banks profits has come down but the Modarabas assets and equity remained intact and their profits for nine months were at an encouraging figure of Rs 936 million.

He thanked the Securities and Exchange Commission of Pakistan (SECP) for its understanding and support of the sector in the difficult times and said that an NBF Reform Committee had been constituted consisting of SECP executives and market representatives to formulate recommendations for the promotion and growth of a sustainable NBFI sector. He said that upon compilation of the Report, the Association would conduct further discussions to carve out the future strategies for various components of the sector.

He informed the participants that the NBFI Reforms will bring about a tide of vast change for the sector and those who wish to be a recognizable part of its future and, therefore, the members would need to take a critical view of their past experiences, corporate capabilities, financial and human capital, operating efficiencies and their enterprising skills to be a part of the future.

Speaking on the occasion, Jawed Hussain, Registrar Modarabas, SECP, appreciated the efforts of the Association in conducting the Code of Corporate Governance seminar and various other activities and also for launching the Yearbook.

He said that all medium to long term issues of the NBFI's and Modarabas were being addressed in the recommendations of the NBFI Reform Committee, which are in the final stages of compilation. He appreciated the Modarabas for being able to face the market challenges in the past successfully, by maintaining equity, assets, profitability and a consistent record of dividend distribution.

He advised the Modarabas to explore the diversity and potential of the Modaraba concept by undertaking innovative business activities and spreading their operations to the rural areas instead of concentrating on the major cities.

He said that the Shariah Compliance and Audit Mechanism introduced recently was aimed to enhance the market image and business linkage of Modarabas with the Islamic Banks.

The Yearbook 2011 of the NBFI & Modaraba Association of Pakistan was launched in a ceremony in which the CEOs and Directors of Leasing Companies, Investment Banks and Modarabas participated.

Earlier, a seminar on the revised Code of Corporate Governance was conducted by Asad Ali Shah, Managing Partner, Deloitte Pakistan for the benefit of the participants.

Asad Ali Shah explained the salient features of the revised Code, particularly the changes and amendments introduced in April.  He was of the view that the revised Code was more relative to the changing requirements of the corporate sector, locally and internationally, and was aimed to achieve better reporting, effective governance and transparent conduct of business by the corporate sector. The role of the independent directors was discussed in particular and its implications on the quality of the board proceedings dealt with.

A trophy was presented to Standard Chartered Modaraba upon completion of its 25 years of business operations and the significant achievements and contributions of the Modaraba were recognized.