Portfolio Update September 2012
Bindar Trading and Investment GMFA Stake: 69.60% Company Website: www.bindar-jo.com Bindar Trading and Investment ( Bindar ) is one of the largest consumer finance companies in Jordan. Bindar finances vehicles for personal and commercial use, durable assets and real estate properties. Pre tax profit for H12012 stood at USD 981 compared to USD 629k for the same period last year. The loan portfolio grew by 5.4% and total assets increased by 7.9% over H12011. In line with growth strategy, Bindar is expanding its branch network a new branch in East Amman is about to commence operation. In response to improved performance and implementation of successful share buy back, Bindar s share price improved by 28% since 31 st March 2012. Bindar has sold its car rental and car trading subsidiaries to focus on core financing operations. To meet the growth challenge the company is maintaining strict internal controls, corporate governance and risk management regime to help expand business prudently without jeopardizing the asset-liability mix... Financial Year Ended 31 st December FY2009 FY2010 FY2011 H12011 H12012 Net Interest Income 3,932 4,249 3,817 1,792 2,121 Net Profit 1,783 (345) 1,463 774 771 Net Worth 30,804 29,046 30,468 29,899 30,252 Total Assets 48,794 43,157 42,306 41,614 44,707 ROE 5.79% -1.19% 4.80% 5.17% 5.11% ROA 3.65% -0.80% 3.46% 3.71% 3.44% Source: Audited financial statements for 2009,2010, 2011, and management accounts for H12011 & H12012. 2
Jordan Trade Facilities Company GMFA Stake: 87.30% Company Website: www.jtf.com.jo Jordan Trade Facilities Company ( JOTF ) was listed on the Amman Stock Exchange in 2001. JOTF provides financing for vehicles and durable assets and is one of the first companies to enter the consumer finance business in Jordan. JOTF is diversifying its product portfolio and has ventured in credit cards and SME financing. 3 For H12012, JOTF maintained the same level of net interest income as for H12011, however the loan portfolio increased marginally by 0.3% and total assets by 0.8% over last year. New financing during the period was 6.4% lower than last year. The trend is in line with material slow down in credit expansion of the regional financial institutions. JOTF is diversifying its product suite by offering student loans, SME financing, credit cards and customs bills discounting. Efforts are afoot to expand the leasing businesses to tap in the Islamic finance clientele. Beginning of 2012, JOTF successfully repaid 40% of its existing 5 year bond, one year prior to its maturity. The management is working with financial advisors to launch a new five year bond at competitive rates. Financial Year Ended 31 st December FY2009 FY2010 FY2011 H12011 H12012 Net Interest Income 3,370 3,736 3,886 1,932 1,854 Net Profit 502 2,045 1,988 1,065 687 Net Worth 25,630 27,662 28,102 26,923 26,522 Total Assets 42,196 41,434 44,538 42,071 42,432 ROE 1.96% 7.39% 7.07% 7.91% 5.18% ROA 1.19% 4.93% 4.46% 5.06% 3.24% Source: Audited financial statements for 2009,2010, 2011, and management accounts for H12011 & H12012
PTC India Financial Services Ltd. GMFA Stake: 3.68% Investment Date: March 2011 Company Website: www.ptcfinancial.com PTC India Financial Services Ltd ( PFS ) is a non-banking financial institution promoted by PTC India Limited ( PTC ) to make principal investments in, and provide financial solutions to companies with projects across the energy value chain. PFS recorded income of USD11.1mn in Q1FY13 (ending on 30 June 2012) compared to USD8.6mn in Q1FY12. During the same period, PAT stood at USD4.2mn compared to USD2.2mn last year, accounting for 91% YOY growth. Net interest margin and cost of funds equaled 9.1% and 8.7% respectively, compared to 5.0% and 10.5% for last year. Despite rising interest rates, PFS has managed lower funding cost and maintained its competitive edge by securing ECB funding of USD76mn. Debt sanctions for the quarter equaled USD176mn. Furthermore, since the quarter ended, PFS has sanctioned USD82mn to 3 power projects. The total debt sanctions at the end of Q1FY13 reached USD1,335mn, which is a 14% increase over the last year. To reduce concentration risk in portfolio, initiatives have been taken to diversify in other promising areas in energy value chain like ports, coal washeries, coal mining and energy equipment supply. Financial Year Ended 31 st March FY2010 FY2011 FY2012 Q12012 Q12013 Net Interest Income 438 6,938 12,647 1,885 5,829 Net Profit 5,659 8,339 30,278 2,241 4,235 Net Worth 141,399 229,210 230,357 229,210 230,357 Total Assets 213,239 382,648 386,097 382,648 386,097 ROE 4.01% 3.64% 13.14% 3.91% 7.35% ROA 2.65% 2.18% 7.85% 2.34% 4.38% Source: Audited financial statements for 2010, 2011,2012 and management accounts for Q12012 & Q12013 4
Al Manar Financing & Leasing GMFA Stake: 13.7% Company Website: www.almanar.com.kw Al Manar Financing and Leasing Company ( Al Manar ) is an Islamic financial institution providing Islamic Shari'ah compliant financial products and services across variety of sectors, including consumer, real estate and fleet financing. 5 Al Manar recorded USD7.1mn of financing revenue during H12012 and collected USD39.2mn of receivables compared to budgeted collection of USD36mn. The company s overall profitability for H12012 stood at USD3.1mn compared to budgeted target of USD2.3mn and net loss of USD5.6mn for the FY2011. The management continues to improve operational efficiency by optimizing G&A expenses and refinancing existing loans with new ones at lower rates. Net interest margin for the period stood at 7.83% compared to 9.41% last year. Interest spread reduced to 3.92% compared to 5.18% for the FY2011 on account of lower pricing of new loans and higher cost of funding. Management has secured new funding amounting to approximately USD22mn during the first half of 2012. Introduction of fiduciary accounts is likely to positively impact the company s cost of funding and expected to help raise significant amounts. Management is also considering mezzanine financing options as part of financing diversification strategy. Financial Year Ended 31 st December FY2009 FY2010 FY2011 H12011 H12012 Net Interest Income 13,275 13,636 11,690 5,727 4,983 Net Profit (14,511) 2,709 (5,692) 3,297 3,073 Net Worth 116,190 121,120 116,537 128,287 116,426 Total Assets 282,629 212,715 180,739 203,131 191,555 ROE -12.49% 3.91% -4.88% 5.14% 5.28% ROA -5.13% 1.99% -3.15% 3.25% 3.21% Source: Audited financial statements for 2009,2010, 2011, and management accounts for H12011 & H12012.
Al Soor Financing & Leasing GMFA Stake: 12.4% Company Website: www.alsoorfinance.com Al-Soor Financing and Leasing Company KSCC ( Al-Soor ) is a closed Kuwaiti shareholding company offering consumer finance, trade finance, and supplementary home improvement finance. During Q12013 ending on June 2012, Al Soor recorded net loss of USD 2.05mn compared to USD1.3mn profit for Q12012. The loss during the period is attributable largely to increase in provisions on two large corporate accounts which resulted in impairments of USD 2.06mn. The two accounts are expected to be restructured during the second quarter of the fiscal year. On a better note, new financing for the period improved to USD74.6mn compared to USD41.1mn for the same period last year. Loan portfolio grew by 23% y-o-y over Q12012. The company is currently undergoing a Central Bank of Kuwait supervised transition of its subsidiary, Al Mulla International Finance & Investments Company, into becoming an Islamic Finance Company. The management expects to have the license by the end of 2012. Financial Year Ended 31 st March FY2010 FY2011 FY2012 Q12012 Q12013 Net Interest Income 36,381 31,394 27,533 4,347 7,846 Net Profit 18,454 14,810 12,251 1,325-2,054 Net Worth 227,529 252,955 255,028 256,073 251,628 Total Assets 377,878 390,926 418,924 369,213 440,192 ROE 8.11% 5.85% 4.81% 2.07% -3.27% ROA 4.88% 3.79% 2.93% 1.43% -1.87% Source: Audited financial statements for 2009, 2010, 2011, 2012 and management accounts for Q12012 & Q12013 6
Dar Al Tamleek GMFA Stake: 4.67% Investment Date: June 2009 Company Website: www.daraltamleek.com Dar Al Tamleek ( DAT ) is a Saudi closed Joint Stock Shariah compliant company engaged in mortgage financing and servicing finance contracts. DAT currently holds an 11% share of the Saudi Arabian real estate financing market Net interest income for H12012 stood at USD 4.55mn a near 6% decline from H1 2011. Net profit for the period declined to USD3.68mn from USD8.12mn in H12011. The decline is attributable to reduction in income from servicing of mortgage finance contracts under Masakin programme. DAT is facing increased competition from banks offering aggressive pricing, lower down payment requirements and higher payment to income ratios. Currently 8 banks and 2 non-banking financial institutions are offering 0% down payment on their home finance products. The management of DAT views this trend as extremely risky. DAT is offering a new mortgage financing product catering to the Saudi citizens who have already applied to Real Estate Development Fund (REDF), a public sector housing initiative of Saudi Govt. Clients are offered the chance to obtain financing from DAT and then transfer their loans to REDF, upon receipt of approval. DAT distributed a cash dividend of SAR0.25/share equivalent to a dividend yield of 3.5% for 2011.. Financial Year Ended 31 st December FY2009 FY2010 FY2011 H12011 H12012 Net Interest Income 3,286 7,334 9,221 4,844 4,550 Net Profit (6,337) 6,076 15,690 8,123 3,683 Net Worth 120,968 127,071 134,813 140,893 138,486 Total Assets 139,366 158,801 186,935 196,677 211,985 ROE -5.24% 4.78% 10.81% 11.53% 5.32% ROA -4.55% 3.83% 7.96% 8.26% 3.47% 7 Source: Audited financial statements for 2009,2010, 2011, and management accounts for H12011 & H12012
Asian Finance Bank GMFA Stake: 6.67% Company Website: www.asianfinancebank.com Asian Finance Bank (AFB) is one of the three licensed foreign Islamic banks operating in Malaysia offering full range Shari ah compliant banking products for retail and corporate clients. It also provides some investment banking services. During H12012, AFB recorded net loss of USD 907k compared to net profit of USD 65k during H12011. The loss is attributable to impairment of USD 1.78mn on a vessel financing fund in which AFB invested in 2008. AFB s balance sheet expanded during H1 2012 with an increase of 24% in financing assets. This has put pressure on spread which has decreased from 1.77% for FY 2011 to 1.57% in H1 2012 while NIM decreased from 3.10% to 2.50%. The Board of AFB has urged the management to focus on corporate segment rather than SMEs where the bank lacks the bandwidth and infrastructure. QIB is also helping the bank to set up an investment banking arm which will share some of QIB s infrastructure for Middle Eastern clients. Financial Year Ended 31 st December FY2009 FY2010 FY2011 H12011 H12012 Net Interest Income 6,891 9,909 9,453 5,026 4,168 Net Profit 461 (10,989) 258 65 (907) Net Worth 95,525 124,378 150,099 157,450 148,236 Total Assets 605,233 727,177 768,608 691,819 863,887 ROE 0.48% -8.83% 0.17% 0.09% -1.22% ROA 0.08% -1.51% 0.04% 0.02% -0.21% Source: Audited financial statements for 2009,2010, 2011, and management accounts for H12011 & H12012. 8
BMI Bank BSC GMFA Stake: 10.0% Company Website: www.bmibank.com.bh BMI Bank (previously Bank Muscat International) is engaged in commercial banking activities through its eight branches in Bahrain, Qatar, and Seychelles. BMI currently offers a wide range of financial solutions through retail banking including SME banking, corporate banking, private banking, global trade services, international business development, financial institutions, correspondent banking, Islamic financial services and treasury services. The bank recorded net profit of USD761K in H12012 versus net loss of USD13.7mn in H12011. Net loans and advances grew by 40% compared to Dec 2011. Conventional customer deposits increased by 16.5% versus December 2012 and capital adequacy ratio stood stable at 19.7% (as of March 2012 ) versus 19.4% in December 2011. The Bank s high cost base continues to negatively impact the bottom line. The BOD has emphasized cost rationalization and operational efficiencies in IT and employee costs. The Bank is expected to report USD3.1mn of net profits for the year 2012 assuming no write-backs and political stability in Bahrain. Financial Year Ended 31 st December FY2009 FY2010 FY2011 H12011 H12012 Net Interest Income 37,873 36,963 29,774 14,809 19,342 Net Profit (44,936) (67,512) (12,787) -13,736 761 Net Worth 298,732 229,090 218,996 214,854 221,451 1,499,16 1,844,67 Total Assets 1,786,089 1,566,007 1,569,981 7 6 ROE -15.04% -26.62% -4.14% -12.79% 0.69% ROA -2.52% -4.19% -0.59% -1.84% 0.09% 9 Source: Audited financial statements for 2009,2010, 2011, and management accounts for H12011 & H12012
Industrial Bank of Kuwait GMFA Stake: 2.50% Company Website: www.ibkuwt.com The Industrial Bank of Kuwait ( IBK ) was established with the initiative of Government of Kuwait for the purpose of supporting industrial projects in Kuwait. The company provides medium and long-term financing for the establishment, expansion, and modernization of the industrial sector in Kuwait. For the year ended December 2011, Bank s net interest income reduced by 11% to reach USD 55mn, however net income increased from USD 28.6mn to USD 30.1mn attributable to major reduction in loan provisions and reduction in G&A expenses. The board recommended cash dividend of KD2 per share equivalent to a dividend yield of 1.3%. As on November 2011, the government Support level is maintained at 2, reflecting the strong likelihood of support by the government as a key shareholder of IBK and the Bank s systemic importance in funding the industrial sector in Kuwait. The outlook for all credit ratings for the bank remains Stable. Financial Year Ended 31 st December (in USD 000) FY2008 FY2009 FY2010 FY2011 Net Interest Income 82,465 65,407 61,432 54,691 Net Profit 34,161 10,623 28,618 30,112 Net Worth 716,051 671,981 722,259 745,417 Total Assets 2,073,553 2,196,251 2,162,242 2,340,774 ROE 4.77% 1.58% 3.96% 4.04% ROA 1.65% 0.48% 1.32% 1.29% Source: Audited financial statements for 2008, 2009, 2010 and 2011 10
Gulf Takaful Insurance Company GMFA Stake: 18.2% Company Website: www.gulftakaful.com Gulf Takaful Insurance Company( GTIC ) is a closed Shariah compliant shareholding company offering motor, property, general accident insurance, re-insurance products and insurance appraisals. Gulf Takaful has the largest medical provider s network in Kuwait, which includes over 74 hospitals, clinics, pharmacies and labs. Gross written premium for H12012 is US$ 9,813mn, a near 16% increase over the same period last year. Net deficit in insurance operations reduced from USD 1.7mn in H12011 to USD 1.3mn in H12012, reflecting the improvement in portfolio quality. Shareholders losses for H12012 stood at USD 439 thousand compared to profit of USD 554 thousand in the same period in 2011. Losses are largely attributable to decrease in the NAV of some of the funds in the investment portfolio. Global Capital Management ( GCM ) is working with the management to achieve cost reduction, improve portfolio quality, enhance organizational and management efficiency. Financial Year Ended 31 st December FY2009 FY2010 FY2011 H12011 H12012 Gross Premiums 15,769 14,244 17,305 8,466 9,813 Net Profit (5,318) (2,514) 1,534 554 (439) Net Worth 49,821 49,012 50,687 49,693 50,266 Total Assets 52,720 51,968 52,421 51,735 52,081 ROE -10.7% -5.1% 3.0% 2.2% -1.7% ROA -10.1% -4.8% 2.9% 2.1% -1.7% Source: Audited financial statements for 2009,2010, 2011, and management accounts for H12011 & H12012. 11
Al Fajer Retakaful Insurance Company GMFA Stake: 20% Investment Date: January 2010 Company Website: www.alfajerre.com Al Fajer is the first retakaful company in Kuwait. The company has a paid up capital of KD 50mn (US$175.1mn), and a license to operate reinsurance business for all kinds of takaful insurance. During Q12013, ending June 2012, gross written contributions increased by 6% compared to last year. Performance of participants fund & the shareholders fund remained in line with the budget. The company managed to recover 100% of its investment in the Investment Dar through settlement comprising 52% cash and 48% real estate properties in prime location in Kuwait. The management had already provided KD 3.6mn provision for this investment which might be released by end of the financial year. In the aftermath of firing of the CEO, a management committee led by GCM team member is effectively managing the company. Al Fajer remains focused on the diversification of the treaty portfolio by region, country, line and class of business in 2012/2013 and beyond. 12. Financial Year Ended 31 st March FY2010 FY2011 FY2012 2011 2012 April-July April-July Gross Contributions 44,290 58,492 62,946 24,920 25,092 Net Profit (19,578) (1,377) 788 423 1,658 Net Worth 163,150 161,769 160,201 160,434 159,366 Total Assets 163,150 170,058 169,406 168,768 170,817 ROE -12.8% -0.8% 0.5% 0.79% 3.1% ROA -12.8% -0.8% 0.47% 0.75% 2.9% Source: Audited financial statements for 2010,2011, 2012 and management accounts for the period April-July 2011 & 2012
For more information please contact: Rajiv Nakani, CFA Managing Partner Global Capital Management Ltd. T: +965 2295 1201 F: +965 2295 1268 Global Capital Management Ltd., 100% subsidiary of Global Investment House KSCC Global Tower, Sharq, Al Shuhada a Street, Kuwait www.globalinv.net