Escorts Investment Bank, owned by Malik Riaz through Bahria Town, reported huge losses of Rs. 154 million in the financial year 2017-18, which is 29 percent more than the losses it incurred in the previous financial year, i.e. Rs.119 million.
The new management strived hard to contain the losses of the bank after streamlining the operation of the investment and fulfilling the regulatory requirement of paid-up capital but it may take additional time in future with new operational strategy and new business plans in place.
According to the details, the first half-year results pertaining to old management had reported an after-tax loss of Rs. 95.856 million as compared to a loss of Rs. 37.538 million during the first half of the financial year 2017.
According to the financial report, the primary reasons for the increase in loss for the period included provision/impairment of assets, a shortfall in income for the period from Rs. 26.816 million to Rs. 8.836 million and balances written off amounting to Rs. 113.913 million. Further, deferred income tax asset of Rs. 62.566 million has been recognized on available tax losses due to foreseeable taxable profits of the company.
In the second half of the new management control, the investment bank has reported an after-tax loss of Rs. 58.553 million thus aggregating loss for the year that ended 30 June 2018 to Rs. 154.409 million. The primary reason for the increase in loss in second half relates to expenditures incurred to strengthen the company’s operations through the development of policies, manuals and procedures along with investment on human resource for effective and efficient team building.
The company has earned revenue of Rs. 22.973 million through investment in the treasury market and other income in the initial period after the acquisition.
Bahria Town invests Rs. 1.2 Billion In Escorts Investment Bank
Malik Riaz’s Bahria Town Private Ltd (BTPL) made an investment of Rs. 1.2 billion in Escorts Investment Bank to enhance its financial stability and regularity requirement of the bank and to dispose of outstanding liabilities.
It is pertinent to mention here that Bahria Town acquired 33,628,176 shares of the bank which comprises 76.254% of the total shareholding acquiring the majority shares of the company along with its management control in January 2018.
SECP Renewed License of Escorts Bank for Three Years
As the bank has successfully complied with minimum equity requirement of SECP along with satisfactory repayment of certificates of deposits, its license has been renewed under Investment Finance Services license for the period of three years along with permission to raise deposits.
The bank restructured all its departments and hired experienced and qualified professionals.
The new management, after the acquisition, focused on developing a strong structure to run the business efficiently and effectively, hired experienced and qualified professional team. The team worked on the development of strong control systems, started work on IT system improvements, development of products, marketing strategies, redesigning the website and also concentrated on the branding of the company, according to the financial reports.
Escort Investment Bank primarily focuses on the housing finance activities that will be carried out after developing a handsome portfolio of the bank. However, the management has decided that the business permitted under IFS license with emphasis on house finance shall be undertaken.
The management has decided to start microlending as a pilot project with the objective to provide resources to women and unemployed young people in backward areas especially in rural areas for small business. This pilot project shall be initiated in the near future.
The bank will open two more branches in Bahria town phase 8 Rawalpindi/Islamabad and in Tariq Road Karachi.