Inception Of The Summit Bank Finance Essay

Since the origin of the Summit Bank on 18th August 2010 the bank has focused on an aggressive growing scheme and reinvented its mission and vision statements, the bank was antecedently known as ArifHabib and was Partially acquired by Suroor Investments a stron fiscal group. Later took topographic point the acquisition of Mybank this is where this research undertaking has played the function.

The Research undertaking focuses on the station amalgamation profitableness analysis with two attacks ( I ) Financial comparing before and after the amalgamation, ( two ) Questionnaire information tabular matter where qualitative information was measured. Once the consequences of the two attacks were obtained they were combined to make an reply to the hypothesis of the research.

The purpose of the survey was non to analyze this peculiar meger entirely but was besides to see what elements affected in doing a amalgamation consequence as a good/profitable/ efficient/ right determination amalgamation.

It besides opens manner for chances related to future bank amalgamations. Actually the determination devising of those amalgamations what should be the pre-requisites.

Strategic direction was good studied and discussed with the directors and employees, followed by an in-depth analysis of the organisational effects it had.


Company Overview

Summit bank which is the topic of our survey is soon one of the fastest turning commercial bank. Coming to development of the Summit Bank

“ The Pakistan operations of Rupali Bank Limited were acquired by Arif Habib Securities Limited under the Scheme of Amalgamation approved by the State Bank of Pakistan. The name of Rupali Bank Ltd was later changed to Arif HabibRupali Bank Ltd and so eventually to Arif Habib Bank Ltd in October 2007. On 31st March 2010, Suroor Investments Ltd, A a company incorporated in Mauritius, acquired 59.41 % interest in Arif Habib Bank Ltd from Arif Habib Securities Ltd, and on 18th August 2010, ArifHabib Bank Ltd was rebranded as Summit Bank Ltd. Suroor Investments Ltd, besides entered into portion purchase understandings ( SPAs ) with bulk stockholders of MyBank Ltd and Atlas Bank Ltd, who after completion of the minutess have merged in Summit Bank Ltd spread outing the Bank ‘s geographical outreach with a web of 166 Real – Time Online subdivisions across the state. In line with the direction ‘s vision of doing this bank a front smuggler amongst its equal Bankss, this amalgamation has brought synergisms and entree to a wider scope of markets and clients. ”[ I ]

This is information shows that the bank went through several phases of acquisition and amalgamation before going what it is today. This besides shows that the bank had different direction hence different determination shapers at different stairss, we can non disregard the places Mybank and Atlas Bank and the survey must individually analyze the fiscal statements this will besides let us to analyze the synergisms and loads contributed by the amalgamation which is portion of analyzing the Profitableness of the amalgamation.

Summit Bank Today

After completion of amalgamation with My bank on 30th December 2011 the bank is now runing with a subdivision web of 165 subdivisions.[ two ]As a consequence of amalgamation multiple subdivisions were located in the same locality which were rheniums located strategically and were able to cut down rental costs by Rs.53 Million.[ three ]This is a immense synergism that is observed in decrease of disbursals and will impact the gross of the Current Bank.

Board of Directors of Summit Bank

Mission Statement

To be a fiscal establishment based on Trust, Integrity and Good Governance.

To present fiscal solutions to our clients.

To supply equal chances & A ; professional working environment to our employees.

To supply just return to our stockholders on their investing.

To function the community at big.

To dispatch corporate societal duty.[ four ]

Vision Statement

To be the preferable supplier of fiscal merchandises & A ; services to the markets[ V ].


From the above provided information we do recognize that the Bankss attack is focused. The bank is clear of its aims and of the way that needs to be followed in order to accomplish the above stated model.

The first clause of the mission is sing the work moralss of the bank the 2nd half ensures engaging of competitory, effectual and efficient direction.

The 2nd clause ensures that the company want to give its employees a professional and yet comfy environment.

Third clause being most of import in footings of profitableness cheque and struggle of involvement.

The 4th is the intent and endurance of the organisation and the last 1 is the realisation of duty.

Merchandises and Servicess Offered

The Banks Services may be divided in Six Core Servicess


There are six nucleus services offered by the bank which is a competitory figure for a bank of this size in the peculiar part. They are good distinguished from each other and cater to all sections and sectors from persons to SMEs to big corporate organisations leting a broad scope of signifiers of minutess that may be made.

Deposit Merchandises

Summit Classic Account

Cardinal Features:

One history with a package of merchandise

Minimum monthly mean balance every bit low as Rs. 50,000/-

Up to 3 Visa Debit Cards free.

Particular Retirement Or Investment Insurance Plan at merely Rs. 2000/month ( bancassurance )

Loan Facility ( secured ) with particular rates[ six ]

Current History

Non-interest bearing

Starter check book issued when the history is opened

UnlimitedA free-of-costA dealing installation

No tax write-off of Zakat

Choice of periodic statements ( monthly, quarterly, semiannual and one-year ) by station

Entree to account statement anytime through Internet Banking installation

Account dealing information through SMS

Free issue of VISA debit card

Cash backdown through big ATM web[ seven ]

Savingss Account

Starter check book is issued when the history is opened

No punishment on minimal balance non being maintained

Choice of periodic statements ( on monthly, quarterly, semiannual and one-year footing ) by station.

Access to your history statement anytime through our Internet Banking and e-Statement installations

Account dealing information through SMS

Free issue of a VISA debit card

Easy hard currency backdown through a huge web of ATMs[ eight ]

Term Deposits

Persons ( individual or joint )

Minor leagues ( to be operated by the defender )

Charitable establishments

Provident fund & A ; other financess of benevolent nature

Local organic structures

Autonomous corporations

Limited companies[ nine ]

Firms, associations, educational establishments, fiscal and other establishments who intend to retain their sedimentations for a fixed period in order to gain a higher rate of net income.


Deposit Limits

Rs. 50,000 up-to Rs.10 million

Rate of Net income

Term Deposits

Expected Rate of Net income

3 Calendar months

8.50 %

6 Calendar months

8.75 %

1 Year

9.50 %

2 Year

10.00 %

3 Year

10.00 %


Source Official Website Summit Bank dated 9/8/2012

Daily Product Account

Here the involvement is calculated on the day-to-day shutting balance.

Hamara Summit Family Savings Account

Key Features

Grouped histories for the household

Initial Investment Requirement-Rs.5,000/-

Minimal Balance Requirement-Rs.5,000/-

Attractive return of 9 %

Extra 2 % as fillip characteristic

Up to Five free Visa debit cards

Minor leagues can do purchases and retreat hard currency at ATMs via the Visa Debit Card[ x ]

Summit Advantage Account

Cardinal Features:

Maximum Loan up to 70 % of the depositA with no extra markupA ( 11.0 % p.a. )

Exceptional returns up to 11.0 % p.a.

Monthly net income payout

Term: 1 twelvemonth

Minimal investing of Rs 100,000/- with a maximal bound of up to Rs 50,000,000

Entree to aA scope of value added installations[ xi ]

Acme Sixer

Added Insurance


The above information describes the Key characteristics of each merchandise. In-depth survey of the merchandises makes the cardinal differences evident of merchandises under the same class. In this peculiar compose up the differences in sedimentation merchandises are apparent. The different nest eggs rates offered depending upon lower limit sedimentations, on your income, on the clip period of the sedimentations, if the rates are altering with every twelvemonth or month so what conditions is to be met. The bank has made attempts to suit maximal sedimentation base through the assortment of merchandises and flexibleness given to the consumer.

This allows the consumers to take harmonizing to their ain sedimentation demands.

Corporate and Investment Banking

Commercial and SME Banking

Commercial & A ; SME Division marks Medium Sized Companies with a turnover of at least PKR 25 – 50 million.A

Financing is offered to the following

Working Capital Financing

Procurement of Inventory

Receivabless financing

Procurement of Machinery

Expansion of production installations

Basal metabolic rate

Import / Exports

Guarantees[ xii ]


Home Finance

These are chiefly mortgage loans. These loans are offered for immoveable belongings such as lodging finance. The intent is to let

Personal Finance

The salient characteristics of this program are appended here-under:

Loan Amount

Minimal: Rs.25,000/-Maximum: Rs.1,000,000/-

Loan Tenor

Minimum: 1 yearMaximum: 5 old ages

Type of Loan

Term Loan

Type of Facility


Type of Markup

Fixed During Loan Term

Premature Payment Facility


Loan Enhancement Facility

AvailableA A ( History / Income Based )

Loan Top-up Facility


Beginning: Official Website of Summit Bank as at 9/8/12


“ Bancassurance ” A is the distribution of insurance merchandises by Bankss, through their ain distribution channels.

The Products and Sub-Products are listed below

MetLife Alico

The Graduate Plan

The Wedding Planner

Golden Age Plan


Jubilee Life

Jubilee Life ( officially New Jubilee Life Insurance Company Limited ) , a subordinate of the Agha Khan Fund for Economic Development ( AKFED ) , Switzerland, brings planetary experience to Pakistan. For over a decennary, Jubilee Life has been in the concern of supplying clients with a better life ; a life of security and safety. Jubilee Life ‘s clients can be secured in the cognition that their operations are backed by an internationally acclaimed organisation with planetary range.[ xiii ]


A combination of nest eggs and protection elements guaranting that the household is secured even after retirement.

The salient characteristics of this program are appended here-under:

Merchandise Type

Unit of measurement linked life insurance

Policy Term

Min 10yrs to max up to 57 year with retirement age 55 – 75 year pick

Minimum Basic Premium

Annual 24000/ , A

semi-annul 12000/ ,

quarterly 6000/-

Monthly 2000/-

Premium Payment Method

Direct debit from SMBL history

Eligible Age for Enrollment

Min 18yrs to Max 65yrs

Unit of measurement Allotment

1yrs policy 30 % A

2yrs policy 85 %

3yrs policy 90 %

4yrs onwards 100 %

AVAP 100 %

Investing Stratigies

Managed FundA

Yaqeen Growth Fund

Meesaq Fund

Capital Growth Fund

Loyalty Bonus

5 year and onwards 3 %

Maturity Benefit

At the terminal of the chosen term of the program, the policy holder will have the accrued hard currency value of the program. If the attained age of the policy holder at adulthood is 55 year or above, he will besides hold an option to utilize the hard currency value, to purchase a pension, particularly tailored for persons who prefer a steady watercourse of income alternatively of a ball amount sum, at the clip of retirement. The Pension term and conditions will be defined at the clip of the adulthood.

Free Look Period

14 yearss

Partial Withdrawal

If you need to retreat hard currency for run intoing some exigency demands, but do non desire to give up the policy, you can retreat any sum provided that the residuary hard currency value of your policy after backdown is greater than or equal to Rs. 24,000 ( the remainder hard currency value floor may be reviewed by Jubilee Life )

Grace Period

30 yearss ( reclamation )

Policy Resignation

After completion of two policy old ages ( given two twelvemonth ‘s complete premiums have been paid ) , you can give up your policy. At the clip of resignation, you will be paid in full the hard currency value of your fund. However, resignation in early policy old ages may ensue in lower hard currency values.

Non-Medical Limit

PKR 2.0 Million upto Age of 44 years

Optional Riders

*Optional Riders available on petition

Beginning: Official web site of Summit Bank as at 9/8/12


SunehraAaghaaz offers to do regular, systematic nest eggs, and allows for protection to the household from uncertainnesss.

The salient characteristics of this program are appended here-under:

Merchandise Type

Unit of measurement linked life insurance

Policy Term

Min 10yrs to max up to 70 years

Minimum Basic Premium

Annual 24000/ , semi-annul 12000/ ,

quarterly 6000/-

Monthly 2000/-

Premium Payment Method

Direct debit from SMBL history

Eligible Age for Enrollment

Min 18yrs to Max 65yrs

Unit of measurement Allotment

1yrs policy 30 %

2yrs policy 85 %

3yrs policy 90 %

4yrs onwards 100 %

AVAP 100 %

Investing Stratigies

Managed Fund

Yaqeen Growth Fund

Meesaq Fund

Capital Growth Fund

Loyalty Bonus

5 year and onwards 3 %

Maturity Benefit

Account value Payable in Lump sum Payment

Free Look Period

14 yearss

Partial Withdrawal

If you need to retreat hard currency for run intoing some exigency demands, but do non desire to give up the policy, you can retreat any sum provided that the residuary hard currency value of your policy after backdown is greater than or equal to Rs. 24,000 ( the remainder hard currency value floor may be reviewed by Jubilee Life )

Grace Period

30 yearss ( reclamation )

Policy Resignation

After the completion of two policy old ages ( given two old ages ‘ complete premiums have been paid ) , you can give up your policy. At the clip of resignation, you will be paid in full the Cash Value of your fund. However, resignation in early policy old ages may ensue in lower hard currency values.

Non-Medical Limit

PKR 2.0 Million upto Age of 44 years

Optional Riders

*Optional Riders available on petition

Beginning: Official web site of acme bank as at 9/8/12.

Electronic Banking

Our Mobile Banking allows clients to avail a assortment of banking services of pure SMS-based engineering, including nomadic balance recharge and public-service corporation measure payments, every bit good as history information.

Internet Banking is another channel on which we offer extended banking services. Customers can see history information, wage measures, reassign financess, and conduct many other minutess through their history ( s )

Therefore supplying a fast, secure and convenient manner to banking.

Summit Bank isA a member of 1LINK Guarantee Limited. To larn about the merchandises and services offered by 1LINK, please chink on the linkA hypertext transfer protocol: //[ xiv ]


Summit Bank has designed and developed its ain electronic interface by the name of ‘Amanat Cash ‘ to ease assorted exchange companies and Bankss to direct place remittal to Pakistan on existent clip footing. This has made possible, for all Pakistanis, to have remittals by their loved 1s for FREE, in a fast and to the full secured mode. The service we offer is readily available to every one regardless of holding history in Summit Bank.[ xv ]

Outstanding Features Of Summit Bank Home Remittance includes:

Fastest Account Credit


Quick Processing

Real Time

Premium, entirely dedicated friendly Customer Service for Home Remittance Customers.

24/7 Customer support through Contact Center.

Trade Finance

Trade Finance

Trade Finance being the premier focal point of our Management, we offer broad assortment of Funded and Non-Funded Trade related installations.[ xvi ]

Other Servicess

To go extremely Competitive in the field Evening Banking Branches were highlighted these subdivisions operate longer than the usual banking hours, to farther heighten the experience e-banking services were introduced which did fulfill the demands of different sections of the consumers. The Saturday banking subdivisions were besides singled out as Saturday is vacation for other Bankss. The Bank was successfully able to go portion of the VISA international web by August 2011.[ xvii ]This allows the bank to increase the beginning of foreign exchange every bit good as income non to bury it removes limitation from being able to obtain local currency from anyplace where ATMs are located.

These policies show that the bank is ambitious to accomplish its ends of broadening and diversifying its client base, uninterrupted invention and add-on to merchandise and services offered, besides, to go on to increase its present e-banking and ramifying banking services.

Literature Review


Banking is portion of the fiscal systems ; which has a huge figure of establishments working under it for the allotment and mobilisation of fiscal resources, is an built-in portion of the economic system.

Banking in my position is a phenomena itself no less a universe of its ain yet so closely related to the planetary economic phenomena, concern rhythms, and money supply. They act as mediators between the excess units and the shortage units. Rescuers are chiefly families, whereas borrowers are concerns, investors and houses “ As providers, families are depositors of nest eggs ; as users they are borrowers of the banking system, where Bankss are fiscal mediators.[ xviii ]

When speaking of the construction of the fiscal system it is divided in two parts indirect finance and direct finance it is the indirect finance where commercial Bankss play a function.

The mechanism shows us how Bankss are driving forces for the economic development through economic growing when the borrowers have successful concern ventures ensuing in net incomes which result in corporate enlargement increased income and increased employment cut downing bettering the state ‘s GDP.

Now once we are through with the function of Bankss let us non bury that commercial Bankss are besides concerns which need to be successful concern ventures and failure to do net incomes can take to their shutdown and deteriorate the trust of the rescuers from the banking system, particularly in a developing economic system such as Pakistan. Banks have their ain merchandises which are a beginning net incomes their balance is different yet the same if the merchandises are understood good. Traveling on banking in Pakistan is every bit much a babe as the state itself and with the many economic and other political and many more factors the banking system has suffered much, political influence in the wreckage of Bankss can non be ignored.

The relationship is explicit in the diagram on the following page.

There is a list of Banking Risks faced by the Bankss whose in deepness analysis is interesting and a new gap.

FINANCIAL SYSTEM: Flow of financess Structure & A ; Operationss

Str[ xix ]

Debt or Equity Fundss

Investing financess

Investing Fundss

Surplus Unit of measurements

Savers Households Business Firms Government Foreigners

Deficit Units Spenders Households Business Firms Government Foreigners

Debt or Equity Fundss

Direct Finance

Fiscal Markets

Loan Fundss

Deposit Fundss

Indirect Finance

Fiscal IntermediationBanking Sector in Pakistan

When speaking about Bankss it is the cardinal bank which ne’er loses its importance which in most portion of the universe is separate from the authorities which truly does n’t intend it is separate from political influences.

In Pakistan State Bank plays the function, gives all the advises and put all the regulations and ordinances non to bury offers investing chances to the Bankss in Pakistan to a high degree that economic growing is really reduced.

Before we move on to the current banking construction Lashkar-e-Taiba ‘s see what history tells us at the clip of divider all Bankss but two moved to India with all their major clients, the two Bankss which stayed included Habib Bank and all in all Pakistan had 70 subdivisions of Bankss in all. At the clip there was no cardinal bank for Pakistan and Reserve Bank of India acted as the cardinal bank as Pakistan did non hold its ain currency nevertheless India shortly started to retreat the currency. This gave the freshly born state a immense set back as the Reserve Bank started retreating money Pakistan so came up with its ain currency and in June 1948 Pakistan succeeded to make so. Then came development of the fiscal sector which was shortly met by two wars 1965 and 1975 which were a set dorsum to the system.

Today, after much battle the banking sector in Pakistan has made a base and demands to better further, foreign Bankss have come in after denationalization of the banking sector was introduced the corporate sector was given credits which once more further improved the places and after this rapid decennary long stage of denationalization we recognize the 6 largest Bankss of Pakistan peculiarly in footings of sedimentation per centum. This introduced involvement rate banking in more free and obvious ways.

However presently in the twelvemonth 2012 it is observed that many big foreign Bankss have wrapped up their system and program to recover.

The growing rate of the sedimentations say Fiscal nest eggs besides play a critical function, during the past decennary this mean growing rate of fiscal nest eggs was 13 % per twelvemonth.[ xx ]

Fiscal system sedimentations include banking system sedimentations and NBFI ‘s sedimentations. NSS are non portion of Financial System Deposits, these have increased from Rs 1174 Billion to Rs 4731 Billion over the past decennary. And Banking Deposits were the largest being being 97 %[ xxi ].

The banking sector of Pakistan consists of the entire 40 Bankss in which there are 4 public scheduled Bankss runing, 25 local private Bankss, 7 foreign Bankss and 4 specialised Bankss[ xxii ].

Post-Merger Profitability Analysis

As observed from the past surveies it is seen that huge figure of academic research analyze pre and post-merger efficiency and profitableness nevertheless it is besides observed that these surveies are done with regard to a peculiar topic such as the wealth holder that is the equity holder, nevertheless this peculiar research paper will analyse efficiency and profitableness in peculiar from the position of the institute itself and therefore the stockholder.

In order to measure the fiscal public presentation of an institute usage of fiscal ratios is like a cosmopolitan criterion which will be the chief research methodological analysis used here. The research method has besides been used by ( Kemal, 2011 ) for RBS. In his paper he has mentioned Rhoades ( 1993 ) whose paper had 33 bank to bank amalgamations as a sample and he has discussed cost and net income efficiency with boundary lines and cross boundary lines and no cost efficiency was analyzed cross boundary line amalgamations. Another paper Resti ( 1998 ) analyzed the paper with regard to public presentation, mark markets of incorporate Bankss and reached to a decision that the efficiency did increase in the ulterior old ages of the amalgamation if the size of the bank was non excessively large. The article besides concluded that it was better if the merged bank were of equal size.

Challenges & A ; Issues

The higher recognition hazard in the signifier of non-performing loans is impacting the public presentation of the bank in peculiar where we have authorities influence. Second major issue is that of public presentation is that the public Bankss are more affected by the inauspicious state of affairss of the economic system and non-satisfactory administration the higher grade of capital losingss result in insolvency which is so covered by the SBP. To make a higher grade of competition and to increase the transparence in the direction of the whole system denationalization should be considered as a basic docket.

Proper variegation of the hazard among all the sectors should be done e.g. curtailing the flow of recognition to merely a few sectors which consequences in the net incomes extremely skewed to the public presentation of those sectors which can farther be of high hazard. The high liquidness demands by bank can besides be a beginning of inefficiency doing its proper direction a important undertaking. As keeping a higher degree of liquidness the needed means the bank is under using its assets doing the banking concern cost uneffective by increasing the costs of support

There is a demand to place all the supervisory governments ; their duties, effectual execution of the supervisory model for which the trained staff is a requirement. Strict notice should be taken with regard to enforcement of jurisprudence, executions of the judgements of the tribunals on the footing of the differences associating to the fiscal issues.

Hence, the efficiency analysis of Bankss will assist to place the attainment of efficiency utilizing rational resources which seem to be in conformity with the policies of the direction and more significantly the map of bank in the economic system ; merely if the Bankss will be runing in the efficient mode the efficient allotment of money can take topographic point.

Competitive Analysis

For the intents of competitory analysis NIB bank has been selected. NIB bank has a really similar history of amalgamations as Summit Bank and hence is a good benchmark for analysis of fiscal informations non to bury that the NIB Bank size is besides in the same bracket as Summit Bank.

About NIB Bank ‘NIB started operations in October 2003 with a paid up capital of Rs. 1.2 bn. Operationss for NDLC, IFIC ‘s Pakistan and Credit Agricole Indosuez Pakistan were amalgamated with their assets and liabilities in April 2004.

Temasek Holdings acquired 25 % shareholding in NIB in March 2005 through Bugis Investments which was enhanced to over 70 % in June 2005.NIB has subdivisions all over Pakistan. ”[ xxiii ]

We will concentrate on the Financial Analysis of the two Banks over the past three old ages.


Company Overview

My bank was launched in 2005 as a populace limited company under the Companies Ordinance 1984. It ‘s banking operations commenced from November 2005. The bank was involved in commercial banking and related services.


Deposit strategies

Foreign trade

Utility aggregation measures


Car funding

MySahoolat ( MyDream Home ) – place funding

Easy recognition strategy

Agricultural finance strategies

Online banking

Standard atmosphere

Mobile banking.

Were the services offered by the bank.

Vision Statement

To be the best Customer Service bank in the state with the highest Economic Value Added through engaged and motivated people.

Mission Statement

Satisfying clients, constructing the productive & A ; everlasting relationship.

Core values


The Core values of the two Bankss were coherent, which is really indispensable.


Gaining Per Share

As it may be apparent the earning per portion state of affairs has improved after the amalgamation it was negative 2 and this has most surely declined even though Summit has non every bit yet announced any dividends.

As for ROI we may see clerarly from the Financial Reports that the ROI has besides improved over the past twelvemonth this was attributed to the decrease in cost when the two Bankss merged and synergisms enavbled them to layoff every bit good as near down unneeded subdivisions and strategically relocate wher they could flip more figure of Depositors.


Fiscal Analysis

Profitableness Analysis







-27.9 %

-83.98 %

-50.83 %



-1.28 %

-4.18 %

-5.41 %


Pre-Provisions Operating Net income / Avg. Equity

-56.84 %

-40.34 %

-12.04 %


Pre-Provisions Operating Net income / Avg. Assetss

-2.69 %

-2.80 %

-1.28 %


Forces Expense to Total Net Gross

327.20 %

176.48 %

127.93 %


Cost to Total Revenue

-448.79 %

-194.00 %

483.50 %


Other Operating Income / Total Net Gross

56.22 %

35.23 %

30.30 %


Taxes / Pre Tax Net income

-49.50 %

-22.12 %

-9.57 %


Net Non Earning Assets / Assets cyberspace of Non Interest Liabilitiess

25.17 %

22.59 %

16.10 %

Profitability Ratios for Summit Bank

Beginning: The informations to cipher values was taken from Annual Report of Summit Bank.

Profitability Ratios for NIB Bank








-15.05 %

-74.02 %

1.66 %



-14.95 %

-74.01 %

1.66 %


Pre- Provision Operating Profit/ Avg Equity

-5.24 %

-9.30 %

6.70 %


Pre- Provision Operating Profit/ Avg Assetss

-5.23 %

-9.32 %

4.46 %


Forces Expenses- to – Entire Net Gross

111.13 %

149.12 %

75.48 %


Cost- to – Entire Net Gross

120.47 %

151.79 %

84.00 %


Other Operating Income/Total Net Gross

50.86 %

36.78 %

23.75 %


Taxes/Pre Tax Net income

41.27 %

19.88 %

-7.29 %


Net Non- Earning Assets/ Assets cyberspace of Non- Interest Liabilitiess

34.68 %

33.05 %

42.01 %

Beginning: The informations to cipher values was taken from Annual Report of NIB Bank


As may detect from the above ratios the profitableness ratios of NIB bank are better this may be due to the MBL amalgamation as that introduced a batch of defaulter recognition base which the bank was able to in 2011 nevertheless we see that Summit Bank ‘s place has improved contrary to NIB bank whose place has deteriorated over the past three old ages. The most of import ratio here is ROE specially when our survey is based upon analysing the efficiency of the amalgamations.

Capital Adequacy Ratio Analysis

Capital Adequacy Ratios for Summit Bank







Equity / Total Assetss

4.60 %

4.97 %

10.65 %


Adjusted Equity ( including reappraisal excess ) / Entire Assetss

5.20 %

4.67 %

10.62 %


Reappraisal Surplus ( shortage ) / Adjusted Equity

11.58 %

-6.54 %

-0.28 %


Capital Adequacy Ratio as per SBP

7.77 %

5.35 %

9.83 %

Beginning: The informations to cipher values was taken from Annual Report of Summit Bank

Capital Adequacy Ratios for NIB Bank



A 2011



A 1

Equity/Total Assetss

8.78 %

8.31 %

20.01 %

A 2

Adjusted Equity ( Including reappraisal impact ) /Total Assetss

8.83 %

8.31 %

19.95 %

A 3

Reappraisal Surplus/ ( Deficit ) /Adjusted Equity

0.66 %

0.01 %

-0.28 %

A 4

Capital Adequacy Ratio as per SBP

7.77 %

5.35 %

9.83 %

Beginning: The informations to cipher values was taken from Annual Report of NIB Bank


It is clearly apparent that the equity for NIB is much stronger than that of Summit Bank nevertheless it may non be said that it is a good mark as it reflects the under use of Assetss by NIB bank we need the Industry norms to do more appropriate decisions. As the impact of stableness will go more apparent as NIB is more stable and less aggressive at the minute. Besides the economic state of affairs has to be kept in head.

LiquidityRatio Analysis

Liquidity Ratios for Summit Bank







Liquid Assets / Deposits and Borrowings

39.47 %

34.02 %

36.91 %


Fundss / Deposits and Borrowings

43.98 %

54.65 %

56.31 %


Fundss / sedimentations

64.75 %

71.05 %

59.14 %


Demand Deposits / Total Deposits

19.78 %

13.06 %

12.42 %


Export Refinance / Progresss

38.06 %

11.83 %

8.40 %


Finance ( cyberspace of Export Refinance ) / Deposits

40.11 %

62.65 %

54.17 %


Government Securities / Total Assetss

25.83 %

21.11 %

23.33 %


Fundss / Entire Assetss

40.21 %

49.81 %

48.48 %


Lending to Financial Institutions/Borrowing from FI ‘s ( cyberspace of ERF )

6.37 %

0.00 %

8897.41 %

Beginning: The informations to cipher values was taken from Annual Report of Summit Bank







Liquidity Assets/Deposits and Borrowings




A 2

Finances/Deposits and Borrowings

38.60 %

47.40 %

50.59 %

A 3

Demand Deposits/Total Deposits

30.39 %

25.19 %

26.40 %

A 4

Export Refinance/Advances

16.00 %

17.30 %

17.01 %

A 5

Fundss ( cyberspace of export refinance ) /Deposits

50.41 %

56.54 %

71.20 %

A 6

Government Securities/Total Assetss

34.25 %

31.08 %

33.55 %

A 7

Finances/Total Assetss

45.53 %

55.27 %

54.71 %

A 8

Lending to Financial Institutions/Borrowing from Fis ( net ERF )

38.96 %

21.82 %

11.78 %

Liquidity Ratios for NIB Bank

Beginning: The informations to cipher values was taken from Annual Report of NIB Bank


In footings of Liquidity both Bankss have comparable ratios which shows that after all Summit is making good within its subdivision size has sufficient depositors to maintain up in the market even though sedimentations are ne’er plenty in a bank. The liquidness is in good form Demand deposits portray a comfy place.

Loan Loss Coverage Ratios Analysis

Loan Loss Coverage Ratios for Summit Bank


Loan Loss coverage

A 2011




Impaired Lending / Gross Progresss

48.75 %

34.42 %

31.25 %


Loan Loss Provisions ( Specific + General ) / Impaired Lending

49.37 %

50.24 %

51.19 %


Net Impaired Lending / Equity

206.05 %

157.77 %

60.22 %


Net Impaired Lending / Adjusted Equity

182.20 %

168.09 %

60.39 %

Beginning: The informations to cipher values was taken from Annual Report of Summit Bank

Loan Loss Coverage Ratios for NIBBank






A 1

Impaired Lending/Gross Fundss

64.73 %

50.33 %

28.87 %

A 2

Loan Loss Provision/Impaired loaning

-69.10 %

-68.50 %

-68.20 %

A 3

Internet Impaired lending/Equity

447.91 %

545.79 %

201.76 %

A 4

Internet Impaired lending/Adjusted Equity

444.93 %

545.76 %

202.32 %

Beginning: The informations to cipher values was taken from Annual Report of NIB Bank


Impaired Lending has been by and large high in the twelvemonth unit of ammunition for all the Bankss and in this regard we see that despite of all the impaired loaning brought in by my bank Summit has been able to maintain the figures under control unlike NIB Bank which has figures traversing 60 % . Now this is dismaying for the Banks.

Growth Ratios for Summit bank



A 2011



Entire assets

65.70 %

89.32 %


Gross Fundss

38.91 %

106.17 %


Impaired Lending

96.75 %

127.12 %



93.91 %

76.13 %



46.77 %

61.91 %



53.26 %

-11.61 %

Beginning: The informations to cipher values was taken from Annual Report of Summit Bank

Growth Ratio for Summit Bank






A 1

Entire Assetss




A 2

Gross Fundss




A 3

Impaired loaning




A 4





A 5

Customer Deposits




A 6





Beginning: The informations to cipher values was taken from Annual Report of NIB Bank


The growing ratios besides reflect that acme bank is making what they want an aggressive growing with per centums 65 % as compared to those of NIB Bank.


Mega Environment

The Mega Environment of the Summit Bank involves economic, political, socio-cultural, technological environment and faith where Islamic Banking plays a function, Pakistan being Islamic Republic of Pakistan hence the fundamental law is in coherency with Shariah Law.

Beginning: Adapted from Sadler and Craig ( 2003 ) ” Strategic Management ” , p.52

Political and Legal Environment

Political environment and its impact on the banking industry, before the fiscal liberalisation and denationalization period commercial Bankss in Pakistan chiefly catered to the adoption demands of the Government. This manner Banking recognition was concentrated to a few public sector organisations and the growing of the private sector was non apparent. This suited the Bankss requirement to take less hazard and non to overlook the fact that it opened doors for many such political influencers the Mehran bank dirt to BCCI fraud all are apparent consequences from the clip. This manner the fiscal system suffered, political intervention in determination devising related to imparting created deformations in the system due to the overly low recovery rates on such loans[ xxiv ]. The all clip NPLs issue that we face today.

Economic Environment

The chief factors in economic environment impacting the banking industry include GDP growing rate, rising prices rate, alterations in the degree of involvement rates, money supply, disposable income, unemployment rates. Sing the GDP growing rate as new occupations are created in the economic system the income per capita will increase, people will hold higher buying power and higher disposable income which will take to high nest eggs i.e. ; the sedimentations for Bankss will increase and therefore they will hold more financess to impart out.[ xxv ]

Technological Environment

The technological environment plays a critical function in altering the kineticss of the banking industry, holding both optimistic every bit good as the inauspicious impacts for the banking industry. Information engineering aid Bankss in such a manner that it reduces the costs involved in the processing and direction of the information,

Socio-cultural Environment

The most of import factor observed in the last few old ages in Pakistan is the alteration of life style of the people which has in bend affected their ingestion patterns – people are more inclined towards ingestion and less nest eggs. Peoples tend to borrow more and more they want to devour today and wage tomorrow.

It can go a major beginning of involvement gross for the house as higher involvement rate can be charged ; higher hazard premium involved. There is increased demand for services



Religion as mentioned above for Pakistan has played a cardinal function played a cardinal function in altering how things work in the industry every bit good as increased the degree of competition with debut of Islamic banking and other Islamic products.. There has been observed rather high enlargement in the Islamic banking particularly in FY 2005-10. Islamic banking is widely practiced in assorted Muslim states and it is regarded as the interest-free banking. The chief difference/ struggle between the conventional and the Islamic banking are the involvement rates. However the mean one-year growing of ten old ages FY 2000-11 of Islamic Banks has observed to be 46 % as compared to the growing of commercial Bankss around 14 % which is much less as compared to Islamic Banks[ 1 ]xxvixxvii.

Porter ‘s Competitive Forces

Beginning: Hill and Jones ( 2012 ) , “ Strategic Management Theory: An Integrated Approach ” p.50

Michael E. Porter introduced the construct of how scheme is affected by the competitory forces of the industry in his article published in Harvard Business Review, March/April 1979[ xxviii ]. Despite the reported unfavorable judgments of the theoretical account, it is still effectual as a foundation for industry analysis. Sing the banking sector of Pakistan, the Five Forces Model signifies attraction of the industry in which Summit Bank operates. Evaluation of these competitory forces will assist determine the appropriate scheme for the organisation.


Research Aims

The aim of the present research was to carry on a Post-Merger Profitableness and Efficiency Analysis. The analysis was intended to widen to analyze the benefit to the stakeholders of the amalgamation in short and long term and besides aimed to propose policies and conditions favourable to the amalgamation with regard to the economic system

Problem Statement/Research Question

Post amalgamation Profitability Analysis of Summit Bank.

That is to see if the Summit bank and Mybank amalgamation was a success or non.

Research Methodology

Measure 1

Development of Hypothesis

Hypothesis: Amalgamation of Summit Bank with My Bank a profitable determination?

To analyze the hypothesis stated above, the present research focused chiefly on the Post-Merger Profitability of theBank, this profitableness was besides compared to the Pre-Merger profitableness of the two Banks.

Measure 2

Data Collection and Analysis

The EPS values before and after the amalgamation were compared to analyse how the market absorbed the information and what the market perceptual experience of this amalgamation was.

In add-on to the EPS value the ROI was compared in a similar mode followed by, Profitability Ratio Analysis as a comparing and Liquidity Ratios Analysis. These ratios were taken as per the several Bank Statements.

Summit Bank was besides compared to NIB Bank following a Fiscal Analysis model.

In order to integrate the impact of the Management in the present research survey a questionnaire was conducted.

Measure 3

Development and Administration of the Questionnaire

The questionnaire that was administered was formulated in order to run into the aims of the present research, therefore it was based on five basic inquiries which are as follow:

What is the Managements ‘ perceptual experience of the amalgamation in footings of profitableness and efficiency?

What is the employees ‘ perceptual experience of the amalgamation?

Where were the cost efficiencies reaped from if any were reaped?

The figure of subdivisions that were closed and Layoffs.

Any other synergisms that were brought in through the amalgamation.

The Questionnaire was administered to 30 current Summit employees 10 of whom were from the Mybank squad. At the clip of informations tabular matter they were separated and the positions of employees retained were individually analyzed and those of acme were individually analyzed. The choice was wholly random the standard was that they should be presently employed in the Bank. However the purpose was that some of the employees interviewed should be from Mybank squad. So that the consequences were non biased.

The Questionnaire is attached at the terminal.

Measure 4

Data Tabulation

Datas from the questionnaires was tabulated and analyzed utilizing per centums during this measure. Pie charts and histograms were employed to pictorially picture the consequences of the informations that was collected. Modes, average and average were used to further show the consequences in a meaningful mode, and make a decision sing the consequences.

Measure 5


Hypothesis can non be rejected.

Research Restrictions

The primary restriction for the present research was a deficiency of clip ; due to clip restraints the sample size had to be limited. In add-on, it was observed that clients demonstrated an involuntariness to react to inquiries refering to post and pre-merger perceptual experience of the bank, their satisfaction with the services being offered, and whether they were good cognizant of the services being offered by the bank. Furthermore, it proved hard to acquire in touch with the Risk Department of the Bank and as a consequence a really little sum of information was gathered.

Justification of Methodology

The Research Methodology includes a intercrossed attack that is quantitative every bit good as qualitative information was studied.

The Quantitative Data included information from published one-year studies, the position of the direction was studied from there the accomplishments and the procedure of amalgamation was studied from the theoretical portion of the one-year studies, most of the synergisms obtained from the amalgamation were besides mentioned in the introductory paragraphs of the one-year studies as mentioned above in the literature reappraisal. The figure of subdivisions that were shut down were besides taken from the one-year studies. Net incomes per portion were besides taken from the one-year studies and was one of the cardinal variables in analyzing the effects of the amalgamation. The other cardinal information taken from the one-year statements were the fiscal statements which were used to cipher the fiscal ratios to analyze the public presentation of the bank, capital adequateness, and liquidness place, a competitory bank NIB was selected on the footing of the similarity in size with regard to the subdivision size and nature of amalgamations and foreign support, these ratios were so compared to that of the competitory bank in order to see how acme ‘s amalgamation had come along in the market the ratio analysis was adopted from several other surveies such as that of ( Kemal,2011 ) for RBS, who in his paper has mentioned Rhodes ( 1993 ) whose paper has 33 bank to bank amalgamations as a sample and he has discussed cost and net income efficiency utilizing this attack. Another writer Resti ( 1998 ) analyzed the paper with regard to public presentation, mark markets of incorporate Bankss making a decision that amalgamation did better efficiency and public presentation in the long tally, if the size of the bank was non excessively big, this is besides the paper from which the research was inspired. The ground of choosing the competitory bank with regard to size is besides attributed to Resti ( 1998 ) whose documents decision said that it was better if the incorporate Bankss were of equal size and this is true for Acme every bit good as NIB bank amalgamations.

However, this information entirely was non considered sufficient to mensurate a Bankss amalgamation profitableness and efficiency and therefore primary research was conducted, this involved one on one interviews with regard to the inquiries mentioned in measure 3 followed by a questionnaire built maintaining these inquiries in head for the employees of the bank. 30 employees were given these questionnaires in 3 different subdivisions. The intent of carry oning primary research was to derive an penetration of the direction ‘s perceptual experience of the amalgamation, the impact of the amalgamation on the employees, the impact of the amalgamation on the work moralss, service efficiency and merchandise development. Summit bank clients were besides questioned for service efficiency, merchandises and their perceptual experience of bank public presentation station amalgamation and pre amalgamation.

Primary Research Results


Mr. Abdul Rauf Tahir ( Operations Manager ) was interviewed profoundly for managerial achievements of the amalgamation. He was from the Summit Team and said the amalgamation was a success as this has allowed the bank to turn in size and salvage costs as antecedently explained. He explained that the two Bankss were working on really similar system hence most of the employees did non confront the issue of working with the new system and that the managerial alterations were brought approximately bit by bit so that the pick employees/ or one would state the most gifted 1s could be farther groomed. He besides said that closing of excess subdivisions for illustration if there were two subdivisions with in the same zone so one was shut and this added to the cost nest eggs and increasing grosss. He farther added that the merchandise and nest eggs have increased and improved. There was “ undistinguished ” loss of clients most of them switched to the new merchandises. These points were besides highlighted by Mr. Awan Manzoor besides portion of the Operations squad at Nawaz Shrif Interchange Branch. Two Gross saless Employees were besides interviewed at the H block Branch DHA, Lahore. Mr. Ghazanfar Abid and CRO Ms. Madeeha Kaul.they highlighted on wholly different point and that was the betterments in the subdivision decor and the improved logo had worked miracles in the market perceptual experience of the Summit Bank. They said the full mark Market has changed and the new locations are much more strategic in nature Mr.Abid highlighted that he was antecedently working in the CMH subdivision and that they got immense concern for the medical college. They besides highlighted that the amalgamation had stimulated most of the employees and the fillips had done the same, those who could non vie in the competent environment were asked to go forth and therefore they believed that the new direction was just.

Hence all three of them believed that the amalgamation was for the better of the stakeholders every bit good as the employees.

The few direction disagreements faced they said were non peculiar to amalgamation and are faced otherwise every bit good.

Tabulations Analysis

Majority of the employees considered the amalgamation to be a good thought, this tabular matter is from all questionnaires irrespective of Mybank squad or Summit squad. 62 % said yes.

Of the Mybank employees a great bulk said NO.

Majority ( 40 % ) of the employees seemed instead loath to the thought. 15 % being apathetic and 19 % welcoming 25 % being Unhappy.

A great bulk ‘s sentiment has changed over the clip period and really few seem non to be satisfied. This is besides apparent from the interviews.

A Great bulk is Apathetic towards the work civilization and moralss ( 55 % ) . The other half was divided among those satisfied and non satisfied.


Primary Research Findings

All in all the sentiment of the bank employees towards the amalgamation is clear they consider it to be a profitable and efficient determination peculiarly in the Long-Run.

After tabling informations it was observed that the bulk of employees were satisfied with the station amalgamation work civilization and environment, this is besides supported by the interview as the interviewees considered that the work environment had improved massively, the bank perceptual experience had improved and that the work kineticss had become more competitory and exciting for those willing to work hard. Summit Bank has retained a figure of My-bank employees, the employees were satisfied by the fact that the new direction had retained competitory people and that the determination of lay-offs was decidedly merit based, merely one employed complained and said some prejudice was felt ab initio. The Summit squad was wise and the procedure of layoffs was done over a period of 8 months.

Those who were from my-bank squad a great bulk said that they were loath towards the amalgamation as they did non cognize what to anticipate, outlooks with regard to the new employee policies, their hereafter assigned marks, salary bundles and other employee installations. In the interview it was mentioned that they were concerned sing the layoff criteria/ method and that if the bank direction of the peculiar subdivision was traveling to be led by a my-bank squad forces or by a Summit bank personnel..

More than 50 % of the employees seem to be apathetic to the work civilization and moralss as they say that a bank is a bank, and there are non many differences in the wok civilization, one of the employees mentioned here that you stay apathetic if direction political relations does non come in and he said that “ work political relations ” in acme bank is less than that of many other Bankss as the bank is concentrating on growing and enlargement and with comparatively cardinal attack unlike many big Banks.

Secondary Research Finding

The secondary Research Finding led a acquisition that things differed from amalgamation to amalgamation and several factors besides fiscal places contributed to the success of any amalgamation.

Past researches besides show that amalgamations that are successful, their success is normally reaped in the long term and non needfully in the short term. Like Rhodes ( 2011 ) paper shows, which was a cross boundary line amalgamation analysis with a sample of 33 Bankss.

There was a immense sum of information gathered on economic policy of the state and it importance to any amalgamation this was supported by the primary research findings.

Overall Research Findings.

All in all it is apparent from the research that Bankss are chiefly puting in authorities securities and therefore the private sector is greatly influenced in Pakistan. At such a point in clip amalgamations can be a good thought if adequate liquidness is available with both the Bankss maintaining in head the off balance sheet point and the hazards associated with them. Other demographic factors should besides be kept in head such as what the work kineticss of the institutes and the two directions should be unfastened to new thoughts to let for synergisms. It is besides indispensable that the employees are good informed of what is coming so that they are non de-motivated and minimum discouraging rumours are spread.

It is besides indispensable for Bankss that their size is in the similar bracket this is supported by both the literature reappraisal and the questionnaire.

He perceptual experience of the market towards any amalgamations plays a critical function in its success and failure as the emotional fond regard and service satisfaction with a trade name plays a function in client keeping every bit good as in absorbing new market sections.


Summit Bank is good cognizant of the fact that there are immense rivals and a great competition in the service, nevertheless they need to recognize that it is Islamic Banking which is turning at the minute more quickly than conventional banking and to increase sedimentations and client base the bank must concentrate on development of Islamic merchandises, and this merchandise development needs to take topographic point on both the loaning side as good.

The economic state of affairs must be realized and at a clip when many Bankss prefer imparting to the authorities and non the private sector the bank should perforate into micro-lending merchandises higher hazard will return in higher returns. However the Risk direction squad should cipher the hazard capacity good harmonizing to the current capital adequateness ratio and consequences of the research a good scheme can take to first-class consequences in micro loaning, he method of loaning should be adopted from Microfinance bank such as Kashf bank. Who lend in groups which reduces the hazard of loaning.


It is observed that much research has non been done on the station amalgamation profitableness of Bankss in Pakistan or Asia and those which have been done are more with regard to merely the fiscal portion such as ( Kemal, 2011 ) and it is besides observed that off balance sheet points were frequently ignored.

Through this research it was aimed that a recent amalgamation should be studied and that room for future research on amalgamations be created.

We see that researches done in the US and Europe show a batch of contradiction from amalgamation to amalgamation and hence the first recommendation is “ the monetary value of doing a error is greater than the

monetary value of losing an chance ” hence those doing the determination should establish their determination on factors beyond fiscal, these factors include the influence of the stronger party peculiarly if the work moralss are different and the gait of invention in the two institutes.

The economic policies peculiarly the financial policy it is observed that the high T-bill rates and increased authorities adoption over the past five old ages have slowed down the private sector in Pakistan, Law and order state of affairs should besides be considered increased terrorist activities and public violences which make Bankss a mark of devastation lead to heavy loss of belongings to the Bankss, and other estate, investors have lost involvement in the Pakistan Economy. With mention to Pakistan Religion as discussed earlier is besides an indispensable portion as the perceptual experience of people is strongly related to their perceptual experience of what is right and incorrect sacredly, other demographic factors such as literacy should be kept in head, it is intriguing how a great bulk is involved in informal ways of salvaging such as “ commission system ” this is found in all categories of income.