KARACHI - The NIB bank has sustained Rs 9.20 billion losses in the calendar year 2008 to rinse the balance sheet of the bank and to move the bank towards growth in 2009. For the year 2008 NIB Bank had declared a loss after tax of Rs 7475 million, principally as a result of a very conservative approach to provisioning of loans and impairment of other assets. 'Of the total provisions of Rs 9.2 billion, almost Rs 5 billion are subjective where we have provided over and above what is required by the State Bank of Pakistan's Prudential Regulations," President and CEO NIB Bank Khawaja Iqbal Hassan told newsmen on Monday. He shared the financial results of the bank with the selected journalists and the experience of acquisition of PICIC after the completion of one-year of merger of NIB and PICIC. The 2008 results have been impacted primarily by three factors which together contributed a negative Rs 8.2 billion (after-tax): Credit provisions; Goodwill Impairment and Fall in equity markets. In anticipation of these provisions and impairments, the bank had raised Rs 12 billion in new capital through a Rights Issue in December 2008, almost all of which was subscribed by the majority shareholder, Fullerton Financial Holdings, a subsidiary of Temasek Holdings of Singapore, added Mr Khawaja. This increase in capital and the growth of key businesses should position the bank for profitable performance in 2009, notwithstanding the difficult environment. The NIB had completed the first year of its merger with PICIC and PICIC Commercial Bank (PCBL) in 2008, in a difficult economic environment, he said, adding the merger was made more challenging by the growing pressure on the portfolio quality of banks and rising costs of funds and operations. A fundamental transformation in business models, risk management processes and organizational culture were some of our priorities in 2008, he said while sharing the financial results of the bank with newsmen for the year 2008. In 2008 the NIB performed well but the losses relating to PICIC, stock market crash and overall slowdown in the economy wiped out the gains of the bank last year, he said. He, however, was confident that in 2009 the NIB Bank would earn a handsome profit. 'The bank has shown good financial performance in the first two months of 2009 and we are anticipating earning of profit this year," he added. 'I am hopeful that after the completion of the first quarter of 2009 the bank would report profit." Despite the conservative provisioning, due to the increase in capital, NIB continues to remain extremely sound and healthy. The bank is significantly better capitalized than required, with a Capital Adequacy Ratio (CAR) which is amongst the highest of all banks in Pakistan and well in excess of the SBP mandated ratio of 9 per cent. 'We are also highly liquid with a loan to deposit ratio of 57.4 per cent as of December 2008," he said. NIB President said that given the weaker economy through most of 2008, even normally robust borrowers have been under pressure. Additionally, many corporate borrowers inherited from PICIC and PICIC Commercial Bank (PCBL) proved to be marginal in these stressful times and consequently the bank has taken substantial provisions on such names, he said. 'After this level of provisioning, our coverage ratio of total provisions to total non-performing loans is 75%, considerably better than where we expect the industry to be at the end of 2008.We are also ahead of the industry in that we are perhaps the only large bank to have taken a 100% provision against some very large corporate borrowers," he said. Goodwill Impairment: As a part of the acquisition of PICIC and PCBL, Goodwill of Rs 25261 million was recorded on our books, being the difference between the price we paid for the acquisition and their net assets on our books. Fall in Equity markets: The collapse of the equity markets during 2008 affected the value of investments we inherited from PICIC. This was evident in the equity holdings we inherited as well as the investments in PICIC Insurance, PICIC Asset Management Company and the funds it manages. The combined after tax impact of the write downs we were required to take in these investments was Rs 665 million. Khawaja said that on a consolidated basis, the loss after tax was Rs 9179 million. The difference of Rs 1705 million between the standalone and consolidated results is primarily due to losses in the value of the funds of PICIC Asset Management Company as a result of the equity market collapse, which contributed Rs 1517 million after-tax loss, due to the requirement of marking to market. NIB now has 244 branches in 61 cities across the country, of which 242 are dedicated to Retail, SME and Small Businesses. A key element of our strategy is to group customers with similar needs into one of our main business segments. This has enabled us to construct a distinctive business model for each segment, with appropriate specialized products and services.