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April 18

Summit

2012

Bank

Corporate Governance code and the practices of Summit Bank

Sir. Nauman Habib

By Muhammad Haseeb Mustafa Shah Kakakhel

Summit Bank

Vision

To be the preferred provider of financial products & services to the markets.

Mission

To be a financial institution based on Trust, Integrity, and Good Governance.

To deliver financial solutions to our customers.

To provide equal opportunities & professional working environment to our employees.

To provide fair return to our shareholders on their investment.

To serve the community at large.

To discharge corporate social responsibility.

Board of Drirectors:

Name

Designation

Mr. Nasser Abdulla Hussain Lootah

Chairman

Mr. Hussain Lawai

President & CEO

Mr. Nasim Beg

Director

Mr. M. Farid ud Din

Director

Mr. Dr. Ahmad Khalil Mohammed Samea Al Mutawa

Director

Mr. Shehryar Faruqe

Director

The board comprise of 2 sponsored directors, 1 executive director and for

independent or NED’s.

This is well according to corporate governance practices as the board

constitute of majority of NED’s .

As Summit Bank do not have any subsidries so Hussain Lawai can hold the chairs of president and CEO.

Board Committees:

Board Audit Risk Human Comitte Management Resource
Board
Audit
Risk
Human
Comitte
Management
Resource

Audit Committee:

Name

Designation

Mr. Assad Ullah Khwaja

Chairman

Mr. Nasim Beg

Member

Mr. Shehryar Faruqe

Member

Proper disclosure of financial statements.

Facilitate the external auditor.

Determine the comliance with relevent issues.

Risk Management:

Name

Designation

Mr. Nasim Beg

Chairman

Mr. Assad Ullah Khwaja

Member

Mr. Hussain Lawai

Member

Review the risk appetite and tolerance and recommend for approval.

Review completeness of the risk identification and assessment.

Evaluate effectiveness of risk mitigation strategies.

Report to the accounting officer any material changes to the institution’s risk profile.

Evaluate the effectiveness of the fraud prevention plan.

Human Resource:

Name

Designation

Mr. Assad Ullah Khwaja

Chairman

Mr. Hussain Lawai

Member

Shehryar Faruqe

Member

Monitor, evaluate, and make decisions on behalf of the Board with respect to policies and strategic matters related to human resource.

Review and recommend salary framework for employees and executives.

Planning for human resource skill and intellect devolvement.

Devise remuneration policies.

Remuneration:

Category

Amount in ‘000

2011

2010

Salaries, allowances, etc.

1,381,438

1,211,352

Non-executive directors' fees, allowances and other expenses

675

355

Auditors' remuneration

7,737

6,178

Summit Bank have not disclosed their remueration policy in their annual report, Accodring to the Corporate Governance code, They have to declare pilicy in their report, as part of disclosure.

Statements:

Summit Bank have presented all the information about financial recording in their Annual Report of 196 Pages.

All the financial recordings do not bear any signature of the responsible authorities.

Auditors Report: Directors Message: The year was fairly challenging for your Bank and the management had

Auditors Report:

Auditors Report: Directors Message: The year was fairly challenging for your Bank and the management had

Directors Message:

The year was fairly challenging for your Bank and the management had to achieve results against the backdrop of tough economic/market conditions and overhang of its non-performing loan portfolio. During the year, the Bank successfully tackled the issues emerging from the integration of Atlas Bank Ltd and MyBank Ltd. These problems were deep, diverse and comprised of issues like; i) creating synergies amongst the work force coming from different working cultures; ii) the rationalization of branch network and locations necessitated by the multiple- branches at close physical proximities; iii) cleaning the credit portfolio and recovery of Non-performing loans; iv) rationalization of operational costs. The integration process also brought out certain glaring systemic shortfalls that were addressed on priority basis like comprehensive revamping of compliance requirements for the prudential regulations

The bank, as a conscious policy decision, during the year focused on reducing the cost of its deposits and was able to effectively bring it down to 9.49% by the end of the year 2011 as compared to 9.7% in the preceding year 2010. The bank also successfully managed to close its deposit position at Rs. 89.649 billion as at December 31, 2011 as compared to Rs. 61.608 billion at the end of year 2010. The

apparent increase in deposits was primarily due to acquisition of Mybank Limited during the year. However, considering the merged entities collectively, total deposits declined slightly as these deposits stood at Rs. 91.087 billion on December 31, 2010. This marginal fall in deposits is reflective of the Bank’s focus on cost reductions and growth of low cost and CASA deposit base.

Despite multiple challenges and several policy initiatives the Bank also remained focused and continued its efforts for recoveries against non-performing loans (NPLs). The continuous efforts yielded results and a substantial amount of Rs. 2.206 billion of Provisions against NPLs was reversed that provided a net impact of Rs. 493 million charge to Profit & Loss during the year.

Following a cautious strategy, the Bank closed its net loan portfolio book at Rs. 57.330 billion for the year 2011 as compared to Rs. 58.418 billion as at December 31, 2010 of merged entity. However, investments increased to Rs. 36.305 billion by the end of the year 2011, which demonstrates the Bank’s prudent strategy of maintaining high liquidity and investing in SLR eligible securities.

The bank incurred an after tax loss of Rs. 1.537 billion, during the year under review, primarily due to the provisions against non-performing loans and suspension of related markup.

Acknowledgment

The Board would like to appreciate and thank the State Bank of Pakistan, the Securities and Exchange Commission of Pakistan and other regulatory authorities for their continuous guidance and support. The Board is also grateful to the valued customers and shareholders of the Bank for their continued trust and support and assures them of continued commitment to improving the quality of services and the experience they share with the Bank.

The Board would also like to place on record its appreciation for the employees of the Bank for their professionalism, commitment and dedication towards making Summit Bank Limited realize its vision.

On Behalf of the Board of Directors

Husain Lawai President & CEO Karachi February 29, 2012

List of Share Holders:

List of Share Holders: Annual General Meeting:  Prior Notice are made to the directors of

Annual General Meeting:

Prior Notice are made to the directors of the company.

Minutes of the meeting are duly recorded.

Evaluation is carried out to measure the number of objectives met.

Corporate Governance:  The Bank encourages representation of independent non-executive directors and directors representing minority interest

Corporate Governance:

The Bank encourages representation of independent non-executive directors and directors representing minority interest on its Board of Directors. At present, the Board has two sponsor directors, one executive director and four independent / non-executive directors.

The directors have confirmed that none of them is serving as a director in more than ten listed companies.

All the resident directors of the Bank are registered as tax payers and none of them has defaulted in payment of any loan to a banking company, a DFI

or an NBFI or being a member of stock exchange has been declared as a defaulter by that stock exchange.

No casual vacancy occurred in the Board of Directors during the year.

The Bank has prepared a ‘Statement of Ethics and Business Practices’, which has been signed by all the directors and key employees of the Bank.

The Bank has developed a vision/mission statement, overall corporate strategy and significant policies, which are periodically renewed and updated. A complete record of particulars of significant policies along with the dates on which they were approved or amended is maintained.

All the powers of the Board have been duly exercised and the Board has taken decision on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the executive directors have been taken by the Board.

The meetings of the Board were presided over by the Chairman and the Board met once in every quarter. Written notices of the Board meetings, along with agenda and working papers were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.

There was no new appointment of CFO or Company Secretary during the year.

The Directors on the Board of the Bank are individuals of repute and integrity with vast diversified experience of the financial and corporate affairs. They are also directors in other listed companies and are well conversant with the local laws and practices.

The Director’s report for this year has been prepared in compliance with the

requirements of the Code and describes the salient matters required to be disclosed.

The financial statements of the Bank were duly endorsed by the CEO and CFO before approval of the Board.

The directors, CEO, and executives do not hold any interest in the shares of the Bank other than that disclosed in the pattern of shareholdings.

The Bank has complied with all the corporate and financial reporting requirements of the Code.

The Board has formed an audit committee. It comprises of three members, all of whom including the Chairman of the Committee are non-executive directors.

The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of the Bank as required by the Code. The terms of reference of the Committee have been formed and advised to the Committee for compliance.

The Board has set-up an effective internal audit function. The staff of Internal Audit Department is suitably qualified and experienced for the purpose and is conversant with the policies and procedures of the Bank.

The statutory auditors of the Bank have confirmed that they have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses, and minor children do not hold shares of the Bank and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on Code of Ethics as adopted by the Institute of Chartered Accountants of Pakistan.

The statutory auditors or the persons associated with them have not been appointed to provide services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.

The related party transactions have been placed before the Audit Committee and approved by the Board of Directors.

We confirm that all other material principles contained in the Code have been complied.