KARACHI (May 08 2003) : National Investment Trust Ltd, Pakistan's largest mutual fund, said on Wednesday that its profit rose by 28 percent in the nine months ended on March 31, 2003, because of better pay-out and return from term finance certificates.
Net profit rose to Rs 2.16 billion, from Rs 1.69 billion in the same period a year earlier, Tariq Iqbal Khan, chairman of the company told reporters on Wednesday.
“During the period, we restructured our portfolio from non-paying dividend companies to high-yielding stocks, boosting our earnings,” Iqbal said.
Income from dividends rose by 11 percent, to Rs 1.8 billion.
Capital gains realised a growth of 35.1 percent, to Rs 627 million, as the share market in the nine months up to March 31 rose 53 percent, to 2715.72 points.
The company's net investment in the stock market stood at Rs 29 billion, up from Rs 17.4 billion in the year ended June 30, Khan said.
Moreover, “we increased our investment in bonds, commonly known as term finance certificates, much safer as compared to equity market,” Iqbal said.
“Over the period, our plan is to increase investment in bonds to Rs 7 billion. In nine months to March 31, investments in bonds were more than double to 21 million rupees,” he said.
He pointed out that the main factor behind plans to increase investments in term finance certificates is to give benefits to unit holders.
Their investments will be safer in this avenue as compared to equity market because of price risk factor attached.
Replying to a question he said that the State Bank's proposed measure to limit banks in equity market is a bold step and would help banks to exceed their exposure.
He said that if weaker banks made excessive buying and the market dragged into the minus column, the depositors at the end of the day will lose their money.
He pointed out that in the past the NIT never invested in COT market, “and won't invest in future”.
National Investment Trust continues to add value for its unit holders – the fund has again outperformed the benchmark KSE-100 Index by 4.6 percent during the period July 1, 2002 to March 31, 2003, he said.
Referring to the third quarter report the Chairman said: “In fact, the income per unit of Rs 1.46 earned in the first nine months of the current fiscal year already exceeds the full year per unit income of Rs 1.22 earned last year.”
Iqbal said that the pro-active and dynamic policies set by the Board of Directors, and their precise implementation, are credited for the superior performance.
NIT's Board has been fully supportive of a portfolio restructuring exercise that has been undertaken to align the fund with its foremost investment objective of income generation.
NIT lists its portfolio objectives, in order of priority, as: 1) Income Generation, 2) Capital Preservation, and 3) Growth. The performance achieved in the first nine months of the current fiscal year is ample confirmation that NIT is practising what it is preaching, he said.
Chairman and MD NIT said that the above performance has also been good enough to again outperform the benchmark KSE-100 Share Index by 4.6 percent during the period.
The per unit Net Asset Value of NIT increased by 56.9 percent from Rs 10.99 on July 11, 2002 (the first day following book closure) to Rs 17.24 on March 31, 2003, while the KSE – 100 Index increased by 52.3 percent during the same period (from 1,783.17 points on July 11, 2002 to 2,715.72 points on March 31, 2003).
During the banking exhibition, 'Financial Ideas 2003', held at the Expo Centre, Karachi on April 17, 2003 for 3 days, NIT offered a special discount of 25 paisa per unit only to those customers who visited NIT's stall.
The discount offer was valid up to April 26, 2003.
Keeping in view the positive response from the customers and the demand of other branch managers, NIT has decided to extend the facility of said Discount on countrywide basis for a period of ten (10) days, ie, from May 15, 2003 to May 24, 2003.
NIT foresees a bright future for the equity markets with the quick end to the war in Iraq expected to minimise the impact on the economy of the shocks of war.
This is already evident to an extent from the revived interest in the stock market.
Corporate earnings and payouts are continuing to improve on the back of increased macro economic stability.
This, coupled with the rationalisation of the interest rate environment, means that the most attractive returns for investors will be from investment in equity markets.