Silk Bank to Float Rs 2 Billion Term Finance Certificate

Silk Bank will float a Term Finance Certificate of Rs 2 billion in coming months to raise funds for meeting its requirements.

The central bank has given a final approval to the management of the bank to issue a Term Finance Certificate (TFC). The bank has been also given an option to exercise a call option of Rs 500 million depending on the situation.

The capital will help the management of the bank to implement its expansion plan for operations in the coming months, which have been submitted in the central bank earlier as targets to achieve a certain level of growth in profit, assets and branches network.

The bank will meet its requirement of Capital Adequacy Ratio described under Basel III. This additional fund will empower the bank financially to expand its business operations through network, services and products.

Silk Bank witnessed tough financial issues for the past couple of years including shortfall of paid-up capital and consistent losses on the balance sheet.

However, its growth and profit expectations for 2017 remain very strong and are driven by the Bank’s high earning consumer assets and card portfolios where the Bank maintains a leadership position in several products.

In late 2016, the management of Silk Bank received an approval of State Bank of Pakistan (SBP) to adjust Rs 2 billion investment through the subscription of its right shares. Accordingly, the bank’s management has allotted shares to four new investors with separate parts of overall 1.28 billion shares at the rate of 1.56 per share at the discount of Rs 8.44 per share).

The bank supported by government and Arif Habib Limited as investors and underwriter have played a tremendous role to get dragged out the bank from swelling losses to gradual profit since last year.

The bank succeeded in fulfilling paid-up capital requirement of central bank at Rs 10 billion with the help of these two business tycoons and continued to book profit despite challenging times due to low-interest rates.

Its paid-up capital even exceeded Rs 16 billion which will be enough for the next many years.

The steady improvement in profitability is the result of the implementation of a well formulated business strategy. The present management is focusing on the ongoing two-fold strategy on the revenue side and the growth side which is led by contributions from high yielding consumer assets.​