Corporate Finance Project

Corporate Finance Auto Car Leasing Presented To: Mr. Noman Moeen

Presented By: Ali Riaz Mubashar Ali Shan Shahzad Ahmad Khan Ghulam Jillani

Our Mission “Establish Islamic banking as banking of first choice...”

Our Vision “To be a premier Islamic bank...”

MEEZAN BANK CAR IJRAH     HISTORY OF MEEZAN BANK     • Meezan Bank is Public Listed Company, first incorporated on January 27, 1997. •   • It is started operations as Islamic Investment Bank in August 1997 same year. •   • In January, 2002, in an historic initiative, Meezan Bank was granted the Nations first fullfledged commercial banking license dedicated to Islamic Banking, by the State Bank of Pakistan

CAR IJRAH

Car Ijarah is Pakistan’s first "Interest Free" car financing based on the Islamic financing mode of Ijarah (Islamic leasing). • Meezan Bank’s Car Ijarah is a car rental agreement, approved by Meezan Banks Shariah Board • Under Ijarah, all ownership-related risks lie with the Bank while all usage related risks lie with the user Ease of acquiring any new locally assembled car    No upfront Insurance Payment    No advance Rental

Car Ijarah also features Used Vehicles Used Car Selection Criteria • The second hand car selected should be from its first owner. • The vehicle should not be older than 5 years. • The minimum security deposit for a vehicle up to 2 years of age is 20%, while minimum security deposit for a vehicle over 2 years of age is 30%. • At the time of termination of the Ijarah agreement, the vehicle should not be more than 8 years old. • Maximum Rs. 1 million & Minimum 0.25 million

Only for local assembled cars

Key Features • Low monthly rental • Rental paid after delivery, not in advance • Fastest processing and delivery • Tracker option available • Minimum deposit as low as 20% • All types of cars

Conclusion • The Car Ijarah business was launched four years ago and now stands at Rs. 3,150 million. • The Bank has financed over 10,000 vehicles till June 30, 2008. Growth has been steady during this period. • Healthy portfolio management and risk diversification is clear across the portfolio, with 54% of the car ijarah. • cases resting in the 3 year tenure, 18% in 4 years, and 28% in 5 years. Furthermore, over 50% of financing is done.

• In the 800 – 1,000cc category, the most stable middle market consumer financing, with light commercial vehicles. • and imported units at 6% and 4% respectively. • The non-performing portfolio presents another Meezan Bank milestone at 0.5% of the total principal outstanding.

NBP Vision “To be an Institutional and Excellence which will create and maintain an environment of state of art management system professional and innovation” “Attain the status of Most Professionally and profitably run modaraba among its competitors”

MISSION “The Fundamental Mission is to Seek the Pleasure of Allah Through Making Humble Contribution in the Transformation of our Mercantile, Financial System and Business Dealings in Accordance with the Principal Enshrined in the Sharia”

History • First National Bank Modaraba Company Limited (a wholly owned subsidiary of National Bank of Pakistan). • Incorporated in Pakistan Under the Companies Ordinance 1984. • FNBM Start the Car Financing Business Operations on December 04,2003.

CRITERIA FOR CAR IJARAH. • NIC CARD • INCOME CERTIFICATE FOR SALARIED PERSONS AND BUSINESSMAN • INSTALLMENT MUST BE 1/3 OF HOME TAKE INCOME. • LEASE 3-TO-4 YEARS. • INSTALLMENT = COST OF VEHICLE+ MARKUP

MODE OF PAYMENTS. • Monthly • Quarterly • Through post dated cheques • In case of delay of installment LEGAL ACTION can be taken

Key Features • Low monthly and Quaterly rental • Rental paid in advance • Fastest processing and delivery • Tracker option not available • Minimum deposit as low as 10% (contd.)

• Only new and local assembled cars with parts availability in local market • For second hand cars, they only deals in LUXURY CARS • Net Investment in Car IJARAH is Rs. 965,093,293

Interest Charging Criteria Formula: KIBOR + Interest Rate Current Rates: KIBOR is 16% And Int. Rate is 4%

Market Share PORTFOLIO MARKET SHARE IS 23% Car Financing Market Share: • In industrial Sector 65% • In Public Sector 25% • Others 10%

Conclusion • First National Bank Modaraba is a multipurpose, perpetual and multi-dimensional Modaraba formed under Modaraba Companies Ordinance 1980 • The Car Ijarah business was launched five years ago • 100% subsidiary of National Bank of Pakistan

History of Escorts Investment Bank Limited • Public limited company incorporated in Pakistan under the Companies Ordinance, 1984. • The Company was incorporated in Pakistan on 15 May 1995 and started its commercial operations on 16 October 1996. • Started car leasing in 2001

Mission Statement To build Escorts Investment Bank Limited into an elite institution comparable with, if not better than any top quality local or foreign financial institution operating in Pakistan, in terms of a progressive corporate culture and an autonomous, committed and dedicated Executive

Vision Statement Value addition for our stakeholders through enhanced business activity and emphasis on better Risk Identification and Management as opposed to Risk Avoidance.

Value Statement • • • •

We are combine and working like a chain. Encouraging self-development. We hold high expectations. We provide exceptional long lasting services. • Consistent entertainment service and production quality.

Network Head Office: Escorts House 26 – Davis Road, Lahore Tel: (042) 637 1931 - 34 Fax: (042) 637 5950 Email: [email protected] Web site: www.escortsbank

Continue…

Branch Offices: Karachi Office: Ground Floor, Bharia Complex I Moulvi Tamizzudin Khan Road Tel: (021) 563 6061 - 63 Fax: (021) 563 6075 Email: karachi@escortsbank Islamabad Office: 32 - West Sohrab Plaza, Jinnah Avenue, Blue Area, Islamabad Tel: (051) 287 4601 - 03 Fax: (051) 287 4604 Email: islamabad@escortsbank.

CRITERIA FOR CAR LEASING • NIC CARD • PROPERTY PAPERS WITH 3 WITH YEARS RESIDENCY OR BUSINESS • INCOME STATEMENT FOR LAST 1 YEAR • INSTALLMENT MUST BE 1/4 OF HOME TAKE INCOME. • LEASE UPTO FIVE YEARS. • INSTALLMENT = COST OF VEHICLE+ MARKUP RATE+INSURANCE PREM

Key Features • Financing Local, Imported, new and used cars • Highly economical rates • Fast track approvals • Low monthly, Quarterly and SemiAnnually rental • Rental paid after delivery

• Delivery depends upon dealers • Rate of return ranges from 11.36% to 17% • Min. deposit is 10% & Max. is 61.53% • Max loan payment is Rs.3,500,000 • Net Investment in Car Leasing is Rs.53,761,296 • Zero termination charges

Conclusion • Public limited company incorporated in Pakistan under the Companies Ordinance, 1984. • They started car leasing 7 years ago in 2001. • Offering local, imported, used and new cars. • Offering economical rates with minimum documentation. • The Bank has financed over 6250 vehicles