⚡ Flash Summary

First National Bank Modaraba (FNBM) reported a net loss of Rs. 3.9 million for the year ended June 30, 2025, a stark contrast to the previous year’s net profit of Rs. 34.7 million. This decline is attributed to reduced income from short-term deposit placements and ongoing finance costs related to legacy borrowing. Recoveries from non-performing loans (NPLs) slowed, amounting to Rs. 14.75 million compared to Rs. 73.90 million in FY24. Management is actively evaluating strategic options for business revival, including potential balance sheet restructuring. The company remains committed to Shariah compliance and adherence to applicable audit mechanisms.

📌 Key Takeaways

• 📉 FNBM reports a net loss of Rs. 3.9 million in FY25, a significant drop from the Rs. 34.7 million profit in FY24.
• 💸 Income from short-term placements decreased to Rs. 40.5 million in FY25 from Rs. 49.7 million in FY24 due to SBP policy rate reduction.
• ⚠️ Accrued finance costs on a short-term loan facility amounted to Rs. 34.2 million in FY25, down from Rs. 49.5 million in FY24.
• 💰 Recoveries from non-performing portfolio totaled Rs. 14.75 million in FY25, a substantial decrease from Rs. 73.90 million in FY24.
• ⚖️ Recoveries included Rs. 1.89 million from reversal of doubtful recoveries, Rs. 6.37 million from reversal of suspended income, and Rs. 6.49 million in principal recovered.
• 💼 Operating expenses were managed at Rs. 16.30 million.
• 📜 FNBM faces challenges with accumulated losses exceeding 50% of its paid-up fund and a winding-up petition filed by SECP.
• 🚫 No dividends were declared for the year ended June 30, 2025.
• 🌱 Management is actively evaluating strategic options under a comprehensive business revival plan.
• ⚖️ The financial statements have been prepared on the basis of estimated realizable/settlement values of assets and liabilities.
• ✔️ The company is fully committed to Sharia’h compliance.

🎯 Investment Thesis

SELL. FNBM faces significant financial and legal challenges, with accumulated losses exceeding 50% of its paid-up fund and a winding-up petition filed by SECP. The transition to estimated realizable values signals distress. No dividends were declared, and recovery momentum from NPLs has significantly slowed. There is no price target given the uncertainty.