| Bank Al-Falah - 2005 |
=========================================================================================== BALANCE SHEET AS AT DECEMBER 31, 2005 =========================================================================================== 2005 2004 Notes Rupees in '000 =========================================================================================== ASSETS: Cash and balances with treasury banks 7 24,788,625 19,708,518 Balances with other banks 8 9,713,369 3,183,957 Lendings to financial institutions 9 27 050 493 - Investments 10 57,425,700 35,503,196 Advances 11 118,864,010 88,931,400 Other assets 12 3,851,529 3,226,959 Operating fixed assets 13 6,620,067 4,280,504 Deferred tax assets - - 248,313,793 154,834,534 LIABILITIES: Bills payable 14 3,733,124 2,233,671 Borrowings from financial institutions 15 5,844,389 12,723,830 Deposits and other accounts 16 222,345,067 129,714,891 Subordinated loans 17 3,223,355 1,899,480 Liabilities against assets subject to finance lease - - Other liabilities 18 5,219,666 2,725,344 Deferred tax liabilities 19 484 066 275 834 240,849,667 149,573,050 Net assets 7,464,126 5,261,484 REPRESENTED BY: Share capital 20 3,000,000 2,500,000 Reserves 2,351,218 1,008,772 Unappropriated profit 1,386,845 860,300 6,738,063 4,369,072 Surplus on revaluation of assets 21 726,063 892,412 7,464,126 5,261,484 Contingencies and commitments 22 =========================================================================================== =========================================================================================== PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2005 =========================================================================================== 2005 2004 Notes Rupees in '000 =========================================================================================== Mark up/ return/ interest earned 23 12,246,811 5,620,203 Mark-up/ Return/ interest expensed 24 7,204,992 2,434,459 Net mark-up/ interest income 5,041,819 3,185,744 Provision against non-performing loans and advances 11.4 (402,298) (370,208) Gain/ (loss) on re-measurement of 23,163 (2,165) held for trading investments Bad debts written off directly (512) (351) (379,647) (372,724) Net mark-up/ interest income after provisions 4,662,172 2,813,020 NON MARK-UP/INTEREST INCOME: Fee, commission and brokerage income 1,158,747 675,868 Dividend income 52,014 52,539 Income from dealing in foreign currencies 290,091 218,820 Other income 25 744,518 572,822 Total non-markup/ interest income 2,245,370 1,520,049 6,907,542 14,333,069 NON MARK-UP/INTEREST EXPENSES: Administrative expenses 26 4,313,023 2,677,635 Other provisions/ write-offs 10,125 - Other charges 27 21,104 1,700 Total non-mark-up/ interest expenses 4,344,252 2,679,335 2,563,290 1,653,734 Extraordinary/ unusual items - - Profit before taxation 2,563,290 1,653,734 TAXATION FOR THE YEAR: - Current 592,635 586,159 - Deferred 267,524 (3,663) FOR PRIOR YEARS: - Current (7,000) (30,000) - Deferred 8,037 9,249 28 861,196 561,745 Profit after taxation 1,702,094 1,091,989 Unappropriated profit brought forward 860,300 963,042 Transferred from general reserve - - Transferred from surplus on revaluation of fixed assets - net of tax 24,870 23,667 Profit available for appropriation 2,587,264 2,078,698 APPROPRIATIONS: Transferred to statutory reserve (340,419) (218,391) Bonus shares - interim @ nil (2004: @ 25 percent) - (500,000) Final dividend for 2004: @ nil (2003: @ 25 percent) - (500,000) Interim dividend @ 12 percent (2004: @ nil) (360,000) - Transfer to reserve for issue of bonus shares (500,000) - (1,200,419) (1,218,398) Unappropriated profit carried forward 1,386,845 860,300 Basic / diluted earnings per share 29 5.75 3.90 =========================================================================================== =========================================================================================== CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2005 =========================================================================================== 2005 2004 Note Rupees in '000 =========================================================================================== CASH FLOW FROM OPERATING ACTIVITIES: Profit before taxation 2,563,290 1,653,734 Dividend income (52,014) (52,539) 2,511,276 1,601,195 ADJUSTMENTS FOR NON-CASH CHARGES: Depreciation 468,973 294,446 Amortisation - intangible assets 14,397 11,886 Provision against non-performing advances 402,298 370,208 (Gain)/ loss on remeasurement (23,163) 2,165 of held for trading investments Provision against other assets 452 - Bad debts written-off directly 512 351 Gain on sale of operating fixed assets (4,309) (4,297) Provision for gratuity 46,637 27,531 905,797 702,290 3,417,073 2,303,485 (INCREASE) / DECREASE IN OPERATING ASSETS: Lendings to financial institutions (26,260,493) 6,787,733 Net investment in held for trading securities (430,538) (283,065) Advances (30,335,420 (40,085,839) Other assets - net of provision (481,695) (1,675,903) against other assets (57,508,146) (35,257,074) INCREASE / (DECREASE) IN OPERATING LIABILITIES: Bills payable 1,499,453 1,025,000 Borrowings from financial institutions (6,879,441) (403,924) Deposits 92,630,176 53,016,569 Other liabilities 2,572,780 1,328,383 89,822,968 54,966,028 35,731,895 22,012,439 Gratuity paid (46,637) (27,531) Income tax paid (807,373) (1,345,952) Net cash flow from operating activities 34,877,885 20,638,956 CASH FLOW FROM INVESTING ACTIVITIES: Net investment in available for sale securities (3,660,288) 22,464,569 Net investment in held to maturity securities (17,172,695) (27,753,009) Investment in subsidiary company (34,000) (33,600) Investment in associated companies (810,628) (1,138,176) Dividend received 52,367 54,629 Investment in operating fixed assets (2,827,988) (1,798,145) Sale proceeds of property 9,364 7,195 and equipment disposed-off Net cash flow from investing activities (24,443,868) (8,196,537) CASH FLOW FROM FINANCING ACTIVITIES: Issue of share capital 999,600 - Issue of sub-ordinated loans 1,324,615 1,250,000 Redemption of sub-ordinated loans (740) (260) Dividend paid (360,000) (500,000) Net cash flow from financing activities 1,963,475 749,740 Adjustment of exchange translation reserve 2,027 - Increase in cash and cash equivalents 12,399,519 13,192,159 Cash and cash equivalents at beginning of the year 22,892,475 9,700,316 Cash and cash equivalents at end of the year 30 35,291,994 22,892,475 =========================================================================================== ==============================================================================================================================================================
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2005
==============================================================================================================================================================
Share Share Statutory Reserve for Exchange Unappropriated Total
capital premium reserve issue of translation profit
Bonus shares reserve
(Rupees in ('000)
==============================================================================================================================================================
Balance at January 1, 2004 as previously reported 2,000,000 - 790,374 - - 463,042 3,253,416
Effect of change in accounting policy with respect
to dividend declared after the balance sheet - - - - - 500,000 500,000
Balance at January 1, 2004 as restated 2,000,000 - 790,374 - - 963,042 3,753,416
CHANGES IN EQUITY FOR 2004:
Transfer from surplus on revaluation of fixed assets
- net of tax - - - - - - -
- - - - - 23,667 23,667
Profit for the year - - - - - 1,091,989 1,091,989
Total recognised income and expense for the - - - - - 1,115,656 1,115,656
Transfer to statutory reserve - - 218,398 - - (218,398) -
issue of bonus shares 500,000 - - - - (500,000) -
Final dividend of 2003 @ 25 percent - paid - - - - - (500,000) (500,000)
Balance at December 31, 2004 2,500,000 - 1,008,772 - - 860,300 4,369,072
CHANGES IN EQUITY FOR 2005:
Transfer from surplus on revaluation of fixed assets
- net of tax - - - - - 24,870 24,870
Profit for the year - - - - - 1,702,094 1,702,094
Total recognised income and expense for the year - - - - - 1,726,964 1,726,964
Transfer to statutory reserve - - 340,419 - - (340,419) -
issue of rights shares 500,000 500,000 - - - - 1,000,000
Effect of foreign currency translation - - - - 2,027 - 2,027
Interim dividend @ 12 percent - - - - - (360,000) (360,000)
Transfer to reserve for issue of bonus shares 1 share
for every 3 shares held (2004: nil) - (500,000) - 1,000,000 - (500,000) -
Balance at December 31, 2005 3,000,000 - 1,349,191 1,000,000 2,027 1,386,845 6,738,063
==============================================================================================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 20051. STATUS AND NATURE OF BUSINESS Bank Alfalah Limited was incorporated on June 21, 1992 as a public limited company under the Companies Ordinance, 1984. It commenced banking operations from November 1, 1992. The Bank is engaged in banking services as described in the Banking Companies Ordinance, 1962 and is operating through 128 conventional banking (2004: 79) branches, 15 Islamic banking (2004: 11) branches and 4 overseas (2004: Nil) branches, with the registered office at B.A. Building, I.I. Chundrigar Road, Karachi. The Bank is listed on Karachi and Lahore Stock Exchanges. 2. BASIS OF PRESENTATION In accordance with the Islamic Banking System, trade related mode of financing include purchase of goods by the Bank from its customer and simultaneous re-sale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these financial statements as such, but are restricted to the amount of facility actually utilised and the appropriate portion of mark-up thereon. 3. STATEMENT OF COMPLIANCE These financial statements are prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984 and the Banking Companies Ordinance, 1962. Approved accounting standards comprise of such International Accounting Standards as notified under the provisions of the Companies Ordinance, 1984. Wherever the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 or directives issued by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan differ with requirements of these standards the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 or the requirements of the said directives take precedence. The Securities and Exchange Commission of Pakistan (SECP) has approved and notified the adoption of International Accounting Standard 39, Financial Instruments: Recognition and Measurement and International Accounting Standard 40, Investment Property. The requirements of these standards have not been followed in preparation of these financial statements as the State Bank of Pakistan has deferred the implementation of these standards for the banks in Pakistan till further instructions. However, investments have been classified in accordance with the requirements prescribed by the State Bank of Pakistan for financial statements. 4. DISCONTINUING OPERATION On October 28, 2005 the Board of Directors of the Bank approved a plan to segregate its business of Islamic Banking into a separate entity. The segregation reflects Bank's plan to remain competitive with ever increasing competition in the local market and become the premier Islamic bank. Resultantly, in order to achieve this objective the Board feels that the Islamic Banking Division should be converted into a wholly owned subsidiary of the Bank. As of December 31, 2005 the Islamic Banking Division's assets were Rs 15,320 million and its liabilities were Rs 13,999 million. During 2005, Islamic Banking Division earned revenue of Rs 622.368 million, incurred expenses of Rs 579.576 million and earned a pre-tax profit of Rs 42.792 million with a related tax expense (including current and deferred tax) of Rs 14.38 million. During 2005, Islamic Banking Division's cash inflow from operating activities was Rs 1,153.442 million, cash outflow from investing activities was Rs 189.473 million, and cash inflow from financing activities was Rs 700 million. 5. BASIS OF MEASUREMENT These financial statements have been prepared under the historical cost convention, as modified for the revaluation of investments in Market Treasury Bills, Pakistan Investment Bonds, Federal Investment Bonds and listed securities and in conformity with the accented accounting practices of banking institutions in Pakistan. The preparation of financial statements in conformity with approved accounting standards requires management to make judgements, estimates and assumptions that effect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of approved accounting standards that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 38. 6. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 6.1. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprises cash and balances with treasury bank, balances with other banks and call lendings. 6.2. REVENUE RECOGNITION Mark-up income and expense and profit on murabaha and musharika financing are recognised on a time proportion basis taking into account effective yield on the instrument. Fee, commission and brokerage except income from guarantees are accounted for on receipt basis. Mark-up / return on non-performing advances are suspended, where necessary and recognised on receipt basis. Dividend income is recognised at the time when the bank's right to receive has been established. Financing method is used in accounting for income from lease and ijarah financing. Under this method, the unrealised lease income (excess of the sum of total lease rentals and estimated residual value over the cost of leased assets) is deferred and taken to income over the term of the lease period so as to produce a constant periodic rate of return on the outstanding net investment in lease. Unrealised lease income is suspended, where necessary, in accordance with the requirements of the Prudential Regulations of the State Bank of Pakistan and recognised on receipt basis. Gains/ losses on termination of lease contracts, documentation charges, front end fee and other lease income are recognised as income on receipt basis. 6.3. ADVANCES Loans and advances including financing under murabaha and musharika and net investment in finance lease / ijarah are stated net of provisions against non-performing advances. Specific and general provisions are made against advances in accordance with the guidance in the Prudential Regulations issued by the State Bank of Pakistan from time to time. The net provision made/ reversed during the year is charged to profit and loss account and accumulated provision is netted off against advances. Advances are written off when there are no realistic prospects of recovery. Leases/ ijarah financing where the bank transfers substantially all the risks and rewards incidental to ownership of an asset are classified as finance leases. A receivable is recognised at an amount equal to the present value of the lease payments, including any guaranteed residual value. 6.4. INVESTMENTS Investments are classified into 'held to maturity', 'held for trading' or 'available for sale' categories in accordance with the requirements of BSD Circular No 10 dated July 13, 2004 as amended vide BSD Circular No 11 dated August 4, 2004 and BSD Circular No 14 dated September 24, 2004. The investments of the bank are classified in the following categories: Securities held for trading These are investments acquired principally for the purpose of generating profits from short-term fluctuations in price or dealer's margin. Securities held to maturity These are investments with fixed or determinable payments and fixed maturity and the bank has the positive intent and ability to hold them till maturity. Available for sale These are investments which do not fall under the held for trading and held to maturity categories. Quoted securities where ready quotes are available on Reuters Page (PKRV) or Stock Exchange, other than investments classified as held to maturity and investments in subsidiaries, are valued at market value. Investments classified as held to maturity are carried at amortised cost. The surplus / deficit arising as a result of revaluation at market value on 'held for trading' portfolio is taken to income and that relating to the 'available for sale' portffolio is kept in a separate account and shown below equity. Investment in associates and subsidiaries are carried at cost less impairment loss, if any. [Unquoted securities are stated at cost less provision for impairment loss. The difference between the face value and purchase price is amortised over the remaining life of the security using the effective yield method. All purchases and sales of investments that require delivery within the time frame established by regulation or market convention are recognised at trade date which is the date at which the bank commits to purchase or sell the investment. Gains or losses on disposals during the year are taken to profit and loss account. Sale and repurchase agreements The Bank enters into purchase / (sale) of investment under agreements to resale / (repurchase) at a certain date in the future at a fixed price. Investments purchased subject to commitment to resale them at the future dates are not recognised. The amounts paid are recognised in lending to financial institutions. The receivables are shown as collateralised by the underlying security. Investments sold under repurchase agreements continue to be recognised in the balance sheet and are measured in accordance with the accounting policy for investments. The proceeds from the sale of the investments are reported in borrowings from financial institutions. The difference between the purchase/ (sale) and resale / (repurchase) consideration is recognised on a time proportion basis over the period of the transaction and is included in mark-up / return / interest earned or expensed. 6.5. OPERATING FIXED ASSETS Tangible Office premises are shown at cost/ revalued amount less accumulated depreciation. All other assets are stated at cost less accumulated depreciation and impairment losses, if any. Depreciation is charged to income applying the straight-line method using the rates specified in note 13.3 to the financial statements. Maintenance and normal repairs are charged to income as and when incurred. Major renewals and improvements are capitalised. Gains and losses on disposal of fixed assets are taken to profit and loss account. The surplus on revaluation of fixed assets (net of deferred taxation) to the extent of the incremental depreciation charged on the revalued assets is transferred to retained earnings. Intangible assets Intangible assets with definite useful lives are stated at cost less accumulated amortisation and impairment losses, if any by taking into consideration the estimated useful life. 6.6. CAPITAL WORK IN PROGRESS Capital work in progress is stated at cost less impairment losses, if any. 6.7. TAXATION Current Current tax is the expected tax payable on the taxable income for the year using tax rates enacted at the balance sheet date and any adjustment to tax payable in respect of previous years. Deferred Deferred tax is recognised using the balance sheet liability method on all major temporary differences arising between the carrying amounts of assets and liabilities for the financial reporting purposes and amounts used for the taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amounts of assets and liabilities using the tax rates enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available and the credits can be utilised. Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefits will be realised. 6.8. STAFF RETIREMENT BENEFITS Defined Benefit Plan The bank operates an approved funded gratuity scheme covering eligible employees whose period of employment with the Bank is five years or more. Contributions to the fund are made on the basis of actuarial recommendations. Projected Unit Credit Method has been used for the actuarial valuation. The results of current valuation are summarised in note 32. Actuarial gains / losses in excess of 10 percent of actuarial liabilities or plan assets are recognised over the average lives of employees. Defined Contribution Plan The bank operates a recognised Provident Fund Scheme for all its permanent employees to which equal monthly contributions are made both by the bank and employees at the rate of 8.33 percent of basic salary. 6.9. FOREIGN OPERATIONS AND FOREIGN CURRENCIES Foreign Operations Initial recognition The assets and liabilities of foreign branches taken over are initially recognised at cost. Any resulting goodwill is immediately written off. Subsequent measurement Assets and liabilities of foreign operations are translated into rupees at the exchange rate prevailing at the balance sheet date. Profit and loss account is translated at the average rate of conversion for the period. Gains and losses arising on the transactions are taken to Exchange Translation Reserve. Foreign Currencies Assets and liabilities in foreign currencies are translated into Pak Rupee at the rates of exchange prevailing at the balance sheet date. Foreign currency transactions are converted at the rates prevailing on the transaction date. Forward contracts other than contracts with SBP relating to foreign currency deposits are valued at forward rate applicable to the respective maturities of the relevant foreign exchange contract. Forward purchase contracts with SBP relating to foreign currency deposits are valued at the spot rate prevailing on the balance sheet date. The forward cover fee payable on such contracts is amortised over the term of the contracts Exchange gains and losses are included in income currently. 6.10. PROVISIONS Provision for guarantee claims and other off balance sheet obligations is recognised when intimated and reasonable certainty exists for the bank to settle the obligation. Expected recoveries are recognised by debiting customer's account. Charge to profit and loss account is stated net-off expected recoveries. Other provisions are recognised when the Bank has a legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate. 6.11. ACCEPTANCES Acceptances comprise undertakings by the bank to pay bills of exchange drawn on customers. The bank expects most acceptances to be simultaneously settled with the reimbursement from the customers. Acceptances are accounted for as off balance sheet transactions and are disclosed as contingent liabilities and commitments. 6.12. OFF-SETTING Financial assets and financial liabilities are only off-set and the net amount is reported in the financial statements when there is a legally enforceable right to set-off the recognised amount and the bank intends either to settle on a net basis, or to realise the assets and to settle the liabilities simultaneously. Income and expense items of such assets and liabilities are also off-set and the net amount is reported in the financial statements. 6.13. IMPAIRMENT The carrying amount of Bank's assets other than the deferred tax assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the assets' recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in profit and loss account. 7. CASH AND BALANCES WITH TREASURY BANKS ===========================================================================================
2005 2004
Notes Rupees in '000
===========================================================================================
IN HAND:
Local currency (including in transit Rs 66.689 million) 3,542,352 2,971,777
Foreign currency (including in transit Rs 67.952 million) 897,695 497,893
WITH STATE BANK OF PAKISTAN IN:
Local currency current account 7.1 14,334,985 13,132,499
Foreign currency current account 7.2 939,111 655,193
Foreign currency deposit account 7.3 2,365,555 1,793,320
WITH OTHER CENTRAL BANKS IN:
Foreign currency current account 7.4 285,085 -
Foreign currency deposit account 7.5 1,091,149 -
WITH NATIONAL BANK OF PAKISTAN IN:
Local currency current account 1,332,693 657,836
24,788,625 19,708,518
===========================================================================================7.1. This account is maintained under the requirement of section 22 of the Banking Companies Ordinance, 1962.7.2. This account is maintained under the requirement of BSD Circular No 18 dated March 31, 2001. 7.3. This account is maintained under the requirement of BSD Circular No 18 dated March 31, 2001. Profit rates on these deposits are fixed by SBP on monthly basis. Profit ranging between 1 .40% to 3.29% was paid during the year. 7.4. This represents an amount of USD 4.774 million equivalent to Rs 285.085 million placed with Da Afghan Bank of Afghanistan to comply with the regulatory capital requirement. 7.5. This represents an amount of USD 18.270 million (Taka 1.21 billion) placed with Central Bank of Bangladesh to meet the minimum capital requirement for Bangladesh operations. 7.6 This includes balances with Islamic Banking Division amounting to Rs 2,502.913 million (2004: Rs 2,719.238 million). 8. BALANCES WITH OTHER BANKS ===========================================================================================
2005 2004
Note Rupees in '000
===========================================================================================
IN PAKISTAN:
On current account 134,125 127,174
On deposit account 1,205,005 50,000
OUTSIDE PAKISTAN:
On current account 1,864,632 1,861,578
On deposit account 8.1 6,509,607 1,145,205
9,713,369 3,183,957
===========================================================================================8.1. This represents placements of funds generated through foreign currency deposits scheme (FE-25), at interest rates ranging from 2.0% to 4.83% per annum with maturities up to December 2006.8.2. This includes balances with Islamic Banking Division amounting to Rs 2,007.817 million (2004: Rs 127.523 million). 9. LENDINGS TO FINANCIAL INSTITUTIONS ===========================================================================================
2005 2004
Note Rupees in '000
===========================================================================================
Call Money Lendings 790,000 -
Repurchase Agreement Lendings (Reverse Repo) 9.1 26,260,493 -
27,050,493 -
===========================================================================================9.1. SECURITIES HELD AS COLLATERAL AGAINST LENDINGS TO FINANCIAL INSTITUTIONS================================================================================================================
2005 2004
Held by the Further Total Held by the Further Total
Bank given as Bank given as
collateral collateral
(Rupees in ('000)
================================================================================================================
Treasury Bills 18,361,493 - 18,361,493 - - -
Pakistan investment Bonds 7,899,000 - 7,899,000 - - -
26,260,493 - 26,260,493 - - -
================================================================================================================10. INVESTMENTS10.1. INVESTMENT BY TYPE =======================================================================================================================
2005 2004
Held by the Given as Total Held by the Given as Total
Bank collateral Bank collateral
(Rupees in ('000)
=======================================================================================================================
AVAILABLE FOR SALE SECURITIES:
Treasury Bills 5,534,534 - 5,534,534 - - -
Pakistan Investment Bonds 2,151,343 - 2,151,343 3,328,439 877,420 4,205,859
Federal Investment Bonds - - - 15,598 - 15,598
Fully paid up ordinary shares
/ units - Listed 597,738 - 597,738 512,034 - 512,034
Fully paid up ordinary shares
/ units - Un-listed 76,979 - 76,979 6,356 - 6,356
Term Finance Certificates 496,345 - 496,345 362,043 - 362,043
Certificates of Investment 105,259 - 105,259 205,168 - 205,168
Prize Bonds 9,445 - 9,445 4,297 - 4,297
8,971,643 - 8,971,643 4,433,935 877,420 5,311,355
HELD TO MATURITY SECURITIES:
Government Bonds 85,341 - 85,341 85,341 - 85,341
Pakistan Investment Bonds 9,635,243 255,327 9,890,570 8,534,837 1,598,129 10,132,966
Treasury Bills 33,967,529 - 33,967,529 13,918,840 3,259,769 17,178,609
Term Finance certificates 1,767,600 - 1,767,600 1,141,429 - 1,141,429
45,455,713 255,327 45,711,040 23,680,447 4,857,898 28,538,345
HELD FOR TRADING:
Treasury Bills 276,775 - 276,775 - - -
Fully paid up ordinary shares
/ units - Listed 436,828 - 436,828 283,065 - 283,065
713,603 - 713,603 283,065 - 283,065
ASSOCIATES:
Warid Telecom (Private) Limited 1,848,804 - 1,848,804 1,138,176 - 1,138,176
Alfalah GHP Value Fund 100,000 - 100,000 - - -
1,948,804 - 1,948,804 1,138,176 - 1,138,176
SUBSIDIARIES:
Alfalah Securities (Private) Limited 76,000 - 76,000 42,000 - 42,000
Alfalah GHP Investment
Management Limited 33,600 - 33,600 33,600 - 33,600
109,600 - 109,600 75,600 - 75,600
57,199,363 255,327 57,454,690 29,611,223 5,735,318 35,346,541
Gain / (loss) on remeasurement off held
for trading' investments 20,998 - 20,998 (2,165) - (2,165)
Surplus / (deficit) on revaluation of
'available for sale' securities (net) (49,988) - (49,988) 138,471 20,349 158,820
(28,990) - (28,990) 136,306 20,349 156,655
57,170,373 255,327 57,425,700 29,747,529 5,755,667 35,503,196
=======================================================================================================================10.1.1. This includes investment of Islamic Banking Division amounting to Rs 97.973 million (2004: Rs 124,587 million).10.2. INVESTMENT BY SEGMENT ===========================================================================================
2005 2004
Notes Rupees in '000
===========================================================================================
FEDERAL GOVERNMENT SECURITIES:
- Treasury Bills 10.2.1 39,778,838 17,178,609
- Pakistan Investment Bonds 10.2.2 12,041,913 14,338,825
- Federal Investment Bonds - 15,598
Government Bonds 10.2.3 85 341 85 341
- Prize Bonds 9,445 4,297
51,915,537 31,6226,70
FULLY PAID UP ORDINARY SHARES:
- Listed Companies 10.2.4 1,034,561 795,099
- Unlisted Companies 10.2.5 76,979 6,356
1,111,545 801,455
TERM FINANCE CERTIFICATES, DEBENTURES,
BONDS AND PARTICIPATION TERM CERTIFICATES:
- Term Finance Certificates - quoted 10.2.6 496,345 362,043
- Term Finance Certificates - unquoted 10.2.7 1,767,600 1,141,429
2,263,945 1,503,472
Investments in subsidiary companies 10.2.8 109,600 75,600
Investments in associated companies 10.2.9 1,948,804 1,138,176
OTHER INVESTMENTS:
Certificates of Investment 10.2.10 105,259 205,168
57,454,690 35,346,541
Gain/ (loss) on re-measurement of
held for trading investments 20,998 (2,165)
Surplus / (deficit) on revaluation of
available for sale securities (net) 21.2 (49,988) 158,820
(28,990) 156,655
57,425,700 35,503,196
===========================================================================================10.2.1. Treasury bills are for the periods of six months and one year.The effective rates of profit on treasury bills range between 5.514% to 8.471% per annum with maturities up to December 2006. 10.2.2. Pakistan Investment Bonds are for periods of three, five, ten and fifteen years. The rates of profit range from 6% to 14% per annum with maturities from January 2006 to June 2019. These also include PIBs having face value of Rs 35 million (2004: Rs 35 million) pledged with the National Bank of Pakistan as security to facilitate Telegraphic Transfer discounting facility. 10.2.3. This represents bonds issued by the Federal Government to settle the dues of Heavy Mechanical Complex at the rate of 6% per annum redeemable on maturity in March 2009. 10.2.4. Investments in listed companies / funds include the following: The par value of these shares / certificates/units is Rs 10 except where stated. ===========================================================================================
2005 2004 2005 2004
No of shares Rupees in '000
certificates/units
===========================================================================================
MUTUAL FUNDS:
- 50,000 Atlas Income Fund** - 25,000
1,090,000 - AKD Index Tracker Fund 10,900 -
369,500 - Pakistan Capital Market Fund 4,881 -
1,898,500 - Pakistan Premier Fund 25,728 -
4,495,290 8,095,790 ABAMCO Composite Fund 44,953 80,898
2,500,000 2,500,000 Meezan Balanced Fund 25,000 25,000
400,000 2,319,500 Pakistan Strategic Allocation Fund 4,000 23,190
** The par value of
these units is Rs 500
INVESTMENT COMPANIES & BANKS
500,000 2,635,000 Askari Commercial Bank Limited 27,256 188,788
925,000 - Faysal Bank Limited 69,109 -
- 1 50,000 National Bank of Pakistan - 12,129
150,000 - Pakistan Industrial Credit
and Investment Corporation 1 0,827 -
- 399,000 Bank of Punjab - 26,616
200,000 275,000 MCB Bank Limited 33,950 16,447
690,000 - Union Bank Limited 43,234 -
350,000 - United Bank Limited 32,851 -
CEMENT:
695,000 698,000 D.G.Khan Cement Limited
(Preference Shares) 7,660 7,696
700,000 - D.G.Khan Cement Limited 76,969 -
- 300,000 Pioneer Cement Limited - 6,086
900,000 - Lucky Cement Limited 71,336 -
FUEL, ENERGY & OIL & GAS:
1,414,000 2,887,000 Hub Power Company Limited 50,935 98,939
15,000 - Pakistan State Oil 6,437 -
142,700 - Pakistan Oilfields Limited 59,347 -
25,000 - Pakistan Petroleum Limited 5,284 -
4,855,500 - Southern Electric Power
Company Limited 49,801 -
1,275,000 - Kot Addu Power Company Limited 59,652 -
3,802,500 5,342,000 Kohinoor Energy Limited 120,548 166,790
- 250,000 Sui Northern Gas Pipelines Limited - 15,358
- 475,000 Sui Southern Gas Company Limited - 12,580
- 150,000 Japan Power Generation Limited - 1,080
AUTOMOBILE ASSEMBLERS:
1,558,500 - Dewan Farooque Motors 49,721 -
TEXTILE COMPOSITE:
625,000 - Nishat Mills Limited 67,850 -
87,000 - Azgard Nine Limited 3,615 -
TECHNOLOGY & COMMUNICATION:
- 1,000 000 Pakistan Telecommunication
Company Limited - 44,250
- 1,534,500 Call Mate Telips Telecom Limited - 24,972
- 1,400,000 Southern Networks Limited - 14,000
CHEMICALS & FERTILISERS:
338,100 - ICI Pakistan 47,623 -
3,200 000 400 000 Pakistan PTA Limited 25,099 5,280
1,034,566 795,099
===========================================================================================10.2.5. INVESTMENT IN UNLISTED COMPANIES===========================================================================================
2005 2004 2005 2004
No of shares Rupees in '000
certificates/units
===========================================================================================
PAKISTAN EXPORT FINANCE GUARANTEE
AGENCY LIMITED:
572,531 572,531 Chief Executive : Mr S. M. Zaeem 5,725 5,725
8 5 Shares of SWIFT 1,254 631
7,000,000 - Al-Hamra Hills (Private) Limited
Chief Executive: Mr Habib Ahmed 70,000 -
Break-up value: Rs 10 each share.
76,979 6,356
===========================================================================================10.2.6. TERM FINANCE CERTIFICATES - QUOTED, SECURED===========================================================================================
2005 2004 2005 2004
No of shares Rupees in '000
certificates/units
===========================================================================================
DEWAN SALMAN FIBRE LIMITED:
NIL (2004: 11,800) certificates of Rs 5,000 each
Mark up: 16 percent per annum
Redemption : Eight equal quarterly instalments
commencing September 2003
Maturity: June 2005 - 14,726
Gulistan Textile Mills Limited
6,000 (2004: 6,000) certificates of Rs 5,000 each
Mark up: 2 percent above SBP discount
rate with a floor of 14 percent
per annum and a ceiling of 17.5 percent per annum
Redemption : Six equal semi-annual instalments
commencing March 2004
Maturity: September 2006 9,982 19,984
Askari Commercial Bank Limited (2nd Issue)
20,000 (2004: Nil) units of Rs 5,000 each
Mark up: 6 Months KIBOR (Ask Side) + 150 basis
points per annum (no floor no cap)
Redemption: Bullet at maturity
Maturity: 8 years from date of disbursement
i.e October 31, 2013 100,000 -
UNION BANK LIMITED (3RD ISSUE):
10,000 (2004: Nil) units of Rs 5,000 each
Mark up: 6 Months KIBOR + 200
basis points prevailing one
working day prior to the beginning
of each semi annual period.
Redemption: A nominal amount
i.e. 0.16 percent of the Issue
Amount will be re-paid equally in each
of the redemption periods
during the first 4 years.
Maturity: 7 years from the date of issue. 50,000 -
BANK AL HABIB LIMITED:
9,350 (2004: 9,350) certificates of Rs 5,000 each
MARK UP:
The average 6 month KIBOR + 1.50 percent
per annum with a floor of 3.50 percent and
a cap of 10.00 percent per annum
Redemption: The TFC is structured to redeem 0.25 percent
of principal semi-annually in the first 78 months and the
remaining principal in three semi-annual
instalments of 33.25 percent
respectively starting from the 84th month.
Maturity: June 2012 46,731 46,750
PRIME COMMERCIAL BANK LIMITED:
6,578 (2004: Nil) units of Rs 5,000 each
Mark up: 6 month KIBOR (Ask Side) + 190
basis points (no floor no cap)
Redemption: Redemption after a grace period
of 54 months in 4 equal instalments
Maturity: 8 years from the date of
disbursement i.e February 2012. 32,884 -
TRUST LEASING CORPORATION LIMITED:
11,136* (2004: 11,136)
certificates of Rs 5,000 each
Mark up: 3.00 percent + KIBOR
(6 months ask side) with a
floor of 6.00 percent per annum and
a cap of 10.00 percent per
annum Redemption: Principal repayment
in 10 equal semi-annual
instalments; profit payable on semi-annual basis
Maturity: July 2009 *
8,000 in pre IPO Participation, 3,136 in IPO 44,544 55,680
CRESCENT LEASING CORPORATION LIMITED:
10,000 (2004: 10,000)
certificates of Rs 5,000 each
Mark up: Six months KIBOR
(Average, Ask Side) + 1 .75 percent
per annum Redemption: Ten equal
semi-annual instalments
commencing January 2005; the issuer
has a Call Option exercisable
at any time from the beginning of the
nineteenth month till the end
of the sixtieth month from the issue
date only on a profit payment
date subject to a 30 day notice period
Maturity: July 2009 40,000 50,000
FIRST DAWOOD INVESTMENT BANK LIMITED:
6,000 (2004: 6,000) certificates of Rs 5,000 each
Mark up: On SBP discount
rate + 1 .75 percent per annum with
a floor of 13.50 percent and
a cap of 17.50 percent per annum
Redemption: Bullet at maturity;
the issuer has a Call Option
exercisable in whole for redemption
at face value at the end
of every 5 years from the date
of issue.
The investor has a Put Option
exercisable in whole
for redemption at face value
at the end of every 5 years from the date of issue.
Maturity: September 2006 31,485 33,615
FIRST DAWOOD INVESTMENT BANK LIMITE:
2,000 (2004: 2,000) certificates of Rs 5,000 each
Mark up: On SBP discount
rate + 1 .75 percent per annum
with a floor of 12.25 percent and
a cap of 16.25 percent per annum
Redemption: Bullet at maturity;
the issuer has a Call Option
exercisable in whole for redemption
at face value at the end
of every five years from the date
of issue.
The investor has a Put Option
exercisable in whole for redemption
at face value at the end of every
five years from the date of issue.
Maturity: September 2007 10,797 11,304
GULSHAN SPINNING MILLS LIMITED:
10,000 (2004: 10,000) certificates of Rs 5,000 each
Mark up: Six months KIBOR
(Average, Ask Side) + 1 .80 percent
per annum with a cap of 15 percent per annum
Redemption: Seven equal semi-annual
instalments commencing June 2006
Maturity: June 2009 49,970 50,000
PARAMOUNT SPINNING MILLS LIMITED:
16,000 (2004: 16,000) certificates of Rs 5,000 each
Mark up: Six months KIBOR
(Average, Ask Side) + 1.80 percent
per annum with a cap of 15 percent per annum
Redemption: Seven equal semi-annual
instalments commencing June 2006
Maturity: September 2009 79,952 79,984
496,345 362,043
===========================================================================================10.2.7. TERM FINANCE CERTIFICATES - UNQUOTED, SECURED===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
PAKISTAN INTERNATIONAL AIRLINES CORPORATION:
100,000 (2004: 100,000)
certificates of Rs 5,000 each
Mark up: SBP discount rate
+ 0.5 percent per annum with a floor of
eight percent per annum and a cap
of 12.50 percent per annum
Redemption: First four equal semi-annual
instalments commencing August 2003 amounting to
Rs 5,000 each.
Next six equal semi-annual instalments commencing
August 2005 amounting to Rs 12,499,500 each,
subsequent six equal semi-annual
instalments commencing August 2008
amounting to Rs 70,830,500 each; the issuer
has a Call Option exercisable any time
at 24th, 48th and 72nd month to redeem
in full or part with a premium.
Maturity: February 2011 487,481 499,985
AL-ABBAS SUGAR MILLS (PRIVATE) LIMITED:
10,000 (2004: 10,000) certificates of Rs 5,000 each
Mark up: Cut-off yield of the last successful
SBP auction of the 3 month Treasury Bills + 3.25
percent per annum with a floor of 6 percent
per annum and a cap of 13 percent per annum.
Redemption: Nineteen equal quarterly
instalments commencing January 2004; the issuer
has a Call Option exercisable any time
after two years to repay in whole
or in part on a coupon date
at a three months notice and with a premium.
Maturity: July 2008 28,720 39,474
Pakistan Mobile Communication (Private) Limited
30,000 (2004: 30,000) certificates of Rs 5,000 each
Mark up: Six month KIBOR
(Average, Ask Side) + 1 .60 percent
per annum with a floor of 4.95 percent per annum
and a cap of 12.00 percent per annum
Redemption: Five equal semi-annual
instalments commencing September 2006; the issuer has a
Call Option exercisable any time from
the 36th month to 54th month
on a coupon date subject to 30 days notice period
to repay in whole or in part
Maturity: September 2009 150,000 150,000
PAKISTAN MOBILE COMMUNICATION (PRIVATE) LIMITED:
50,000 (2004: 50,000) certificates of Rs 5,000 each
Mark up: Simple average of last three 6 - month Treasury
Bills cut-off rate + 2.25 percent per annum
with a floor of 6.00 percent
per annum and a cap of 12.00 percent per annum
Redemption: Five equal semi-annual
instalments commencing
September 2006; the issuer has a
call option exercisable any time
from the first principal repayment date
(i.e. starting from the 36th month)
onwards on a coupon date subject to 30 days
notice period to repay in whole or in part.
Maturity: September 2008 251,439 251,970
PAKISTAN MOBILE COMMUNICATION (PRIVATE) LIMITED:
50 (2004: Nil) units of Rs 5,000,000 each
Mark up: 6 Months KIBOR (Ask Side)
+ 270 basis points per annum
Redemption: Bullet payment at maturity
Maturity: 6 months i.e March 2006 250,000 -
Azgard Nine Limited
500 (2004: 500) certificates of Rs 100,000 each
Mark up: Six month KIBOR + 1.75 percent per annum
Redemption: Eight equal semi-annual
instalments commencing
from eighteenth month of the issue
date; the issuer has a Call
Option exercisable at profit payment
date to redeem in full or in
part the outstanding issue amount of the TFCs
Maturity: August 2009 50,000 50,000
Bosicor Pakistan Limited
20,000 (2004: 20,000)
certificates of Rs 5,000 each
Mark up: Six month KIBOR
(average ask side) + 5.5 percent
per annum with a floor of 9.00
percent per annum and a cap
of 13.00 percent per annum
payable semi-annually
Redemption: Seven equal semi-annual
instalments commencing
August 2006; the issuer has a
Call Option exercisable at any time
from the 1st principal repayment
date (i.e. starting from the 24th
month) onwards on a coupon
date subject to a 60 days
notice period to repay in whole or in part.
Maturity: August 2009 100,000 100,000
Security Leasing Corporation Limited
10,000 (2004: 10,000) certificates of Rs 5,000 each
Mark up: Six month KIBOR (Average, Ask Side) + 190 basis
point per annum. Redemption:
Ten equal semi-annual instalments
commencing January 2005; the issuer has a
Call Option exercisable
at any time from the beginning of the
nineteenth month till the end
of the sixtieth month form the
issue date only on profit
payment date subject to a
30 days notice period.
Maturity: April 2008 49,960 50,000
SECURITY LEASING CORPORATION LIMITED:
(2nd Issue)
20,000 (2004: Nil) units of Rs 5,000 each
Mark up: 6 Months KIBOR
(Ask Side) + 165 basis
point per annum (no floor no cap)
Redemption: Ten equal
quarterly instalments commencing
from the 9th month of the
issue; the issuer has a Call Option
exercisable at any mark-up
payment date after a period of
12 months from the issue date
to redeem in full or in part the
issue amount outstanding
of the PPTFCs subject to a
90 days notice to the Investors.
Maturity: 3 years from date
of disbursement i.e. June 2008. 100,000 -
Reliance Exports (Private) Ltd.
30,000 (2004: Nil) units of Rs 10,000 each
Mark up: 6 Months KIBOR (Ask Side)
+ 250 basis point per annum
(no floor no cap)
REDEMPTION:
Redemption after a grace period of
one year in stepped-up instalments.
The issuer has a Call Option
exercisable at any mark-up payment
date to redeem in full or in
part the Issue amount outstanding
of the PPTFCs subject to a
60 days notice to the Investors.
Maturity: 7 years from the date
of disbursement i.e. July 2012. 300,000 -
1,767,600 1,141,429
===========================================================================================10.2.8. This represents investment in 7.60 million (2004: 4.2 million) ordinary shares of Rs 10 each of Alfalah Securities (Private) Limited - Chief Executive Mr Mohammad Shoib Memon and 3.36 million (2004: 3.36 million) ordinary shares of Rs 10 each in Alfalah GHP Investment Management Limited - Chief Executive Mr Aziz Anis Dhedhi.10.2.9. This represents investment in 184.880 million (2004: 113.817 million) ordinary shares of Rs 10 each of Warid Telecom (Private) Limited - Chief Executive Mr Hamid Farooq and 2 million (2004: Nil) units of Rs 50 each of Alfalah GHP Value Fund - (Investment Adviser - Alfalah GHP Investment Management Limited). 10.2.10. PARTICULARS OF CERTIFICATE OF INVESTMENT IS AS FOLLOWS ===========================================================================================
Tenor Profit rate 2005 2004
(percent per Rupees in '000
annum)
===========================================================================================
Pak Libya Holding Company (Private) Limited 3 years 5.25 105,259 205,168
===========================================================================================11. ADVANCES===========================================================================================
2005 2004
Notes Rupees in '000
===========================================================================================
Loans, cash credits, running finances, etc.
In Pakistan 99,826,193 80,733,210
Outside Pakistan 1,361,725 -
101,187,918 80,733,210
NET INVESTMENT IN FINANCE LEASE / LJARAH FINANCING:
In Pakistan 11.2 12,158,131 6,374,637
Outside Pakistan - -
12,158,131 6,374,637
BILLS DISCOUNTED AND PURCHASED
(EXCLUDING TREASURY BILLS):
Payable in Pakistan 2,222,723 1,647,111
Payable outside Pakistan 4,848,219 1,536,499
7,070,942 3,183,610
120,416,991 90,291,457
Provision for non-performing advances 11.4 (1,552,981) (1,360,057)
118,864,010 88,931,400
===========================================================================================11.1. PARTICULARS OF ADVANCES11.1.1. ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
In local currency 112,384,613 86,892,902
In foreign currencies 6,479,397 2,038,498
118,864,010 88,931,400
===========================================================================================11.1.2.===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Short term (for up to one year) 70,847,093 57,723,151
Long term (for over one year) 48,016,917 31,208,249
118,864,010 88,931,400
===========================================================================================11.2. NET INVESTMENT IN FINANCE LEASE/ IJARAH FINANCING========================================================================================================
2005 2004
Not later Later than one Over five Total Total
than year & less years
one year than five years
(Rupees in '000)
========================================================================================================
Lease rental receivable 2,012,664 9,763,270 55,173 11,831,107 6,248,575
Add: Residual value 202,752 1,999,930 3,997 2,206,679 997,677
Minimum lease payments 2,215,416 11,763,200 59,170 14,037,786 7,246,252
Financial charges for future period (347,153) (1,528,649) (3,853) (1,879,655) (871,615)
Present value of minimum lease payments 1,868,263 10,234,551 55,317 12,158,131 6,374,637
========================================================================================================11.3. Advances include Rs 1.06 billion (2004: Rs 2.935 billion) which have been placed under non-performing status as detailed below:=================================================================================================================================
2005
Provision Required Provision held
Domestic Overseas Total Specific General Specific General
(Rupees in '000)
=================================================================================================================================
CATEGORY OF CLASSIFICATION
OTHER ASSETS ESPECIALLY:
Mentioned (Agri financing) 22,705 - 22,705 - - -
Substandard 171,072 - 171,072 6,975 - 6,975 -
Doubtful 48,787 - 48,787 11,006 - 11,006 -
Loss 776,116 41,275 817,391 689,388 - 689,388 -
1,018,680 41,275 1,059,955 707,369 754,967 707,369 845,612
=================================================================================================================================11.4. PARTICULARS OF PROVISION AGAINST NON-PERFORMING ADVANCES=================================================================================================================================
2005 2004
Specific General Total Specific General Total
Note (Rupees in '000)
=================================================================================================================================
Opening balance 851,119 508,938 1,360,057 1,006,215 149,896 1,156,111
Opening balance of foreign branch
acquired during the year 20,787 16,629 37,416 - - -
Charge for the year 206,704 320,269 526,973 92,053 359,052 451,105
Reversals (124,451) (224) (124,675) (80,887) (10) (80,897)
82,253 320,045 402,298 11,166 359,042 370,208
Transferred from interest in suspense 3,637 - 3,637 - - -
Amounts written off 11.5.1 (250,427) - (250,427) (166,262) - (166,262)
Closing balance 707,369 845,612 1,552,981 851,119 508,938 1,360,057
=================================================================================================================================11.5. PARTICULARS OF WRITE OFFs11.5.1. ===========================================================================================
2005 2004
Note Rupees in '000
===========================================================================================
Against provisions 11.4 250,427 166,262
Directly charged to profit and loss account 512 351
250,939 166,613
===========================================================================================11.5.2.===========================================================================================
2005 2004
Note Rupees in '000
===========================================================================================
Write-offs of Rs 500,000 and above 11.6 248,808 159,623
Wriite-offs of below Rs 500,000 2,131 6,990
250,939 166,613
===========================================================================================11.6. Details of loan write offs of Rs 500,000 and aboveIn terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the statement in respect of written-off loans or any other financial relief of five hundred thousand rupees or above allowed to persons during the year ended December 31, 2005 is given in Annexure-1. 11.6.1. PARTICULARS OF LOANS AND ADVANCES TO DIRECTORS, ASSOCIATED COMPANIES, ETC ===========================================================================================
Balance Maximum
as at amount of
December advances
31, 2005 including
temporary
advances
granted during
the year
===========================================================================================
Debts due by directors, executives or officers
of the bank or any of them either severally
or jointly with any other persons 153,675 155,475
Debts due by companies or firms in which
the directors of the bank are interested as directors,
partners or in the case of private companies as members. 31,969 34,559
Debts due by subsidiary companies,
controlled firms, managed modarabas,
and other related parties. 224,565 224,565
===========================================================================================11.7. This includes advances of Islamic Banking Division amounting to Rs 9.934 billion (2004: Rs 4.063 billion.)12. OTHER ASSETS ===========================================================================================
2005 2004
Notes Rupees in '000
===========================================================================================
Income/ mark-up accrued in local currency 2,423,566 1,330,454
Income/ mark-up accrued in foreign currency 107,158 22,325
Advances, deposits, advance rent and other prepayments 1,137,084 752,856
Advance taxation 142,483 -
Dividend receivable 60 413
Branch adjustment account - 947,883
Unrealised gain on forward foreign exchange contracts 26,095 29,994
Prepaid exchange risk fee 1,628 3,552
Stationary and stamps on hand 49,258 32,032
Short term receivables 1,824 1,328
Receivable against issue of rights 20.3 400 -
Receivable from brokers 12.1 116,289 246,558
4,005,845 3,367,395
Less: Provision held against other assets 12.4 (10,071) (9,619)
Mark-up held in suspense account (144,245) (1 30,817)
3,851,529 3,226,959
===========================================================================================12.1. This represents amount receivable from brokers against sale of shares.12.2. This includes amount of Rs 19.667 million (2004: Rs 30.152 million) receivable from related parties. 12.3. This includes other assets of Islamic Banking Division amounting to Rs 120.601 million (2004: Rs 145.370 million) 12.4. PROVISIONS AGAINST OTHER ASSETS ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Opening balance 9,619 9,619
Charge for the year 452 -
Closing balance 10,071 9,619
===========================================================================================13. OPERATING FIXED ASSETS===========================================================================================
2005 2004
Notes Rupees in '000
===========================================================================================
Capital work-in-progress 13.2 1,038,875 495,553
Property and equipment 13.3 5,551,517 3,752,322
Intangible assets 13.4 29,675 32,629
6,620,067 4,280,504
===========================================================================================13.1. This includes Capital work-in-progress, property and equipment and intangible assets of Rs 44.231 million (2004: Rs 6.969 million), Rs 608.605 million (2004: Rs 464.717 million) and Rs 3.286 million (2004: Nil) respectively of Islamic Banking Division.13.2. CAPITAL WORK-IN-PROGRESS ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Advance to suppliers and contractors 1,038,875 495,553
===========================================================================================13.3. PROPERTY AND EQUIPMENT================================================================================================================================================
Description Cost / Additions / Revaluation Cost / Accumulated Depreciation Accumulated Net book Rate of
revaluation (disposals)/ surplus Revaluation as depreciation for the year/ depreciation a value at depreciation
at January 1, *adjustments at December January 1, (on disposal)/December 31, December 31, %
2005 31, 2005 2005 *adiustments 2005 2005 per annum
(Rupees in('000)
================================================================================================================================================
Office premises 1,691,664 1,181,593 - 2,849,274 14,375 34,060 51,330 2,797,944 2.5-5.5
Revaluation 1,138,799 - - 1,138,799 40,113 40,113 80,226 1,058,573 2.5-5.5
2,830,463 1,181,593 - 3,988,073 54,488 74,173 131,556 3,856,517 2.5
* (23,983) - - - * 2,895 - - -
Lease hold
improvement 295,292 163,023 - 481,899 105,960 74,971 177,669 304,230 20
(399) (367)
* 23,983 * (2,895)
Furniture and
Fixtures 259,610 118,926 - 376,545 74,656 33,408 107,269 269,276 10-25
(1,991) (795)
Office equipment 887,179 651,844 - 1,534,854 388,813 233,310 619,516 915,338 20-25
(4,169) (2,607)
Vehicles 212,213 157,837 - 361,582 108,518 53,111 155,426 206,156 25
(8,468) (6,203)
2005 4,484,757 2,273,223 - 6,742,953 732,435 468,973 1,191,436 5,551,517
(15,027) (9,972)
2004 2,912,844 1,588,606 - 4,484,757 451,747 294,446 732,435 3,752,322
(15,074) (12,176)
*(1,619) *(1,582)
================================================================================================================================================13.3.1. Included in cost of property and equipment are fully depreciated items still in use having cost of Rs 229.195 million (2004: Rs 201.192 million).13.3.2. The fair value of property and equipment as per management estimate is not materially different from the carrying amount. 13.3.3. The above balance of owned operating assets represents the value of assets subsequent to revaluation on December 30, 1999 and December 31, 2003 which had resulted in surplus of Rs 830.950 million and Rs 516.802 million respectively and additions thereafter at cost. 13.3.4. As at December 31, 2005, un-depreciated balance of revaluation surplus included in the carrying value of fixed assets, amounted to Rs 1,058.573 million (2004: Rs 1,098.686 million). 13.4. INTANGIBLE ASSETS ==================================================================================================================
COST AMORTISATION
As at Additions / As at As at As at Net book Rate of
January 1, (deletions) December January For the year December value as at amortisation
2005 31, 2005 1, 2005 31, 2005 December % per
31, 2005 annum
(Rupees in ('000)
==================================================================================================================
Computer software 52,859 11,443 64,302 20,230 14,397 34,627 29,675 20
Goodwill 15,440 - 15,440 15,440 - 15,440 -
2005 68,299 11,443 79,742 35,670 14,397 50,067 29,675
2004 60,815 7,484 68,299 23,784 11,886 35,670 32,629
==================================================================================================================13.5. DETAILS OF DISPOSAL OF FIXED ASSETS HAVING COST OF MORE THAN Rs 1,000,000 OR NET BOOK VALUE OF Rs 250,000 OR ABOVE=============================================================================================
Cost Accumulated Net book Sale Mode of Particulars of purchaser
depreciation value proceeds disposal
(Rupees in '000)
=============================================================================================
Vehicle 835 60 775 835 Insurance claim Adamiee Insurance
Vehicle 555 156 399 474 Insurance Claim Adamjee Insurance
Vehicle 809 58 751 765 Insurance Claim Adamjee Insurance
Vehicle 785 493 292 705 Insurance Claim Adamiee Insurance
=============================================================================================14. BILLS PAYABLE===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
In Pakistan 3,458,499 2,233,671
Outside Pakistan 274,625 -
3,733,124 2,233,671
===========================================================================================15. BORROWINGS FROM FINANCIAL INSTITUTIONS===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
In Pakistan 5,815,915 12,252,275
Outside Pakistan 28,474 471,555
5,844,389 12,723,830
===========================================================================================15.1. PARTICULARS OF BORROWINGS FROM FINANCIAL INSTITUTIONS===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
In local currency 5,815,915 12,252,275
In foreign currencies 28,474 471,555
5,844,389 12,723,830
===========================================================================================15.2. DETAILS OF BORROWINGS FROM FINANCIAL INSTITUTIONS===========================================================================================
2005 2004
Notes Rupees in '000
===========================================================================================
SECURED
BORROWINGS FROM STATE BANK OF PAKISTAN UNDER:
Export refinance scheme 15.2.1 5,585,988 6,677,505
LONG TERM FINANCE FOR EXPORT ORIENTED:
Projects scheme (LTFEOP) 15.2.2 29,927 -
Repurchase agreement borrowings 15.2.3 100,000 5,459,770
5,715,915 12,137,275
UNSECURED:
Call borrowings 15.2.4 100,000 115,000
Overdrawn nostro accounts 28,474 471,555
128,474 586,555
5,844,389 12,723,830
===========================================================================================15.2.1. This facility is secured against demand promissory note executed in favour of the State Bank of Pakistan.The effective mark-up rate is 7.5 % per annum payable on a quarterly basis. 15.2.2. This facility is secured against demand promissory note executed in favour of the State Bank of Pakistan. The outstanding amount represents a borrower namely Novatex Limited. The effective mark-up rate is 5 % per annum payable on a quarterly basis. 15.2.3. This represents repurchase agreement borrowings from another bank at a rate of 6.5 % per annum maturing in January 2006. 15.2.4. This represents call borrowing in interbank market at the rate of 8.40 % per annum maturing in January 2006. 16. DEPOSITS AND OTHER ACCOUNTS ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
CUSTOMERS:
Fixed deposits 80,167,779 21,892,081
Savings deposits 81,057,975 65,965,795
Current accounts - Non-remunerative 45,814,316 36,213,567
Margin, call and sundry deposits 3,509,310 2,123,779
210,549,380 126,195,222
FINANCIAL INSTITUTIONS:
Remunerative deposits 11,760,879 3,503,281
Non-remunerative deposits 34,808 16,388
11,795,687 3,519,669
222,345,067 129,714,891
===========================================================================================16.1. PARTICULARS OF DEPOSITS===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
In local currency 202,080,886 117,687,673
In foreign currencies 20,264,181 12,027,218
222,345,067 129,714,891
===========================================================================================16.2. These include deposits of Rs 12,471.732 million (2004: Rs 6,548.307 million) [Foreign currency Rs 1,200.653 million (2004: Rs 323.768 million)] of Islamic Banking Division.17. SUBORDINATED LOANS ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Term Finance Certificates / - Quoted, Unsecured 649,220 649,480
Mark-up 1.33 percent above 5 years PIB yield;
floor: 10 percent per annum;
cap: 15 percent per annum
Subordination
The TFCs are subordinated
to all other indebtedness
of the Bank including deposits.
Rating AA--
Tenor Six years
Redemption 2 equal semi-annual instalments
commencing June 2008.
Maturity December 2008
Term Finance Certificates II - Quoted, Unsecured 1,249,520 1,250,000
Mark-up Base Rate* + 1.50 percent
* Base rate is the simple
average of the ask side
rate of the six months (KIBOR)
prevailing on the first day
of the start of each half-yearly
period and mark-up due
at the end of that period.
Subordination The TFCs are subordinated
as to the payment of
principal and profit.
In the case of occurrence of an
event of default, the TFC
holder will rank below the
senior unsecured creditors and
depositorors and other
creditors of the bank.
Rating AA--
Tenor Eight years
Redemption 3 equal semi-annual instalments
commencing 84th month
of the issue date.
Maturity December 2012
Term Finance Certificates III Quoted, Unsecured 1,324,615
Mark-up Base Rate* + 1.50%
* Base rate is the simple
average of the ask rate
of the six months (KIBOR)
prevailing on the first
day of the start of each half-yearly
period and mark-up due
at the end of that period.
Subordination The TFCs are subordinated as to the
payment of principal and profit to
all other indebtedness of the bank
Rating AA--
Tenor Eight years
Redemption 3 equal semi-annual instalments
commencing 84th month of the issue
Maturity date. November 2013 3,223,355 1,899,480
===========================================================================================18. OTHER LIABILITIES===========================================================================================
2005 2004
Note Rupees in '000
===========================================================================================
Mark-up / return/ interest payable in local currency 1,783,284 701,230
Mark-up/ return / interest payable in foreign currency 97,558 37,154
Unearned commission and income on bills discounted 118,326 88,495
Accrued expenses 138,381 214,055
Payable against redemption of credit card reward points 102,793 66,161
Branch adjustment account 344,186 -
Taxation - 79,255
Lease security deposit 2,302,841 997,677
Payable to defined benefit plan - -
Exchange difference payable to SBP 13,099 6,693
Payable to brokers 18.1 98,959 384,043
Others 220,239 150,581
5,219,666 2,725,344
===========================================================================================18.1. This represents amounts payable to brokers against purchase of shares.18.2. These include Rs 1,269.103 million (2004: Rs 411.728 million) of Islamic Banking Division. 19. DEFERRED TAX (LIABILITIES) / ASSETS ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
DEFERRED DEBITS ARISING IN RESPECT OF:
Provision for doubtful debts 883,798 729,330
Excess of Tax WDV over Accounting
WDV of operating fixed assets - 21,720
Deficit on revaluation of securities 18,803 -
License fee charged off 13,475 14,053
916,076 765,103
DEFERRED CREDITS ARISING IN RESPECT OF:
Write offs/ reversals of provision for bad debts (563,178) (450,401)
Leasing operations (356,921) (119,136)
Excess of accounting net book value over tax written
down value of fixed assets (72,414) -
Surplus on revaluation of operating fixed assets (407,629) (422,874)
Surplus on revaluation of securities - (48,526)
(1,400,142) (1,040,937)
(484,066) (275,834)
===========================================================================================20. SHARE CAPITAL20.1. AUTHORISED CAPITAL ===========================================================================================
2005 2004 2005 2004
Rupees in '000
===========================================================================================
400,000,000 400,000,000 Ordinary shares of Rs 10 each 4,000,000 4,000,000
===========================================================================================20.2. ISSUED, SUBSCRIBED AND PAID UP ORDINARY SHARES OF Rs 10 EACH===========================================================================================
2005 2004 2005 2004
Rupees in '000
===========================================================================================
75,000,000 75,000,000 Fully paid in cash 750,000 750,000
175,000,000 175,000,000 Bonus shares 1,750,000 1,750,000
50,000,000 - Right shares issued during the year 500,000 -
300,000,000 250,000,000 3,000,000 2,500,000
===========================================================================================20.3. The right shares include 20,000 shares, representing rights relating to applications rejected and missing from the offer for sale of shares.These right shares would be offered to those applicants who would be allotted/ offered shares or accordance with the directives/ guidance of the Securities and Exchange Commission of Pakistan. These shares at entitled to all corporate actions as all other ordinary shares. 21. SURPLUS ON REVALUATION OF ASSETS ===========================================================================================
2005 2004
Notes Rupees in '000
===========================================================================================
SURPLUS ARISING ON REVALUATION OF:
- fixed assets 21.1 757,248 782,118
- securities 21.2 (31,185) 110,294
726,063 892,412
===========================================================================================21.1. SURPLUS ON REVALUATION OF FIXED ASSETS===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Surplus on revaluation of fixed assets 1,347,752 1,347,752
Deficit reversed due to disposal 243 243
Less: related deferred tax liability (468,999) (468,999)
Transferred to retained earnings relating to
incremental depreciation (net of tax) (121,748) (96,878)
757,248 782,118
===========================================================================================21.2. SURPLUS ON REVALUATION OF SECURITIES===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
(i) Government securities (49,481) 105,481
(ii) Quoted shares 5,572 40,464
(iii) Term Finance Certificates - quoted (6,079) 12,875
(49,988) 158,820
Related deferred tax asset/ (liability) 18,803 (48,526)
(31,185) 110,294
===========================================================================================22. CONTINGENCIES AND COMMITMENTS22.1. DIRECT CREDIT SUBSTITUTES ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
CONTINGENT LIABILITY IN RESPECT OF GUARANTEES GIVEN FAVOURING:
(i) Government 964,112 636,962
(ii) Banking companies and other financial institutions 44,214 72,475
(iii) Others 975,229 559,050
1,984,155 1,268,487
===========================================================================================22.2. TRANSACTION-RELATED CONTINGENT LIABILITIESContingent liability in respect of performance bonds, bid bonds, shipping guarantees, standby letters of credit etc. favouring: ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
(i) Government 8,957,823 9,154,516
(ii) Banking companies and other financial institutions 662,917 75,037
(iii) Others 5,004,954 3,286,554
14,625,694 12,516,107
===========================================================================================22.3. TRADE-RELATED CONTINGENT LIABILITIES===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Letters of credit 20,490,078 14,698,842
Acceptances 4,814,441 4,510,247
===========================================================================================22.4. OTHER CONTINGENCIES===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Claims against the bank not acknowledged as debts 540,749 701,200
===========================================================================================22.5. COMMITMENTS IN RESPECT OF FORWARD LENDING===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Commitments to extend credit 2,046,000 866,000
===========================================================================================22.6. COMMITMENTS IN RESPECT OF FORWARD EXCHANGE CONTRACTS===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Purchase 3,195,895 8,959,825
Sale 4,683,657 5,334,423
===========================================================================================22.7. COMMITMENTS FOR THE ACQUISITION OF OPERATING===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
fixed assets and intangibles 121,522 119,300
===========================================================================================22.8. COMMITMENTS IN RESPECT OF REPO TRANSACTIONS===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
- Repurchase 206,743 5,542,013
- Resale 26,457,918 -
===========================================================================================23. MARK-UP / RETURN / INTEREST EARNED===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
(a) On loans and advances to:
(i) customers 8,779,866 4,152,725
(ii) financial institutions 89,513 18,909
(b) On investments in:
(i) available for sale securities 574,719 628,338
ii) held to maturity securities 1,888,494 691,503
iii) held for trading 1,401 -
(c) On deposits with financial institutions 420,056 81,913
(d) On securities purchased under resale agreements 492,762 46,815
12,246,811 5,620,203
===========================================================================================23.1. These include mark-up earned of Rs 303.466 million (2004: Rs 96.626 million) of Islamic Banking Division.24. MARK-UP / RETURN / INTEREST EXPENSED ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Deposits (including exchange risk fee) 6,447,085 1,795,093
Securities sold under repurchase agreements 235,177 398,704
Other short term borrowings 314,856 156,290
Term Finance Certificates 207,874 84,372
7,204,992 2,434,459
===========================================================================================25. OTHER INCOME===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Postage, telex, service charges etc. 500,658 319,276
Net profit on sale of property and equipment 4,309 4,297
Gain on sale of shares / certificates / units - net 231,878 246,117
Gain on sale of government securities - net 7,673 3,132
744,518 572,822
===========================================================================================26. ADMINISTRATIVE EXPENSES===========================================================================================
2005 2004
Notes Rupees in '000
===========================================================================================
Salaries, allowances, etc. 1,538,299 1,025,856
Charge for defined benefit plan - Gratuity 46,637 27,531
Contribution to defined
contribution plan - Provident Fund 53,281 34,014
Brokerage and commissions 320,808 140,039
Rent, taxes, insurance, electricity, etc. 529,956 324,774
Legal and professional charges 48,394 41,977
Communication 209,750 125,968
Repair and maintenance 178,312 110,136
Stationery and printing 115,982 78,272
Advertisement and publicity 283,426 243,643
Donations 26.1 117,600 17,100
Auditors remuneration 26.2 4,311 2,820
Depreciation 13.3 468,973 294,446
Amortisation of intangible assets 13.4 14,397 11,886
Entertainment, vehicle running expenses,
travelling and subscription 207,161 127,214
Others 175,736 71,959
4,313,023 2,677,635
===========================================================================================26.1. DONATIONS===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
President Relief Fund for Earthquake Victims - 2005 100,000 -
Pakistan Human Development Fund (PHDF) - 15,900
Rising Sun Institute Lahore 8,000 -
Beautification of I.I. Chundrigar Road 7,500 -
Mr Mohammad Afzal - 1,000
M/s Zindagi Trust 700 -
MIs Patients Welfare Association 500 -
Lahore Medical & Dental College 400 -
Shaukat Khanum Memorial Hospital - 200
The Lahore Hospital Welfare Society 200 -
Pakistan Society for Rehabilitation of the Disabled 100 -
Escort Foundation 100 -
Umeed-e-Noor Center for Challenged Children 100 -
117,600 17,100
===========================================================================================None of the Directors or their spouses had any interest in the donees.26.2. AUDITOR'S REMUNERATION ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Audit fee 2,609 1,505
Fee for half yearly review 600 600
Special certifications and sundry advisory services 592 365
Out-of-pocket expenses 510 350
4,311 2,820
===========================================================================================27. OTHER CHARGES===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Penalties imposed by State Bank of Pakistan 21,104 1,700
===========================================================================================28. TAXATION===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
FOR THE YEAR:
Current 592,635 586,159
Deferred 267,524 (3,663)
860,159 582,496
FOR PRIOR YEAR:
Current (7,000) (30,000)
Deferred 8,037 9,249
1,037 (20,751)
861,196 561,745
===========================================================================================The income tax assessments of the bank have been finalised upto and including tax year 2005.Matters of disagreement exist between the bank and tax authorities for various assessment years and are pending with the Commissioner of Income Tax (Appeals), Income Tax Appellate Tribunal (ITAT) and High Court of Sindh. The issues mainly relate to addition of mark-up in suspense to income, taxability of profit on government securities, bad debts written off and disallowance relating to profit and loss expenses. However, adequate provision has been made in the financial statements in this respect. During the year the Bank has been selected for tax audit in respect of Tax Year 2004 and the notice under section 176 of Income Tax Ordinance 2001 has been issued by the Tax Department (LTU). The audit is expected to be finalised in 2006. Further, during the year, various appeals have also been decided in bank's favour. 28.1. RELATIONSHIP BETWEEN TAX EXPENSE AND ACCOUNTING PROFIT ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Profit before tax 2,563,290 1,653,734
Tax at the applicable rate of 38% (2004: 41%) 974,050 678,031
EFFECT OF:
- Change in tax rate 8,037 9,249
- income chargeable to tax at reduced rates (17,165) (18,914)
- income exempt from tax (88,114) (96,708)
- other differences (8,612) 20,087
- prior year provision (7,000) (30,000)
Tax expense for the year 861,196 561,745
===========================================================================================29. BASIC EARNINGS PER SHARE===========================================================================================
2005 2004
===========================================================================================
Profit for the year 1,702,094 1,091,989
===========================================================================================
===========================================================================================
Number of Shares in thousand
===========================================================================================
Weighted average number of ordinary shares 296,016 280,428
Basic and diluted earnings per share Rupees 5.75 3.90
===========================================================================================30. CASH AND CASH EQUIVALENTS===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Cash and balances with treasury banks 24,788,625 19,708,518
Balances with other banks 9,713,369 3,183,957
Call lendings 790,000 -
35,291 994 22,892,475
===========================================================================================31. STAFF STRENGTH===========================================================================================
2005 2004
===========================================================================================
Total number of employees at the end of the year 5,218 3,352
===========================================================================================32. DEFINED BENEFIT PLAN32.1. PRINCIPAL ACTUARIAL ASSUMPTIONS ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Discount factor used (% per annum compounded) 10.00 9.00
Expected yield on investment (% per annum) 10.00 9.00
Salary increase (% per annum) 10.00 9.00
Normal retirement age 60 years 60 years
===========================================================================================32.2. RECONCILIATION OF PAYABLE TO DEFINED BENEFIT PLAN===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Present value of defined benefit obligations 261,191 176,786
Fair value of plan assets (183,665) (131,193)
Net actuarial losses not recognised (71,866) (45,593)
Unrecognised transitional obligation (5,660) -
- -
===========================================================================================32.3. MOVEMENT IN PAYABLE TO DEFINED BENEFIT PLAN===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Opening balance - -
Charge for the year 46,637 27,531
Contribution to fund made during the year (46,637) (27,531)
Closing balance - -
===========================================================================================32.4. CHARGE FOR DEFINED BENEFIT PLAN===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Current service cost 26,908 17,298
Interest cost 15,911 9,482
Expected return on plan assets (11,807) (7,897)
Actuarial losses 3,102 5,269
Past service cost 12,523 3,379
46,637 27,531
===========================================================================================32.5. ACTUAL RETURN ON PLAN ASSETS===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
13,956 6,522
===========================================================================================33. REMUNERATION OF DIRECTORS AND EXECUTIVES===========================================================================
Chief Executive Officer Executives
2005 2004 2005 2004
Rupees in '000
===========================================================================
Managerial remuneration 5,600 5,100 223,169 126,932
Bonus 5,312 2,950 75,150 37,214
Retirement benefit plan 467 375 23,185 14,432
Rent and house maintenance 2,706 960 69,046 41,628
Utilities 560 240 - -
Medical - - - -
Others - - - -
14,546 9,625 390,550 220,206
Number of persons 1 1 192 112
===========================================================================The Chief Executive and certain executives have been provided with the free use of cars and household equipments.34. MATURITIES OF ASSETS AND LIABILITIES =======================================================================================================
2005
Total Upto three Over Over one Over
months 3 months year to five years
to one year five years
(Rupees in '000)
=======================================================================================================
ASSETS:
Cash and balances with
treasury banks 24,788,625 24,788,625 - - -
Balances with other banks 9,713,369 8,177,361 1,536,008 - -
Lendings to Financial
Institution 27,050,493 26,950,493 100,000 - -
Investments 57,425,700 13,983,358 29,597,761 6,681,470 7,163,111
Advances 118,864,010 16,697,899 54,149,194 39,398,936 8,617,981
Other assets 3,851,529 2,960,860 432,883 280,881 176,905
Operating fixed assets 6,620,067 926,177 1,796,701 1,954,159 1,943,030
248,313,793 94,484,773 87,61 2,547 48,315,446 17,901,027
LIABILITIES:
Bills payable 3,733,124 3,733,124 - - -
Borrowings from financial
institutions 5,844,389 228,474 5,585,988 - 29,927
Deposits and other accounts* 222,345,067 116,828,604 50,1 63,516 21,475,170 33,877,777
Subordinated loans 3,223,355 370 3,330 645,520 2,574,135
Other liabilities 5,219,666 2,617,276 630,997 1,892,325 79,068
Deferred tax liabilities 484,066 18,803 - 465,263 -
240,849,667 123,426,651 56,383,831 24,478,278 36,560,907
Net assets 7,464,126 (28,941,878) 31,228,716 23,837,168 (18,659,880)
Share Capital 3,000,000
Reserves 2,351,218
Unappropriated profit 1,386,845
Surplus on revaluation of assets 726,063
7,464,126
======================================================================================================= * 20 percent of saving deposits have been classified in each of up to three months, over three months to one year and over one year to five years category with the remaining 40 percent being classified under the over five years category based on management's experience with such class of deposits.However, contractually these deposits are payable on demand. Liquidity risk is the risk that the bank will not be able to raise funds to meet its commitments. The bank's Asset and Liability Management Committee manages the liquidity position on a continuous basis. The Committee monitors the maintenance of balance sheet liquidity ratios, depositors' concentration both in terms of the overall funding mix and avoidance of undue reliance on large individual deposits and liquidity contingency plans. Moreover, core retail deposits (current accounts and saving accounts) form a considerable part of the bank's overall funding therefore significant importance is attached to the stability and growth of these deposits. 35. YIELD / INTEREST RATE RISK =============================================================================================================================
2005
Effective Total Up to three Over Over one Over Note expose
Yield/ interest months 3 months year to five years to yield/
rate to one year five years interest rate
(Rupees in '000)
=============================================================================================================================
ON - BALANCE SHEET
FINANCIAL INSTRUMENTS
ASSETS:
Cash and balances with
treasury banks 3.290 24,788,625 2,365,555 - - - 22,423,070
Balances with other banks 4.315 9,713,369 6,178,604 1,536,008 - - 1,998,757
Lendings to Financial
institutions 7.921 27,050,493 26,950,493 100,000 - - -
Investments 7.665 57,425,700 12,861,358 29,597,761 6,681,470 5,134,707 3,150,404
Advances 8.900 118,864,010 16,697,899 54,149,194 39,398,936 8,617,981 -
Other assets 3,708,046 - - - - 3,708,046
241,550,243 65,053,909 85,382,963 46,080,406 13,752,688 31,280,277
LIABILITIES:
Bills payable 3,733,124 - - - - 3,733,124
Borrowings from financial
institutions 7.511 5,844,389 200,000 5,585,988 - 29,927 28,474
Deposits and other
accounts* 4.880 222,345,067 70,979,481 50,163,515 21,475,170 33,877,777 45,849,124
Subordinated loans 9.600 3,223,355 370 3,330 645,520 2,574,135 -
Other Liabilities 4,875,474 - - - - 4,875,474
240,021,409 71,179,851 55,752,833 22,120,690 36,481,839 54,486,196
On-balance sheet gap 1,528,834 (6,125,942) 29,630,130 23,959,716 (22,729,151) 23,205,919
Cumulative yield/ interest
risk sensitivity gap (6,125,942) 23,504,188 47,463,904 24,734,753 (23,205,919)
============================================================================================================================= * 20 percent of saving deposits have been classified in each of upto three months, over three months to one year and over one year to five years category with the remaining 40 percent being classified under the over five years category based on management's experience with such class of deposits.However, contractually these deposits are payable on demand. 35.1. The interest rate risk arises from the fluctuation in the value of financial instruments consequent to the changes in the market interest rates. The bank is exposed to interest rate risk as a result of mismatches or gaps in the amounts of assets and liabilities and off-balance sheet instruments that mature or are re-priced in a given period. In order to ensure that this risk is managed within acceptable limits, the bank's Asset and Liability Management Committee monitors the re-pricing of the assets and liabilities on a regular basis. The bank's interest rate risk is limited since the majority of customer's deposits are retrospectively re-priced on a biannual basis on the profit and loss sharing principles. Hence bank's exposure in three months to one-year time as mentioned above has no impact on bank's results. 36. CURRENCY RISK =================================================================================
2005
Assets Liabilities Off-balance Net foreign
sheet items* currency
exposure
Rupees in '000
=================================================================================
Pakistan Rupee 221,010,857 219,356,571 (158,268) 1,496,018
United States Dollar 15,429,334 15,711,542 118,746 (163,462)
Great Britain Pound 1,847,258 1,860,312 19,090 6,036
Japanese Yen 14,496 40 (14,689) (233)
Euro 1,357,261 1,376,477 49,652 30,436
Other currencies 1,891,037 1,716,467 (14,531) 160,039
241,550,243 240,021,409 - 1,528,834
================================================================================= * The off-balance sheet items have been valued at year end rates.36.1. Currency risk arises from the fluctuation in the value of financial instruments consequent to the changes in foreign exchange rates. The bank manages this risk by setting and monitoring dealer, currency and counter-party limits for on and off balance sheet financial instruments. Off-balance sheet financial instruments are contracts, the characteristics of which are derived from those of underlying assets. These include forwards and swaps in foreign exchange market. The bank's exposure in these instruments represents forward foreign exchange contracts on behalf of customers in import and export transactions and forward sales and purchases on behalf of customers in the inter-bank market. The risks associated with forward exchange contracts are managed by matching the maturities and fixing counter-party, dealers' intra-day and overnight limits. The exposure of the bank to currency risk is also restricted by the statutory limit on aggregate exposure enforced by the State Bank of Pakistan. 37. FAIR VALUE OF FINANCIAL INSTRUMENTS =================================================================================================
2005 2004
Book value Fair value Book value Fair value
Rupees in '000
=================================================================================================
ON-BALANCE SHEET FINANCIAL INSTRUMENTS
ASSETS:
Cash balances with treasury banks 24,788,625 24,788,625 19,708,518 19,708,518
Balances with other banks 9,713,369 9,713,369 3,183,957 3,183,957
Lendings to financial institutions 27,050,493 27,050,493 - -
Investments 57,425,700 56,360,387 35,503,196 34,833,430
Advances 118,864,010 118,864,010 88,931,400 88,931,400
Other Assets 3,708,046 3,708,046 2,213,498 2,213,498
241,550,243 240,484,930 149,540,569 148,870,803
LIABILITIES:
Bills Payable 3,733,124 3,733,124 2,233,671 2,233,671
Borrowings from financial institution 5,844,389 5,844,389 12,723,830 12,723,830
Deposits and other accounts 222,345,067 222,345,067 129,714,891 129,714,891
Subordinated loan 3,223,355 3,223,355 1,899,480 1,899,480
Other liabilities 4,875,474 4,875,474 2,277,378 2,277,378
240,021,409 240,021,409 148,849,250 148,849,250
Off-balance sheet financial instruments
Forward purchase of foreign exchange 3,224,283 3,195,895 8,947,317 8,959,825
Forward sale of foreign exchange 4,738,140 4,683,657 5,351,909 5,334,423
=================================================================================================38. ACCOUNTING ESTIMATES AND JUDGEMENTSThe bank makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. (a) Provision against non performing loans and advances The Bank reviews its loan porffolio to assess amount of non performing loans and advances and provision required there against on a quarterly basis. The provision is made in accordance with prudential regulations issued by State Bank of Pakistan. The forced sale values are estimated by independent valuations of the assets mortgaged/pledged. The provision will change due to changes in prudential regulations relating to increased percentage against substandard debts and increased discounting of forced sale values. (b) Classification of Investments Management decides on acquisition of an investment whether it should be classified as held to maturity, held for trading, or available for sale. Held to maturity The Bank follows the guidance provided in the State Bank of Pakistan's (SBP) circulars on classifying non-derivatives financial assets with fixed or determinable payments and fixed maturity as held-to-maturity. In making this judgement, the Bank evaluates its intention and ability to hold such investments to maturity. Held for trading Classification of investments as held for trading depends on the criteria let by the pronouncement of SBP vide its circular and how management monitor the performance of these investments and have readily available reliable fair values and the changes in fair values are reported as part of profit or loss in the financial statements. Available for sale All other investments are classified as available for sale. (c) Valuation of unquoted equity investments. The Bank estimates impairment to the investment in unqoted equity securities based on factors such as: -- the expected cashflows discounted at current rates applicable for items with similar terms and risks characteristics; -- Break-up value of unquoted equity investments; -- Other valuation models. (d) Income taxes In making the estimates for income taxes currently payable by the Bank, the management looks at the current income tax law and the decisions of appellate authorities on certain issues in the past. There are various matters where bank's view differs with the view taken by the income tax department and such amounts are shown as contingent liability. 39. CONCENTRATION OF CREDIT AND DEPOSITS Credit risk management Credit risk represents the accounting loss that would be recognised at the reporting date if counterparts failed to perform as contracted. The bank has built-up and maintained a sound loan portfolio in terms of well-defined Credit Policy approved by the Board of Directors. It's credit evaluation system comprises of well-designed credit appraisal, sanctioning and review procedures for the purpose of emphasising prudence in its lending activities and ensuring quality of asset portfolio. Special attention is paid by the management in respect of non-performing loans. A separate Credit Monitoring Cell (CMC) is operational at the Head Office. A "watchlist" procedure is also functioning which identifies loans showing early warning signals of becoming non-performing. The Bank constantly monitors overall credit exposure and takes analytical and systematic approaches to its credit structure categorised by group and industry. The credit portfolio is well diversified sectorally with manufacturing and exports accounting for the bulk of the financing which is considered to be low risk due to the nature of underlying security. 39.1. SEGMENT BY CLASS OF BUSINESS ======================================================================================================================
2005
Contingencies
and
Deposits Advances Commitments
(Rupees in '000) Percent (Rupees in '000) Percent (Rupees in '000) Percent
======================================================================================================================
Agri business 1,531,047 0.69 4,039,016 3.40 335,298 0.80
AUTOMOBILE AND TRANSPORTATION:
Equipments 4,946,577 2.22 4,518,216 3.80 1,625,303 3.88
Chemical and Pharmaceuticals 1,523,142 0.69 1,808,180 1.52 1,558,254 3.72
Cement 695,187 0.31 1,649,374 1.39 2,408,408 5.75
Communication 7,193,318 3.24 896,358 0.75 1,834,689 4.38
ELECTRONIC & ELECTRICAL:
Appliances 696,027 0.31 1,638,143 1.38 1,583,488 3.78
Educational Institutes 3,352,905 1.51 593,985 0.50 54,111 0.13
Financial 10,925,720 4.91 2,977,027 2.50 2,812,608 6.71
Fertilisers 4,479,942 2.01 460,735 0.39 588,771 1.40
Food & Allied Products 997,532 0.45 3,137,503 2.64 210,956 0.50
Glass & Ceramics 99,589 0.04 259,746 0.22 547,892 1.31
Ghee & Edible Oil 656,963 0.30 901,559 0.76 541,273 1.29
Housing Societies/Trusts 2,961,424 1.33 1,036,194 0.87 7,997 0.02
Insurance 1,409,691 0.63 91,549 0.08 100,664 0.24
Import & Export 1,924,628 0.87 3,709,434 3.12 463,524 1.11
Iron/Steel 1,987,071 0.89 1,600,289 1.35 1,878,505 4.48
Oil & Gas 7,973,068 3.59 1,201,261 1.01 4,663,088 11.13
Paper & Board 427,124 0.19 339,081 0.29 1,739,181 4.15
Production and Transmission
of Energy 21,180,290 9.53 731,283 0.62 2,450,859 5.85
Real Estate / Construction 7,383,895 3.32 2,805,210 2.36 1,245,080 2.97
Retail/ Wholesale Trade 3,744,262 1.68 4,732,230 3.98 1,125,326 2.68
Rice Processing and Trading 482,484 0.22 3,302,822 2.78 26,204 0.06
Sugar 1,018,299 0.46 1,610,618 1.36 127,442 0.30
Shoes & Leather Garments 725,846 0.33 574,884 0.48 135,431 0.32
Sports Goods 61,105 0.03 295,144 0.25 5,596 0.01
Surgical Goods 34,871 0.02 98,958 0.08 43,358 0.10
Textile Spinning 1,446,926 0.65 11,586,298 9.75 1,676,105 4.00
Textile Weaving 1,052,664 0.47 4,545,694 3.82 1,059,366 2.53
Textile Composite 1,463,777 0.66 8,137,774 6.85 1,437,132 3.43
Welfare Institutions 4,072,286 1.83 663,669 0.56 8,988 0.02
Individuals 71,709,117 32.25 28,674,505 24.12 1,622,044 3.87
Others 54,188,290 24.37 20,247,271 17.04 7,997,427 19.08
222,345,067 100.00 118,864,010 100.00 41,914,368 100.00
======================================================================================================================39.2. SEGMENT BY SECTOR======================================================================================================================
2005
Contingencies
and
Deposits Advances Commitments
(Rupees in '000) Percent (Rupees in '000) Percent (Rupees in '000) Percent
======================================================================================================================
Public/Government 64,102,676 28.83 6,917,284 5.82 6,514,819 15.54
Private 158,242,391 71.17 111,946,726 94.18 35,399,549 84.46
222,345,067 100.00 118,864,010 100.00 41,914,368 100.00
======================================================================================================================40. GEOGRAPHICAL SEGMENT ANALYSIS==================================================================================================
2005
Profit before Total Asset Net Assets Contingencies
Employed Employed and
taxation commitments
(Rupees in '000)
==================================================================================================
Pakistan 2,549,740 244,721,675 6,158,223 41,387,719
Asia Pacific (including South Asia) 13,550 3,592,118 1,305,903 526,649
2,563,290 248,313,793 7,464,126 41,914,368
==================================================================================================41. RELATED PARTY TRANSACTIONSParties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions and include major shareholders, associated companies with or without common directors, retirement benefit funds and directors and key management personnel and their close family members. Banking transactions with the related parties are executed substantially on the same terms, including mark-up rates and collateral, as those prevailing at the time for comparable transactions with unrelated parties and do not involve more than a normal risk (i.e. under the comparable uncontrolled price method). Contributions to and accruals in respect of staff retirements and other benefit plans are made in accordance with the actuarial valuations /terms of the contribution plan. Remuneration to the executives are determined in accordance with the terms of their appointment. Details of transactions with related parties and balances with them excluding those entered into with directors / executives as per their terms of employment as at the year-end were as follows: 41.1. FINANCING ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
With subsidiary company
- Alfalah Securities (Private) Limited
Balance at the beginning of the year 90,809 -
Disbursements during the year 17,927,013 25,847,114
Repayments during the year (17,793,257) (25,756,305)
Balance at the end of the year 224,565 90,809
Maximum amount utilised 230,035 211,152
under Running Finance arrangement
With associated company
- Warid Telecom (Private) Limited
Balance at the beginning of the year - -
Disbursements during the year 34,559 -
Repayments during the year (2,590) -
Balance at the end of the year 31,969 -
===========================================================================================These accounts are of current nature which are subject to variations.41.2. DEPOSITS ===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
WITH SUBSIDIARY COMPANIES:
Balance at the beginning of the year 60,329 25,164
Placements during the year 831,919 30,799,008
Withdrawal during the year (853,534) (30,763,843)
Balance at the end of the year 38,714 60,329
WITH ASSOCIATED COMPANY:
- Warid Telecom (Private) Limited
Balance at the beginning of the year - -
Placements during the year 12,040,037 -
Withdrawal during the year (11,382,048) -
Balance at the end of the year 657,989 -
WITH OTHER RELATED PARTY:
Balance at the beginning of the year 9,897 3,448
Placements during the year 2,928,740 1,051,634
Withdrawal during the year (2,921,879) (1,045,185)
Balance at the end of the year 16,758 9,897
===========================================================================================41.3. WITH SUBSIDIARY COMPANIES===========================================================================================
2005 2004
Rupees in '000
===========================================================================================
Mark-up / interest earned 12,029 3,137
Brokerage and commissions 4,104 5,299
Rent Income 2,194 838
Finance lease income 173 82
Lease rentals 2,018 398
Leases disbursed during the 10,068 1,885
year to subsidiary companies
Receivable against trade 15,276 30,152
of marketable securities
Receivable against expenditures 489 8,171
Reimbursement of expenditures 12,923 -
Security deposit 1,003 209
Communication charges recovered - 503
Bank Charges recovered 245 36
Subscription towards share capital 34,000 33,600
WITH ASSOCIATED COMPANIES:
Commission income from 9,559 -
Warid Telecom (Private) Limited
Investment in Alfalah GHP Value Fund 100,000 -
With key management personnel and benefit plans
Remuneration paid to Chief Executive Officer 14,645 9,625
Contribution to employee provident fund 53,815 34,014
===========================================================================================41.4.There are no loans and advances to directors and related parties, except to the extent described above and in note 11.6.1. 42. DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on February 25, 2006 by the Board of Directors of the bank. 43. GENERAL Figures have been rounded off to the nearest thousand rupees except stated otherwise. |