| Allied Bank - 2010 |
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Unconsolidated Statement of Financial Position as at December 31, 2010
==================================================================================================================
December December Note December December
31, 2010 31, 2009 31, 2010 31, 2009
==================================================================================================================
US $ in '000 Rupees in '000
==================================================================================================================
ASSETS
365,096 313,807 Cash and balances with treasury banks 6 31,265,608 26,435,633
6,768 15,200 Balances with other banks 7 579,555 1,280,443
134,159 333,837 Lendings to financial institutions 8 11,488,944 28,122,932
1,414,971 1,125,210 Investments 9 121,173,409 94,789,492
2,955,503 2,817,421 Advances 10 253,099,509 237,344,038
179,359 147,751 Operating fixed assets 11 15,359,742 12,446,748
5,656 - Deferred tax assets 12 484,387 -
192,445 213,138 Other assets 13 16,480,372 17,955,045
5,253,957 4,966,364 449,931,526 418,374,331
LIABILITIES
48,096 37,540 Bills payable 15 4,118,791 3,162,429
242,588 472,671 Borrowings 16 20,774,450 39,818,532
4,335,574 3,903,951 Deposits and other accounts 17 371,284,268 328,875,037
64,164 65,253 Sub-ordinated loans 18 5,494,800 5,497,000
- - Liabilities against assets subject to finance lease - -
- 22 Deferred tax liabilities 12 - 1,871
143,447 131,283 Other liabilities 19 12,284,360 11,059,484
4,833,869 4,610,720 413,956,669 388,414,353
420,088 355,644 NET ASSETS 35,974,857 29,959,978
REPRESENTED BY
91,328 84,400 Share capital 20 7,821,009 7,110,008
87,777 78,142 Reserves 7,516,910 6,582,845
184,834 144,803 Unappropriated profit 15,828,533 12,198,425
363,939 307,345 31,166,452 25,891,278
56,149 48,299 Surplus on revaluation of assets -net of tax 21 4,808,405 4,068,700
420,088 355,644 35,974,857 29,959,978
Contingencies and commitments 22
==================================================================================================================Unconsolidated Profit and Loss Account for the year ended December 31, 2010==================================================================================================================
December December Note December December
31, 2010 31, 2009 31, 2010 31, 2009
==================================================================================================================
US $ in '000 Rupees in '000
==================================================================================================================
525,390 488,138 Mark-up/Return/Interest earned 24 44,992,696 41,121,503
261,893 266,159 Mark-up/Return/Interest expensed 25 22,427,652 22,421,694
263,497 221,979 Net Mark-up/Interest income 22,565,044 18,699,809
35,903 37,546 Provision against non-performing
loans and advances 10.4 3,074,576 3,162,963
15,057 12,512 Provision for diminution in the value
of investments -net 9.3 1,289,404 1,054,046
(3,277) 3,331 Provision against lending to
financial institutions 8.5 (280,595) 280,595
- - Bad debts written off directly 10.5 - -
47,683 53,389 4,083,385 4,497,604
215,814 168,590 Net Mark-up/Interest income after
provisions 18,481,659 14,202,205
Non-mark-up/interest income
29,090 32,146 Fee, commission and brokerage income 26 2,491,200 2,708,002
13,058 16,322 Dividend income 1,118,270 1,374,967
4,887 9,045 Income from dealing in
foreign currencies 418,524 761,934
16,541 12,880 Gain on sale of securities 27 1,416,532 1,085,043
- - Unrealized loss on revaluation of investments
(279) (94) classified as held for trading -net 9.14 (23,884) (7,897)
2,933 427 Other income 28 251,144 35,985
66,230 70,726 Total Non-mark-up/Interest income 5,671,786 5,958,034
282,044 239,316 24,153,445 20,160,239
Non-mark-up/interest expenses
131,271 111,863 Administrative expenses 29 11,241,587 9,423,503
3,866 (670) Provision / (Reversal) against
other assets -net 13.2 331,077 (56,431)
Reversal against off-balance sheet
(1,030) (301) obligations -net 19.1 (88,239) (25,353)
2,974 2,552 Workers Welfare fund 31 254,666 215,023
832 800 Other charges 30 71,248 67,377
137,913 114,244 Total non-mark-up/Interest expenses 11,810,339 9,624,119
- - Extra-ordinary/unusual items - -
144,131 125,072 Profit before taxation 12,343,106 10,536,120
Taxation 32
48,591 42,099 Current 4,161,179 3,546,462
4,367 - Prior years 373,941 -
(4,873) (1,573) Deferred (417,346) (132,509)
48,085 40,526 4,117,774 3,413,953
96,046 84,546 Profit after taxation 8,225,332 7,122,167
142,444 101,336 Unappropriated profit brought forward 12,198,425 8,536,697
421 384 Transfer from surplus on revaluation
of fixed assets -net of tax 36,046 32,360
142,865 101,720 12,234,471 8,569,057
238,911 186,266 Profit available for appropriation 20,459,803 15,691,224
0.120 0.110 Earnings per share -Basic
and Diluted (in Rupees) 33 10.52 9.11
==================================================================================================================Unconsolidated Statement of Comprehensive Income for the year ended December 31, 2010=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Profit after taxation for the year 8,225,332 7,122,167
Other comprehensive income - -
Total comprehensive income for the year 8,225,232 7,122,167
=============================================================================================Unconsolidated Statement of Cash Flows for the year ended December 31, 2010==================================================================================================================
December 31, December 31, Note December December
2010 2009 31, 2010 31, 2009
==================================================================================================================
US $ in '000 Rupees in '000
==================================================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES
144,133 125,070 Profit before taxation 12,343,106 10,536,120
(13,058) (16,322) Less: Dividend income (1,118,270) (1,374,967)
131,075 108,748 11,224,836 9,161,153
Adjustments for non-cash charges
9,932 7,515 Depreciation / amortization 850,537 633,056
35,903 37,546 Provision against non-performing
loans, advances -net 3,074,576 3,162,963
15,057 12,512 Provision for diminution in the
value of investments -net 1,289,404 1,054,046
(3,277) 3,331 (Reversal) / provision against lendings
to financial institutions (280,595) 280,595
279 94 Unrealized loss on revaluation of
held for trading securities 23,884 7,897
(1,030) (301) Reversals against off balance sheet obligations -net (88,239) (25,353)
3,866 (670) Provision / (reversals) against other assets -net 331,077 (56,431)
- 111 Operating fixed assets written off 5 9,373
(140) (50) Gain on sale of fixed assets (11,977) (4,220)
- - Bad debts written off directly - -
60,590 60,088 5,188,672 5,061,926
191,665 168,836 16,413,508 14,223,079
(Increase) / decrease in operating assets
197,516 (149,693) Lendings to financial institutions 16,914,583 (12,610,344)
(9,418) (800) Held for trading securities (806,565) (67,385)
(219,883) (326,857) Advances -net (18,830,047) (27,534,993)
(19,395) (24,572) Other assets (excluding advance taxation) (1,660,945) (2,069,966)
(51,180) (501,922) (4,382,974) (42,282,688)
Increase / (decrease) in operating liabilities
11,168 2,492 Bills payable 956,362 209,939
(219,263) 140,215 Borrowings from financial institutions (18,776,934) 11,811,971
495,223 372,734 Deposits 42,409,231 31,399,716
15,254 (30,228) Other liabilities 1,306,263 (2,546,450)
302,382 485,213 25,894,922 40,875,176
442,867 152,127 37,925,456 12,815,567
(20,153) (23,795) Income tax paid -net (1,725,871) (2,004,490)
422,714 128,332 Net cash flows from operating activities 36,199,585 10,811,077
CASH FLOWS FROM INVESTING ACTIVITIES
(317,679) (134,002) Net investments in available-for-sale securities (27,204,980) (11,288,568)
11,925 22,142 Net investments in held-to-maturity securities 1,021,179 1,865,280
13,003 16,311 Dividend income received 1,113,562 1,374,038
(44,070) (23,404) Investments in operating fixed assets (3,774,048) (1,971,579)
263 250 Proceeds from sale of fixed assets 22,489 21,058
(336,558) (118,703) Net cash used in investing activities (28,821,798) (9,999,771)
CASH FLOWS FROM FINANCING ACTIVITIES
(26) 35,600 Net (payment) / receipt of sub-ordinated loan (2,200) 2,999,000
(34,791) (24,610) Dividends paid (2,979,352) (2,073,173)
(34,817) 10,990 Net cash (used in) / from financing activities (2,981,552) 925,827
51,339 20,619 Increase in cash and cash equivalents during the year 4,396,235 1,737,133
318,507 299,016 CASH AND CASH EQUIVALENTS AT
BEGINNING OF THE YEAR 27,275,922 25,189,600
921 5,081 EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS 78,838 428,027
370,767 324,716 CASH AND CASH EQUIVALENTS
AT END OF THE YEAR 34 31,750,995 27,354,760
==================================================================================================================Unconsolidated Statement of Changes in Equity for the year ended December 31, 2010============================================================================================================================================================================
Share Share Statutory Bonus Issue Special Merger General Un-appro-
Capital Premium Reserve Reserve Reserve* Reserve* Reserve priated Profit Total
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Rupees in '000
============================================================================================================================================================================
Balance as at January 01, 2009 6,463,644 2,341,322 3,055,595 - 67,995 333,864 6,000 8,536,697 20,805,117
Changes in equity during the year
ended December 31, 2009
Total comprehensive income
for the year ended
December 31, 2009 - - - - - - - 7,122,167 7,122,167
Transactions with owners recognized
directly in equity
Transfer to statutory reserve for issue
of bonus shares for
the year ended December 31, 2008 @ 10% - (646,364) - 646,364 - - - - -
Issue of bonus shares 646,364 - - (646,364) - - - - -
Final cash dividend for the year
ended December 31, 2008
(Re. 1.00 per ordinary share) - - - - - - - (646,364) (646,364)
Interim cash dividend for the year ended
December 31, 2009 (Rs. 2 per ordinary share) - - - - - - - (1,422,002) (1,422,002)
646,364 (646,364) - - - - - (2,068,366) (2,068,366)
Transferred from surplus on
revaluation of fixed assets
to un-appropriated profit -net of tax - - - - - - - 32,360 32,360
Transfer to statutory reserve - - 1,424,433 - - - - (1,424,433) -
Balance as at December 31, 2009 7,110,008 1,694,958 4,480,028 - 67,995 333,864 6,000 12,198,425 25,891,278
Changes in equity during the year
ended December 31, 2010
Total comprehensive income
for the year ended - - - - - - - 8,225,332 8,225,332
December 31, 2010
Transactions with owners recognized
directly in equity
Transfer to reserve for issue of bonus shares
for the year ended
December 31, 2009 @ 10% - (711,001) - 711,001 - - - - -
Issue of bonus shares 711,001 - - (711,001) - - - - -
Final cash dividend for the
year ended December
31, 2009 (Rs. 2.00 per ordinary share) - - - - - - - (1,422,002) (1,422,002)
Interim cash dividend for the
year ending December
31, 2010 (Rs. 2.00 per ordinary share) - - - - - - - (1,564,202) (1,564,202)
711,001 (711,001) - - - - - (2,986,204) (2,986,204)
Transferred from surplus on
revaluation of fixed assets
to un-appropriated profit -net of tax - - - - - - - 36,046 36,046
Transfer to statutory reserve - - 1,645,066 - - - - (1,645,066) -
Balance as at December 31, 2010 7,821,009 983,957 6,125,094 - 67,995 333,864 6,000 15,828,533 31,166,452
============================================================================================================================================================================Notes to the Unconsolidated Financial Statements for the year ended December 31, 20101. STATUS AND NATURE OF BUSINESS Allied Bank Limited ("the Bank"), incorporated in Pakistan, is a Scheduled Bank, engaged in commercial banking and related services. The Bank is listed on all stock exchanges in Pakistan. The Bank operates a total of 806 (2009: 779) branches in Pakistan including the Karachi Export Processing Zone Branch (overseas business unit). The long term credit rating of the Bank assigned by The Pakistan Credit Rating Agency Limited (PACRA) is 'AA'. Short term rating of the Bank is 'A1+'. The Bank is the holding company of ABL Asset Management Company Limited. The registered office of the Bank is situated in Lahore whereas the principal office is situated at Khayaban-e-Iqbal, Main Clifton Road, Bath Island, Karachi. 2. (a) BASIS OF PRESENTATION -.These unconsolidated financial statements represent separate financial statements of the Bank. The unconsolidated financial statements of the Bank and its subsidiary company are being issued separately. -.In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, the State Bank of Pakistan (SBP) has issued various circulars from time to time. Permissible forms of trade-related modes of financing include purchase of goods by banks from their customers and immediate resale 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 unconsolidated financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. -.These unconsolidated financial statements have been presented in Pakistan Rupees, which is the Bank's functional and presentation currency. The amounts are rounded to nearest thousand. -.The US Dollar amounts reported in the balance sheet, profit and loss account and cash flow statement are stated as additional information, solely for the convenience of the users of financial statements. For the purpose of translation of these statements from Rupees to US Dollar, the rate of Rs 85.6367 (2009: Rs. 84.2416) per US Dollar has been used, as it was the prevalent rate as on balance sheet date. (b).BASIS OF MEASUREMENT These unconsolidated financial statements have been prepared under the historical cost convention except that certain assets are stated at revalued amounts / fair values as disclosed in their respective notes. 3. STATEMENT OF COMPLIANCE 3.1. These unconsolidated financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved Accounting Standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Banking Companies Ordinance, 1962, the Companies Ordinance, 1984 and the directives issued by SBP. In case requirements of provisions and directives issued under the Banking Companies Ordinance, 1962, Companies Ordinance, 1984 and the directives issued by State Bank of Pakistan differ, the provisions of and directives issued under the Banking Companies Ordinance, 1962, the Companies Ordinance, 1984 and the directives issued by SBP shall prevail. 3.2. The SBP, vide BSD Circular No. 10, dated August 26, 2002 has deferred the applicability of International Accounting Standard 39, Financial Instruments: Recognition and Measurement (IAS 39) and International Accounting Standard 40, Investment Property (IAS 40) for banking companies till further instructions. Further, according to a notification of Securities and Exchange Commission of Pakistan dated April 28, 2008, International Financial Reporting Standard (IFRS) 7 "Financial Instruments Disclosure" has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these unconsolidated financial statements. However, investments have been classified and valued in accordance with the requirements prescribed by SBP through various circulars. 3.3. New and amended standards and interpretations become effective During the year, following new / revised standards, amendments and interpretations to accounting standards became effective: IFRS 2 - Share-based payments: Amendments relating to Group Cash-settled Share-based payment transactions IFRS 3 - Business Combinations (Revised) IFRS 27 - Consolidated and Separate Financial Statements (Amendment) IFRS 39 - Financial instruments: Recognition and Measurement - Eligible hedged items (Amendments) IFRIC 17 - Distribution of Non-cash Assets to owners. In May 2008 and April 2009, International Accounting Standards Board issued amendments to various standards primarily with a view to remove inconsistencies and clarifying wording. These improvements are listed below: Issued in May 2008: - IFRS 5 - Non-current Assets Held For Sale and Discontinued Operations Issued in April 2009: - IFRS 2 -.Share Based Payments: Amendments relating to Group Cash-settled Share-based payment transaction. - IFRS 5 - Non-current Assets Held For Sale and Discontinued Operations - IFRS 8 - Operating Segments - IAS 1 - Presentation of Financial Statements. - IAS 7 - Statement of Cash Flows. - IAS 17 - Leases. - IAS 36 - Impairment of Assets. - IAS 38 - Intangible Assets. - IAS 39 - Financial Instruments: Recognition and measurement - IFRIC 9 - Reassessment of Embedded Derivatives - IFRIC 16 - Hedges of a Net Investment in a Foreign Operation Adoption of the above standards, amendments and interpretations did not affect the accounting policies of the Bank. The implications of the amendment to the IFRS-2 relating to the Government of Pakistan share option scheme for employees of State Owned Enterprises are under considerations of the Institute of the Chartered Accountants of Pakistan. 3.4. Standards, Interpretations and Amendments to Published Approved Accounting. Standards that are not yet effective The following standards, amendments and interpretations of approved accounting standards will be effective for accounting periods beginning on or after January 01, 2011. These standards are either not relevant to the Bank's operations or are not expected to have a significant impact on the Bank's financial statements other than amendment in certain disclosures: IAS 12 Income Taxes (Amendment) The amended standard in effective for annual periods beginning on or after January 01, 2012. It clarifies the recognition of deferred tax assets. IAS 24 Related Party Disclosures (Amendment) The amended standard is effective for annual periods beginning on or after 1 January 2011. It clarified the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised standard introduces a partial exemption of disclosure requirements for government related entities. Early adoption is permitted for either the partial exemption for government-related entities or for the entire standard. IAS 32 Financial Instruments: Presentation -Classification of Rights Issues (Amendment) The amendment to IAS 32 is effective for annual periods beginning on or after 1 February 2010 and amended the definition of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro rata to all of the existing owners of the same class of an entity's non-derivative equity instruments, or to acquire a fixed number of the entity's own equity instruments for a fixed amount in any currency. IFRS 9 Financial Instruments: Classification and Measurement IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2013. In subsequent phases, the IASB will address classification and measurement of financial liabilities, hedge accounting and de-recognition. The completion of this project is expected in early 2011. IFRIC 14 Prepayments of a minimum funding requirement (Amendment) The amendment to IFRIC 14 is effective for annual periods beginning on or after 1 January 2011 with retrospective application. The amendment provides guidance on assessing the recoverable amount of a net pension asset. The amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset. IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC 19 is effective for annual periods beginning on or after 1 July 2010. The interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid. The equity instruments issued are measured at their fair value. In case that this cannot be reliably measured, the instruments are measured at the fair value of the liability extinguished. Any gain or loss is recognized immediately in profit or loss. The IASB issued Improvements to IFRSs, an omnibus of amendments to its IFRS standards. The amendments have not been adopted as they become effective for annual periods on or after either 1 July 2010 or 1 January 2011, however the future adoption of these amendments will not have any significant impact on the Banks financial statements. IFRS 3 Business Combinations Improvements in IFRS 3 Business Combinations is effective for annual periods beginning on or after 1 July 2010. These amendments clarifies the measurement of non-controlling interests, un-replaced and voluntarily replaced share-based payment awards, Transition requirements for contingent consideration from a business combination that occurred before the effective date of the revised IFRS. IFRS 7 Financial Instruments: Disclosures Improvements in IFRS 7 Business Combinations is effective for annual periods beginning on or after 1 July 2011 and clarifies the disclosures requirements. IAS 1 Presentation of Financial Statements In May 2010, the IASB issued Improvements to IFRSs, which amends IAS 1 requirements relating to Statement of Changes in Equity. Entities shall apply these amendments for annual periods beginning on or after 1 January 2011. IAS 27 Consolidated and Separate Financial Statements In May 2010, the IASB issued Improvements to IFRSs, which amends IAS 27 requirements. Entities shall apply these amendments for annual periods beginning on or after 1 July 2010. These improvements deals with transition requirements for amendments arising as a result of IAS 27 Consolidated and Separate Financial Statements. IFRIC 13 Customer Loyalty Programmes IFRIC 13 Customer Loyalty Programmes is amended to further clarify the estimation of fair value of award credits. Such amendments are applicable for annual periods beginning from 1 January 2011. 4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates that affect the reported amounts of assets, liabilities, income and expenses. It also requires the management to exercise its judgment in the process of applying the Bank's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience, including expectations of future events that are believed to be reasonable under the circumstances. The areas where various assumptions and estimates are significant to the Bank's financial statements or where judgment was exercised in application of accounting policies are as follows: i).Classification of investments -.In classifying investments as "held-for-trading" the Bank has determined securities which are acquired with the intention to trade by taking advantage of short term market / interest rate movements and are to be sold within 90 days. -.In classifying investments as "held-to-maturity" the Bank follows the guidance provided in SBP circulars on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity. In making this judgment, the Bank evaluates its intention and ability to hold such investments to maturity. -.The investments which are not classified as held for trading or held to maturity are classified as available for sale. ii).Provision against non-performing loans and advances and debt securities classified as investments The Bank reviews its loan portfolio and debt securities classified as investments to assess amount of non-performing loans and advances and debt securities and provision required there-against. While assessing this requirement various factors including the delinquency in the account, financial position of the borrower, the forced sale value of the securities and the requirements of the Prudential Regulations are considered. For portfolio impairment provision on consumer advances, the Bank follows, the general provision requirement set out in Prudential Regulations. These provisions change due to changes in requirements. iii).Valuation and impairment of available for sale equity investments The Bank determines that available-for-sale equity investments are impaired when there has been a significant or prolonged decline in the fair value below its cost. This determination of what is significant or prolonged requires judgment. In making this judgment, the Bank evaluates among other factors, the normal volatility in share price. In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance, changes in technology and operational and financing cash flows. iv).Income taxes In making the estimates for income taxes currently payable by the Bank, the management leaks at the current income tax laws and the decisions of appellate authorities on certain issues in the past. In making the provision for deferred taxes, estimates of the Bank's future taxable profits are taken into account. v).Fair value of derivatives The far values of derivatives which are not quoted in active markets are determined by using valuation technique. The valuation techniques take into account the relevant interest rates in affect at the balance sheet date and the rates contracted. vi).Fixed assets, depreciation and amortization In making estimates of the depreciation / amortisation, the management uses method which reflects the pattern in which economic benefits are expected to be consumed by the Bank and estimates the useful life. The method applied and useful lives estimated are reviewed at each financial year and if there is a change in the expected pattern or timing of consumption at the future economic benefits embodied in the assets, the estimate would lee changed to reflect the change pattern. Such a change is accounted for as change in accounting estimates in accordance with International Accounting Standard - 8, Accounting Policies, 'Changes Accounting Estimates and Errors'. vii).Defined benefits plan Liability is determined on the basis of actuarial advice using the Projected Unit Credit Method. The actuarial assumptions used to determine the liability and related expense are disclosed in note 36. 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted in the preparation of these unconsolidated financial statement are the same as those applied in the preparation of the unconsolidated financial statements of the Bank for the year ended December 31, 2009 and are enumerated as follows: 5.1. Change in accounting policies Pursuant to the adoption of revised IAS -1 through SBP BSD Circular Letter on. 7 dated 20 April, 2010. Balance Sheet has been renamed to Statement of Financial Position. 5.2. Cash and cash equivalents: For the purpose of cash flow statement, cash and cash equivalents include cash and balances with treasury banks and balance with other banks (net of overdrawn nostro balance) in current and deposit accounts. 5.3. Lendings to / borrowing from financial instructions The Bank enters into transactions of borrowing (re-purchase) from and lending (reverse re-purchase) to financial instructions, at contracted rates for a specified period of time. These are recorded as under: (a).Sale under re-purchase agreements Securities sold subject to re-purchase agreement are retained in the financial statements as investments and the counter party liability is included in borrowing from financial institutions. The differential in sale and re-purchase value is accrued on a prorata basis and recorded as interest expense. (b).Purchase under resale agreement Securities purchased under agreement to resale (reverse re-purchase) are included in lendings to financial, institution. The differential between the contracted price and re-sale price is amortised over the period at the contract and recorded as interest income. Securities held as collateral are not recognised in the financial statements, unless these are sold to third parties, in which case the obligation to return them is recorded at fair value as a trading liability under borrowings from financial institutions Other borrowings including borrowings from SBP are recorded at the proceeds received. Mark-up on such borrowing is charged to the profit and loss account on a time proportion basis. Lendings are stated net of provision. Mark-up on such lending is charged to the profit and loss account on a time proportion basis except mark-up on impaired/ delinquent lendings, which is recognized on receipt basis. 5.4. Investments 5.4.1. The Bank at the time of purchase classifies its investment portfolio into the following categories, which are initially recognized at fair value plus the acquisition cost, except in case of held for trading investments, in which cases, these are charged off to the profit and loss account. 5.4.1.1. Investments in subsidiaries are stated at cost less impairment, if any. 5.4.1.2. Other investments are classified as follows: (a).Held for trading These are securities which are either acquired for generating a profit from short-term fluctuations in market prices, interest rate movements, dealer's margin or are securities included in a portfolio in which a pattern of short-term profit taking exists. (b).Held to maturity These are securities with fixed or determinable payments and fixed maturity that the Bank has the positive intent and ability to hold to maturity. (c).Available for sale These are investments, other than those in subsidiary, that do not fall under the held for trading or held to maturity categories. 5.4.2. In accordance with the requirements of the SBP, quoted securities, other than those classified as held to maturity and investments in subsidiaries, are carried at market value. Investments classified as held to maturity are carried at amortized cost whereas investments in subsidiaries are carried at cost less impairment losses, if any. Unrealized surplus / (deficit) arising on revaluation of the Bank's held for trading investment portfolio is taken to the profit and loss account. Surplus / (deficit) arising on revaluation of quoted securities classified as available for sale is kept in a separate account shown in the balance sheet below equity. The surplus/(deficit) arising on these securities is taken to the profit and loss account when actually realised upon disposal or when the investment is considered to be impaired. Unquoted equity securities are valued at the lower of cost and book break-up value. Subsequent increases or decreases in the carrying value are credited/charged to profit and loss account. Break-up value of equity securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements. Investments in other unquoted securities are valued at cost less impairment losses, if any. Provision for diminution in the value of securities (except for debentures, participation term certificates and term finance certificates) is made after considering impairment, if any, in their value. Provision for diminution in value of debentures, participation term certificates and term finance certificates are made in accordance with the requirements of Prudential Regulations issued by SBP. Associates as defined under local statutes but not under IAS are accounted for as ordinary investments. All "regular way" purchases and sales of investments are recognized on the trade date, i.e., the date that the Bank commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of investments that require delivery of assets within the time frame generally established by regulation or convention in the market place. 5.5. Advances (including net investment in finance lease) Advances are stated net of general and specific provisions. Specific provision against funded loans is determined in accordance with the requirements of the Prudential Regulations issued by the SBP and charged to the profit and loss account. General provision is maintained on consumer portfolio in accordance with the requirements of Prudential Regulations issued by SBP and charged to the profit and loss account. Leases, where the Bank transfers substantially all the risks and rewards incidental to the ownership of an asset to the lessee are classified as finance leases. A receivable is recognized at an amount equal to the present value of the minimum lease payments, including un-guaranteed residual value, if any. Finance lease receivables are included in advances to the customers. Advances are written off when there are no realistic prospects of recovery. 5.6. Operating fixed assets and depreciation Tangible assets Property and equipment owned by the Bank, other than land which is not depreciated, are stated at cost or revalued amount less accumulated depreciation and impairment losses, if any. Land is carried at revalued amount. Depreciation is calculated using the straight line method, except buildings which are depreciated using the reducing balance method, to write down the cost of property and equipment to their residual values over their estimated useful lives. The rates at which the fixed assets are depreciated are disclosed in note 11.2. The residual values, useful lives and depreciation methods are reviewed and changes, if any, are treated as change in accounting estimates, at each balance sheet date. Depreciation on additions is charged from the month the assets are available for use, while no depreciation is charged in the month in which the assets are disposed off. Surplus arising on revaluation of fixed assets is credited to surplus on revaluation of fixed assets account. Deficit arising on subsequent revaluation of fixed assets is adjusted against the balance in the above mentioned surplus account as allowed under the provisions of the Companies Ordinance, 1984. The surplus on revaluation of fixed assets to the extent of incremental depreciation charged on the related assets, is transferred directly to unappropriated profit (net of deferred tax). Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does not differ materially from their fair value. An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in the profit and loss account in the year the asset is derecognized, except that the related surplus on revaluation of fixed assets (net of deferred tax) is transferred directly to unappropriated profit. Subsequent costs are included in the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit and loss account. Intangible assets Intangible assets are carried at cost less any accumulated amortization and impairment losses, if any. The cost of intangible assets is amortized over their estimated useful lives, using the straight line method. Amortization is charged from the month the assets are available for use at the rate stated in note 11.3. The useful lives are reviewed and adjusted, if appropriate, at each balance sheet date. Capital work-in-progress Capital work-in-progress is stated at cost less impairment losses, if any. 5.7. Taxation Current Provision for current taxation is based on taxable income for the year determined in accordance with the prevailing laws for taxation on income earned. The charge for current tax is calculated using the prevailing tax rates or tax rates expected to apply to the profits for the year. The charge for current tax also includes adjustments, where considered necessary relating to prior years, arising from assessments finalised during the year for such years. Deferred Deferred tax is recognized using the balance sheet liability method on all temporary differences, at the balance sheet date between the amounts attributed to assets and liabilities for financial reporting purpose and amounts used for taxation purposes. Deferred tax is calculated at the rates that are expected to apply to the periods when the difference will reverse, based on tax rates that have been enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the assets can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. "The Bank also recognizes a deferred tax asset/liability on deficit/surplus on revaluation of fixed assets and securities which is adjusted against the related deficit/surplus in accordance with the requirements of IAS-12 "Income Taxes". 5.8. Staff retirement and other benefits 5.8.1. Staff retirement schemes a).For employees who opted for the new scheme introduced by the management: "An approved pension scheme (defined benefit scheme) under which the benefits on the basis of frozen basic salary service and age as on June 30, 2002 are payable to all employees whose date of joining the Bank is on or before July 01, 1992, i.e., who have completed 10 years of service as on June 30, 2002; and An approved gratuity scheme (defined benefit scheme) under which the benefits are payable as under: i).For members whose date of joining the Bank is on or before July 01, 1992, their services would be calculated starting from July 01, 2002 for gratuity benefit purposes. ii).For members whose date of joining the Bank is after July 01, 1992 their services would be taken at actual for the purpose of calculating the gratuity benefit. A Contributory Provident Fund scheme to which equal contribution are made by the Bank and the employees (defined contribution scheme). b).For employees who did not opt for the new scheme: An approved pension scheme (defined benefit scheme) under which the benefits on the basis of frozen basic salary as on June 30, 2002 are payable to all employees opting continuation of the previous scheme and whose date of joining the Bank is on or before July 01, 1992, i.e., who had completed ten years of service as on June 30, 2002. Until December 31, 2008, the bank operated a contributory benevolent fund, which was discontinued during the year for active employees. Existing employees were also given an option to settle their monthly grant with a lump sum payment. Those who have not opted for the lump sum option will continue to receive benevolent grant (defined benefit scheme). c).Post retirement medical benefits The Bank provides post retirement medical benefits to eligible retired employees. Provision is made annually to meet the cost of such medical benefits on the basis of actuarial valuation carried out using the Projected Unit Credit Method. Annual contributions towards the defined benefit schemes are made on the basis of actuarial valuation carried out using the Projected Unit Credit Method. Actuarial gains/losses arising from experience adjustments and changes in actuarial assumptions are amortized over the future expected remaining working lives of the employees, to the extent of the greater of ten percent of the present value of the defined benefit obligations at that date (before deducting plan assets) and ten percent of the fair value of any plan assets at that date. 5.8.2. Other benefits Employees' compensated absences Employees' entitlement to annual leave is recognised when they accrue to employees. A provision is made for estimated liability for annual leaves as a result of services rendered by the employee against unavailed leaves, as per terms of service contract, up to balance sheet date, based on actuarial valuation using Projected Unit Credit Method. 5.9. Assets acquired in satisfaction of claims The Bank occasionally acquires assets in settlement of certain advances. These are stated at lower of the carrying value of the related advances and the current fair value of such assets. 5.10. Deposits Deposits are initially recorded at the amount of proceeds received. Mark-up accrued on deposits is recognized separately as part of other liabilities and is charged to the profit and loss account on a time proportion basis. 5.11. Subordinated loans Subordinated loans are initially recorded at the amount of proceeds received. Mark-up accrued on these loans is recognized separately as part of other liabilities and is charged to the profit and loss account on a time proportion basis. 5.12. Impairment At each balance sheet date, the Bank reviews the carrying amount of its assets (other then deferred tax assets) to determine whether there is an indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of assets is estimated in order to determine the extent of the impairment loss, if any. Recoverable amount is the greater of net selling price and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the assets is reduced to its recoverable amount. The resulting impairment loss is recognized as an expense immediately, except for the impairment loss on revalued fixed assets which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of those assets. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Bank estimates the asset's or cash-generating unit's recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the profit and loss account unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase. 5.13. Provisions Provisions are recognized when the Bank has a present obligation (legal or constructive) as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. Provision against identified non-funded losses is recognized when intimated and reasonable certainty exists for the Bank to settle the obligation. The loss is charged to the profit and loss account net of expected recovery and is classified under other liabilities. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate. 5.14. Dividend distribution and appropriations Bonus and cash dividend and other appropriations (except for the appropriations required by law), declared / approved subsequent to balance sheet date are considered as non-adjusting event and are not recorded in unconsolidated financial statements of the current year. These are recognized in the period in which these are declared / approved. 5.15. Foreign currencies a).Foreign currency transactions Transactions in foreign currencies are translated into rupees at the foreign exchange rates ruling on the transaction date. Monetary assets and liabilities in foreign currencies are expressed in rupee terms at the rates of exchange ruling on the balance sheet date. Foreign bills purchased are valued at spot rate and forward foreign exchange contracts are valued at forward rates applicable to their respective maturities. b).Translation gains and losses Translation gains and losses are included in the profit and loss account. c).Commitments Commitments for outstanding forward foreign exchange contracts disclosed in these financial statements are translated at forward rates applicable to their respective maturities. Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in rupee terms at the rates of exchange ruling on the balance sheet date. 5.16. Financial instruments 5.16.1. Financial assets and liabilities Financial assets and financial liabilities are recognised at the time when the Bank becomes a party to the contractual provision of the instrument. Financial assets are de-recognised when the contractual right to future cash flows from the asset expires or is transferred along with the risk and reward of the asset. Financial liabilities are de-recognised when obligation specific in the contract is discharged, cancelled or expired. Any gain or loss on de-recognition of the financial asset and liability is recognised in the profit and loss account of the current period. The particular recognition and subsequent measurement methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with them. 5.16.2. Derivative financial instruments Derivative financial instruments are initially recognized at fair value on the date on which the derivative contract is entered into and are subsequently re-measured at fair value using appropriate valuation techniques. All derivative financial instruments are carried as assets when fair value is positive and liabilities when fair value is negative. Any change in the fair value of derivative financial instruments is taken to the profit and loss account. 5.17. Off setting Financial assets and financial liabilities are set off and the net amount is reported in the financial statements when there is a legally enforceable right to set off and the Bank intends to either settle on a net basis, or to realize the assets and to settle the liabilities simultaneously. 5.18. Revenue recognition Revenue is recognized to the extent that the economic benefits will flow to the Bank and the revenue can be reliably measured. These are recognised as follows: a).Advances and investments Mark-up/return on regular loans / advances and investments is recognized on a time proportion basis. Where debt securities are purchased at premium or discount, the same is amortized through the profit and loss account using the effective interest rate method. Interest or mark-up recoverable on classified loans and advances and investments is recognized on receipt basis. Interest / return / mark-up on classified rescheduled / restructured loans and advances and investments is recognized as permitted by the regulations of the SBP. Dividend income is recognized when the right to receive the dividend is established. Gains and losses on sale of investments are recognized in the profit and loss account. b).Lease financing Financing method is used in accounting for income from lease financing. Under this method, the unearned 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 income on classified leases is recognized on receipt basis. Gains / losses on termination of lease contracts and other lease income are recognized when realized. c).Fees, brokerage and commission Fees, brokerage and commission on letters of credit/guarantee and other services are recognized on an accrual basis except account maintenance and service charges are recognized when realized. 5.19. Segment reporting A segment is a distinguishable component of the Bank that is subject to risks and rewards that are different from those of other segments. A business segment is one that is engaged either in providing certain products or services, whereas a geographical segment is one engaged in providing certain products or services within a particular economic environment. Segment information is presented as per the Bank's functional structure and the guidance of State Bank of Pakistan. The Bank comprises of the following main business segments: 5.19.1. Business segments a).Corporate finance This includes investment banking activities such as mergers and acquisitions, underwriting, privatization, securitization, Initial Public Offers (IPOs) and secondary private placements. b).Trading and sales This segment undertakes the Bank's treasury, money market and capital market activities. c).Retail banking Retail banking provides services to small borrowers i.e. consumers, small and medium enterprises (SMEs) and borrowers' agriculture sector. It includes loans, deposits and other transactions with retail customers. d).Commercial banking This includes loans, deposits and other transactions with corporate customers. e).Payment and settlement This includes payments and collections, funds transfer, clearing and settlement with the customers. 5.19.2. Geographical segments The Bank conducts all its operations, including the operations of EPZ Karachi branch, in Pakistan. 5.20. Earnings per share The Bank presents earnings per share (EPS) data for its ordinary shares. EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the period. 6. CASH AND BALANCES WITH TREASURY BANKS =============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
In hand
Local currency 4,604,307 5,143,793
Foreign currencies 352,944 413,588
4,957,251 5,557,381
658,678 613,685
Remittances in transit
With State Bank of Pakistan (SBP) in
Local currency current accounts 6.1 14,193,354 12,694,476
Foreign currency current account 6.2 2,639 5,829
14,195,993 12,700,305
Foreign currency deposit accounts
- Non remunerative 1,401,830 977,413
- Remunerative 6.3 4,205,490 2,932,240
5,607,320 3,909,653
With National Bank of Pakistan in
Local currency current accounts 5,821,160 3,611,940
National Prize Bonds 25,206 42,669
31,265,608 26,435,633
=============================================================================================6.1. Deposits with the SBP are maintained to comply with the statutory requirements issued from time to time.6.2. This represents US Dollar Settlement Account maintained with SBP. 6.3. This represents special cash reserve maintained with the SBP. The special cash reserve currently carries no mark-up. 7. BALANCES WITH OTHER BANKS =============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
In Pakistan
On current accounts 284 284
Outside Pakistan
On current accounts 7.1 579,271 1,280,159
579,555 1,280,443
=============================================================================================7.1. Included in nostro accounts are balances, aggregating to Rs.126.448 million (2009: Rs. 198.082 million), representing balances held with a related party outside Pakistan.8. LENDINGS TO FINANCIAL INSTITUTIONS =============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Call money lendings - 525,000
Letters of placement - 649,750
Repurchase agreement lendings (Reverse Repo) 8.1 & 8.4 11,392,277 26,347,932
Certificates of investment 8.2 96,667 880,845
11,488,944 28,403,527
Provision against lendings to Financial Institute 8.5 - (280,595)
11,488,944 28,122,932
=============================================================================================8.1. These are short-term lendings to various financial institutions against the government securities as disclosed in note # 8.4 below. These carry mark-up at rates ranging between 12.50% and 13.25% (2009: 11.75% and 12.40 %) per annum and will mature on various dates, latest by January 31, 2011.8.2. The certificate of investment carries mark-up at the rate 13.26% (2009: ranging between 13.0% end 14.47% on performing lendings) per annum and will mature on various dates latest by February 08, 2012. 8.3. Particulars of lending =============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
In local currency 11,488,944 28,122,932
In foreign currencies - -
11,488,944 28,122.932
=============================================================================================8 4. Securities held as collateral against lending to financial institutions================================================================================================
December 31, 2010 December 31, 2009
================================================================================================
Further Further
Held by given as Held by given as
Bank collateral Total Bank collateral Total
================================================================================================
Rupees in '000
================================================================================================
Market Treasury Bills 11,392,277 - 11,392,277 22,527,333 3,820,599 26,347,932
11,392,277 - 11,392,277 22,527,333 3,820,599 26,347,932
================================================================================================8.5. Particulars of provision=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in'000
=============================================================================================
Opening balance 280,595 -
Charge for the year - 280,595
Reversal (280,595) -
Net (reversal) / charge (280,595) 280,595
Closing balance - 280,595
=============================================================================================9. INVESTMENTS9.1. Investments by types ==================================================================================================================================
December31, 2010 December31, 2009
==================================================================================================================================
Note Held by Given as Held by Given as
Bank collateral Total Bank collateral Total
==================================================================================================================================
Rupees in '000
==================================================================================================================================
Held-for-trading securities
Ordinary shares at listed companies 16,053 - 16,053 67,385 - 67,385
Units at open-end mutual funds 850,000 - 850,000 - - -
866,053 - 866,053 67,385 - 67,385
Available-for-sale securities
Market Treasury Bills 57,507,818 2.298,869 59,846,687 27,019,901 6,976,575 33,996,476
Pakistan Investment Bonds 246,764 - 246,764 246,204 - 246,204
Ordinary shares at listed companies /
certificates of mutual funds 5,564,180 - 5,564,180 4,882,928 - 4,882,928
Preference Shares 282,688 - 282,688 191,667 - 191.667
Units at open-end mutual funds 1,655,757 - 1,655,757 3,497,813 - 3,497,813
Ordinary shares of unlisted companies 245,193 - 245,193 215,193 - 215.193
investment in related parties
- Listed shares 1,948,264 - 1,948,264 2,449,082 - 2,449,082
- Unlisted shares 602,496 - 602,496 597,496 - 597,496
- Open-end mutual funds 1,000,000 - 1,000,000 853,000 - 853,003
Pre IPO investment - - - 35,300 - 35,000
Sukuk Bonds 4,783,539 - 4,783,539 3,637,774 - 3,637,774
Term Finance Certificates (TFCs) 29,872,458 - 29,872,458 26,036,936 - 26,036,936
133.749,157 2.298.869 106.348,026 69,659,994 6,976,575 76,636,569
Held-to-maturity securities
Pakistan Investment Bonds 7,493,147 - 7,493,147 7,690,939 - 2,690,909
Foreign Currency Bonds (US$) 645,701 - 645,701 73,286 - 73,286
TFCs, Debentures, Bonds and PTCs 5,078,932 - 5,878,932 10,274,764 - 10,274,764
14,017,780 - 14,017,780 18,338,959 - 18,338,959
Subsidiary
ABL Asset Management Company Limited 500,333 - 500,000 530,000 - 500,000
Investment at cost 119,132,990 2,298,869 121,431,859 88,266,338 6,976,575 95,242,913
Provision for diminution in the
value of investments 9.3 (2,681,810) - (,681,810) (2,185,929) - (2,185,929)
Unrealized less on revaluation of
Held-for-trading securities 9.14 (23,884) - (23,884) (7,897) - (7,897)
Surplus / (Deficit) on revaluation of
Available-for-sale securities 21.2 2,449,383 12,139) 2,447,244 1,740,361 44 1,740,405
Total investments 118,876,679 2,296,730 121,173,439 87,812,873 6,976,619 94,789,492
==================================================================================================================================9.2. Investments By Segments:=============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Federal Government Securities:
- Market Treasury Bills 9.2.1 � 9.2.3 59,846,687 33,996,476
- Pakistan Investment Bonds 9.2.1 7,739,911 7,937,113
- Foreign Currency Bonds (US$) 9.2.4 645,701 73,286
- Ijarah Sukuk Bonds 9.2.1 100,000 100,000
Fully paid up ordinary shares of listed
companies/certificates of mutual funds 9.4 7,528,496 7,399,395
Fully paid up ordinary shares of unlisted company 9.5 847,689 812,689
Investment in Units of Open End Mutual Funds 9.6 3,505,757 4,347,813
Pre IPO Investments 9.7 - 35,000
Fully paid up Preference Shares 9.8 282,688 191,667
Term Finance Certificates (TFCs), Debentures,
Bonds and Participation Term Certificates:
Term Finance Certificates 9.9
- Listed 2,423,334 2,208,104
- Unlisted 29,717,278 30,335,030
Debentures 9.10 63,479 63,479
Bonds
- Government 9.11 - 118,513
- Others (Sukuk) 9.11 8,225,203 7,118,712
Participation Term Certificates 9.12 5,636 5,636
Subsidiary 500,000 500,000
Total investments at cost 121,431,859 95,242,913
Less: Provision for diminution in the value of investment 9.3 (2,681,810) (2,185,929)
Investments (Net of Provisions) 118,750,049 93,056,984
Unrealized loss on revaluation
of Held-for-trading securities 9.14 (23,884) (7,897)
Surplus / (Deficit) on revaluation
of Available-for-sale securities 21.2 2,447,244 1,740,405
Total investments at market value 121,173,409 94,789,492
=============================================================================================9.2.1. Principal terms of investments in Federal Government Securities======================================================================================================
Name of investment Maturity Redemption Coupon
Period
======================================================================================================
Market Treasury Bills 13 January, 2011 to 01 December, 2011 On maturity At maturity
Foreign Currency Bonds (US$) 13 March, 2016 On maturity Half Yearly
Pakistan Investment Bonds 14 February, 2011 to 19 May, 2016 On maturity Half Yearly
Ijara Sukuk Bonds 26 September, 2011 On maturity Half Yearly
======================================================================================================9.2.2. Included herein are Market Treasury Bills having a book value of Rs.1,992.376 million (2009: Rs.6,639.897 million), given as collateral against repurchase agreement borrowings from financial institutions.9.2.3. Included herein are Market Treasury Bills having a face value of Rs. 339.800 million (2009: Rs 339.800 million), held by the SBP and National Bank of Pakistan against Demand Loan and TT/DD discounting facilities sanctioned to the Bank. 9.2.4. Investments in Foreign Currency Bonds ============================================================================================================
Name of Bond Coupon Date of Date of Coupon Redemption December December
Rate Issue Maturity Due Period 31, 2010 31, 2009
============================================================================================================
US $ Bonds Rupees in '000
============================================================================================================
KH 000020 ($ 695,880) 58,622
KH 030040 ($ 174,070) 14,664
Euro Dollar Bond $ 3,000,000) 7 125% 01 Oct 09 31-Mar-16 31-Mar-11 6.5 Years 229,375 -
Euro Dollar Bond ($ 3,200,000) 7.125% 24-May-10 31-Mar-16 31-Mar-11 5.9 Years 258,928 -
Euro Dollar Bond ($ 200,000,000) 7.125% 30-Mar-06 31-Mar-16 31-Mar-11 10 Years 157,398 -
645,701 73,286
============================================================================================================9.3. Particulars of Provision=============================================================================================
Note December 31, December 31,
2010 2309
=============================================================================================
Rupees in '000
=============================================================================================
Opening balance 2,185,929 1,955,90s3
Charge for the year 1,359,432 1,056,835
Reversals (70,028) (2,789)
Net charge 1,289,404 1,054,046
Reversal as gain on disposal (793,523) (822,283)
Amounts written off - (1,737)
Closing balance 9.3.1 2,681,810 2,185,929
=============================================================================================9.3.1. Particulars of Provision in respect of Type and Segment=============================================================================================
December 31, December 31,
2010 2309
=============================================================================================
Rupees in '000
=============================================================================================
By Type
Available-for-sale securities
Ordinary shares/certificates of Listed companies 571,682 1,310,674
Ordinary shares of unlisted companies 27,832 45,176
Preference shares 149,355 -
Unit of open end mutual funds 55,424 100,000
Sukuk Bonds 105,528 -
Term Finance Certificates 125,000 -
1,034,821 1,455,850
Held-to-maturity securities
TFCs, Debentures. Bonds and PTCs 1,646,989 730,079
2,681,810 2,185,929
By Segment
Fully Paid up Ordinary Shares
- Listed companies 571,682 1,310,674
- Unlisted companies 27,832 45,176
- Preference Shares 149,355 -
- Units of open-end mutual fund 55,424 100,000
804,293 1,455,850
Term Finance Certificates Debentures
Bonds and Participation Term Certificates
Bonds 1,141,621 590,250
Term Finance Certificates 666,781 70,714
Debentures 63,479 63,479
Participation Term Certificates 5,636 5,636
1,877,517 730,079
2,681,810 2,185,929
=============================================================================================9.4. Investments in Listed Shares / Certificates of Mutual Funds=========================================================================================================================
2010 2009
=========================================================================================================================
Cost per share/No. of shares/ No. of shares/
certificates certificates Total Cost certificates Total Cost
=========================================================================================================================
Name of Company / mutual fund Rupees Rupees '000 Rupees '000
=========================================================================================================================
Askari Bank Limited - - - 5,305,372 107,616
Attock Petroleum Limited - - - 166,618 57,788
Bank Al Habib Limited 33.55 1,000,000 33,551 - -
Crescent Steel & Allied Products Limited - - - 903,295 55,124
Dadabhoy Leasing Company Limited - 47,300 - 47,300 -
Dadabhoy Modaraba 8.85 567,500 5,025 567,500 5,025
D.G. Khan Cement Limited 25.59 7,387,891 189,063 - -
Engro Corporation Limited 170.71 3,594,372 613,592 - -
Engro Chemical Pakistan Limited. - - - 3,608,536 553,258
Eye Television Network Limited 21.11 2,748,917 58,024 1,894,534 89,677
Fauji Fertilizer Company Limited 86.48 15,894,987 1,374,557 12,444,987 998,879
First Credit & Investment Bank Limited - - - 4,646,900 46,234
Habib Bank Limited 100.10 2,000,000 200,205 - -
Hub Power Company Limited -related party 31.45 39,009,500 1,226,828 46,547,409 1,414,727
Kaiser Arts & Craft Limited - 766,500 - 766,500 -
Lucky Cement Limited. - - - 4,145,846 225,190
Meezan Bank Limited 16.09 1,990,762 32,027 4,497,568 89,040
Mohib Export Limited. - 21,275 - - -
Nishat (Chunian) Limited -related party 24.11 8,000,000 192,909 - -
Nishat Chunian Power Limited -related party 10.00 36,734,693 367,347 44,260,774 442,608
Nishat Power Limited (underwriting) -related party - - - 100 10
Nishat Mills Limited 50.13 7,795,000 390,800 - -
Nishat Power Limited -related party 10.00 35,408,850 354,088 59,173,739 591,737
National Refinery Limited 190.68 1,773,220 338,125 - -
Otsuka Pakistan Limited 34.92 95,517 3,335 - -
Pace Pakistan Limited. - - - 5,104,658 69,363
Pak Oman Advantage Fund - - - 96,000 960
Pakistan Oil Field Limited. 250.35 5,200,000 1,301,823 3,980,360 809,007
Pakistan Petroleum Limited. - - - 2,746,400 421,181
Pakistan State Oil Company Limited 249.56 2,000,000 499,119 1,870,000 466,447
PICIC Growth Mutual Fund 14.13 14,186,600 200,451 9,490,938 189,532
PICIC Growth Fund 32.51 63,400 2,061 63,400 2,060
Redco Textile Mills Limited 10.00 300 3 300 3
S.G. Fibers Limited. 58.20 788,800 45,908 788,800 45,908
SAFA Textile Mills Limited 10.00 860,200 8,602 860,200 8,602
UBL Capital Protected Fund 8.91 8,420,250 75,000 7,725,000 75,000
United Bank Limited - - - 10,716,000 567,034
Held for Trading Shares
Pakistan State Oil - - - 200,000 67,385
Japan Power Generation Limited 1.93 7,925,040 15,295 - -
Pioneer Cement Limited 7.10 106,784 758 - -
7,528,496 7,399,395
=========================================================================================================================9.5. Investments in Un-Listed Shares================================================================================================================================================================
Name of Company Percentage of No. of Break-up Value Paid up Value Cost Based on Name of Chief
Holding shares per shares per share audited Executive/managing
Rupees Rupees Rupees '000 accounts Agent
as at
================================================================================================================================================================
Al-Amin Textile Mills Limited - 13,100 N/A 10 - N/A Mr. Anis-ur-Rahman
Arabian Sea Country Club Limited -related party 6.45% 500,000 10.93 10 5,000 30-Jun-10 Mr. Arif Khan Abbasi
Atlas Power Limited -related party 10.99% 35,500,000 9.91 10 355,000 30-Jun-09 Mr. Maqsood A. Basra
Attock Textile Mills Limited - 55,500 N/A 10 506 N/A Mrs. Fareeda Khanum
Bankers Equity Limited - 807,699 N/A 10 - N/A Under liquidation
Dawood Family Takaful Limited 4.67% 3,500,000 9.44 10 35,000 31-Dec-09 Mr. Abdul Halim Nasri
Eastern Capital Limited 16.13% 500,000 13.05 10,000 5,000 30-Jun-07 Under liquidation
Equity Participation Fund - 1 76.51 100 - 30-Jun-08 Mr. Jamal Nasim
First Women Bank Limited -related party 8.97% 2,544,000 38.55 10,000 21,200 31-Dec-09 Ms. Shafqat Sultana
Habib Allied International Bank -related party 9.50% 2,375,000 238.45 136 214,769 31-Dec-09 Mr. Nauman K. Dar
KATEX Mills Limited - 151,100 N/A 10 1,511 N/A Col. Muhammad Yaqub (Rtd)
Khushhali Bank Limited. 11.73% 20,000,000 12.18 10 200,000 31-Dec-09 Mr. M. Ghalib Nishtar
Kohinoor Looms - 21,000 N/A 10 - N/A De-listed
National Woolen Mills - 6,900 N/A 10 52 N/A Haji Sher Shah
National Institutional Facilitation Technologies
(Pvt) Limited (NIFT) -related party 4.35% 472,744 50.77 10 1,526 30-Jun-09 Mr. Muzaffar M Khan
Pakistan Agricultural Storage and Services
Corporation Limited (PASSCO) 3.33% 1,000 20,953.03 1,000 1,000 31-Mar-09 Maj. Gen Ahmed Nawaz
Salim Mela
Ruby Rice & Gen Mills - 14,500 N/A 10 104 N/A Mr. Mehboob Ali
SME Bank Limited. 0.24% 580,778 9.28 10 5,250 31-Dec-09 Mr. R.A. Chughtai
SWIFT - 10 0 10 1,771 - -
847,689
================================================================================================================================================================9.6. Detail of Investments in Open Ended Mutual Funds========================================================================================================================
No. of Units Paid-up value per Total Cost
Name of Company Certificate
2010 2009 Rupees 2010 2009
========================================================================================================================
Rupees in '000
========================================================================================================================
ABL Cash Fund -related party 14,844,724 - 10 150,000 -
ABL Income Fund -related party 75,000,000 75,000,000 10 750,000 750,000
ABL Stock Fund -related party 10,000,000 10,000,000 10 100,000 100,000
AH Dow Jones Safe Pak Titans 15 Index Fund 400,000 - 50 20,000 -
Atlas Money Market Fund 99,502 - 500 50,000 -
AMZ Plus Income Fund 563,126 1,016,028 100 55,424 100,000
Crosby Phoenix Fund 435,545 - 100 44,296 -
Faysal Saving Growth Fund - 1,456,876 100 - 150,000
JS Income Fund - 997,077 100 - 100,000
KASB Liquid Fund 3,644,483 5,015,216 100 341,885 472,813
Lakson Money Market Fund 2,490,957 1,000,904 100 250,000 100,000
MCB Dynamic Cash Fund - 5,101,313 100 - 500,000
NAFA Cash Fund 93,969,726 104,830,739 10 894,152 1,000,000
National Investment Trust - 5,000,000 10 - 50,000
United Growth & Income Fund - 10,518,684 100 - 1,000,000
UBL Principal Protected Plan-II - 250,000 100 - 25,000
ABL Cash Fund -Held for Trading 82,756,472 - 10 850,000 -
3,505,757 4,347,813
========================================================================================================================9.7. Pre IPO Investment=============================================================================================
December 31, December 31,
2010 2309
=============================================================================================
Rupees in '000
=============================================================================================
Dawood Family Takaful Limited - 35,000
- 35,000
=============================================================================================9.8. Detail of Investments in Preference Shares=======================================================================================================================================
Percentage No. of Paid-up Total paid-Total Cost Based on Name of Chief
Name of Company of Note Holding certificate Value per up value December audited Executive/
certificate 31, 2010 accounts Managing Agent
=======================================================================================================================================
Rupees in '000
=======================================================================================================================================
Masood Textile Mills Limited 9.8.1 19% 5,833,335 10 58,333 58,333 30 June 10 Mr. Shahid Nazeer
Fazal Cloth Mills Limited 9.8.2 30% 7,500,000 10 75,000 75,000 30 June 09 Mr. Sheikh Naseem Ahmed
First Dawood Investment Bank Ltd 9.8.3 13.88% 9,935,500 10 99,355 99,355 30 June 10 Mr. Abdus Samad Khan
Trust Investment Bank Ltd 9.8.4 16.31% 5,000,000 10 50,000 50,000 30 June 10 Mr. Hamayun Nabi Jan
282,688
=======================================================================================================================================9.8.1. This represents KIBOR plus 2% cumulative preference shares with call option available to the issuer and Conversion Option available to the Bank, after completion of four years from the date of issue, i.e., June 29, 2005, at a discount of 15%.9.8.2. This represents KIBOR plus 2.5% cumulative preference shares having redemption terms within 60 days after completion of 5 years from the date of issue, i.e., May 13, 2006. 9.8.3. This represents KIBOR plus 4% cumulative preference shares with call option available to the issuer and Conversion Option available to the Bank, any time after issue. 9.8.4. This represents KIBOR plus 100 bps cumulative preference shares with call option available to the issuer and Conversion Option available to the Bank, after completion of three 3 years from the date of issue. 9.9. Detail of Investments in TFCs =========================================================================================================================
No. of Units Paid-up value per Total Cost
Name of Company Certificate
=========================================================================================================================
2010 2009 Rupees 2010 2009
=========================================================================================================================
Rupees in '000
=========================================================================================================================
Listed
Askari Bank Limited 20,000 20,000 5,000 99,960 100,000
Standard Chartered Bank (Pakistan) Limited 10,000 10,000 5,000 47,420 49,930
Faysal Bank Limited 70,000 - 5,000 350,000 -
Faysal Bank Limited (Royal Bank Of Scotland) 7,000 7,000 5,000 26,201 34,936
United Bank Limited-3rd Issue 10,000 10,000 5,000 49,920 49,940
United Bank Limited -4th Issue -HTM 37,000 37,000 5,000 184,815 184,889
Searle Pakistan Limited 10,000 10,000 5,000 6,248 18,743
NIB Bank Limited -HTM 76,789 76,789 5,000 383,561 383,715
United Bank Limited - PPTFC 122,558 122,558 5,000 612,177 612,422
Telecard Limited -HTM 75,888 75,888 5,000 139,444 172,911
Pak Arab Fertilizers Limited 84,080 84,080 5,000 395,176 420,148
Azgard Nine Limited 1,300 1,300 5,000 4,327 4,868
Escort Investment Bank Limited 20,000 20,000 5,000 49,960 83,267
Financial Receivable Securitization Company Limited 21,000 21,000 5,000 70,563 86,722
Orix Leasing Pakistan Limited 1,500 1,500 5,000 3,562 5,613
2,423,334 2,208,104
Unlisted
Orix Leasing Pakistan Limited 23,000 23,000 100,000 1,916,667 2,300,000
(Chief Executive: Mr. Teizon Kissat)
Dewan Farooque Spinning Mills Limited -HTM 25,000 25,000 5,000 31,250 31,250
(Chief Executive: Mr. Dewan Abdul Baqi Farooqui)
Al-Abbas Sugar Industries -HTM 25,000 25,000 5,000 74,950 99,950
(Chief Executive: Mr. Shunaid Qureshi)
Javedan Cement Limited 5,750 5,750 100,000 503,125 575,000
(Formerly Al-Abbas Holding (Pvt) Limited) -HTM
(Chief Executive: Mr. Aves Chochinwala)
Javedan Cement Limited 5,750 5,750 100,000 503,125 575,000
(Formerly Ghani Holding (Pvt) Limited) -HTM
(Chief Executive: Mr. Aves Chochinwala)
New Allied Electronics Industries -HTM - 10,000 - - 27,777
(Chief Executive: Mian Pervaiz Akhtar)
Javedan Cement Limited 2,500 2,500 100,000 250,000 250,000
(Chief Executive: Mr. Aves Chochinwala)
Grays Leasing Limited 18,000 18,000 5,000 20,000 50,000
(Chief Executive: Mr. Naveed Amin)
Rai Textile Mills Limited - HTM - 6 - - 12
(Chief Executive: Mr. Javed Ahmad Kayani)
Aruj Textile Mills Limited - HTM 5 5 654,970 615 852
(Chief Executive: Sheikh Muhammad Tahir)
Blue Star Spinning Mills Limited - HTM 1 1 165,291 - -
(Chief Executive: Ch.Sardar Mohammad) 1 1 270,681 - -
1 1 263,639 - -
1 1 251,937 - -
1 1 244,584 - -
1 1 233,192 - -
1 1 225,529 - -
1 1 214,966 - -
1 1 206,474 - -
1 1 195,704 - -
1 1 187,419 - -
1 1 176,954 - -
1 1 168,364 - -
1 1 158,215 - -
1 1 149,309 - -
1 1 139,574 - -
1 1 130,254 1,726 1,726
Bentonite Limited - HTM 13 13 107,610 - -
(Chief Executive: Mr. Khalid Shakeel) 1 1 107,619 - -
1 1 470,440 - -
15 15 20,100 - -
1 1 20,680 1,360 1,360
Shah Jewana Textile Mills Limited - HTM 13 13 40,010 - -
(Chief Executive: Mrs.Shahida Faisal Saleh Hyat) 1 1 40,069 - -
11 11 12,090 - -
1 1 120,127 118 118
Faruki Pulp Mills Limited - HTM - 13 1,050,900 - -
(Chief Executive: Mr. Salim Akbar Faruki) - 1 1,050,993 - 6,435
Choudhry Wire Rope Industries - HTM 13 13 217,000 - -
(Chief Executive: Ch. Muhammad Akram) 1 1 228,902 621 621
Sadhuja Textile Mills Limited - HTM 1 1 137,946 - -
(Chief Executive: Mr. Ali Asghar) 3 3 278,924 - -
2 2 274,376 - -
1 1 2,790,892 916 916
Tanocraft Limited - HTM 15 15 59,500 - -
(Chief Executive: Mr. Kanwer Furqan Ali) 1 1 60,942 - -
5 5 69,900 - -
1 1 70,385 145 145
Khairpur Sugar Mills Limited - HTM 13 13 55,536 - -
(Chief Executive: Muhammad Mubeen Jumani) 1 1 55,538 - -
5 5 337,000 - -
1 1 337,077 887 1,248
Bachani Sugar Mills Limited - HTM 23 23 135,227 - -
(Chief Executive: Mr. Najmuddin Ansari) 1 1 135,236 - -
14 14 1,526,874 - -
13 13 655,656 - -
1 1 655,657 12,667 12,667
========================================================================================================================
=======================================================================================================================================
Name of Company No. of Units Paid-up value per
Certificate Total Cost
=======================================================================================================================================
2010 2009 Rupees 2010 2009
=======================================================================================================================================
Rupees in '000
=======================================================================================================================================
Frontier Ceramics - HTM 15 15 117,000 - -
(Chief Executive: Mr. Shamsul Hassan) 1 1 118,846 - -
13 13 224,000 - -
1 1 217,221 - -
13 13 113,000 - -
1 1 113,960 1,466 2,073
Bank Al-Habib Limited 60,000 60,000 5,000 299,640 299,880
(Chief Executive: Mr. Abbas D. Habib)
National Transmission Distribution Company Limited (PPTFC) 2,348,200 2,348,200 5,000 11,741,000 11,741,000
(Chief Executive: Mr. Rasul Khan Mahsud)
Power Holding (Pvt) Limited (Islamabad Electric Supply Company 300 400 10,000,000 3,000,000 4,000,000
(Chief Executive: Mr. Fazeel Asif)
Power Holding (Pvt) Limited (Lahore Electric Supply Company Ltd 300 400 10,000,000 3,000,000 4,000,000
(Chief Executive: Mr. Fazeel Asif)
Power Holding (Pvt) Limited (WAPDA) 200 - 10,000,000 2,000,000 -
(Chief Executive: Mr. Fazeel Asif)
Power Holding (Pvt) Limited 1,271,400 1,271,400 5,000 6,375,000 6,357,000
(Chief Executive: Mr. Fazeel Asif)
Total 29,717,278 30,335,030
=======================================================================================================================================9.10. Detail of Investments in Debentures (Fully Provided)===============================================================================================================
Name of company Terms Cost
===============================================================================================================
Principal Interest Rate of Interes 2010 2009
===============================================================================================================
Rupees in '000
===============================================================================================================
Public Sector
Haripur Cold Storage Overdue Overdue 12.50% 500 500
Haripur Cold Storage Overdue Overdue 12.50% 459 459
Haripur Cold Storage Overdue Overdue 12.50% 56 56
Karachi Development Authority Overdue Overdue 12.00% 62,355 62,355
Private Sector
EFFEF Industries Overdue Overdue 14.00% 109 109
63,479 63,479
===============================================================================================================9.11. Detail of Investments in Bonds===============================================================================================================
Name of Bond / Sukuk Coupon Rate Date of Issue Date of Coupon Due Coupon
Cost Maturity date Frequency 2010 2009
===============================================================================================================
Rupees in '000
===============================================================================================================
Government
Public Sector Enterprise - 118,513
- 118,513
===============================================================================================================
============================================================================================================================================
Sukuk Bonds
Dawood Hercules Limited 6MK+1.2% 18-Sep-07 18-Sep-12 18-Mar-11 Half Yearly 904,800 1,000,000
Security Leasing Corporation Limited 6 MK+2.0% 06-Jan-07 31-Mar-14 20-Jan-11 Monthly 137,109 168,750
Century Paper & Board Mills Limited Last 5 Days
6 Month avg
K+1.35% 25-Sep-07 24-Sep-14 25-Mar-11 Half Yearly 920,000 1,150,000
K.S. Sulemanji Esmailji & Sons Limited 3 MK+2.4% 30-Jun-08 30-Jun-12 31-Mar-11 Quarterly 142,500 142,500
Liberty Power Tech. Limited 3 MK+3.0% 31-Mar-09 31-Mar-19 31-Mar-11 Half Yearly 2,530,797 1,026,524
Al-Zamin Leasing Modaraba 6 MK+1.9% 12-May-08 12-May-12 12-May-11 Half Yearly 154,375 190,938
Quetta Textile Mills Limited 6 MK+1.5% 27-Sep-08 27-Sep-15 27-Mar-11 Half Yearly 48,333 50,000
Shahraj Fabrics Pvt Limited 6 MK + 2.1% 08-Mar-08 08-Mar-13 08-Mar-11 Half Yearly 200,000 200,000
Maple Leaf Cement Factory Limited 3 MK + 1.% 03-Dec-07 03-Dec-18 03-Mar-11 Quarterly 3,187,289 3,190,000
8,225,203 7,118,712
============================================================================================================================================9.12. Detail of Investment in Participation Term Certificates - (fully provided)===============================================================================================================
Name of the Borrower No. of Certific Value per Cost
2010 2009 Certificate 2010 2009
===============================================================================================================
Rupees in '000
===============================================================================================================
Crystal Chemicals 1 1 59,000
(Chief Executive: Mr. Maqsood A Shaikh) 13 13 62,000 1,559 1,559
MAS Dairies Limited. 1 1 50,000
(Chief Executive: Mian Nisar Akhtar) 9 9 51,000 1,009 1,009
Pangrio Sugar Mills Limited 15 15 236,000
(Chief Executive: Mr. Sajid Hussain Naqvi) 1 1 240,000
1 1 168,000
13 13 169,000 3,068 3,068
5,636 5,636
===============================================================================================================9.13. Quality of Available for Sale Securities================================================================================================================
2010 2009
Market Market
Name of Security value/Book Rating value/Book Rating
Value Value
================================================================================================================
Rupees '000 Rupees '000
================================================================================================================
Government Securities
Market Treasury Bills 59,846,686 Un Rated 33,997,603 Un Rated
Pakistan Investment Bonds 246,764 Un Rated 244,899 Un Rated
Government of Pakistan Ijara Sukuk 100,000 Un Rated 101,000 Un Rated
Listed TFCs
Askari Bank Limited 99,960 AA- 97,357 AA-
Azgard Nine Limited 4,327 CCC (RW) 4,853 AA-
Faysal Bank Limited (Royal Bank of Scotland) 26,201 AA- 34,568 AA-
Escort Investment Bank Limited 49,960 A 82,547 A+
Faysal Bank Limited 350,000 AA- - -
Financial Receivable Securitization Company Limited-A 42,505 A+ 53,395 A+
Financial Receivable Securitization Company Limited-B 28,058 A+ 31,250 A+
NIB Bank Limited - - 22,931 A
Pak Arab Fertilizers Limited 395,176 AA 394,509 AA
Searle Pakistan Limited 6,248 A- 18,136 BBB+
Standard Chartered Bank (Pakistan) Limited (Union Bank) 47,420 AAA 49,963 AAA
United Bank Limited-3rd Issue 49,920 AA 49,312 AA
United Bank Limited-4th Issue 184,815 AA 163,025 AA
ORIX Leasing Pakistan Limited 3,562 AA+ 5,637 AA+
Unlisted TFCs
Islamabad Electricity Supply Company Limited - - 4,000,000 **
Power Holding (Pvt) Limited (NTDC) 11,741,000 ** 11,741,000 **
Javedan Cement Limited 250,000 ** 187,500 **
Grays Leasing Limited 20,000 A- 50,000 A-
Bank Al-Habib Limited 299,640 AA 299,880 AA
ORIX Leasing Pakistan Limited 1,916,667 AA+ 2,035,500 AA+
Power Holding (Pvt) Limited 6,357,000 ** 6,357,000 **
Power Holding (Pvt) Limited (LESCO) 3,000,000 ** - -
Power Holding (Pvt) Limited (IESCO) 3,000,000 ** - -
Power Holding (Pvt) Limited (WAPDA) 2,000,000 ** - -
Shares Unlisted
Arabian Sea Country Club Limited* 5,000 ** 5,000 **
Attock Textile Mills Limited 506 ** 506 **
Atlas Power Limited* 355,000 ** 355,000 **
Dawood Family Takaful Limited 35,000 A- - -
Eastern Capital Limited* 5,000 ** 5,000 **
Equity Participation Fund* 0 ** - **
First Women Bank Limited* 21,200 BBB+&A2 21,200 BBB+&A2
Habib Allied International Bank Limited* 214,769 ** 214,769 **
KATEX Mills Limited 1,511 ** 1,511 **
Khushhali Bank Limited* 200,000 A-&A-2 200,000 A-&A2
National Woolen Mills 52 ** 52 **
National Institutional Facilitation Technologies (Pvt) Ltd 1,526 ** 1,527 **
Nishat Chunian Power Limited* - - 10 AA & A1+
PASSCO* 1,000 ** 1,000 **
Ruby Rice & Gen Mills 105 ** 105 **
SME Bank Limited* 5,250 BBB&A-3 5,250 BBB&A3
SWIFT 1,771 ** 1,770 **
Shares / Certificates Listed
Askari Bank Limited - - 144,837 AA&A1+
Attock Petroleum Limited - - 57,920 **
Bank Al-Habib Limited 33,551 AA+ &A1+ - -
Crescent Steel & Allied Products - - 23,495 A+&A1
Dadabhoy Modaraba 5,025 ** 5,025 **
D.G. Khan Cement Limited 189,063 ** - -
Engro Chemical Pakistan Limited 613,592 AA&A1+ 661,336 AA&A1+
Eye Television Network Limited 58,024 A&A1 55,150 A & A1
Fauji Fertilizer Company Limited* 998,879 ** 1,280,963 **
Fauji Fertilizer Company Limited 375,677 ** - -
First Credit & Investment Bank Limited - - 15,567 A-&A2
Habib Bank Limited 200,205 A+&A-1+ - -
Hub Power Company Limited* 999,085 AA+&A1+ 968,686 AA+&A1+
Hub Power Company Limited 227,743 AA+&A1+ 478,008 AA+&A1+
Lucky Cement Limited - - 274,621 **
Meezan Bank Limited 32,027 AA-&A-1 70,792 A+&A1
National Refinery Limited 338,125 AAA&A1+ - -
Nishat (Chunian) Limited 192,909 A&A-2 - -
Nishat Chunian Power Limited* 300,000 AA-&A1+ 309,000 AA&A1+
Nishat Chunian Power Limited 67,347 AA-&A1+ 146,886 AA&A1+
Nishat Mills Limited 390,800 A+&A1
Nishat Power Limited* 300,000 AA-&A1+ 381,900 AA&A1+
Nishat Power Limited 54,089 AA-&A1+ 371,382 AA&A1+
Otsuka Pakistan Limited 3,335 ** - -
PACE Pakistan Limited - - 29,862 A&A1
Pak Oman Advantage Fund - - 1,008 FS AA-(f)
Pakistan Oilfield Limited 1,301,823 ** 918,548 **
Pakistan Petroleum Limited - - 520,690 **
Pakistan State Oil Company Limited 499,119 AA+&A1+ 556,213 AA+&A1+
PICIC Growth Mutual Fund 202,512 ** 135,341 **
Redco Textile Mills Limited 3 ** 3 **
S.G. Fibers Limited 45,908 ** 45,908 **
SAFA Textile Mills Limited 8,602 ** 8,602 **
UBL Capital Protected Fund 75,000 AA+(cpf) 61,800 AA+(cpf)
United Bank Limited - - 626,350 AA+&A1+
Preference Shares
Trust Investment Bank Limited 50,000 BBB-&A3 - **
First Dawood Investment Bank 99,355 D&D - **
Fazal Cloth Mills Limited 75,000 A-&A2 75,000 **
Masood Textile Limited 58,333 ** 116,667 **
Investments in Mutual Funds
ABL Cash Fund 150,000 AA+(f) - -
ABL Income Fund 750,000 A+(f) 750,750 A(f)
ABL Stock Fund 100,000 MFR 5-Star 130,600 **
AH Dow Jones Safe Pak Titans 15 Index Fund 20,000 ** - -
Atlas Money Market Fund 50,000 AA+(f) - -
AMZ Plus Income Fund 55,424 BB(f) 100,000 BB(f)
Crosby Phoenix Fund 44,296 A(f) - -
Faysal Saving & Growth Fund - - 149,927 FS-A(F)
JS Aggressive Income Fund - - 99 4-Star
JS Income Fund - - 102,988 AA-(F)
KASB Liquid Fund 341,885 BBB+(f) 444,097 5-Star
Lakson Money Market Fund 250,000 AA(f) 101,422 **
MCB Dynamic Cash Fund - - 528,214 **
NAFA Cash Fund 894,151 A+(f) 1,065,080 3-Star
National Investment Trust - - 50,650 4-Star
United Growth & Income Fund - - 1,065,015 FS-A(F)
UBL Principal Protected Fund Plan-II - - 25,000 **
Pre Ipo Investment
Dawood Family Takaful Limited - - 35,000 **
Sukuk Bonds
Security Leasing Corporation Limited 137,109 ** 150,526 BBB-&A3
Century Paper & Board Mills Limited 920,000 A+ 1,106,016 A+
Dawood Hercules Limited 904,800 ** 972,541 **
K.S.Sulemanji Esmailji & Sons 142,500 ** 142,500 **
Liberty Power Tech Limited 2,530,797 AA- 1,026,524 **
Quetta Textile Mills Limited 48,333 ** 41,386 **
================================================================================================================ * Strategic Investments of the Bank** Ratings are not available =============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Unrealized loss on revaluation of investments
classified as held for trading ordinary shares of listed companies
Pakistan State Oil Company Limited - (7,897)
Pioneer Cement Limited (35) -
Japan Power Generation Limited (1,902) -
ABL Cash Fund (21,947) -
(23,884) (7,897)
=============================================================================================10. ADVANCES=============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Loans, cash credits, running finances, etc. - in Pakistan 263,054,733 243,166,083
Net investment in finance lease - in Pakistan 10.2 1,261,371 846,699
Bills discounted and purchased (excluding treasury bills)
Payable in Pakistan 973,826 389,507
Payable outside Pakistan 3,239,841 5,484,414
4,213,667 5,873,921
Advances - gross 268,529,771 249,886,703
Provision for non-performing advances 10.4 (15,420,788) (12,535,255)
General provision for consumer financing 10.4 (9,474) (7,410)
(15,430,262) (12,542,665)
Advances - net of provision 253,099,509 237,344,038
=============================================================================================10.1. Particulars of advances (Gross)10.1.1. =============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
In local currency 265,263,158 248,499,608
In foreign currencies 3,266,613 1,387,095
268,529,771 249,886,703
=============================================================================================10.1.2.=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Short term (for upto one year) 160,261,738 152,487,239
Long term (for over one year) 108,268,033 97,399,464
268,529,771 249,886,703
=============================================================================================10.2. Net investment in finance lease===========================================================================================================================================================
December 31, 2010 December 31, 2009
===========================================================================================================================================================
Not later Later than one Not later Later than one
than one and less than Over five than one and less than Over five
year five years years Total year five years years Total
===========================================================================================================================================================
Rupees in '000
===========================================================================================================================================================
Lease rentals receivable 274,677 531,796 383,700 1,190,173 263,578 366,287 200,381 830,246
Residual value 51,759 135,880 65,555 253,194 57,695 65,271 38,364 161,330
Minimum lease payments 326,436 667,676 449,255 1,443,367 321,273 431,558 238,745 991,576
Financial charges for future
periods (49,745) (79,409) (52,842) (181,996) (45,668) (61,458) (37,751) (144,877)
Present value of minimum
lease payments 276,691 588,267 396,413 1,261,371 275,605 370,100 200,994 846,699
===========================================================================================================================================================10.3. Advances include Rs. 18,688.166 million (2009: Rs. 16,281.178 million) which have been placed under non-performing status as detailed below:-===========================================================================================================================================================
December 31, 2010
===========================================================================================================================================================
Category of Classified Advances Provision Required Provision Held
Classification Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total
===========================================================================================================================================================
Rupees in '000
===========================================================================================================================================================
Other Assets Especially
Mentioned 24,340 - 24,340 - - - - - -
Substandard 1,604,264 - 1,604,264 330,109 - 330,109 330,109 - 330,109
Doubtful 3,937,765 - 3,937,765 1,968,882 - 1,968,882 1,968,882 - 1,968,882
Loss 13,121,797 - 13,121,797 13,121,797 - 13,121,797 13,121,797 - 13,121,797
18,688,166 - 18,688,166 15,420,788 - 15,420,788 15,420,788 - 15,420,788
===========================================================================================================================================================
December 31, 2009
===========================================================================================================================================================
Category of Classified Advances Provision Required Provision Held
Classification Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total
===========================================================================================================================================================
Rupees in '000
===========================================================================================================================================================
Other Assets Especially
Mentioned 21,370 - 21,370 - - - - - -
Substandard 3,045,384 - 3,045,384 760,816 - 760,816 760,816 - 760,816
Doubtful 2,713,157 - 2,713,157 1,356,579 - 1,356,579 1,356,579 - 1,356,579
Loss 10,501,267 - 10,501,267 10,417,860 - 10,417,860 10,417,860 - 10,417,860
16,281,178 - 16,281,178 12,535,255 - 12,535,255 12,535,255 - 12,535,255
===========================================================================================================================================================10.4. Particulars of provision against non-performing advances===============================================================================================================================
December31, 2010 December31, 2009
===============================================================================================================================
Note Specific General Total Specific General Total
===============================================================================================================================
Rupees in '000
===============================================================================================================================
Opening balance 12,535,255 7,410 12,542,665 10,657,709 10,060 10,667,769
Charge for the year 493,691 2,064 4,568,195 4,180,963 - 4,180,963
Reversals 4,566,131 - (1,493,619) (1,015,350) (2,650) (1,018,000)
Charged to profit and loss account 3,072,512 2,064 3,074,576 3,165,613 (2,650) 362,963
Amounts written off 10.5 (186,979) - (186,979) (1,288,067) - (1,288,067)
Closing balance 15,420,788 9,474 15,430,262 2,535,255 7,410 2,665
===============================================================================================================================10 4.1.===============================================================================================================================
December31, 2010 December31, 2009
===============================================================================================================================
Specific General Total Specific General Total
===============================================================================================================================
Rupees in '000
===============================================================================================================================
In local currency 15,420,788 9,474 15,430,262 12,535,255 7,410 12,542,665
In foreign currencies - - - - - -
15,420,788 9,474 15,430,262 12,535,255 7,410 12,542,665
===============================================================================================================================10.5. Particulars of write offs10.5.1. =============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Against provisions 186,979 1,288,067
Directly charged to Profit and Loss account - -
186,979 1,288,067
=============================================================================================10.5.2.=============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Write Offs of Rs. 500,000 and above 10.6 1 13.208 1,047,845
Write Offs of Below Rs 500,000 73,771 240,222
186,979 1,288,067
=============================================================================================10.6. Details of loan write off 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 and above allowed to a person(s) during the year ended December 31, 2010 is given in Annexure "I". However, these write offs do not affect the Bank's right to recover debts from these customers. 10.7. Particulars of loans and advances to Directors, related parties. etc. =============================================================================================
December December
21, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Debts due by directors, executives or officers of the Bank
or any of them either severally or jointly with any other persons
Balance at beginning of the year 5,345,324 4,929,471
Loans granted during the year 976,105 1,264,410
Repayments (1,000,418) (848,557)
Balance at end of the year 5,321,011 5,345,324
=============================================================================================Details of loans and advances to associates, subsidiary and other related parties are given in note 41.11. OPERATING FIXED ASSETS =============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Capital work-in-progress
Capital work-in-progress 11.1 3,279,994 1,686,872
Property and equipment 11.2 11,897,388 10,604,335
Intangible assets 11.3 182,360 155,541
15,359,742 12,446,748
=============================================================================================11.1. Capital work-in-progress=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Civil works 2,572,875 1,047,556
Equipment 46,893 170,601
Advances to suppliers and contractors 660,226 468,715
3,279,994 1,686,872
=============================================================================================11.2. Property and equipment==========================================================================================================================================================================
Cost/Revaluation Accumulated Depreciation
==========================================================================================================================================================================
At Additions At At Charge for At Net book Annual
January 1, (Adjustment) / December 31, January 1, the Year/ December 31, Value at Rate of
Description Note 2010 (Deletions) Write-off 2010 2010 Adjustment/ Write-off 2010 December 31, Depreciation
(Depreciation 2010 %
on Deletions)
==========================================================================================================================================================================
Rupees in '000
==========================================================================================================================================================================
Land-Freehold 11.4 4,329,181 1,257 - 4,317,291 - - - - 4,317,291 -
(7,155)
(5,992)
Land - Leasehold 11.4 1,606,518 76,864 - 1,683,382 - - - - 1,683,382 -
Buildings - Freehold 11.4 1,111,365 630,707 - 1,742,072 95,997 69,382 - 165,379 1,576,693 5
Buildings - Leasehold 11.4 1,748,797 289,721 - 2,038,518 85,569 90,240 - 175,809 1,862,709 5
Furniture 396,368 154,466 (53) 526,651 179,486 39,406 (53) 195,052 331,599 10
and fixtures (24,130) (23,787)
Electrical, office 2,509,523 570,691 (116) 3,038,487 1,205,300 433,812 (111) 1,598,545 1,439,942 4.28 - 50
and computer (41,611) (40,456)
equipment
Vehicles 234,467 28,273 - 244,661 131,155 44,441 - 160,487 84,174 20
(18,079) (15,109)
Building improvements 460,971 376,264 - 837,024 95,348 140,237 - 235,426 601,598 20
(rented premises) (211) (159)
Total 12,397,190 2,121,088 (169) 14,428,086 1,792,855 817,518 (164) 2,530,698 11,897,388
(90,023) (79,511)
==========================================================================================================================================================================11.2. Property and equipment==========================================================================================================================================================================
Cost/Revaluation Accumulated Depreciation
==========================================================================================================================================================================
At Additions At At Charge for At Net book Annual
January 1, (Adjustment) / December 31, January 1, the Year/ December 31, Value at Rate of
Description Note 2009 (Deletions) Write-off 2009 2009 Adjustment/ Write-off 2009 December 31, Depreciation
(Depreciation 2009 %
on Deletions)
==========================================================================================================================================================================
Rupees in '000
==========================================================================================================================================================================
Land - Freehold 11.4 4,275,975 53,206 - 4,329,181 - - - - 4,329,181 -
Land - Leasehold 11.4 1,424,398 182,120 - 1,606,518 - - - - 1,606,518 -
Buildings - Freehold 11.4 823,642 287,723 - 1,111,365 49,083 46,914 - 95,997 1,015,368 5
Buildings - Leasehold 11.4 1,625,970 122,827 - 1,748,797 - 85,569 - 85,569 1,663,228 5
Furniture 279,013 141,292 (132) 396,368 176,179 24,672 (127) 179,486 216,882 10
and fixtures (23,805) (21,238)
Electrical, office 1,920,561 643,606 (12,697) 2,509,523 900,720 346,013 (3,329) 1,205,300 1,304,223 14.28 - 50
and computer equipment (41,947) (38,104)
Vehicles 234,246 14,156 - 234,467 92,873 42,882 - 131,155 103,312 20
(13,935) (4,600)
Building improvements 153,915 308,411 - 460,971 35,778 59,832 - 95,348 365,623 20
(rented premises) (1,355) (262)
Total 10,737,720 1,753,341 (12,829) 12,397,190 1,254,633 605,882 (3,456) 1,792,855 10,604,335
(81,042) (64,204)
==========================================================================================================================================================================
==============================================================================================================================================
Intangible assets
==============================================================================================================================================
Cost Accumulated Amortization
==============================================================================================================================================
Description At January Additions At December 31 At January Charge for At December Net book value Rate of
1, 2010 2010 1, 2010 the Year 31, 2010 at December amortization
==============================================================================================================================================
(Rupees in '000) 31, 2010 %
==============================================================================================================================================
Computer software 230,517 59,838 290,355 74,976 33,019 107,995 182,360 14.28
==============================================================================================================================================
Cost Accumulated Amortization
==============================================================================================================================================
Description At January Additions At December 31 At January Charge for At December Net book value Rate of
1, 2009 2009 1, 2009 the Year 31, 2009 at December amortization
==============================================================================================================================================
(Rupees in '000) 31, 2010 %
==============================================================================================================================================
Computer software 154,708 75,809 230,517 47,802 27,174 74,976 155,541 14.28
==============================================================================================================================================11.4. Bank arranged for valuation of properties as at December 31, 2008 from five independent valuers (Akbani & Javed Associates, Progressive Architects & Engineers, Jasper & Jasper, Hasib Associates (Pvt.) Ltd. and Consultancy Support & Services). The revalued amounts of properties have been determined on the basis of Fair Value Model. The revaluation resulted in net increase in the carrying values of the properties by Rs. 1,512.713 million. Had there been no revaluation, the carrying amount of revalued assets would have been as follows:=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
- Land 3,509,739 3,515,042
- Building 1,202,404 1,265,689
=============================================================================================11.5. Fair value of property and equipment including land and buildings is not expected to be materially different from their carrying amount.Land and Buildings were revalued as at December 31, 2008 and are carried at market value less accumulated depreciation. 11.6. =============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Incremental depreciation charged
during the year transferred to profit and loss account 21.1 47,297 49,785
=============================================================================================11.7.=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Restriction/discrepancy in the
title of property having a net book value of 116,157 119,713
=============================================================================================11.8.=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Carrying amount of temporarily
idle property and equipment 35,550 18,446
=============================================================================================11.9. The gross carrying amount of fully depreciatedmortized assets that are still in use:=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Furniture and fixtures 104,795 91,713
Electrical, office and computer equipment 592,849 485,217
Vehicles 21,265 19,718
Intangible assets - software 33,411 29,759
=============================================================================================11.10.=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
The carrying amount of property and equipment that have retired
from active use and are held for disposal - 5,992
=============================================================================================11.11. Fixed assets include a plot at carrying value of Rs. 31 million, which is acquired with the funds of the Bank and held in the name of Muhammad Waseem Mukhtar, a Director of the Bank.11.12. The details of disposals of assets whose original cost or book value exceeds rupees one million or two hundred and fifty thousand rupees respectively, whichever is lower, are given in Annexure "II". 11.13. Information relating to sale of fixed assets (otherwise than through a regular auction) made to chief executive or a director or an executive or a shareholder holding not less than ten percent of the voting shares of the Bank or any related party, as required by SBP's BSD circular no. 4 dated February 17, 2006, is given in Annexure "II". 12. DEFERRED TAX ASSET / (LIABILITY) � NET =============================================================================================
Note December 31, December 31,
2010 2009
=============================================================================================
Rupees in '000
=============================================================================================
Deferred debits arising in respect of
Compensated leave absences 12.2 153,605 216,646
Provision against: 12.2
Investments 79,098 79,098
Other assets 275,847 305,418
Off balance sheet obligations 169,525 169,525
Provision against Advances 4 (ii) 1,025,795 223,560
Post retirement medical benefits 12.2 276,249 327,168
Workers welfare fund 86,455 75,258
Loss on sale of listed shares - 39,863
2,066,574 1,436,536
Deferred credits arising due to:
Surplus on revaluation of fixed assets 21.1 (314,611) (331,165)
Surplus on revaluation of investments 21.2 (403,875) (472,787)
Accelerated tax depreciation / amortization (845,185) (603,564)
Excess of investment in finance lease over written down
value of leased assets (18,516) (30,891)
(1,582,187) (1,438,407)
484,387 (1,871)
=============================================================================================12.1. Reconciliation of deferred tax================================================================================================================================================
Balance as at Recognised in Recognised in Balance as at Recognised in Recognised in Balance as at
January 01, Profit and Loss Equity December 31, Profit and Loss Equity December 31,
2009 Account 2009 Account 2010
================================================================================================================================================
(Rupees in '000)
================================================================================================================================================
Deferred debits arising in respect of:
Compensated leave absences 244,254 (27,608) - 216,646 (63,041) - 153,605
Provision against:
- Investments 82,293 (3,195) - 79,098 - - 79,098
- Other assets 310,498 (5,080) - 305,418 (29,571) - 275,847
- Off balance sheet obligations 169,525 - - 169,525 - - 169,525
- Advances - 223,560 - 223,560 802,235 - 1,025,795
Post retirement medical benefits 351,653 (24,485) - 327,168 (50,919) - 276,249
Workers welfare fund - 75,258 - 75,258 11,197 - 86,455
Loss on sale of listed shares - 39,863 - 39,863 (39,863) - -
Deficit on revaluation of investments 690,817 - (690,817) - - - -
1,849,040 278,313 (690,817) 1,436,536 630,038 - 2,066,574
Deferred credits arising due to:
Surplus on revaluation of fixed assets (348,590) 17,425 - (331,165) 16,554 - (314,611)
Surplus on revaluation of investments - - (472,787) (472,787) - 68,912 (403,875)
Accelerated tax depreciation /
amortization (423,790) (179,774) - (603,564) (241,621) - (845,185)
Excess of investment in finance
lease over written down
value of leased assets (47,436) 16,545 - (30,891) 12,375 - (18,516)
(819,816) (145,804) (472,787) (1,438,407) (212,692) 68,912 (1,582,187)
1,029,224 132,509 (1,163,604) (1,871) 417,346 68,912 484,387
================================================================================================================================================12.2. Through Finance Act 2007, a new section 100A read with the 7th Schedule (the Schedule) was inserted in the Income Tax Ordinance, 2001 for the taxation of banking companies. The Schedule seeks to simplify the taxation of banking companies and is applicable from the tax year 2009 (financial year ending on December 31, 2008).The deferred tax asset on the deductible temporary differences disallowed as a deduction in the past up to December 31, 2007, for which transitory provisions are not available, is being kept as an asset as the Bank is confident that transitory provisions would be introduced to set out the mechanism of claiming where benefit of these allowances can be claimed. 13. OTHER ASSETS =============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Income/Mark-up accrued on advances, investments and lendings to financial institutions:
- in local currency 10,540,088 9,619,170
- in foreign currencies 31,115 65,454
Receivable on sale of investment - 30,466
Advances, deposits, advance rent and other prepayments 1,105,867 916,713
Advance taxation (payments less provisions) 1,863,690 4,672,939
Stationery and stamps on hand 29,713 22,293
Prepaid exchange risk fee 66 18
Due from the employees' retirement benefit schem 36.4 1,504,938 1,509,879
Excise duty 26 11
Receivable from SBP - customers encashment 487 203,834
Non banking assets acquired in satisfaction of c 13.1 1,730,492 938,496
Suspense account 696,059 588,281
Others 40,612 203,682
17,543,153 18,771,236
Less: Provision held against other assets 13.2 (1,062,781) (816,191)
Other assets (net of provision) 16,480,372 17,955,045
=============================================================================================13.1.=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Market value of non banking assets
acquired in satisfaction of claims 1,747,410 1,077,601
=============================================================================================13.2. Provision against Other Assets:=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Opening balance 816,191 887,138
Charge for the year 331,077 77,326
Reversals - (133,757)
Net charge / (reversal) 331,077 (56,431)
Written off (84,487) (14,516)
Closing balance 1,062,781 816,191
=============================================================================================14. CONTINGENT ASSETSThere were no contingent assets of the Bank as at December 31, 2010 and December 31, 2009. 15. BILLS PAYABLE =============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
In Pakistan 4,118,791 3,162,429
Outside Pakistan - -
4,118,791 3,162,429
=============================================================================================16. BORROWINGS=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
In Pakistan 20,680,282 39,457,216
Outside Pakistan 94,168 361,316
20,774,450 39,818,532
=============================================================================================16.1. Particulars of borrowings with respect to currencies=============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
In local currency 20,518,433 39,457,216
In foreign currencies 256,017 361,316
20,774,450 39,818,532
Details of borrowings (Secured/Unsecured)
Secured
Borrowings from State Bank of Pakistan
Under export refinance scheme 16.3 13,301,654 12,225,858
Long term financing facility - Export oriented project 16.4 1,889,208 1,254,403
Long term financing facility 16.4 3,316,675 4,768,650
18,507,537 18,248,911
Borrowing from financial institutions 16.5 20,000 -
18,527,537 18,248,911
Repurchase agreement borrowings 16.6 1,990,896 10,558,305
Unsecured
Call borrowings 16.7 161,489 10,650,000
Overdrawn nostro accounts 94,168 361,316
256,017 11,011,316
20,774,450 39,818,532
=============================================================================================16.3. The Bank has entered into various agreements for financing with the State Bank of Pakistan (SBP) for extending export finance to customers. As per agreements, the Bank has granted to SBP the right to recover the outstanding amount from the Bank at the date of maturity of the finance by directly debiting the current account maintained by the Bank with the SBP. These carry interest at the rate of 10% (2009: 7.0%) per annum. These borrowings are repayable within six months from the deal date.16.4. This represents Long Term Financing against Export Oriented Projects availed by the Bank for further extending the same to its customers for export oriented projects, for a maximum period of 7.5 years. The loan repayments to SBP correspond the respective repayment from customers. The loan carries mark-up at the rate ranging from 5.0% to 8.6% (2009: 7.0%) per annum. 16.5. This represents short term borrowing from National Bank of Pakistan. 16.6. These represent funds borrowed from the local interbank market against government securities, carrying mark-up at rate 13.5% (2009: ranging between 10.75% and 12.40%) per annum maturing on various dates, latest by January 03, 2011. 16.7. These represent unsecured borrowings in foreign currency from the local interbank market, carrying mark-up at rates, ranging between 0.8% and 1.3% (Local currency 2009: 11.45% and 12.90%) per annum maturing on various dates, latest by March 28, 2011. 17. DEPOSITS AND OTHER ACCOUNTS =============================================================================================
December 31, December 31,
2010 2009
=============================================================================================
Rupees in '000
=============================================================================================
Customers
Fixed deposits 109,051,434 98,425,685
Savings deposits 93,636,169 85,274,893
Current accounts - Remunerative 57,006,516 47,706,475
- Non-remunerative 110,871,294 93,273,720
Financial Institutions 370,565,413 324,680,773
Financial Instructions
Remunerative deposits 718,855 4,194,264
371,284,268 328,875,037
=============================================================================================17.1. Particulars of deposits=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
In local currency 343,375,302 308,359,491
In foreign currencies 27,908,966 20,515,546
371,284,268 328,875,037
=============================================================================================18. SUB-ORDINATED LOANS=============================================================================================
December 31, December 31,
2010 2009
=============================================================================================
Rupees in '000
=============================================================================================
Term Finance Certificates - I 2,496,000 2,497,000
Term Finance Certificates - II 2,998,800 3,000,000
5,494,800 5,497,000
=============================================================================================The Bank has issued following unsecured sub-ordinated Term Finance Certificates to improve the Bank's capital adequacy. Liability to the TFC holders is subordinated to and rank inferior to all other debts of the Bank including deposits. The salient features of the issues are as follows:=================================================================================================================================
Outstanding Amount-
=================================================================================================================================
(Rupees in thousand) Term Finance certificate Term Finance certificate - II
=================================================================================================================================
2,496,000 2,998,800
Issue date December 06, 2006 August 28, 2009
Total issue 2,500,000 3,000,000
Rating AA- AA-
Listing Karachi Stock Exchange Karachi Stock Exchange
(Guarantee) Limited (Guarantee) Limited
Mark - up repayment Semi annually Semi annually
Rate - Six months KIBOR plus 1.9% - Six months KIBOR plus 0.85%
for first 5 years
- Six months KIBOR plus 1.30%
from start of 6th year
Call Option Call option is not available to the issuer
Issuer has the right to seek redemption after
the eleventh redemption date of the entire
TFC issue, prior to its stated maturity.
Repayment 8 Years (2007 - 2014 10 Years (2010 - 2019)
=================================================================================================================================19. OTHER LIABILITIES=============================================================================================
Note December December
31, 2010 31, 2039
=============================================================================================
Rupees in 000
=============================================================================================
Mark-up/Return/Interest payable in local currency 3,727,598 4,639,847
Mark-up/Return/Interest payable in foreign currency 417,918 352,215
Accrued expenses 720,467 594,704
Branch adjustment account 1,401,372 741,233
Unrealized loss on forward foreign exchange contracts 281,215 37,933
Provision for:
gratuity 36.4 94,917 90,841
employees medical benefits 36.4 1,632,793 485,820
employees' compensated absences 36.12 872,706 838,006
Unclaimed dividends 49,162 43,503
Dividend payable 8,279 7,086
Provision against off-balance sheet obligations 19.1 370,764 459,003
Retention money payabLe 92,891 81,489
Security deposits against [ease 254,009 161,544
Sundry deposits 1,203,461 1,012,960
Workers Welfare Fund Payable 253,940 221,948
Others 902,868 291,352
12,284,360 11,059,484
=============================================================================================19.1. Provision against oft-balance sheet obligations=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Opening balance 459,003 484,356
Charge for the year 33,054 25,049
Reversals (121,293) (50,402)
Net charge (88,239) (25,353)
Closing balance 370,764 459,003
=============================================================================================The above provision has been made against letters of guarantee issued by the Bank.19.2. =============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
In local currency 11,718,230 10,552,633
In foreign currencies 566,130 506,851
12,284,360 11,059,484
=============================================================================================20. SHARE CAPITAL20.1. Authorized capital ===================================================================================================================
December December December December
31, 2010 31, 2009 31, 2010 31, 2009
===================================================================================================================
No. of shares Rupees in '000
===================================================================================================================
1,000,000,000 1,000,000,000 Ordinary shares of Rs.10/- each 10,000,000 10,000,000
===================================================================================================================20.2. Issued, subscribed and paid-up capital===================================================================================================================
Fully paid-up Ordinary shares of Rs. 10/- each
===================================================================================================================
December 31, December 31, December December
2010 2009 31, 2010 31, 2009
===================================================================================================================
No. of shares Ordinary shares Rupees in '000
===================================================================================================================
406,780,094 406,780,094 Fully paid in cash 4,067,801 4,067,801
357,772,190 286,672,114 Issued as bonus shares 3,577,722 2,866,721
764,552,284 693,452,208 7,645,523 6,934,522
Ordinary shares of Rs. 10 each, determined
pursuant to the Scheme of Amalgamation in accordance
with the swap ratio stipulated therein less 9,200,000
Ordinary shares of Rs. 10 each, held by Ibrahim Leasing
9,148,550 18,348,550 Limited on the cut-off date (September 30, 2004) 91,486 91,486
8,400,000 Ordinary shares of Rs. 10 each, determined
pursuant to the Scheme of Amalgamation of
First Allied Bank Modaraba with Allied Bank Limited
8,400,000 8,400,000 in accordance with the share swap ratio stipulated ther 84,000 84,000
782,100,834 711,000,758 7,821,009 7,110,008
===================================================================================================================Ibrahim Fibers Limited and Ibrahim Agencies (Private) Limited, associated undertakings of the Bank, held 287,078,695 (36.71%) and Nil (0.00%) [(December 31, 2009: 287,678,69 6(40.46%) and 66,247,840 (9.32%)] ordinary shares of Rs.10 each, respectively, as at balance sheet date.21. SURPLUS ON REVALUATION OF ASSETS - NET OF TAX =============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Surplus/(deficit) arising on revaluation of:
- fixed assets 21.1 2,765,036 2,801,082
- securities 21.2 2,043,369 1,267,618
Surplus on revaluation of assets - net of tax 4,808,405 4,068,700
=============================================================================================21.1. Surplus on revaluation of Fixed Assets=============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Surplus on revaluation of fixed assets as at January 1 3,132,247 3,182,032
Surplus realised on disposal of
revalued properties - net of deferred tax (5,303) -
Transferred to unappropriated profit in respect of incremental
depreciation charged during the year - net of deferred tax (30,743) (32,360)
Related deferred tax liability (16,554) (17,425)
11.6 (47,297) (49,785)
Surplus on revaluation of fixed assets as at December 31 3,079,647 3,132,247
Less: Related deferred tax liability on:
Revaluation as at January 1 331,165 348,590
Incremental depreciation charged during the
year transferred to profit and loss account (16,554) (17,425)
314,611 331,165
2,765,036 2,801,082
=============================================================================================21.2. Surplus/(Deficit) on revaluation of Available-for-sale securities=============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Federal Government Securities
Market Treasury Bills (120,712) 1,127
Pakistan Investment Bonds (23,870) (19,305)
Term Finance Certificates - (381,506)
Sukuk Bonds - (97,281)
Shares/Certificates - Listed 2,528,671 2,069,929
Open end Mutual Funds 63,155 167,441
9.1 2,447,244 1,740,405
Less: Related deferred tax (liability) / asset (403,875) (472,787)
2,043,369 1,267,618
=============================================================================================22. CONTINGENCIES AND COMMITMENTS22.1. Direct credit substitutes =============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Guarantees in favour of:
Banks and financial institutions 1,769,128 1,035,107
=============================================================================================22.2. Transaction-related contingent liabilities=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Guarantees in favour of:
Government 9,512,438 5,752,873
Others 8,585,255 10,352,695
18,097,693 16,105,568
=============================================================================================22.3.=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Trade-related contingent liabilities 52,044,205 65,895,610
=============================================================================================22.4.=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Claims against the bank not acknowledged as debt 3,943,404 4,346,919
=============================================================================================22.5. The Bank makes commitments to extend credit in the normal course of its business but these being revocable commitments do not attract any significant penalty or expense if the facility is unilaterally withdrawn.22.6. Commitments in respect of forward foreign exchange contracts =============================================================================================
December December 31,
31, 2010 2009
=============================================================================================
Rupees in '000
=============================================================================================
Purchase 23,100,518 23,338,782
Sale 7,371,457 8,827,975
=============================================================================================22.7. Commitments in respect of:=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Civil works 1,260,603 604,828
Acquisition of operating fixed assets 372,584 327,650
=============================================================================================22.8.=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Commitments in respect of lease financing 168,437 32,630
=============================================================================================22.9.=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Commitments in respect of procurement of software 258 36,523
=============================================================================================22.10. Other Contingencies22.10.1. The income tax assessments of the Bank have been finalized upto and including tax year 2010 for local and Azad Kashmir operations. While finalizing income tax assessments upto tax year 2009, income tax authorities made certain add backs with aggregate tax impact of Rs. 9,631 million. As a result of appeals filed by the Bank before appellate authorities, the add backs amounting to Rs. 2,524 million and Rs. 6,987 million were set-aside and deleted respectively. While giving appeal effects on most of the deleted issues, a refund of Rs. 5,794 million has been determined. Against most of the deleted and set-aside issues, Department is in appeal before higher appellate authorities. Pending finalization of appeals, no provision has been made by the Bank on aggregate sum of Rs. 9,631 million. The management is hopeful that the outcome of these appeals will be in favour of the Bank. 22.10.2. As a result of a compromise decree granted by the Honourable High Court of Sindh in August 2002, Fateh Textile Mills Limited pledged 16,376,106 shares of ABL with the Bank as security consequent to the default by Fateh Textile Mills Limited on the terms of the decree. The Bank published a notice on June 23, 2004 in accordance with the requirements of section 19(3) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and invited sealed bids from interested parties to purchase the pledged shares. The bidding process was scheduled for July 23, 2004 and the Bank had fixed a reserve price of Rs. 25 per share. On the bid date, the highest offer for these shares was received at a rate of Rs. 25.51 per share. The bid was approved and the successful bidder had deposited an amount of Rs. 417.75 million with the Bank. Fateh Textile Mills Limited had filed a suit against the Bank in the High Court of Sindh challenging the sale of the above shares. The High Court had not granted a stay order on the process of sale of shares. However, the matter is still pending in the Court. 23. DERIVATIVE INSTRUMENTS The Bank at present does not offer structured derivative products such as Interest Rate Swaps, Forward Rate Agreements or FX Options. However, the Bank's Treasury buys and sells derivative instruments such as: � Forward Exchange Contracts � Foreign Exchange Swaps � Equity Futures Forward Exchange Contracts Forward Exchange Contract (FEC) is a product which is offered to the obligor who transact internationally. These traders use this product to hedge themselves from unfavorable movements in a foreign currency, however, by agreeing to fix the exchange rate, they do not benefit from favorable movements in that currency. An FEC is a contract between the Obligor and the Bank in which both agree to exchange an amount of one currency for another currency at an agreed forward exchange rate for settlement more than two business days after the FEC is entered into (the day on which settlement occurs is called the value date). FEC is entered with those Obligors whose credit worthiness has already been assessed. If the relevant exchange rate moves un-favourably, the Bank will lose money, and Obligor will benefit from that movement because the Bank must exchange currencies at the FEC rate. In order to mitigate this risk of adverse exchange rate movement, the Bank hedges its exposure by taking forward position in inter-bank FX. Foreign Exchange Swaps A Foreign Exchange Swap (FX Swap) is used by the Bank if it has a need to exchange one currency for another currency on one day and then re-exchange those currencies at a later date. Exchange rates and forward margins are determined in the "interbank" market and fluctuate according to supply and demand. An FX Swap prevents the Bank from gaining any benefit resulting from a favourable exchange rate movement in the relevant currency pair between the time Bank enters into the transaction deal and when settlement occurs. Cancellation of the swap may also result in exposure to market movements. The key advantage of an FX swap is that it provides the Bank with protection against unfavourable currency movements between the time it enters into the transaction and settlement. The term and amounts for FX Swap can also be tailored to suit the Bank's particular needs. Equity Futures An equity futures contract is a standardized contract, traded on a futures counter of the stock exchange, to buy or sell a certain underlying scrip at a certain date in the future, at a specified price. The Bank uses equity futures as a hedging instrument to hedge its equity portfolio, in both held for trading and available for sale, against equity price risk. Only selected shares are allowed to be traded on futures exchange. Equity futures give flexibility to the Bank either to take delivery on the future settlement date or to settle it by adjusting the notional value of the contract based on the current market rates. Maximum exposure limit to the equity futures is 10% of Tier I Capital of the Bank. The accounting policies used to recognize and disclose derivatives are given in note 5.15.2. The risk management framework of derivative instruments is given in note 43. 24. MARK-UP/RETURN/INTEREST EARNED =============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
On loans and advances 31,348,386 30,142,124
On investments in:
Available for sale securities 10,354,988 6,862,910
Held to maturity securities 1,292,088 1,761,520
11,647,076 8,624,430
On deposits with financial institutions 5,450 12,875
On securities purchased under resale agreements 1,858,505 2,152,279
On certificates of investment 31,467 70,833
On letters of placement 23,579 44,029
On call money lending 78,233 74,933
44,992,696 41,121,503
=============================================================================================25. MARK-UP/RETURN/INTEREST EXPENSED=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Deposits 16,649,281 17,946,020
Long term borrowing 353,197 259,786
Securities sold under repurchase agreements 767,920 607,703
Call money borrowing 1,173,399 1,158,272
Brokerage and commission 159,998 156,746
Sub-ordinated loans 761,979 826,025
Other short term borrowings 2,561,878 1,467,142
22,427,652 22,421,694
=============================================================================================26. FEE, COMMISSION AND BROKERAGE INCOME=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Core fees, commission and brokerage 2,250,747 2,376,488
Account maintenance charges 240,453 331,514
2,491,200 2,708,002
=============================================================================================27. GAIN ON SALE OF SECURITIES=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Shares - Listed 1,372,962 895,378
Shares - Unlisted - 7,393
Open End Mutual Funds 43,570 182,272
1,416,532 1,085,043
=============================================================================================28. OTHER INCOME=============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Gain on sale of operating fixed assets 11,977 4,220
Miscellaneous 86,549 31,765
Compensation of Tax Refund 28.1 152,618 -
251,144 35,985
=============================================================================================28.1. This represents claim of the bank in respect of compensation for delayed refunds under section 171 of the income tax ordinance 2001 pertaining to tax year 2008. This compensation has been calculated at kibor applicable under section 171 on the amount of refund for the period commencing at the end of the three months of refund becoming due to the bank and the date of adjustment of refund by the income tax authorities.29. ADMINISTRATIVE EXPENSES =============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Salaries, allowances, etc. 29.3 5,979,990 4,879,688
Charge for defined benefit plan 36 472,290 616,127
Contribution to defined contribution plan - provident fund 191,008 164,205
Non-executive directors' fees, allowances and other expenses 1,725 2,125
Rent, taxes, insurance, electricity, etc. 1,322,361 967,756
Legal and professional charges 81,774 105,737
Communications 250,976 290,374
Repairs and maintenance 209,551 160,934
Stationery and printing 244,122 216,829
Advertisement and publicity 196,651 188,195
Auditors' remuneration 29.1 11,111 11,135
Depreciation/Amortization 11.2 & 11.3 850,537 633,056
Security service charges 463,925 361,433
Travelling, conveyance and fuel expenses 218,006 179,745
Entertainment 124,549 97,132
Computer expenses 270,538 236,886
Subscription 292,311 183,408
Donations 29.2 38,260 97,265
Others 21,902 31,473
11,241,587 9,423,503
=============================================================================================29.1. Auditors' remuneration===============================================================================================================================
December 31, 2010 December 31, 2009
===============================================================================================================================
KPMG Ernst & M. Yousaf Total KPMG Ernst & M. Yousaf Total
Taseer Hadi Young Ford Adil Saleem Taseer Hadi Young Ford Adil Saleem
& Co. Rhodes & Co. & Co. Rhodes & Co.
Sidat Hyder Sidat Hyder
===============================================================================================================================
Rupees in '000
===============================================================================================================================
Audit fee 2,730 2,730 - 5,460 2,730 - 2,730 5,460
Special certifications, half yearly
reviews and sundry
miscellaneous services 1,622 1,470 430 3,522 2,070 - 2,375 4,445
Out-of-pocket expenses 1,025 200 904 2,129 538 - 692 1,230
5,377 4,400 1,334 11,111 5,338 - 5,797 11,135
===============================================================================================================================29.2. None of the directors, executives and their spouses had any interest in the donations disbursed during the year. Donations paid in excess of Rs. 100,000 to a single party during the year are as follows:=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Institute of Business Administration 10,000 10,000
Donation for Flood Affected Persons, Punjab 10,000 -
Chief Minister of Punjab Flood Relief Fund 5,000 -
Chhipa Welfare Association Karachi 3,530 -
M/s Book Group Karachi 2,500 -
Bakhtawar Amin Memorial Trust Hospital 2,000 -
Shoukat Khanum Memorial Cancer Hospital 1,000 -
Lahore Businessmen Association for Rehabilitation of the Disable 1,000 -
Agha Khan Hospital and Medical College Foundation 1,000 1,000
Patient Welfare Association, DMC & Civil Hospital Karachi 500 -
Liver Center Civil Hospital Karachi 500 -
Jazba Foundation Lahore 500 -
M/s Tehzeeb Social Welfares Lahore 250 -
National Textile College Mananwala Faisalabad 180 -
Pakistan Hindu Council 100 -
Citizen Foundation Karachi 100 -
Bait ul Sakoon Karachi 100 -
The Karachi Education Initiative - 50,000
Tamir Welfare Organization - 2,500
SOS Children's Villages of Pakistan - 500
Rural Education & Area Development - 500
National Management Foundation - 20,000
Lahore Business Association - 500
Khoja Society for People's Education - 200
GC University Lahore - 1,000
Family education service foundation - 1,000
Abdus Sattar Edhi Foundation - 10,000
38,260 97,200
=============================================================================================29.3. During the year, the Bank announced the Voluntary Retirement Scheme (VRS) for its employees. 195 employees of the Bank opted for retirement under this scheme. In accordance with the actuary recommendations, the Bank has recognized an amount of Rs. 294 million to cover additional retirement benefits in respect of such employees.30. OTHER CHARGES =============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Penalties imposed by SBP 59,647 32,095
Education cess 10,017 21,384
Fixed assets written off 5 9,373
Other assets written off 1,579 4,525
71,248 67,377
=============================================================================================31. WORKERS WELFARE FUNDUnder the Workers Welfare Fund Ordinance (WWF), 1971 the Bank is liable to pay WWF @ 2% of profit before tax as per accounts or declared income as per income tax return, whichever is higher. 32. TAXATION =============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Current - for the year 4,161,179 3,546,462
- for prior years 373,941 -
4,535,120 3,546,462
Deferred (417,346) (132,509)
4,117,774 3,413,953
=============================================================================================32.1. Relationship between tax expense and accounting profit=============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Accounting profit for the current year 12,343,106 10,536,120
Tax on income @ 35% (2009: 35%) 4,320,087 3,687,642
Effect of permanent differences 20,876 110,890
Adjustments in respect of tax at reduced rates (441,043) (343,742)
Others 217,854 (40,837)
Tax charge for the current year 4,117,774 3,413,953
=============================================================================================33. EARNINGS PER SHARE - BASIC AND DILUTED=============================================================================================
Profit after taxation 8,225,332 7,122,167
=============================================================================================
Number of Shares
=============================================================================================
Restated
=============================================================================================
Weighted average number of ordinary
shares outstanding during the year 782,100,834 782,100,834
=============================================================================================
Rupees
=============================================================================================
Restated
=============================================================================================
Earnings per share - basic and diluted 10.52 9.11
=============================================================================================There is no dilution effect on basic earnings per share.33.1. The corresponding figure of weighted average number of shares outstanding and earning per shares have been restated to include the effect of bonus shares issued by the Bank during the year. 34. CASH AND CASH EQUIVALENTS =============================================================================================
Note December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Cash and balances with treasury banks 6 31,265,608 26,435,633
Balances with other banks 7 579,555 1,280,443
Overdrawn nostro accounts 16 (94,168) (361,316)
31,750,995 27,354,760
=============================================================================================35. STAFF STRENGTH=============================================================================================
Number
=============================================================================================
Permanent 8,947 8,713
Temporary/on contractual basis/trainee 136 142
Bank's own staff strength at the end of the year 9,083 8,855
Outsourced 3,505 2,835
Total staff strength 12,588 11,690
=============================================================================================36. DEFINED BENEFIT PLANS36.1. General description The Bank operates a funded gratuity scheme for all employees including those who opted for the new staff retirement benefit scheme introduced by the management with effect from July 1, 2002. For the employees, serving the Bank prior to July 01, 2002 and did not opt for the new scheme, the Bank continues to operate a funded pension scheme. The Bank also operates a contributory benevolent fund (defined benefit scheme - funded) and provides post retirement medical benefits (unfunded scheme) to eligible retired employees. 36.2. Number of Employees under the schemes The number of employees covered under the following defined benefit scheme/plans are: =============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Number
=============================================================================================
- Gratuity fund 9,083 8,855
- Pension fund 2,701 3,040
- Benevolent fund 235 551
- Employees' compensated absences 8,947 8,713
- Post retirement medical benefits 8,947 8,713
=============================================================================================36.3. Principal actuarial assumptionsThe actuarial valuations were carried out on December 31, 2010 based on the Projected Unit Credit Method, using the following significant assumptions: =========================================================================================================
Sources of estimation December December
31, 2010 31, 2009
=========================================================================================================
Discount rate Yield on investments 13.00% 13.00%
in Government Bonds
Expected rate of return on plan assets:
Pension fund Yield on investments 13.00% 13.00%
Gratuity fund in Government Bonds 13.00% 13.00%
Benevolent fund 13.00% 13.00%
Expected rate of salary increase Rate of salary increase 11.00% 11.00%
Pension indexation rate 7.00% 7.00%
Medical inflation rate 8.00% 8.00%
Exposure inflation rate 3.00% 3.00%
=========================================================================================================36.4. Reconciliation of (receivable from) / payable to defined benefit plans=========================================================================================================================
December 31, 2010
=========================================================================================================================
Note Pension Gratuity Benevolent Post Leave fund
fund fund fund retirement Encashment
medical
=========================================================================================================================
Rupees in '000
=========================================================================================================================
Present value of defined b 36.6 4,237,829 941,933 22,819 1,752,683 872,705
Fair value of plan's/schem 36.7 (5,368,825) (849,433) (143,814) - -
Net actuarial (losses) /
canes not recognizing (343,263) 2,417 59,637 (119,890) -
Benefit of the surplus not available to
(1,474,259) 94,917 (61,358) 1,632,793 872,705
the Bank - - 30,679 - -
Net (asset) / liability (1,474,259) 94,917 (30,679) 1,632,793 872,705
=========================================================================================================================
December 31, 2009
=========================================================================================================================
Note Pension Gratuity Benevolent Post Leave fund
fund fund fund retirement Encashment
medical
=========================================================================================================================
Rupees in '000
=========================================================================================================================
Present value of defined b 36.6 4,040,811 766,547 60,968 1,681,204 838,005
Fair value of plan's/schem 36.7 (5,138,070) (593,567) (143,594) - -
Net actuarial (losses)
/ gains not recognizing (389,670) (82,139) 36,726 (195,384) -
(1,486,929) 90,841 (45,900) 1,485,820 838,005
Benefit of the surplus not available to
the Bank - - 22,950 - -
Net (asset) / liability (1,486,929) 90,841 (22,950) 1,485,820 838,005
=========================================================================================================================36.4.1. The latest actuarial valuation of Benevolent Fund, carried out as at December 31, 2010 highlighted a surplus amounting to Rs. 30.679 million attributable to the Bank. The Bank has maintained 100% provision against it.36.4.2. The effect of increase of one percentage point and the effect of decrease of one percentage point in the medical trend rates on the present value of medical obligation as at December 31, 2010 would be Rs. 95.401 million (2009: Rs. 86.444 million) and Rs. 113.873 million (2009: Rs. 74.285 million) respectively. 36.5. Movement in (receivable from) /payable to defined benefit plans =================================================================================================
December 31, 2010
Note Pension Gratuity Benevolent Post Leave fund
fund fund fund retirement Encashment
medical
=================================================================================================
Rupees in '000
=================================================================================================
Opening balance (1,486,929) 90,841 (22,950) 1,485,820 838,005
Charge/(reversal) for the year 36.9 12,670 157,076 (7,729) 292,455 214,819
Benefits paid - (153,000) - (145,482) (180,119)
Closing balance (1,474,259) 94,917 (30,679) 1,632,793 872,705
=================================================================================================
December 31, 2009
=================================================================================================
Note Pension Gratuity Benevolent Post Leave fund
fund fund fund retirement Encashment
medical
=================================================================================================
Rupees in '000
=================================================================================================
Opening balance (1,358,768) 90,845 (141,708) 1,277,755 832,215
Charge/(reversal) for the year 36.9 (128,161) 151,462 230,131 278,022 84,669
Benefits paid - (151,466) (111,373) (69,957) (78,879)
Closing balance (1,486,929) 90,841 (22,950) 1,485,820 838,005
=================================================================================================36.6. Reconciliation of present value of defined benefit obligations=================================================================================================
December 31, 2010
=================================================================================================
Pension Gratuity Benevolent Post Leave
fund fund fund retirement Encashment
medical
=================================================================================================
Rupees in '000
=================================================================================================
Opening balance 4,040,811 766,547 60,968 1,681,204 838,005
Current service cost - 134,654 - 53,403 61,641
Interest cost 538,112 111,051 5,446 223,203 108,941
Benefits paid (663,521) (116,278) (18,245) (145,482) (180,119)
VRS loss 130,527 4,736 - 9,184 23,399
Actuarial gains / (losses) 191,900 41,223 (25,350) (68,829) 20,838
Closing balance 4,237,829 941,933 22,819 1,752,683 872,705
=================================================================================================
December 31, 2009
=================================================================================================
Pension Gratuity Benevolent Post Leave
fund fund fund retirement Encashment
medical
=================================================================================================
Rupees in '000
=================================================================================================
Opening balance 3,400,000 557,547 474,679 1,521,833 832,215
Current service cost - 106,250 1,410 56,611 44,783
Interest cost 476,000 78,057 13,362 213,057 116,510
Benefits paid (327,102) (36,065) (673,461) (69,957) (78,879)
VRS loss - - 251,675 - -
Actuarial (gains) / losses 491,913 60,758 (6,697) (40,340) (76,624)
Closing balance 4,040,811 766,547 60,968 1,681,204 838,005
=================================================================================================36.7. Reconciliation of fair value of plan assets=================================================================================================
December 31, 2010
=================================================================================================
Pension Gratuity Benevolent Post Leave
fund fund fund retirement Encashment
medical
=================================================================================================
Rupees in '000
=================================================================================================
Opening balance 5,138,070 593,567 143,594 - -
Expected return on plan assets 682,948 93,795 18,667 - -
Bank's contribution - 153,000 - - -
Employees' contribution - - - - -
Benefits paid (663,521) (116,278) (18,245) - -
Actuarial gains / (losses) 211,328 125,349 (202) - -
Closing balance 5,368,825 849,433 143,814 - -
=================================================================================================
December 31, 2009
=================================================================================================
Pension Gratuity Benevolent Post Leave
fund fund fund retirement Encashment
medical
=================================================================================================
Rupees in '000
=================================================================================================
Opening balance 4,319,903 304,031 617,643 - -
Expected return on plan assets 604,786 42,564 47,123 - -
Bank's contribution - 151,466 111,373 - -
Employees' contribution - - - - -
Benefits paid (327,102) (36,065) (673,461) - -
Actuarial gains 540,483 131,571 40,916 - -
Closing balance 5,138,070 593,567 143,594 - -
=================================================================================================36.8. Composition of fair value of plan assets=================================================================================================
December 31, 2010
=================================================================================================
Pension Gratuity Benevolent Post Leave
fund fund fund retirement Encashment
medical
=================================================================================================
Rupees in '000
=================================================================================================
Government securities 1,497,001 - - - -
Open end mutual fund units 722,968 - - - -
Listed shares * 1,629,057 378,175 28,422 - -
Bank balances * 1,519,799 471,258 115,392 - -
5,368,825 849,433 143,814 - -
Shares of ABL 640,102,826 202,055,290 - - -
Bank balances with ABL 1,519,799 471,258 115,392 - -
641,622,625 202,526,548 115,392 - -
=================================================================================================
December 31, 2009
=================================================================================================
Pension Gratuity Benevolent Post Leave
fund fund fund retirement Encashment
medical
=================================================================================================
Rupees in '000
=================================================================================================
Government securities 680,122 76,659 - - -
Open end mutual funds 562,484 - - - -
Listed shares * 1,251,087 242,100 31,926 - -
Bank balances * 2,644,377 274,808 111,668 - -
5,138,070 593,567 143,594 - -
* Fair value of Bank's financial instruments
included in plan assets
Shares of ABL 486,987 153,784 10,110 - -
Bank balances with ABL 2,644,377 274,808 111,668 - -
3,131,364 428,592 121,778 - -
=================================================================================================36.9. Charge for defined benefit plan=================================================================================================
December 31, 2010
=================================================================================================
Pension Gratuity Benevolent Post Leave
fund fund fund retirement Encashment
medical
=================================================================================================
Rupees in '000
=================================================================================================
Current service cost - 134,654 - 53,403 61,641
Interest cost 538,111 111,051 5,446 223,203 108,941
Expected return on plan assets (682,948) (93,795) (18,667) - -
Actuarial (gains)/losses 26,980 430 (2,237) 6,665 20,838
Contributions - employee - - - - -
VRS Loss 130,527 4,736 - 9,184 23,399
Benefit of the surplus not available t - - 7,729 - -
12,670 157,076 (7,729) 292,455 214,819
=================================================================================================
December 31, 2009
=================================================================================================
Pension Gratuity Benevolent Post Leave
fund fund fund retirement Encashment
medical
=================================================================================================
Rupees in '000
=================================================================================================
Current service cost - 106,250 1,410 56,611 44,783
Interest cost 476,000 78,057 13,362 213,057 116,510
Expected return on plan assets (604,786) (42,564) (47,124) - -
Actuarial losses / (gains) 625 9,719 7,154 8,354 (76,624)
Contributions - employee - - - - -
VRS Loss - - 251,675 - -
Benefit of the surplus not available t - - 3,654 - -
(128,161) 151,462 230,131 278,022 84,669
=================================================================================================36.9.1. The effect of increase of one percentage point and the effect of decrease of one percentage point in the medical trend rates on the aggregate of the current service cost and interest cost components of net period post-employment medical costs would be Rs. 6.201 million (2009: Rs. 11.238 million) and Rs. 7.402 million (2009: Rs. 9.657 million) respectively.36.10. Actual return on plan assets =============================================================================================
December December
31, 2010 31 2009
=============================================================================================
Rupees in '000
=============================================================================================
- Pension fund 894,276 1,145,269
- Gratuity fund 219,144 174,135
- Benevolent fund 18,465 88,039
=============================================================================================36.11. Five year data of defined benefit plan and experience adjustments==========================================================================================================================
Pension fund
==========================================================================================================================
2010 2009 2008 2007 2006
==========================================================================================================================
Rupees in '000
==========================================================================================================================
Present value of defined benefit obligation 4,237,829 4,040,811 3,400,000 3,461,993 3,295,249
Fair value of plan assets (5,368,825) (5,138,070) (4,319,903) (5,738,722) (5,155,897)
Surplus (1,130,996) (1,097,259) (919,903) (2,276,729) (1,860,648)
Experience adjustments on plan obligations / assets
Actuarial gain / (loss) on obligation (191,900) (491,912) (117,235) (219,179) (63,723)
Actuarial gain / (loss) on assets 211,328 540,483 (1,264,567) 449,195 (529,840)
==========================================================================================================================
Gratuity fund
==========================================================================================================================
2010 2009 2008 2007 2006
==========================================================================================================================
Rupees in '000
==========================================================================================================================
Present value of defined benefit obligation 941,933 766,547 557,547 574,685 463,564
Fair value of plan assets (849,433) (593,567) (304,031) (475,357) (393,999)
Deficit 92,500 172,980 253,516 99,328 69,565
Experience adjustments on plan obligations / assets
Actuarial gain / (loss) on obligation (41,223) (60,758) 60,479 (22,810) 1,848
Actuarial gain / (loss) on assets 125,349 131,570 (216,667) (28,678) 19,193
==========================================================================================================================
Benevolent fund
==========================================================================================================================
2010 2009 2008 2007 2006
==========================================================================================================================
Rupees in '000
==========================================================================================================================
Present value of defined benefit obligation 22,819 60,968 474,679 557,296 532,218
Fair value of plan assets (143,814) (143,594) (617,643) (692,158) (610,811)
(Surplus) (120,995) (82,626) (142,964) (134,862) (78,593)
Experience adjustments on plan obligations / assets
Actuarial gain / (loss) on obligation 25,350 6,697 94,790 1,424 51,450
Actuarial gain / (loss) on assets (202) 40,916 (153,801) (6,400) (27,417)
Post retirement medical
==========================================================================================================================
2010 2009 2008 2007 2006
==========================================================================================================================
Rupees in '000
==========================================================================================================================
Present value of defined benefit obligation 1,752,683 1,681,204 1,521,833 1,624,176 1,458,865
Fair value of plan assets - - - - -
Deficit 1,752,683 1,681,204 1,521,833 1,624,176 1,458,865
Experience adjustments on plan obligations
Actuarial gain / (loss) on obligation 68,829 40,340 153,494 (62,511) (68,312)
==========================================================================================================================
Leave Encashment
==========================================================================================================================
2010 2009 2008 2007 2006
==========================================================================================================================
Rupees in '000
==========================================================================================================================
Present value of defined benefit obligation 872,705 838,005 832,215 875,178 925,392
Fair value of plan assets - - - - -
Deficit 872,705 838,005 832,215 875,178 925,392
Experience adjustments on plan obligations - - - - -
Actuarial gain / (loss) on obligation - - - - -
==========================================================================================================================36.12. Expected contributions to be paid to the funds in the next financial yearThe Bank contributes to the gratuity fund as per actuarial's expected charge for the next one year. Contribution to the benevolent fund is made by the Bank as per rates set out in the benevolent scheme. No contributions are being made to pension fund due to surplus of fair value of plan's assets over present value of defined obligation. Based on actuarial advice, management estimates that the charge / reversal in respect of defined benefit plans for the year ending December 31, 2010 would be as follows: ==========================================================================================================================
Pension Gratuity Benevolent Post Leave
fund fund fund retirement Encashment
medical
==========================================================================================================================
Rupees in '000
==========================================================================================================================
Expected (reversal) / charge for the next year (147,029) 152,594 (13,029) 284,453 191,001
==========================================================================================================================37. DEFINED CONTRIBUTION PLANThe Bank operates a contributory provident fund scheme for employees who are covered under the new gratuity scheme. The employer and employee both contribute 8.33% of the basic salaries to the funded scheme every month. Number of employees covered under this plan are 8,525 (2009: 7,478) as on December 31, 2010. During the year, employees made a contribution of Rs. 191.000 (2009: Rs. 164.205) million to the fund. The Bank has also made a contribution of equal amount to the fund. 38. COMPENSATION OF DIRECTORS AND EXECUTIVES ==============================================================================================================================
President/Chief Executive Directors Executives*
==============================================================================================================================
Note December December December December December December
31, 2010 31, 2009 31, 2010 31, 2009 31, 2010 31, 2009
==============================================================================================================================
Rupees in '000
==============================================================================================================================
Fees 38.1 - - 1,725 2,125 - -
Managerial remuneration 26,045 16,930 - - 762,600 568,076
Charge for defined benefit plans 1,613 1,127 - - 200,575 129,859
Contribution to defined
contribution plan 1,344 1,411 - - 63,525 47,321
Rent and house maintenance 11,724 7,619 - - 339,458 255,635
Utilities 2,790 1,781 - - 75,661 56,808
Medical 135 784 - - 93,536 67,923
Bonus 50,456 16,452 - - 232,092 226,902
Conveyance and others 424 222 - - 123,745 69,385
38.2 94,531 46,326 1,725 2,125 1,891,192 1,421,909
Number of persons 1 1 4 6 844 612
==============================================================================================================================38.1. This represents remuneration paid to directors for attending meetings of the Board of Directors, Audit Committee and other committees held during the year. Board of Directors had recommended an increase in meeting fee from Rs. 25,000 to Rs. 50,000 with effect from 18 October, 2010, and the same shall be approved in the upcoming Annual General Meeting.38.2. This includes remuneration of ex-president and current president. * During the year SBP approved the appointment of an Executive Director as a full time employee of the Bank effective from July 01, 2010, however his role on the Board of Directors shall remain as an Executive Director. 39. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of traded investments is based on quoted market prices, and have been disclosed in note 9. Fair value of fixed term loans, other assets, other liabilities and fixed term deposits cannot be calculated with sufficient reliability due to the absence of current and active market for such assets and liabilities and reliable data regarding market rates for similar instruments. The provision for impairment of loans and advances has been calculated in accordance with the Bank's accounting policy as stated in note 5.5. The maturity and repricing profile and effective rates are stated in notes 43.3.1 and 43.2.4 respectively. In the opinion of the management, the fair value of the remaining financial assets and liabilities are not significantly different from their carrying values since assets and liabilities are either short-term in nature or in the case of customer loans and deposits are frequently repriced. 40. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES The segment analysis with respect to business activity is as follows:- =========================================================================================================================================
December 31, 2010
=========================================================================================================================================
Corporate Trading & Retail Commercial Payment & Eliminations Total
Finance Sales Banking Banking Settlement
=========================================================================================================================================
Rupees in '000
=========================================================================================================================================
Total Income 409,614 2,021,742 23,977,826 40,871,128 444,758 (17,060,586) 50,664,482
Total Expenses (210,172) (2,001,367) (19,943,573) (37,105,938) (238,686) 17,060,586 (42,439,150)
Net Income 199,441 20,375 4,034,254 3,765,190 206,072 - 8,225,332
Segment Assets (Gross) 222,575 12,393,503 106,907,076 349,369,145 214,079 - 469,106,378
Segment Non Performing Loans - - 6,237,635 12,450,450 - - 18,688,085
Segment Provision Required - - 5,136,558 10,293,704 - - 15,430,262
Segment Liabilities 263,553 2,469,120 334,172,029 72,662,635 4,389,332 - 413,956,669
Segment Return on Net Assets (ROA) (%)* 89.61% 0.16% 3.77% 1.08% 96.26% - -
Segment Cost of Funds (%)* 0.00% 13.01% 6.04% 9.88% 0.00% - -
=========================================================================================================================================
December 31, 2009
=========================================================================================================================================
Corporate Trading & Retail Commercial Payment & Eliminations Total
Finance Sales Banking Banking Settlement
=========================================================================================================================================
Rupees in '000
=========================================================================================================================================
Total Income 610,451 2,347,927 19,869,881 37,921,530 375,825 (14,046,077) 47,079,537
Total Expenses (315,757) (2,336,961) (17,239,657) (33,897,888) (213,185) 14,046,077 (39,957,371)
Net Income 294,694 10,966 2,630,224 4,023,643 162,640 - 7,122,167
Segment Assets (Gross) 467,199 28,531,518 94,853,781 310,096,743 250,471 - 434,199,712
Segment Non Performing Loans - 280,595 4,644,319 11,636,859 - - 16,561,773
Segment Provision Required - 280,595 3,477,878 9,064,788 - - 12,823,261
Segment Liabilities 378,254 21,540,856 276,350,228 86,774,744 3,370,272 - 388,414,354
Segment Return on Net Assets (ROA) (%)* 63.08% 0.04% 2.77% 1.30% 64.93% - -
Segment Cost of Funds (%)* 0.00% 10.47% 7.63% 10.72% 0.00% - -
========================================================================================================================================= * The segment return on net assets and cost of funds are based on average assets and average liabilities for the year.41. RELATED PARTIES TRANSACTIONS The Bank has related party relationships with its subsidiary, companies with common directorship, directors, employee benefit plans and key management personnel. Contributions to the accounts in respect of staff retirement benefits are made in accordance with actuarial valuation /terms of the contribution plan. Remuneration of the key management personnel are in accordance with the terms of their employment. Other transactions are at agreed terms. ================================================================================================================================================================================================
December 31, 2010 December 31, 2009
================================================================================================================================================================================================
Key Key
Associated management Other related Associated management Other related
Directors Companies Subsidiary personnel parties Directors Companies Subsidiary personnel parties
================================================================================================================================================================================================
Rupees in '000
================================================================================================================================================================================================
Nature of related party transactions
Loans
Loans at the beginning of the year 22,461 - - 237,298 14,318,863 27,040 - - 205,884 6,156,764
Loans given during the year 85,655 - - 38,960 2,173,199 13,040 - - 70,322 8,196,479
Loans repaid during the year (46,535) - - (76,223) (430,166) (17,619) - - (38,908) (34,380)
Loans at the end of the year 61,581 - - 200,035 16,061,896 22,461 - - 237,298 14,318,863
Deposits
Deposits at the beginning of the year 9,661 9,400 2,382 10,782 - 4,845 55,423 778 14,275 -
Deposits received during the year 2,973,552 9,298,676 449,916 179,754 - 555,123 1,631,336 524,455 268,641 -
Deposits repaid during the year (2,973,392) (9,214,111) (449,057) (174,408) - (550,307) (1,677,359) (522,851) (272,134) -
Deposits at the end of the year 9,821 93,965 3,241 16,128 - 9,661 9,400 2,382 10,782 -
Nostro balances - 126,448 - - - - 198,082 - - -
Lendings - - - - - - 1,097,434 - - -
Borrowings - 161,850 - - - - 484,267 - - -
Investments in shares / open-end mutual funds - 240,969 500,000 - 3,304,790 - 240,969 500,000 - 3,655,599
Non funded Exposure - - - - 4,111,021 - - - - 4,003,500
Other receivables - - - - - - - 2,016 - -
Net receivable from
staff retirement benefit funds - - - - 1,452,077 - - - - 1,343,345
Staff retirement fund deposits - - - - 3,042,357 - - - - 4,810,081
================================================================================================================================================================================================
December 31, 2010 December 31, 2009
================================================================================================================================================================================================
Key Key
Associated management Other related Associated management Other related
Directors Companies Subsidiary personnel parties Directors Companies Subsidiary personnel parties
================================================================================================================================================================================================
Rupees in '000
================================================================================================================================================================================================
Mark-up earned 481 - - 11,863 2,432,979 1,049 - - 14,226 1,316,436
Income on placements - 6 - - - - 175 - - -
Income on lendings - 155 - - - - 22,860 - - -
Dividend income - - - - 292,892 - - - - 9,855
Sales Commission - - 10,879 - 29,857 - - 6,155 - -
Mark-up expense on deposits 443 - 520 364 408,256 205 40 476 675 369,511
Interest expense on borrowings - 600 - - - - 161 - - -
Directors' meeting fee 1,725 - - - - 2,125 - - - -
Remuneration - - - 190,577 - - - - 166,331 -
NIFT charges - - - - 66,040 - - - - 64,768
Bank charges levied - 23 8 - 33 - - 8 - 17
Rent Expense - 4,880 - - - - - - - 7,971
Charge / (reversal) in respect of staff
retirement benefit funds - - - - 472,290 - - - - 417,641
================================================================================================================================================================================================Other balances, held with related parties, outstanding at the end of the current year and transactions made during the year are included in notes 7.1, 9.4, 9.5, 20.2 and 38 to these unconsolidated financial statements.42. CAPITAL ASSESSMENT AND ADEQUACY 42.1. Scope of Applications The Basel II Framework is applicable to the Bank both at the consolidated level (comprising of wholly owned subsidiary - ABL Asset Management Company Limited) and also on a stand alone basis. 42.2. Capital Structures Banks regulatory capital is analyzed into two tiers: Tier 1 capital, which includes fully issued, subscribed and paid up capital, balance in share premium account, reserve for bonus issue, general reserves as per the financial statements and net un-appropriated profits, etc after deductions for investments in the equity of subsidiary companies engaged in banking and financial activities and deficit on revaluation of available for sale investments. Tier 2 capital, which includes general provisions for loan losses (up to a maximum of 1.25 % of risk weighted assets), reserves on the revaluation of fixed assets and equity investments (up to a maximum of 45% of the balance in the related revaluation reserves) and subordinated debt (up to a maximum of 50%). The Bank has issued unsecured subordinated Term Finance Certificates, which contributes towards Tier II capital for minimum capital requirements (MCR) to support the Bank's growth. The regulatory approvals for TFC I and TFC II work obtained in December 2006 and August 2009 respectively. Liability to the TFC holders is subordinated to and ranked inferior to all other debts of the bank including deposits and is not redeemable before maturity without prior approval of the SBP. The salient features of the issue are as follows: ======================================================================================================================================
Term Finance Certificate - I Term Finance Certificate - II
======================================================================================================================================
Outstanding Amount-
======================================================================================================================================
(Rupees in thousand) 2,496,000 2,998,800
Issue date December 06, 2006 August 28, 2009
Total issue 2,500,000 3,000,000
Rating AA- AA-
Listing Karachi Stock Exchange Karachi Stock Exchange
(Guarantee) Limited (Guarantee) Limited
Rate Payable semi annually Payable semi annually
- Six months KIBOR plus 1.9% - Six months KIBOR plus 0.85% for first 5 years
- Six months KIBOR plus 1.30% from
start of 6th year
Call Option Call option is not available Issuer has the right to
to the issue seek redemption after the eleventh redemption date of the entire TFC
issue, prior to its stated maturity.
Repayment 8 Years (2007 - 2014) 10 Years (2009 - 2019)
======================================================================================================================================Tier 3 Capital has also been prescribed by the SBP for managing market risk; however the Bank does not have any Tier 3 capital.The required capital is achieved by the Bank through: (a) enhancement in the risk profile of asset mix at the existing volume level; (b) ensuring better recovery management; and (c) maintain acceptable profit margins. Detail of the Bank's eligible capital (on an unconsolidated basis) is as follows: =============================================================================================
December December
31, 2010 31, 2009
=============================================================================================
Rupees in '000
=============================================================================================
Tier I Capital
Shareholders' equity /Assigned Capital 7,821,009 7,110,008
Share premium 983,957 1,694,958
Reserves 6,532,953 4,887,887
Unappropriated profits (Net of Losses) 15,828,533 12,198,425
Total Tier I Capital 31,166,452 25,891,278
Less: Book value of intangibles (182,360) (155,541)
Shortfall in provisions required against classified
assets irrespective of relaxation allowed (70,250) (317,785)
Reciprocal investment (8,482) -
Other deductions (represents 50% of investment in subsidiary) (250,000) (250,000)
(511,092) (723,326)
Eligible Tier I Capital 30,655,360 25,167,952
Tier II Capital
Subordinated Debt (upto 50% of total Tier 1 Capital) 4,496,400 4,997,600
General Provisions subject to 1.25%
of Total Risk Weighted Assets 9,474 7,410
Revaluation Reserve (upto 45%) 2,487,100 2,192,694
Total Tier II Capital 6,992,974 7,197,704
Less: Investment in a subsidiary company (50%) (250,000) (250,000)
Eligible Tier II Capital 6,742,974 6,947,704
Eligible Tier III Capital - -
Total Regulatory Capital Base 37,398,334 32,115,656
=============================================================================================42.3. Capital AdequacyObjectives of Managing Capital Capital Management aims to ensure that there is sufficient capital to meet the capital requirements of the Bank as determined by the underlying business strategy and the minimum requirements of the SBP. The Capital Management process is governed by the Bank's Asset & Liability Committee (ALCO) and Management Committee (MANCO). Further, capital adequacy and management is overseen by the Board's Risk Management Committee (BRMC) and Strategic Planning and Monitoring Committee (SPMC). Bank's capital management seeks: - to comply with the capital requirements set by the regulators and comparable to the peers; - to actively manage the supply of capital costs and increase capital velocity; - to increase strategic and tactical flexibility in the deployment of capital to allow for the timely reallocation of capital; - to improve the liquidity of the Bank's assets to allow for an optimal deployment of the Bank's resources; - to protect the Bank against unexpected events and maintain strong ratings; - to safeguard the Bank's ability to continue as a going concern so that it can continue to provide adequate return to shareholders; - availability of adequate capital (including the quantum) at a reasonable cost so as to enable the Bank to expand; and - to achieve low overall cost of capital with appropriate mix of capital elements. Externally Imposed Capital Requirements In order to strengthen the solvency of Banks / Development Financial Institutions (DFI), SBP through its BSD Circular No. 07 of 2009 dated April 15, 2009 has asked the Banks to raise their minimum paid up capital to Rs. 7 billion (free of losses) by the end of financial year 2010. Furthermore the Banks are required to increase their minimum paid up capital to Rs 10 billion in a phased manner by the end of financial year 2013. SBP through its BSD Circular No. 09 dated April 15, 2009 has asked Banks to achieve the minimum Capital Adequacy Ratio (CAR) of 10% on standalone as well as on consolidated basis latest by December 31, 2010. The paid up capital and CAR of the Bank stands at Rs. 7.821 billion and 13.84% of its risk weighted exposure as at December 31, 2010. The Bank has complied with all externally imposed capital requirements as at year end. 42.4. Risk Weighted Exposures =============================================================================================================
Capital Requirements Risk Weighted Assets
December December December December
31, 2010 31, 2009 31, 2010 31, 2009
=============================================================================================================
Rupees in '000
=============================================================================================================
Credit Risk
Portfolios subject to standardized approach (Simple or
Comprehensive) On- Balance Sheet
(a) Cash and Cash Equivalents - - - -
(b) Claims on Government of Pakistan (Federal or Provincial
Governments) and SBP, denominated in PKR - - - -
(c) Foreign Currency claims on SBP arising out of
statutory obligations of banks in Pakistan - - - -
(d) Claims on other sovereigns and on Government
of Pakistan or provincial governments or
SBP denominated in currencies other than PKR 66,166 11,925 661,656 119,253
(e) Claims on Bank for International Settlements,
International Monetary Fund, European
Central Bank, and European Community - - - -
(f) Claims on Multilateral Development Banks - - - -
(g) Claims on Public Sector Entities in Pakistan 53,265 171,935 532,647 1,719,347
(h) Claims on Banks 272,908 72,253 2,729,075 722,530
(i) Claims, denominated in foreign currency,
on banks with original maturity of
3 months or less 45,367 25,768 453,672 257,682
(j) Claims on banks with original maturity of 3
months or less denominated in PKR
and funded in PKR 87,567 142,180 875,665 1,421,804
(k) Claims on Corporates (excluding equity exposures) 12,948,032 11,329,555 129,480,323 113,295,546
(l) Claims categorized as retail portfolio 2,247,752 2,504,596 22,477,519 25,045,963
(m) Claims fully secured by residential property 177,253 171,663 1,772,533 1,716,626
(n) Past Due loans:
1. The unsecured portion of any claim (other than loans and
claims secured against eligible residential mortgages as
defined in section 2.1 of circular 8 of 2006) that
is past due for more than 90 days and/or impaired: - - - -
where specific provisions are less than 20 per cent of
the outstanding amount of the past due claim. 3,651 3,206 36,510 32,055
where specific provisions are no less than 20 percent
of the outstanding amount of the past due claim. 324,304 364,115 3,243,038 3,641,146
where specific provisions are more than 50 percent
of the outstanding amount of the past due claim. - 4,170 - 41,703
2. Loans and claims fully secured against eligible
residential mortgages that are past
due for more than 90 days and/or impaired - - - -
3. Loans and claims fully secured against eligible
residential mortgage that are past
due by 90 days and /or impaired and specific
provision held there against is
more than 20% of outstanding amount - - - -
(o) Listed Equity investments and regulatory
capital instruments issued by other banks
(other than those deducted from capital)
held in the banking book. 584,574 469,881 5,845,742 4,698,807
(p) Unlisted equity investments (other than that deducted
from capital) held in banking book 134,229 115,128 1,342,285 1,151,282
(q) Investments in venture capital - - -
(r) Investments in premises, plant and equipment
and all other fixed assets 1,517,738 1,229,121 15,177,383 12,291,209
(s) Claims on all fixed assets under operating lease - - -
(t) All other assets 452,937 550,520 4,529,377 5,505,203
18,915,743 17,166,016 189,157,425 171,660,156
Off- Balance Sheet - Non Market related Exposures
Direct Credit Substitutes/ Lending of securities or posting
of securities as collateral 1,942,157 1,404,899 19,421,569 14,048,990
Trade Related contingencies/Other Commitments with original maturity
of one year or less 379,656 707,806 3,796,561 7,078,056
2,321,813 2,112,705 23,218,130 21,127,046
Off-Balance Sheet - Market related Exposures 17,112 24,435 171,120 244,353
Total Credit Risk (A) 21,254,668 19,303,156 212,546,675 193,031,555
Market Risk
Capital Requirement for portfolios subject to Standardized
Approach
Interest rate risk - - - -
Equity position risk etc. 1,362,909 1,073,159 13,629,093 10,731,588
Capital Requirement for portfolios subject to Internal Models
Approach
1,362,909 1,073,159 13,629,093 10,731,588
Interest rate risk - - - -
Foreign exchange risk etc. 96,687 7,466 966,868 74,663
96,687 7,466 966,868 74,663
Total Market Risk (B) 1,459,596 1,080,625 14,595,961 10,806,251
Operational Risk
Basic Indicator Approach-Total of operational risk (C ) 4,300,912 3,459,877 43,009,127 34,598,766
TOTAL of A + B + C 27,015,176 23,843,658 270,151,765 238,436,572
=============================================================================================================
=============================================================================================
Capital Adequacy Ratio December December
31, 2010 31, 2009
=============================================================================================
Total eligible regulatory capital held (Note 42 (a) 37,398,334 32,115,656
Total Risk Weighted Assets (Note 42.4) (b) 270,151,765 238,436,572
Capital Adequacy Ratio (a)/(b) 13.84% 13.47%
=============================================================================================43. RISK MANAGEMENTThe Risk Management Framework (the Framework) provides principles for identifying, assessing, and monitoring risk within the Bank. The Framework specifies the key elements of the risk management process in order to maximise opportunities, to minimise adversity and to achieve improved outcomes and outputs based on informed decision making. Categories of Risk The Bank generates most of its revenues by accepting Credit, Country, Liquidity and Market Risk. Effective management of these four risks is the decisive factor in our profitability. In addition, the Bank is subject to certain consequential risks that are common to all business undertakings. These risks are grouped under two headings: Operational and Reputation Risk. The Framework is organized with reference to these five risk categories, as detailed below: Credit Risk This risk is defined as the possibility of loss due to unexpected default or a deterioration of credit worthiness of a business partner. Credit Risk includes Country Risk i.e., the risks that counterparty is unable to meet its foreign currency obligations as a result of adverse economic conditions or actions taken by governments in the relevant country. Market Risk The risk of loss generated by adverse changes in the price of financial assets or contracts currently held by the Bank (this risk is also known as price risk). Liquidity Risk The risk that the Bank is unable to meet its payment obligations when they fall due and to replace funds when they are withdrawn; the consequences of which may be the failure to meet obligations to repay depositors and fulfill commitments to lend. Operational Risk Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events. The definition excludes reputational risk. Reputational Risk The risk of failing to meet the standards of performance or behaviour required or expected by stakeholders in commercial activities or the way in which business is conducted. Risk Responsibilities - The Board of Directors is accountable for overall supervision of the risk management process. This is discharged by distributing responsibilities at Board level for their management and determining the manner in which risk authorities are set. The Board is also responsible for approval of all risk policies and ensuring that these are properly implemented. Further, the Board shall also seek appointment of senior management personnel capable of managing the risk activities conducted by the Bank. - The Board Risk Management Committee (BRMC) is responsible for ensuring that the overall risk strategy and appetite of the Bank is appropriately defined in the Strategic Plan and recommend the same to the Board of Directors. - The BRMC recommends for approval to the Board of Directors the policies proposed by MANCO (Management Committee of the Bank) or ALCO (Assets and liability committee) which discharges various responsibilities assigned to it by the BRMC. - The CEO and Group Chiefs are accountable for the management of risk collectively through their membership of risk committees, i.e., Management Committee and the Asset & Liability Committee. Independent supervision of risk management activities is provided by the Audit Committee. - The Risk Management Group is headed by a Group Chief responsible to set-up and implement the Framework of the Bank. Risk Management Group Organization Risk management functions have been segregated by business specialization, i.e., Credit Risk, Credit Administration, Risk Architecture, Risk Analytics, Operational Risk and Market Risk. All these functions are operating in tandem to improve and maintain the health of assets and liabilities. 43.1. Credit Risk Credit risk, the potential default of one or more debtors, is the largest source of risk for the Bank. The Bank is exposed to credit risk through its lending and investment activities. The Bank's credit risk function is divided into Corporate and Financial Institutions Risk, Commercial and Retail Risk, and Consumer Risk. The functions operate within an integrated framework of credit policies, guidelines and processes. The credit risk management activities are governed by the Credit Risk Framework of the Bank that defines the respective roles and responsibilities, the credit risk management principles and the Bank's credit risk strategy. Further Credit Risk Management is supported by a detailed Credit Policy and Procedural Manual. The Bank manages 3 principal sources of credit risk: i).Sovereign credit risk on its public sector advances ii).Non-sovereign credit risk on its private sector advances iii).Counterparty credit risk on interbank limits Sovereign Credit Risk When the Bank lends to public sector borrowers, it prefers obtaining a full sovereign guarantee or the equivalent from the Government of Pakistan (GOP). However, certain public sector enterprises have a well defined cash flow stream and appropriate business model, based on which the lending is secured through collaterals other than GOP guarantee. Non-Sovereign Credit Risk When the Bank lends to private sector borrowers it does not benefit from sovereign guarantees or the equivalent. Consequently, each borrower's credit worthiness is analyzed on the Credit Application Package that incorporates a formalized and structured approach for credit analysis and directs the focus of evaluation towards a balanced assessment of credit risk with identification of proper mitigates. These risks include Industry Risk, Business Risk, Financial Risk, Security Risk and Account Performance Risk. Financial analysis is further strengthened through use of separate financial spreadsheet templates that have been designed for manufacturing/trading concerns, financial institutions and insurance companies. Counter Party Credit Risk on Interbank Limits In the normal course of its business, the Bank's Treasury utilizes products such as Reverse REPO and call lending to meet the needs of the borrowers and manage its exposure to fluctuations in market, interest and currency rates and to temporarily invest its liquidity prior to disbursement. All of these financial instruments involve, to varying degrees, the risk that the counterparty in the transaction may be unable to meet its obligation to the Bank. Reflecting a preference for minimizing exposure to counterparty credit risk, the Bank maintains eligibility criteria that link the exposure limits to counterparty credit ratings by external rating agencies. For example, the minimum rating for counterparties to be eligible for a banking relationship with the Bank is BBB. Country Risk The Bank has in place a Country Risk Management Policy which has been approved by the Board. This policy focuses on international exposure undertaken by the Bank. The Bank utilizes country risk rating assessment reports published by Dun & Bradstreet Limited (an international credit rating agency) which use political, commercial, macroeconomic and external risk factors in assigning a country risk rating. The country risk limits used by the Bank are linked to the Dun & Bradstreet ratings and FID is responsible for monitoring of country exposure limits. Credit Administration Credit Administration is involved in minimizing losses that could arise due to security and documentation deficiencies. The Credit Administration Division constantly monitors the security and documentation risks inherent in the existing credit portfolio through six regional credit administration departments located all over the country. Risk Analytics To ensure a prudent distribution of asset portfolio, the Bank manages its lending and investment activities within a framework of Borrower, Group and Sector exposure limits and risk profile benchmarks. Internal Risk Rating Models The Bank has developed internal risk rating models to assign credit risk ratings to its Corporate and Institutional borrowers. These models are based on expert judgment, comprising of both quantitative and qualitative factors. The ratings are assigned at Risk Analytic's Level and are given due weightage while extending credit to these asset classes. The Bank intends to comply with the requirements of Foundation Internal Ratings Based approach for credit risk measurement under Basel II, for which services of a consultant have been solicited to assist the Bank in carrying out statistical testing and validation of the rating models. Stress Testing The Bank is also conducting stress testing of its existing portfolio, which includes all assets, i.e., advances as well as investments. This exercise is conducted on a semi-annual basis through assigning shocks to all assets of the Bank and assessing its resulting affect on capital adequacy. Early Warning System In order to ensure that monitoring of the regular lending portfolio focuses on problem recognition, an early warning system in the form of a 'Watch-List' category has been instituted to cover the gap between Regular and Substandard categories. Identification of an account on the said 'Watch-List' influences the lending branch to carry out an assessment of the borrower's ability to rectify the identified problem / weakness within a reasonable time-frame, consider tighter structuring of facilities, confirm that there are no critical deficiencies in the existing security position and, if possible, arrange for strengthening of the same through obtaining additional collateral. It should however, be noted that the Watch-List category of accounts is part of the Bank's Regular portfolio and does not require any provisioning. In some cases, an account may even be downgraded directly from a Regular to Sub-Standard or worse on subjective basis based on the severity of the trigger involved. Management of Non-Performing Loans The Bank has a Special Asset Management Group (SAM), which is responsible for management of non-performing loans. SAM under-takes restructuring / rescheduling of problem loans, as well as litigation both civil and criminal for collection of debt. For the non-performing loan portfolio, the Bank makes a specific provision based on an assessment of the credit impairment of each loan. At the end of 2010, the average specific provisioning rate was 81.86% of the non-performing loan portfolio. The accounting policies and methods used to determine specific and general provision are given in the note numbers 5 and 10 to these unconsolidated financial statements. The movement in specific and general provision held is given in note 10.4 to these financial statements. Portfolio Diversification During the year 2010, the advances grew by 7.46%, while concomitantly maintaining healthy Advances to Deposit Ratio and Capital Adequacy Ratio. While expanding the advances portfolio, efficient portfolio diversification has been a key consideration. The diversification takes into account the volatility of various sectors by placing concentration limits on lending to these sectors thereby ensuring a diversified advances portfolio. Composition of the Bank's advance's portfolio is significantly diversified. Textile, Cement, Agriculture and Electric Generation are major contributors to the advances portfolio. These sectors are considered to be the biggest contributors towards country's GDP as well. 43.1.1. Segmental Information 43.1.1.1. Segments by class of business ===============================================================================================================================
December 31, 2010
===============================================================================================================================
Advances (Gross) Deposits Contingencies and
Commitments
===============================================================================================================================
Rupees Percent Rupees Percent Rupees Percent
in '000 in '000 in '000
===============================================================================================================================
Agriculture, Forestry, and Hunting 495,779 0.18 18,145,379 4.89 98,684 0.09
Fishing 8,024 0.00 - - - -
Food & Beverages 5,778,648 2.15 2,008,456 0.54 132,952 0.12
Grains & related 19,484,217 7.26 3,602,908 0.97 288,907 0.27
Sugar 6,860,317 2.55 1,470,727 0.40 54,748 0.05
Spinning 18,163,273 6.76 6,372,522 1.72 664,582 0.61
Weaving 7,569,712 2.82 4,352,291 1.17 505,840 0.47
Finishing of Textile 10,961,581 4.08 1,671,885 0.45 2,303,899 2.13
Manufacture of made up & ready
made garments 2,845,462 1.06 922,801 0.25 129,652 0.12
Footwear & leather garments 802,575 0.30 427,135 0.12 120,642 0.11
Paper & paper boards 3,721,354 1.39 5,394 0.00 680,088 0.63
Printing, publishing & allied 86,078 0.03 34,752 0.01 135,655 0.13
Petroleum products 812,110 0.30 3,927,026 1.06 4,163,165 3.85
Chemical & pharmaceutical 15,939,600 5.94 338,679 0.09 2,108,997 1.95
Rubber & plastic 1,143,507 0.43 662,789 0.18 180,878 0.17
Cement/clay & ceramics 14,151,349 5.27 2,980,338 0.80 1,328,995 1.23
Basic metals (iron, steel) 2,208,997 0.82 1,531,727 0.41 1,136,417 1.05
Machinery & equipment 3,141,899 1.17 904,093 0.24 389,027 0.36
Power, gas, water & sanitary 43,181,647 16.08 2,594,281 0.70 18,322,632 16.95
Manufacture of transport equipment 375,545 0.14 113,392 0.03 214,393 0.20
Tobacco - - 17,434 0.00 - -
Financial 3,077,428 1.15 2,307,736 0.62 34,325,654 31.75
Health & social welfare 383,198 0.14 10,030,940 2.70 - -
Education 139,771 0.15 4,269,958 1.15 81,946 0.08
Real estate, renting, and business activitie 5,881,142 2.19 32,945,936 8.87 12,160 0.01
Transport, storage & communication 4,780,065 1.78 1,363,453 0.37 34,967 0.03
Hotel, restaurant & clubs 149,872 0.06 1,048,080 0.28 5,225,642 4.83
Construction 6,468,245 2.41 17,393,998 4.68 81 1.09
Furniture & sports goods 982,716 0.37 860,080 0.23 1,183,566 1.09
Wholesale & retail trade 13,447,803 5.01 35,043,611 9.44 142,278 0.13
Individuals 6,627,507 2.47 118,576,797 31.94 6,157,707 5.69
Others 68,860,350 25.64 95,359,670 25.68 28,004,133 25.90
268,529,771 100.00 371,284,268 100.00 108,128,287 100.00
===============================================================================================================================43.1.1.2. Segments by sector===============================================================================================================================
December 31, 2010
Advances (Gross) Deposits Contingencies and
Commitments
===============================================================================================================================
Rupees Percent Rupees Percent Rupees Percent
in '000 in '000 in '000
===============================================================================================================================
Public/Government 58,359,399 21.73 41,868,197 11.28 14,459,970 13.37
Private 210,170,372 78.27 329,416,071 88.72 93,668,317 86.63
268,529,771 100.00 371,284,268 100.00 108,128,287 100.00
===============================================================================================================================43.1.1.3. Details of non-performing advances and specific provisions by class of business segment===================================================================================================
December 31, 2010 December 31, 2009
===================================================================================================
Classified Specific Classified Specific
Advances Provisions Advances Provisions
Held Held
===================================================================================================
Rupees in '000
===================================================================================================
Agriculture, Forestry, and Hunting 151,668 111,761 11,136 6,639
Food & Beverages 855,203 711,950 110 110
Spinning 3,170,992 2,085,969 - -
Weaving 9,040 9,040 - -
Finishing of Textile 1,909,925 1,513,757 3,503,605 2,177,059
Footware & leather garments 64,976 64,976 2,698,380 2,266,018
Paper & paper boards 2,559 2,559 2,559 2,559
Printing, publishing & allied 36,787 35,335 40,089 40,089
Petroleum products 5,037 5,037 7,719 5,202
Chemical & pharmaceutical 127,902 110,402 133,062 133,062
Rubber & plastic 2,135 2,135 2,479 2,479
Cement/clay & ceramics 119,625 29,906 - -
Basic metals (iron, steel) 775,333 734,740 773,682 604,058
Machinery & equipment 1,274,679 1,274,679 1,683,723 1,683,723
Power, gas, water & sanitary 842,846 842,846 842,186 421,388
Manufacture of transport equipment 72,354 72,354 71,462 71,462
Financial 281,313 132,370 649,707 258,925
Health & social welfare - - 68,412 67,063
Real estate, renting, and business activitie 1,733,911 1,349,097 390,889 98,073
Transport, storage & communication 361,458 359,815 358,532 358,532
Hotel, restaurant & clubs 61,408 61,408 - -
Construction 887,907 763,419 407,132 384,112
Furniture & sports goods 450 450 450 450
Wholesale & retail trade 2,353,764 1,971,045 1,863,000 1,715,075
Individuals 48,303 48,303 239,539 239,472
Others 3,538,591 3,127,435 2,533,325 1,999,705
18,688,166 15,420,788 16,281,178 12,535,255
===================================================================================================43.1.1.4. Details of non-performing advances and specific provisions by sector.===================================================================================================
December 31, 2010 December 31, 2009
Classified Specific Classified Specific
Advances Provisions Advances Provisions
Held Held
===================================================================================================
Rupees in '000
===================================================================================================
Public/Government - - - -
Private 18,688,166 15,420,788 16,281,178 12,535,255
18,688,166 15,420,788 16,281,178 12,535,255
===================================================================================================43.1.1.5. Geographical Segment Analysis===================================================================================================
December 31, 2010
===================================================================================================
Profit Total Net Contingencies
before assets assets and
taxation employed employed Commitments
===================================================================================================
Rupees in '000
===================================================================================================
Pakistan 12,343,106 449,931,526 35,974,857 108,128,287
===================================================================================================43.1.2. Credit Risk - General DisclosuresThe Bank is following standardized approach for all its Credit Risk Exposures. 43.1.2.1. Credit Risk: Disclosures for portfolio subject to Standardized Approach and supervisory risk weights in IRB approach Basel II specific Under standardized approach, the capital requirement is based on the credit rating assigned to the counterparties by the External Credit Assessment Institutions (ECAIs) duly recognized by SBP for capital adequacy purposes. In this connection, the Bank utilizes the credit ratings assigned by ECAIs and has recognized agencies such as PACRA (Pakistan Credit Rating Agency), JCR-VIS (Japan Credit Rating Company - Vital Information Systems), Fitch, Moody's and Standard & Poors which are also recognized by the SBP. The Bank also utilizes rating scores of Export Credit Agencies (ECA) participating in the "Arrangement on Officially Supported Export Credits" The Standardised Approach to credit risk sets out fixed risk weights corresponding, where appropriate, to external credit assessment levels or for unrated claims. Selection of ECAIs The Bank selects particular ECAI(s) for each type of claim. Amongst the ECAIs that have been recognised as eligible by SBP, the following are being used against each respective claim type. Sovereigns Exposures: For foreign currency claims on sovereigns, the Bank uses country risk scores of Export Credit Agencies (ECA) participating in the "Arrangement on Officially Supported Export Credits" available on OECD's website. Exposures to Multilateral Development Banks (MDBs): For exposures on MDBs not eligible for a 0% risk weight, ratings of Moody's S&P and Fitch are being used to calculate risk-weighted assets. Exposures to Public Sector Entities (PSEs): For PSE exposures, rating of PACRA and JCR-VIS are used to arrive at risk weights. Bank Exposures: For foreign banks (i.e., incorporated outside Pakistan), ratings of Moody's, S&P and Fitch is being used to arrive at risk weights. However, for local bank (i.e., incorporated in Pakistan) ratings of PACRA and JCR-VIS are used. Corporate Exposures: Ratings assigned by PACRA and JCR-VIS are used for claims on Corporates (excluding equity exposures). Use of ECAI Ratings The Bank prefers solicited ratings over unsolicited ratings at all times, owing to the greater degree of accuracy (in general) associated with solicited ratings as compared to unsolicited to unsolicited ratings. Unsolicited ratings may only be used in cases where a solicited ratings is not available. Mapping to SBP Rating Grades The selected final ratings (after application of the principles stated above) for all exposures need to be translated to the standard rating grades given by the SBP. In this regard, the mapping tables to be used for converting ECAI ratings to SBP rating grades are given below: Long-Term Rating Grades Mapping ================================================================================
SBP Fitch Moody's S & P PACRA JCR-VIS ECA Scores
================================================================================
Rating grade
================================================================================
1 AAA Aaa AAA AAA AAA 0
AA+ Aa 1 AA+ AA+ AA+ 1
AA Aa2 AA AA AA
AA- Aa3 AA- AA- AA-
2 A+ A1 A+ A+ A+ 2
A A2 A A A
A- A3 A- A- A-
3 BBB+ Baa1 BBB+ BBB+ BBB+ 3
BBB Baa2 BBB BBB BBB
BBB- Baa3 BBB- BBB- BBB-
4 BB+ BB1 BB+ BB+ BB+ 4
BB Ba2 BB BB BB
BB- Ba3 BB- BB- BB-
5 B+ B1 B+ B+ B+ 5
B B2 B B B
B- B3 B- B- B- 6
6 CCC+ Caa1 CCC+ CCC CCC 7
and below and below and below
CC CC
C C
D
================================================================================ Short-Term Rating Grades Mapping==================================================================== SBP Rating Grade Fitch Moody's S & P PACRA JCR-VIS S1 F1 P-1 A-1+ A-1 A-1+ A-1 A-1+ A-1 S2 F2 P-2 A-2 A-2 A-2 S3 F3 P-3 A-3 A-3 A-3 S4 Others Others Others Others Others ====================================================================Types of exposures and ECAI's used ================================================================================
December 31, 2010
================================================================================
Exposures Fitch Moody's S & P PACRA JCR-VIS
Corporate - - - Yes Yes
Banks Yes Yes Yes Yes Yes
Sovereigns - - - - -
SME's - - - - -
Securitizations - - - - -
Public Sector - - - - -
Enterprises - - - Yes Yes
================================================================================ Credit exposures subject to Standardized Approach===========================================================================================================
December 31, 2010 December 31, 2009
===========================================================================================================
Rupees in '000
===========================================================================================================
Exposures Rating Amount Deduction Net Amount Deduction Net
Category Outstanding CRM Amount Outstanding CRM Amount
===========================================================================================================
Corporate 1 36,193,388 - 36,193,388 49,932,599 - 49,932,599
2 18,916,685 - 18,916,685 15,421,338 - 15,421,338
3,4 1,069,354 - 1,069,354 1,500,707 - 1,500,707
5,6 908,325 - 908,325 3,294,270 - 3,294,270
Claims on banks with original maturity
of 3 months or less 13,493,628 9,113,821 4,379,806 28,426,234 21,078,346 7,347,888
Retail 37,361,108 2,803,830 34,557,278 42,830,060 5,112,371 37,717,689
Public sector entities 1 2,025,120 - 2,025,120 277,577 - 277,577
Others 178,418,520 - 178,418,520 130,755,272 - 130,755,272
Unrated 193,605,375 63,962,118 129,643,257 173,666,253 62,809,386 110,856,867
===========================================================================================================43.1.2.2. Credit Risk: Disclosures with respect to Credit Risk Mitigation for Standardized ApproachThe Bank has adopted the Simple Approach of Credit Risk Mitigation for the Banking Book. Since, the trading book of the Bank only comprises equity investments, and units in open ended mutual funds, therefore no Credit Risk Mitigation benefit is taken in the trading book. In instances where the Bank's exposure on an obligor is secured by collateral that conforms with the eligibility criteria under the Simple Approach of CRM, then the Bank reduces its exposure under that particular transaction by taking into account the risk mitigating effect of the collateral for the calculation of capital requirement i.e. risk weight of the collateral instrument securing the exposure is substituted for the risk weight of the counter party. The Bank accepts cash, lien on deposits, government securities and eligible guarantees etc. under the simple approach of Credit Risk Mitigation. The Bank has in place detailed guidelines with respect to valuation and management of various collateral types. In order to obtain the credit risk mitigation benefit, the Bank uses realizable value of eligible collaterals to the extent of outstanding exposure. Since no specific asset is available by way of security in the context of unfunded credit protection, the creditworthiness and reliability of the provider and the validity and enforceability of that party's obligations is of paramount importance. Therefore, unfunded credit protection is only "eligible" if it is provided by an appropriate counterparty which may include National Government, Central Bank etc. 43.2. Equity Position Risk in the Banking Book The Bank makes investment for variety of purposes. Some of the investment positions of equity holding are made for revenue generation as part of strategic initiatives, while other equity holdings are held to earn capital gain and dividend to support the Bank's business activities. Classification of investments Under SBP's directives, equity investment may be classified as "Held for Trading (HFT)", "Available for Sale (AFS)" or "Investment in Subsidiaries and Associates". Some of the equity investments are listed and traded in public through stock exchanges, while other investments are unlisted. Policies, valuation and accounting of equity investments In accordance with the requirements of the SBP, quoted securities are carried at market value whereas investments in subsidiaries are accounted for in accordance with the relevant International Accounting Standard as applicable in Pakistan. The unrealized surplus / (deficit) arising on revaluation of the bank's held for trading investment portfolio is taken to the profit and loss account. The surplus / (deficit) arising on revaluation of quoted securities classified as available for sale is kept in a separate account shown in the balance sheet below equity. The surplus / (deficit) arising on these securities is taken to the profit and loss account when actually realised upon disposal. Unquoted equity securities are valued at the lower of cost and break-up value. Subsequent increases or decreases in the carrying value are credited / charged to profit and loss account. Break-up value of equity securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements. Investments in other unquoted securities are valued at cost less impairment losses, if any. Provision for diminution in the value of securities is made after considering impairment, if any, in their value. Profit and loss on sale of investments is included in income currently. Composition of equity investments =============================================================================
Held for Available for Investment in
Trading Sale Subsidiary
=============================================================================
Rupees in '000
=============================================================================
Equity Investments - Publicly Traded 842,169 9,469,432 -
Equity Investments - Others - 819,856 500,000
Total Value 842,169 10,289,288 500,000
=============================================================================The cumulative realized gain / (loss) arose of Rs. 1,416.532 million (2009: Rs. 1,085.043 million) from sale of equity securities/certificates of mutual funds and units of open end mutual funds; however unrealized loss of Rs. 2,447.24 million (2009: unrealized loss of Rs. 1,740.405 million) was recognized in the statement of financial position in respect of "AFS" securities.43.2.1. Market Risk The Bank is exposed to Foreign Exchange Rate Risk, Interest Rate Risk and Equity Price Risk. Market Risk performs risk measurement, monitoring and control functions through use of various risk procedures and models. To give it a formal structure, all the policies and guidelines are approved by the Board and relevant management committees. The Bank appointed services of a foreign risk advisory firm for assistance in establishment of Market Risk Management Framework." Market Risk Pertaining to the Trading Book Trading Book A trading book consists of positions in financial instruments held either with trading intent or in order to hedge other elements of the trading book. To be eligible for trading book, financial instruments must be held with the intent of trading and free of any restrictive covenants on their tradability. In addition, positions need to be frequently and accurately valued and the portfolio should be actively managed. The Bank's trading book includes equity securities classified as 'Held for Trading' and 'Available for Sale - Non-Strategic Equity Investments'. These positions are actively managed by the capital market desk. Bank's trading book constitutes capital market equities therefore, they are exposed to equity price risk. Risk Pertaining to Banking Book Investment Portfolio All investments excluding trading book are considered as part of banking book. Banking book includes: i) Available for sale securities - Strategic Portfolio ii) Held to maturity securities iii) Other strategic investments Treasury investments parked in the banking book include: i) Government securities ii) Capital market investments iii) Strategic investments iv) Investments in bonds, debentures, etc Due to the diversified nature of investments in banking book, it is subject to interest rate and equity price risk. Interest Rate Risk - Banking Book Government securities (PIBs & T-Bills), Bonds, Debentures, etc. and other money market investments are subject to interest rate risk. To capture the risk associated with these securities extensive modelling is being done with respect to duration analysis. Stress testing and scenario models are also in place to capture the sensitivity of the portfolio to adverse movement in interest rates. For prudent risk management, all money market investments are marked to market to assess changes in the market value of investments due to interest rate movements. Equity Position Risk - Banking Book The Bank's portfolio of equity securities categorized under 'Available for Sale - Strategic only' and 'any other Strategic Investments' are parked in the banking book. These investments expose the Bank to equity price risk. Stress Testing The Bank also conducts Stress Testing of the Bank's investment portfolio to ascertain the impact of various scenarios on the capital adequacy and sustainability of the Bank. The exercise assumes various stress conditions, with respect to Market Risk (Rise or Fall in Interest Rates, leading to interest rate risk), Equity Price Risk resulting from Stock Market movements, FX Rate Risk leading from adverse movements in exchange rates and Liquidity Risk (ability to meet short-term obligations if there is a run on deposits). Duration GAP Analysis A Duration Gap Analysis is also conducted to ascertain the duration gap between the Bank's assets and liabilities, to ascertain the effect of interest rate shifts on the market value of equity. 43.2.2. Foreign Exchange Risk Foreign Exchange Risk is the risk of loss arising from fluctuations of exchange rates. Our FX Risk is first controlled through substantially matched funding policy. On the mismatched exposures, the Bank utilizes appropriate derivative instruments such as Forwards and Swaps. The majority of net foreign currency exposure is in US Dollars. The Bank is carefully monitoring the net foreign currency exposure and the effect of exchange rate fluctuations by conducting sensitivity analysis and stress testing, as well as utilizing the currency forwards and swaps to hedge the related exposure. ===========================================================================
December 31, 2010
===========================================================================
Net foreign
Assets Liabilities Off-balance currency
sheet items exposure
===========================================================================
Rupees in '000
===========================================================================
Pakistani Rupee 435,458,613 384,713,703 (15,729,062) 35,015,849
United States Dollar 13,755,164 23,386,053 10,514,240 883,351
Great Britain Pound 236,093 2,655,422 2,453,832 34,503
Japanese Yen 2,325 1,384 - 941
Euro 454,025 3,195,680 2,770,140 28,485
Other Currencies 25,306 4,427 (9,150) 11,729
===========================================================================
December 31, 2009
===========================================================================
Net foreign
Assets Liabilities Off-balance currency
sheet items exposure
===========================================================================
Rupees in '000
===========================================================================
Pakistani Rupee 411,212,277 367,030,641 (14,299,698) 29,881,938
United States Dollar 6,589,864 17,372,733 10,854,270 71,401
Great Britain Pound 270,856 1,914,153 1,644,207 910
Japanese Yen 369 807 - (438)
Euro 266,329 2,094,517 1,831,086 2,898
Other Currencies 34,636 1,502 (29,865) 3,269
7,162,054 21,383,712 14,299,698 78,040
418,374,331 388,414,353 - 29,959,978
===========================================================================43.2.3. Equity Position RiskThe Board with the recommendations of ALCO approves exposure limits applicable to investments in Trading and Banking Book. Equity securities are perpetual assets and are classified under either Held for Trading Portfolio or Available for Sale Portfolio. Concentration Risk ALCO is responsible for making investment decisions in the capital market and setting limits that are a component of the risk management framework. Portfolio, Sector and Scrip wise limits are assigned by the ALCO to guard against concentration risk and these limits are reviewed and revised periodically. The capital market desk ensures compliance of concentration limits set by ALCO. Limit monitoring is done on a daily basis. Limit breaches if any are promptly reported to ALCO with proper reason and justification. Price Risk Trading and investing in equity securities give rise to price risk. ALCO and Treasury's Capital Market Unit both ensure that through prudent trading strategy and use of equity futures, the equity price risk is mitigated, albeit to a certain extent. 43.2.4. Mismatch of Interest Rate Sensitive Assets and Liabilities Yield / interest rate sensitivity position for on-balance sheet instruments is based on the earlier of contractual re-pricing or maturity date and for off-balance sheet instruments is based on settlement date. =================================================================================================================================================================================================================
December 31, 2010
Effective Total Exposed to Yield/ Interest risk Not exposed
Yield/ Up to Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Above to Yield/
Interest 1 month to 3 to 6 months to to 2 to 3 to 5 to 10 10 years Interest
rate months months 1 year years years years years Risk
=================================================================================================================================================================================================================
(Rupees in '000)
=================================================================================================================================================================================================================
On-balance sheet financial instruments
Assets
Cash and balances with treasury banks 0.00% 31,265,608 4,205,490 - - - - - - - - 27,060,118
Balances with other banks 579,555 - - - - - - - - - 579,555
Lendings to financial institutions 12.77% 11,488,944 11,395,278 6,000 9,000 18,000 36,000 24,666 - - - -
Investments - net 11.92% 121,173,409 31,795,536 35,205,775 30,848,057 4,594,856 875,197 2,779,620 2,310,175 124,409 - 12,639,784
Advances - net 12,93% 253,099,509 29,759,116 93,298,494 8,960,242 101,318,100 2,341,154 1,158,954 7,098,427 5,897,725 - 3,267,297
Other assets - net 11,969,473 - - - - - - - - - 11,969,473
429,576,498 77,155,420 128,510,269 39,817,299 105,930,956 3,252,351 3,963,240 9,408,602 6,022,134 - 55,516,227
Liabilities
Bills payable 4,118,791 - - - - - - - - - 4,118,791
Borrowings 14.15% 20,774,450 4,429,756 4,571,107 6,939,553 371,849 743,697 743,697 1,487,395 1,487,396 - -
Deposits and other accounts 5.14% 371,284,268 100,048,780 31,668,457 21,421,896 99,354,335 1,905,394 775,526 3,548,589 1,184,770 505,227 110,871,294
Sub-ordinated loan 14.52% 5,494,800 - 2,998,800 2,496,000 - - - - - - -
Other liabilities 9,550,178 - - - - - - - - - 9,550,178
411,222,487 104,478,536 39,238,364 30,857,449 99,726,184 2,649,091 1,519,223 5,035,984 2,672,166 505,227 124,540,263
On-balance sheet gap 18,354,011 (27,323,116) 89,271,905 8,959,850 6,204,772 603,260 2,444,017 4,372,618 3,349,968 (505,227) (69,024,036)
Off-balance sheet financial instruments
Commitments in respect of forward
exchange contracts - purchase 23,100,518 - - - - - - - - - 23,100,518
Commitments in respect of forward
exchange contracts - sale (7,371,457) - - - - - - - - - (7,371,457)
Off-balance sheet gap 15,729,061 - - - - - - - - - 15,729,061
Total yield / interest risk
sensitivity gap 34,083,072 (27,323,116) 89,271,905 8,959,850 6,204,772 603,260 2,444,017 4,372,618 3,349,968 (505,227)
Cumulative yield / interest
risk sensitivity gap 34,083,072 (27,323,116) 61,948,789 70,908,639 77,113,411 77,716,671 80,160,688 84,533,306 87,883,275 87,378,048
Mismatch of Interest Rate
Sensitive Assets and Liabilities
================================================================================================================================================================================================================= Yield / interest rate sensitivity position for on-balance sheet instruments isbased on the earlier of contractual re-pricing or maturity date and for off-balance sheet instruments is based on settlement date. =================================================================================================================================================================================================================
December 31, 2009
Effective Total Exposed to Yield/ Interest risk Not exposed
Yield/ Up to Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Above to Yield/
Interest 1 month to 3 to 6 months to to 2 to 3 to 5 to 10 10 years Interest
rate months months 1 year years years years years Risk
=================================================================================================================================================================================================================
(Rupees in '000)
=================================================================================================================================================================================================================
On-balance sheet
financial instruments
Assets
Cash and balances
with treasury banks 0.90% 26,435,633 3,909,653 - - - - - - - - 22,525,980
Balances with other banks 1,280,443 - - - - - - - - - 1,280,443
Lendings to financial
institutions 15.57% 28,122,932 27,597,346 525,586 - - - - - - - -
Investments - net 11.99% 94,789,492 20,069,962 34,932,406 23,820,139 6,564,115 - - - 299,880 - 9,102,990
Advances - net 12.53% 237,344,038 82,738,168 107,791,953 27,306,134 642,372 1,618,041 1,274,431 3,252,041 4,985,775 3,977,788 3,757,335
Other assets - net 14,896,094 - - - - - - - - - 14,896,094
Liabilities
402,868,632 134,315,129 143,249,945 51,126,273 7,206,487 1,618,041 1,274,431 3,252,041 5,285,655 3,977,788 51,562,842
Bills payable 3,162,429 - - - - - - - - - 3,162,429
Borrowings 13.91% 39,818,532 16,494,831 10,002,829 7,728,038 430,218 860,436 860,436 1,720,872 1,720,872 - -
Deposits and other accounts 8.31% 328,875,037 72,230,754 29,247,682 13,351,969 108,560,820 8,547,080 452,715 497,288 1,948,083 764,926 93,273,720
Sub-ordinated loan 17.31% 5,497,000 - 3,000,000 2,497,000 - - - - - - -
Other liabilities 8,644,817 - - - - - - - - - 8,644,817
385,997,815 88,725,585 42,250,511 23,577,007 108,991,038 9,407,516 1,313,151 2,218,160 3,668,955 764,926 105,080,966
On-balance sheet gap 16,870,817 45,589,544 100,999,434 27,549,266 (101,784,551) (7,789,475) (38,720) 1,033,881 1,616,700 3,212,862 (53,518,124)
Off-balance sheet financial instruments
Commitments in respect of forward
exchange contracts - purchase 23,338,782 - - - - - - - - - 23,338,782
Commitments in respect of forward
exchange contracts - sale (8,827,975) - - - - - - - - - (8,827,975)
Off-balance sheet gap 14,510,807 - - - - - - - - - 14,510,807
Total yield / interest risk
sensitivity gap 31,381,624 45,589,544 100,999,434 27,549,266 (101,784,551) (7,789,475) (38,720) 1,033,881 1,616,700 3,212,862
Cumulative yield / interest risk
sensitivity gap 31,381,624 45,589,544 146,588,978 174,138,244 72,353,693 64,564,218 64,525,498 65,559,379 67,176,079 70,388,941
=================================================================================================================================================================================================================Yield risk is the risk of decline in earnings due to adverse movement of the yield curve.Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market interest rates. 43.2.4.1. Reconciliation of Assets and Liabilities exposed to Yield/Interest Rate Risk with Total Assets and Liabilities ===========================================================================================================================================
December December Reconciliation December December
Reconciliation to total assets 31, 2010 31, 2009 to total 31, 2010 31, 2009
liabilities
===========================================================================================================================================
(Rupees in '000) (Rupees in '000)
===========================================================================================================================================
Balance as per statement of
financial position 429,576,498 402,868,632 Balance as per statement of financial position 411,222,487 385,997,815
Less: Non financial assets
Less: Non financial liabilities
Operating fixed assets 15,359,742 12,446,748
Deferred tax asset 484,387 - Deferred tax liability - 1,871
Other assets 4,510,899 3,058,951 Other liability 2,734,182 2,414,667
20,355,028 15,505,699 2,734,182 2,416,538
Total financial assets 449,931,526 418,374,331 Total financial liabilities 413,956,669 388,414,353
===========================================================================================================================================43.3. Liquidity RiskLiquidity risk is the risk that the Bank is unable to fund its current obligations and operations in the most cost efficient manner. ALCO is the forum to oversee liquidity management. The overall Bank's principle is that the ALCO has the responsibility for ensuring that Bank's policy for liquidity management is adhered to on a continual basis. Other than customer's deposits, the Bank's funding source is the inter-bank money market. Change in the government monetary policy and market expectations of interest rate are all important factors that can adversely affect our key funding source. Efficient and accurate planning plays a critical role in liquidity management. Our MIS provides information on expected cash inflows/out flows which allow the Bank to take timely decisions based on the future requirements. Gap analysis, stress testing and scenario analysis is done on periodic basis to capture any adverse effect of market movements on liquidity position. Based on the results produced, ALCO devises the liquidity management strategy to maintain sufficient liquidity to deal with any related catastrophe. 43.3.1. Maturities of Assets and Liabilities - Based on contractual maturity of the assets and liabilities of the Bank ===========================================================================================================================================================================================================
December 31, 2010
Total Up to 1 Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Above
month to 3 to 6 months to to 2 to 3 to 5 to 10 10 years
months months 1 year years years years years
===========================================================================================================================================================================================================
(Rupees in '000)
===========================================================================================================================================================================================================
Assets
Cash and balances with
treasury banks 31,265,608 31,265,608 - - - - - - - -
Balances with other banks 579,555 579,555 - - - - - - - -
Lendings to financial institutions 11,488,944 11,395,278 6,000 9,000 18,000 36,000 24,666 - - -
Investments 121,173,409 30,400,822 7,226,738 24,730,061 13,347,366 13,525,088 14,365,266 8,740,975 8,837,093 -
Advances 253,099,509 42,242,367 79,458,132 27,641,135 8,411,571 12,901,437 13,678,575 18,242,651 40,905,788 9,617,853
Operating fixed assets 15,359,742 121,584 243,167 364,751 729,502 937,209 403,045 550,200 670,320 11,339,964
Deferred tax assets 484,387 (4,493) (61,229) (36,213) 53,513 405,771 727,060 (5,023) (351,614) (243,385)
Other assets 16,480,172 8,638,380 2,061,348 2,005,604 1,494,620 745,624 - - - 1,534,796
Liabilities 449,931,526 124,639,101 88,934,156 54,714,338 24,054,572 28,551,129 29,198,612 27,528,803 50,061,587 22,249,228
Bills payable 4,118,791 4,118,791 - - - - - - - -
Borrowings 20,774,450 4,429,756 4,571,107 6,939,554 371,848 743,697 743,697 1,487,396 1,487,395 -
Deposits and other accounts 371,284,268 156,357,836 54,731,004 44,484,443 48,281,096 13,807,470 12,677,603 15,450,665 16,751,615 8,742,536
Sub-ordinated loan 5,494,800 - 600 500 1,100 2,200 1,248,200 1,249,400 2,992,800 -
Deferred tax liabilities - - - - - - - - - -
Other liabilities 12,284,360 4,383,934 3,963,998 226,572 417,848 451,408 645,738 795,948 1,398,914 -
413,956,669 169,290,317 63,266,709 51,651,069 49,071,892 15,004,775 15,315,238 18,983,409 22,630,724 8,742,536
Net assets / (liabilities) 35,974,857 (44,651,216) 25,667,447 3,063,269 (25,017,320) 13,546,354 13,883,374 8,545,394 27,430,863 13,506,692
Share capital 7,821,009
7,516,910
Unappropriated profit 15,828,533
Surplus on revaluation of assets
31,166,452
- net of tax 4,808,405
35,974,857
===========================================================================================================================================================================================================Maturities of Assets and Liabilities - Based on contractual maturity of the assets and liabilities of the Bank===========================================================================================================================================================================================================
December 31, 2009
===========================================================================================================================================================================================================
Total Up to 1 Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Above
month to 3 to 6 months to to 2 to 3 to 5 to 10 10 years
months months 1 year years years years years
===========================================================================================================================================================================================================
(Rupees in '000)
===========================================================================================================================================================================================================
Assets
Cash and balances with
treasury banks 26,435,633 26,435,633 - - - - - - - -
Balances with other banks 1,280,443 1,280,443 - - - - - - - -
Lendings to financial institutions 28,122,932 27,597,346 525,586 - - - - - - -
Investments 94,789,492 9,000,182 8,927,492 13,194,584 18,075,604 8,337,517 10,480,059 21,530,978 5,243,076 -
Advances 237,344,038 37,438,908 74,344,851 19,306,617 18,888,330 21,576,011 16,239,339 25,387,888 20,246,987 3,915,107
Operating fixed assets 12,446,748 57,569 115,134 172,701 345,401 821,447 821,447 877,704 1,201,598 8,033,747
Deferred tax assets - - - - - - - - - -
Other assets 17,955,045 8,361,140 2,186,139 2,272,857 1,734,520 1,890,508 - - - 1,509,881
Liabilities
418,374,331 110,171,221 86,099,202 34,946,759 39,043,855 32,625,483 27,540,845 47,796,570 26,691,661 13,458,735
Bills payable 3,162,429 3,162,429 - - - - - - - -
Borrowings 39,818,532 16,494,831 10,002,829 7,728,038 430,218 860,436 860,436 1,720,872 1,720,872 -
Deposits and other accounts 328,875,037 143,060,674 55,154,523 30,551,474 40,485,432 18,012,593 9,918,228 9,962,802 11,413,597 10,315,714
Sub-ordinated loan 5,497,000 - 600 500 1,100 2,200 2,200 2,496,400 2,994,000 -
Deferred tax liabilities 1,871 (24,456) (10,048) (16,835) (89,940) 137,947 (132,231) (89,873) 194,205 33,102
Other liabilities 11,059,484 4,292,464 3,882,751 193,410 377,917 297,415 282,483 503,959 1,229,085 -
388,414,353 166,985,942 69,030,655 38,456,587 41,204,727 19,310,591 10,931,116 14,594,160 17,551,759 10,348,816
Net assets / (liabilities) 29,959,978 (56,814,721) 17,068,547 (3,509,828) (2,160,872) 13,314,892 16,609,729 33,202,410 9,139,902 3,109,919
Share capital 7,110,008
Reserves 6,582,845
Unappropriated profit 12,198,425
Surplus on revaluation of assets
25,891,278
- net of tax 4,068,700
29,959,978
===========================================================================================================================================================================================================43.3.1.1. When an asset or liability does not have any contractual maturity date, the period in which these are assumed to mature has been taken as the expected date of maturity.43.4. Maturities of Assets and Liabilities - Based on the working prepared by the Asset and Liabilities Management Committee (ALCO) of the Bank This analysis has been prepared on the basis of the balances determined by the Assets and Liabilities Management Committee (ALCO) of the bank, keeping in view the historical receipt / withdrawal pattern of these balances. ===========================================================================================================================================================================================================
December 31, 2010
===========================================================================================================================================================================================================
Total Up to 1 Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Above
month to 3 to 6 months to to 2 to 3 to 5 to 10 10 years
months months 1 year years years years years
===========================================================================================================================================================================================================
(Rupees in '000)
===========================================================================================================================================================================================================
On-balance sheet financial instruments
Assets
Cash and balances
with treasury banks 31,265,608 31,265,608 - - - - - - - -
Balances with other banks 579,555 579,555 - - - - - - - -
Lendings to financial institutions 11,488,944 11,395,278 6,000 9,000 18,000 36,000 24,666 - - -
Investments - net 121,173,409 30,400,822 7,226,738 24,730,061 13,347,366 13,525,088 14,365,267 8,740,975 8,837,093 -
Advances - net 253,099,509 42,242,367 79,458,132 27,641,135 8,411,571 12,901,437 13,678,575 18,242,651 40,905,788 9,617,853
Operating fixed assets 15,359,742 121,584 243,167 364,751 729,502 937,209 403,045 550,199 670,320 11,339,964
Deferred tax assets 484,387 (4,493) (61,229) (36,213) 53,513 405,771 727,061 (5,023) (351,615) (243,385)
Other assets - net 16,480,372 8,638,380 2,061,348 2,005,604 1,494,620 745,624 - - - 1,534,796
Liabilities
449,931,526 124,639,101 88,934,156 54,714,338 24,054,572 28,551,129 29,198,614 27,528,802 50,061,586 22,249,228
Bills payable 4,118,791 4,118,791 - - - - - - - -
Borrowings 20,774,450 4,429,756 4,571,107 6,939,554 371,848 743,697 743,697 1,487,396 1,487,395 -
Deposits and other accounts 371,284,268 57,927,122 66,772,552 53,426,003 57,222,656 17,907,447 16,777,580 24,884,660 43,856,913 32,509,335
Sub-ordinated loan 5,494,800 - 600 500 1,100 2,200 1,248,200 1,249,400 2,992,800 -
Deferred tax liabilities - - - - - - - - - -
Other liabilities 12,284,360 4,383,934 3,963,998 226,572 417,848 451,408 645,738 795,948 1,398,914 -
143,956,669 70,859,603 75,308,257 60,592,629 58,013,452 19,104,752 19,415,215 28,417,404 49,736,022 32,509,335
Net assets 35,974,857 35,779,498 13,625,899 (5,878,291) (33,958,880) 9,446,377 9,783,398 (888,602) 325,564 (10,260,107)
Share capital 7,821,009
Reserves 7,516,910
Unappropriated profit 15,828,533
Surplus on revaluation of assets
31,166,452
- net of tax 4,808,405
35,974,857
===========================================================================================================================================================================================================43.4.1. Maturities of Assets and Liabilities - Based on the working prepared by the Asset and Liabilities Management Committee (ALCO) of the BankThis analysis has been prepared on the basis of the balances determined by the Assets and Liabilities Management Committee (ALCO) of the bank, keeping in view the historical receipt / withdrawal pattern of these balances. ===========================================================================================================================================================================================================
December 31, 2009
Total Up to 1 Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Above
month to 3 to 6 months to to 2 to 3 to 5 to 10 10 years
months months 1 year years years years years
(Rupees in '000)
===========================================================================================================================================================================================================
Assets
Cash and balances with
treasury banks 26,435,633 26,435,633 - - - - - - - -
Balances with other banks 1,280,443 1,280,443 - - - - - - - -
Lendings to financial institutions 28,122,932 27,597,346 525,586 - - - - - - -
Investments - net 94,789,492 9,000,182 8,927,492 13,194,584 12,889,897 13,523,224 10,480,059 21,530,978 5,243,076 -
Advances - net 237,344,038 37,438,908 74,344,851 19,306,617 18,888,330 21,576,011 16,239,339 25,387,888 20,246,987 3,915,107
Operating fixed assets 12,446,748 57,567 115,134 172,701 345,401 821,447 821,447 877,704 1,201,598 8,033,749
Deferred tax assets - - - - - - - - - -
Other assets - net 17,955,045 8,361,140 2,186,139 2,272,857 1,734,520 1,890,508 - - - 1,509,881
418,374,331 110,171,219 86,099,202 34,946,759 33,858,148 37,811,190 27,540,845 47,796,570 26,691,661 13,458,737
Liabilities
Bills payable 3,162,429 3,162,429 - - - - - - - -
Borrowings 39,818,532 16,494,831 10,002,829 7,728,038 430,218 860,436 860,436 1,720,872 1,720,872 -
Deposits and other accounts 328,875,037 62,639,964 68,007,954 43,404,545 53,338,503 19,706,372 11,612,007 15,376,345 31,706,196 23,083,151
Sub-ordinate loan 5,497,000 - 600 500 1,100 2,200 2,200 2,496,400 2,994,000 -
Deferred tax liabilities 1,871 (24,456) (10,048) (16,835) (89,940) 137,947 (132,231) (89,873) 194,205 33,102
Other liabilities 11,059,484 4,292,464 3,882,751 193,410 377,917 297,415 282,483 503,959 1,229,085 -
388,414,353 86,565,232 81,884,086 51,309,658 54,057,798 21,004,370 12,624,895 20,007,703 37,844,358 23,116,253
Net assets 29,959,978 23,605,987 4,215,116 (16,662,899) (20,199,650) 16,806,820 14,915,950 27,788,867 (11,152,697) (9,657,516)
Share capital 7,110,008
Reserves 6,582,845
Unappropriated profit 12,198,425
25,891,278
Surplus on revaluation of assets
- net of tax 4,068,700
29,959,978
===========================================================================================================================================================================================================43.5. Operational RiskThe Bank, like all financial institutions, is exposed to many types of operational risks, including the potential losses arising from internal activities or external events caused by breakdowns in information, communication, physical safeguards, business continuity, supervision, transaction processing, settlement systems and procedures and the execution of legal, fiduciary and agency responsibilities. The Bank has in place a BOD approved Operational Risk Framework. Various policies and procedures with respect to this framework are currently being implemented across the Bank. The Bank maintains a system of internal controls designed to keep operational risk at appropriate levels, in view of the bank's financial strength and the characteristics of the activities and market in which it operates. These internal controls are periodically updated to conform to industry best practice. The Bank has also developed a Business Continuity Plan applicable to all its functional areas, with assistance of a consultant. The Bank is currently in the process of implementing internationally accepted Internal Control-Integrated Framework published by the Committee of Sponsoring Organizations of the Tread way Commission (COSO), with a view to consolidate and enhance the existing internal control processes. Currently the Bank uses the Basic Indicator Approach for assessing its operational risk capital charge. However, migration to Standardised Approach is planned for future. For this purpose the bank is currently implementing required systems and technology. 44. NON ADJUSTING EVENT AFTER THE BALANCE SHEET DATE The Board of Directors of the Bank in its meeting held on February 11, 2011 has proposed a cash dividend in respect of 2010 of Rs. 2.0 per share (2009: Rs. 2.00 per share). In addition, the directors have also announced a bonus issue of 10% (2009: 10%). These appropriations will be approached in the forthcoming Annual General Meeting. The unconsolidated financial statements of the Bank for the year ended December 31, 2010 do not include the effect of these appropriations which will be accounted for in the unconsolidated financial statements for the year ending December 31, 2011. 45. GENERAL 45.1. These accounts have been prepared in accordance with the revised forms of annual financial statements of the banks issued by the State Bank of Pakistan through its BSD Circular No. 04 dated February 17, 2006 and BSD circular letter No. 07 dated April 20, 2010. 46. DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue on February 11, 2011 by the Board of Directors of the Bank. |