Corporate Information 2. Directors' Review 3. Independent Auditors Review Report to the members of Bank AL Habib Limited 5

Transcription

1 CONTENTS Corporate Information 2 Directors' Review 3 Independent Auditors Review Report to the members of Bank AL Habib Limited 5 Unconsolidated Condensed Interim Statement of Financial Position 6 Unconsolidated Condensed Interim Profit and Loss Account 7 Unconsolidated Condensed Interim Statement of Comprehensive Income 8 Unconsolidated Condensed Interim Cash Flow Statement 9 Unconsolidated Condensed Interim Statement of Changes in Equity 10 Notes to the Unconsolidated Condensed Interim Financial Statements 11 Consolidated Financial Statements 29 1

2 CORPORATE INFORMATION Board of Abbas D. Habib Chairman Directors Ali Raza D. Habib Anwar Haji Karim Arshad Nasar Murtaza H. Habib Qumail R. Habib Executive Director Safar Ali Lakhani Shahid Ghaffar Syed Mazhar Abbas Syed Hasan Ali Bukhari Mansoor Ali Khan Chief Executive Audit Syed Mazhar Abbas Chairman Committee Anwar Haji Karim Member Arshad Nasar Member Safar Ali Lakhani Member Syed Hasan Ali Bukhari Member Human Resource Syed Mazhar Abbas Chairman & Remuneration Anwar Haji Karim Member Committee Arshad Nasar Member Murtaza H. Habib Member Syed Hasan Ali Bukhari Member Company Secretary Statutory Auditors Legal Advisor Registered Office Principal Office Share Registrar Website Mohammad Taqi Lakhani KPMG Taseer Hadi & Co. Chartered Accountants LMA Ebrahim Hosain Barristers, Advocates & Corporate Legal Consultants 126-C, Old Bahawalpur Road, Multan 2nd Floor, Mackinnons Building, I.I. Chundrigar Road, Karachi Central Depository Company of Pakistan Ltd. CDC House 99-B, Block-B, S.M.C.H.S. Main Shahrah-e-Faisal, Karachi

3 DIRECTORS REVIEW On behalf of the Board of Directors of the Bank, it is my pleasure to present the un-audited financial statements of Bank AL Habib Limited along with the un-audited consolidated financial statements of Bank AL Habib Limited and the Bank s Subsidiaries AL Habib Capital Markets (Private) Limited and AL Habib Credit & Finance (Hong Kong) Limited for the half year ended June 30, Alhamdolillah, during the period under review, the performance of the Bank continued to be satisfactory. The deposits increased to Rs billion as compared to Rs billion on December 31, In the same period, advances increased to Rs billion from Rs billion, while investments increased to Rs billion from Rs billion. The pre-tax profit of the Bank for the half year ended June 30, 2017 was Rs. 7,667.0 million as compared to Rs. 6,839.5 million during the corresponding period last year. Your Bank now has a network of 624 offices, comprising 560 branches, 61 sub-branches, and 3 Representative Offices. Our branch network includes 42 Islamic Banking Branches and 3 Overseas Branches. Continuing with our branch expansion policy, the Bank intends to open more branches during the year Pakistan Credit Rating Agency Limited (PACRA) has maintained the Bank s long term and short term entity ratings at AA+ (Double A plus) and A1+ (A One plus), respectively. The rating of our unsecured, subordinated TFC issue 2016 has also been maintained at AA (Double A). These ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments. We wish to thank our customers for their continued support and confidence, the State Bank of Pakistan for their guidance, and local and foreign correspondents for their cooperation. We also thank all our staff members for their sincere and dedicated services. On behalf of the Board of Directors Karachi: August 23, 2017 Abbas D. Habib Chairman 3

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5 INDEPENDENT AUDITORS REVIEW REPORT TO THE MEMBERS OF BANK AL HABIB LIMITED Introduction We have reviewed the accompanying unconsolidated condensed interim statement of financial position of Bank AL Habib Limited ( the Bank ) as at 30 June 2017, and the related unconsolidated condensed interim profit and loss account, unconsolidated condensed interim statement of comprehensive income, unconsolidated condensed interim cash flow statement, unconsolidated condensed interim statement of changes in equity and notes to the accounts for the six-months period then ended (here-in-after referred to as the interim financial information ). Management is responsible for the preparation and presentation of this interim financial information in accordance with approved accounting standards as applicable in Pakistan for Interim Financial Reporting. Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for Interim Financial Reporting. Other Matter The figures for the quarter ended 30 June 2017 in the unconsolidated condensed interim profit and loss account and unconsolidated condensed interim statement of comprehensive income have not been reviewed and we do not express a conclusion on them. Karachi: 23 August 2017 KPMG Taseer Hadi & Co. Chartered Accountants Muhammad Taufiq 5

6 UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 ASSETS Note (Un-audited) (Audited) 30 June 31 December Cash and balances with treasury banks 59,009,601 50,600,041 Balances with other banks 2,863,487 2,866,455 Lendings to financial institutions Investments - net 7 422,590, ,027,569 Advances - net 8 310,422, ,440,098 Operating fixed assets 9 21,874,217 18,894,031 Deferred tax assets - net Other assets 13,637,992 12,567, ,397, ,395,816 LIABILITIES Bills payable 16,339,860 13,872,057 Borrowings 10 99,166,504 93,717,345 Deposits and other accounts ,339, ,171,954 Sub-ordinated loans 12 3,998,400 3,999,200 Liabilities against assets subject to finance lease Deferred tax liabilities - net 3,282,072 4,131,830 Other liabilities 12,118,548 8,989, ,244, ,882,072 NET ASSETS 43,153,107 42,513,744 REPRESENTED BY: Share capital 11,114,254 11,114,254 Reserves 12,449,031 11,949,311 Unappropriated profit 13,062,434 12,858,807 36,625,719 35,922,372 Surplus on revaluation of assets - net of tax 13 6,527,388 6,591,372 CONTINGENCIES AND COMMITMENTS 14 43,153,107 42,513,744 The annexed notes 1 to 24 form an integral part of these unconsolidated condensed interim financial statements. ABBAS D. HABIB Chairman MANSOOR ALI KHAN Chief Executive SYED MAZHAR ABBAS Director ANWAR HAJI KARIM Director ASHAR HUSAIN Chief Financial Officer 6

7 UNCONSOLIDATED CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED) FOR THE HALF YEAR ENDED 30 JUNE 2017 Note Half year ended Quarter ended 30 June 30 June 30 June 30 June Mark-up / return / interest earned 15 24,652,374 24,836,674 12,509,312 12,651,614 Mark-up / return / interest expensed 16 (11,911,901 ) (12,078,244 ) (5,973,030 ) (6,142,504 ) Net mark-up / return / interest income 12,740,473 12,758,430 6,536,282 6,509,110 (Provision) / reversal against non-performing Bad debts written-off directly loans and advances - net Provision for diminution in the value of investments (128,743) , (331,169) 00 (452,188) 00 (128,743) 724,848 (331,169) (452,188) Net mark-up / return / interest income after provisions 12,611,730 13,483,278 6,205,113 6,056,922 NON MARK-UP / INTEREST INCOME Fees, commission and brokerage income 1,580,809 1,259, , ,276 Dividend income 257, , , ,089 Income from dealing in foreign currencies 253, , , ,790 Gain on sale / redemption of securities - net 2,311,761 45,757 1,579,114 11,796 Unrealised (loss) / gain on revaluation of investments classified as held for trading - net (10,621) 5 3,303 5 Other income 512, , , ,547 Total non mark-up / interest income 4,905,881 2,382,045 2,897,053 1,165,503 17,517,611 15,865,323 9,102,166 7,222,425 NON MARK-UP / INTEREST EXPENSES Administrative expenses (9,650,538 ) (8,903,477 ) (4,897,783 ) (4,415,683 ) Other (provisions) / reversals / write-offs (7,325 ) 31,049 (28,176 ) 00 Other charges (192,773 ) (153,371 ) (118,971 ) (69,609 ) Total non mark-up / interest expenses (9,850,636 ) (9,025,799 ) (5,044,930 ) (4,485,292 ) 7,666,975 6,839,524 4,057,236 2,737,133 Extra-ordinary / unusual items PROFIT BEFORE TAXATION 7,666,975 6,839,524 4,057,236 2,737,133 Taxation - Current (2,885,916 ) (2,577,535 ) (1,557,495 ) (1,075,730 ) - Prior years (503,224 ) (502,993 ) (503,224 ) (502,993 ) - Deferred 281,985 27, ,492 93,370 (3,107,155 ) (3,053,090 ) (1,802,227 ) (1,485,353 ) PROFIT AFTER TAXATION 4,559,820 3,786,434 2,255,009 1,251,780 (Rupees) Basic and diluted earnings per share The annexed notes 1 to 24 form an integral part of these unconsolidated condensed interim financial statements. ABBAS D. HABIB Chairman MANSOOR ALI KHAN Chief Executive SYED MAZHAR ABBAS Director ANWAR HAJI KARIM Director ASHAR HUSAIN Chief Financial Officer 7

8 UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED) FOR THE HALF YEAR ENDED 30 JUNE 2017 Half year ended Quarter ended 30 June 30 June 30 June 30 June Profit after taxation for the period 4,559,820 3,786,434 2,255,009 1,251,780 Other comprehensive income Items that are or may be reclassified subsequently to profit and loss account Exchange differences on translation of net investment in foreign branches 5,350 1,660 (2,514) 1,543 Items that will never be reclassified to profit and loss account subsequently Remeasurement of defined benefit plan Related tax charge Comprehensive income transferred to equity 4,565,170 3,788,094 2,252,495 1,253,323 Components of comprehensive income not reflected in equity Surplus on revaluation of available for sale securities (2,540,146) 2,159,372 (1,889,099) 1,328,713 Related tax charge 889,051 (755,781) 661,185 (465,051) (1,651,095) 1,403,591 (1,227,914) 863,662 Surplus on revaluation of operating fixed assets 1,951, ,951, Related tax charge (321,328) 00 (321,328) 00 1,630, ,630, Total comprehensive income 4,544,213 5,191,685 2,654,719 2,116,985 The annexed notes 1 to 24 form an integral part of these unconsolidated condensed interim financial statements. ABBAS D. HABIB Chairman MANSOOR ALI KHAN Chief Executive SYED MAZHAR ABBAS Director ANWAR HAJI KARIM Director ASHAR HUSAIN Chief Financial Officer 8

9 UNCONSOLIDATED CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE HALF YEAR ENDED 30 JUNE 2017 Note 30 June 30 June CASH FLOW FROM OPERATING ACTIVITIES Note Profit before taxation Less: Dividend income 7,666,975 (257,797) 6,839,524 (389,215) 7,409,178 6,450,309 Adjustments for: Depreciation 917, ,376 Amortisation 52,784 47,619 Provision / (reversal) against non-performing loans and advances - net 128,743 (724,848) Gain on sale of operating fixed assets (87,229) (50,811) Gain on sale / redemption of securities - net (2,311,761) (45,757) Unrealised loss / (gain) on held for trading securities 10,621 (5) Charge for defined benefit plan 127, ,000 Charge for compensated absences 18,485 24,442 Provision / (reversal) against off-balance sheet items 5,000 (31,049) (1,138,608) 87,967 6,270,570 6,538,276 (Increase) / decrease in operating assets Lendings to financial institutions 00 1,705,623 Advances - net (49,111,054) (37,542,448) Other assets - (excluding advance taxation) (1,137,258) (1,186,055) (50,248,312) (37,022,880) Increase in operating liabilities Bills payable 2,467,803 5,999,440 Borrowings 6,434,813 66,110,862 Deposits and other accounts 68,167,525 33,699,524 Other liabilities - (excluding provision for taxation) 2,923,928 1,834,257 79,994, ,644,083 36,016,327 77,159,479 Income tax paid (3,244,043) (2,960,228) Net cash generated from operating activities 32,772,284 74,199,251 CASH FLOW FROM INVESTING ACTIVITIES Net investments in securities (17,776,702) (62,771,637) Net investments in associates (25,000) 000 Dividend received 172, ,477 Investments in operating fixed assets (2,025,229) (2,821,607) Sale proceeds from disposal of operating fixed assets 105,531 63,882 Net cash used in investing activities (19,548,550) (65,175,885) CASH FLOW FROM FINANCING ACTIVITIES (Repayments) / receipts of sub-ordinated loans Dividend paid (800) (3,836,038) 1,005,400 (3,820,916) Net cash used in financing activities (3,836,838) (2,815,516) Exchange differences on translation of net investment in foreign branches 5,350 1,660 Increase in cash and cash equivalents 9,392,246 6,209,510 Cash and cash equivalents at beginning of the period 52,321,784 41,758,103 Cash and cash equivalents at end of the period 18 61,714,030 47,967,613 The annexed notes 1 to 24 form an integral part of these unconsolidated condensed interim financial statements. ABBAS D. HABIB Chairman MANSOOR ALI KHAN Chief Executive SYED MAZHAR ABBAS Director ANWAR HAJI KARIM Director ASHAR HUSAIN Chief Financial Officer 9

10 UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED) FOR THE HALF YEAR ENDED 30 JUNE 2017 Revenue Reserves Share Capital Statutory Foreign Currency Special Reserve Translation Reserve General Reserve Unappropriated Total Reserve Profit Balance as at 01 January 2016 (Audited) 11,114,254 9,413, , , ,000 10,253,920 31,697,833 Total comprehensive income for the half year ended 30 June 2016: Profit after tax ,786,434 3,786,434 Other comprehensive income , , , ,786,434 3,788,094 Transfer from surplus on revaluation of fixed assets - net of tax ,521 26,521 Transfer to statutory reserve , (757,287) 00 Transaction with owners of the bank Cash dividend - 31 December 2015 (Rs. 3.5 per share) (3,889,989) (3,889,989) Balance as at 30 June 2016 (Un-audited) 11,114,254 10,170, , , ,000 9,419,599 31,622,459 Total comprehensive income for the half year ended 31 December 2016: Profit after tax ,332,795 4,332,795 Other comprehensive income (5,854) (53,736) (59,590) (5,854) ,279,059 4,273,205 Transfer from surplus on revaluation of fixed assets - net of tax ,708 26,708 Transfer to statutory reserve , (866,559) 00 Balance as at 31 December 2016 (Audited) 11,114,254 11,037, , , ,000 12,858,807 35,922,372 Total comprehensive income for the half year ended 30 June 2017: Profit after tax ,559,820 4,559,820 Other comprehensive income , , , ,559,820 4,565,170 Transfer from surplus on revaluation of fixed assets - net of tax ,166 28,166 Transfer to statutory reserve , (494,370) 00 Transaction with owners of the bank Cash dividend - 31 December 2016 (Rs. 3.5 per share) (3,889,989) (3,889,989) Balance as at 30 June 2017 (Un-audited) 11,114,254 11,531, , , ,000 13,062,434 36,625,719 The annexed notes 1 to 24 form an integral part of these unconsolidated condensed interim financial statements. ABBAS D. HABIB Chairman MANSOOR ALI KHAN Chief Executive SYED MAZHAR ABBAS Director ANWAR HAJI KARIM Director ASHAR HUSAIN Chief Financial Officer 10

11 NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE HALF YEAR ENDED 30 JUNE STATUS AND NATURE OF BUSINESS Bank AL Habib Limited (the Bank) is a banking company incorporated in Pakistan on 15 October 1991 as a public limited company under the Companies Ordinance, 1984 having its registered office at 126-C, Old Bahawalpur Road, Multan with principal place of business in Karachi. Its shares are listed on Pakistan Stock Exchange Limited. It is a scheduled bank principally engaged in the business of commercial banking with a network of 560 branches (31 December 2016: 518 branches), 61 sub-branches (31 December 2016: 87 sub-branches) and 03 representative offices (31 December 2016: 03 representative offices). The branch network of the Bank includes 03 overseas branches (31 December 2016: 03 overseas branches) and 42 Islamic Banking branches (31 December 2016: 41 Islamic Banking branches). 2. BASIS OF PRESENTATION 2.1 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 includes purchase of goods by banks from customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchase and resale arising under these arrangements are not reflected in these unconsolidated condensed interim financial statements as such, but are restricted to the amount of facility actually utilised and the appropriate portion of mark-up thereon. However, the Islamic Banking branches of the Bank have complied with the requirements set out under the Islamic Financial Accounting Standards (IFAS), issued by the Institute of Chartered Accountant of Pakistan and notified under the provisions of repealed Companies Ordinance, The financial results of the Islamic Banking branches have been consolidated in these unconsolidated condensed interim financial statements for reporting purposes, after eliminating material inter-branch transactions / balances. Key financial information of the Islamic Banking branches are disclosed in note STATEMENT OF COMPLIANCE 3.1 This unconsolidated condensed interim financial information has been prepared in accordance with the requirements of International Accounting Standard 34 Interim Financial Reporting, the provisions of repealed Companies Ordinance, 1984, Banking Companies Ordinance, 1962 and the directives issued by the Securities and Exchange Commission of Pakistan (SECP) and SBP. In case where requirements differ, provisions of the repealed Companies Ordinance, 1984, Banking Companies Ordinance, 1962 and the said directives have been followed. The Companies Ordinance, 1984 was repealed by enactment of the Companies Act, 2017 on 30 May SECP vide its Circular No. 17 of 2017 and press release of 20 July 2017, has clarified that all those companies whose financial year, including quarterly and other interim period, closes on or before 30 June 2017 can prepare financial statements in accordance with the provisions of repealed Companies Ordinance, SBP vide BSD Circular No. 10, dated 26 August 2002 has deferred the applicability of IAS 39, "Financial Instruments: Recognition and Measurement" and IAS 40, "Investment Property" for banking companies till further instructions. Further, according to the notification of SECP dated 28 April 2008, International Financial 11

12 Reporting Standard (IFRS) - 7 "Financial Instruments: Disclosures" has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these unconsolidated condensed interim financial statements. However, investments have been classified and valued in accordance with the requirements of various circulars issued by SBP. 3.3 The disclosures made in these unconsolidated condensed interim financial statements have been limited based on the format prescribed by SBP vide BSD Circular Letter No. 2, dated 12 May 2004 and IAS 34 "Interim Financial Reporting". They do not include all the information required in the annual financial statements, and these unconsolidated condensed interim financial statements should be read in conjunction with the annual financial statements of the Bank for the year ended 31 December These are separate unconsolidated condensed interim financial statements of the Bank in which investments in subsidiaries and associates are reported on the basis of direct equity interest and are not consolidated or accounted for by using equity method of accounting. 4. BASIS OF MEASUREMENT 4.1 Accounting convention These unconsolidated condensed interim financial statements have been prepared under the historical cost convention, except that certain fixed assets and non-banking assets acquired in satisfaction of claims are stated at revalued amounts, certain investments and commitments in respect of certain forward exchange contracts have been marked to market and are carried at fair value and staff retirement benefits are carried at present value. 4.2 Functional and presentation currency These unconsolidated condensed interim financial statements are presented in Pak Rupees which is the Bank's functional and presentation currency. 4.3 Accounting estimates and assumptions The preparation of these unconsolidated condensed interim financial statements requires management to make judgments, estimates and assumptions that effect the application of policies and reported amounts of assets and liabilities, income and expenses. The areas where assumptions and estimates are significant to these unconsolidated condensed interim financial statements are the same as those disclosed in the annual financial statements of the Bank for the year ended 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted for preparation of these unconsolidated condensed interim financial statements are same as those applied in the preparation of annual financial statements of the Bank for the year ended 31 December 2016 unless otherwise disclosed or specified. 6. FINANCIAL RISK MANAGEMENT The financial risk management objectives and policies adopted by the Bank are consistent with those disclosed in the annual financial statements of the Bank for the year ended 31 December

13 7. INVESTMENTS 7.1 Investments by type Note 30 June 2017 (Un-audited) 31 December 2016 (Audited) Held by Given as Total Held by Given as Total Bank Collateral Bank Collateral Available for Sale Securities Market Treasury Bills 187,453,288 67,377, ,831, ,762,623 62,559, ,322,291 Pakistan Investment Bonds 45,051, ,051,327 50,282, ,282,495 Foreign Currency Bonds 3,080, ,080,948 5,254, ,254,192 Sukuk Bonds 13,133, ,133,564 10,794, ,794,106 Fully paid-up ordinary shares - Listed 2,168, ,168,601 3,162, ,162,708 Fully paid-up ordinary shares - Unlisted 46, ,759 45, ,529 Term finance certificates - Listed 702, , , ,771 Term finance certificates - Unlisted 2,151, ,151,331 2,227, ,227,524 Units of mutual funds 1,625, ,625,000 2,100, ,100, ,413,448 67,377, ,791, ,331,948 62,559, ,891,616 Held to Maturity Securities 7.2 Pakistan Investment Bonds 91,308, ,308,773 91,101, ,101,157 Foreign Currency Bonds 2,124, ,124,747 2,386, ,386,321 Sukuk Bonds 1,770, ,770, , ,785 95,204, ,204,246 94,159, ,159,263 Held for Trading Securities Fully paid-up ordinary shares - Listed 297, , , ,000 Associates Habib Sugar Mills Limited 182, , , ,690 Habib Asset Management Limited 60, ,000 60, ,000 First Habib Income Fund 150, , , ,000 First Habib Stock Fund 10, ,000 10, ,000 First Habib Cash Fund 150, , , ,000 First Habib Islamic Stock Fund (Formerly First Habib Islamic Balanced Fund) 10, ,000 10, ,000 First Habib Islamic Income Fund 25, , Subsidiaries AL Habib Capital Markets (Private) Limited 587, , , , , , , ,000 AL Habib Credit & Finance (Hong Kong) Limited , , , ,127 Investments at cost 351,703,371 67,377, ,081, ,408,028 62,559, ,967,696 Less: Provision for diminution in the value of investments (5,700) 00 (5,700) (5,700) 00 (5,700) Investments (net of provisions) 351,697,671 67,377, ,075, ,402,328 62,559, ,961,996 (Deficit) / surplus on revaluation of held for trading securities - net (7,236) 00 (7,236) 3, ,385 Surplus / (deficit) on revaluation of available for sale securities - net ,530,935 (8,893) 3,522,042 6,042,721 19,467 6,062,188 Total Investments 355,221,370 67,368, ,590, ,448,434 62,579, ,027, The aggregate market value of held to maturity securities as at 30 June 2017 amounted to Rs. 103,486 million (31 December 2016: Rs. 103,979 million). 13

14 8. ADVANCES Note (Un-audited) (Audited) 30 June 31 December Loans, cash credits, running finances, etc. In Pakistan 242,607, ,997,397 Outside Pakistan 17,867,370 18,611, ,474, ,608,917 Islamic financing and related assets - gross ,480,430 18,134,258 Net investment in finance lease In Pakistan 11,853,478 8,305,218 Outside Pakistan ,853,478 8,305,218 Bills discounted and purchased (excluding market treasury bills) Payable in Pakistan 2,882,048 1,635,915 Payable outside Pakistan 17,689,880 12,582,959 20,571,928 14,218,874 Advances - gross 318,380, ,267,267 Provision against non-performing loans and advances Specific provision 8.1 (4,754,771) (4,882,330) General provision against small enterprises and consumer advances (as per SBP regulations) 8.2 (203,438) (194,839) General provision 8.3 (3,000,000) (2,750,000) (7,958,209) (7,827,169) Advances - net of provisions 310,422, ,440, Advances include Rs. 5, million (31 December 2016: Rs. 5, million) which have been placed under non-performing status as detailed below: 30 June 2017 (Un-audited) Classified advances Provision required Provision held Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total Category of classification Other assets especially mentioned 23, , Substandard 115, ,989 26, ,229 26, ,229 Doubtful 1,536, ,536, , , , ,201 Loss 3,064, ,038 4,003,993 3,046, ,038 3,985,897 3,046, ,038 3,985,897 4,741, ,038 5,680,415 3,815, ,038 4,754,771 3,815, ,038 4,754,771 14

15 31 December 2016 (Audited) Classified advances Provision required Provision held Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total Category of classification Other assets especially mentioned 18, , Substandard 94, ,120 23, ,071 23, ,071 Doubtful 1,426, ,426, , , , ,328 Loss 3,235, ,604 4,175,982 3,218, ,604 4,159,397 3,218, ,604 4,159,401 4,774, ,604 5,715,466 3,941, ,604 4,882,326 3,941, ,604 4,882, General provision represents provision amounting to Rs million (31 December 2016: Rs million) against consumer finance portfolio and Rs million (31 December 2016: Rs million) against advances to small enterprises as required by the Prudential Regulations issued by SBP. 8.3 In line with its prudent policies, the Bank also made general provision of Rs. 250 million during the period, bringing the total of such provision to Rs. 3,000 million (31 December 2016: Rs. 2,750 million) against its loans and advances portfolio. This general provision is in addition to the requirements of the Prudential Regulations. (Un-audited) (Audited) 30 June 31 December 9. OPERATING FIXED ASSETS Capital work-in-progress 960, ,415 Property and equipment 20,805,408 18,125,803 Intangible assets 108, ,813 21,874,217 18,894, The following additions were made during the period: (Un-audited) Half year ended 30 June 30 June Leasehold land 117, ,532 Buildings on leasehold land 352,819 1,076,175 Improvements to leasehold buildings 183, ,916 Furniture and fixtures 90,221 91,345 Electrical, office and computer equipments 766, ,003 Vehicles 155, ,421 Intangible assets 39,806 67,378 1,704,950 2,719,770 15

16 9.2 The written down value of fixed assets disposed off during the period were as follows: (Un-audited) Half year ended 30 June 30 June Leasehold land 7, Buildings on leasehold land 2, Improvements to leasehold buildings 1,283 6,434 Furniture and fixtures 1, Electrical, office and computer equipments 1,633 2,255 Vehicles 3,928 4,019 18,302 13, During the period, the Bank's leasehold land and buildings on leasehold land were revalued by M/s. Iqbal A. Nanjee & Co. on the basis of present physical condition and location of leasehold land and buildings on leasehold land. As a result of revaluation the market value of leasehold land and buildings on leasehold land were determined at Rs. 15,162 million. The details of revalued amounts are as follows: Total revalued amount of land 7,025,925 Total revalued amount of buildings 8,136,236 Had the leasehold land and buildings on leasehold land not been revalued, the total carrying amounts of revalued properties as at 30 June 2017 would have been as follows: Land 4,788,144 Buildings 5,071,829 (Un-audited) (Audited) 30 June 31 December 10. BORROWINGS Secured Borrowings from SBP Export refinance scheme 20,758,984 20,143,239 Renewable energy 1,923, Long term financing for imported and locally manufactured plant and machinery 8,900,235 5,632,293 Financing facility for storage of agricultural produce 67,847 56,875 31,650,284 25,832,407 Repurchase agreement borrowings 67,357,162 62,556,286 99,007,446 88,388,693 Unsecured Borrowings from financial institutions 00 4,183,940 Overdrawn nostros 159,058 1,144, ,058 5,328,652 99,166,504 93,717,345 16

17 11. DEPOSITS AND OTHER ACCOUNTS (Un-audited) (Audited) 30 June 31 December Note Customers Fixed deposits 118,997, ,762,820 Savings deposits 185,873, ,130,029 Current accounts - Remunerative 80,236,093 72,737,910 Current accounts - Non-remunerative 247,299, ,377, ,406, ,007,949 Financial institutions Remunerative deposits 17,671,523 14,150,564 Non-remunerative deposits 2,261,379 2,013,441 19,932,902 16,164, ,339, ,171, SUB-ORDINATED LOANS - unsecured Term Finance Certificates (TFCs) - V - (Unquoted) ,998,400 3,999, Term Finance Certificates - V - (Unquoted) Total issue Rupees 4,000 million Rating AA Rate Payable six monthly at six months KIBOR plus 0.75% without any floor and cap Redemption 6th-108th month: 0.36%; 114th and 120th month: 49.82% each Tenor 10 years Maturity March 2026 Note (Un-audited) (Audited) 30 June 31 December 13. SURPLUS ON REVALUATION OF ASSETS - NET OF TAX Fixed assets / non-banking assets ,238,061 2,650,950 Available for sale investments ,289,327 3,940,422 6,527,388 6,591,372 17

18 (Un-audited) (Audited) 30 June 31 December 13.1 Fixed assets / non-banking assets Balance at beginning of the period / year 3,421,927 3,489,993 Surplus on revaluation of the Bank s fixed assets / non-banking assets during the period / year 1,951,466 13,825 Disposal / adjustments (14,910) 00 Transfer to unappropriated profit in respect of incremental depreciation charged during the period / year (43,333) (81,891) 5,315,150 3,421,927 Related deferred tax liability on: Balance at beginning of the period / year 770, ,630 Revaluation of the Bank s fixed assets / non-banking assets during the period / year 321,328 2,009 Disposal / adjustments (49) 00 Transfer to unappropriated profit in respect of incremental depreciation charged during the period / year (15,167) (28,662) (1,077,089) (770,977) 4,238,061 2,650, Available for sale investments Federal Government Securities 3,407,075 4,457,817 Fully paid-up ordinary shares (52,583) 1,177,059 Term finance certificates, sukuk bonds and foreign currency bonds 48,770 10,294 Units of mutual funds 118, ,018 3,522,042 6,062,188 Related deferred tax liability (1,232,715) (2,121,766) 2,289,327 3,940, CONTINGENCIES AND COMMITMENTS 14.1 Direct credit substitutes Financial guarantees issued favouring: Financial institutions 1,102, ,792 Others 4,712,227 4,538,313 5,815,032 5,469, Transaction-related contingent liabilities Guarantees issued favouring: Government 33,348,410 34,649,327 Financial institutions 616, ,401 Others 15,597,265 11,682,502 49,561,899 46,926,230 18

19 14.8 Other contingencies (Un-audited) (Audited) 30 June 31 December 14.3 Trade-related contingent liabilities Letters of credit 95,914, ,691,663 Acceptances 21,963,196 16,622,601 Bankers liability rediscount 00 1,898, ,877, ,212, Commitments in respect of forward lending Commitments to extend credit (excluding commitments that are unilaterally cancellable) 12,482,421 10,967, Commitments in respect of forward exchange contracts Purchase 52,663,994 49,396,754 Sale 41,222,717 28,383,678 The maturities of above contracts are spread over the period upto one year Commitments for the acquisition of operating fixed assets 622, , Claims against the Bank not acknowledged as debts 4,765,920 4,459,758 Income tax returns of the Bank have been submitted upto and including the Bank s financial year The income tax assessments of the Bank are complete upto tax year For tax year 2012 and 2013, amended order was received from ACIR based on a rectification application filed by the Bank resulting in net aggregate tax impact of Rs million. After filing of appeal, Commissioner Inland Revenue (Appeals) has passed appellate orders by allowing Rs million. The Bank has filed an appeal before Income Tax Appellate Tribunal against the above referred orders. For tax years 2009 and 2011, Commissioner Inland Revenue (Appeals) has passed appellate orders by confirming disallowance of provision for non-performing loans, other provisions and amortization of intangible assets having an aggregate tax impact of Rs million. The Bank has filed an appeal before Income Tax Appellate Tribunal against the above referred orders. The management, based on the opinion of its tax advisor, is confident about the favourable outcome of the above matters. 19

20 (Un-audited) Half year ended Quarter ended 30 June 30 June 30 June 30 June 15. MARK-UP / RETURN / INTEREST EARNED On loans and advances to: Customers 8,656,873 7,028,821 4,580,391 3,625,127 Financial institutions 107,692 74,258 58,044 47,724 8,764,565 7,103,079 4,638,435 3,672,851 On investments: Available for sale securities 10,331,336 9,725,213 5,054,839 4,922,213 Held to maturity securities 5,454,104 7,864,311 2,767,397 3,977,508 15,785,440 17,589,524 7,822,236 8,899,721 On deposits with financial institutions 72, ,892 34,776 72,931 On securities purchased under resale agreements 29,689 31,011 13,841 5,971 On call money lendings 24 1, MARK-UP / RETURN / INTEREST EXPENSED 24,652,374 24,836,674 12,509,312 12,651,614 Deposits 9,369,195 8,665,489 4,828,955 4,271,358 Sub-ordinated loans 135, ,610 68, ,949 Repurchase agreement borrowings 1,782,676 2,380, ,471 1,346,737 Borrowings from SBP 320, , , ,267 Other borrowings 303, , , , BASIC AND DILUTED EARNINGS PER SHARE 11,911,901 12,078,244 5,973,030 6,142,504 Profit after taxation 4,559,820 3,786,434 2,255,009 1,251,780 (Number of shares in thousands) Weighted average number of ordinary shares 1,111,425 1,111,425 1,111,425 1,111,425 (Rupees) Basic and diluted earnings per share CASH AND CASH EQUIVALENTS (Un-audited) Half year ended 30 June 30 June Cash and balances with treasury banks 59,009,601 44,720,988 Balances with other banks 2,863,487 3,702,547 Overdrawn nostros (159,058) (455,922) 61,714,030 47,967,613 20

21 19. FAIR VALUE OF FINANCIAL INSTRUMENTS The table below analyses financial instruments measured at the end of reporting period by the level in the fair value hierarchy into which the fair value measurement is categorised: 30 June 2017 ( Un-audited) Carrying amount Fair value Available Held for Held to Loans and Other Other Total Level 1 Level 2 Level 3 Total for sale trading maturity receivables financial financial assets liabilities Note On-balance sheet financial instruments Financial assets measured at fair value - Investments Federal Government Securities (TBills + PIBs + Sukuk Bonds + FC Bonds) 312,037, ,037, ,037, ,037,626 Foreign Currency Bonds - Others 1,402, ,402, ,402, ,402,055 Sukuk Bonds - Others 965, , , ,889 Fully paid-up ordinary shares - Listed 2,116, , ,406,642 2,406, ,406,642 Units of mutual funds 1,743, ,743,780 1,743, ,743,780 Term Finance Certificates - Listed 706, , , ,482 Financial assets not measured at fair value - Cash and bank balances with treasury banks ,009, ,009, Balances with other banks ,863, ,863, Investments Federal Government Securities (TBills + PIBs + Sukuk Bonds + FC Bonds + TFC) 4,923, ,809, ,732, ,091, ,091,329 Foreign Currency Bonds - Others , , Sukuk Bonds - Others ,505, , ,640, Fully paid-up ordinary shares - Unlisted , , Term Finance Certificates - Unlisted , , Associates Listed shares , , , ,603 Mutual funds , , , ,689 Unlisted shares , , Subsidiaries - Unlisted shares , , Advances ,422, ,422, Other assets ,119, ,119, ,307, ,624 95,204, ,422,408 74,780, ,005,719 5,534, ,496, ,031,095 Financial liabilities not measured at fair value - Bills payable (16,339,860 ) (16,339,860 ) Borrowings (99,166,504 ) (99,166,504 ) Deposits and other accounts (652,339,479 ) (652,339,479 ) Sub - ordinated loans (3,998,400 ) (3,998,400 ) Other liabilities (9,741,839 ) (9,741,839 ) (781,586,082 ) (781,586,082 ) ,307, ,624 95,204, ,422,408 74,780,863 (781,586,082 ) 25,419,637 5,534, ,496, ,031,095 Off-balance sheet financial instruments measured at fair value Forward purchase of foreign exchange contracts ,663,994 52,663, ,815, ,815,894 Forward sale of foreign exchange contracts (41,222,717) (41,222,717) 00 (41,278,736 ) 00 (41,278,736 ) Off-balance sheet financial instruments not measured at fair value Commitment to extent credit ,482,421 12,482,

22 31 December 2016 (Audited) Carrying amount Fair value Available Held for Held to Loans and Other Other Total Level 1 Level 2 Level 3 Total for sale trading maturity receivables financial financial assets liabilities Note On-balance sheet financial instruments Financial assets measured at fair value - Investments Federal Government Securities (TBills + PIBs + Sukuk Bonds + FC Bonds) 291,880, ,880, ,880, ,880,945 Foreign Currency Bonds - Others 1,700, ,700, ,700, ,700,622 Sukuk Bonds - Others Fully paid-up ordinary shares - Listed 4,339, , ,497,152 4,497, ,497,152 Units of mutual funds 2,517, ,517,018 2,517, ,517,018 Term Finance Certificates - Listed 704, , , ,600 Financial assets not measured at fair value - Cash and bank balances with treasury banks ,600, ,600, Balances with other banks ,866, ,866, Investments Federal Government Securities (TBills + PIBs + Sukuk Bonds + FC Bonds + TFC) 5,128, ,489, ,618, ,305, ,305,566 Foreign Currency Bonds - Others , , Sukuk Bonds - Others ,837, , ,986, Fully paid-up ordinary shares - Unlisted , , Term Finance Certificates - Unlisted , , Associates Listed shares , , , ,877 Mutual funds , , , ,010 Unlisted shares , , Subsidiaries - Unlisted shares , , Advances ,440, ,440, Other assets ,432, ,432, ,948, ,385 94,159, ,440,098 64,661, ,366,710 8,477, ,887, ,364,790 Financial liabilities not measured at fair value - Bills payable (13,872,057) (13,872,057) Borrowings (93,717,345) (93,717,345) Deposits and other accounts (584,171,954) (584,171,954) Sub - ordinated loans (3,999,200) (3,999,200) Other liabilities (7,633,100) (7,633,100) (703,393,656) (703,393,656) ,948, ,385 94,159, ,440,098 64,661,860 (703,393,656 ) 26,973,054 8,477, ,887, ,364,790 Off-balance sheet financial instruments measured at fair value Forward purchase of foreign exchange contracts ,396,754 49,396, ,711, ,711,786 Forward sale of foreign exchange contracts (28,383,678) (28,383,678) 00 (28,563,379 ) 00 (28,563,379) Off-balance sheet financial instruments not measured at fair value Commitment to extent credit ,967,104 10,967, The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Fair value measurements using input for the assets or liabilities that are not based on observable market data (i.e. unobservable inputs) The Bank has not disclosed the fair values for these financial assets and liabilities, as these are for short term or reprice over short term. Therefore, their carrying amounts are reasonable approximation of fair value Fixed assets have been carried at revalued amounts determined by professional valuer (level 2 measurement) based on their assessment of the market value as disclosed in note 9. 22

23 20. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES The segment analysis with respect to business activity is as follows: Half year ended 30 June 2017 (Un-audited) Retail Commercial Inter Segment Total Banking Banking Elimination Total income 11,813,257 26,642,301 (8,897,303) 29,558,255 Total expenses (9,953,645) (20,834,938) 8,897,303 (21,891,280 ) Net income 1,859,612 5,807, ,666,975 As at 30 June 2017 (Un-audited) Segment assets (net of provisions) 670,855, ,202,607 (599,660,445 ) 830,397,970 Segment non performing loans 52,107 5,628, ,680,415 Segment provision required 44,360 4,710, ,754,771 Segment liabilities 665,964, ,940,930 (599,660,445 ) 787,244,863 Segment return on assets (ROA) (%)* 1.76% 3.51% Segment cost of funds (%)* 1.49% 2.89% Half year ended 30 June 2016 (Un-audited) Retail Commercial Inter Segment Total Banking Banking Elimination Total income 11,186,886 23,897,730 (7,865,897) 27,218,719 Total expenses (8,523,937) (19,721,155) 7,865,897 (20,379,195 ) Net income 2,662,949 4,176, ,839,524 As at 30 June 2016 (Un-audited) Segment assets (net of provisions) 545,595, ,027,719 (503,476,312) 751,147,198 Segment non performing loans 44,162 5,739, ,783,688 Segment provision required 39,840 4,530, ,569,961 Segment liabilities 543,815, ,638,282 (503,476,312) 711,977,028 Segment return on assets (ROA) (%)* 2.05% 3.37% Segment cost of funds (%)* 1.57% 2.94% *These percentages have been computed based on closing assets / liabilities figures. 23

24 21. RELATED PARTY TRANSACTIONS Related parties of the Bank comprise subsidiaries, associates (including entities having directors in common with the Bank), retirement benefit funds, major shareholders, directors and key management personnel and their close family members. Transactions with related parties of the Bank are carried out on an arm's length basis in terms of the policy as approved by the Board of Directors. The transactions with employees of the Bank are carried out in accordance with the terms of their employment. Transactions for the period / year end balances outstanding as at the period / year end with related parties are summarised as follows: 30 June 2017 (Un-audited) Subsidiaries Associates Non Key Retirement Total Executive Management Benefit Directors Personnel Funds Deposits At beginning of the period 14,314 2,777, , , ,775 4,642,116 Placements during the period 313,991 43,181,226 2,406,395 1,168,195 7,604,677 54,674,484 Withdrawals during the period (227,519) (43,789,231 ) (2,129,529) (1,053,514) (7,368,609) (54,568,402) At end of the period 100,786 2,169, , ,771 1,078,843 4,748,198 Advances At beginning of the period 00 1,391, , ,440,503 Given during the period 5,399,096 17,319,934 7,324 65, ,791,819 Repaid during the period (5,399,096) (17,226,392 ) (7,244) (31,872) 00 (22,664,604) At end of the period 00 1,484, , ,567,718 Investments At beginning of the period 200, , ,817 Investments made during the period 00 26, ,230 Investments redeemed during the period At end of the period 200, , ,047 Contingencies and commitments 00 1,051, ,051, December 2016 (Audited) Deposits At beginning of the year 13,185 3,398, , , ,824 4,353,523 Placements during the year 414, ,514,517 2,811,177 2,212,391 4,772, ,726,018 Withdrawals during the year (413,851) (117,135,141 ) (2,438,591) (2,193,840) (4,256,002) (126,437,425) At end of the year 14,314 2,777, , , ,775 4,642,116 Advances At beginning of the year , , ,032,663 Given during the year 5,650,821 27,478,082 5,112 89, ,223,108 Repaid during the year (5,650,821) (27,064,890 ) (5,046) (94,511) 00 (32,815,268) At end of the year 000 1,391, , ,440,503 Investments At beginning of the year 200, , ,817 Investments made during the year Investments redeemed during the year At end of the year 200, , ,817 Contingencies and commitments 00 1,191, ,191,933 24

25 Half year ended 30 June 2017 (Un-audited) Subsidiaries Associates Non Key Retirement Total Executive Management Benefit Directors Personnel Funds Forward purchase contracts Other assets 20, ,751 Other liabilities Unrealised loss on forward contracts Purchase of securities 00 1, ,230 Purchase of mutual funds 00 25, ,000 Sale of securities 00 63, ,000,096 1,063,201 Mark-up earned , , ,420 Mark-up expensed ,802 16,903 10,479 34, ,564 Bank charges and commission 1 4, ,735 Salaries and allowances , ,512 Bonus , ,194 Contribution to defined contribution plan , ,049 Contribution to defined benefit plan , ,410 Staff provident fund , ,851 Staff gratuity fund , ,500 Directors' fee , ,550 Insurance claim received 00 10, ,306 Insurance premium paid , ,332 Dividend income 00 44, ,821 Rental income 1, ,050 Rental paid 00 7, ,258 Commission expensed 1, ,566 Donation Other expensed 00 2, ,970 Other income Half year ended 30 June 2016 (Un-audited) Forward purchase contracts , ,768 Other assets 13, ,907 Other liabilities Unrealised loss on forward contracts 00 3, ,354 Purchase of securities Purchase of mutual funds Sale of securities 00 12, , ,365 Mark-up earned , , ,414 Mark-up expensed ,641 6,821 13,714 16, ,603 Bank charges and commission 00 2, ,081 Salaries and allowances , ,532 Bonus , ,496 Contribution to defined contribution plan , ,873 Contribution to defined benefit plan , ,454 Staff provident fund , ,168 Staff gratuity fund , ,000 Directors' fee , ,975 Insurance claim received 00 6, ,315 Insurance premium paid , ,086 Dividend income 00 41, ,044 Rental income 1, ,050 Rental paid Commission expensed 1, ,195 Donation , ,900 Other expensed 00 2, ,612 Other income