Ar 11 pt03

Consolidated Financial Statements of NBP and Its Subsidiary Companies 2011
Directors Report on Consolidated Financial Statement

As at December 31, 2011
It gives me great pleasure to present on behalf of the Board of Directors, the Consolidated Annual Report of the National Bank of Pakistan for the year ended December 31, 2011. The operating results and appropriations, as recommended by the Board are given below: Rs. in million Profit before taxation for year 2011 Taxation - Current year - Prior year(s) - Deferred After Tax Profit Non Controlling Interest Profit Brought Forward Transfer from on revaluation of fixed assets Profit available for appropriation Transfer to Statutory Reserve (10% of after tax profit) Bonus shares issued-2010 Cash dividend paid-2010 1,760 3,364 10,091 15,215 Profit carried forward Earning per share (Rs) 69,712 10.53 9,230 260 (1,083) 8,407 17,709 3 67,104 112 84,927 26,116
On behalf of the Board of Directors Qamar Hussain President Date: March 06, 2012
153
INDEPENDENT AUDITORS REPORT TO THE MEMBERS

Anjum Asim Shahid Rahman
Chartered Accountants 1st & 3rd Floor, Modern Motors House Beaumont Road Karachi 75530, Pakistan
KPMG Taseer Hadi & Co.
Chartered Accountants Sheikh Sultan Trust Building No. 2 Beaumont Road Karachi 75350, Pakistan
We have audited the annexed consolidated financial statements of National Bank of Pakistan (the holding company) and its subsidiary companies (together, The Group) comprising consolidated statement of financial position as at December 31, 2011 and the related consolidated profit and loss account, consolidated statement of comprehensive income, consolidated cash flow statement and consolidated statement of changes in equity together with the notes forming part thereof (here-in-after referred to as the the consolidated financial statements) for the year then ended. These consolidated financial statements include unaudited certified returns from the branches, except for 80 branches which have been audited by us and 17 branches audited by auditors abroad. These consolidated financial statements are responsibility of the Banks management. Our responsibility is to express our opinion on these financial statements based on our audit. We conducted our audit in accordance with the Auditing Standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements present fairly in all material respects the financial position of the Group as at December 31, 2011 and the results of its operations, its comprehensive income, its cash flows and changes in equity for the year then ended in accordance with the approved accounting standards as applicable in Pakistan. The consolidated financial statements of the Bank for the year ended December 31, 2010 were audited by Anjum Asim Shahid Rahman, Chartered Accountants and M. Yousuf Adil Saleem & Co., Chartered Accountants who through their report dated March 01, 2011 expressed an unqualified opinion thereon.
Anjum Asim Shahid Rahman
Chartered Accountants

Chartered Accountants Syed Iftikhar Anjum
Engagement Partner:
Karachi Date: March 6, 2012
154
Muhammad Shaukat Naseeb
Engagement Partner:
Consolidated Statement of Financial Position

2010 2011 US Dollars in '000 1,285,854 341,799 256,279 3,347,336 5,324,176 307,082 77,316 600,659 11,540,501 1,465,810 312,076 493,195 3,552,446 5,860,305 312,708 88,643 738,999 12,824,182 LIABILITIES 89,016 218,545 9,251,516 --1,372 --520,295 10,080,744 1,459,757 101,225 293,195 10,310,833 --1,031 --608,161 11,314,445 1,509,737 NET ASSETS REPRESENTED BY 149,586 279,384 746,046 1,175,016 5,538 1,180,554 279,203 1,459,757 186,983 291,359 775,046 1,253,388 5,509 1,258,897 250,840 1,509,737 Share capital Reserves Unappropriated profit 19 16,818,286 26,206,507 69,712,113 112,736,906 495,488 113,232,394 22,562,015 135,794,409 21 13,454,629 25,129,425 67,103,611 105,687,665 498,076 106,185,741 25,113,091 131,298,832 Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities Other liabilities 14 15 16 9,104,710 26,371,675 927,415,132 --92,739 --54,701,435 1,017,685,691 135,794,409 8,006,631 19,657,207 832,134,054 --123,413 --46,798,330 906,719,635 131,298,832 ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets Other assets Note 6 7 8 9 10 11 12 13 2011 2010 Rupees in '000 131,843,291 28,069,897 44,360,727 319,527,254 527,109,209 28,126,754 7,973,084 66,469,884 1,153,480,100 115,657,025 30,743,368 23,051,171 301,078,498 478,886,755 27,620,697 6,954,228 54,026,725 1,038,018,467
17 12 18
Non-controlling interest Surplus on revaluation of assets - net CONTINGENCIES AND COMMITMENTS 20
The annexed notes 1 to 45 and Annexure I and II form an integral part of these consolidated financial statements.
President
Director
Director
Director
155
Consolidated Profit and Loss Account

For the year ended December 31, 2011
2010 2011 US Dollars in '000 985,944 502,189 483,755 77,913 32,297 1,029 45 111,284 372,471 1,063,861 539,398 524,463 69,149 34,893 104,042 420,421 Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against non-performing advances-net Provision for diminution in the value of investments-net Impairment of goodwill Provision against off balance sheet obligations Net mark-up / interest income after provisions Note 23 24 2011 2010 Rupees in '000 95,689,741 48,516,517 47,173,224 6,219,671 3,138,494 ----9,358,165 37,815,059 88,681,381 45,169,744 43,511,637 7,007,975 2,904,949 92,593 3,965 10,009,482 33,502,155
10.4 9.11 18.1
109,751 11,866 25,336 27,932 75 (189) 744 2,003 24,280 201,798 574,269
110,606 17,735 35,540 26,574 (389) 359 930 1 28,274 219,630 640,051
NON MARK-UP / INTEREST INCOME Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale and redemption of securities - net Unrealized (loss) / gain on revaluation of investments classified as held-for-trading Share of loss from joint ventures Share of profits from associates - net of tax Gain on revalaution of previously held equity interest Other income Total non mark-up / interest income
25 26 9.12
9,948,547 1,595,192 3,196,630 2,390,211 (35,039) 32,181 83,559 --2,543,139 19,754,420 57,569,479
9,871,667 1,067,273 2,278,898 2,512,363 6,730 (16,976) 66,906 180,131 2,183,891 18,150,883 51,653,038
27
297,202 1,999 1,322 300,523 273,746 273,746 109,751 (10,430) (22,788) 76,533 197,213
341,993 6,168 1,533 349,694 290,357 290,357 102,616 2,891 (12,041) 93,466 196,891
NON MARK-UP / INTEREST EXPENSES Administrative expenses Other provisions / write offs Other charges Total non mark-up / interest expenses Extra ordinary / unusual items PROFIT BEFORE TAXATION Taxation - Current - Prior year(s) - Deferred
28 29
30 PROFIT AFTER TAXATION Attributable to:
30,760,815 554,810 137,852 31,453,477 26,116,002 --26,116,002 9,229,882 260,000 (1,083,045) 8,406,837 17,709,165
26,732,045 179,819 118,887 27,030,751 24,622,287 --24,622,287 9,871,640 (938,158) (2,049,600) 6,883,882 17,738,405
198,001 (788) 197,213
196,920 (29) 196,891
Shareholders of the bank Non-controlling interest
17,711,753 (2,588) 17,709,165

10.53
17,809,304 (70,899) 17,738,405

10.59
----------- US Dollars ----------0.12 0.12
------------ Rupees ------------
Basic and diluted earnings per share
31
President
Director
Director
Director
156
Consolidated Statement of Comprehensive Income

2010 2011 US Dollars in '000 Profit after taxation for the year Other comprehensive income: Exchange adjustments on translation of net assets of foreign branches, subsidiaries and joint venture Income tax relating to component of other comprehensive income 2011 2010 Rupees in '000
197,213
196,891
17,709,165
17,738,405
(244)
(7,598)
(683,390)
(21,955)
--(244) 196,969
--(7,598) 189,293
--(683,390) 17,025,775
--(21,955) 17,716,450
Comprehensive income transferred to equity Components of comprehensive income not reflected in equity
(2,054) 3,092 1,038 198,007
(27,528) (714) (28,242) 161,051
Deficit on revaluation of investments Deferred tax on revaluation of investments
(2,476,068) (64,189) (2,540,257) 14,485,518
(184,745) 278,133 93,388 17,809,838
Total comprehensive income Attributable to:
198,795 (788) 198,007
161,080 (29) 161,051
Shareholders of the bank Non-controlling interest
14,488,106 (2,588) 14,485,518
17,880,737 (70,899) 17,809,838
Surplus arising on revaluation of investments has been reported in accordance with the requirements of the directives of the State Bank of Pakistan in a separate account below equity.
President
Director
Director
Director
157
Consolidated Cash Flow Statement

2010 2011 US Dollars in '000
CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Less: Dividend income Adjustments: Depreciation Amortization Provision against non-performing advances - net Provision for diminution in the value of investments - net Provision against off balance sheet obligations Unrealized loss / (gain) on revaluation of investments classified as held-for-trading Capital gain on redemption of NI(U)T LoC Units Impairment of goodwill Gain on sale of operating fixed assets Financial charges on leased assets Share of (Gain) / loss from joint ventures Share of profits from associates Other provisions / write offs (Increase) / decrease in operating assets Lendings to financial institutions - gross Net investment in trading securities Advances - net Other assets (excluding advance tax) Increase in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities (excluding current taxation) Income tax paid Financial charges paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Net investment in available-for-sale securities Net investment in held-to-maturity securities Dividend income received Investment in operating fixed assets (including intangible) Effects of exchange differences on translation of net assets of foreign branches Investment in subsidiary and associates Sale proceeds of operating fixed assets disposed off Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Payments of lease obligations Dividend paid Net cash used in financing activities Increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 32 11.2 11.3 10.4 9.11 18.1 9.12 26 11.7 Note
2011 2010 Rupees in '000
273,746 (11,866) 261,880 12,291 144 77,913 32,297 44 (75) (3,273) 1,029 (389) 242 189 (744) 1,998 121,666 383,546 (37,706) (46,287) (118,930) 51,274 (151,649) (29,068) (285,103) 1,163,158 49,667 898,654 (103,911) (242) (104,153) 1,026,398 (1,012,188) 101,626 11,866 (30,662) (244) (2,327) 701 (931,228) (304) (89,615) (89,919) 5,251 1,616,427 1,621,678
290,357 (17,735) 272,622 14,865 388 69,149 34,893 --390 (7,127) (197) 337 (358) (929) 6,168 117,579 390,201 (237,360) (80,514) (605,278) (84,177) (1,007,329) 12,208 76,459 1,059,318 86,045 1,234,030 (158,666) (337) (159,003) 457,899 56,006 (172,999) 15,683 (23,039) (7,598) (63,086) 1,907 (193,126) (689) (112,037) (112,726) 152,047 1,621,682 1,773,729
26,116,002 (1,595,192) 24,520,810 1,337,073 34,854 6,219,671 3,138,494 --35,039 (641,081) --(17,710) 30,335 (32,181) (83,559) 554,810 10,575,745 35,096,555 (21,349,556) (7,241,912) (54,442,125) (7,571,331) (90,604,924) 1,098,079 6,877,148 95,281,078 7,739,352 110,995,657 (14,271,368) (30,335) (14,301,703) 41,185,585 5,037,467 (15,560,547) 1,410,628 (2,072,260) (683,390) (5,674,293) 171,508 (17,370,887) (62,004) (10,077,219) (10,139,223) 13,675,475 145,863,319 159,538,794
24,622,287 (1,067,273) 23,555,014 1,105,494 12,920 7,007,975 2,904,949 3,965 (6,730) (294,424) 92,593 (34,968) 21,766 16,976 (66,906) 179,819 10,943,429 34,498,443 (3,391,495) (4,163,338) (10,697,281) 4,611,992 (13,640,122) (2,614,538) (25,643,768) 104,621,041 4,467,321 80,830,056 (9,346,271) (21,766) (9,368,037) 92,320,340 (91,041,973) 9,140,800 1,067,273 (2,757,917) (21,955) (209,288) 63,185 (83,759,875) (27,310) (8,060,510) (8,087,820) 472,645 145,390,674 145,863,319
11.7
President
Director
Director
Director
158
Consolidated Statement of Changes in Equity

Share capital
Revenue Exchange Bonus Shares Statutory General Issue Translation Reserves Capital
Unappropriated Profit
Sub total
Non Controlling Interest
Total
------------------------------------------------------------ Rupees in '000 ----------------------------------------------------Balance as at January 1, 2010 Acquisition of NBP Fullerton Asset Management (Formerly National Asset Fullerton Management) Total comprehensive income for the year Profit after tax for the year ended December 31, 2010 Other comprehensive income - Exchange adjustment on translation of foreign branches, subsidiaries and joint venture Transferred from surplus on revaluation of operating fixed assets Transfer to statutory reserve Transactions with owners, recorded directly in equity Transfer for issue of bonus shares Issue of bonus shares (25%) Cash dividend paid for the year ended December 31, 2009 (Rs. 7.5 per share) 2,690,927 2,690,927 (2,690,927) (2,690,927) 10,763,702 7,529,156 --15,344,565 521,338 61,696,594 95,855,355 110,930 95,966,285
458,045
458,045
17,809,304
17,809,304
(70,899)
17,738,405
(21,955) (21,955) -
1,756,321
17,809,304 117,738 (1,756,321)
(21,955) 17,787,349 117,738 -
(70,899) -
(21,955) 17,716,450 117,738 -
2,690,927 13,454,629
7,507,201
- (8,072,777) - (10,763,704) 67,103,611
(8,072,777) (8,072,777) 105,687,665
- (8,072,777) - (8,072,777) 498,076 106,185,741
Balance as at December 31, 2010 Total comprehensive income for the year Profit after tax for the year ended December 31, 2011 Other comprehensive income - Exchange adjustment on translation of foreign branches, subsidiaries and joint venture Transferred from surplus on revaluation of operating fixed assets Transfer to statutory reserve Transactions with owners, recorded directly in equity Transfer for issue of bonus shares Issue of bonus shares (25%) Cash dividend paid for the year ended December 31, 2010 (Rs. 7.5 per share)
17,100,886 521,338
17,711,753
17,711,753
(2,588)
17,709,165
(683,390) (683,390) -
1,760,472
17,711,753 111,850 (1,760,472)
(683,390) 17,028,363 111,850 -
(2,588) -
(683,390) 17,025,775 111,850 -
3,363,657
3,363,657 (3,363,657)
(3,363,657) -
3,363,657 16,818,286
6,823,811
- (10,090,972) (10,090,972) - (13,454,629) (10,090,972) 69,712,113 112,736,906
- (10,090,972) - (10,090,972) 495,488 113,232,394
Balance as at December 31, 2011
18,861,358 521,338
President
Director
Director
Director
159
Notes to the Consolidated Financial Statements

1. THE GROUP AND ITS OPERATIONS 1.1 The "Group" consists of: Holding Company National Bank of Pakistan (the bank) Percentage Holding 2011 % 100 100 100 100 58.32 54 76.51 2010 % 100 100 100 100 58.32 54 76.51
Subsidiary Companies NBP Leasing Limited JSC Subsidiary Bank of NBP in Kazakhstan NBP Exchange Company Limited NBP Modaraba Management Company Limited Taurus Securities Limited NBP Fullerton Asset Management Limited Cast-N-Link Products Limited (Note 9.10)
The Group is principally engaged in commercial banking, modaraba management, brokerage, leasing, foreign currency remittances, asset management, exchange transactions and investment advisory services. Brief profile of the holding company and subsidiaries is as follows: National Bank of Pakistan National Bank of Pakistan (the Bank) was incorporated in Pakistan under the National Bank of Pakistan Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. It's registered and head office is situated at I.I. Chundrigar Road, Karachi. The bank is engaged in providing commercial banking and related services in Pakistan and overseas. The bank also handles treasury transactions for the Government of Pakistan (GoP) as an agent to the State Bank of Pakistan (SBP). The Bank operates 1,277 (2010: 1,266) branches in Pakistan and 23 (2010: 23) overseas branches (including the Export Processing Zone branch, Karachi). The bank also provides services as trustee to National Investment Trust (NIT), Long-Term Credit Fund (LTCF) and Endowment Fund for student loans scheme. NBP Leasing Limited, Pakistan NBP Leasing Limited (NBPLL) was incorporated in Pakistan on November 7, 1995 as a public limited unquoted company under the Companies Ordinance, 1984. The registered office of NBPLL is situated at 4th Floor, P.R.C. Towers, M.T. Khan Road, Karachi. NBPLL is principally engaged in the business of leasing as licensed under the Non-Banking Finance Companies Rules, 2003 (the NBFC Rules). NBPLL was also engaged previously in the business of discounting / trade of negotiable instruments which has been discontinued, since May 15, 2008 due to changes in Non-Banking Finance Companies and Notified Entities Regulations, 2008. JSC Subsidiary Bank of NBP in Kazakhstan JSC Subsidiary Bank of NBP in Kazakhstan (JSC) is a joint-stock bank, which was incorporated in the Republic of Kazakhstan in 2001. JSC conducts its business under license number 25 dated October 29, 2005 (initial license was dated December 14, 2001) and is engaged in providing commercial banking services. The registered office of JDC is located at 105, Dostyk Ave, 050051, Almaty. NBP Exchange Company Limited, Pakistan NBP Exchange Company Limited (NBPECL) is a public unlisted company, incorporated in Pakistan on September 24, 2002 under the Companies Ordinance, 1984. NBPECL obtained license for commencement of operations from State Bank of Pakistan (SBP) on November 25, 2002 and commencement of business certificate on December 26, 2003 from the Securities and Exchange Commission of Pakistan (SECP). The registered office of NBPECL is situated at Shaheen Complex, M.R.Kiryani Road, Karachi. NBPECL is engaged in foreign currency remittances and exchange transactions. NBPECL has 12 branches (2010: 12 branches).
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NBP Modaraba Management Company Limited, Pakistan NBP Modaraba Management Company Limited (NBPMMCL) is a public unlisted company, incorporated in Pakistan on August 6, 1992. Its registered office is 26 - Mclagon Road, Lahore. The principal purpose of the NBPMMCL is to float and manage modarabas. NBPMMCL at present is managing First National Bank Modaraba. Taurus Securities Limited, Pakistan Taurus Securities Limited (TSL) is a public unlisted company, incorporated in Pakistan on June 27,1993 under the Companies Ordinance, 1984. The registered office of TSL is situated at 6th Floor, Progressive Plaza, Beaumont Road, Civil Lines, Karachi. It is engaged in the business of stock brokerage, investment counselling and fund placements. TSL is a corporate member of the Karachi Stock Exchange (Guarantee) Limited. NBP Fullerton Asset Management Limited NBP Fullerton Asset Management Limited (NAFA), was incorporated in Pakistan as public limited company on August 24, 2005 under the Companies Ordinance, 1984 and obtained certificate for commencement of business on December 19, 2005. The main sponsors of NAFA are National Bank of Pakistan and Alexandra Fund Management Pte. Ltd. (a member of Fullerton Fund Management Group, Singapore). the company is mainly involved in the business of asset management and investment advisory services. The company has been issued license by the Securities and Exchange Commission of Pakistan (SECP) to carry on business of asset management services and investment advisory services as a Non-Banking Finance Company (NBFC) under section of 282C of the Companies Ordinance, 1984 and under the Non-Banking Finance Companies and Notified Entities Regulations, 2008. The principal / registered office of the company is situated at 9th Floor, Adamjee House, I.I. Chundrigar Road, Karachi. The Pakistan Credit Rating Agency Limited has assigned management quality rating AM2- to NBP Fullerton Asset Management Limited. As at December 31, 2011 the company is managing the following funds and discretionary portfolio: Type of Fund 1.2 NAFA Income Opportunity Fund, formerly NAFA Cash Fund NAFA Income Fund NAFA Islamic Aggressive Income Fund NAFA Islamic Multi Asset Fund NAFA Multi Asset Fund NAFA Stock Fund NAFA Government Securities Liquid Fund NAFA Savings Plus Fund NAFA Riba Free Savings Fund NAFA Asset Allocation Fund NAFA Financial Sector Income Fund Discretionary Portfolio Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund
Basis of Consolidation The consolidated financial statements include the financial statements of the bank (holding company) and its subsidiary companies together - "the Group". Subsidiary companies are consolidated from the date on which more than 50% of voting rights are transferred to the Group or power to control the company is established and excluded from consolidation from the date of disposal or when the control is lost. The assets, liabilities, income and expenses of subsidiary companies have been consolidated on a line by line basis. Income and expenses of subsidiaries acquired during the year are included in the consolidated statement of the comprehensive income from the effective date of acquisition.
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Non-Controlling interest / (minority interes) in equity of the subsidiary companies are measured at fair value for all the subsidiaries acquired from period beginning on or after January 1, 2010 whereas minority interest of previously acquired subsidiary is measured at the portion of operation and of net assets of subsidiary companies attributable to interest which is not owned by holding company. Material intra-group balances and transactions have been eliminated. The management of the Bank had applied to the Securities & Exchange Commission of Pakistan (SECP) for the exemption from the requirements of section 237 of the Companies Ordinance, 1984 in respect of consolidating its subsidiary Cast-N-Link Products Limited (CNL). The SECP, vide its letter #EMD/233/627/2002-852 dated January 6, 2012 under section 237(8) of the Companies Ordinance, 1984, based on the fact that investments of the Bank in CNL is not material and comprise of 0.0003% of the total assets of the Bank, and the investment have been fully provided for, granted the exemption from consolidating CNL in its financial statements for the year ended December 31, 2011.
2. BASIS OF PRESENTATION 2.1 In accordance with the directives of the Federal Government of Pakistan regarding shifting of banking system to Islamic modes, the SBP has issued various circulars from time to time. Permissible form of trade related mode of financing includes purchase of goods by the Bank 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 financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. Key financial figures of the Islamic banking branches of the Bank have been disclosed in note 42 to these consolidated financial statements. 2.2 The US Dollar amounts shown on the consolidated statement of financial position, consolidated profit and loss account, consolidated statement of comprehensive income and consolidated cash flow statement are stated as additional information solely for the convenience of readers. For the purpose of conversion to US Dollars, the rate of Rs. 89.9457 to 1 US Dollar has been used for 2010 and 2011 as it was the prevalent rate as on December 31, 2011.
3. STATEMENT OF COMPLIANCE 3.1 These consolidated 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 and Islamic Financial Accounting Standards (IFASs) issued by the Institute of Chartered Accountants of Pakistan as are notified under the Companies Ordinance, 1984, the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and directives issued under the Companies Ordinance, 1984 and the State Bank of Pakistan. Wherever the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 or directives issued under the Companies Ordinance, 1984 and the State Bank of Pakistan differ with the requirements of IFRSs or IFASs, the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 or the requirements of the said directives shall prevail. SBP has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments: Recognition and Measurement' and IAS 40, 'Investment Property' for Banking Companies through BSD Circular Letter No. 10 dated August 26, 2002. Further, according to the notification of SECP dated April 28, 2008, the 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 financial statements. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP. Application of new and revised International Financial Reporting Standards (IFRSs) 3.3.1 New / revised standards and interpretations to existing standards effective from current period or earlier adopted The following standards (revised or amended) and interpretations became effective for the current financial period or earlier adopted: IFRS 2 (Amendments) "Share-based Payments - Group cash-settled share-based payment transactions".
3.2
3.3
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On August 14, 2009, the Government of Pakistan (GoP) launched Benazir Employees Stock Option Scheme (the Scheme) for employees of certain State Owned Enterprises (SOEs) and non-State Owned Enterprises where GoP holds significant investments (non-SOEs). The Scheme is applicable to permanent and contractual employees who were in employment of these entities on the date of launch of the Scheme, subject to completion of five years vesting period by all contractual employees and by permanent employees in certain instances. The Scheme provides for a cash payment to employees on retirement or termination based on the price of shares of respective entities. To administer this scheme, GoP shall transfer 12% of its investment in such SOEs and non-SOEs to a Trust Fund created for the purpose by each of such entities. The eligible employees would be allotted units by respective Trust Fund in proportion to their respective length of service and on retirement or termination such employees would be entitled to receive such amounts from respective Trust Fund in exchange for the surrendered units as would be determined based on market price for listed entities or break-up value for non-listed entities. The shares relating to the surrendered units would be transferred back to GoP. The Scheme also provides that 50% of dividend related to shares transferred to the respective Trust Fund would be distributed amongst the unit-holder employees. The balance 50% dividend would be transferred by the respective Trust Fund to the Central Revolving Fund managed by the Privatization Commission of Pakistan for payment to employees against surrendered units. The deficit, if any, in Trust Fund to meet the re-purchase commitment would be met by the GoP. An employees trust fund to administer the scheme for the Banks employees was formed on October 26, 2010. However, the shares have not yet been transferred to the Trust Fund. The Scheme, developed in compliance with the stated GoP policy of empowerment of employees of State Owned Enterprises, needs to be accounted for by the covered entities, including the Bank, under the provisions of amended International Financial Reporting Standard 2 Share Based Payments (IFRS 2). Securities and Exchange Commission of Pakistan has granted an exemption from application of IFRS 2 to the Scheme. Had the exemption not been granted, the staff costs of the Bank for the period would have been higher by Rs. 1,125 million (December 31, 2010: Rs. 1,125 million), profit before taxation would have been lower by Rs. 1,125 million (December 31, 2010: Rs. 1,125 million), unappropriated profit would have been lower by Rs. 2,677 million (December 31, 2010: Rs. 1,552 million) and reserves would have been higher by Rs. 2,677 million (December 31, 2010: Rs. 1,552 million), hence, there would have been no impact on net equity. Further, earnings per share would have been lower by Rs. 0.67 per share (December 31, 2010: Rs. 0.67). 3.3.2 The following standards, amendments and interpretations of approved accounting standards will be effective for accounting periods beginning on or after January 01, 2012: Amendments to IAS 12 deferred tax on investment property (effective for annual periods beginning on or after January 01, 2012). The 2010 amendment provides an exception to the measurement principle in respect of investment property measured using the fair value model in accordance with IAS 40 Investment Property. The measurement of deferred tax assets and liabilities, in this limited circumstance, is based on a rebuttable presumption that the carrying amount of the investment property will be recovered entirely through sale. The presumption can be rebutted only if the investment property is depreciable and held within a business model whose objective is to consume substantially all of the assets economic benefits over the life of the asset. The amendments are not relevant to the Group's financial statements. IAS 27 Separate Financial Statements (2011) - (effective for annual periods beginning on or after January 01, 2013). IAS 27 (2011) supersedes IAS 27 (2008). Three new standards IFRS 10 Consolidated Financial Statements, IFRS 11- Joint Arrangements and IFRS 12- Disclosure of Interest in Other Entities dealing with IAS 27 would be applicable effective January 01, 2013. IAS 27 (2011) carries forward the existing accounting and disclosure requirements for separate financial statements, with some minor clarifications. The amendment are not likely to have an impact on financial statements of the Bank.
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IAS 28 Investments in Associates and Joint Ventures (2011) - (effective for annual periods beginning on or after January 01, 2013). IAS 28 (2011) supersedes IAS 28 (2008). IAS 28 (2011) makes the amendments to apply IFRS 5 to an investment, or a portion of an investment, in an associate or a joint venture that meets the criteria to be classified as held for sale; and on cessation of significant influence or joint control, even if an investment in an associate becomes an investment in a joint venture. The amendment are not likely to have an impact on Group's financial statements. IAS 19 Employee Benefits (amended 2011) - (effective for annual periods beginning on or after January 01, 2013). The amended IAS 19 includes the amendments that require actuarial gains and losses to be recognised immediately in other comprehensive income; this change will remove the corridor method and eliminate the ability for entities to recognise all changes in the defined benefit obligation and in plan assets in profit or loss, which currently is allowed under IAS 19; and that the expected return on plan assets recognised in profit or loss is calculated based on the rate used to discount the defined benefit obligation. During the year, the Group has not recognised any actuarial loss in the consolidated profit and loss account and its net unrecognised actuarial loss at December 31, 2011 amounted to Rs. 5,259 million. Following the change actuarial losses will be recorded immediately in other comprehensive income. Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) - (effective for annual periods beginning on or after July 01, 2012). The amendments require that an entity present separately the items of other comprehensive income that would be reclassified to profit or loss in the future if certain conditions are met from those that would never be reclassified to profit or loss. The amendments do not address which items are presented in other comprehensive income or which items need to be reclassified. The requirements of other IFRSs continue to apply in this regard. The amendments are not likely to have an impact on Group's financial statements. Disclosures Transfers of Financial Assets (Amendments to IFRS 7) - (effective for annual periods beginning on or after July 01, 2011). The amendments introduce new disclosure requirements about transfers of financial assets, including disclosures for financial assets that are not derecognised in their entirety; and financial assets that are derecognised in their entirety but for which the entity retains continuing involvement. The amendments are not likely to have an impact on Group's financial statements. Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) (effective for annual periods beginning on or after January 01, 2014). The amendments address inconsistencies in current practice when applying the offsetting criteria in IAS 32 Financial Instruments: Presentation. The amendments clarify the meaning of currently has a legally enforceable right of set-off; and that some gross settlement systems may be considered equivalent to net settlement. The amendments are not likely to have an impact on Group's financial statements. Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) (effective for annual periods beginning on or after January 01, 2013). The amendments to IFRS 7 contain new disclosure requirements for financial assets and liabilities that are offset in the statement of financial position or subject to master netting agreement or similar arrangement. The amendments are not likely to have an impact on Group's financial statements. IFRIC 20 - Stripping cost in the production phase of a surface mining (effective for annual periods beginning on or after January 01, 2013). The interpretation requires production stripping cost in a surface mine to be capitalized if certain criteria are met. The interpretation is not relevant to the Group's financial statements.
4. BASIS OF MEASUREMENT These consolidated financial statements have been prepared under the historical cost convention except for revaluation of land and buildings which are stated at revalued amount and certain investments, commitments in respect of certain forward exchange contracts and derivative financial instruments that are carried at fair value.
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5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 5.1 Business Combination Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the bank, liabilities incurred by the bank to the former owners of the acquiree and the equity interests issued by the bank in exchange for control of the acquiree. Acquisitionrelated costs are recognised in profit and loss account as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the bank's net assets in the event of liquidation are measured at fair value at the date of the acquisition. When a business combination is achieved in stages, the bank's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the bank obtains control) and the resulting gain or loss, if any, is recognised in profit or loss account. 5.2 Goodwill Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the subsidiary company. For the purposes of impairment testing, goodwill is allocated to each of the bank's cash-generating units (or entities of cash-generating units) that is expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cashgenerating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit and loss account. An impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. 5.3 Cash and cash equivalents Cash and cash equivalents include cash and balances with treasury banks and balances with other banks in current and deposit accounts less overdrawn nostro accounts.
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5.4 Investments Investments other than those categorised as held-for-trading are initially recognised at fair value which includes transactions costs associated with the investments. Investments classified as held-for-trading are initially recognised at fair value, and transaction costs are expensed in the profit and loss account. All regular way purchases / sales of investment are recognised on the trade date, i.e., the date the Bank commits to purchase / sell the investments. Regular way purchases or sales of investment require delivery of securities within the time frame generally established by regulation or convention in the market place. The Bank has classified its investment portfolio, except for investments in subsidiaries, associates and joint ventures, into held-for-trading, held-to-maturity and available-for-sale as follows: Held-for-trading These are 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. These are carried at market value, with the related unrealized gain / (loss) on revaluation being taken to profit and loss account. Held-to-maturity These are securities with fixed or determinable payments and fixed maturity that are held with the intention and ability to hold to maturity. These are carried at amortised cost. Available-for-sale These are investments that do not fall under the held-for-trading or held-to-maturity categories. These are carried at market value except in case of unquoted securities where market value is not available, which are carried at cost less provision for diminution in value, if any. Surplus / (deficit) on revaluation is taken to surplus / (deficit) on revaluation of assets account shown below equity. Provision for diminution in value of investments in respect of unquoted shares is calculated with reference to book value of the same. On derecognition or impairment in quoted available-for-sale investments, the cumulative gain or loss previously reported as 'surplus / (deficit) on revaluation of assets' below equity is included in the consolidated profit and loss account for the period. Provision for diminution in value of investments for unquoted debt securities is calculated as per the SBP's Prudential Regulations. Held-for-trading and quoted available-for-sale securities are marked to market with reference to ready quotes on Reuters page (PKRV) or MUFAP or the Stock Exchanges, as the case may be. Associates Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for under the equity method of accounting. However, in case where associates are considered as fully impaired and financial statements are not available these investments are stated at cost less provision. Under the equity method, the Groups share of its associates post-acquisition profits or losses is recognized in the consolidated profit and loss account, its share of post-acquisition movements in reserves is recognized in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Groups share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate. Joint venture - The Group has interests in joint venture which is jointly controlled entity. A joint venture is contractual arrangement whereby two or more parties undertake in economic activity that is subject to a joint control and includes a jointly controlled entity that involves the establishment of separate entity in which each venturer has an interest. The Group accounts for its interest in joint venture using the equity method of accounting. The carrying values of investments are reviewed for impairment when indications exist that the carrying values may exceed the estimated recoverable amounts.
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5.5 Discount of negotiable instruments These are stated at amortized cost less provision for doubtful debts, if any. The provision is made in accordance with the SECP Prudential Regulations for Non-Banking Finance Companies. 5.6 Repurchase and resale agreements Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue to be recognised in the consolidated statement of financial position and are measured in accordance with accounting policies for investment securities. The counterparty liability for amounts received under these agreements is included in borrowings. The difference between sale and repurchase price is treated as markup / return / interest expense and accrued over the life of the repo agreement using effective yield method. Securities purchased with a corresponding commitment to resell at a specified future date (reverse repos) are not recognised in the consolidated statement of financial position, as the Bank does not obtain control over the securities. Amounts paid under these agreements are included in lendings to financial institutions. The difference between purchase and resale price is treated as mark-up / return / interest income and accrued over the life of the reverse repo agreement using effective yield method. 5.7 Derivative financial instruments Derivative financial instruments are initially recognised at fair value on the dates on which the derivative contracts are 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 instruments is taken to the profit and loss account. 5.8 Financial instruments All financial assets and financial liabilities are recognized at the time when the Group becomes a party to the contractual provisions of the instrument. A financial asset is derecognised where (a) the rights to receive cash flows from the asset have expired; or (b) the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (i) the Group has transferred substantially all the risks and rewards of the asset, or (ii) the Group has neither transferred nor retained substantially all the risk and rewards of the asset, but has transferred control of the asset. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Any gain or loss on derecognition of the financial assets and financial liabilities is taken to income currently. 5.9 Advances Advances are stated net off specific and general provisions. Provisions are made in accordance with the requirements of Prudential Regulations issued by the SBP and charged to the profit and loss account. These regulations prescribe an age based criteria (as supplemented by subjective evaluation of advances by the banks) for classification of non-performing loans and advances and computing provision / allowance there against. Such regulations also require the Bank to maintain general provision / allowance against consumer advances at specified percentage of such portfolio. General provision for loan losses of overseas branches is made as per the requirements of the respective central banks. Advances are written off where there are no realistic prospects of recovery. 5.10 Net investment in lease finance Leases where the Group transfers substantially all the risk and rewards incidental to ownership of the assets to the lessee are classified as finance leases. Net investment in lease finance is recognised at an amount equal to the aggregate of minimum lease payment including any guaranteed residual value and excluding unearned finance income, write-offs and provision for doubtful lease finances, if any. The provision against lease finance is made in accordance with the requirements of the NBFC Regulations and the internal criteria as approved by the Board of Directors of NBPLL.
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5.11 Operating fixed assets and depreciation Property and equipment Owned assets Property and equipment except land and buildings are stated at cost less accumulated depreciation and impairment losses, if any. Land is stated at revalued amount. Buildings are stated at revalued amount less accumulated depreciation and impairment, if any. Cost of operating fixed assets of foreign branches include exchange differences arising on translation at year-end rates. Depreciation is charged to profit and loss account applying the diminishing balance method except vehicles, computers and peripheral equipment and furnishing provided to executives, which are depreciated on straight-line method at the rates stated in note 11.2. Depreciation is charged from the month in which the assets are brought into use and no depreciation is charged from the month the assets are deleted. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the consolidated profit and loss account during the period in which they are incurred. Assets are derecognised when disposed off or when no future economic benefits are expected from its use or disposal. Gains and losses on disposal of property and equipment are included in consolidated profit and loss account currently. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each consolidated statement of financial position date. Land and buildings' valuation are carried out by professionally qualified valuers with sufficient regularity to ensure that their carrying amount does not differ materially from their fair value. The surplus arising on revaluation of fixed assets is credited to the Surplus on Revaluation of Assets account shown below equity. The bank has adopted the following accounting treatment of depreciation on revalued assets, keeping in view the requirements of the Companies Ordinance, 1984 and SECP's SRO 45(1)/2003 dated January 13, 2003: depreciation on assets which are revalued is determined with reference to the value assigned to such assets on revaluation and depreciation charge for the year is taken to the consolidated profit and loss account; and an amount equal to incremental depreciation for the year net of deferred taxation is transferred from Surplus on Revaluation of Fixed Assets account to unappropriated profit through consolidated statement of changes in equity to record realization of surplus to the extent of the incremental depreciation charge for the year.
Leased assets (as lessee) Assets subject to finance lease are accounted for by recording the asset and the related liability. These are recorded at lower of fair value and the present value of minimum lease payments at the inception of lease and subsequently stated net of accumulated depreciation. Depreciation is charged on the basis similar to the owned assets. Financial charges are allocated over the period of lease term so as to provide a constant periodic rate of financial charge on the outstanding liability. Ijarah (as lessor) Assets leased out under 'Ijarah' are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Assets under Ijarah are depreciated over the period of lease term. However, in the event the asset is expected to be available for re-Ijarah, depreciation is charged over the economic life of the asset using straight line basis. Ijarah income is recognised on a straight line basis over the period of Ijarah contract.
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Intangible assets Intangible assets are stated at cost less accumulated amortization and impairment losses, if any. Amortization is charged to income applying the straight-line method at the rates stated in note 11.3. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Capital work-in-progress Capital work-in-progress is stated at cost. These are transferred to specific assets as and when assets are available for use. Impairment The carrying values of operating fixed assets are reviewed for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amounts, operating fixed assets are written down to their recoverable amounts. The resulting impairment loss is taken to consolidated profit and loss account except for impairment loss on revalued assets which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of assets. Where impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised recoverable amount but limited to the extent of the amount which would have been determined had there been no impairment. Reversal of impairment loss is recognized as income. 5.12 Deposits and their cost Deposits are recorded at the fair value of proceeds received. Deposit costs are recognised as an expense in the period in which these are incurred using effective markup / interest rate method. 5.13 Taxation Current Provision of current taxation is based on taxable income for the year determined in accordance with the prevailing laws of taxation on income earned for local as well as foreign operations, as applicable to the respective jurisdictions. The charge for the current tax also includes adjustments wherever considered necessary relating to prior years, arising from assessments framed during the year. Deferred Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognised for all deductible temporary differences and unused tax losses, to the extent that it is probable that taxable profits will be available against which the deductible temporary differences and unused tax losses can be utilised. The carrying amount of deferred income tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit or deductable temporary differences will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to gain / loss recognized in surplus on revaluation of assets is charged / credited to such account.
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5.14 Employee benefits 5.14.1 Defined benefit plans Pension scheme The Group operates an approved funded pension scheme for its eligible employees. The Group's costs are determined based on actuarial valuation carried out using Projected Unit Credit Method. Actuarial gains / losses exceeding, the higher of 10% of present value of defined benefit obligation or 10% of the fair value of plan assets are recognized as income or expense in the profit and loss account over the estimated working lives of the employees. Where the fair value of plan assets, exceeds the present value of defined benefit obligation together with unrecognized actuarial gains or losses and unrecognized past service cost, the Group reduces the resulting asset to an amount equal to the total of present value of any economic benefit in the form of reduction in future contributions to the plan and unrecognized actuarial losses and past service costs. Gratuity scheme The Group also operates an un-funded gratuity scheme for its eligible contractual employees. Provision is made in the consolidated financial statements based on the actuarial valuation using the Projected Unit Credit Method. Actuarial gains / losses are accounted for in a manner similar to pension scheme. Post retirement medical benefits The Group operates an un-funded post retirement medical benefits scheme for all of its employees. Provision is made in the consolidated financial statements for the benefit based on actuarial valuation carried out using the Projected Unit Credit Method. Actuarial gains / losses are recognised in the profit and loss account over the estimated working lives of employees. Benevolent scheme The Group operates un-funded benevolent scheme for all of its eligible employees. Provision is made in the consolidated financial statements for the benefit based on actuarial valuation carried out using the Projected Unit Credit Method. Actuarial gains / losses are accounted for in a manner similar to pension scheme. 5.14.2 Defined contribution plan The Group operates an approved funded provident fund scheme covering all its employees. Equal monthly contributions are made by the Group and employees to the fund in accordance with the fund rules. 5.14.3 Retirement and other benefit obligations In respect of JSC Subsidiary Bank of NBP in Kazakhstan (JSC) The JSC withholds amounts of pension contributions from employee salaries and pays them to state pension fund. The requirements of the Kazakhstans legislation state pension system provides for the calculation of current payments by the employer as a percentage of current total payments to staff. This expense is charged in the period the related salaries are earned. Upon retirement all retirement benefit payments are made by pension funds selected by employees.
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5.14.4 Other employee benefits Employees' compensated absences The Group also makes provision in the consolidated financial statements for its liabilities towards compensated absences. This liability is estimated on the basis of actuarial advice under the Projected Unit Credit method. 5.15 Revenue recognition Income on loans and advances and debt security investments are recognized on a time proportion basis that takes into account effective yield on the asset. In case of advances and investments classified under the Prudential Regulations, interest / mark-up is recognized on receipt basis. Interest / mark-up on rescheduled / restructured advances and investments is recognized in accordance with the Prudential Regulations of SBP. Fee, brokerage and commission income other than commission on letter of credit and guarantees and remuneration for trustee services are recognized upon performance of services. Commission on letters of credit and guarantees is recognized on time proportion basis. Dividend income on equity investments and mutual funds is recognized when right to receive is established. Premium or discount on debt securities classified as held-for-trading, available-for-sale and held-to-maturity securities is amortised using the effective interest method and taken to consolidated profit and loss account. Gains and losses on disposal of investments and operating fixed assets are dealt with through the consolidated profit and loss account in the year in which they arise. The Group follows the financing method in accounting for recognition of finance lease. At the commencement of a lease, the total unearned finance income i.e. the excess of aggregate installment contract receivables plus residual value over the cost of the leased asset is amortized over the term of the lease, applying the effective yield method, so as to produce a constant periodic rate of return on the net investment in finance leases. Initial direct costs are deferred and amortized over the lease term as a yield adjustment. Processing, front end and commitment fees and commission are recognized as income when received. Rental income from operating leases / Ijarah is recognized on a straight-line basis over the term of the relevant lease. Profit on trading and revaluation of financial instruments is recognised on trade date basis and is taken to consolidated profit and loss account. 5.16 Foreign currencies translation The Group's financial statements are presented in Pak Rupees (Rs.) which is the Group's functional and presentation currency. Foreign currency transactions are converted into Rupees applying the exchange rate at the date of the respective transactions. Monetary assets and liabilities in foreign currencies and assets / liabilities of foreign branches are translated into Rupees at the rates of exchange prevailing at the statement of financial position date. Forward foreign exchange contracts are valued at the rates applicable to their respective maturities. All gains or losses on dealing in foreign currencies are taken to profit and loss account currently. Profit and loss account balances of foreign branches are translated at average exchange rate prevailing during the year. Gains and losses on translation are included in the consolidated profit and loss account except gain / losses arising on translation of net assets of foreign branches, which is credited to exchange translation reserve reflected under reserves.
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Items included in the consolidated financial statements of the Group's foreign branches are measured using the currency of the primary economic environment in which the Bank operates (the functional currency). Commitments for outstanding forward foreign exchange contracts are disclosed in these consolidated financial statements at committed amounts. 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 financial position date. 5.17 Provision for off balance sheet obligations Provision for guarantees, claims and other off balance sheet obligations is made when the Bank has legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of amount can be made. Charge to consolidated profit and loss account is stated net of expected recoveries. 5.18 Off setting Financial assets and financial liabilities are only set off and the net amount is reported in the consolidated financial statements when there is a legally enforceable right to set off and the Group intends either to settle on a net basis, or to realize the assets and to settle the liabilities simultaneously. 5.19 Fiduciary assets Assets held in a fiduciary capacity are not treated as assets of the Group in the consolidated statement of financial position. 5.20 Dividend and other appropriations Dividend and appropriation to reserves, except appropriation which are required by the law, are recognised as liability in the Group's financial statements in the year in which these are approved. 5.21 Earnings per share The Group presents basic and diluted earnings per share (EPS) for its shareholders. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, if any. There were no dilutive potential ordinary shares in issue at December 31, 2011. 5.22 Related party transactions Transactions between the Group and its related parties are carried out on an arm's length basis other than pension fund and other staff loan. 5.23 Accounting estimates and judgments The preparation of consolidated financial statements in conformity with Approved Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Banks accounting polices. The estimates / judgments and associated assumptions used in the preparation of the consolidated financial statements are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The key areas of estimates and judgments in relation to these consolidated financial statements are as follows:
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a) Provision against non-performing loans and advances The Group reviews its loan portfolio to assess amount of non-performing loans and determine provision required there against on a quarterly basis. While assessing this requirement various factors including the past dues, delinquency in the account, financial position of the borrower, value of collateral held and requirements of Prudential Regulations are considered except for loans and advances where relaxation has been allowed by SBP. General provision for loan losses of overseas branches is made as per the requirements of the respective central banks. The amount of general provision against consumer advances is determined in accordance with the relevant prudential regulations and SBP directives. b) Fair value of derivatives The fair values of derivatives which are not quoted in active markets are determined by using valuation techniques. The valuation techniques take into account the relevant interest and exchange rates over the term of the contract. c) Impairment of available-for-sale investments The Group considers that available-for-sale equity investments and mutual funds are impaired when there has been a significant or prolonged decline in the fair value below its cost except for investments where relaxation has been allowed by SBP. This determination of what is significant or prolonged requires judgment. In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance. In view of the conditions placed on sale of certain investments, the Bank has been allowed exemption from impairment on investments in shares of PSO and SNGPL referred to in note 9.2.1 by SBP. d) Held-to-maturity investments The Group follows the guidance provided in the SBP circulars on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity as held-to-maturity. In making this judgment, the Group evaluates its intention and ability to hold such investments to maturity. e) Income taxes In making the estimates for current and deferred taxes, the management looks at the income tax law and the decisions of appellate authorities on certain issues in the past. There are certain matters where the Groups view differs with the view taken by the income tax department and such amounts are shown as contingent liability. f) Operating fixed assets, depreciation and amortization In making estimates of the depreciation / amortization method, the management uses method which reflects the pattern in which economic benefits are expected to be consumed by the Group. The method applied is reviewed at each financial year end and if there is a change in the expected pattern of consumption of the future economic benefits embodied in the assets, the method would be changed to reflect the change in pattern. g) Employees' benefit plans The liabilities for employees' benefits plans are determined using actuarial valuations. The actuarial valuations involve assumptions about discount rates, expected rates of return on assets, future salary increases and future pension increases as disclosed in note 34. Due to the long term nature of these plans, such estimates are subject to significant uncertainty.
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6. CASH AND BALANCES WITH TREASURY BANKS In hand Local currency Foreign currency With State Bank of Pakistan in Local currency current accounts Local currency deposit account Note 2011 2010 Rupees in '000
12,158,677 2,784,549 14,943,226 6.1 69,638,374 29 69,638,403 2,451,020 7,353,061 164,451 --9,968,532
11,277,999 2,690,449 13,968,448 59,346,406 29 59,346,435 2,183,736 6,551,208 49,397 8,588,450 17,372,791
Foreign currency current account Foreign currency deposit account Foreign currency collection account Foreign currency placement account With other central banks in Foreign currency current accounts Foreign currency deposit accounts
6.2 6.2 6.3
6.4 6.5 32
29,665,327 15,324,162 7,627,803 9,645,189 37,293,130 24,969,351 131,843,291 115,657,025
6.1 6.2 6.3 6.4 6.5
This includes statutory liquidity reserves maintained with the SBP under Section 22 of the Banking Companies Ordinance, 1962. These represent mandatory reserves maintained in respect of foreign currency deposits under FE-25 scheme, as prescribed by the SBP. This represents US Dollar placements and carry interest at the rate of Nil per annum (2010: 0.67% per annum). These balances pertain to the foreign branches and are held with central banks of respective countries. These include balances to meet the statutory and central bank regulatory requirements of respective countries. These balances pertain to the foreign branches and are held with central banks of respective countries. These include balances to meet the statutory and central bank regulatory requirements. These carry interest at the rate of 0.25% per annum (2010: 0.23% to 0.25% per annum). Note 2011 2010 Rupees in '000 88,884 94,796 183,680 12,612 342,012 354,624
7. BALANCES WITH OTHER BANKS In Pakistan On current account On deposit account
Outside Pakistan On current accounts On deposit accounts
7.1 32
10,008,831 17,877,386 27,886,217 28,069,897
5,621,968 24,766,776 30,388,744 30,743,368
7.1 These include various deposits with correspondent banks and carry interest rates ranging from 0.04% to 8.0% per annum (2010: 0.05% to 9.0% per annum).
174

8. LENDINGS TO FINANCIAL INSTITUTIONS Call money lendings Repurchase agreement lendings (Reverse Repo) Letters of placement Less: Provision held against lendings 8.1 Particulars of lendings - gross In local currency In foreign currencies Note 8.3 8.4 & 8.4.1 8.5 8.1 8.2 2011 2010 Rupees in '000 722,400 43,638,327 173,500 44,534,227 (173,500) 44,360,727 1,006,015 21,932,156 246,500 23,184,671 (133,500) 23,051,171
44,534,227 --44,534,227
23,184,671 --23,184,671
8.2
Movement in provision held against lendings is as follows: Opening balance Charge for the year Closing balance 133,500 40,000 173,500 96,000 37,500 133,500
8.3
These carry mark-up [excluding zero rate lending to a financial institution amounting to Rs. 122.400 million (2010: Rs. 153.000 million) which is guaranteed by the SBP] at rates ranging from 12% to 13.15% per annum (2010: 12.75% to 14% per annum) having maturities ranging from January 03, 2012 to March 29, 2012. These carry mark-up at rates ranging from 11% to 12% per annum (2010: 12.75% to 13.9% per annum) having maturities ranging from January 03, 2012 to February 27, 2012.
8.4
8.4.1
Securities held as collateral against lendings to financial institutions

2011 Held by bank Further given as collateral Total Held by bank 2010 Further given as collateral Total
------------------ Rupees in '000 --------------- ----------------- Rupees in '000 ----------------Market Treasury Bills Pakistan Investment Bonds 35,348,011 8,290,316 43,638,327 ------35,348,011 8,290,316 43,638,327 16,594,751 5,337,405 21,932,156 - - - 16,594,751 - - - 5,337,405 - - - 21,932,156
8.4.2
Market value of the securities under repurchase agreement lendings amount to Rs. 43,483 million (2010: Rs. 22,184 million).
8.5
These carry mark-up at rates ranging from 11.20% to 18.5% per annum (2010: 11.20% to 18.5% per annum). Full provision has been made against these placements at year-end.
175

2011 2010
Held by bank Given as collateral
9. INVESTMENTS
Note 9.1 Investments by type: Held-for-trading securities Market Treasury Bills Pakistan Investment Bonds Ordinary shares of listed companies Investment in mutual funds Ijarah Sukuk Bonds Total held-for-trading securities Available-for-sale securities Ordinary shares of listed companies Ordinary shares of unlisted companies Investment outside Pakistan Market Treasury Bills Preference shares Pakistan Investment Bonds GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities Term Finance Certificates / Musharika and Sukuk Bonds Investments in mutual funds NI(U)T LoC Units NI(U)T Non-LoC Units NIT Equity Market Opportunity Fund Units Total available- for- sale securities Held-to-maturity securities Pakistan Investment Bonds Market Treasury Bills GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities Debentures, Bonds, Sukuks, Participation Term Certificates and Term Finance Certificates Total held-to-maturity securities Investments in associates Investments in joint venture Investments in subsidiary Investments at cost Less: Provision for diminution in value of investments Investments (net of provisions) Unrealized (loss) / gain on revaluation of investments classified as held-for-trading Surplus / (deficit) on revaluation of available-for-sale securities Total investments at carrying value
Held by bank
Given as collateral
Total
Total
------------- Rupees in '000 ---------------- -------------- Rupees in '000 --------------13,042,925 97,727 611,971 54,923 20,000 13,827,546 ------------13,042,925 97,727 611,971 54,923 20,000 13,827,546 5,278,693 732,253 533,677 ----6,544,623 ------------5,278,693 732,253 533,677 ----6,544,623
9.13
9.6
27,827,808 1,065,173 28,892,981 463,295 159,199,048 307,760 38,302,933 3,484,334 --5,362,824 19,569,935 1,831,543 --600,000 1,032,755 259,047,408
- - - 27,827,808 18,853,296 --1,053,198 1,065,173 - - - 28,892,981 19,906,494 --463,295 463,295 10,971,238 170,170,286 155,716,032 --294,760 307,760 - - - 38,302,933 16,201,897 --3,193,093 3,484,334 --214,663 ----3,254,119 5,362,824 - - - 19,569,935 61,799,389 --971,574 1,831,543 --1,397,619 ----600,000 600,000 --1,147,500 1,032,755 10,971,238 270,018,646 265,160,435
- - - 18,853,296 --1,053,198 - - - 19,906,494 --463,295 9,051,796 164,767,828 --294,760 302,801 16,504,698 --3,193,093 --214,663 --3,254,119 - - - 61,799,389 --971,574 --1,397,619 --600,000 --1,147,500 9,354,597 274,515,032
9.5.1 9.5.2
9.4
24,105,281 215,137 534,046 793,296 937,790 2,200,567 28,786,117 7,299,447 2,856,556 1,245 311,818,319
---------------
24,105,281 215,137 534,046 793,296 937,790 2,200,567 28,786,117
8,817,941 ----1,407,077 114,842 2,885,128 13,224,988
---------------
8,817,941 ----1,407,077 114,842 2,885,128 13,224,988
9.3 9.7 9.8 9.10
--1,645,129 7,299,447 --2,574,164 2,856,556 --1,245 1,245 10,971,238 322,789,557 289,150,584
--1,645,129 --2,574,164 --1,245 9,354,597 298,505,181
9.11
(10,081,084) 301,737,235
- - - (10,081,084) (6,716,015) 10,971,238 312,708,473 282,434,569
- - - (6,716,015) 9,354,597 291,789,166
9.12 20.1
(35,039) 6,797,616 308,499,812
---
(35,039)
6,730
---
6,730
56,204 9,317,237 6,853,820 11,027,442 319,527,254 291,758,536
(34,635) 9,282,602 9,319,962 301,078,498
176

9.2 Investments by segments Federal Government Securities Market Treasury Bills Pakistan Investment Bonds GoP Foreign Currency Bonds Ijarah Sukuk Bonds Note 2011 2010 Rupees in '000 183,428,348 170,046,521 62,505,941 26,054,892 4,018,380 3,193,093 2,750,000 1,000,000 252,702,669 200,294,506 793,296 9.14 28,439,779 1,065,173 29,504,952 19,386,973 1,053,198 20,440,171 1,621,740
9.4
Foreign Government Securities Fully Paid up Ordinary Shares Listed Companies Unlisted Companies
Debentures, Bonds, Participation Term Certificates, Term Finance Certificates, Musharika and Sukuk Bonds Listed Unlisted
2,180,288 16,860,214 19,040,502 6,300,614
2,694,993 60,989,524 63,684,517 3,368,961
Foreign Currency Debt Securities Other Investments NI(U)T LoC Units NI(U)T Non-LoC Units NIT Equity Market Opportunity Fund Units Investments in mutual funds Preference Shares Investment outside Pakistan Investments in associates Investments in joint venture Investments in subsidiary Total investments at cost Provision for diminution in value of investments Investments (Net of provisions) Unrealized (loss) / gain on revaluation of investments classified as held-for-trading Surplus on revaluation of available-for-sale securities Total investments at carrying value 9.11
9.5.1 9.5.2
9.6 9.7 9.8 9.10
--600,000 1,032,755 1,886,466 307,760 463,295 7,299,447 2,856,556 1,245
1,397,619 600,000 1,147,500 971,574 294,760 463,295 1,645,129 2,574,164 1,245
322,789,557 298,505,181 (10,081,084) (6,716,015)
312,708,473 291,789,166
9.12 20.1
(35,039) 6,853,820
6,730 9,282,602
319,527,254 301,078,498
177

9.2.1 SBP vide their letter dated January 26, 2012 has granted exemption till December 31, 2012 from recognising impairment loss of Rs. 793 million on account of shares acquired as tri-party consent agreement dated June 29, 2011. 9.3 9.4 Market value of held-to-maturity investments is Rs. 26,834 million (2010: Rs. 10,654 million). These include Pakistan Investment Bonds amounting to Rs. 75 million (2010: Rs. 75 million) held by the SBP as pledge against demand loans and TT / DD discounting facilities.
9.5
Investment in Mutual Funds managed by National Investment Trust Limited (NITL) 9.5.1 National Investment (Unit) Trust - [NI(U)T] In the meeting of NI(U)T - LoC Holders, held on November 11, 2010, the LOC Holders consented to the transfer of frozen shares [Pakistan State Oil Company Limited (PSO) and Sui Northern Gas Pipe Line Limited (SNGPL)] to the Bank on closing share price of October 13, 2010. A letter was also sent to the Privatization Commission (PC) to communicate about the settlement and obtain concurrence for transfer of the strategic assets to the Bank. PC responded on February 17, 2011 requiring that new agreement would be signed between the Bank, NITL and PC and the frozen shares after the transfer to the Bank will remain frozen in the books of the Bank on the same conditions as these are held by NITL. In this respect a new agreement termed as ''Consent Agreement'' was finalised on June 29, 2011. Consequently the Bank has recorded the redemption / disposal of remaining 71.347 million LoC units and in consideration of those units the Bank has recorded its share of Strategic Investments at the closing rate of October 13, 2010. The Banks share of Strategic Investments comprise of the shares of PSO (11.00 million shares) and SNGPL (13.72 million shares). Accordingly, there is a capital gain of Rs. 641 million on redemption / disposal of balance LoC units. The share of other LoC Holders has been recorded as payable to NI(U)T - LOC Holders Fund. These shares are valued at Rs. 2,715 million and can not be sold without the concurrence of PC. 9.5.2 NIT Equity Market Opportunity Fund The bank's investment is Rs. 1,033 million (2010: Rs. 1,148 million) in NIT Market Opportunity Fund (NIT EMOF). NIT EMOF was established in the year 2008 as an open end mutual fund for the special purpose of equity market stabilization and is managed by National Investment Management Limited. As of the statement of financial position date, the net assets value of the NIT EMOF units held by the Bank amounted to Rs. 1,380 million (2010: Rs. 1,650 million).
9.6
Investment outside Pakistan - Bank Al-Jazira The bank holds 17,500,000 (2010: 17,500,000) shares in Bank Al-Jazira (BAJ) incorporated in the Kingdom of Saudi Arabia, representing 5.83% (2010: 5.83%) holding in total equity of BAJ. The investment has been marked to market using closing price as quoted on the Saudi Stock Exchange in accordance with SBP concurrence vide letter No. BSD/SU-13/331/685/2006 dated February 17, 2006. Rating of BAJ is BBB+ by Capital Intelligence.
178

9.7 Investments in associates Unlisted Number of shares 12,500,000 2,300,000 1,300,000 33,333 11,000 37,500 4,481,500 2,500,000 644,508 40,000,000 9,900,000 5,000 200,000 9,000,000 150,000 Percentage of holding 33.33 21.89 39.50 33.33 20.37 32.05 8.96 21.50 25.00 23.45 23.11 20.00 20.00 30.00 20.00 Note 2011 2010 Rupees in '000
Pakistan Emerging Venture Limited Information System Associates Limited National Fructose Company Limited Pakistan Insulation Limited Venture Capital Fund Management Kamal Enterprises Limited Mehran Industries Limited National Assets Insurance Company Limited Tharparkar Sugar Mills Limited Youth Investment Promotion Society Khushhali Bank Limited Dadabhoy Energy Supply Company Limited K-Agricole Limited New Pak Limited Pakistan Mercantile Exchange Limited Prudential Fund Management Listed First Credit and Investment Bank Limited National Fibres Limited Taha Spinning Mills Limited Land Mark Spinning Mills Limited S.G. Fibres Limited Nina Industries Limited First National Bank Modaraba AKD Opportunity Fund NAFA Income Fund NAFA Riba Free Fund NAFA Income Opportunity Fund (Formerly NAFA Cash Fund) NAFA Multi Asset Fund NAFA Financial Sector Income Fund NAFA Stock Fund NAFA Islamic Aggressive Income Fund (Formerly NAFA Islamic Income Fund) NAFA Islamic Multi Asset Fund NAFA Government Securities Liquid Fund NAFA Savings Plus Fund
51,415 1,719 6,500 44,815 400,000 32,105 90,000 626,554
51,415 1,719 6,500 695 400,000 32,105 90,000 582,434
20,000,000 17,119,476 833,300 3,970,859 3,754,900 4,906,000 7,500,000 3,280,254 2,080,775 5,009,987 3,601,691 4,410,752 49,917,635 7,500,000 7,500,000 7,500,000 502,722,026 3,000,000
30.77 20.19 20.59 32.79 25.03 20.27 30.00 24.55 4.11 20.62 1.66 7.28 48.56 5.44 35.27 27.93 32.75 5.03 9.7.1
217,317 2,501 39,710 218,535 49,060 99,372 97,521 14,719 61,257 30,116 28,690 503,892 40,333 53,277 60,409 5,125,943 30,241 6,672,893 7,299,447 (620,640) 6,678,807
243,039 2,501 39,710 218,535 49,060 96,394 21,432 51,752 36,691 46,755 57,022 59,671 78,350 30,934 30,849 1,062,695 1,645,129 (492,240) 1,152,889
Less:
Provision for diminution
179

9.7.1 Aggregate value of investments in associates (quoted) on the basis of latest available quoted prices amounts to Rs. 6,548 million (2010: Rs. 887.389 million). Due to low trade volumes of securities, management considers that there is no active market for these quoted investments, except for First Credit and Investment Bank Limited, AKD Opportunity Fund and NAFA Funds therefore provision for impairment has been made against the same. Associates with zero carrying amount, represent the investments acquired from former NDFC which have negative equity or whose operations were closed at the time of amalgamation. Subsequent to year end a consortium led by United Bank Limited have offered a price of Rs. 20.44 per share for Bank's holding in Khushali Bank Limited. The details of break-up value based on latest available financial statements of unlisted investments in associates are as follows: Year / Period ended Break-up value
9.7.2
9.7.3
9.7.4
Rupees in '000 Pakistan Emerging Venture Limited Information System Associates Limited Mehran Industries Limited Tharparkar Sugar Mills Limited Khushhali Bank Limited Prudential Fund Management Dadabhoy Energy Supply Company Limited Pakistan Mercantile Exchange Limited 9.8 Investments in joint venture United National Bank Limited (UNBL) June 30, 2011 June 30, 2011 June 30, 2001 September 30, 2001 December 31, 2010 June 30, 2007 June 30, 2007 June 30, 2011 1,694 17,949 5,681 (83,140) 520,400 (2,482) 103,952 (84,533)
Note
2011 2010 Rupees in '000 2,856,556 2,856,556 2,574,163 2,574,163
9.8.1 9.8.1
Under a joint venture agreement, the Bank holds 13.5 million ordinary shares (45%) and United Bank Limited (UBL) holds 16.5 million ordinary shares (55%) in UNBL. In addition to ordinary shares, four preference shares categories as "A", "B", "C" and "D" have been issued and allotted. The "B" and "D" category shares are held by the Bank and category "A" and "C" are held by UBL. Dividends payable on "A" and "B" shares are related to the ability of the venture to utilize tax losses that have been surrendered to it on transfer of business from the Bank or UBL as appropriate. Dividends payable on "C" and "D" shares are related to loans transferred to the venture by the Bank or UBL that have been written-off or provided for at the point of transfer and the ability of the venture to realize in excess of such loan value.
9.9
Investments of the Group in associated companies, First Credit and Investment Bank Limited (FCIBL), First National Bank Modaraba (FNBM), AKD Opportunity Fund, NAFA funds and Joint Venture company, United National Bank Limited have been accounted for under equity method of accounting as at December 31, 2011 in accordance with the treatment specified in International Accounting Standard 28 "Investments in Associates" and International Accounting Standard 31 "Interests in Joint Ventures" respectively.
180

Below is the summary of financial information of associates and joint venture company that have been accounted for under equity method of accounting:
2011 Based on the financial Assets Liabilities Equity Revenue Profit / (loss) statements as on -------------------------------------- (Rupees in '000) -------------------------------------United National Bank Limited First Credit and Investment Bank Limited First National Bank Modaraba AKD Opportunity Fund NAFA Income Fund NAFA Riba Free Fund NAFA Income Opportunity Fund (Formerly NAFA Cash Fund) NAFA Multi Asset Fund NAFA Financial Sector Income Fund NAFA Stock Fund NAFA Islamic Aggressive Income Fund (Formerly NAFA Islamic Income Fund) NAFA Islamic Multi Asset Fund NAFA Government Securities Liquid Fund NAFA Savings Plus Fund December 31, 2011 December 31, 2011 December 31, 2011 December 31, 2011 165,447 250,280 15,707,685 608,857 2,504 8,309 4,584 162,943 241,971 604,273 11,721 15,017 820,780 41,012 (8,224) (23,456) 692,298 33,552 December 31, 2011 December 31, 2011 December 31, 2011 December 31, 2011 2,563,096 582,093 1,054,127 848,289 480,557 20,087 3,931 11,631 2,082,539 562,006 1,050,196 836,658 152,626 29,510 23,145 40,114 (197,591) (30,799) 19,059 (80,929) December 31, 2011 December 31, 2011 June 30, 2011 September 30, 2011 December 31, 2011 December 31, 2011 28,973,329 1,351,120 2,167,573 393,546 409,183 639,116 22,740,193 664,233 1,830,433 5,420 3,310 3,561 6,233,136 686,887 337,140 388,126 405,873 635,555 960,479 69,235 473,558 (23,279) 27,445 31,804 10,377 (24,508) 30,600 (26,294) (44,875) 27,206
71,751 15,635,934
2010 Assets Liabilities Equity Revenue Profit / (loss) Based on the financial statements as on -------------------------------------- (Rupees in '000) -------------------------------------United National Bank Limited First Credit and Investment Bank Limited First National Bank Modaraba NAFA Income Fund NAFA Riba Free Fund NAFA Income Opportunity Fund (Formerly NAFA Cash Fund) NAFA Multi Asset Fund NAFA Stock Fund NAFA Islamic Aggressive Income Fund (Formerly NAFA Islamic Income Fund) NAFA Islamic Multi Asset Fund NAFA Government Securities Liquid Fund NAFA Savings Plus Fund December 31, 2011 December 31, 2011 December 31, 2011 181,006 296,344 551,332 2,570 7,762 6,101 178,436 288,582 545,231 17,536 66,415 464,338 39,674 20,823 53,697 389,536 31,615 December 31, 2011 December 31, 2011 December 31, 2011 2,987,511 714,582 982,578 482,347 8,594 55,783 2,505,164 705,988 926,795 262,677 178,682 220,229 224,677 143,863 187,215 December 31, 2010 21,009,339 June 30, 2010 June 30, 2010 December 31, 2011 December 31, 2011 1,464,724 1,761,258 464,445 379,786 15,288,886 533,249 1,429,718 3,511 3,008 5,720,453 931,475 331,540 460,934 376,778 781,888 164,282 370,064 30,734 7,419 (62,928) 7,874 26,234 9,929 8,014
December 31, 2011 10,866,258
55,824 10,810,434
181

9.9.1 Movement Schedule for Investment in Associates and Joint Venture
2011 Opening Balance Addition Disposal Dividend paid Share of Exchange profit / Transalati (loss) for on Reserve the year - net of tax Closing Surplus Surplus (Deficit) on (Deficit) on Balance Revaluation Revaluation Properties Securities
------------------------------------------------------------------------------ Rupees in '000 -----------------------------------------------------------------------------Joint Venture United National Bank Limited
2,574,163 2,574,163
32,181 32,181
131,121 131,121
148,541 148,541
(29,450) (29,450)
2,856,556 2,856,556 -
Associates Listed First Credit and Investment Bank Limited National Fibres Limited Taha Spinning Mills Limited Land Mark Spinning Mills Limited S.G. Fibres Limited Nina Industries Limited First National Bank Modaraba AKD Opportunity Fund NAFA Income Fund NAFA Riba Free Fund NAFA Income Opportunity Fund (Formerly NAFA Cash Fund) NAFA Multi Asset Fund NAFA Financial Sector Income Fund NAFA Stock Fund NAFA Islamic Aggressive Income Fund (Formerly NAFA Islamic Income Fund) NAFA Islamic Multi Asset Fund NAFA Government Securities Liquid Fund NAFA Savings Plus Fund Unlisted Pakistan Emerging Venture Limited Information System Associates Limited National Fructose Company Limited Pakistan Insulation Limited Venture Capital Fund Management Kamal Enterprises Limited Mehran Industries Limited National Assets Insurance Company Limited Tharparkar Sugar Mills Limited Youth Investment Promotion Society Khushhali Bank Limited Dadabhoy Energy Supply Company Limited K-Agricole Limited New Pak Limited Pakistan Mercantile Exchange Limited Prudential Fund Management
243,039 2,501 39,710 218,535 49,060 96,394 21,432 51,752 36,691 46,755 57,022
100,000 500,000 -
(2,488) (8,732) (10,524) (9,154) (16,757) (104,139) (3,731)
(20,619) 2,978 (2,479) (3,082) 9,453 (4,087) (2,361) 3,085 (3,305) (26) (662) 101,535 3,129
(5,103) (3,631) 52 (6,972) 807 (2,860) 2,786 (522) (2,387) (6)
217,317 2,501 39,710 218,535 49,060 99,372 97,521 14,719 61,257 30,116 28,690 503,892 40,333 53,277 60,409 5,125,943 30,241
59,671 78,350 30,934 5,100,000 30,849
51,415 1,719 6,500 695 44,815 400,000 32,105 90,000 1,645,129 5,744,815
(695) (695)
(155,525)
83,559
(17,836)
51,415 1,719 6,500 44,815 400,000 32,105 90,000 7,299,447
182

9.9.1 Movement Schedule for Investment in Associates and Joint Venture
2010 Opening Balance Addition Disposal Dividend paid Share of Exchange profit / Transalati (loss) for on Reserve the year - net of tax Closing Surplus Surplus (Deficit) on (Deficit) on Balance Revaluation Revaluation Properties Securities
------------------------------------------------------------------------------ Rupees in '000 -----------------------------------------------------------------------------Joint Venture United National Bank Limited
2,317,249 2,317,249
(10,685) (10,685)
(59,407) (59,407)
328,106 328,106
(1,100) (1,100)
2,574,163 2,574,163
Associates Listed First Credit and Investment Bank Limited National Fibres Limited Taha Spinning Mills Limited Land Mark Spinning Mills Limited S.G. Fibres Limited Nina Industries Limited First National Bank Modaraba NAFA Income Fund NAFA Riba Free Fund NAFA Income Opportunity Fund (Formerly NAFA Cash Fund) NAFA Multi Asset Fund NAFA Stock Fund NAFA Islamic Aggressive Income Fund (Formerly NAFA Islamic Income Fund) NAFA Islamic Multi Asset Fund NAFA Governtment Securities Liquid Fund NAFA Savings Plus Fund Unlisted Pakistan Emerging Venture Limited Information System Associates Limited National Fructose Company Limited Pakistan Insulation Limited Venture Capital Fund Management Kamal Enterprises Limited Mehran Industries Limited National Assets Insurance Company Limited Tharparkar Sugar Mills Limited Youth Investment Promotion Society Khushhali Bank Limited Dadabhoy Energy Supply Company Limited K-Agricole Limited New Pak Limited Pakistan Mercantile Exchange Limited Prudential Fund Management
259,194 2,501 39,710 218,535 49,060 93,651 -
61,870 50,100 35,920 42,124 57,554 52,826 73,229 30,861 31,072
(40,144) -
(7,091) (789) (1,688) (6,872) (8,996) (9,163) (2,327) (2,403)
(16,155) 9,834 (268) 1,652 3,464 7,629 6,340 26,800 23,030 2,400 2,180
(26) (1,904) (1,310)
(10,959) (8,746) -
243,039 2,501 39,710 218,535 49,060 96,394 21,432 51,752 36,691 46,755 57,022 59,671 78,350 30,934 30,849
51,415 1,719 6,500 695 400,000 32,105 30,000 1,185,085
60,000 495,556
(40,144)
(39,329)
66,906
(22,945)
51,415 1,719 6,500 695 400,000 32,105 90,000 1,645,129
183

Percentage of holding 9.10 Investments in subsidiaries Cast-N-Link Products Limited Less: Provision for diminution in value of investment 76.51 1,245 1,245 (1,245) 1,245 1,245 (1,245) 2011 2010
9.11
Particulars of provision for diminution in value of investments Opening balance Charge for the year Reversals Transfer Amount written off Closing balance 9.11.1 Particulars of provision in respect of type Available-for-sale securities Ordinary shares of listed companies and mutual funds Ordinary shares of unlisted companies Debentures, Bonds, Participation Term Certificates, Term Finance Certificates and Sukuk Bonds Preference shares Held-to-maturity securities Debentures, Bonds, Participation Term Certificates, and Term Finance Certificates Investments in associates Investments in subsidiary 9.11.2 Particulars of provision in respect of segments Fully Paid up Ordinary Shares Debentures, Bonds, Participation Term Certificates, Term Finance Certificates and Sukuk Bonds Other investments Investments in associates Investments in subsidiary
Note
2011 2010 Rupees in '000 6,716,015 3,945,612 (807,118) 3,138,494 227,157 (582) 10,081,084 2,187,187 3,280,886 (375,937) 2,904,949 1,630,000 (6,121) 6,716,015
9.11.4 9.11.1
5,710,306 217,675 2,689,018 113,000
2,964,742 99,768 2,246,593 80,000
729,200 9.7 9.10 620,640 1,245 10,081,084
831,427 492,240 1,245 6,716,015
5,724,689
2,774,312 3,078,020 370,198 492,240 1,245 6,716,015
9.10.3
3,418,218 316,292 620,640 1,245 10,081,084
9.11.3
In accordance with BSD Circular No. 11 dated October 21, 2011 issued by the SBP, the Bank has availed the benefit of Forced Sale Value (FSV) against non-performing investments. During the year, total FSV benefit availed by the Bank resulted in increase in after tax profit of Rs. 997 million. Accordingly, as of December 31, 2011, the accumulated increase in profit after tax of Rs. 1,257 million (2010: Rs. 260 million) shall not be available for payment of cash or stock dividend as required by aforementioned SBP directive.
184

9.11.4 Write off / waiver of TFCs Scan Recycling Limited Allied Ghee Write off Waiver Rupees in '000 582 473 1,370 582 1,843
9.12
Unrealized (loss) / gain on revaluation of investments classified as held-for-trading Ordinary shares of listed companies Federal Government securities
2011 2010 Rupees in '000 (39,000) 3,961 (35,039) 6,385 345 6,730
9.13
The investment in shares includes shares of Pakistan International Airlines Corporation, Pakistan National Shipping Corporation, Pakistan State Oil Company Limited, Sui Northern Gas Pipeline Limited and Pakistan Engineering Company Limited, with carrying value of Rs. 2,769 million that have been frozen by the Government of Pakistan (GoP) for sale in the equity market due to their proposed privatization. Detailed information relating to investments in shares of listed and unlisted companies, Preference Shares, Mutual Funds, Government Securities, Bonds, Debentures, Term Finance Certificates, Participant Term Certificate, Sukuks etc. including quality of available-for-sale securities is given in Annexure-I to the financial statements.
9.14
10. ADVANCES Loans, cash credits, running finances, etc. In Pakistan Outside Pakistan Net investment in finance lease In Pakistan Outside Pakistan
Note
2011 2010 Rupees in '000
518,758,918 48,123,170 566,882,088 10.2 735,031 --735,031
457,724,559 50,025,522 507,750,081 457,260 --457,260
Bills discounted and purchased (excluding Government treasury bills) Payable in Pakistan Payable outside Pakistan Advances - gross Less: Provision against non-performing advances Advances - net of provision 10.1
11,733,608 15,237,920 26,971,528 594,588,647 67,479,438 527,109,209
19,427,325 12,495,712 31,923,037 540,130,378 61,243,623 478,886,755
185

10.1 Particulars of advances - gross 10.1.1 In local currency In foreign currencies 531,563,106 63,025,541 594,588,647 403,646,567 190,942,080 594,588,647 477,609,144 62,521,234 540,130,378 357,805,453 182,324,925 540,130,378
10.1.2
Short-term (for upto one year) Long-term (for over one year)
10.2
Net investment in finance lease

Not later than one year
2011 Later than one and less than five years 680,512 96,941 777,453 126,032 651,421 Over five years ----------Not later than one year 277,147 51,770 328,917 28,488 300,429
2010 Later than one and less than five years 164,153 53,287 217,440 60,609 156,831 Over five years -----------
Total
Total
Lease rentals receivable Residual value Minimum lease payments Financial charges for future periods
Rupees in '000
198,729 49,921 248,650 165,040 83,610
879,241 146,862 1,026,103 291,072 735,031
441,300 105,057 546,357 89,097 457,260
The leases executed are for a term of 3 to 5 years. Security deposit is generally obtained upto 10% of the cost of leased assets at the time of disbursement. The Group requires the lessees to insure the leased assets in favour of the Group and maintain financial ratios, as required under the SECP Prudential Regulations for Non-Banking Finance Companies. Additional surcharge is charged on delayed rentals. The fixed return implicit in these ranges from 14.15% to 20.65% (2010: 14.12% to 20.63%) per annum. 10.3 Advances include Rs. 88,325 million (2010: Rs. 86,872 million) which have been placed under non-performing status as detailed below:
Category of Classification
Classified Advances Domestic Overseas Total 2011 Provision Required Domestic Provision Held Domestic Overseas Total
Rupees in '000
Overseas
Total
Other Assets Especially Mentioned Substandard Doubtful Loss
622,297 5,606,741 12,284,111 66,077,877 84,591,026
--622,297 --365,295 5,972,036 1,038,961 908,853 13,192,964 3,865,157 2,459,423 68,537,300 56,445,890 3,733,571 88,324,597 61,350,008
------91,324 1,130,285 1,038,961 454,426 4,319,583 3,865,157 1,739,857 58,185,747 56,445,890 2,285,607 63,635,615 61,350,008
----91,324 1,130,285 454,426 4,319,583 1,739,857 58,185,747 2,285,607 63,635,615
Category of Classification
Classified Advances Domestic Overseas Total
2010 Provision Required Domestic Provision Held Domestic Overseas Total
Rupees in '000
Overseas
Total
Other Assets Especially Mentioned Substandard Doubtful Loss
399,848 5,085,209 9,644,901 68,585,592 83,715,550
399,848 ----296,281 5,381,490 937,870 339,350 9,984,251 2,383,650 2,520,172 71,105,764 52,066,706 3,155,803 86,871,353 55,388,226
------74,070 1,011,940 937,870 169,675 2,553,325 2,383,650 1,846,220 53,912,926 52,066,706 2,089,965 57,478,191 55,388,226
----74,070 1,011,940 169,675 2,553,325 1,846,220 53,912,926 2,089,965 57,478,191
186

10.4 Particulars of provision against non-performing advances 2011
Specific Note Opening balance Foreign exchange adjustments Charge for the year Reversal during the year 57,478,191 (33,992) 9,809,034 (3,669,324) 6,139,710 Transfer in / (out) Amounts written off Other adjustments Closing balance 10.6 478,202 (256,574) (169,922) 63,635,615 General Total Specific
2010
General Total
Rupees in '000
3,765,432 61,243,623 53,750,154 (1,570) (35,562) 2,681 9,932,776 5,257,006 2,014,914 55,765,068 (451) 2,230
258,277 10,067,311 79,961 6,219,671
1,750,969 11,683,745 - (4,675,770) 1,750,969 7,007,975
(178,316) (3,847,640) (4,675,770)
478,202 (1,630,000) (256,574) (169,922) (27,890) 126,240
- (1,630,000) (27,890) 126,240
3,843,823 67,479,438 57,478,191
3,765,432 61,243,623
10.5
Particulars of provisions against non-performing advances 2011

Specific In local currency In foreign currencies 61,350,008 2,285,607 63,635,615 General Total Specific
2010
General Total
Rupees in '000
3,339,558 64,689,566 55,388,226 504,265 2,789,872 2,089,965 3,843,823 67,479,438 57,478,191 3,371,012 58,759,238 394,420 2,484,385 3,765,432 61,243,623
10.5.1
In accordance with BSD Circular No. 11 dated October 21, 2011 issued by the SBP, the Bank has availed the benefit of Forced Sale Value (FSV) against non-performing advances. During the year, total FSV benefit availed by the Bank resulted in increase in after tax profit of Rs. 2,705 million. Accordingly, as of December 31, 2011, the accumulated increase in profit after tax of Rs. 5,039 million (2010: Rs. 2,334 million) shall not be available for payment of cash or stock dividend as required by aforementioned SBP directive. General provision against consumer loans represents provision maintained at an amount ranging from 1.5% to 3% of the performing portfolio as required by the Prudential Regulations issued by the SBP. In addition, management in the previous year reviewed recoverability of loans in certain sectors with particular reference to history of default and current economic conditions. Based on this review, in addition to specific provision made in accordance with the prudential regulations, a general provision has been made for possible risk of losses in respect of such sectors aggregating Rs. 1,538 million (2010: Rs. 1,716 million). Note 10.3 2011 2010 Rupees in '000 256,574 256,574 11,742 244,832 256,574 27,890 27,890 25,034 2,856 27,890
10.5.2
10.6
Particulars of write offs 10.5.1 Against provisions
10.5.2
Write offs of Rs. 500,000 and above Write offs of below Rs. 500,000
10.7
187

10.7 Details of loans write offs of Rs. 500,000 and above In 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 Rs. 500,000 or above allowed to a person(s) during the year ended December 31, 2011 is given in Annexure II. 2011 2010 Rupees in '000
10.8
Particulars of loans and advances to directors, associated companies, etc. Debts due by directors, executives, officers and staff of the Bank or any of them either severally or jointly with any other person:
Balance at beginning of the year Loans granted / additions during the year Repayments Balance at end of the year Debts due by companies or firms in which the directors of the bank are interested as directors, partners or in the case of private companies as members: Balance at beginning of the year Adjustments due to retirement/appointment of directors Loans granted / additions during the year Repayments / other adjustments Balance at end of the year Debts due by subsidiary companies, controlled firms, managed modarabas and other related parties: Balance at beginning of the year Loans granted / additions during the year Repayments Balance at end of the year
19,379,753 19,492,373 3,386,182 3,521,317 (3,160,052) (3,633,937) 19,605,883 19,379,753
17,479,250 12,423,114 (7,914,702) --1,635,668 9,969,859 (1,192,748) (4,913,723) 10,007,468 17,479,250
1,294,419 --(13,390) 1,281,029
1,287,942 6,477 --1,294,419
11.
OPERATING FIXED ASSETS Capital work-in-progress Property and equipment Intangible assets 11.1 Capital work-in-progress Civil works Equipment Advances to suppliers and contractors License and implementation fee for core banking software
2011 2010 Rupees in '000 2,490,151 24,995,000 641,603 28,126,754 1,984,574 25,054,803 581,320 27,620,697
1,460,038 3,144 25,976 1,000,993 2,490,151
1,151,590 101 123,917 708,966 1,984,574
188

11.2 Property and equipment
Cost / revalued amount At January 1, 2011 Owned Land - freehold 9,516,046 67,729 44,223 (34,230) 9,583,775 9,583,775 Nil Revaluation / * transfers At Additions / (deletions) December *(adjustments) 31, 2011 At January 1, 2011 Accumulated depreciation Book Value at At Charge for Rate of the year / Revaluation / December December 31, 2011 depreciation (deletions) *(adjustments) 31, 2011
Rupees in '000
- leasehold
7,361,872
7,371,865
7,371,865
Nil
Buildings on land: - freehold 2,620,851 101,191 (36,000) * (69,000) 55,105 (4,111) * (2,808) 323,903 (70,226) 2,617,042 244,687 118,367 363,054 2,253,988 5% on book value
- leasehold
2,422,701
2,470,887
210,760
116,538 (25)
327,273
2,143,614 5% on book value
Furniture and fixtures
2,303,621
2,557,298
1,212,031
224,714 (15,345)
1,421,400
1,135,898 10% to 30% on book value, 20% on straight-line on new furnishing limit to executives and refurbishment of branches
Computer and peripheral equipment
2,150,706
276,406 (5,536)
2,421,576
1,717,622
292,581 (5,342)
2,004,861
416,715
33.33% on cost
Electrical and office equipment
2,590,362
247,512 (9,116)
2,828,758
1,611,074
223,102 (4,099)
1,830,077
998,681 20% on book value
Vehicles
994,356
260,964 (37,201) -
1,218,119
526,804
159,939 (41,764)
644,979 -
573,140
20% on cost
29,960,515
1,377,033 31,069,320 (196,420) * (71,808)
5,522,978
1,135,241 (66,575)
6,591,644 24,477,676
Assets held under finance lease Vehicles 308,827 31,330 (22,342) (4,624) 317,815 116,297 63,175 (4,485) 425 (320) 174,987 142,828 20% on cost
Office equipment
17,928
13,304
11,111
11,216
2,088
20% on book value
Assets given under Ijarah
494,619
94,513 (13,330)
575,802
76,700
138,232 (11,538) 1,337,073 (82,918)
203,394
372,408
25-33% on cost
2011
30,781,889 -
1,502,876 31,976,241 (236,716) * (71,808)
5,727,086
6,981,241 24,995,000
* These represents transfer of non-banking assets.
189

11.2.1 Property and equipment
Cost / revalued amount At January Revaluation / * transfers 1, 2010 Owned Land - freehold - leasehold Buildings on land: - freehold - leasehold Furniture and fixtures 2,442,383 2,180,285 1,693,966 ----3,064 --* 80,808 178,468 242,416 532,945 (7,162) --2,620,851 2,422,701 2,303,621 124,382 100,338 1,028,248 120,305 110,422 173,747 (4,189) 14,225 ----------244,687 210,760 1,212,031 2,376,164 5% on book value 2,211,941 5% on book value 1,091,590 10% to 30% on book value, 20% on straight-line on new furnishing limit to executives and refurbishment of branches 9,516,046 7,297,134 --64,738 9,516,046 7,361,872 ----------------9,516,046 7,361,872 Nil Nil Additions / (deletions) At December 31, 2010 At January 1, 2010 Accumulated depreciation Book Value at Charge for At the year / Revaluation / December December 31, 2010 (deletions) (adjustments) 31, 2010 Rate of depreciation
Rupees in '000
Computer and peripheral equipment
1,821,843
1,735 * 30,705
297,604 (1,181)
2,150,706
1,434,733
261,435 (2,198) 23,652 229,650 (76,927) 3,556 118,577 (49,363) 8,811 1,014,136 (132,677)
---------
1,717,622
433,084 33.33% on cost
Electrical and office equipment
2,303,096
1,212 --* 17,933 1,077 --* 26,697 7,088 --* 156,143
348,460 (80,339) ---
2,590,362
1,454,795
1,611,074
Vehicles
798,818 28,053,571
233,463 994,356 (65,699) --1,898,094 29,960,515 (154,381)
448,779 4,591,275
-----
526,804
467,552 20% on cost
5,522,978 24,437,537
Assets held under finance lease Vehicles 204,074 --24,755 --4,450 101,975 (21,977) 6,119 --308,827 116,116 4,140 6,605 158 22,473 (26,432) 2,916 1,432 --116,297 192,530 20% on cost
Office equipment
7,359
17,928
---
11,111
Assets given under Ijarah 2010
239,977 28,504,981
--7,088 29,205
350,000 (95,358)
494,619
96,553 4,810,549 4,298
65,969 (85,822) 1,105,494 (243,499)
-----
76,700
417,919 25-33% on cost
2,356,188 30,781,889 (271,716)
5,727,086 25,054,803
Addition of assets on account of acquisition of NBP Fullerton Asset Management Limited (formerly known as National Fullerton Asset Management Limited)
190

11.3 Intangible assets
Cost as at January 1, 2011 Impairment Accumulated Book value Cost as at Accumulated December amortization / Amortization charge for amortization and as at the year impairment as at December 31, 2011 impairment as for the year (Note 11.6) December 31, at January 1, 31, 2011 2011 2011 ------------------------------------------------------------------------- Rupees in '000 ----------------------------------------------------------------Additions Rate of amortization
Computer software Website Room and Membership Card Goodwill on acquisition of NAFA Others
44,371 1,041 12,591 655,146 2,601 715,750
95,137 --------95,137
139,508 1,041 12,591 655,146 2,601 810,887
38,195 1,041 --92,593 2,601 134,430
34,774 --80 ----34,854
-------------
72,969 1,041 80 92,593 2,601 169,284
66,539 33.33 % on cost - - - 33.33 % on cost 12,511 562,553 - - - 20 % on cost 641,603
Cost as at January 1, 2010
Impairment Accumulated Book value Cost as at Accumulated December amortization / Amortization charge for amortization and as at the year impairment as at December 31, 2010 impairment as for the year (Note 11.6) December 31, at January 1, 31, 2010 2010 2010 ------------------------------------------------------------------------- Rupees in '000 ----------------------------------------------------------------Additions
Rate of amortization
Computer software Website Room and Membership Card Goodwill on acquisition of NAFA Others
41,997 1,041 12,591 --2,601 58,230
2,374 ----655,146 --657,520
44,371 1,041 12,591 655,146 2,601 715,750
25,342 1,041 ----2,534 28,917
12,853 ------67 12,920
------92,593 --92,593
38,195 1,041 --92,593 2,601 134,430
6,176 33.33 % on cost - - - 33.33 % on cost 12,591 562,553 --20 % on cost 581,320
11.4 The Bank's domestic properties were revalued by independent professional valuers in the year 2007 followed by desktop valuation in 2008. These properties were revalued by M/S Younus Mirza & Co., M/S Dimen Associates (Private) Limited and M/S Arch-e-Decon (Private) Limited on the basis of market value. The revaluation had resulted in increase in surplus on revaluation of operating fixed assets by Rs. 13,114 million. The Bank's property of Bishkek and Baku branches were revalued in 2009 and 2010 respectively by LLC The Agency of Services "Burana Asia" and External Auditors (as allowed under local laws) respectively resulting in a surplus of Rs. 97.283 million. Had there been no revaluation, the carrying amount of revalued assets would have been as follows: Land freehold leasehold Building freehold leasehold Rupees in '000 1,132,637 871,228 578,233 549,917
191

11.5 The Islamic Banking Branches of the Bank have entered into Ijarah transactions with customers during the year. The significant Ijarah transactions have been entered in respect of stationary engines and car. The rate of profit is 6 months KIBOR + 2.75% and 3 months KIBOR + 1.3% (2010: 6 months KIBOR + 2.0% to 2.75% and 3 months KIBOR + 1.3% to 2.5%). The Ijarah payments receivable from customers for each of the following periods under the terms of the respective agreements are given below: 2011 2010 Rupees in '000 Not later than one year Later than one year but not later than five years 161,773 261,082 422,855 145,098 489,385 634,483
11.6 The recoverable amount of goodwill on acquisition of NAFA was tested for impairment based on value in use, in accordance with IAS-36. The value in use calculations are based on cash flow projections based on the budget and forecast approved by management for 2011. These are then extrapolated for a period of five years using a steady long term expected growth of 3% and terminal value is determined based on long term earnings multiple. The cash flows are discounted using a pre-tax discount rate of 20%. 11.7 Details of disposals of property and equipment Details of property and equipment whose original cost or the book value exceeds Rupees one million or two hundred fifty thousand rupees respectively, whichever is lower are given below:
Particulars of property and equipment Motor Vehicle Motor Vehicle Motor Vehicle Motor Vehicle Motor Vehicle Motor Vehicle Motor Vehicle Motor Vehicle Motor Vehicle Motor Vehicle Motor Vehicle Motor Vehicle Motor Vehicle Building Land leasehold Building Freehold land Building Leasehold land Islamic Banking : Ijarah Assets Ijarah Assets Ijarah Assets Ijarah Assets Other assets (having book value of less than Rs. 250,000 or cost of less than Rs. 1,000,000) December 31, 2011 December 31, 2010 Original cost 1,269 1,096 1,269 1,319 915 995 1,859 1,239 1,269 1,239 699 1,092 1,288 35,260 36,000 1,490 1,108 3,750 1,271 7,200 101,627 135,089 236,716 271,716 Book value 952 514 909 616 397 402 806 785 840 698 419 ----35,234 36,000 1,490 111 375 199 720 81,467 72,331 153,798 28,217 Gain/ Sale (loss) on proceeds disposal 952 514 909 616 397 402 806 785 1,269 698 523 813 777 35,000 36,000 1,490 111 375 199 720 83,356 88,152 171,508 63,185 429 104 813 777 (234) 1,889 15,821 17,710 34,968 Mode of Disposal As per service rules As per service rules As per service rules As per service rules As per service rules As per service rules As per service rules As per service rules As per service rules As per service rules Auction Auction Auction Auction Auction Auction Ijarah maturity Ijarah maturity Ijarah maturity Ijarah maturity Particulars of Purchaser Mr. Ayaz Ahmed, Ex-SVP Mr. Ashraf Khan, Ex-SVP Mr. Raja Asad Habib, Ex-SVP Mr. Fayyaz Rabbani, Ex-EVP Mr. Farhan Ahmed, Ex-SVP Mr. Mohammad Rafique, SVP Mr. N.B. Soomro, Ex-SEVP Mr. Mahmoodul Hasan, Ex-SVP Mr. Muhammad Nazir, Ex-SVP Mr. Gulrez Khan, Ex-SVP Mr. Mian Muhammad Nadeem Mr. Naseer Ahmed Mr. Noor Shah Various Mr. Tasawar-ul-Haq Mr. Tasawar-ul-Haq Hira Textiles Limited Pacific Pharmaceuticals Limited H.Sadar Ali Akhtar (Private) Limited H.Sadar Ali Akhtar (Private) Limited
------------------- Rupees in '000 --------------------
192

12. DEFERRED TAX ASSETS - net Deductible temporary difference on: Provision for diminution in the value of investments Provision against advances Other provision Charge against defined benefits plans Unrealised loss on derivatives Provision against off-balance sheet obligation Others Taxable temporary differences on: Excess of accounting book value of leased assets over lease liabilities Difference between accounting book value of operating fixed assets and tax base Revaluation of securities Revaluation of operating fixed assets (12,502) (299,322) 20.1 20.2 (16,149) (391,165) Note 2011 2010 Rupees in '000 2,684,890 1,586,671 6,424,530 6,189,551 334,051 521,225 1,468,297 1,156,724 942,204 --116,622 116,622 --37,587 11,253,151 10,325,823
(1,814,915) (1,750,726) (1,153,328) (1,213,555) (3,280,067) (3,371,595) 7,973,084 6,954,228
Net Deferred tax assest
12.1 Movement in temporary differences during the year

January 1, 2010 Acquisition Recognized Recognized December Recognized Recognized December during the in Profit in surplus in Profit in surplus 31, 2011 31, 2010 year on and Loss on and Loss Account revaluation Account revaluation of assets of assets Rupees in '000
Deferred tax assets arising in respect of: Provision for diminution in the value of investments Provision against advances Other provision Charge against defined benefits plans Unrealised loss / (gain) on derivatives Provision against off-balance sheet obligations Others
553,506 4,720,840 281,966 927,443 116,622 6,600,377
1,033,165 1,468,711 52,085 229,281 942,204 3,725,446
1,586,671 6,189,551 334,051 1,156,724 942,204
1,098,219 234,979 187,174 311,573 (942,204) 37,587 927,328
2,684,890 6,424,530 521,225 1,468,297 -
116,622 - 10,325,823
116,622 37,587 - 11,253,151
Less: Deferred tax (liabilities) arising in respect of: Excess of accounting book value of leased assets over lease liabilities Difference between accounting book value of operating fixed assets and tax base Revaluation of securities Revaluation of operating fixed assets Others
(7,065)
(9,084)
(16,149)
3,647
(12,502)
(222,293) (2,028,859) (1,276,951) (750) (3,535,918) 3,064,459
(6,338) (6,338) (6,338)
(168,872) 63,396 7,088 (107,472) 3,617,974
- (391,165) 278,133 (1,750,726) - (1,213,555) 278,133 (3,371,595) 278,133 6,954,228
91,843 60,227 155,717 1,083,045
- (299,322) (64,189) (1,814,915) - (1,153,328) (64,189) (3,280,067) (64,189) 7,973,084
Net deferred tax assets
193

13. OTHER ASSETS
Income / mark-up accrued in local currencies Income / mark-up accrued in foreign currencies Advances, deposits, advance rent and other prepayments Advance taxation (payments less provisions) Income tax refunds receivable Compensation for delayed refund receivable Receivable from GoP Assets acquired from Corporate and Industrial Restructuring Corporation (CIRC) Branch adjustment account - net Unrealized gain on forward foreign exchange contracts Receivable on account of swaps Commission receivable Stationery and stamps on hand Non-banking assets acquired in satisfaction of claims Barter trade balances Receivable on account of Government transactions Receivable from Government under VHS scheme Less: Provision Note
2011 2010 Rupees in '000

19,797,793 760,809 2,779,780 6,070,402 16,501,280 1,935,092 5,648 372,854 3,355,696 2,944,752 2,725,638 3,344,383 246,583 1,183,587 195,399 323,172 418,599 (418,599) --4,050,405 296,133 34,546 3,033,343 69,957,295 18,707,775 734,511 2,523,072 1,288,916 16,850,798 1,856,256 5,648 405,657 2,772,582 181,473 --3,240,760 436,939 360,869 195,399 323,172 418,599 (418,599) --3,522,884 260,403 519,305 3,190,828 57,377,247
13.1
13.7 13.2
13.3 13.4 13.5
Receivable from pension fund Prize bonds in hand Receivable for sale of shares Others
34.1.2
Less: Provision held against other assets Income / mark-up accrued in local currency / foreign currencies Advances, deposits, advance rent and other prepayments Stationery and stamps on hand Barter trade balances Receivable on account of Government transactions Others Other assets (net of provision) 296,729 800,000 96,542 195,399 323,172 1,775,569 3,487,411 66,469,884 327,081 800,000 201,200 195,399 323,172 1,503,670 3,350,522 54,026,725
13.4 13.6
13.1 This includes Rs. 800 million (2010: Rs. 800 million) advance against Pre-IPO placement of Term Finance Certificates. 13.2 Upon dissolution of CIRC and take over by the Bank with effect from September 22, 2006, the said amount represents receivable from GoP. 13.3 The market value of non-banking assets acquired in satisfaction of claims does not materially differ as most of properties have been acquired in 2011. 13.4 This represents amount receivable from GoP on account of encashment of various instruments handled by the Bank for GoP as an agent of the SBP. 13.5 This represents payments made under the Voluntary Handshake Scheme (VHS), recoverable from GoP. Due to uncertainty about its recoverability, full amount has been provided for.
194

13.6 Provision against other assets Note Opening balance Charge for the year Transfer out Reversals / write offs Closing balance 2011 2010 Rupees in '000 3,350,522 3,089,996 339,884 260,526 (46,477) ----(156,518) 3,487,411 3,350,522
13.6.1
13.6.1 This includes Rs. 800 million (2010: Rs. 800 million) as provision against Pre-IPO placement of Term Finance Certificates. 13.7 Movement in Compensation for delayed refund Opening balance Accrued during the year Realized during the year Closing balance Note 2011 2010 Rupees in '000 9,766 1,856,256 2,280,430 1,846,490 (2,201,594) --1,935,092 1,856,256
14.
BILLS PAYABLE In Pakistan Outside Pakistan 9,001,765 7,777,211 102,945 229,420 9,104,710 8,006,631
15.
BORROWINGS In Pakistan Outside Pakistan 15.1 & 15.2 15.1 Particulars of borrowings with respect to currencies In local currency In foreign currencies 15.2 Details of borrowings 15.2 25,696,333 19,265,569 675,342 391,638 26,371,675 19,657,207 25,696,333 19,265,569 675,342 391,638 26,371,675 19,657,207
Secured Borrowings from State Bank of Pakistan: Under Export Refinance Scheme Under Long-Term Financing under Export Oriented Project (LTF-EOP) Under Long-Term Financing Facility (LTFF) Repurchase agreement borrowings
8,747,072 568,868 2,045,232 11,361,172 11,011,456 22,372,628
6,213,967 1,412,760 1,465,900 9,092,627 8,855,758 17,948,385
Unsecured Call borrowings Overdrawn nostro accounts Others
32
3,553,853 1,100,948 374,394 537,074 70,800 70,800 3,999,047 1,708,822 26,371,675 19,657,207
195

15.2.1 Mark-up / interest rates and other terms are as follows: - The Bank has entered into agreements with the SBP for extending export finance to customers. As per the terms of the agreement, the Bank has granted SBP the right to recover the outstanding amount from the Bank at the date of maturity of finances by directly debiting the current account maintained by the Bank with the SBP. These borrowings carries mark-up ranging from 5% to 10% (2010: 8% to 9.5%). Call borrowings carry interest ranging from 11.25% to 13.10% per annum (2010: 11.00% to 13.90% per annum) having maturities ranging from January 03, 2012 to March 29, 2012. Repurchase agreement borrowings carry mark-up at the rates ranging from 11.62% to 11.64% per annum (2010: 11.55% to 14.00% per annum) having maturity on January 06, 2012. Unsecured borrowings "Others" carry interest at the rate of 10% per annum (2010: 10% per annum).
15.3 Borrowings from the SBP under export oriented projects refinance schemes of the SBP are secured by the Bank's cash and security balances held by the SBP.
16.
DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Savings deposits Current accounts - remunerative Current accounts - non-remunerative Financial Institutions Remunerative deposits Non - remunerative deposits 65,157,053 76,896,253 142,053,306 16.1 927,415,132 30,939,064 53,231,032 84,170,096 832,134,054 Note 2011 2010 Rupees in '000 257,518,704 232,868,411 80,905,162 214,069,549 785,361,826 218,701,230 266,342,975 68,525,875 194,393,878 747,963,958
16.1 Particulars of deposits In local currency In foreign currencies [including deposits of foreign branches of Rs. 119,925 million (2010: Rs. 97,996 million)]
761,976,513 165,438,619 927,415,132
688,730,713 143,403,341 832,134,054
196

17. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE
2011
2010
Minimum Financial Principal Minimum Financial Principal lease charges for outstanding lease charges for outstanding payments future periods payments future periods
Rupees in '000
Not later than one year Later than one year and but not later than five years 68,181 11,978 56,203 66,572 14,957 51,615
39,535 107,716
2,999 14,977
36,536 92,739
81,069 147,641
9,271 24,228
71,798 123,413
The Group has entered into lease agreements with First National Bank Modaraba and Orix Leasing Pakistan Limited for lease of vehicles. Lease rentals are payable in quarterly instalments. Financial charges included in lease rentals are determined on the basis of discount factors applied at the rates ranging from KIBOR + 0.9% to KIBOR + 5% per annum (2010: KIBOR + 0.9% to KIBOR + 4.00% per annum). At the end of lease term, the Bank has option to acquire the assets, subject to adjustment of security deposits. 18. OTHER LIABILITIES Note Mark-up / return / interest payable in local currency Mark-up / return / interest payable in foreign currencies Unearned commission and income on bills discounted Accrued expenses Advance payments Unclaimed dividends Derivatives: Loss on forward foreign exchange contracts 22.3 Loss on cross currency swaps 18.1 Provision against off balance sheet obligations Employee benefits: 34.1.3 Post retirement medical benefits 34.2.1 Compensated absences 34.1.4 Benevolent fund 34.1.5 Gratuity scheme Staff welfare fund Liabilities relating to: Payable on account of cross currency swaps Barter trade agreements Special separation package Payable to GoP for acquisition of assets from CIRC Payable to brokers Others [(including provision of Rs. 756 million (2010: Rs. 506 million) for contingencies)] 2011 2010 Rupees in '000 14,660,584 267,552 347,791 2,093,250 177,443 59,514 1,002,094 1,609,555 454,026 4,223,434 3,148,005 1,156,499 234,340 371,257 4,014,936 12,392,801 78,422 232,460 --8,177,472 54,701,435 14,522,712 502,481 94,921 2,208,380 22,035 45,761 629,295 2,331,973 454,026 3,732,073 2,572,878 895,661 173,732 371,257 --11,843,111 78,422 232,460 345,922 5,741,230 46,798,330
197

18.1 Provision against off balance sheet obligations Note Opening balance Charge for the year Closing balance 2011 2010 Rupees in '000 454,026 --454,026 450,061 3,965 454,026
18.1.1
18.1.1 This represents provision against non-funded exposure of borrowers where the Bank considers that the borrower will not be able to meet its contractual obligations at the time of amount becoming due. 19. SHARE CAPITAL 19.1 Authorized 2010 2011 Number of shares 2,500,000,000 2,500,000,000 Ordinary shares of Rs.10 each 2011 2010 Rupees in '000 25,000,000 25,000,000
19.2 Issued, subscribed and paid-up 140,388,000 1,205,074,900 1,345,462,900 140,388,000 1,541,440,600 1,681,828,600 Ordinary shares of Rs.10 each Fully paid in cash Issued as fully paid bonus shares 1,403,880 15,414,406 16,818,286 1,403,880 12,050,749 13,454,629
The Federal Government and the SBP held about 75.60 % (2010: 75.60%) shares of the Bank as at the year ended December 31, 2011. 19.3 Shares of the Bank held by its associates 2011 2010 Rupees in '000 Following shares were held by the associates of the Bank as of year end: NAFA Multi Asset Fund NAFA Stock Fund 309,522 303,274 612,796 225,018 506,831 731,849
20.
SURPLUS ON REVALUATION OF ASSETS - net Note Available-for-sale securities Fixed assets 20.1 20.2 2011 2010 Rupees in '000 4,967,574 7,507,831 17,594,441 17,605,260 22,562,015 25,113,091
198

20.1 Surplus / (deficit) on revaluation of available-for-sale securities - net of tax Federal Government securities Term Finance Certificates and Sukuks Shares and mutual funds GoP Foreign Currency Bonds Foreign Currency Debt. Securities NI(U)T LoC Units NI(U)T Non-LoC Units NIT Equity Market Opportunity Fund Units Investment outside Pakistan Deferred tax liability recognized Share of revaluation loss on securities of associates 20.2 Surplus on revaluation of fixed assets - net of tax 12 Note 2011 2010 Rupees in '000 481,362 (1,232,965) (71,285) (215,922) (347,306) 2,713,159 720,733 (119,692) (11,264) (121,529) 511,892 --101,420 (21,809) 565,873 402,853 6,651,226 6,129,676 6,853,820 9,282,602 (1,814,915) (1,750,726) (24,045) (71,331) 4,967,574 7,507,831
Surplus on revaluation on January 1, Surplus on revaluation of the Bank's properties during the year Transferred to unappropriated profit in respect of incremental depreciation charged during the year - net of deferred tax Related deferred tax liability 11.4
18,393,306 18,567,352 --7,088
Less: Related deferred tax liability on: Revaluation as at January 1, Incremental depreciation charged during the year transferred to profit and loss account Share of surplus on revaluation of fixed assets of joint venture Surplus on revaluation on December 31, 12
(111,850) (117,738) (63,396) (60,227) (172,077) (181,134) 18,221,229 18,393,306
1,213,555
1,276,951
(63,396) (60,227) 1,153,328 1,213,555 425,509 526,540 17,594,441 17,605,260
199

21. CONTINGENCIES AND COMMITMENTS 21.1 Direct credit substitutes Include general guarantee of indebtedness, bank acceptance guarantees and standby letters of credit serving as financial guarantees for loans and securities issued in favour of: 2011 2010 Rupees in '000 - Government - Financial institutions - Others 21.2 Transaction-related contingent liabilities Includes performance bonds, bid bonds, warranties, advance payment guarantees, shipping guarantees and standby letters of credits related to particular transactions issued in favour of: 2011 2010 Rupees in '000 - Government - Financial institutions - Others 14,457,548 9,825,641 13,282,900 37,566,089 19,873,392 106,771 15,527,147 35,507,310 3,677,940 4,513,887 5,361,703 7,239,823 21,588,873 21,223,626 30,628,516 32,977,336
21.3 Trade-related contingent liabilities
2011 2010 Rupees in '000 47,591,186 46,299,854 107,289 591 121,860,942 114,746,125 169,452,719 161,153,268
Letters of credit issued in favour of: - Government - Financial institutions - Others 21.3 Other contingencies
21.4.1
Claims against the Bank not acknowledged as debts [including SBP liabilities on Bangladesh borrowing and interest thereon amounting to Rs. 183 million (2010: Rs.178 million), claims relating to former Mehran Bank Limited amounting to Rs. 965 million (2010: Rs. 965 million) and claims relating to employees, the amount involved can not be ascertained reasonably].
8,704,944
8,243,510
200

21.4.2 Taxation The income tax returns of the Bank for global operations and for Azad Jammu Kashmir have been filed under section 120 of the Income Tax Ordinance, 2001 upto the tax year 2011 (accounting year ended December 31, 2010) and amended by the Taxation Officer under section 122(5A) of the Income Tax Ordinance, 2001 upto the tax year 2010 (accounting year ended December 31, 2009). During the year, taxation authorities in connection with monitoring of withholding taxes have passed orders under section 161/205 of the Income Tax Ordinance, 2001 for the tax years 2009, 2010 and 2011 raising demand of Rs. 2.3 billion subject to rectification on production of additional challans. The additional challans have been collected from the branches and submitted to the income tax authorities for verification by them. An appeal has also been filed before the Appellate Tribunal of Inland Revenue on the grounds that monitoring default could not be created without identification of the specific parties to whom withholding tax was deductible. In addition to above, other matters under contingencies includes interest credited to suspense account and allocation of common expenditure between taxable and exempt / low tax rate. The aggregate effect of aforementioned contingencies amounts to Rs. 5,453 million (2010: Rs. 3,413 million). However, management has made a provision of Rs. 260 million against the aforementioned matters based on the opinion of tax consultants of the Bank who expect favourable outcome upon adjudication. 21.4.3 Barter Trade Agreements In order to reduce pressure on the balance of payment, the GoP had entered into barter trade agreements with various countries and designated the Bank to handle the related transactions on behalf of GoP. Accordingly, the Bank executed banking arrangements with the designated banks of these countries and opened accounts in their names. In one of the barter agreement, repayments made to the Bank by the GoP could not be utilized due to non-finalization of Letter of Exchange for its utilization after 1994 at Government level, which was required under the relevant barter agreement. The concerned bank is now demanding payment of interest on the balances in its accounts with the Bank. Since these balances are maintained in current accounts and there is also no clause for payment of any interest in the relevant banking arrangement, therefore the Bank strongly refused such claims. 21.4.4 Golden Handshake (GHS) In 1997 Golden Handshake Scheme (GHS) was introduced with the cut-off date of October 31, 1997. However, despite the lapse of due date, many GHS optees continued their services till 1998 and 1999. In February 1998, a circular was issued for enhancement in salaries, which was not applicable to GHS optees. In calculating dues of GHS optees, their pensionary benefits were calculated till the cut-off date. Such employees filed cases against the Bank in various courts including Federal Services Tribunal and the Honourable High Court for enhancement/recalculation of their dues in the light of circular of February 1998. In some cases, the Honourable High Court decided against the Bank, despite the disclaimer signed by such optees not to claim any more benefits than what the Bank had already paid to them. This disclaimer came up for interpretation before the Supreme Court, which upheld the Banks view that such disclaimer bars / prohibits the optees to claim any amount in excess of what they had received. Lahore and Sindh Honourable High Courts, in some cases, decided against the Bank, and directed it, to pay additional benefits by calculating upto the actual date on which the optees released from the service. The Bank filed appeals against the aforesaid orders of Lahore and Sindh High Courts. The said appeals have been accepted by the Honourable Supreme Court and the judgment of Lahore and Sindh Honourable High Courts have been set-aside. The writ petitions filed by some retired employees for additional benefits under GHS were pending in Honourable Islamabad High Court and were argued by the Bank's lawyer in December 2011 and have been dismissed by following the dictum laid down by the Honourable Supreme Court. Similar writ petitions are still pending in Honourable Lahore High Court, Lahore & Multan Bench of Honourable Lahore High Court which have not yet been fixed for final hearing. However, the Bank based on the legal opinion is of the view that as per law, the Bank is not likely to be burdened in any further financial liability for payment of any additional benefits.
201

21.5 Commitments in respect of forward exchange contracts Purchase Sale 21.6 Commitments in respect of trading in government securities Purchase (reverse repo) Sale 21.7 21.8 Commitments for the acquisition of operating fixed assets Other commitments Cross currency swap Professional services to be received 22 DERIVATIVE INSTRUMENTS 22.1 The bank is involved in derivative transactions including interest rate swaps, cross currency swaps and equity futures. The bank also enter into forward foreign exchange contracts, the un-realized gain and loss on such contracts are disclosed in note 13 and 18. The Asset Liability Committee regularly reviews the Banks risk profile in respect of derivatives. Operational procedures and controls have been established to facilitate complete, accurate and timely processing of transactions and derivative activities. These controls include appropriate segregation of duties, regular reconciliation of accounts, and the valuation of assets and positions. The Bank has established trading limits, allocation process, operating controls and reporting requirements that are specifically designed to control risk of aggregate positions, assure compliance with accounting and regulatory standards and provide accurate management information regarding these activities. Accounting policies in respect of derivative financial instruments are mentioned in note 5.4. At December 31, 2011 and 2010 only cross currency swaps were outstanding and their analysis is as follows: 22.2 Product Analysis Counterparties With other entities for 2010 2011 Cross Currency Swaps Cross Currency Swaps No. of Notional No. of Notional Contracts Principal Contracts Principal Rupees in'000 Rupees in'000 10 3,410,259 10 4,956,420 3,410,259 147,669 4,956,420 166,126 2,000,000 --1,643,221 --50,000 2,375,461 2011 2010 Rupees in '000 160,587,401 98,499,566 106,748,426 60,773,315
Hedging Market Making Total Hedging Market Making
10 10
3,410,259 3,410,259
10 10
4,956,420 4,956,420
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22.3 Maturity Analysis 2011 No. of Contracts ------------10 ----Notional Principal ------------3,410,259 ----2010 Remaining Maturity No. of Contracts ------------10 ----Notional Principal ------------4,956,420 ----Negative Mark to Market Positive ------------3,338,202 ----Net ------------(1,042,675) ----Negative Mark to Market Positive ------------3,410,259 ----Net ------------(1,609,555) ----Cross Currency Swaps Remaining Maturity
-------------------------------- Rupees in '000 --------------------------------Upto 1 month 1 to 3 months 3 to 6 months 6 month to 1 Year 1 to 2 Year 2 to 3 Years 3 to 5 Years 5 to 10 years Above 10 Years ------------5,019,814 -----
-------------------------------- Rupees in '000 --------------------------------Upto 1 month 1 to 3 months 3 to 6 months 6 month to 1 Year 1 to 2 Year 2 to 3 Years 3 to 5 Years 5 to 10 years Above 10 Years 23. MARK-UP / RETURN / INTEREST EARNED On loans and advances to: Customers Financial institutions On investments in: Held-for-trading securities Available-for-sale securities Held-to-maturity securities On deposits with financial institutions On securities purchased under resale agreements ------------8,395,813 -----
2011 2010 Rupees in '000 62,269,651 1,634,302 63,903,953 1,124,170 26,593,814 1,208,998 28,926,982 609,159 2,249,647 95,689,741 57,763,119 1,371,490 59,134,609 792,985 24,615,208 913,191 26,321,384 608,237 2,617,151 88,681,381
203

24. MARK-UP / RETURN / INTEREST EXPENSED Deposits Securities sold under repurchase agreements Short-term borrowings 2011 2010 Rupees in '000 45,702,145 1,501,188 1,313,184 48,516,517 43,112,819 1,094,376 962,549 45,169,744
25.
INCOME FROM DEALING IN FOREIGN CURRENCIES This includes Rs. 5,558 million (2010: Rs. 4,376 million) on account of interest income on foreign currency swap transactions.
26.
GAIN ON SALE AND REDEMPTION OF SECURITIES - net Note Federal government securities Market Treasury Bills Pakistan Investment Bonds GoP Ijara Sukuks 2011 2010 Rupees in '000 269,822 (78,059) 4,500 196,263 9.5.1 641,081 44,715 1,508,152 --2,390,211 36,824 25,885 --62,709 294,424 123,728 1,906,286 125,216 2,512,363
Gain on Redemption of NIT Units-LOC Holders' Fund Gain on NIT - MOF Shares and Mutual Funds Gain on Sale of Foreign Government / debt securities
27.
OTHER INCOME Note Rent on property Gain on sale of property and equipment Others 2011 2010 Rupees in '000 33,652 17,710 2,491,777 2,543,139 40,840 34,968 2,108,083 2,183,891
11.7 27.1
27.1
This includes Rs. 2,280 million (2010: Rs. 1,846) for compensation of delayed refunds determined under Section 171 of Income Tax Ordinance 2001.
204

28. ADMINISTRATIVE EXPENSES Salaries and allowances Charge for defined benefit plans Non-executive directors' fee, allowances and other expenses Rent, taxes, insurance, electricity, etc. Legal and professional charges Communications Repairs and maintenance Financial charges on leased assets Stationery and printing Advertisement, sponsorship and publicity Donations Contributions for other Corporate and Social Responsibility Auditors' remuneration Depreciation Amortization Conveyance Entertainment Travelling Security services Outsourcing Others Note 2011 2010 Rupees in '000 19,272,146 2,274,525 35 28.1 29,154 1,855,564 213,000 681,036 681,320 30,335 689,450 282,635 96,610 83,140 100,872 1,337,073 34,854 151,373 63,124 264,410 1,168,334 455,123 996,737 30,760,815 16,850,368 1,666,466 26,903 1,627,039 349,364 690,565 503,525 21,766 552,794 141,553 59,611 61,980 116,364 1,105,494 12,920 128,508 52,091 241,972 1,094,480 366,241 1,062,041 26,732,045
28.2 28.3 28.4 11.2 11.3
28.1 28.2
This includes Rs. 2.254 million (2010: Rs. 3.381 million) insurance premium against directors' liability insurance. Donations include following amounts exceeding Rs. 0.1 million Thalesemia Care Centre Medical Aid Foundation Mery Adelaide Leprosy Centre Caravan of Life Trust Pakistan Ltd. Children Welfare Society Karachi School of Business Leadership Institute of Business Administration (IBA) Afzaal Memorial Thalesemia Prime Minister Flood Relief Fund SOS Children Village, Multan Memon Medical Institute Sheikh Zayed Hospital Karachi Press Club Library Nighaban Welfare Association Islamabad Police 2011 2010 Rupees in '000 1,600 500 2,000 1,000 500 20,000 25,000 1,000 45,000 ------------96,600 --------------1,368 50,000 3,000 1,200 250 1,517 100 100 57,535
205

28.3 Contributions for Corporate & Social Responsibilities include following amounts exceeding Rs. 0.1 million Flood Relief 2011 /2010 (Affectees) Construction of rural clean water supply & sewerage system model village Hamid Pur Multan Medicines / eatable items purchased & distributed to affectees of rain Dist. of Badin & Mirpurkhas Sun shade and uplifting of pedestrian bridge at Larkana 2011 2010 Rupees in '000 63,305 10,000 5,110 4,725 83,140 61,980 ------61,980
None of the directors / executives or their spouses have any interest in the donees, except Mr. Syed Ali Raza (Chairman) and Mr. Tariq Kirmani (director) who are the member of the Board of Directors of Institute of Business Administration and the member of the Board of Governors' of Marie Adelaide Leprosy Centre respectively. 28.4 Auditors' remuneration
Anjum Asim Shahid Rahman 5,660 1,980 4,600 2,942
2011 Total
2010 Total
---------------------------------------- Rupees in '000 --------------------------------------Audit fee Review of interim financial statements Fee for audit of domestic branches Fee for taxation, special certifications and sundry advisory services Fee for audit of overseas branches including advisory services and out-of-pocket expenses Fee for audit of subsidiaries Out-of-pocket expenses 5,660 1,980 4,600 578 11,320 3,960 9,200 3,520 11,320 3,960 9,200 37,085
--2,520 15,338
--2,411 17,593
62,838 5,103 4,931 100,872
48,715 1,450 4,634 116,364
29.
OTHER CHARGES Penalties imposed by the SBP
2011 2010 Rupees in '000 137,852 137,852 118,887 118,887
30.
TAXATION For the year Current Deferred For prior year Current Deferred 30.1
2011 2010 Rupees in '000 9,229,882 (1,083,045) 8,146,837 260,000 --260,000 30.2 8,406,837 9,871,640 (2,049,600) 7,822,040 630,216 (1,568,374) (938,158) 6,883,882
206

30.1 30.2 Current taxation includes Rs. 605 million (2010: Rs. 551 million) of overseas branches. Relationship between tax expense and accounting profit 2011 2010 Rupees in '000 Accounting profit before tax Income tax at statutory rate @ 35% (2010: 35%) Increase / (decrease) in taxes resulting from: Inadmissible differences Income taxed at reduced rate Prior year adjustable timing differences Overseas taxation Prior year tax effects Tax charge for current and prior years 31. BASIC AND DILUTED EARNINGS PER SHARE 2011 Profit after tax for the year Weighted average number of ordinary shares Basic earnings per share Basic and diluted earnings per share are same. Rupees in '000 Numbers in '000 Rupees 17,711,753 1,681,829 10.53 2010 17,809,304 1,681,829 10.59 48,248 (1,123,506) --81,494 260,000 8,406,837 51,205 (858,965) (1,568,374) 12,000 630,216 6,883,882 26,116,002 9,140,601 24,622,287 8,617,800
31.1 32.
Earnings per share for the year 2010 has been restated for the effect of bonus shares issued. 2011 2010 Rupees in '000 131,843,291 28,069,897 (374,394) 159,538,794 2011 115,657,025 30,743,368 (537,074) 145,863,319 2010 15,030 1,494 16,524
CASH AND CASH EQUIVALENTS Note Cash and balances with treasury banks Balances with other banks Overdrawn nostros 6 7 15.2
33.
STAFF STRENGTH Permanent Temporary / on contractual basis Total Staff Strength 33.1
Numbers
14,413 2,511 16,924
In addition to the above, the Bank is utilizing the services of other companies for outsourcing purposes including security staff and the number of persons deployed by such companies as at year end are 7,961 (2010: 7,337).
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34. EMPLOYEE BENEFITS 34.1 Defined benefit plans
34.1.1 General description General description of the type of defined benefit plan and accounting policy for recognising actuarial gains and losses is disclosed in note 5.10 to the financial statements. Principal actuarial assumptions The financial assumptions used in actuarial valuation at December 31, 2011 of pension fund, post retirement medical benefits, benevolent fund and gratuity scheme are as follows: 2011 2010 Salary increase rate 13% per annum 14% per annum Discount rate 13% per annum 14% per annum Expected rate of return on plan assets 13% per annum 14% per annum Pension indexation rate 10% per annum 10% per annum Rate of inflation in the cost of medical benefits 10% per annum 10% per annum Exposure inflation rate 3% per annum 3% per annum Number of employees covered under retirement benefit plan 14,481 14,656 34.1.2 Reconciliation of recoverable from pension fund Note Present value of defined benefit obligations Fair value of plan assets Net actuarial losses not recognized Past service cost - non vested 13
2011 2010 Rupees in '000 28,538,893 (25,026,571) (4,237,006) (3,325,721) (4,050,405) 21,761,425 (22,382,345) (2,197,457) (704,507) (3,522,884)
The recognized amount has been restricted to present value of any economic benefits available in the form of refunds from the plan or reduction in future contribution to the plan. Movement in recoverable from pension fund 2011 2010 Rupees in '000 (3,522,884) 470,360 (997,881) (4,050,405) (3,666,344) 695,262 (551,802) (3,522,884)
Opening net asset Charge for the year Contribution to the fund made during the year
Charge for pension fund
2011 2010 Rupees in '000 548,862 2,948,199 (3,104,980) --78,279 470,360 581,304 2,733,227 (2,769,422) 71,874 78,279 695,262
Current service cost Interest cost Expected return on plan assets Actuarial gains recognized Past service cost-vested
208

Movement of present value of defined benefit obligation Opening present value of defined benefit obligation Current service cost Interest cost Benefit paid Past service cost-non vested Actuarial loss / (gain) on obligation Closing present value of defined benefit obligation Movement in fair value of plan assets Opening fair value of plan assets Expected return on plan assets Contributions Benefits paid Actuarial (loss) / gain on assets Closing fair value of plan assets Actual return on plan assets
2011 2010 Rupees in '000 21,761,425 548,862 2,948,199 (1,405,716) 2,699,492 1,986,631 28,538,893 19,523,049 581,304 2,733,227 (923,087) --(153,068) 21,761,425
22,382,345 3,104,980 997,881 (1,405,716) (52,919) 25,026,571 3,052,061
19,781,585 2,769,422 551,801 (923,087) 202,624 22,382,345 2,972,045
34.1.2.1 Components of fair value of plan assets as a percentage of total fair value of plan assets:
2011 % 2010 %
Bonds Equities Cash and net current assets Reconciliation of recoverable from pension fund for the five years is as follows:
78.10 20.35 1.55
84.44 11.71 3.85
2011 2010 2009 2008 2007 ------------------------------------------------------------- Rupees --------------------------------------------------------Present value of defined benefit obligations Fair value of plan assets Net actuarial (losses) / gains not recognized Past service cost - Non vested 28,538,893 (25,026,571) (4,237,006) (3,325,721) (4,050,405) 21,761,425 (22,382,345) (2,197,457) (704,507) (3,522,884) 19,523,049 (19,781,585) (2,625,022) (782,786) (3,666,344) 15,011,555 (17,738,992) (1,587,558) (181,948) (4,496,943) 12,704,049 (19,503,391) 3,122,997 --(3,676,345)
209

34.1.3 Reconciliation of payable to medical benefit plan Note Present value of defined benefit obligations Net actuarial losses not recognized 13 Movement in net liability recognized Opening net liability Charge for the year Benefits paid 3,732,073 688,585 (197,224) 4,223,434 3,407,225 589,042 (264,194) 3,732,073 2011 2010 Rupees in '000 5,362,361 (1,138,927) 4,223,434 4,019,855 (287,782) 3,732,073
Charge for medical benefit plan Current service cost Interest cost 139,611 548,974 688,585 108,454 480,588 589,042
Movement of present value of defined benefit obligation Opening present value of defined benefit obligation Current service cost Interest cost Benefit paid Actuarial loss on obligation Closing present value of defined benefit obligation Reconciliation of payable to medical benefit plan for the five years is as follows:
2011 2010 Rupees in '000 4,019,855 139,611 548,974 (197,225) 851,146 5,362,361 3,432,771 108,454 480,588 (264,195) 262,237 4,019,855
2011 2010 2009 2008 2007 ------------------------------------------------------------- Rupees --------------------------------------------------------Present value of defined benefit obligations Net actuarial (losses) / gains not recognized 5,362,361 (1,138,927) 4,223,434 4,019,855 (287,782) 3,732,073 3,432,771 (25,546) 3,407,225 2,909,308 37,246 2,946,554 2,726,617 (144,141) 2,582,476
Effect of 1% movement in assumed medical cost trend rate

2011 2010 Increase Decrease Increase Decrease -------------------------------------------- Rupees ---------------------------------------Present value of defined benefit obligations Net actuarial (losses) / gains not recognized 626,598 106,659 (532,708) (90,564) 404,578 70,093 (364,652) (59,996)
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34.1.4 Reconciliation of payable to benevolent fund Present value of defined benefit obligations Actuarial gain on obligation not recognised Past service cost - non vested Note 2011 2010 Rupees in '000 1,486,439 140,775 (470,715) 1,156,499 895,661 ----895,661
Movement in net liability recognized for benevolent fund Opening net liability Charge for the year Benefits paid 18 Charge for benevolent fund Current service cost Interest cost Past service cost - vested Actuarial gains recognized 17,444 124,146 137,056 --278,646 14,392 117,337 --(52,004) 79,725 895,661 278,646 (17,808) 1,156,499 838,123 79,725 (22,187) 895,661
Movement of present value of defined benefit obligation Opening present value of defined benefit obligation Current service cost Interest cost Benefit paid Past service cost - vested Past service cost - non vested Actuarial (gain) on obligation Closing present value of defined benefit obligation 895,661 17,444 124,146 (17,808) 137,056 470,715 (140,775) 1,486,439 838,123 14,392 117,337 (22,187) ----(52,004) 895,661
Reconciliation of net liability recognized for benevolent fund for the five years is as follows:
2011 Opening net liability Net charge for the year Benefits paid 895,661 278,646 (17,808) 1,156,499
2010 838,123 79,725 (22,187) 895,661
2009 765,748 114,022 (41,647) 838,123
2008 759,957 53,256 (47,465) 765,748
2007 802,937 22,756 (65,736) 759,957
------------------------------------------------------------- Rupees ---------------------------------------------------------
211

34.1.5 Reconciliation of payable to gratuity benefit plan Present value of defined benefit obligations Net actuarial losses not recognized Past service cost - non vested Movement in net liability recognized Opening liability Charge for the year Benefits paid Charge for gratuity benefit plan Current service cost Interest cost 18 Note 2011 2010 Rupees in '000 367,576 (27,413) (105,823) 234,340 187,884 (14,152) --173,732
173,732 78,504 (17,896) 234,340
123,789 52,553 (2,610) 173,732
53,453 25,051 78,504
33,484 19,069 52,553
Movement of present value of defined benefit obligation Opening present value of defined benefit obligation Current service cost Interest cost Benefit paid Past service cost - non vested Actuarial loss on obligation Closing present value of defined benefit obligation 187,884 53,453 25,051 (17,896) 105,823 13,261 367,576 136,211 33,484 19,069 (2,610) --1,730 187,884
Reconciliation of net liability recognized for defined gratuity obligation for the five years is as follows:
2011 2008 2007 2010 2009 ------------------------------------------------------------- Rupees --------------------------------------------------------Present value of defined benefit obligations Net actuarial gains not recognized Past service cost - Non vested 367,576 (27,413) (105,823) 234,340 187,884 (14,152) --173,732 136,211 (12,422) --123,789 116,216 (9,946) --106,270 82,098 (4,309) (11,081) 66,708
34.2 34.2.1
Other employee benefits Movement in net liability recognized for compensated absences Opening net liability Charge for the year Benefits paid during the year
Note
2011 2010 Rupees in '000
18
2,572,878 740,270 (165,143) 3,148,005
2,397,308 229,971 (54,401) 2,572,878
Reconciliation of net liability recognized for compensated absences for the five years is as follows:
2011 2010 2009 2008 2007 ------------------------------------------------------------- Rupees --------------------------------------------------------Opening net liability Net charge for the year 2,572,878 575,127 3,148,005 2,397,308 175,570 2,572,878 2,246,752 150,556 2,397,308 1,662,930 583,822 2,246,752 1,639,708 23,222 1,662,930
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34.3 Expected contributions to be paid to the funds in the next financial year
2012 Pension Benevolent Medical Gratuity Funds Scheme Scheme Scheme -------------------------------------------- Rupees ---------------------------------------------Contributions to be paid 1,759,294 286,996 974,824 141,288
35.
COMPENSATION OF DIRECTORS AND EXECUTIVES

President Directors Executives 2010 2011 2010 2010 2011 2011 -------------------------------------------------------------------------- Rupees ---------------------------------------------------------------------Fees Managerial remuneration Charge for defined benefit plan Rent and house maintenance Utilities Medical Conveyance Leave fare assistance Bonus and others --14,708 1,745 6,589 1,851 71 608 443 51,512 77,527 --11,760 --4,539 2,680 101 --12,456 38,109 69,645 29,154 ----------------29,154 26,903 ----------------26,903 --1,250,826 176,025 542,628 158,259 156,847 386,561 --645,822 3,316,968 --672,313 90,761 346,189 100,834 138,597 211,726 --443,494 2,003,914
------------------------------------------------------------------------ Number ---------------------------------------------------------------------Number of persons 2 1 4 6 1232 796
The President and certain executives are also provided with free use of the Bank's cars, household equipment and free membership of clubs.
36.
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 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 5.6. The maturity and re-pricing profile and effective rates are stated in notes 42.4.1 and 42.3.3 respectively. In the opinion of 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.
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37. Segment Details with respect to Business Activities The segment analysis with respect to business activity is as follows:
Corporat Finance Trading & Sales Retail Banking Commercial Banking Payment & Settlement Agency Services Assets Retail Management Brokerage Total
2011 Total income Inter segment revenue Total expenses Net income Segment assets (Gross) Segment non-performing loans Segment provision required Segment liabilities (Gross) Segment return on net assets (ROA) (%) Segment cost of funds (%) 2010 Total income Inter segment revenue Total expenses Net income Segment assets (Gross) Segment non-performing loans Segment provision required Segment liabilities (Gross) Segment return on net assets (ROA)(%) Segment cost of funds (%) 347,119 --2,074 345,045 --------0.00% 0.00% 4,007,212 (1,267,561) 564,479 2,175,172 8,988,040 ----59,633 24.20% 0.00% 5,468,514 12,778,269 13,736,239 4,510,544 145,766,096 6,618,312 5,564,909 222,764,481 3.38% 4.39% 554,927 --17,318 537,609 --------0.00% 0.00% 1,826,039 (764,606) 152,815 908,618 13,672,883 ------6.65% 0.00% 6,030,707 13,134,219 15,234,998 3,929,928 169,320,927 4,798,458 5,083,567 251,304,294 2.46% 4.98%
Rupees in '000 51,917,854 (12,369,613) 20,145,995 19,402,246 952,448,847 83,526,139 62,395,871 753,347,180 2.41% 6.38% 1,802,687 --1,352,241 450,446 --------0.00% 0.00% 4,429,589 --3,503,647 925,942 17,201,680 ----12,791,575 5.38% 0.00% 299,737 --346,783 (47,046) 503,920 ----188,132 -9.34% 0.00% 66,104 --57,845 8,259 66,927,644 --40,811,642 26,116,002
331,843 1,153,480,100 --88,324,597 67,479,438 --54,510 1,017,685,691 2.49% 0.00% 2.62% 5.98%
45,228,016 (11,510,708) 18,602,274 15,115,034 868,756,836 80,253,041 55,678,714 683,764,371 2.06% 5.93%
2,287,441 --1,254,454 1,032,987 --------0.00% 0.00%
4,233,773 --2,804,162 1,429,611 13,957,125 ------10.24% 0.00%
20,669 --14,828 5,841 191,310 ----48,016 3.05% 0.00%
69,776 --61,723 8,053
61,662,520 --37,040,233 24,622,287
359,060 1,038,018,467 --86,871,353 --61,243,623 83,134 906,719,635 2.24% 0.00% 2.59% 5.80%
37.1
Segment reporting A segment is a distinguishable component of the Bank that is engaged either in providing product or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.
37.1.1 Business segments Corporate finance Corporate banking includes, services provided in connection with mergers and acquisition, underwriting, privatization, securitization, research, debts (government, high yield), equity, syndication, IPO and secondary private placements. Trading and sales It includes fixed income, equity, foreign exchanges, commodities, credit, funding, own position securities, lending and repos, brokerage debt and prime brokerage. It includes fixed income, equity, foreign exchanges, commodities, credit, funding, own position securities, lending and repos, brokerage debt and prime brokerage. Retail banking It includes retail lending and deposits, banking services, trust and estates, private lending and deposits, banking service, trust and estates investment advice, merchant / commercial and private labels and retail.
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Commercial banking Commercial banking includes project finance, real estate, export finance, trade finance, factoring, lending, guarantees, bills of exchange and deposits. Payment and settlement It includes payments and collections, funds transfer, clearing and settlement. Agency services It includes escrow, depository receipts, securities lending (customers), corporate actions, issuer and paying agents. Assets management It includes asset management and investment advisory services. Retail brokerage It includes business of stock brokerage, investment counseling and fund placements. 38. TRUST ACTIVITIES 38.1 National Investment Trust (NIT) Under a trust deed, the Bank provides services, as a trustee to NIT and is performing functions of sale / purchase of NIT units, safe custody and maintaining unit holders accounts. The Bank is keeping approximately 1,129 million (2010: 1,010 million) shares with market value of Rs. 31,908 million (2010: Rs. 35,500 million) in safe custody / Central Depository Company of Pakistan on behalf of NIT. 38.2 Long-Term Credit Fund (LTCF) Consequent upon the NDFC's amalgamation, the Bank manages on behalf of the GoP, LTCF established from the proceeds of loans disbursed by various international funding agencies for financing private sector energy development projects. Fund assets are accounted for separately from those of the Bank and amounted to Rs. 57,724 million on December 31, 2011 (2010: Rs. 58,885 million). 38.3 Endowment Fund Students Loan Scheme was launched by the GoP in collaboration with major commercial banks with a view to extend financial help by way of mark-up free loan to the meritorious students without sufficient resources for pursuing scientific technical and professional education within Pakistan. Students Loan Scheme is being administered by a high powered committee headed by the Deputy Governor, the SBP and the Presidents of the Bank, Habib Bank Limited, United Bank Limited, MCB Bank Limited, Allied Bank Limited and the Deputy Secretary, Ministry of Finance as member. The SBP has assigned the Bank to operate the scheme. The Committee in its meeting held on August 7, 2001 approved creation of Endowment Fund initially at an amount of Rs. 500 million, Rs. 396 million were transferred from the old Qarz-e-Hasna Fund, Rs. 50 million contributed by the GoP and Rs. 54 million were contributed by participating banks (HBL, NBP and UBL 25% each, MCB 17.5% and ABL 7.5%). The amount of the endowment fund in investments stands at Rs. 649 million as at December 31, 2011 (2010: Rs.697 million).
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39. RELATED PARTY TRANSACTIONS AND BALANCES The Bank has related party relationship with its associated undertakings, subsidiary companies, employee benefit plans, and its key management personnel (including their associates). The details of investments in subsidiary companies and associated undertakings are stated in note 9. Transactions between the Bank and its related parties are carried out under normal course of business, except employees staff loans, employees sale of assets, provident fund and loan given to NBP Exchange Company Limited, that are as per agreement. Detail of loans and advances to the companies or firms, in which the directors of the Bank are interested as directors, partners or in case of private companies as members, are given in note 10.7. There are no transactions with key management personnel other than under advance salary. Contributions in respect of staff retirement and other benefit plans are disclosed in note 34. Remuneration to the executives and disposal of assets are disclosed in notes 35 and 11.6.
2011 At January 1, Given during the year Received during the year At At January December 01, 31, Rupees in '000 1,294,419 126,519 (38,341) 88,178 --10,700 10,700 (13,390) (16,768) (16,768) 1,281,029 120,451 (38,341) 82,110 1,287,942 97,439 --97,439 6,477 46,553 --46,553 --(17,473) --(17,473) 1,294,419 126,519 --126,519 Given during the year 2010 Received during the year At December 31
Advances Associates Key management executives *Adjustment
1,382,597
10,700
(30,158)
1,363,139
1,385,381
53,030
(17,473)
1,420,938
2011 At January 1, Received Withdrawals At At January during the during the December 01, year year 31, Rupees in '000 58,136 164 58,300 217,213 217,213 (260,763) (260,763) 14,586 164 14,750 15,500 15,500 405,351 7,300,000 7,448,101 Received during the year
2010 Withdrawals during the year At December 31
Deposits Key management executives *Adjustment
214,538 214,538
(171,902) (171,902)
58,136 58,136 5,037 8,400,000 8,909,272
Pension Fund (Current) Pension Fund (Fixed Deposit) Provident Fund
5,037 30,056 (29,237) 5,856 8,400,000 10,200,000 (2,500,000) 16,100,000 8,909,272 2,281,333 (966,150) 10,224,455
9,798,211 (10,198,525) 2,600,000 (1,500,000) 3,093,221 (1,632,050)
17,372,609 12,728,602 (3,756,150) 26,345,061 15,168,952 15,705,970 (13,502,477) 17,372,445 *Adjustments due to changes in key management executives.
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Placements with: Joint ventures Associates Reverse Repo lending to: Pension Fund Repo borrowing from: Joint ventures Associates Off Balance Sheet items Forward exchange contracts with Joint Ventures - Bought - Sold Income for the year On advances / placements with: Joint ventures Key management executives Debts due by company in which a directors of the Bank is interested as director Mark-up on lending (Reverse Repo): Associates Pension Fund Expenses for the year Remuneration to key management executives Charge for defined benefit plan Mark-up on deposits of: Provident fund Pension fund Commission paid to subsidiaries Key management executives Mark-up on Borrowing (Repo / Call): Joint ventures Associates
2011 2010 Rupees in '000
614,100 23,332
264,591 23,332
9,999,998
---
78,063 ---
311,349 380,362
974,344 962,351
-----
2,874 3,077 1,376,979
272 3,503 2,032,190
2,257 19,545
-----
396,086 13,236
300,596 11,721
1,743,585 940,492 4,135 2,597
1,772,840 929,343 4,690 1,101
1,661 130
--4,117
39.1 Although the Federal Government and the SBP held about 75.60% (2010: 75.60%) shares of the Bank, the transactions with these entities have not been treated as related party transactions for the purpose of this disclosure. The amount of advances, investments and deposits are disclosed in respective notes.
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40. CAPITAL ASSESSMENT AND ADEQUACY BASEL II 40.1 Statutory minimum capital requirement and management of capital The Bank's objectives when managing capital, which is a broader concept than the 'equity' on the face of the statement of financial position, are: - to comply with the capital requirements set by the regulators of the banking markets where the Bank operates; - to safeguard the Bank's ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and - to maintain a strong capital base to support the development of its business. According to the BSD Circular No. 7 dated 15th April, 2009, minimum paid up capital requirement have been revised as follows: "Minimum Paid up Capital "Dead line by which to be (Net of losses) - Rs. in '000'" increased" 8,000,000 9,000,000 10,000,000 31-12-2011 31-12-2012 31-12-2013
The paid-up capital of the Bank for the year ended December 31, 2011 stood at Rs. 16,818 billion (2010 : Rs. 13.454 billion) and is in compliance with the SBP requirement for the said year. In addition the Bank has maintained minimum Capital Adequacy Ratio (CAR) of 16.80% (2010: 17.23%). The SBP's regulatory capital as managed by the Bank is analyzed into following tiers:
- Tier I capital, which comprises highest quality capital element and include fully paid up capital, balance in share premium account, reserve for issue of bonus shares, general reserves and unappropriated profits (net of accumulated losses, if any). - Tier II capital, which includes general reserve for loan losses, revaluation reserve, exchange translation reserve and subordinated debt. - Tier III capital, which includes short term sub-ordinated debt. This capital is solely for the purpose of meeting a proportion of the capital requirement for market risk. Various limits are applied to elements of the capital base. Qualifying Tier II and Tier III capital cannot exceed the tier I capital. Revaluation reserves are eligible up to 45 percent for treatment as Tier II capital. There is also restriction on the amount of general reserve for loan losses up to 1.25 percent of total risk weighted assets. Subordinated debt cannot exceed 50 percent of Tier I capital. Further Tier III capital cannot exceed 250 percent of Tier I capital. Risk weighted assets are measured according to the nature and reflect an estimate of credit, market and other risks associated with each asset and counterparty, taking into account any eligible collateral or guarantees. A similar treatment is adopted for off balance sheet exposures, with some adjustments to reflect more contingent nature of potential losses.
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The Bank's policy is to maintain strong capital base so as to maintain, investor, creditor and market confidence and to sustain future development of the business. The adequacy of the Bank's capital is monitored using, among other measures, the rules and ratios established by the SBP. The ratios compare the amount of eligible capital with the total of risk-weighted assets. The Bank monitors and reports its capital ratio under the SBP rules, which ultimately determines the regulatory capital required to be maintained by Banks and DFIs. There have been no material changes in the Bank's management of capital during the year.
40.2 Tier I Capital

Fully paid-up capital General reserves Unappropriated profits Non Controlling Interest
2011 2010 Rupees in '000

16,818,286 19,382,696 69,706,141 495,488 106,402,611 13,454,629 17,622,224 67,103,611 498,076 98,678,540
Deductions: Book value of intangibles Shortfall in provisions required against classified assets irrespective of any relaxation allowed Reciprocal cross holdings by the Bank 50% of the investments in equity and other regulatory capital of majority owned subsidiaries or other financial subsidiaries not consolidated in the statement of financial position Total eligible Tier I capital Supplementary Capital Tier II Capital General provisions subject to 1.25% of total Risk Weighted Assets Revaluation reserve (upto 45%) Foreign exchange translation reserve Deductions: 50% of the investments in equity and other regulatory capital of majority owned subsidiaries or other financial subsidiaries not consolidated in the statement of financial position Total eligible Tier II capital Tier III Capital Eligible Tier III Capital Total eligible Capital
1,642,596 3,716,917 25,155 923,539 100,094,404
1,294,889 2,349,749 56,221 1,656,799 93,320,882
1,465,953 11,286,459 6,823,811 19,576,223
3,765,432 12,088,556 7,507,201 23,361,189
923,539 18,652,684 ----118,747,088
1,656,799 21,704,390 ----115,025,272
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40.3 Capital Adequacy Ratio
Credit Risk Claim on Public sector entities Claims on other sovereigns Banks Corporates Retail portfolio Loans secured by residential property Past due loans Investment in operating fixed assets Other assets Off balance sheet - non-market related exposure Off balance sheet - market related exposure Equity exposure risk held in the banking book
Capital Requirements 2011 2010 Rupees in '000

1,450,734 2,734,894 1,131,404 21,086,491 7,377,958 570,195 3,023,388 2,611,175 4,002,076 7,062,420 208,008 1,444,950 52,703,693 849,802 4,032,659 1,014,635 16,053,604 8,185,406 589,577 3,815,429 2,633,041 2,474,430 8,052,952 112,132 1,619,096 49,432,763
Risk Weighted Assets 2011 2010 Rupees in '000

14,507,339 27,348,939 11,314,035 210,864,909 73,779,579 5,701,948 30,233,882 26,111,752 40,020,759 70,624,200 2,080,075 14,449,497 527,036,914 8,498,024 40,326,586 10,146,354 160,536,038 81,854,059 5,895,773 38,154,293 26,330,411 24,744,296 80,529,517 1,121,318 16,190,964 494,327,633
Market Risk Interest rate risk Equity position risk Foreign exchange risk Operational Risk Total
372,879 4,497,639 2,088,297 6,958,815 11,010,366 70,672,874
248,493 3,880,343 2,810,868 6,939,704 10,377,694 66,750,161
3,728,790 44,976,392 20,882,970 69,588,152 110,103,658 706,728,724
2,484,928 38,803,430 28,108,677 69,397,035 103,776,937 667,501,605
Capital Adequacy Ratio Total eligible regulatory capital held Total Risk Weighted Assets Capital Adequacy Ratio
(a) (b)
40.2 118,747,088 40.3 706,728,724 (a) / (b) 16.80%
115,025,272 667,501,605 17.23%
40.4 Credit risk - General disclosures The Bank uses the 'Standardised Approach' for all its credit risk exposures. The Bank uses reputable and the SBP approved rating agencies for deriving risk weight to specific credit exposures. These are applied consistently across the Bank credit portfolio for both on - balance sheet and off - balance sheet exposures. The methodology applied for using External Credit Assessment Institutions (ECAI's) inclusive of the alignment of alpha numerical scale of each agency used with risk bucket is as per the SBP Basel II guidelines as is given below:
2011 Exposures Corporate Banks Sovereigns SME's Securitisation Others JCR - VIS P P O O N/A N/A PACRA P P O O N/A N/A
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40.5 Credit Exposures subject to Standardised Approach
2011 Rating Category No. Amount Outstanding Deduction CRM Net Amount Amount Outstanding 2010 Deduction CRM Net Amount
Rupees in '000 Cash and cash equivalents Claims on Government of Pakistan Foreign currency claims on the SBP 1 Claims on other sovereigns and on the GoP Claims on other sovereigns and on the GoP 2,3,4, 5 Claims on other sovereigns and on the GoP Unrated 1 Public Sector Enterprises Unrated Public Sector Enterprises 1,2,3,4, 5 Banks Unrated Banks 1 Corporates 2,3,4 Corporates Unrated Corporates Unrated Retail portfolio Secured by residential property Past due loans Listed equity investments - banks Unlisted equity investments Investments in fixed assets Other assets 14,943,225 360,164,922 9,804,081 28,803,065 25,495,159 3,586,471 1,834,550 89,389,469 67,665,232 4,765,392 43,672,934 13,825,961 202,535,370 126,482,326 16,291,281 24,632,736 13,178,250 847,498 26,111,752 40,020,759 1,114,050,433 --------------61,108,611 21,799,559 ------8,885,000 28,109,554 ------------119,902,724 13,968,448 14,943,225 ----297,226,791 360,164,922 --17,372,791 9,804,081 --20,185,825 28,803,065 --26,631,014 25,495,159 --2,564,314 3,586,471 1,727,929 1,834,550 117,291,779 102,023,660 28,280,858 13,169,244 46,854,708 45,865,673 --6,939,830 4,765,392 --28,977,620 43,672,934 --14,470,749 13,825,961 8,885,000 154,979,320 193,650,370 31,085,741 140,224,486 98,372,772 --16,845,065 16,291,281 --29,393,163 24,632,736 --14,760,819 13,178,250 --953,430 847,498 --26,330,411 26,111,752 --24,744,296 40,020,759 994,147,709 1,002,442,788 155,163,645 13,968,448 297,226,791 17,372,791 20,185,825 26,631,014 2,564,314 1,727,929 15,268,119 33,685,464 6,939,830 28,977,620 14,470,749 146,094,320 109,138,745 16,845,065 29,393,163 14,760,819 953,430 26,330,411 24,744,296 847,279,143
41. RISK MANAGEMENT The Bank in its capacity of being the largest bank in the country is fully aware of its critical and leading role in sustainable economic growth of Pakistan. The Bank is therefore committed to the establishment of a robust risk management system that caters to the full range of activities that can potentially impact its risk profile i.e. volatility of the global / local markets, technological advancement, innovative new financial products, changing regulatory environment etc. A significant milestone towards achieving this objective was the hiring of external consultancy services of one of the most reputed and experienced consultant for the Bank wide implementation of the Basel II Accord last year. This project will align the Bank to international best practices and the requirements of the Basel II Accord. This would also maintain long term sustainable growth of the Bank and ensure that it continues to retain the role of the market leader. This would cater interests of all stakeholders, especially the depositors. Risk management function has been restructured and made independent of all risk taking and approving units; its functional reporting is to the Board of Directors of the Bank and administrative reporting to the President of the Bank. Risk management has been reorganized and staffing capacity strengthened to effectively cater to the requirements of Basel II accord. Credit Risk Review Wing has been made a separate entity to focus on this key risk function. Data collection, structuring and sanitization have also been recognized as a critical component in risk management, therefore a dedicated Unit has been created for this challenging function. Risk management functions charter and specific job descriptions of all of the Units have been designed and approved. Risk management charter states the scope, functions and roles and responsibilities of the risk management function. There is also an Executive Risk Management Committee, comprising of key Group Heads - emphasizing the Bank's commitment to a robust risk management process and risk culture.
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In conjunction with the consultant, there has been a significant progress towards achieving the objective of this consultancy, such as: - The bank wide diagnostic exercise, interactively with all the groups within the Bank, has been performed and areas for improvement have been identified and systematically documented. - A remediation planning exercise has been conducted whereby proposed actions (i.e. projects / initiatives) against the gaps identified in Basel II diagnostic phase, together with their prioritization, responsibilities for implementation and timelines have been developed. - Assessment of existing and proposed systems has been performed to identify data fields / requirements and system functionalities for capital charge to be calculated accurately on the basis of information captured / to be captured / aggregated in such systems. - Data collection and validation guidelines have been developed and disseminated across the Bank. Further, training sessions have been conducted by the Consultants to train the staff operating at regional and branch levels with regard to data capturing and validation, cleansing and aggregation. - An Operational Risk Management Framework has been developed to help align the Bank with the sound practices for operational risk set by Basel Committee and provide guidance for setting the operational risk strategy of the Bank, selection and adoption of risk and loss measurement tools, reporting and communication and establishment of operational risk management processes. Other initiatives with respect to Operational Risk Management include nominations of Operational Risk Coordinators from all groups / divisions and conduct of detailed orientation sessions with the stakeholders across the Bank. - To strengthen the risk management culture in the organization, the Bank organized various orientation and discussion sessions during the year. In this regard, an orientation / discussion session with members of the Board Risk Committee and Director - BSD, the SBP was held during the year. Additionally, an Enterprise Risk Management training session, by a reputed external consultant, was arranged for creating awareness amongst the senior management across all disciplines. - The implementation process of this consultancy will also systematically lay the building blocks for future implementation of the Advanced Approaches of the Basel Accord. 41.1 Credit risk management
41.1.1 Credit risk architecture The Credit Risk Architecture Unit (CRAU) has been formed as a part of the organizational restructuring and a charter for it has been designed. Credit Risk Architecture is responsible to supervise that there is a framework in place for effective assessment / measurement, mitigation and reporting of credit risks both on counterparty as well as portfolio level. Primary responsibilities include formulation and proposition of credit risk strategies, policies, credit assessment methodologies, credit portfolio and sector management, including limit setting, MIS and monitoring. This Wing on regular frequency also analyses and presents to the Executive Risk Management Committee / Board Risk Committee, the Bank's comparative position to other key market players on diverse facets, and makes necessary recommendations. The Wing has ownership for the development process of credit risk ratings models for current use and subsequently rating models to be used for the Basel II FIRB approach; this includes necessary data collection, storage, cleansing and validation.
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41.1.2 Credit risk policy, strategy and ICAAP Focus on Policy formulation and review, monitoring progress on implementation, ICAAP and other strategic aspects etc. Where required / applicable, the function will work with the support and involvement of the respective business and other groups / functions and will coordinate with them in this regard. 41.1.3 Credit Modelling and Analytics This includes development of obligor risk rating templates and supporting rating framework to achieve such compliance, coordinating the process of data collection, cleansing and validation processes to be undertaken in this regard and provide due facilitation and support in implementation of credit rating engine, going forward. 41.1.4 Credit Portfolio Management Credit portfolio management activities extend to development of an effective portfolio management structure and framework for conduct of portfolio quality reviews and proactive reporting to the management for necessary remedial actions. 41.1.5 Credit Risk Review In line with the SBP's Risk Management Guidelines, Risk Management Committee has constituted a dedicated Risk Review Wing for undertaking review of loans and advances on post facto basis. The Wing is responsible to independently review the approved credit cases pertaining to new proposals, renewals, restructuring, rescheduling, write-offs and cases involving other credit decisions, on a reasonable sample basis. The results are to be reported to the Chief Risk Officer for onward communication to Executive Risk Management Committee, Board Risk Committee and other relevant authorities. Credit risk review policy has been approved by BoD in September 2011. The function of reviewing cases on a sample basis has also been initiated in the year. Initially, the scope of the Wing is reviewing corporate, commercial and SME portfolios, which will be expended to Agriculture, FIs, Islamic Banking and Overseas portfolios as the capacity and expertise develops. 41.1.6 Country Risk Management This includes establishing, jointly with relevant stakeholders, processes and reporting framework for effective management of country risk including risk assessment, limit setting, exposure monitoring, reporting on concentrations, limit breaches and other aspects. 41.1.7 Basel II Implementation and Risk Automation project Basel II / Risk Automation Project Unit is responsible for managing the Basel II project in close coordination with the Basel II consultants and with the active support and involvement of other functions within the risk management as well as other groups and functions across the Bank. The Unit is also responsible to perform project management and support services in relation to evaluation, selection and implementation of suitable risk management applications, as required by the Bank. Risk Automation Project Unit is also responsible for coordinating with various functions regarding their requirements from the risk management applications and providing details to the respective vendors (if the related features are available or supposed to be available in any existing or already procured system) and coordinating with the respective functions and selected vendor(s) in relation to finalization of system blue prints and in the process of deployment of system in accordance with the approved blue prints.
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41.1.8 Consumer Risk Management Unit The Unit is responsible for developing an overall consumer risk policy framework describing the consumer risk structure, principles, standards and policies for product programme designing and approvals management of third party relationships. Consumer Risk Management Unit also supervises that there is a framework in place for effective assessment and measurement and mitigation and reporting of credit risks arising from the consumer and programme based SME portfolios. The bank, as part of its Basel II project is in the process of developing expert judgment scorecards for its housing and personal loan portfolio. The primary responsibilities include formulation / proposition of credit risk strategies, policies, credit assessment methodologies, credit portfolio management including limit setting, MIS and monitoring. 41.1.9 E-CIB and Data Management E-CIB and Data Management Wing consists of a dedicated team of personnel responsible for reviewing quality and integrity of credit and advances related data. Such data may be input at various input sources in various groups, divisions and field functionaries. The Wing is also responsible for performing post facto periodic review of advances data, highlighting inconsistencies and errors in the data and issuing instructions to the relevant data entry points for rectification of errors identified. The wing has started working on enhanced data fields for capital calculations and historical data for credit rating models used for Basel-II standardized and FIRB approaches. 41.1.10 SEGMENTAL INFORMATION 41.1.10.1 Segment by class of business
Advances (Gross) Rupees in '000 Chemical and pharmaceuticals Agriculture Textile Cement Sugar Flour Rice processing Shoes and leather garments Automobile and transportation equipment Financial Insurance Transportation Real estate construction Electronics and electrical appliances Production and transmission of energy Food and tobacco Fertilizer Metal products Telecommunication Hotel and services Public sector commodity operations Individuals General traders Others 3,508,803 29,924,062 66,457,313 10,472,359 15,261,948 2,806,650 9,934,453 1,203,755 --3,307,550 20,922,676 --32,946,584 10,015,840 9,046,856 54,135,848 1,638,057 19,006,645 26,443,680 5,608,880 13,960,505 64,620,621 86,439,511 16,950,643 89,975,408 594,588,647 Percentage % 0.59 5.03 11.18 1.76 2.57 0.47 1.67 0.20 0.56 3.52 0.00 5.54 1.68 1.52 9.10 0.28 3.20 4.45 0.94 2.35 10.87 14.54 2.85 15.13 100.00 2011 Deposits Rupees in '000 2,154,436 22,778,305 2,855,870 230,214 218,833 2,460,809 935,535 268,768 --1,008,777 139,227,188 6,224,703 16,100,908 10,862,712 726,442 --19,444,693 779,280 5,696,512 3,582,195 12,131,343 50,427,658 11,346,682 391,652,916 26,339,994 199,960,359 927,415,132 Percentage % 0.23 2.46 0.31 0.02 0.02 0.27 0.10 0.03 0.11 15.01 0.67 1.74 1.17 0.08 2.10 0.08 0.61 0.39 1.31 5.44 1.22 42.23 2.84 21.56 100.00 Contingencies & Commitments Rupees in '000 2,175,963 602,169 8,286,747 2,439,610 2,315,302 ----155,492 --1,639,679 5,295,744 3,151 4,606,049 4,382,940 2,549,876 105,493,477 737,868 4,163,001 3,160,006 4,843,222 3,465,170 17,714,533 --12,571,882 51,045,443 237,647,324 Percentage % 0.92 0.25 3.49 1.03 0.97 0.00 0.00 0.07 0.69 2.23 0.00 1.94 1.84 1.07 44.39 0.31 1.75 1.33 2.04 1.46 7.45 4.81 0.48 21.48 100.00
224

2010 Advances (Gross) Rupees in '000 Chemical and pharmaceuticals Agriculture Textile Cement Sugar Flour Rice processing Shoes and leather garments Automobile and transportation equipment Financial Insurance Transportation Real estate construction Electronics and electrical appliances Production and transmission of energy Food and tobacco Fertilizer Metal products Telecommunication Hotel and services Public sector commodity operations Individuals General traders Others 4,997,369 27,067,257 70,022,916 7,118,138 13,176,319 706,581 9,644,656 1,010,159 2,819,605 14,586,922 604 27,805,186 7,825,456 7,537,267 62,266,767 2,023,488 18,004,257 18,887,329 6,815,009 16,623,826 64,157,338 76,673,326 22,187,071 58,173,532 540,130,378 Percentage % 0.93 5.01 12.96 1.32 2.44 0.13 1.79 0.19 0.52 2.70 0.00 5.15 1.45 1.40 11.53 0.37 3.33 3.50 1.26 3.08 11.88 14.20 4.11 10.75 100.00 Deposits Rupees in '000 2,724,555 16,330,516 2,137,019 193,034 144,765 72,098 852,648 166,693 860,034 84,170,096 6,212,119 4,252,295 6,671,156 569,528 54,550,085 475,862 2,707,187 5,214,970 48,345,139 33,665,800 12,575,136 340,352,770 32,607,558 176,282,991 832,134,054 Percentage % 0.33 1.96 0.26 0.02 0.02 0.01 0.10 0.02 0.10 10.11 0.75 0.51 0.80 0.07 6.56 0.06 0.33 0.63 5.81 4.05 1.51 40.90 3.92 21.17 100.00 Contingencies & Commitments Rupees in '000 2,537,993 257,337 7,817,950 2,838,910 66,860 --6,000 101,344 198,077 13,827,347 4,323 3,605,133 942,572 2,609,892 32,519,887 10,480 1,241,291 9,328,650 5,319,973 619,473 15,492,881 --5,588,927 124,702,614 229,637,914 Percentage % 1.11 0.11 3.40 1.24 0.03 0.00 0.00 0.04 0.09 6.02 0.00 1.57 0.41 1.14 14.16 0.00 0.54 4.06 2.32 0.27 6.75 2.13 0.30 54.31 100.00
41.1.10.2
Segment by sector
2011 Advances (Gross) Rupees in '000 Percentage % 19.69 80.31 100.00 Deposits Rupees in '000 340,281,916 587,133,216 927,415,132 2010 Advances (Gross) Rupees in '000 Percentage % 24.81 75.19 100.00 Deposits Rupees in '000 329,822,417 502,311,637 832,134,054 Percentage % 39.64 60.36 100.00 Contingencies & Commitments Rupees in '000 163,647,783 65,990,131 229,637,914 Percentage % 71.26 28.74 100.00 Percentage % 36.69 63.31 100.00 Contingencies & Commitments Rupees in '000 148,696,983 88,950,341 237,647,324 Percentage % 62.57 37.43 100.00
Public / Government Private
117,084,000 477,504,647 594,588,647
133,982,491 406,147,887 540,130,378
225

41.1.10.3 Details of non-performing advances and specific provision by class of business segment 2011 Classified Advances 2010 Specific Provision Held 2,272,721 1,054,027 21,267,263 4,612,161 2,649,031 191,749 1,514,164 423,583 1,209,634 564,124 1,810,487 952,419 285,549 1,464,294 530,780 138,795 359,831 131,829 142,000 1,761,335 4,523,526 9,618,889 57,478,191
Specific Classified Provision Advances Held Rupees in '000 2,229,003 1,078,854 22,462,274 3,981,947 3,706,226 288,198 1,723,942 240,897 1,215,260 621,681 1,524,004 1,408,101 1,360,165 2,020,461 1,003,650 101,086 448,215 589,300 1,696,360 3,096,283 4,066,700 8,773,008 63,635,615 2,441,160 1,873,395 26,432,192 5,059,717 3,200,306 244,968 1,875,295 429,807 1,354,447 1,410,483 2,176,995 2,255,065 332,040 11,607,222 565,145 2,697,674 1,473,132 447,913 1,142,498 2,884,481 5,385,614 11,581,804 86,871,353
Chemical and pharmaceuticals Agriculture Textile Cement Sugar Flour Rice processing Shoes and leather garments Automobile and transportation equipment Financial Transportation / Karobar Real estate construction Electronics and electrical appliances Production and transmission of Energy Food and tobacco Fertilizer Metal products Hotel and services Telecommunication Individuals General traders Others
2,337,319 2,110,428 28,761,145 5,091,254 4,137,093 303,328 2,545,678 259,679 1,311,135 904,931 1,699,435 2,475,978 5,421,061 3,572,236 1,023,113 3,258,527 572,471 845,724 1,696,360 4,998,219 4,679,531 10,319,952 88,324,597
41.1.10.4 Details of non-performing advances and specific provision by sector
2011 Classified Advances
2010 Specific Provision Held 614,274 56,863,917 57,478,191
Specific Classified Provision Advances Held Rupees in '000 406,818 63,228,797 63,635,615 12,537,485 74,333,868 86,871,353
673,818 87,650,779 88,324,597
226

41.1.10.5 Geographical segment analysis 2011 Profit before Total assets taxation employed Pakistan Asia Pacific (including South Asia) Europe United States of America Middle East Contingencies Net assets and employed Commitments Rupees in '000 207,598,150 12,931,886 4,760,299 6,494,184 5,862,805 237,647,324
24,351,166 1,014,900,018 115,312,597 75,286,032 14,590,411 753,645 10,319,264 3,036,679 (138,855) 18,968,235 2,363,318 260,998 34,006,551 491,404 889,048 26,116,002 1,153,480,100 135,794,409 2010 Profit before Total assets taxation employed
Contingencies Net assets and employed Commitments Rupees in '000 206,901,499 8,462,795 5,768,015 7,326,269 1,179,336 229,637,914
Pakistan Asia Pacific (including South Asia) Europe United States of America Middle East
23,034,452 909,553,785 113,667,724 48,174,799 10,049,972 415,881 14,862,146 (125,608) 4,208,356 21,033,619 265,681 2,142,935 44,394,118 1,031,881 1,229,845 24,622,287 1,038,018,467 131,298,832
41.2
Operational Risk Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and system or from external events. The Bank seeks to ensure that key operational risks are managed in a timely and effective manner through a framework of policies, procedures and tools to identify, assess, monitor, control and report such risks. In compliance with the Risk Management Guidelines, issued by the SBP, an Operational Risk Management Wing has been established within Risk Management Function. The unit has been strengthened by recruiting skilled resources for Operational Risk Management and imparting adequate trainings to the existing resources. Year 2011 has been a year of significant development in respect of Operational Risk Management. The Bank, after having gone through the diagnostic study phase, has now developed the Operational Risk Management Framework that not only complies with all SBP and Basel II requirements but also accounts for the international best practices. For the purpose of effective and timely implementation of Operational Risk Management Framework, the Bank has also developed remediation plans for Operational Risk Management. These plans are broadly for the areas; Risk and Control Self Assessment, KRIs, Business Line Mapping, Loss Data Collection etc. For identification and assessment of operational risk across the Bank, the Bank has decided to adopt the risk assessment methodology known as Risk and Control Self Assessment (RCSA). The first phase of the RCSA exercise which is Risk & Control Design Assessment (RCDA) is currently being carried out and the Bank intend to develop its first-cut RCDAs by the first half of the year 2012. In 2011, the Bank also underwent a huge historical loss data collection exercise whereby historical loss data was collected from various business / support units. In addition to this, Operational Risk Profile is also communicated to the Board and senior management on a regular basis through presentations, reports, MIS etc.
227

41.3 Market and Liquidity Risk Market Risk is the risk that the value of on and off-balance sheet positions of a financial institution will be adversely affected by movements in market factors such as interest rates, foreign exchange rates, equity prices, and commodity prices; resulting in loss of earnings and capital. Market risk includes price risk and liquidity exposures. Price and liquidity risks are closely interlinked to other risks within the Bank. The objective of Market Risk Management is to identify, measure, monitor and manage the Banks portfolio in order to manage / reduce losses due to market volatility inherent in financial instruments.
Risk Management Policy approved by the Board covers investment, equity trading, foreign exchange, money market, Assets Liability Management and Liquidity Risk. The Banks Assets Liability Committee (ALCO) and Credit Committee approve different exposure limits for implementation by respective business units. Market Risk and Liquidity Wing monitors Market Risk Exposures and Market Risk activities on a day to day basis. This includes investment, Net Open Position, Interest Rate Risk, Revaluation Limits, and Mark to Market Limit, Settlement Limit, Money Market Call Limit, Money Market Reverse Repo Limit, Foreign Currency Wise Exposure and Gap Limit etc. 41.3.1 Foreign Exchange Risk 2011 Assets Liabilities Off-balance sheet items (51,888,051) 23,852,815 2,657,351 21,525,309 3,843,499 9,077 51,888,051 2010 Assets Liabilities Off-balance sheet items Net foreign currency exposure 101,627,867 3,231,148 4,091,735 294,883 5,034,125 17,019,074 29,670,965 131,298,832 Net foreign currency exposure 114,551,362 771,295 4,352,687 (4,319,783) 6,016,373 14,422,475 21,243,047 135,794,409
Rupees in '000 Pakistan Rupee United States Dollar Great Britain Pound Japanese Yen Euro Other currencies 1,003,305,901 68,464,452 9,495,829 30,905,940 10,566,686 30,741,292 150,174,199 836,866,488 91,545,972 7,800,493 56,751,032 8,393,812 16,327,894 180,819,203
1,153,480,100 1,017,685,691
Rupees in '000 Pakistan Rupee United States Dollar Great Britain Pound Japanese Yen Euro Other currencies 885,397,462 86,841,220 8,611,200 12,421,571 13,818,777 30,928,237 152,621,005 1,038,018,467 752,428,881 (31,340,714) 103,188,624 8,718,349 16,630,907 11,834,997 13,917,877 154,290,754 906,719,635 19,578,552 4,198,884 4,504,219 3,050,345 8,714 31,340,714 ---
228

Currency Risk arises where the value of a financial instrument changes due to changes in foreign exchange rates. In order to manage currency risk exposure the Bank enters into ready, spot, forward and swaps transactions with the SBP and in the interbank market. The Banks foreign exchange exposure comprises forward contracts, purchases of foreign bills, foreign currencies cash in hand, balances with banks abroad, foreign placements with the SBP and foreign currencies assets and liabilities. The net open position is managed with the statutory limits, as fixed by the SBP. Appropriate segregation of duties exists between the front, middle and back office functions. 41.3.2 Equity Position Risk Investments in equity are generally regarded as riskier relative to fixed income securities owing to the inherent volatility of stock market prices. The risks from various factors include, but are not limited to: - changes in business cycle affecting the business of the company in which the investment is made. Change in business circumstances (i.e. fundamentals) of the company, its business sector, industry and / or economy in general; - mismanagement of the investee company, third party liability whether through class action or otherwise or occurrence of other events such as strikes, fraud, etc. in the company in which investment is made; - fluctuation in the shares' prices resulting from their dependence on market sentiment, speculative activity, supply and demand of shares and liquidity in the market; - possibility of defaults by participant or failure of the stock exchanges, the depositories, the settlement or the clearing system on discharging their fiduciary responsibilities; and - any government or court order restraining payment of dividend by a company to its shareholders.
The Bank mitigates the aforesaid risks as follows: - through diversification and capping maximum exposure in a single sector / company. Additionally, continuous follow up of these sectors and companies through self monitoring and fundamentals research from reputable brokerage houses; - compliance with the SECP Corporate Governance Rules by the investee company prudent investing practices (focus on dividend payout history); - the Bank will refrain from speculative trading and the investment will be made as per the guidelines on liquidity and growth as per investment policy manual or set by the Board of Directors of the Board; and - the Bank follows a delivery versus payment settlement system thereby minimizing risk in relation to settlement risk.
229
41.3.3 Mismatch of Interest Rate Sensitive Assets and Liabilities
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in the market mark-up / interest rates. The Bank is exposed to interest / mark-up rate risk as a result of mismatches or gaps in the amount of interest / mark-up based assets and liabilities that mature or re-price in a given period. The Bank manages this risk by matching / re-pricing of assets and liabilities. The Bank is generally not excessively exposed to interest / mark-up rate risk as more of its assets and liabilities are repriced frequently. The Assets and Liabilities Committee (ALCO) / Executive Risk Management Committee (ERMC) of the Bank monitors and manages the interest rate risk with the objective of limiting the potential adverse effects on the profitability of the Bank.
Management of interest rate risk is one of the critical components of market risk management in banks. The Bank's net interest income or net interest margin is also dependent on the movement of interest rates and mismatches in the cash flows or re-pricing dates. Interest rate risk management includes establishing and monitoring various risk curbing limits such as duration limits, duration gap limits and interest rate sensitivity limits.
As part of the risk reporting, an interest rate sensitivity statement is prepared on a quarterly basis. This statement classifies the interest rate-sensitive assets and liabilities into various maturity groups enabling the management to monitor the impact of interest rate movements on the Statement of Financial Position. 2011
Exposed to Yield / Interest risk
Total
On-balance sheet financial instruments Rupees in '000 44,918,933 5,165,859 44,157,996 4,365,404 152,052,718 250,660,910 9,535,339 202,731 27,494,363 144,037,340 181,269,773 2,375,447 50,802,468 84,944,642 138,122,557 909,675 108,461,310 79,495,256 188,866,241 6,309,992 26,626,126 32,936,118 31,429,674 14,095,004 45,524,678 74,012 8,879,098 16,983,478 25,936,588
Assets
Effective Yield / Interest rate Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years 28,976,342 4,562,166 33,538,508
Above 10 Years
Non-interest bearing financial instruments 831,548 4,312,479 5,144,027 86,924,358 10,009,565 51,977,055 31,398,173 180,309,151
Cash and balances with treasury banks Balances with other banks Lending to financial institutions - net Investments - net Advances - net Other assets
0.1% 1.8% 10.9% 11.3% 13.6% 0.0%
131,843,291 28,069,897 44,360,727 319,527,254 527,109,209 31,398,173 1,082,308,551
Liabilities
0.0% 8.7% 5.7% 177,800 33,224,236 30,157 33,432,193 155,434,048 2,164,210 22,496 2,186,706 23,749,882
Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities
18.0% 0.0%
On-balance sheet gap
9,104,710 26,371,675 927,415,132 92,739 41,583,618 1,004,567,874 77,740,677 6,442,364 25,525,458 6,229 31,974,051 149,295,722 1,683,072 42,346,431 11,979 44,041,482 94,081,075
15,383,539 531,111,407 21,536 546,516,482 (295,855,572)
1,140,466 342 1,140,808 44,383,870
2,684,900 534,029 3,218,929 29,717,189
99,970 99,970 33,438,538
5,144,027
9,104,710 291,268,925 41,583,618 341,957,253 (161,648,102)
Off-balance sheet financial instruments 59,541,648 69,905,801 129,447,449 3,140,259 78,146,001 20,102,435 101,388,695 17,447,702 14,867,890 32,315,592 126,396,667 210,672,961 250,684,417 84,276,294 5,452,050 1,872,300 7,324,350 162,758,398 373,431,359 23,749,882 397,181,241 44,383,870 441,565,111 29,717,189 471,282,300 33,438,538 504,720,838 5,144,027 509,864,865 (161,648,102) 348,216,763
Cross currency swaps Forward purchase of foreign exchange Forward sale of foreign exchange Off-balance sheet gap
3,140,259 160,587,401 106,748,426 270,476,086
Total Yield / Interest Risk Sensitivity Gap
348,216,763
(166,408,123)
Cumulative Yield / Interest Risk Sensitivity Gap
(166,408,123)
230
231
2010
Exposed to Yield / Interest risk Upto 1 Month Rupees in '000 31,487,219 13,463,517 19,136,044 40,013,820 129,704,340 233,804,940 10,195,202 13,374,064 23,569,266 7,450,951 12,545,012 19,995,963 8,588,450 9,591,700 3,915,127 99,626,426 160,186,089 281,907,792 3,371,642 23,466,434 26,838,076 15,911 1,435,140 79,985,264 72,244,739 153,681,054 17,346,446 5,155,191 22,501,637 187,305 631,018 2,835,915 58,042,554 61,696,792 135,995 4,167,191 4,303,186 75,378,140 5,621,993 40,116,837 1,141 27,436,384 148,554,495 Over 1 to 3 Months Over 3 to 6 Months Above 10 Years Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years Non-interest bearing financial instruments
41.3.3
Mismatch of Interest Rate Sensitive Assets and Liabilities - (continued)
Total
On-balance sheet financial instruments
Assets
Effective Yield / Interest rate
Cash and balances with treasury banks Balances with other banks Lending to financial institutions - net Investments - net Advances - net Other assets
0.20% 1.90% 12.30% 11.60% 13.80% 0.00%
115,657,025 30,743,368 23,051,171 301,078,498 478,886,755 27,436,384 976,853,201
Liabilities
Bills payable 0.00% Borrowings 6.80% Deposits and other accounts 5.60% Sub-ordinated loans Liabilities against assets subject to finance lease 0.00% Other liabilities 17.10% 0.00% On-balance sheet gap 11,604,707 475,003,802 1,284 486,609,793 (252,804,853) 38,734,070 243,173,722 4,522,150 38,777 4,560,927 15,435,036 2,290,805 36,438,582 4,683 2,949,460 500,000 3,449,460 23,388,616 1,958,271 41,842,355 10,420 43,811,046 109,870,008 853,964 21,682,122 27,576 22,563,662 39,133,130 4,520,133 40,673 4,560,806 19,008,460
8,006,631 19,657,207 832,134,054 123,413 40,471,181 900,392,486 76,460,715
22,501,637
4,303,186
8,006,631 247,624,910 40,471,181 296,102,722 (147,548,227)
Off-balance sheet financial instruments
Cross currency swaps Forward purchase of foreign exchange Forward sale of foreign exchange Off-balance sheet gap 46,239,361 33,090,853 79,330,214 (173,474,639) (173,474,639) 149,724,364 265,647,654 323,199,003 115,923,290 39,133,130 304,780,784 6,135,896 47,847,428 26,041,957 80,025,281 4,412,777 1,640,505 6,053,282 19,008,460 323,789,244
6,135,896 98,499,566 60,773,315 165,408,777
15,435,036 339,224,280
23,388,616 362,612,896
22,501,637 385,114,533
4,303,186 389,417,719
(147,548,227) 241,869,492
Total Yield / Interest Risk Sensitivity Gap
241,869,492
Cumulative Yield / Interest Risk Sensitivity Gap
41.4
Liquidity Risk
Liquidity risk is the risk that the Bank will be unable to meet its liability when they fall due. To limit this risk, management has arranged diversified funded sources, manages assets with liquidity in mind and monitors liquidity on daily basis. In addition, the Bank maintains statutory deposits with central banks inside and outside Pakistan.
The purpose of liquidity management is to ensure sufficient cash flows to meet all of the Bank's liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking sustained damage to the Bank's business franchises, as well as to capitalize on opportunities for business expansion. This includes the Bank's ability to meet deposit withdrawals either on demand or at contractual maturity, to repay borrowings as they mature and to make new loans and investments as opportunities arise.
The ALCO / ERMC is responsible for ensuring that the Bank has adequate liquidity and monitors liquidity gaps, to execute this responsibility. Stress testing is performed on the Bank's liquidity processes in line with the SBP requirements. 2011
Exposed to Yield / Interest risk
Total
Upto 1 Month Rupees in '000 131,843,260 15,334,707 44,138,327 5,282,231 101,009,326 19,065 14,044,846 311,671,762 910,215 155,815,408 101,750,348 1,972,423 2,202,864 262,651,258 74,012 14,209,611 38,902,655 2,988,504 35,463 20,787,266 76,997,511 247,196 28,058,362 33,261,810 995,301 6,226,540 68,789,209 9,047,137 222,400 28,895,175 49,345,338 3,754 15,092,868 102,606,672 31 2,456,630 47,818,896 84,062,117 7,717,170 142,054,844 5,599,672 46,151,827 427,707 1,790,606 265,009 54,234,821
Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years
Over 5 to 10 Years
Above 10 Years
Assets
Cash and balances with treasury banks Balances with other banks Lending to financial institutions - net Investments - net Advances - net Operating fixed assets Deferred tax assets - net Other assets
131,843,291 28,069,897 44,360,727 319,527,254 527,109,209 28,126,754 7,973,084 66,469,884 1,153,480,100
28,169,928 61,017,037 248,435 6,147,015 120,904 95,703,319
5,677,971 11,608,751 21,471,565 12,417 38,770,704
Liabilities 9,104,710 15,383,539 636,557,467 5,274 23,324,891 684,375,881 (372,704,119) 177,800 93,120,332 38,680 779,729 94,116,541 168,534,717 6,442,364 101,519,461 6,229 397,233 108,365,287 (5,758,615) 1,683,072 78,392,336 11,979 7,082,905 87,170,292 54,884,552 6,689,343 30,235 16,636,236 23,355,814 53,641,697 2,808,224 342 1,269,299 4,077,865 64,711,344 2,684,900 5,985,785 2,624,693 11,295,378 42,939,443 2,119,288 1,269,299 3,388,587 92,314,732 222,896 1,317,150 1,540,046 37,230,658
Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities
9,104,710 26,371,675 927,415,132 92,739 54,701,435 1,017,685,691 135,794,409
Net assets
Share capital Reserves Unappropriated profit Non-controlling interest Surplus on revaluation of assets - net
16,818,286 26,206,507 69,712,113 495,488 22,562,015 135,794,409
232
233
2010
Exposed to Yield / Interest risk Total Upto 1 Month Rupees in '000 106,853,882 19,085,511 19,091,419 32,379,661 115,698,580 12,658,924 305,767,977 29 1,435,140 67,204,656 30,583,781 6,726,996 105,950,602 198,783 277,314 27,078,415 94,603,635 789,467 977 952,925 123,901,516 9,695 353,703 36,367,520 29,388,566 2,684,955 20,609,647 89,414,086 33,788,231 33,827,618 638,576 1,220,651 69,475,076 10,541,214 59,276,510 671,661 1,611,282 287,377 72,388,044 8,594,636 9,591,700 3,959,752 71,508,720 55,534,843 11,141,021 160,330,672 18,082,045 39,979,936 601,305 5,341,969 429,184 64,434,439 4,128,036 19,993,286 22,234,733 46,356,055 Over 1 to 3 Months Over 3 to 6 Months Above 10 Years Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years
41.4.1 Maturities of Assets and Liabilities - (continued)
Assets
Cash and balances with treasury banks Balances with other banks Lending to financial institutions - net Investments - net Advances - net Operating fixed assets Deferred tax assets - net Other assets
115,657,025 30,743,368 23,051,171 301,078,498 478,886,755 27,620,697 6,954,228 54,026,725 1,038,018,467
Liabilities
Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities 8,006,631 11,604,545 643,396,757 853,964 75,564,331 27,576 519,961 76,965,832 46,935,684 40,673 14,510,798 19,262,049 70,152,037 4,710,578 17,993 21,197,954 684,223,880 (378,455,903) 105,383,003 54,324,464 4,683 877,564 54,947,669 10,420 4,290,245 51,626,138 2,290,967 51,774,455 1,958,271 45,367,202 -
8,006,631 19,657,207 832,134,054 -
4,816,868 22,068 1,080,092 5,919,028 63,556,048
2,949,460 6,503,863 2,161,532 11,614,855 60,773,191
1,080,092 1,080,092 63,354,347
1,080,092 1,080,092 45,275,963
123,413 46,798,330 906,719,635
Net assets
131,298,832
Share capital Reserves Unappropriated profit Non-controlling interest Surplus on revaluation of assets - net
13,454,629 25,129,425 67,103,611 498,076 25,113,091 131,298,832

42. ISLAMIC BANKING BUSINESS The Bank is operating 8 Islamic banking branches as at December 31, 2011 (December 31, 2010: 8 branches). The statement of financial position, and profit and loss account and cash flow statment of such branches are as under: 42.1 Profit Distribution Policy for Islamic Banking Division The profit distribution mechanism during the year complies with the rules and principles of Islamic Shariah and is in the light of guidelines approved by the Shariah Advisor of the Bank's Islamic Banking Division and the SBP guidelines related to Shariah Compliance. The non-compliant income identified during the year is transferred to the charity account.
42.2 Statement of Financial Position As at December 31, 2011 ASSETS Cash and balances with treasury banks Balances with and due from financial institutions Investments Financing / Receivables under: - Murabaha - Diminishing Musharika - Ijarah assets - Other Islamic modes Provision against non performing financings Operating fixed assets Due from Head Office Other assets LIABILITIES Bills payable Deposits and other accounts Due to Head Office Other liabilities NET ASSETS REPRESENTED BY Islamic Banking Fund Unappropriated profit / (Accumulated loss) (Deficit) / Surplus on revaluation of assets - net
2011 2010 Rupees in '000 141,873 --1,557,399 658,310 723,313 372,408 --(192,874) 11,613 --111,182 3,383,224 9,385 1,519,844 1,433,810 48,650 3,011,689 371,535 157,726 200,000 1,038,673 278,398 212,500 417,920 94,513 (278,233) 11,763 44,650 47,993 2,225,903 5,421 2,193,413 --36,186 2,235,020 (9,117)
300,000 71,535 371,535 --371,535 1,273
300,000 (309,117) (9,117) --(9,117) 988
Remuneration to Shariah Advisor CHARITY FUND Opening balance Additions during the period Payment / utilisation during the period Closing balance
--426 (426) ---
--3,000 (3,000) ---
234

42.3 PROFIT AND LOSS ACCOUNT For the year ended December 31, 2011
2011 2010 Rupees in '000 529,589 (280,346) 249,243 (138,619) 110,624 (46,875) 107,234 60,359 170,983 4,105 132 274 4,511 175,494 170,744 (57,448) 113,296 (65,969) 47,327 (278,233) --(278,233) (230,906) 3,104 351 36 3,491 (227,415) (84,575) (311,990)
Profit / return earned on financings, investments and placements Profit / return expensed on deposit Net spread earned Depreciation on assets given on Ijarah Provision against advances and investments Provision reversed against advances and investments Profit / (Loss) after provision Other income Fee, commission and brokerage income Income from dealing in foreign currencies Other income Total other income Other expenses Administrative expenses Profit / (loss) for the year
(103,959) 71,535
235

42.4 Cash Flow Statement For the year ended December 31, 2011 2011 2010 Rupees in '000 71,535 (311,990)
Cash Flow from Operating Activities Profit / (Loss) for the year Adjustments : Depreciation - Own assets Depreciation - Ijarah assets Provision against non performing financings
2,056 138,619 46,875 187,550 259,085
1,409 65,969 278,233 345,611 33,621 (200,000) (1,133,449) 31,580 (1,301,869) (649) 1,712,514 (276,726) (49,544) 1,385,595 117,347
(Increase) / Decrease in operating assets Due from Financial Institutions Financings Other assets (Increase) / Decrease in operating liabilities Bills payable Deposits and other accounts Borrowings from Head Office Other liabilities Net cash (used in) / generated from operating activities Cash Flow from Investing Activities Investment in operating fixed assets Net cash used in investing activities Cash Flow from Financing Activities Net Cash Flow from Financing Activities (Decrease) / Increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year --(15,853) 157,726 141,873 --114,436 43,290 157,726 (510) (510) (2,911) (2,911) 3,964 (673,569) 1,861,179 13,871 1,205,445 (15,343) 200,000 (1,616,684) (63,189) (1,479,873)
236

42.5 Allocation of Income and Expenses to Remunerative Depositors' Pool For the year ended December 31, 2011 Income from financing activities Income from investments Income from placements with Financial Institutions Total Income Less: Administrative expenses directly attributable to the Pool Less: Profit Distributed to other Special Pools Gross Distributable Income Mudarib (Bank) share of profit before Hiba Less: Hiba from bank's share to depositors Net Mudarib (Bank) share of profit Rab-ul-Maal Share of Profit Rab-ul-Maal Share of Profit is distributed as follows: Remunerative depositors' share in Mudarabah pool Bank's equity in Mudarabah pool 216,252 46,678 262,930 51,330 31,978 83,308 2011 2010 Rupees in '000 339,457 188,141 1,991 529,589 (138,619) (81,092) 309,878 (79,748) 32,800 (46,948) 262,930 123,317 46,649 779 170,745 (65,969) (14,641) 90,135 (15,108) 8,281 (6,827) 83,308
Note: Administrative and operating expenses are paid by the Bank and not charged to the depositors' pool as per guidelines of mudarabah. 43. SUBSEQUENT EVENT The Board of Directors has proposed a cash dividend of Rs. 7.5 per share (2010: Rs. 7.5 per share) amounting to Rs. 12,614 million (2010: Rs. 10,091 million) and bonus shares in the proportion of 10 ordinary shares (2010: 25) per 100 ordinary shares held amounting to Rs. 1,682 million (2010: Rs. 3,364 million) at its meeting held on March 6, 2012 for approval of the members at the annual general meeting to be held on March 30, 2012. These financial statements do not reflect this appropriation as explained in note 5.16. 44. GENERAL Figures have been rounded off to the nearest thousand rupees. 45. DATE OF AUTHORIZATION FOR ISSUE The financial statements were authorized for issue on March 6, 2012 by the Board of Directors of the Bank.
President
Director
Director
Director
237

Annexure 'I' Referred to in Note 9.13 to the financial statements
1.1 1.1.1
Particulars of investments held in listed companies and modarabas Ordinary shares
Detail of Investments As at December 31

Investee Held-for-trading Attock Refinery Limited Attock Petroleum Limited Dawood Hercules Chemical Limited D G Khan Cement FFC Bin Qasim Limited Habib Bank Limited ICI Pakistan Limited Lucky Cement Limited MCB Bank Limited Nishat Mills Limited National Refinery Limited Pakistan Oilfields Pakistan Petroluem Limited Pakistan State Oil company Limited P.T.C.L Available-For-Sale Abbott Laboratories Limited Accord Textile Mills Limited Adamjee Floorings Limited Adamjee Insurance Company Limited Adamjee Papers & Board Mills Limited Adil Polypropylene Limited Adil Textile Mills Limited Afsar Textile Mills Limited Agriauto Industries Limited Agritec Limited Al Abbas Sugar Mills Limited Al Abid Silk Mills Limited Al Qaim Textile Mills Al-Ghazi Tractors Limited Al-Hussany Industries Limited Alif Textile Mills Limited Allawasaya Textile & Finishing Mills Limited Allied Bank Limited Amazai Textile Limited Amtex Limited Apex Fabrics Limited Arag Industries Limited Arif Habib Investments Limited Arif Habib Limited Arif Habib Corp Limited (Arif Habib Securities Limited) Aruj Garment Accessories Limited Asim Textile Mills Limited Askari Commercial Bank Limited Aslo Electronics Limited Aswan Tantage Limited Atlas Bank Limited Atlas Honda Limited Attock Petroleum Limited Attock Refinery Limited Awan Textile Mills Limited Ayaz Textile Mills Limited Azgard Nine Babri Cotton Mills Limited Bahawalpur Textile Limited Balochistan Glass Limited Balochistan Particle Board Limited Baluchistan Foundry (Tower) Baluchistan Wheels Limited Bank Al Habib Limited Balance carried forward
JCRVIS
PACRA
No. of shares held 2011 2010
Market Value 2011 2010 Rupees in '000 26,913 2,775 23,591 18,202 60,570 1,101 36,426 167,649 337,227 126,480 93 35,787 32,605 176,625 65,303 14,297 73 329 214,983 5 27,807 96,743 1,833 155 757 131,099 653,452 247,644 63,184 343 279 21,193 802,112 2,713,182 16,726 34,287 30,170 4,959 23,137 36,582 9,075 26,833 22,854 58,844 13,187 62,892 75,064 125,452 540,061 139,091 163 67,282 47,019 274,826 69,019 19,596 275 7,014 2 91,504 5 93,849 68,280 1,135 3,362 181 1,456 210,200 19,077 6,069 35,125 399,849 24,296 473 922 478 27,440 915,837 2,523,825
Unrated Unrated Unrated Unrated Unrated AA+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated
Unrated AA/A1+ Unrated Unrated Unrated Unrated Unrated Unrated AA+/A1+ AAA/A1+ AA-/A1+ Unrated Unrated Unrated AA+/A1+
250,000 36,985 175,267 75,000 1,497,407 106,000 105,141 737,861 2,983,661 1,267,462 233,400 30,080 769,442 137,597 69,093 47,696 32,778 567,047 11,499,000 727,285 583,570 183,265 1,705 31,514 163,464 3,990,783 10,111 23,172,472 144,506 96,478 3,733,816 129,255 34,541 582,237 13,070,676 20,054 86,030 1,584,126 2,300,457 108,696 107,432 22,169,691 41,026 33,283 398,550 37,664 811,357 28,114,699 117,122,338
50,000 275,000 1,000,000 25,000 647,561 300,000 62,916 354,038 100,000 214,924 205,500 212,500 345,680 425,000 4,218,119 1,267,462 233,400 30,080 768,942 137,597 69,093 47,696 32,778 617,047 11,499,000 727,285 583,570 183,265 30,900 31,514 163,464 25 1,304,406 10,111 23,172,472 144,506 96,478 2,626,146 63,932 129,255 34,541 582,237 11,882,433 20,054 86,030 11,703,953 48,561 105,000 3,207,000 108,696 107,432 2,515,091 41,026 33,283 301,443 398,550 37,664 811,357 25,257,506 101,252,281
Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated
Unrated Unrated Unrated AA Unrated Unrated Unrated Unrated Unrated D A/A1 Unrated Unrated Unrated Unrated Unrated Unrated AA/A1+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA/A1+ Unrated Unrated Unrated Unrated Unrated AA/A1+ Unrated Unrated SD Unrated Unrated Unrated Unrated Unrated Unrated AA+/A1+
238

JCRVIS Investee Balance brought forward Bank Alfalah Limited Bank Of Punjab Bankers Equity Limited (B.E.L.) Bankers Equity Limited (B.E.L.) Bankislami Pakistan Limited Bannu Woollen Mills Limited Bata Pakistan Limited Bawany Textile Mills Limited Bela Engineers Limited Berger Paints Limited Blessed Textiles Limited Boc Pakistan Limited Bolan Casting Limited Brother Textile Mills Limited Brr Guardian Modaraba Buxlay Paints Limited Callmate Telips Telecom Limited Casspak Industries Limited Central Cotton Mills Century Paper & Board Mills Limited Charsada Sugar Mills Limited Chashma Sugar Mills Limited Cherat Cement Limited Chilya Corrugated Board Limited Clariant Pakistan Limited Colony Mills Colony Sarhad Textile Colony Sugar Mills Limited Crescent Knitwear Crescent Spinning Mills Crescent Steel & Allied Product Crescent Sugar Mills Crescent Textile Mills Limited Crown Textile Cynamid( Wyeth Pakistan ) D.M.Textile Mills D.S. Industries Limited Dadabhoy Construction Dadabhoy Cement Industries Dadabhoy Leasing Co. Dadabhoy Sack Limited Dadex Eternit Limited Dandot Cement Data Agro Limited Dawood Capital Management Dawood Hercules Corporation Limited Dawood Lawrencepur Limited Dewan Automotive Engg. (Formerly: Allied Motors Limited) Dewan Cement (Pakland Cement) Dewan Khalid Textile Dewan Mushtaq Textile Dewan Salman Fibres Dewan Sugar Mills Dg Khan Cement Din Textile Mills Limited Dost Steel Limited Dynea Pakistan Efu General Insurance Ellcot Spinning Mills Limited Emco Industries Limited English Leasing Limited Engro Corporation Limited Engro Food Limited Engro Polymer & Chemicals Limited Escort Investment Bank Exide Pakistan Limited Faran Sugar Mills Limited Fateh Industries Fateh Sportswear Limited Fateh Textile Mills Fatima Enterprises Fatima Fertilizer Company Limited Fauji Fertilizer Company Limited Faysal Bank Limited Fazal Textile Mills Fazal Vegetable Ghee Balance carried forward PACRA No. of shares held 2011 2010 Market Value 2011 2010 Rupees in '000 2,713,182 651,868 7,155 2,785 1,061 473,068 4,157 35,247 52,074 38,984 184 501 22,559 32 585 46,867 104,832 775 126 272 64,827 8,640 46,621 416 20 7,056 186 220 305,434 4,260 5,734 142 33 3,316 1,392 131,862 63 199 8,182 6,597 742 234 420,900 589,964 12,874 1,776 25,502 64 219 1,192 2 10,579 157,018 37,706 8,514 97 6,018,899 2,523,825 402,391 12,974 3,261 2,557 393,168 7,247 1,205 46,970 60,323 296 1,109 1,295 32,293 36 909 69,878 146,776 1,977 101 586 71,886 2,462 24,901 59,798 465 989 20 8,558 42 392 656 342,851 5,119 10,275 456 380 12,678 2,506 103,185 5,266 149 262 9,446 7,652 1,116 234 687,572 25,270 3,304 38,902 28,344 64 219 1,339 4,264 1,099,335 70,155 13,811 97 6,353,596 117,122,338 57,943,846 1,322,479 251,022 1,485,925 898,394 75,697 578,040 42,972 135,658 314,929 551,942 515,585 1,367,863 429,055 89,291 44 27,384 17,864 1,735,329 4,634 73,223 6,500,269 22,076 703,570 775,397 167,677 181,491 42,130 370,744 3,571,714 1,049,799 161,948 56,858 540,339 40,024 5,004,500 188,742 25,102 160,000 50,135 338,285 7,205,328 135,412 4,587,003 142,425 14,442 2,740,202 696,135 6,929,158 55,076 23,358 214,481 356,591 384,708 360,416 4,540,456 26,104,614 1,770,833 1,184,092 1,360,098 11,712 23,003 11,847 109 461,576 1,050,004 4,637,860 34,527 21,486 269,991,266 101,252,281 35,895,723 1,322,479 251,022 1,485,925 898,394 190,840 570,512 42,972 135,658 314,929 26,112 515,585 1,367,863 429,055 612,819 89,291 44 27,384 17,864 1,916,525 4,634 73,223 6,500,269 22,076 802,056 775,397 167,677 181,491 42,130 370,744 2,613,083 364,790 1,049,799 161,948 56,858 171,537 540,339 40,024 5,004,500 188,742 25,102 2,281 160,000 50,135 338,285 1,728,428 117,750 1 4,587,003 142,425 64,442 4,240,202 696,135 3,420,132 195,769 55,076 23,358 214,481 381,666 384,708 360,416 3,547,662 1,770,833 1,184,092 198,229 1,360,098 11,712 23,003 11,847 320,609 21,486,647 4,500,000 34,527 21,486 218,153,134
Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated D Unrated Unrated Unrated Unrated A+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA Unrated Unrated Unrated Unrated Unrated Unrated A+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA Unrated Unrated
AA/A1+ AA-/A1+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AM4+ Unrated Unrated Unrated D Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA/A1+ AA/A1+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA/A1+ Unrated Unrated
239

JCRVIS Investee Balance brought forward Fecto Cement Limited Ferozsons Laboratories Limited Ffc Bin Qasim Limited First Capital Securities Corp. First Dawood Investment Bank First Equity Modarba First Fidelity Leasing Mod. First National Equities Limited Frontier Ceramics Limited General Tyre & Rubber Co. Ghafoor Textile Mills Ghandhara Nissan Limited Ghani Gases Limited Ghani Glass Limited Gharibwal Cement Ghulam M.Dadabhoy ( Dadabhoy Padube ) Glaxosmithkline (Glaxo Welcome) Globe Textile Mills Grays Of Cambridge Greaves Aircondition Gul Ahmed Textile Gulistan Spinning Mills Gulistan Textile Mills Gulshan Spinning Mills Gypsum Corporation H.Shaikh Muhammed Hussain Habib Bank Limited Habib Bank Modaraba 1St Habib Metropolitan Bank Habib Modaraba (Ist) Habib Sugar Hafiz Textile Mills Haji Mohammad Ismail Mills Limited Hakkim Textile Mills Hala Spinning Mills Limited Harum Textile Hashimi Can Company Highnoon Laboratories Hinopak Motors Limited Honda Atlas Car Hub Power Company Limited Hub Power Company Limited Huffaz Seamless Pipe Ind. Hyderabad Electronic I.B.L. Modaraba (Ist) I.C.C. Textiles Limited I.D.B.P Ibl Healthcare Ibrahim Fibers Ici Pakistan Indus Bank Limited. Indus Dyeing & Manuf. Indus Polyester Co. Innovative Invest.Bank Limited(Housing Finance ) Inter Asia Leasing Company Limited International Industries Limited International Knit Wear International Steel Limited Invest Capital Investment Bank Limited Investec Securities Limited Islamic Investment Bank Itti Textile Mills Jahangir Siddiqui Investment Company Javed Omer Vohra & Co Jehangir Siddiqui & Company Limited Johnson & Phillips (Pak.) Limited Js Bank Limited Js Bank Limited Lor Junaid Cotton Mills Limited Kaisar Arts & Krafts Karachi Electric Supply Corporation Karachi Pipes Karam Ceramics Limited Karim Cotton Mills Karim Silk Mills Limited Kasb Bank Balance carried forward PACRA No. of shares held 2011 2010 Market Value 2011 2010 Rupees in '000 6,018,899 3,433 117,190 462 3,810 1,059 680 287 329 33,456 85 28,156 7,472 249,199 320 3,703 610 9,340 4,078 612,103 7,090 604,085 193 143,441 69 1,196 674 6,664 18,175 21,451 525,166 1,974,708 5,617 1,454 38 25,559 101,683 238,163 247 33,849 741 83 980 13,011 2,049 17,221 2,991 931 1 10,842,199 6,353,596 6,382 108,292 325,711 7,292 2,635 1,361 912 1,066 3,208 36,160 173 28,553 12,871 11,154 278,526 371 8,048 5,089 1,025 6,974 4,292 219,691 12,360 864,043 1,874 174,459 72 1,148 66 542 6,184 34,223 28,800 380,346 10,838 1,302 106 1,235 39,831 193,108 87,748 372,292 540 2,890 496 210 3,440 35,337 2,760 26,927 34 5,253 1,424 2 9,713,270 269,991,266 880,337 1,429,315 10,899 2,048,345 1,394,028 907,135 189,062 121,137 1,600,000 23,424 35,131 2,746,071 1,339,000 25,278 3,714,959 33,704 160,985 30,080 148,830 374,355 613,190 84,176 57,634 5,770,198 1,000,000 35,765,841 26,635 6,546,806 3,792 1,594,650 131,445 1,639,500 29,683 82,154 235,065 259,462 2,482,754 15,355,718 57,740,000 694,269 50,135 727,077 84,016 1,011 945,213 76 267,362 3 17,952 50,000 6,265,792 60,716 2,915,478 3,705,680 50,205 71,339 83,418 31,405 859,960 3,228,503 292,675 10,436,696 51,759 868,959 1,869,225 79,710 182,554 56,285 9,690 760 450,579,967 218,153,134 880,337 1,242,883 9,115,897 2,048,345 1,394,028 907,135 523,903 121,137 1,331,265 1,600,000 23,424 35,131 2,485,000 261,071 1,339,000 25,278 3,158,249 33,704 160,985 30,080 174,034 148,830 374,355 613,190 84,176 57,634 1,801,634 1,500,000 29,804,868 279,701 5,237,445 3,792 1,594,650 131,445 1,639,500 29,683 82,154 213,696 259,462 2,482,754 10,166,956 694,269 50,135 727,077 84,016 1,011 150,459 945,213 1,338,795 76 267,362 3 17,952 50,000 6,220,417 60,716 3,705,680 50,205 71,339 83,418 31,405 859,960 3,241,903 292,675 10,436,696 3,368,056 51,759 868,959 1,869,225 79,710 182,554 56,285 9,690 760 337,417,725
Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated D Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA+ Unrated Unrated AAUnrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated
Unrated Unrated Unrated Unrated CCC Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA+/A1+ AA+/A1+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA+/A1+ AA+/A1+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA/A1+ Unrated A/A1 Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated A-/A2
240

Investee Balance brought forward Kasb Bank (Platinum Bank) Kasb Modaraba Kaytex Mills Kaytex Mills (Saleem Denim Ind.) Khairpur Sugar Mills Limited Khursheed Spinning Mills Kohat Cement Limited Kohat Textile Mills Limited Kohinoor ( Cotton ) Textile Kohinoor Energy Limited Kohinoor Industries Kohinoor Looms Limited Kohinoor Mills Limited Kohinoor Power Co. Kohinoor Sugar Mills Kohinoor Textile Mills Limited Kot Addu Power Company Limited Ksb Pumps Co.Limited Lafarge Pakistan Cement Lafayatte Industries Synth. Leiner Pak.Gelatine Libaas Textile Limited Lotte Pakistan PTA Limited Lucky Cement Limited Maple Leaf Cement Limited Maqbool Textile Mills Mari Gas Company Limited Marr Fabrics Limited Masood Textile Mills Limited Mcb Bank Limited Medi Glass Limited. Meezan Bank Limited Mehar Dastgir Textile Mehran Bank Limited. Mehran Jute Limited Merit Packaging Limited Metropolitan Steel Corp ( Restricted ) Mian Mohammad Sugar Millat Tractors Limited Mirpurkhas Sugar Mills Mitchell'S Fruit Farms Modaraba Al-Mali Mohib Textile Limited Moonlite Pak (Blanket) Morafco Limited Mubarik Dairies Muslim Ghee Mustehkam Cement Limited Mybank Limited Myfip Videos Nagina Cotton Mills Limited National Asset Leasing Corporation National Match Ind. National Over. National Refinery Limited Natover Lease & Refinance Naveed Textile Mills Nib (Ndlc-Ific Bank )Nib Bank Limited Nishat (Chunian) Limited Nishat Chunian Power Limited Nishat Mills Limited Nishat Power Limited Noon Sugar Mills Limited Norrie Textile Mills Nowshera Engg. Works Limited Nusrat Textile Mills Oil And Gas Company Limited Olympia Spinning & Weaving Olympia Textile Mills Orix Leasing Pakistan Limited Otsuka Pakistan Pace Pakistan Limited Package Limited Pak Datacom Limited Pak Electron Limited Pak Ghee Limited Pak Paper Corporation Pak Suzuki Motors Limited Balance carried forward JCRVIS PACRA No. of shares held 2011 2010 Market Value 2011 2010 Rupees in '000 10,842,199 1,009 78 38,507 54 3,988 4,156 2,134 4 1,996 223 1,317 6,944 692,028 24,423 4,878 306 188 53,766 114,132 360 6,359 236,149 71,661 322,303 50 801 190,380 22,409 23,487 274 298 15 3,804 1,351 124,601 22,252 80,652 226,967 458,315 75,570 60,721 38 10,730 1,759 29,074 197,549 20,722 16,051 15 136,697 14,133,747 9,713,270 2,303 580 79 24,550 86 3,100 4,097 2,948 7 94 683 1,864 10,313 395,938 60,519 12,607 207 175 170,528 559 7,302 246,483 91,873 44,677 118 50 8,538 801 260,530 28,460 21,275 111 324 270 113 4,981 54,747 1,835 396,831 23,194 29,536 311,774 497,820 229,575 136 13,055 33 365 11,609 1,759 46,834 307,142 47,931 67,174 15 139,306 13,301,083 Unrated BBB+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AAUnrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated A+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated AAA Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated D Unrated Unrated Unrated Unrated AA+/A1+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated A-/A2 Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AAA/A1+ Unrated Unrated AA-/A1+ AA-/A1+ AA-/A1+ A+/A1 AA-/A1+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA/A1+ Unrated D AA/A1+ Unrated A-/A2 Unrated Unrated Unrated 450,579,967 917,520 82,575 3,088,000 53,900 479,941 2,926,554 31,935 135,351 4,370 86,366 1,240,022 147,865 366,887 2,054,323 16,748,004 1,004,638 2,594,936 46,765 13,900 250,000 5,800,000 1,520,953 194,819 833,382 2,915,417 60,246 4,593,662 2,394,526 150,404 24,856 376,390 61,931 50,204 87,630 521,290 551,541 286,496 507,080 58,846 29,069 28,227 181,013 345,923 537,300 89,498 135,050 13,398 12,471 513,418 371,674 35,979 12,862,190 4,515,797 17,801,350 11,330,410 5,835,515 69,557 13,229 156,134 400,481 21,838 1,689,793 53,619 22,364,967 2,388,163 600,633 4,599,015 29,491 52,831 2,315,727 593,237,252 337,417,725 917,520 351,473 1,208,227 82,575 3,088,000 53,900 479,941 2,926,554 31,935 135,351 4,370 86,366 31,795 147,865 366,887 2,054,323 9,732,978 1,004,638 3,927,387 46,765 13,900 250,000 2,250,000 194,819 849,029 1,972,334 60,246 4,593,662 195,489 150,404 6,958 24,856 376,390 61,931 348,637 50,204 87,630 521,290 551,541 286,496 73,539 507,080 58,846 29,069 28,227 181,013 345,923 19,483,044 537,300 113,499 135,050 13,398 12,471 1,449,398 371,674 35,979 7,862,190 1,300,000 19,376,860 7,757,836 14,145,116 11,337 69,557 13,229 156,134 76,421 21,838 182,618 1,689,793 53,619 17,155,335 2,388,163 600,633 4,784,450 29,491 52,831 1,995,222 480,040,574
241

Investee Balance brought forward Pakistan Engineering Company Limited Pakistan Gum & Chemicals Pakistan International Airlines Corporation "A-Class" Pakistan International Container Terminal Pakistan National Shipping Corporation Pakistan Oil Fields Limited Pakistan Paper Products Limited Pakistan Petrolium Limited Pakistan Refinery Limited Pakistan Reinsurance Company Limited Pakistan Services Limited Pakistan State Oil Pakistan State Oil Pakistan Synthetics Pakistan Telecommuniction Company Limited Pakistan Telephone Cables Pakistan Tobaco Pan Islamic Steamship Pangrio Sugar Paramount Spinning Mills Pearl Fabrics Limited Pervez Ahmed Securities Limited Pioneer Cement Limited Polyron Limited Premium Textile Mills Prosperity Weaving Mills Limited Prudential Investment Bank Prudential Modaraba (Ist) Punjab Building Limited Punjab Cotton Punjab Lamps Punjab Modaraba (Ist) Qayyum Spinning Quality Steel Works Quetta Textile Mills Rcd Ball Redco Textile Mills Limited Regal Ceramics Limited Reliance Cotton Spinning Resham Textile Mills Limited Rex Baren Battery Rmcpl Ruby Textile Mills Rupali Polyester Limited S.G.Power Sadoon Textile Mills Sahrish Textile Mills Saif Mix Concrete Products Saif Textile Mills Limited Saitex Spinning Mills Sajjad Textile Mills Salman Noman Enterprises Samba Bank Limited Samin Textile Limited Sana Industries Limited Sanghar Sugar Mills Sanofi - Aventis Pakistan Limited Sapphire Textile Mills Sardar Chemical Ind.Limited Saudi Pak.Leasing Co. Schon Textiles Mills Searle Pakistan Limited Security Investment Bank Security Leasing Corp. Security Papers Limited Service Fabrics Limited Service Industries Limited Service Textile Mills Shabbir Tiles & Ceramics Shadab Textile Mills Shahmurad Sugar Mills Limited Shahpur Textile Mills Shahtaj Sugar Mills Shahyar (Oe) Textile Mills Shahyar Textile Mills Shakarganj Mills Balance carried forward JCRVIS PACRA No. of shares held 2011 2010 Market Value 2011 2010 Rupees in '000 14,133,747 4,867 2,016 41,077 7,737 252,192 4,865 30,406 227,594 100,117 58,019 436,365 2,499,474 193,543 100 8,077 1,101 9,297 229 90,439 4,208 51 476 355 121 17 2,020 26,536 77 9,376 5,366 256 8,924 6,500 6,043 3,886 11,216 90 760 1,451 33,099 165 164,206 41 14,505 5,826 32 36,434 17,672 18,460,972 13,301,083 33,809 1,091 47,123 23,100 348,227 7,453 63,526 362,080 70,406 224,166 12,318 361,752 108 16,614 2,424 10,341 646 185,537 5,232 84 191 1,036 368 358 20 1,556 29,393 206 28,471 4,839 224 783 12,062 9,790 6,352 6,148 16,604 13,277 68 871 28,074 4,852 460 41,945 206 202,144 33 15,280 8,566 68 32,744 20,275 15,564,385 Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated A+ Unrated Unrated Unrated Unrated A Unrated D Unrated BBB+ A Unrated Unrated Unrated Unrated Unrated Unrated Unrated BBB+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA+/A1+ AA+/A1+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated A-/A2 Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated D 593,237,252 135,242 49,460 20,851,011 608,707 727,933 158,144 180,644 3,361,306 6,459,182 418,460 1,920,537 11,000,720 18,627,814 45,969 145,531 421 397,393 994,301 117,121 301,925 27,405,714 76 184,889 5,674 166,278 226,070 28,648 55,274 595,224 36,653 1,685 9,686 10,027 402,378 45,501 2,775 28,564 13 311,132 816,483 164,692 421 10,043 1,600,069 1,075,363 182,423 167,606 6,154,267 1,604,838 172,448 370,115 103,227 75,413 1,582,673 131,446 1,160,703 935,011 687,561 842,126 82,575 1,801,895 593,895 200,527 408,539 40,023 113,161 3,666,302 713,999,179 480,040,574 135,242 49,460 20,851,011 1 608,707 1,176,601 158,144 292,545 3,361,306 418,460 759,421 1,353,626 18,627,814 45,969 150,719 421 397,393 994,301 117,121 301,925 27,405,714 76 184,889 5,674 166,278 173,902 226,070 28,648 55,274 595,224 36,653 1,685 9,686 10,027 402,378 45,501 2 2,775 28,564 13 311,191 816,483 164,692 421 10,043 3,900,069 1,075,363 182,423 151,508 156,642 6,154,267 1,604,838 137,959 426,969 116,932 131,446 75,413 1,582,673 131,446 467,828 1,160,703 227,802 935,011 687,561 842,126 82,575 1,801,895 781,593 200,641 408,539 40,023 113,161 3,666,302 587,766,332
242

Investee Balance brought forward Shell Gas Lpg (Burshane LPG Pakistan) Shell Pakistan Limited Shezan International Siemens (Pakistan) Engineering Company Limited Siftaq (International) Textile Mills Silk Bank Limited Sindh Alkalis Limited Sindh Fine Textile Mills Sitara Chemicals Industries Limited Sitara Energy Limited Sme Leasing Limited Soneri Bank Limited Southern Networks Limited Standard Chartered Leasing Limited Standard Chartered Modaraba Sui Northern Gas Pipeline Company Limited Sui Northern Gas Pipeline Company Limited Sui Southern Gas Pipeline Company Limited Summit Bank Limited ( Formuly Arif Habib Bank) Sunrise Textile Mills Sunshine Cloth Mills Sunshine Cotton Mills Limited Suraj Cotton Mills Limited Suraj Ghee Limited Syed Match Ind. Taga Pakistan Limited Taj Textile Mills Limited Tandlianwala Sugar Limited Tariq Cotton Mills Tata Textile Mills Tawakkal Limited Tawakkal Modaraba (Ist) Tele Card Limited Thall Limited Thatta Cement Co. Limited Treet Corporation Trg Pakistan Tri Star Modaraba (Ist) Tri Star Polyester Tri-Pack Films Turbo Tec Limited (Tubes) Twakkal Garments Industries Limited U.D.L. Modaraba. (Ist) Unicap Modaraba. Unilever (Pakistan) Limited Union Insurance Co.Of Pakistan United Bank Limited United Brands Limited (Udl Industries) United Distributors Pak. Unity Modaraba Uqab Breeding Farms Wah Noble Chemicals Limited World Call Communication Worldcall Telecom Yousuf Weaving Mills Zafar Textiles Mills Limited Zahur Cotton Mills Zahur Textile Mills Zeal Pak Cement Limited Zil Limited (Zulfeqar Ind.Limited) JCRVIS PACRA No. of shares held 2011 2010 Market Value 2011 2010 Rupees in '000 18,460,972 17,605 10,747 720,427 3,205 277 32,188 19,162 4,307 156,203 257 20,441 449,196 215,543 696,179 63,482 274 100 191 951 21,870 4,005 369,963 234,172 1,807 167 54 296,259 96 2,317 11,355 19,247 627 5,730 21,839,375 15,564,385 26,446 54,070 67,639 644,866 4,744 277 56,953 2,415 16,550 289,618 243 18,387 644,052 307,092 45,344 274 95 283 610 34,897 11,063 285,006 148,952 2,786 211 334 5,374 14 300,212 113 2,326 11,721 55,818 941 124 9,708 18,613,943 Unrated Unrated Unrated Unrated Unrated AUnrated Unrated A+ Unrated BBB Unrated Unrated Unrated Unrated Unrated Unrated Unrated A Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AAUnrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA-/A1+ Unrated AA-/A1+ AA+/A1+ AA/A1+ AA/A1+ AA-/A1+ Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated A+/A1 Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated A-/A2 Unrated Unrated Unrated Unrated Unrated Unrated 713,999,179 781,738 97,634 681,738 54,769 1,810,788 360,212 39,603 445,814 1,130,517 1,230,477 40,051,953 153,522 85,693 1,975,021 28,592,986 13,720,132 36,090,174 36,908,297 7,668 374,721 498,220 27,384 7,162 48,450 763,513 17,948 21,907 1,056,534 57,297 241,827 5,005,876 4,522,771 9,859,862 46,395 151,492 86,788 172,325 178,631 156 5,654,884 4,085 230,525 1,000,000 70,778 324,421 19,247,414 627,427 34,041 225 210,229 247,789 173,700 929,182,692 587,766,332 781,738 259,678 581,538 514,448 54,769 1,810,788 360,212 39,603 445,814 130,517 1,230,477 34,851,736 153,522 85,693 1,975,021 24,085,702 14,336,708 11,901,405 374,721 498,220 27,384 7,162 48,450 763,513 17,948 21,907 1,056,535 57,297 241,827 5,005,876 2,188,145 7,889,430 46,395 0 151,492 320,778 86,788 172,325 873,765 178,631 156 4,400,000 4,085 230,525 1,000,000 70,778 324,421 19,247,414 627,427 34,041 247,725 210,229 247,789 173,700 728,212,580
243

1.1.2 Particulars of Investments held in un-listed companies 1.1.2.1 Ordinary Shares - Holding 10% and above
Investee Rating JCRVIS PACRA Percentage of holding No. of Shares held 37,500,000 2,000,000 30,726,666 2,000,000 275,000 1,011 5,500 15,100 66,125 450,000 500,000 Cost of Investment 2011 210 Break-up value of investment Based on accounts as at Name of Chief Executive
Rupees in '000 Atlas Power Limited Digri Sugar Mills Limited Fauji Akbar Portia Gelcaps Pakistan Limited Intech International I.D.B.P. Pakistan Agriculture Storage Service Corporation (Face value: Rs.1,000 each) Precision Engineering Resources and Engineering Management Corporation Safa Rice Mills Limited Sigma Knitting Mills Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated 10% Unrated 19.1% Unrated 11.0% Unrated 14.6% Unrated 18.6% Unrated Unrated Not Available 18.3% Unrated Unrated Unrated Unrated Unrated 16.8% 10.0% 15.8% 14.1% 375,000 4,063 321,076 4,665 5,500 710,304 375,000 4,063 307,267 4,665 5,500 696,495 Break-up value of investment 525.684 30-Jun-11 Maqsood A. Basra 8,126 30-Sep-99 Mr. Naveed Ahmad Javeri 231,570 30-Jun-11 Mr. Ahmed Kamal Rana Mr. Sadruddin Hashwani 25,340 30-Jun-06 Mr. Hassan Zaidi Not Available Not Available Maj. General Fahim Akhter Khan 109,831 31-Mar-03 Not Available Mr.Zaheer Hussain (484,696) June 30,2005 Mr.Shafaat Ahmed Mr. Pervaiz Alam Not Available (6,793) June 30,1999
Investee
Rating JCRVIS PACRA
No. of Shares held 30,000 140,000 100,000 39,050 30,000 50,000 1,088,600 2,532,000 500,000 50,000 220,000 20,000 50,000 377,800 125,600 181,000 537,300 149,999 10,000 1 762,995 79,200 18,300 220,133 4,950 37,250 10,000,000 100,000 1,152,938 1,076,880 50,000 45,737 39,729,000 75,000 1,695,700 5,000 100,000 6,121,095 26,650 788,500 150,000 644,508 247,100 3,300
Cost of Investment 2011 210
Based on accounts as at
Name of Chief Executive
Rupees in '000 Al Ameen Textile Al Zamin Modarba Management/Professional Management Modaraba Attock Textile Mills Limited Brikks Pvt Limited Babri Cotton Mills Limited Equity Participation Fund (Face value: Rs.100 each) F.T.C. Management Fauji Oil Terminals First Women Bank Limited Fortune Securities Limited Frontier Textile Mills Limited Gulistan Power Generation Limited Hazara Woolen Mills Limited Insecta Pakistan Limited JDM Textile Mills Limited Kaytex Mills Limited Mohib Textile Mills Limited Muslim Ghee Mills Limited Myfip Video Industries National Assets Insurance Limited National Construction Limited National Film Development Corporation Limited National Industry Cooperative Bank of Gujrat National Institution of Facilitation Technology (Pvt) Limited National Investment Trust (Face value: Rs.100 each) National Woolen Mills Limited Newyork Poly Clinic of Karachi Nowshehra Engineering Works Limited Pakistan Paper Corporation Limited Pakistan Textile City Pakistan Tourism Development Corporation Pakistan Export Finance Guarantee Agency Limited People Steel Mills Limited Qadri Textile Mills Limited Refrigerator Manufacturing Company Limited Rousch Power Pakistan Limited Ruby Rice and General Mills Limited Rehman Cotton Mills Limited South Asia Regional Fund Shoaib Capital SME Bank Limited Star Salica Industries Limited Engine System Sunshine Cloth Mills Transmobile Limited Zafar Textiles Mills Limited Zulsham Engineering Works Limited Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AM-DS Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated BBB Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated BBB+/A2 Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated 328 1,000 200 3,218 250 10,886 21,100 5,000 500 2,200 200 4,784 3,778 250 1,526 100 183 41 373 100,000 100 11,529 3,276 500 4,589 132,888 750 16,958 287 271 26,950 267 256 330 354,869 328 1,000 200 _ 250 10,886 21,100 5,000 500 2,200 200 3,778 26,793 250 1,526 100 183 41 373 100,000 100 11,529 3,276 500 4,589 132,888 750 287 272 26,950 267 256 330 356,703 2,134 (1,412) Not Available Mr. Bashir A. Chaudhry June 30, 2006 Mr. Arshad Ali Chaudhry Sept. 30, 1998 Not Available Ali Kuli Khan Khattah 20,473 June 30, 2011 19,939 December 31, 2008 Mr. Muhammad Akhter Engr. Mir Fateh Sultan June 30, 2011 Lt. Gen Hamid Rab Nawaz June 30, 2011 Ms.Shafqat Sultana Dec. 31. 2010 Mr. Qasim Lakhani June 30, 2011 Not available Sep. 30, 2002 Mr. Abdul Shakoor June 30, 2000 Not Available Mr. Syed Tauqeer Haider June 30,1997 Mr.LT. Gen Ali Kuli Khan June 30, 2011 Not Available Not Available Not Available Not Available Not available Dec 31, 2009 Mr. Ali Mohammad Shaikh June 30, 2005 Mr. Sajjad Haider June 30, 2000 Not Available Mr. M. M. Khan June 30, 2011 Mr. Tariq Iqbal Khan June 30, 2010 Not Available Mr. Akhter Aziz khan June 30,1998 Not Available Not Available Mr. Zaheer Hussain June 30, 2011 Not available June 30,1996 Not available Dec 31, 2009 Not Available Not Available Not Available Mr. Naseem Akhter June 30,2011 Not Available Mr. LT. Gen Ali Kuli Khan June 30, 2011 Mr. Jean Fondaumiere Dec 31,07 Not available June 30,2000 Mr. R. A Chughtai 31-12-2010 Not Available Not Available Not Available Mr. Javed Burki June 30,1997 Not Available Not Available
36,174 27,447 226,225 3,116 272 8,096 315 43,784
378 597 (1,825) 5,128 1,796 (241) 76,026 24,983 1,152
650,089 107,895 544 50,986
(44)
244

1.2 Particulars of Investments held in units of mutual funds
Rating JCRVIS PACRA No. of shares held 2011 2010 Market Value 2011 2010 Rupees in '000 146,314 29,706 20,000 49,672 434 147,747 3,331 101,327 50,301 48,814 19,492 7,881 49,735 199,590 10,908 106,800 316,680 24,518 101,058 15,191 1,900 33,879 100,068 48,737 1,758,074 34,224 994 5,311 16,800 2,640 11,686 26,042 29,639 8,742 44,464 8,260 105,100 309,924 26,272 13,996 146,923 3,362 39,847 38,156 7,871 931,378
ABL Cash Fund AH Dow Jones Safe Pak Titans 15 Index Fund AKD Cash Fund Al Falah GHP Cash Fund Asian Stock Fund Askari Soverign Cash Fund Atlas Fund of Funds Dawood Islamic Fund Dominion Stock Fund Faysal Income and Growth Fund Faysal Savings Growth Fund First Dawood Mutual Fund First Habib Cash Fund HBL Money Market Fund IGI Income Fund Invest ec Mutual Fund J.S Large Capital Fund J.S. Growth Fund J.S. Value Fund Lakson Money Market Fund MCB Cash Optimizer Fund Meezan Balanced Fund NAMCO Balanced Fund NIT Government Bond Fund NIT Income Fund Pakistan Capital Market Fund Pakistan International Element Islamic Fund Pakistan Strategic Allocation Fund PICIC Cash Fund PICIC Energy Fund PICIC Growth Fund PICIC Income Fund PICIC Investment Fund Reliance Income Fund UBL Liquidity Plus Fund Unit Trust of Pakistan UTP Large Capital Fund
Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated A+(f) Unrated Unrated Unrated A+(f) Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated -
Unrated Unrated Unrated Unrated Unrated AA+(f) Unrated 4-Star Unrated Unrated Unrated 2-Star/2-Star Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA(f) AA+(f) Unrated Unrated Unrated Unrated 2-Star/3-Star 3-Star/2-Star 3-Star/4-Star Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated
14,616,749 600,000 2,000,000 99,237 173,705 1,470,268 80,326 32,161 983,752 487,509 484,841 87,858 416,857 1,832,764 497,297 1,940,028 2,160,000 10,000,000 29,376,653 3,131,319 996,722 2,133,585 152,491 6,216,321 974,371 505,260 81,696,294
600,000 173,705 1,159,500 80,326 2,000,000 25,109 5,842,809 87,858 319,769 5,340,372 1,832,764 5,928,500 2,000,000 10,000,000 29,376,653 3,131,319 2,133,585 11,088,491 524,500 6,216,321 366,259 96,650 88,423,668
1.3
Particulars of Investments held in Preference shares

Rating JCRVIS Listed: Chenab Textile Mills Limited Nishat Chunian Limited Saleem Sugar Mills Masood Textile Mills Maple Leaf Cement Factory Pak Elektron Limited Pak Elektron Limited Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated SD A/A1 A/A1 Cumulative Cumulative Cumulative Floating Cumulative Cumulative Cumulative 9.25% 15.00% 6.00% 12.65% 9.75% 9.50% 13.26% PACRA Cumulative/ Noncumulative No. of certificates held Rate 2011 2010 Market Value / Cost 2011 2010 Rupees in '000 17,000 18,811 6 50,000 542 124,498 22,500 233,357 13,000 25,000 15,492 6 50,000 477 106,436 22,500 219,911 -
10,000,000 737,699 105 5,000,000 112,996 10,643,642 2,250,000 28,744,442
10,000,000 737,699 105 5,000,000 112,996 10,643,642 2,250,000 28,744,442 -
Unlisted: Pakistan Mercantile Exchange Limited Unrated Unrated -
1,300,000
* Cost of the above investment amounted to Rs. 285.26 million (2010: Rs. 272.26 million)
245

1.4 1.4.1 Term finance certificates Investee Debentures, Bonds, Participation Term Certificates and Term finance certificates
Listed
Allied Bank Ltd. Al-Zaming Leasing Corporation Limited
Rate of interest 13.86% 6 months Kibor + 1.9% Last SBP auction of 5 years PIBS Plus 2.75% with 12.00% as floor & 15.75% as celling 13.39% 6 months Kibor + 1.5% 15.80% 6 month Kibor + 2.4% 15% (Fixed) 14.43% 6 months Kibor + 2.5% 10.00% 6 month Kibor + 1.5% 0.65% above cutt off yield of the last SBP auction of five year PIB's with 4.5% as floor and 9.5% as ceiling. 14.37% 6 months Kibor + 2.4% 15.90% 6 months Kibor + 2.5% 14.25% 6 months Kibor + 2.25% 15.80% 6 month Kibor + 2% 6 month Kibor + 2.25% 14.53% 6 month Kibor + 1.15% 13.42% 6 months Kibor + 1.5% Six Months KIBOR plus 150 basis points with no floor & Cap 3% (Fixed) 15.38% 6 months Kibor + 2.5% 13.50% 6 month Kibor + 1.6% 15.16% 6 months Kibor + 3.25% 6K + 3.75% 8.45% (Fixed) 9.49% (Fixed) 15.08% 6 months Kibor + 1.7% 14.23% 6 Months Kibor +0.85% 2.75% above six month KIBOR no floor & no celling PIB auction held by SBP plus 2.75%
Profit payment Half yearly
Maturity
Long Term Rating AAC
No. of shares held 2011 9 1,030 2010 4,409 1,030
Market Value 2011 2010 Rupees in '000 45 3,863 21,620 3,863
December 6, 2014
Half yearly September 5, 2013
Askari Bank Limited Azgard Nine Limited Bank Al-Falah Limited Bank Al-Falah Limited Bank Al-Habib Limited Bank Al-Habib Limited
Half yearly Half yearly Half yearly Half yearly Half yearly Half yearly
October 31, 2013 August 17, 2012 December 2, 2017 December 2, 2017 June 28, 2012 July 15, 2012
AAD AAAAAA AA
3,000 20,000 35,000 46,200 40,000 -
3,000 20,000 35,000 70,200 40,000 3,000
14,899 89,393 180,170 231,739 120,725 -
14,665 89,393 171,606 354,491 189,203 14,190
Engro Fertilizer Ltd Escorts Invest. Bank Ltd. Faysal Bank Ltd. Financial Receivable Securitization Company Limited IGI Investment Bank Limited NIB Bank Ltd. Orix Leasing Pak. Ltd. Pak Arab Fertilizers
Half yearly December 17, 2016 Half yearly Half yearly March 15, 2012 October 11, 2017
AA BBB-/A3 AAA+ A+(-) A+ AA+ AA
6,000 6,090 37,800 5,000 11,600 1,400 -
6,090 70,000 5,000 1,190 31,000 1,400 690
30,441 6,730 195,384 10,359 56,765 1,129 -
15,092 339,422 14,418 1,485 150,727 3,329 3,146
Half yearly December 27, 2013 Half yearly Half yearly Half yearly Half yearly July 11, 2011 March 5, 2016 May 25, 2012 February 28, 2013
Saudi Pak Leasing Co. Searle Pakistan Ltd. Soneri Bank Limited Sumit Bank Ltd Tele Card Limited (27-05-05) UBL 1st Issue UBL 2nd Issue UBL 3rd Issue UBL 4th Issue World Call Telecom Invest capital investment bank limited
Half yearly Half yearly Half yearly
March 13, 2013 March 9, 2011 March 31, 2011
D BBB+ A+ A D AA AA AA AA A Unrated
10,000 27,000 44,898 2,573 26,909 6,500 100 156,000 1,030
10,000 7,800 27,000 2,573 26,909 6,500 4,000 180,000 3,000 1,030
22,791 100,361 215,806 9,647 84,775 30,883 501 776,581 3,863
25,052 4,848 132,373 12,309 124,063 28,472 19,939 855,413 4,968 3,863
Half yearly November 11, 2018 Half yearly November 27, 2014 Half yearly Half yearly June 26, 2012 March 15, 2013
Half yearly September 8, 2014 Half yearly February 14, 2018
Half yearly November 28, 2011 Half yearly
2,186,850 2,597,950
246

Term finance certificates - Unlisted
Rate of interest Profit payment Maturity Long Term Rating No. of shares held 2011 2010 Market Value 2011 2010 Rupees in '000
Investee
Al Abbas Holding Co Ltd. Afroze Textile Industries Agritech Limited Agro Dairies Limited Al-Azhar Textile Mills Limited Al-Qaim Textile Mills Limited Apex Fabrics Limited Aqma Textile Mills Limited Aswan Tentage & Canvas Mills Limited Babri Cotton Mills Bachani Sugar Mills Limited Baluchistan Cotres Limited Bankers Equity Limited Bela Chemical Limited Bentonite Pak Limited Blue Star Spinning Mills Limited Brother Steel Limited Bunny's Limited Cast-N-Link Product Limited Chiniot Textile Mills Limited Danneman Fabrics Limited Faisalabad Electric Supply Co. Ltd. Faruki Pulp Mills Limited Frontier Ceramics Limited General Dairies & Food Limited Glorex Textile Mills Limited Gujranwala Electric Power Co. Ltd. Gypsum Corporation Limited Ghani Holding Co.Ltd. Hospitex International Limited Jahangir Siddiqui & Company Limited Janana De Malucho Textile Mills Ltd Javedan Cement Limited JDW Sugar Mills Limited Kamal Ghee & Allied Industries Limited Balance carried forward JCL-III JCL- II 6 month Kibor + 2.5% 6 month Kibor + 5% 6 month Kibor + 1.75% 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% Zero Markup 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% 6 months Kibor + 2.5% 22.00% 22.00% 22.00% 6 month Kibor + 0.05% 22.00% 22.00% 22.00% 22.00% 6 month Kibor + 0.05% 22.00% 6 month Kibor + 2.5% 22.00% 6 month Kibor + 1.60% Zero Markup 6 month Kibor + 2.50% 3 month Kibor + 1.25% 22.00% Half yearly Quarterly Half yearly Overdue Overdue Overdue Overdue Overdue Overdue Anually Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Half yearly Overdue Overdue Overdue Overdue Half yearly Overdue Half yearly Overdue Half yearly Anually Overdue Quarterly Overdue August 22, 2014 December 29, 2019 January 14, 2019 Overdue Overdue Overdue Overdue Overdue Overdue December 30, 2016 Overdue Overdue Overdue Overdue Overdue Overdue Overdue December 6, 2012 Overdue Overdue Overdue February 27, 2013 Overdue Overdue Overdue Overdue February 27, 2013 Overdue August 22, 2014 Overdue May 17, 2014 January 1, 2017 October 11, 2014 June 23, 2014 Overdue Unrated Unrated D Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated AA Unrated Unrated Unrated Unrated 5,750 12 57,000 20 14 16 16 14 1 5 28 22 10 24 31 17 17 6,000 16 6 14 30 14 46 6 1 30 10 5,750 16 40,000 11 2,500 40,000 14 5,750 57,000 20 14 16 16 14 1 28 22 10 24 31 17 17 6,000 16 6 14 30 14 46 6 1 30 10 5,750 16 40,000 2,500 40,000 14
503,125 284,000 285,000 5,168 357 2,640 3,549 3,643 44,714 35,896 2,745 62,669 24,595 3,417 2,252 3,093 22,500 2,549 1,185 3,283 1,350 924 900 503,125 511 200,643 76,470 164,063 109,172 4,238 2,357,775
503,125 285,000 5,168 357 2,640 3,549 3,643 35,896 2,745 78,337 24,595 3,417 2,252 3,093 22,500 2,549 1,185 3,283 3,000,000 1,081 1,350 924 3,000,000 900 503,125 511 200,394 187,500 162,297 4,238 8,045,654
247

Term finance certificates - Unlisted
Rate of interest Profit payment Maturity Long Term Rating No. of shares held 2011 2010 Market Value 2011 2010 Rupees in '000
Investee
Balance brought forward Kiran Sugar Mills Limited Kiran Sugar Mills Limited Kunjah Textile Mills Limited Malik Food Industries Limited Minaco Fabrics Limited Munalisa Fruit Juices Munawar Engineering Company Limited Munro & Millar Mills Limited National Tiles & Ceramics Limited National Transmission Dispatch Co. Ltd New Allied Electronic industries limited. Oil & Gas Investment Limited. Pakistan International Airlines Corp. Limited Pakistan Laminates Limited Pak Libya Holding Co Pvt Ltd Parthenon private Limited Pirjee Weaving Mills Limited Royal Bank of Scotland Pak Kuwait Investment Bank Ltd. F Pak Kuwait Investment Bank Ltd. G Pak Hy-Oil Ltd Pak Arab Fertilizer Ltd Power Holding Private Ltd Power Holding A/c WAPDA Rehman Cotton Mills Qand Ghar (Pvt) Limited Raja Weaving Mills Limited Regency Textile Mills Limited Sarela Cement Limited Scan Recycling (Pak) Limited Seri Sugar Mills Limited Shah Jewana Textile Mills Limited Shazeb Industries Limited Sialkot Dairies Silverland Textile Mills Limited Sind Textile Industries Sinsas Enterprises Limited Star Silica International SME Leasing Limited Sunflo Juices Limited Tanocraft Limited Tawakkal Garments Industries Limited Tharparkar Sugar Mills Limited Turbo Tubes Limited Ultra Engineering Industries Limited Waleed Leather Industries Limited Zamir Textile Mills Limited
22.00% 3 month Kibor + 3.00% 6 month Kibor + 3.00% 22.00% 22.00% 22.00% 22.00% 22.00% 6 month Kibor + 1.75 % 3 month Kibor + 1.50 % 6 month Kibor + 2%. 6 month Kibor + 0.85%. 22.00% 6 month Kibor + 1.6%. 6 month Kibor + 0.85%. 22.00% 6 month Kibor + 1.9% 6 month Kibor + 0.65% 3 month Kibor + 0.65% 6 months Kibor + 2.25% 6 months Kibor + 2.50% 6 months Kibor + 2% 6 months Kibor + 2% Zero Markup 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% 3 month Kibor + 1.50% 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% 22.00% 22.00%
Overdue Quarterly Half yearly Overdue Overdue Overdue Overdue Overdue Half yearly Half yearly Half yearly Half yearly Overdue Half yearly Quarterly Overdue Half yearly
Overdue July 6, 2016 April 23, 2014 Overdue Overdue Overdue Overdue Overdue March 30, 2014 December 31, 2020 May 14, 2015 February 18, 2011 Overdue
Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated BBB Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated
24,000 20,000 11 14 2 28 20 16 188,700 594,619 50,000 1 22,000 40,000 900,000 10 -
24,000 20,000 11 14 2 28 20 16 1,918,924 188,700 594,976 1 16 22,000 150,000 100,000 40,000 900,000 2,549,400 3,000,000 2 14 24 32 17 24 26 14 13 6 15 2 16 15,000 28 22 16 5 2 16 38 14
February 7, 2016 December 30, 2017 Overdue December 29, 2012 Quarterly February 22, 2011 Quarterly March 23, 2011 Overdue December 6, 2013 Half yearly May 19, 2015 Half yearly September 18, 2014 Half yearly April 1, 2015 Anually December 30, 2016 Outstanding Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Quarterly Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue July 16, 2011 Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue
2,357,775 120,000 89,879 1,401 1,640 1,500 1,306 205 1,548,500 940,800 2,972,500 249,960 1,280,486 55,119 150,000 3,411,285 90,131 13,272,487
8,045,654 120,000 89,879 1,401 1,640 1,500 1,306 205 9,594,620 1,630,000 943,500 2,973,095 95 401 81,910 749,188 499,226 150,000 4,538,691 12,747,000 15,000,000 2,092 3,831 6,081 6,749 582 5,423 104 2,202 2,320 1,035 7,445 4,302 1,799 18,524 748 904 759 23,332 67 1,126 2,196 7,516 57,268,448
248

1.4.2 Debentures
Terms of Redemption Principal Interest Rate of Interest Cost 2011 2010 Rupees in '000 1,005 270 1,397 269 175 1,510 23 15 3,286 1,998 2,336 495 95 317 180 1,875 204 1,799 3,828 75 150 437 58 1,148 47 50 165 470 156,034 1,000 1,013 510 400 160 66 506 144 489 105 57 740 543 102 955 1,170 368 83 163 280 200 175 178 236 189,354 1,005 270 1,397 269 175 1,510 798 572 23 15 3,286 1,998 2,336 495 95 317 180 1,875 204 1,799 3,828 75 150 437 58 1,148 47 50 165 470 156,034 1,000 1,013 510 400 160 66 506 144 489 105 57 740 543 102 955 1,170 368 83 163 280 200 175 178 236 190,724
Aaj Textile Mills Limited Aaj Textile Mills Limited Ajax Industries Limited Ajax Industries Limited Ali Asbestose Industries Limited Ali Asbestose Industries Limited Allied Ghee Industries Limited Allied Ghee Industries Limited Allied Marbles Industries Allied Marbles Industries Azad Kashmir Mineral Development Corporation Azad Kashmir Mineral Development Corporation Azad Kashmir Mineral Development Corporation Carbon Dioxide Limited Carbon Dioxide Limited Chillya Corrugated Board Consolidated Spinning & Textile Mills Limited Consolidated Sugar Mills Damaan Oil Mills Effef Industries Limited Effef Industries Limited Electric Lamp Manufacturing Electric Lamp Manufacturing Hassan Tanneries Limited Hassan Tanneries Limited Hazara Woolen Mills Hydri Gas Limited Hydri Gas Limited Junaid Cotton Mills Limited Junaid Cotton Mills Limited Karachi Development Authority Khyber Textile Mills Limited Lahore Dyeing & Printing Mill Mansoor Textile Mills Morgah Valley Limited Morgah Valley Limited National Woolen Mills Pakistan Paper Corporation Progressive Tobacco Co. Qadri Textile Mills Limited Regal Ceramics Limited Rising Sun Knitwear Industries Rose Textile Mills Limited Sarhad Bricks Limited Sarhad Bricks Limited SDA-A/C Cold Storage Haripur -1 SDA-A/C Cold Storage Haripur -2 Shafaq Lamp Manufacturing Corporation Shafaq Lamp Manufacturing Corporation Shahdin Limited Shahyar Textile Mills Limited Spinzer Towel Industries Limited Spinzer Towel Industries Limited Sun Publications Limited Zulsham Engineering Works Limited
Outstanding Outstanding Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Outstanding Outstanding Overdue Overdue Overdue Overdue Overdue Overdue Outstanding Overdue Outstanding Outstanding Overdue Outstanding Outstanding Overdue Overdue Overdue Overdue Outstanding Outstanding Overdue Overdue Overdue Overdue Overdue Outstanding Overdue Overdue Overdue Outstanding Outstanding Overdue Overdue Outstanding Outstanding Overdue Overdue Oustanding Oustanding Overdue Overdue
Outstanding Outstanding Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Outstanding Outstanding Overdue Overdue Overdue Overdue Overdue Outstanding Overdue Outstanding Outstanding Overdue Outstanding Outstanding Overdue Overdue Overdue Overdue Outstanding Outstanding Overdue Overdue Overdue Overdue Overdue Outstanding Overdue Overdue Overdue Outstanding Outstanding Overdue Overdue Outstanding Outstanding Overdue Overdue Oustanding Oustanding Overdue Overdue
14% 12.5% 11% 14% 14% 11% 16% Interest free 14% Interest free 12% 14% 12.5% 11% 14% 14% 14% 14% 14% 14% Interest free 11% 14% 14% 12.5% 14% 11% 14% 12.5% 14% 12.5% 14% 11% 14% 11% 14% 14% 11% 14% 14% 14% 14% 14% 11% 14% 12% 12.5% 11% 14% 14% 14% 12.5% 14% 13.5% 14%
249

1.4.3 Participation Term Certificate
Number of certificate(s)
Rate of interest % 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17%
Ali Paper Industries Limited Alipure Jute Mills Limited American Marbals Limited Azmat Oil Industries Limited Annis Garments Limited Bhawalpur Board Mills Limited Bela Chemicals limited Calcium Limited Crystal Chemicals Limited Dadabhoy Cement Limited Delta Tyre & Rubber Co. Frontier Ceramics Limited Gypsum Corporation Limited Ittehad Industries Limited Jubilee Paper Board Mills Kamal Enterprises Limited Khattak Edible Oil Limited Leatherite Limited Mass Dairies Limited Meditex International Limited Morgah Valley Limited National Fructose Limited Pak Belt Industries Limited Pangrio Sugar Mills Limited Punjab Building Products Punjab Cables Mills Limited Rainbow Packages Limited Sampak Paper Board Mills Sarela Cement Limited Shafi Woolen Industries Limited Sindh Glass Industries Limited Star Silica Industries Limited United Wood (Veener) Limited Waziristan Oil Industries Limited Zafar Oil Industries Limited
Paid - up value per certificate Rupees 261,000 172,113 104,167 226,000 32,917 137,000 10,500,000 300,000 259,800 11,601,000 268,714 226,200 32,594 600,000 431,938 64,294 82,467 69,643 229,364 87,800 29,250 550,818 94,692 442,586 121,500 388,667 122,174 14,909 406,629 89,455 598,765 137,467 51,000 88,385 65,455
Cost 2011 2010 Rupees in '000 3,393 7,081 448 226 395 1,918 10,500 300 3,897 7,303 1,118 2,262 1,043 451 4,415 1,093 1,237 2,523 508 468 3,215 757 6,472 1,458 3,833 2,223 165 14,232 490 9,457 1,803 727 1,094 720 97,225 3,393 7,081 448 226 395 1,918 10,500 300 3,897 7,303 1,118 2,262 1,043 451 4,415 1,093 1,237 727 2,523 508 468 3,215 757 8,585 1,458 3,833 2,223 165 14,232 490 9,457 1,803 727 1,094 720 100,065
13 53 12 1 12 14 1 1 15 1 7 10 32 1 16 17 15 14 11 15 16 11 13 29 12 12 23 11 35 11 17 15 15 13 11
250

1.4.4 Investment in Sukuk
Terms of Redemption Principal Interest WAPDA Sukuk (2nd Issue) WAPDA Sukuk (1st Issue) Quetta Textile Mills Limited PIA Corporation Maple Leaf Cement Limited Islamic Banking WAPDA Sukuk Orix Leasing Sitara Energy Security Leasing Limited Kohat Cement Limited Arzoo Textile Limited GoP Ijara Sukuk Engro Fertilizer Limited Sui Southren Gas Co. Limited Pakistan International Airline Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Quarterly Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Quarterly Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Bi-Annual Rate of Interest % 13.55% 6 month Kibor - 0.25% 12.30% 6 month Kibor + 0.35% 14.75% 6 month Kibor + 1.5% 13.70% 6 month Kibor + 1.75% 13.63% 6 months Kibor + 1.7% 12.27% 6 month Kibor - 0.25% 13.27% 6 month Kibor + 1.25% 15.75% 6 month Kibor + 1.95% 3% (Fixed) Fixed 13.95% 6 month Kibor + 2.00% 14.06% As per SBP Publications 14.88% 6 month Kibor + 1.50% 13.45% 3 month Kibor + 0.20% 13.73% 6 month Kibor + 1.75% Market Value/Cost 2011 2010 Rupees in '000 1,332,917 1,310,588 20,016 330,367 550,000 4,531 348,186 550,000 3,145
23,963 6,680 10,674 30,924 70,744 100,000 750,000 216,738 125,386 175,000
23,098 19,040 22,450 45,703 97,589 100,000 50,000 216,737 219,945 175,000
3,747,939 3,181,481
251

1.4.5 Others Government Bond Investment
Terms of Redemption Principal Interest Rate of Interest % Six month's T-Bill auction day on the date preceding the date of payment of return 8142% rate Market Value/Cost 2011 2010 Rupees in '000
CIRC Overseas Bonds Banco Santander Banco Santander Banco Santander Banco Santander Bank of America Bank of America Bank of America Bank of America Bank of America Barclays Bank Barclays Bank BNP Paribas Citibank Citibank Citibank Citibank Goldman Sachs Group Goldman Sachs Group Goldman Sachs Group Goldman Sachs Group Goldman Sachs Group Goldman Sachs Group Hong Kong and Shangai Bank Lloyds TSB Lloyds TSB Lloyds TSB Lloyds TSB Bank Lloyds TSB Bank Merrill Lynch & Co Morgan Stanley Morgan Stanley Morgan Stanley Morgan Stanley Royal Bank of Scotland Royal Bank of Scotland Royal Bank of Scotland Royal Bank of Scotland Royal Bank of Scotland Societe Generale Societe Generale Societe Generale GoP Bonds GoP Bonds GoP Euro Bond GoP Euro Bond Sukuk NB of Republic of Kazakhstan
Overdue
Overdue
11,242
11,242
On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturity On Maturity On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy On Maturiy
Bi-Annual 3.72% Bi-Annual 2.99% Bi-Annual 2.99% Bi-Annual 4.82% Bi-Annual 4.50% Bi-Annual 4.50% Bi-Annual 6.00% Bi-Annual 6.00% Bi-Annual 6.00% Bi-Annual 5.00% Bi-Annual 5.00% Bi-Annual 3.31% Bi-Annual 5.50% Bi-Annual 5.13% Bi-Annual 5.50% Bi-Annual 6.00% Bi-Annual 3.63% Bi-Annual 3.63% Bi-Annual 3.63% Bi-Annual 5.35% Bi-Annual 5.45% Bi-Annual 5.35% Bi-Annual 5.48% Bi-Annual 4.38% Bi-Annual 4.38% Bi-Annual 4.88% Bi-Annual 4.38% Bi-Annual 4.38% Bi-Annual 5.30% Bi-Annual 3.45% Bi-Annual 6.00% Bi-Annual 3.80% Bi-Annual 4.50% Bi-Annual 4.88% Bi-Annual 4.88% Bi-Annual 4.88% Bi-Annual 3.95% Bi-Annual 3.95% Bi-Annual 2.20% Bi-Annual 2.20% Bi-Annual 2.20% Bi-Annual 6.88% Bi-Annual 6.88% Bi-Annual 7.13% Bi-Annual 6.88% Bi-Annual 6 months SIBOR+2.5% Bi-Annual 1.01%
175,421 195,293 44,476 44,476 111,190 186,306 186,306 226,557 93,393 185,643 187,746 213,040 174,756 174,756 87,378 92,208 157,711 189,015 43,294 43,294 175,319 109,729 175,567 178,797 82,809 181,331 165,436 246,151 88,891 88,891 176,383 168,310 84,155 169,091 169,091 169,091 356,031 178,016 2,685,740 678,902 119,925 817,518 10,077,428
171,769 171,769 171,769 77,790 171,769 171,769 213,158 214,711 85,885 171,942 128,827 214,711 42,932 42,932 171,769 214,711 128,827 171,769 85,885 85,885 85,885 171,769 85,885 3,913,826 114,511 7,282,456
252

STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF OF FIVE HUNDRED THOUSAND RUPEES OR ABOVE PROVIDED FROM JANUARY TO DECEMBER 2011
Outstanding liabilities at the beginning of the year Principal 5 4.552 Interest/ mark-up 6 1.101 Others 7 2.669 Total 8 8.322 Annexure II as referred in Note 10.6 to the financial statements Rupees in Million Name of Fathers / Individuals/Partners/ Husband's name. Directors with NIC No. 3 4 Muhammad Rafique Muhammad Saeed Akhtar Muhammad Ali. Muhammad Latif. Nazir Hussain Sheikh Sheikh Nazir Hussain Ghulam Qadir, Ghulam Qadir, Ghulam Qadir, Ghulam Qadir, Ghulam Qadir, Ghulam Rasool, Muhammad Azam, Khushi Muhammad, Ghulam Rasool, Noor Muhammad 4.901 0.068 1.433 6.402 0.312 0.490 0.802 4.000 0.484 0.817 5.301 0.272 0.549 0.821 1.596 0.067 0.654 2.317 0.680 0.680 Other financial Principal Interest/ relief/ written off Mark-up waiver written off provided 9 10 11 2.422 Total (9+10+11)
Sr. No.
Name & Address of the borrower 2 Khair-ul-Sanat Cotton Ginners (Pvt) Ltd. Chak # 58/D-B Tail Wala Road Yazman.
1 1
12 2.422
7 8
10
11
Mr. Muhammad Latif 31202-0480881-3 Mr. Anjum Saeed 31202-9866700-7 Mr. Yousaf Ali 31205-1630125-5 Mrs. Shaista Bibi 31202-0233881-0 Ashfaq Hussain Hamza Karyana Store 33100-9154366-7 Shop No.69-B, Gulistan Colony No.2, Commercial Pervaiz Akhtar Center No.1, Faisalabad. 33100-5120558-3 Muhammad Ijaz, Lyallpur Embroidery 33100-2152379-1 P-267,Street #18, Islam Naqar,Faisalabad. Qamar Saleem, 33100-6046750-1 Saif-ur-Rehman, 33100-2600346-1 Ihtisham-ul-haq, 33100-8204216-9 Muhammad Shahbaz, 33100-0989731-9 Muhammad Azam, 33103Rafiq Azam Textile 0632336-9 31-Chanab Market, Madina Town, Faisalabad. Muhammad Imran Azam, 33100-0654821-7 Abdul Haque, 33100-0692372-7 Muhammad Rafiq, 33100-9913612-9 Muhammad Zahid Muhammad Zahid Hussain Khan, Hussain Khan House # 54, Sir Syed Town, 33100-1018142-1 Scheme No.212/11, Faisalabad" Niaz Muhammad, Niaz Muhammad 33100-6269024-5 House No.316-B, Gulistan Colony No.2, Faisalabad. Mujahid Munir Munir & Sons NIC- 34201-0154664-9 Railway Road Gujrat. NIC- 42000-4085142-7 Syed Haris Bin Saeed Flat No.F-2, Ground Floor, Al-Ashan Appartment Block-II, KDA Scheme No.24, Gulshan-e-Iqbal, Karachi" NIC- 42201-0609514-5 Mr.Muhammad Sohail H.No.5 Row, No.6, Sub Block-B, Nazimabad No.4, Karachi" NIC- 42301-2174650-5 Raheel Nafis Siddiqui H.No.C-18, Block#4, KDA Scheme No.5, Clifton, Karachi" Waheed Ikram Waheed Ikram S/o 42501-0673668-5 Muhammad Shafi House No.D-53, Cantt. Bazar Malir Cantt. Karachi
4.732
0.491
2.236
7.459
0.029
1.030
1.059
Khushi Muhammad
4.777
0.101
1.550
6.428
0.101
0.807
0.908
Munir Ahmed Syed Abu Saeed
6.495 1.915
0.539 0.595
0.548 -
7.582 2.510
0.548 0.595
0.548 0.595
Muhammad Tufail
5.180
1.997
0.601
7.778
1.524
1.524
Nafees Ahmed Siddique
21.940
0.440
3.545
25.925
1.999
1.999
Muhammad Shafi
3.600
1.536
0.837
5.973
0.828
0.828
253

Annexure II as referred in Note 10.6 to the financial statements Rupees in Million Name of Fathers / Individuals/Partners/ Husband's name. Directors with NIC No. 3 Muhammad Ali Rizvi 42201-0641469-5 4 Syed Shahid Raza Outstanding liabilities at the beginning of the year Principal 5 1.000 Interest/ mark-up 6 0.095 Others 7 0.534 Total 8 1.629 Other financial Principal Interest/ relief/ written off Mark-up waiver written off provided 9 10 0.523 11 -
Sr. No.
Name & Address of the borrower 2 Muhammad Ali Rizvi S/o Syed Shahid Raza, D-308, 3rd Floor Crescent View Block-12, Gulistan-eJouhar, Karachi Rehman Board Mills (Pvt) Ltd. 31.5 KM Raiwind Road, Lahore Broadyway Carpets (Pvt) Ltd. Street No.1 , 39 Nicholoson Road, Lahore.
Total (9+10+11)
1 12
12 0.523
13
14
15
16
17
18
19
Fazal Ahmed Javaid 35202-9809193-7 Sarwar Naseem 35202-2815722-0 Ghulam Haider 35202-4933376-7 Abdul Hamid 281-38-027534 Abdul Majeed 35202-2765933-1 Rashid Ahmed 35102-1024701-5 Abdul Hafeez Not available Univesal Technical Works Tariq Nazir 17 K.M. G.T. Road Momin 35202-8218177-7 Pura, Distt. Sheikhupura. Ahsan Tariq 35202-3494339-1 Sheraz Tariq 35200-9446780-1 Ghansham Das Ghansham Das Muhammadi Rice Mill Ratodero Gillani Flour & General Syed Amjad Ali Gillani 82203-8846461-1 Mills 1. Registered Office: Bank Syed Asif Ali Gillani Road, Muzaffarabad, AJK 82203-3237310-7 2. Factory Address: Mouza Mst. Kalsoom Fatima Hill, Gojar Kohala, Near 82203-6090249-2 Kohala Bridge, Tehsil: Dhirkot, Distt: Bagh, AJK Muhammad Iqbal Awan Electronics 35202-4967479-9 (Pvt) Ltd. 30-KM Raiwind Road, Lahore United Sugar Mills Ltd. Shaikh Abdul Wahid And 42301-8051425-3 Pasrur Sugar Mills Ltd. Shaikh Muhammad Saeed 53-A, Depot Lines, 42301-0869369-5 Cntonment Area, Soldier Sheikh Abdul Rauf Bazar, Karachi & 42201-4374272-3 Lahore Office: 32-N, Abida Saeed (Mrs.) Gulberg-II, Industrial 42301-9404381-2 Area, Lahore Nasreen Wahid (Mrs.) 42301-489068-4 Qaiser Begum (Mrs.) 42301-8799320-2 Bilal Saeed 42301-7355556-3
Haji Fazal Elahi Fazal Ahmed Javaid Abdul Hamid Haji Barkat Ali Haji Barkat Ali Haji Barkat Ali Abdul Hamid Nazir Ahmed Tariq Nazir Tariq Nazir
3.265
1.156
2.735
7.156
1.956
1.956
4.920
2.841
7.761
1.461
1.461
5.999
0.125
0.921
7.045
0.644
0.644
0.239
0.404
0.643
0.239
0.404
0.643
Syed Bunyad Ali Shah Syed Bunyad Ali Shah Syed Bunyad Ali Shah
6.724
3.845
10.569
3.845
3.845
Ch. Wali Muhammad
12.834
2.651
15.485
2.651
2.651
Shaikh Maqbool Ahmed Shaikh Maqbool Ahmed Mian Muhammad Deen Mian Muhammad Saeed Shaikh Abdul Wahid Shaikh Maqbool Ahmed Shaikh Muhammad Saeed
41.243
252.443
293.686
251.295
251.295
254

Annexure II as referred in Note 10.6 to the financial statements Rupees in Million Name of Fathers / Individuals/Partners/ Husband's name. Directors with NIC No. 3 Jai Parakash (Mr.) 44201-0775763-5 4 Daulat Raam Outstanding liabilities at the beginning of the year Principal 5 26.556 Interest/ mark-up 6 1.021 Others 7 3.387 Total 8 30.964 Other financial Principal Interest/ relief/ written off Mark-up waiver written off provided 9 10 11 3.987
Sr. No.
Name & Address of the borrower 2 D.R.S. Cotton Industries & Oil Mills Ltd. Shahdadpur, Hyderabad Waseem Sharif Industries Village Sharif Khan Ghawar Kalay Road Tahsil Dargai Malakand
Total (9+10+11)
1 20
12 3.987
21
22
23
24
Muhammad Ejaz 37406-4527583-3 Muhammad Ishaq 15402-0701875-5 Naila Naveed 37406-0481723-4 Bilal Sadiq Cotton Ginning Muhammad Sadiq & Pressing Factory 36102-6000143-7 Near: By pass Mahni Sial Noor Muhammad Kabirwala 36102-1095649-5 Rehman Fiber Zahoor-ul-Haq Opp: Railway Station 36101-0250878-7 Chak No.113, 10-R, Anwarul Haq Jahanian 36101-0250933-1 Iftikharul Haq 36101-0556305-7 Ikram Solvex Inds. (Pvt) Mr.Waqar Azeem 36603-3291052-5 Limited 7-Kilo Meter Kusam Sir Mr. Muhammad Shoaib 36603-9465075-1 Burewala Road, Vehari Mst. Naseem Ikram 36603-6047957-4 Mst. Naheed Waqar 36603-6057552-4 Mst. Fahmida Shoaib 36603-7540121-0
Muhammad Sarwar Abdul Qasim Muhammad Ejaz Muhammad Ramzan Maher Machia All Sons of Abdul Ghani
18.702
6.392
23.346
11.503
0.154
11.657
2.568
2.767
1.007
6.342
2.309
2.309
4.800
2.450
7.250
1.384
1.384
Ikram Ul Haq Ikram Ul Haq Ikram Ul Haq Waqar Azeem Muhammad Shoaib
5.238
3.647
5.306
14.191
2.288
2.288
Grand Total:
197.776
21.930
294.106
512.064
11.742
2.065
283.022
296.829
255
Premium Saver Account

Make Your Savings Grow
Earn 8.50% p.a.* Minimum saving balance of Rs. 20,001/- & a maximum balance of Rs. 1 million Free NBP Cash Card (ATM + Debit) Two debit withdrawals allowed in a month & no limit on number of deposit transactions
NBP
(PLS Saving Account)
*Profit rates are expected
25
Corporate & Investment Banking

NBP maintained its position as one of the eminent players in the vital segment during 2011, and has been successful in further strengthening its strong customer relationship wth premium corporate clients.
NBP
Categories of Shareholders
As of December 31, 2011
Categories of Shareholders Government of Pakistan FEDERAL GOVERNMENT OF PAKISTAN PAKISTAN ATOMIC ENERGY COMMISSION PRIVATISATION COMMISSION OF PAK MINISTRY OF PRVT. & INVEST. State Bank of Pakistan State Bank of Pakistan Directors, Chief Executive Officers and their Spouses and minor children Spouses and minor children TARIQ KIRMANI Associated Companies, Undertakings and Related Parties TAURUS SECURITIES LIMITED CDC - TRUSTEE NAFA STOCK FUND CDC - TRUSTEE NAFA MULTI ASSET FUND NIT and ICP NATIONAL BANK OF PAKISTAN-TRUSTEE DEPARTMENT NI(U)T FUND NATIONAL INVESTMENT TRUST LIMITED Public Sector Companies and Corporations Executives Banks, Development Financial Institutions, Non Banking Financial Institutions Insurance Companies Modarabas and Mutual Funds General Public a. Local b. Foreign Others Total 2 1 1 9,073 303,274 309,522 0.00 0.02 0.02 No. of Shareholders 1 1 1 Shares Held 4,931,952 537,095 1,309,715 Percentage 0.29 0.03 0.08
1,264,700,181
75.20
34,916
0.00
1 1 5 50 21
10,224,345 1,883,490 40,297,867 236,511 18,693,998
0.61 0.11 2.40 0.02 1.11
23 36
18,875,182 87,177,965
1.12 5.18
17,036 127 212 17,521
94,080,859 90,537,895 47,684,639 1,681,828,479
5.59 5.38 2.84 100.00
258
Pattern of Shareholdings
# Of Shareholders 1,697 3,342 2,325 6,631 1,755 549 283 177 91 89 76 37 49 33 22 26 19 21 8 13 13 6 18 7 3 7 3 7 2 6 1 3 5 2 5 4 2 4 2 2 6 2 11 6 1 1 2 2 2 1 5 3 3 3 Shareholdings'Slab 1 101 501 1001 5001 10001 15001 20001 25001 30001 35001 40001 45001 50001 55001 60001 65001 70001 75001 80001 85001 90001 95001 100001 105001 110001 115001 120001 125001 130001 135001 140001 145001 150001 155001 160001 165001 170001 175001 180001 185001 190001 195001 200001 205001 215001 220001 225001 230001 240001 245001 250001 255001 260001 to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to 100 500 1000 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 75000 80000 85000 90000 95000 100000 105000 110000 115000 120000 125000 130000 135000 140000 145000 150000 155000 160000 165000 170000 175000 180000 185000 190000 195000 200000 205000 210000 220000 225000 230000 235000 245000 250000 255000 260000 265000 Total Shares Held 79,156 987,165 1,873,440 18,359,317 12,678,139 6,786,813 4,994,956 4,035,778 2,542,690 2,891,552 2,887,557 1,572,525 2,357,607 1,731,514 1,270,468 1,630,126 1,292,407 1,530,163 631,746 1,070,924 1,146,985 557,578 1,776,959 721,825 322,030 788,071 355,206 867,658 253,000 799,066 135,343 426,877 740,527 303,850 788,321 656,138 333,214 684,231 352,287 370,000 1,129,355 385,593 2,189,894 1,216,749 206,000 218,750 443,718 454,275 461,495 244,643 1,247,837 756,314 769,809 790,105
259
# Of Shareholders 4 1 1 1 2 3 4 1 1 7 1 1 1 1 2 1 1 1 2 1 1 1 1 1 1 1 2 1 1 1 1 2 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 2 Shareholdings'Slab 265001 275001 280001 285001 290001 295001 300001 305001 310001 315001 320001 330001 340001 360001 370001 375001 385001 390001 395001 415001 440001 445001 460001 465001 470001 480001 495001 500001 510001 515001 520001 535001 540001 545001 590001 620001 625001 640001 655001 660001 680001 690001 695001 710001 745001 750001 755001 760001 790001 840001 855001 870001 885001 920001 to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to 270000 280000 285000 290000 295000 300000 305000 310000 315000 320000 325000 335000 345000 365000 375000 380000 390000 395000 400000 420000 445000 450000 465000 470000 475000 485000 500000 505000 515000 520000 525000 540000 545000 550000 595000 625000 630000 645000 660000 665000 685000 695000 700000 715000 750000 755000 760000 765000 795000 845000 860000 875000 890000 925000 Total Shares Held 1,068,349 279,673 281,250 288,545 583,456 900,000 1,207,960 309,522 312,500 2,217,458 321,875 334,750 341,875 363,900 742,690 380,000 387,500 391,495 796,433 415,008 441,000 449,750 463,106 466,718 475,000 485,000 1,000,000 503,007 511,250 518,000 520,148 1,073,571 542,171 546,633 1,182,539 625,000 629,375 640,092 659,630 661,806 684,275 692,187 697,500 711,250 750,000 750,900 756,250 1,523,515 790,183 844,943 856,506 875,000 889,309 1,849,187
260
# Of Shareholders 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 17,521 Shareholdings'Slab 950001 955001 995001 1080001 1150001 1185001 1190001 1225001 1245001 1265001 1305001 1325001 1340001 1445001 1450001 1455001 1520001 1620001 1680001 1685001 1700001 1880001 1970001 2185001 2805001 2820001 3060001 3125001 3160001 3295001 3885001 3940001 3995001 4185001 4930001 5240001 5340001 5390001 5505001 5625001 5660001 5835001 6035001 6335001 8315001 8405001 8935001 10220001 21010001 36510001 68520001 1264700001 to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to 955000 960000 1000000 1085000 1155000 1190000 1195000 1230000 1250000 1270000 1310000 1330000 1345000 1450000 1455000 1460000 1525000 1625000 1685000 1690000 1705000 1885000 1975000 2190000 2810000 2825000 3065000 3130000 3165000 3300000 3890000 3945000 4000000 4190000 4935000 5245000 5345000 5395000 5510000 5630000 5665000 5840000 6040000 6340000 8320000 8410000 8940000 10225000 21015000 36515000 68525000 1264705000 Total Shares Held 953,342 955,135 999,002 1,084,666 1,154,103 1,187,500 1,192,604 1,229,502 1,250,000 1,268,126 1,309,715 1,327,806 1,340,783 1,449,071 1,453,669 1,457,500 1,522,946 1,625,000 1,684,000 1,685,777 1,705,000 1,883,490 1,972,572 2,188,201 2,808,841 2,822,500 3,061,100 3,128,878 3,162,195 3,300,000 3,888,750 3,943,875 4,000,000 4,186,751 4,931,952 5,240,223 5,342,598 5,391,305 5,509,052 5,625,012 5,663,761 5,838,247 6,039,750 6,337,113 8,315,887 8,409,226 8,939,570 10,224,345 21,013,808 36,514,762 68,522,501 1,264,700,181 1,681,828,479
261
Advance Salary
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Loan facility on revolving basis for three years with cleanup in once a year
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Consolidated Financial Statements of NBP and Its Subsidiary Companies 2011

Directors Report on Consolidated Financial Statement

INDEPENDENT AUDITORS REPORT TO THE MEMBERS

KPMG Taseer Hadi & Co.

KPMG Taseer Hadi & Co.

Muhammad Shaukat Naseeb

Consolidated Statement of Financial Position

Non-controlling interest Surplus on revaluation of assets - net CONTINGENCIES AND COMMITMENTS 20

Consolidated Profit and Loss Account

10.4 9.11 18.1

30 PROFIT AFTER TAXATION Attributable to:

198,001 (788) 197,213

196,920 (29) 196,891

Shareholders of the bank Non-controlling interest

17,711,753 (2,588) 17,709,165

17,809,304 (70,899) 17,738,405

----------- US Dollars ----------0.12 0.12

------------ Rupees ------------

Basic and diluted earnings per share

Consolidated Statement of Comprehensive Income

(2,054) 3,092 1,038 198,007

(27,528) (714) (28,242) 161,051

Deficit on revaluation of investments Deferred tax on revaluation of investments

(2,476,068) (64,189) (2,540,257) 14,485,518

(184,745) 278,133 93,388 17,809,838

Total comprehensive income Attributable to:

198,795 (788) 198,007

161,080 (29) 161,051

Shareholders of the bank Non-controlling interest

14,488,106 (2,588) 14,485,518

17,880,737 (70,899) 17,809,838

Consolidated Cash Flow Statement

2011 2010 Rupees in '000

Consolidated Statement of Changes in Equity

Non Controlling Interest

17,809,304 117,738 (1,756,321)

(21,955) 17,787,349 117,738 -

(21,955) 17,716,450 117,738 -

- (8,072,777) - (10,763,704) 67,103,611

(8,072,777) (8,072,777) 105,687,665

- (8,072,777) - (8,072,777) 498,076 106,185,741

17,711,753 111,850 (1,760,472)

(683,390) 17,028,363 111,850 -

(683,390) 17,025,775 111,850 -

- (10,090,972) (10,090,972) - (13,454,629) (10,090,972) 69,712,113 112,736,906

- (10,090,972) - (10,090,972) 495,488 113,232,394

Balance as at December 31, 2011

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements