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THE NEW MEEZAN BANK HEAD OFFICE BUILDING INAUGURATED ON OCTOBER 30, 2011
As we commemorate ten years of Meezan Bank as Pakistan's premier Islamic bank, we couldn't be more humbled and grateful. Indeed, the vibrant growth along with sustained high performance in our first decade is unprecedented in the history of Pakistan. At the same time, the Meezan team has been hard at work to ready the enabling structures for our future progress; and the recent inauguration of Meezan House - our new state of the art Head Office building in Karachi - has certainly been one of the highlights of this past year. Designed by one of Pakistan's leading architects, the building is a subtle blend of contemporary design and elements from Islamic architecture. The distinct faade of black stone and glass, coupled with the bright, colourful and spacious interiors create an environment that is pleasurable and symbolic of our values. The granite and glass denote strength and transparency, while wood and the abundance of natural light keep our hearts and minds close to nature. The beautiful array of soothing water bodies inspires us towards purity, dynamism and constant flux. It is this purity and dynamism that Meezan will continue to strive for in the years and decades to come. By the grace of the Almighty and with the heartening support from our customers and shareholders, the Meezan team is well on its way to making Islamic banking the banking of first choice - Insha'Allah.
VISION
Establish Islamic banking as banking of first choice to facilitate the implementation of an equitable economic system, providing a strong foundation for establishing a fair and just society for mankind.
MISSION
To be a premier Islamic bank, offering a one-stop shop for innovative value-added products and services to our customers within the bounds of Shariah, while optimizing the stakeholders value through an organizational culture based on learning, fairness, respect for individual enterprise and performance.
OUR VALUES
CORE VALUES Shariah-compliance, Integrity, Professionalism, Innovation, Service Excellence, Social Responsibility STAFF Committed, motivated and professionally trained employees who are empathic to their customers needs. BRAND PERSONALITY A sober and established, strong, empathic, professional person; who is an extremely loyal and dependable friend and business partner, and is committed to offering comprehensive value-based Shariah-compliant financial solutions. RELATIONSHIPS Our relationships are long-term. We recognize and value our customers needs above all and strive to ensure their fulfillment. All customers are treated with professionalism and in a friendly manner. It is our endeavour to ensure that they receive efficient and timely service. The Meezan Bank experience is a unique one.
On the occasion of the Opening Ceremony of The State Bank of Pakistan on July 1, 1948
CONTENTS
Vision Mission Our Values Quaids Concept of Islamic Banking Ten Years at a Glance Six Years Horizontal Analysis Six Years Vertical Analysis Calendar of Major Events Shareholders Organisation Structure Corporate Information Meezan Bank History Product Information Chairmans Review Vice Chairmans Message Charity for Social Welfare Business and Operations Review Directors Report to the Members Annexure to the Directors Report Statement of Value Added and Distributed Allocation of Income and Expenses to Remunerative Depositors Pool Shariah Advisors Report Shariah Advisors Report (Urdu) Statement of Sources and Uses of Charity Fund Review Report to the Members Statement of Compliance with the Code of Corporate Governance Statement of Internal Controls Notice of Annual General Meeting Auditors Report to the Members Statement of Financial Position Profit and Loss Account Statement of Comprehensive Income Cash Flow Statement Statement of Changes in Equity Notes to and forming part of the Financial Statements Consolidated Financial Statements Pattern of Shareholding Categories of Shareholders Correspondent Banking Network Branch Network Proxy Form 02 05 06 09 14 16 17 18 19 21 22 24 28 34 36 38 40 54 60 61 62 63 70 71 72 73 75 76 80 81 82 83 84 85 86 145 220 221 222 227
GLASS
Banking is an industry built on trust and Islamic banking is only more so. At Meezan Bank, we appreciate the importance of absolute transparency in our processes, transactions and services. As the pioneering Islamic bank of the country, we shoulder the responsibility of building the foundation that will mould people's views of Islamic banking in the future. Our customers have trusted us to provide them with products and services that fully comply with the principles of Islamic Shariah, and in doing so, have placed immense trust in our propriety. Through the extensive use of glass at Meezan House, we ensure that everyone is continuously reminded of our commitment to absolute transparency.
Corporate Information
Ten Years at a Glance Six Years Horizontal Analysis Six Years Vertical Analysis Calendar of Major Events Shareholders Organisation Structure Corporate Information Meezan Bank History Product Information 14 16 17 18 19 21 22 24 28
Rupees in million 2006 2,704 1,464 1,240 441 250 1,931 (122) (1) 1,808 1,028 780 176 604 27,031 46,439 34,449 3,780 4,763 7,465 1,389 62 12.60 19.50 10 50 10.51 1.88 45.86 22.98 17.80 53.23 65.68 8.35 12.80 1.57 15.64 2005 1,459 690 769 262 360 1,391 (69) 30 1,352 719 633 214 419 19,741 30,676 22,769 2,037 3,025 4,736 786 28 14.85 23.25 16 20 15.92 1.46 52.69 30.42 20.15 51.68 73.86 7.05 10.67 1.67 16.70 2004 534 250 284 133 232 649 (17) (2) 630 409 221 (3) 224 12,340 19,697 13,770 1,346 2,098 2,247 511 16 15.59 16.70 15 30 10.02 1.67 53.15 24.56 24.94 63.02 69.97 10.38 10.00 1.46 12.16 2003 376 183 193 67 220 480 18 (2) 496 255 241 27 214 7,397 11,102 7,757 1,064 1,748 1,649 238 10 16.43 15.50 5.00 10 7.71 2.01 51.45 36.33 32.26 53.12 82.61 15.62 15.62 2.37 13.74 2002 311 192 119 124 164 407 63 (2) 468 198 270 47 223 3,532 6,971 5,079 1,001 1,586 1,151 159 6 15.84 11.50 5.00 10 5.16 2.23 38.41 45.15 37.24 48.64 69.22 16.85 22.99 4.95 16.66
3,500 3,000 2,500 2,000 1,500 1,000 500 0
2007
2008
2009
2010
2011
Total Deposits
Rupees in Million
180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0
54,582 70,234 100,333 131,070 170,030
2007
2008
2009
2010
2011
Total Assets
Rupees in Million
220,000 200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0
2007
2008
2009
2010
2011
Share Capital
Rupees in Million
9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
2007
2008
2009
2010
2011
15
Six Years Horizontal Analysis - Statement of Financial Position / Profit & Loss Account
Rupees in million
Statement of Financial Position Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Operating fixed assets Deferred tax asset Other assets including inventories Liabilities Bills payable Due to financial institutions Deposits and other accounts Deferred tax liabilities Other liabilities 2011 11 Vs 10 % 16,641 2,348 4,065 98,489 59,156 3,985 801 15,065 200,550 2,282 9,236 170,030 5,216 186,764 Net Assets Represented by: Share Capital Reserves Unappropriated Profit Surplus /(Deficit) on revaluation of investments 13,786 8,030 2,058 3,240 458 13,786 30 (76) (61) 79 9 30 134 68 30 29 58 30 4 30 24 15 49 36 35 24 2010 10 Vs 09 2009 09 Vs 08 % % 12,781 9,940 10,512 54,967 54,195 3,066 342 8,949 154,752 1,767 5,829 131,070 5,006 143,672 11,080 6,983 1,380 2,377 340 11,080 52 89 (70) 136 30 27 68 6 25 41 (31) 31 1 25 21 5 31 71 262 21 8,387 5,260 34,487 23,290 41,710 2,416 204 8,414 124,168 1,249 8,468 100,333 46 291 90 60 6 28 100 104 46 2008 08 Vs 07 % 5,764 1,345 18,108 14,527 39,528 1,881 4,123 85,276 1,057 4,008 70,234 453 3,549 79,301 5,975 4,926 845 570 2 (64) 105 38 14 82 47 27 (11) 66 29 5 24 29 5 30 17 (53) 2007 07 Vs 06 % (4) (10) 139 266 28 95 - 2,810 24 67,178 45 1,192 2,416 54,582 430 2,851 61,471 5,707 3,780 721 1,219 112 (44) 58 8 44 48 20 0 37 172 5,644 3,730 8,850 10,535 34,576 1,033 2006 06 Vs 05 % 5,897 4,134 3,700 2,878 27,031 531 2,267 46,438 563 4,285 34,449 398 1,980 41,675 4,763 3,780 528 448 7 4,763 49 45 100 79 37 74 3 51 116 44 51 134 35 51 58 86 (21 67 (87) 58
Profit and Loss Account 2011 11 Vs 10 % Return on financings, investments and placements Return on deposits and other dues expensed Net Spread earned Fee, commission, forex and other income Dividend income and capital gain Income before provisions and operating expenses Provisions Income before operating expenses Administrative and operating expenses Profit before taxation Taxation Profit after taxation 18,032 (8,666) 9,366 1,347 1,158 11,871 (1,389) 10,482 (6,126) 4,356 (965) 3,391 47 31 65 (34) 176 45 (7) 57 35 105 102 106 2010 10 Vs 09 2009 09 Vs 08 % % 12,290 (6,606) 5,684 2,056 419 8,159 (1,497) 6,662 (4,536) 2,126 1,649 22 33 11 54 58 21 (2) 28 31 22 61 10,102 (4,970) 5,132 48 61 38 2008 08 Vs 07 % 6,803 (3,088) 3,715 49 26 75 2007 07 Vs 06 % 4,574 (2,452) 2,122 742 606 3,470 (436) 3,034 (1,765) 1,269 (306) 963 69 67 71 68 142 80 254 68 72 63 74 59 2006 06 Vs 05 % 2,704 (1,464) 1,240 441 250 1,931 (123) 1,808 (1,028) 780 (176) 604 85 112 61 68 (31) 39 215 34 43 23 (18) 44
1,332 66 266 (380) 6,730 (1,532) 5,198 (3,458) 1,740 (715) 1,025 52 114 40 27 75 93 65
802 8 (95) (116) 4,422 (717) 3,705 (2,713) 992 (371) 621 27 64 22 54 (22) 21 (36)
(477) (33)
Six Years Vertical Analysis - Statement of Financial Position / Profit & Loss Account
Rupees in million
Statement of Financial Position Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Operating fixed assets Deferred tax asset Other assets including inventories Liabilities Bills payable Due to financial institutions Deposits and other accounts Deferred tax liabilities Other liabilities Net Assets Represented by: Share capital Reserves Unappropriated Profit Surplus /(Deficit) on revaluation of investments 8,030 2,058 3,240 458 13,786 Profit and Loss Account 2011 Return on financings, investments and placements Return on deposits and other dues expensed Net Spread earned Fee, commission, forex and other income Dividend income and capital gain Income before provisions and operating expenses Provisions Income before operating expenses Administrative and operating expenses Profit before taxation Taxation Profit after taxation 18,032 (8,666) 9,366 1,347 1,158 11,871 (1,389) 10,482 (6,126) 4,356 (965) 3,391 88 (42) 46 7 6 59 (7) 52 (30) 22 (5) 17 2010 12,290 83 2009 10,102 (4,970) 5,132 1,332 266 6,730 (1,532) 5,198 (3,458) 1,740 (715) 1,025 86 (42) 44 11 2 57 (13) 44 (30) 14 (6) 8 2008 6,803 (3,088) 3,715 802 (95) 4,422 (717) 3,705 (2,713) 992 (371) 621 91 (41) 50 11 (1) 60 (10) 50 (36) 14 (5) 9 2007 4,574 77 2006 2,704 (1,464) 1,240 441 250 1,931 (123) 1,808 (1,028) 780 (176) 604 80 (43) 37 13 7 57 (4) 53 (30) 23 (5) 18 4 1 2 0 7 6,983 1,380 2,377 340 11,080 5 1 1 0 7 6,650 1,050 1,390 94 9,184 5 1 1 0 7 4,926 845 570 (366) 5,975 5 1 1 0 7 3,780 721 1,219 (13) 5,707 6 1 1 0 8 3,780 528 448 7 4,763 8 1 1 0 10 2011 16,641 2,348 4,065 98,489 59,156 3,985 801 15,065 200,550 2,282 9,236 170,030 5,216 186,764 13,786 % 8 1 2 49 29 3 0 8 100 1 5 84 3 93 7 2010 12,781 9,940 10,512 54,967 54,195 3,066 342 8,949 154,752 1,767 5,829 131,070 5,006 143,672 11,080 % 8 6 7 36 35 2 0 6 100 1 4 85 3 93 7 2009 8,387 5,260 34,487 23,290 41,710 2,416 204 8,414 124,168 1,249 8,468 100,333 4,934 114,984 9,184 % 7 4 28 19 34 2 0 6 100 1 7 81 4 93 7 2008 5,764 1,345 18,108 14,527 39,528 1,881 4,123 85,276 1,057 4,008 70,234 - 453 3,549 79,301 5,975 % 7 2 21 17 46 2 5 100 1 5 82 1 4 93 7 2007 5,644 3,730 8,850 10,535 34,576 1,033 2,810 67,178 1,192 2,416 54,582 430 2,851 61,471 5,707 % 8 6 13 16 51 2 4 100 2 4 81 1 4 92 8 2006 5,897 4,134 3,700 2,878 27,031 531 2,267 46,438 563 4,285 34,449 398 1,980 41,675 4,763 % 13 9 8 6 58 1 -5 100 1 9 74 1 5 90 10
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Financial Calendar
2011
1st Quarter Results Issued on 2nd Quarter Results Issued on 3rd Quarter Results Issued on Annual Results issued on 16th Annual General Meeting May 2, 2011 August 1, 2011 October 31, 2011 February 20, 2012 Scheduled on March 29, 2012
2010
1st Quarter Results Issued on 2nd Quarter Results Issued on 3rd Quarter Results Issued on Annual Results issued on 15th Annual General Meeting April 23, 2010 August 3, 2010 October 25, 2010 February 14, 2011 March 28, 2011
Share Price
Rupees
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Shareholders
Shareholding Structure
Noor Financial Investment Co, Kuwait Pakistan Kuwait Investment Company (Pvt.) Limited Islamic Development Bank, Jeddah Others Paid up Capital
Rs. in millions
3,944 2,409 749 927 8,029
%
49 30 9 12 100
Noor Financial Investment Company is a Kuwaiti investment company engaged in investment and financial activities primarily in Kuwait, the Middle East, Asia and other emerging markets. The company was established as the financing arm of the National Industries Group (NIG), which is one of the largest private sector industrial groups in Kuwait. Noor provides a broad range of financial services through its investment banking department. These activities services broadly include private equity, investment strategy & implementation, mergers & acquisition advisory, valuations, hedging & risk management, local / foreign listing, long-term financial planning and innovative structuring. The asset management department of the company also engages in managing proprietary and client portfolios of quoted and unquoted securities, real estate and funds in Kuwait, GCC and the MENA region. Pakistan Kuwait Investment Company (Private) Limited (PKIC), a joint venture between the Governments of Pakistan and Kuwait was established in 1979. PKIC is one of the most respected and profitable institutions in Pakistan. The company, operating for over 30 years in Pakistan, is engaged in investment and development banking activities in Pakistan. PKIC is the first financial institution in Pakistan that has been rated AAA (triple A) for the long-term by both PACRA and JCRVIS Credit Rating Company, an affiliate of Japan Credit Rating Company. Islamic Development Bank (IDB) is located in Jeddah and is an International Financial Institutions established in 1975 in pursuance of a declaration by the Conference of Finance Ministers, of Muslim countries to foster economic development and social progress in member (Islamic) countries. IDB has an equity of approximately USD 9 billion and enjoys presence in 56 member countries. The Bank participates in equity capital and grants loans for productive projects and enterprises besides providing financial assistance in other forms for economic and social development.
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Organisation Structure
Shariah Supervisory Board
Shariah Advisor Product Development & Shariah Compliance
Board of Directors
Audit Committee
Internal Audit
Branch Network
Business Segments
Corporate Banking Investment Banking Commercial Banking Treasury and Financial Institutions Consumer Banking
Support
Operations Information Technology Human Resource Service Quality Alternate Distribution Channels Marketing Training
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Corporate Information
Board of Directors
H.E. Sheikh Ebrahim Bin Khalifa Al-Khalifa Abdullateef A. Al-Asfour Rana Ahmed Humayun Mohammed Azzaroog Rajab Ahmed Abdul Rahim Mohamed Alaa A. Al-Sarawi Mian Muhammad Younis Mohammad Abdul Aleem Irfan Siddiqui Ariful Islam Chairman Vice Chairman
Audit Committee
Mian Muhammad Younis Ahmed Abdul Rahim Mohamed Mohammad Abdul Aleem
Company Secretary
Tasnimul Haq Farooqui
Management
Irfan Siddiqui Ariful Islam Arshad Majeed Muhammad Shoaib Qureshi Rizwan Ata Shabbir Hamza Khandwala Faizur Rehman Zubair Haider Abdul Ghaffar Memon Irfan Ali Hyder Muhammad Abdullah Ahmed Muhammad Raza Munawar Rizvi Saleem Wafai Sohail Khan Syed Amir Ali Tasnimul Haq Farooqui Zia-ul-Hasan Ahmed Ali Siddiqui Omer Salimullah Muhammad Asadullah Saleem Khan Kazi Muhammad Aamir Aasim Salim Anwarul Haq Muhammad Abid Tariq Mehboob President & CEO Chief Operating Officer Operations Risk Management Commercial Banking Finance Information Technology Corporate Banking Remedial Asset Management/Prevention of Fraud and Forgery Human Resource Treasury & Financial Institutions Consumer Banking and Marketing Branch Expansion & Administration Compliance Learning & Development & Corporate Communication Investment Banking Legal Affairs Internal Audit Product Development & Shariah Compliance Alternate Distribution Channels Service Quality North Region South-II Region Multan Region Faisalabad Region South-I Region South-III Region
Shariah Advisor
Dr. Muhammad Imran Usmani
Auditors
KPMG Taseer Hadi & Co.
Registered Office
Meezan House, C-25, Estate Avenue, SITE, Karachi-Pakistan. PABX: (92-21) 38103500. UAN: 111-331-331
E-mail
info@meezanbank.com
Website
www.meezanbank.com
Shares Registrar
THK Associates (Pvt.) Ltd. State Life Building -3, Dr. Ziauddin Ahmed Road Karachi-75530, Pakistan. Ph: (9221) 111-000-322, Fax: (9221) 35655595
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Meezan, the Arabic word for 'Balance' has been taken from Surah-e-Rahman. At Meezan Bank, we believe in maintaining a balance between the needs of our shareholders, our customers, our staff and other stakeholders. This approach will InshaAllah help us achieve our Vision of providing '... a strong foundation for establishing a fair and just society for mankind'. Our identity is derived from this. In the following pages, we are pleased to present an overview of the history of Meezan Bank.
The Bank acquires Pakistan operations of Societe Generale and is issued the
by SBP Now a . full-fledged scheduled Islamic commercial bank, it is renamed as Meezan Bank
EasyHome
Pakistan's first Shariah-compliant Housing finance product is launched
for the historic transaction of international Sukuk offering for USD 600 million under a mandate awarded by the Government of Pakistan
1997
Riba-Free Certificates of Islamic Investment launched.
2002
Deposit base stood at
2003
Branch network reaches 10 branches nationwide while the deposit base grows to
2004
Deposit base grows to
Rs.7.7 billion
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Al Meezan Investment Management Limited becomes a subsidiary of Meezan Bank through acquisition of majority shares
A 24/7 Call Center is established and ATM/Debit Cards as well as new ATMs are introduced
Islamic Export Refinance scheme is introduced in coordination with SBP SME operations start as an independent business unit
Online Banking is launched across all branches SBP establishes a dedicated Islamic Banking Department and constitutes a Shariah Board
The year of 2002 will always remain a landmark year in the history of the banking industry in Pakistan. The advent of Islamic Banking, spearheaded by the birth of Meezan Bank, heralded the growth of a new segment in the banking industry. I was extensively involved in the development of the Islamic Banking framework, working hand in hand with the management of Meezan Bank. Today, as Meezan Bank celebrates 10 years of its founding, I look forward to an era of greater growth and awareness in the Islamic Banking industry of Pakistan and am confident that Meezan Bank will play a pivotal role in this story. My heartfelt felicitations to everyone at Meezan Bank on successfully completing 10 years of Islamic Banking. DR. ISHRAT HUSAIN
Governor State Bank of Pakistan, December 1999 - December 2005
BANKING
introduced for the first time in Pakistan
2005
Deposit base grows to
2006
Deposit base grows to
2007
Import/Export business reaches
2008
Deposit base grows to
Rs. 22 billion
Number of branches reaches
Rs. 34 billion
Number of branches reaches in 21 cities
Rs. 70 billion
Rs. 70 billion
Introduction of Tijarah financing allowing customers to raise funds for financing of stocks of finished goods First dedicated Islamic Banking Training Centers established in 3 cities
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Rs. 54 billion
Introduction of Istisna financing for the working capital needs of customers
Meezan Islamic Institution Deposit Account launched as a product tailored for Islamic Financial Institutions enabling them to manage their excess liquidity through a checking account with Meezan Bank Dollar Mudarabah Certificates and Special Musharkah Certificates launched for liquidity management and inter-bank market
Internet Banking
launched
Congratulations to Meezan Bank on reaching the milestone of 10 years of operations. Being at the center stage of the development of Islamic finance industry, Meezan Bank, with its shareholders and management, has played a critical role in extending outreach, financial instrument diversification and innovation. The Banks growth, from its birth in 2002 to 100 branches in 2007 and now 275 branches in 2011, bears witness to the trust that customers place with Meezan Bank. Meezan Bank is well known for nurturing the industry beyond its institution and with its overseas partnership is respected beyond borders. I believe that successfully maintaining this trust will be their greatest challenge, and biggest victory, in the coming years and with the management and shareholders continued drive, the Bank will deepen its footprints further and serve the consumer in accordance with Shariah principles - InshaAllah.
Governor State Bank of Pakistan, January 2006 - January 2009
Cities
Cities
The Bank is now the 9th largest bank in Pakistan in terms of branch network
2009
Islamic Bank of the Year
2010
Total deposits reach
2011
Total assets of the Bank cross
The journey continues towards making Islamic banking the banking of first choice in Pakistan... InshaAllah
Best Islamic Bank in Pakistan Best Islamic Bank in Pakistan Profit/Return earned on financing and investment activities exceeds Rs. 10 billion A Hajj and Umrah product Best Islamic Bank in Pakistan Best Islamic Trade Finance Bank in Pakistan Best Islamic Deal - Pakistan 38 Islamic Banking seminars held in 23 cities _ attended by over 4,400 participants Launch of Wakalah based financing product for the development of partnerships between Islamic banks and Microfinance banks
Islamic Bank of the Year Technical services and support agreement with
launched
and Meezan Euro Savings Account as well as Meezan Pound Savings Account launched Meezan Bank stands among the top three auto-finance providers in the country
110 Customers Appreciation Days and 27 Islamic Banking seminars held across the country
Home remittance service available at all branches Launch of Running Musharakah for working capital requirements of corporate customers
Product Information
Meezan Bank offers a diverse range of Shariah-compliant deposit and financing products through its 275 branches across 83 cities in Pakistan. All products of the Bank are approved by the Shariah Supervisory Board and are 100% Riba-Free. The Bank's nationwide real-time Online Banking system allows customers to conduct banking transactions at any branch of Meezan Bank, regardless of which branch their account is in. Meezan Bank also offers an extensive ATM network, free Internet Banking facility on all Pak Rupee Accounts, globally accepted VISA Debit Card, SMS Alerts service on every debit and credit transaction in customers' account and a 24/7 Call Center.
This is a checking account that works on the basis of 'Qard' and provides the convenience of conducting day-to-day transactions. There is no restriction on withdrawals or number of transactions and there is no deduction of service charges if the balance maintained is low.
Meezan Bank's Rupee Savings Account provides monthly profit along with a variety of free packaged benefits. Profit is calculated on the daily balance and credited into the account on a monthly basis. Minimum investment required for opening an account is Rs. 100 and there is no deduction of service charges if the balance maintained is low.
Meezan Bachat Account is a savings account for small savers that offers a higher expected profit. The minimum investment required for opening an account is Rs. 25,000. Profit is calculated with a higher weightage for account balances upto Rs. 1 million and a lower weightage is assigned on a balance over and above Rs. 1 million. There is no restriction on withdrawals or number of transactions and there is no deduction of service charges if the balance maintained is low.
Meezan Bank's Karobari Munafa Account is a savings account for business people where profit is calculated on the daily balances and credited into the account on a monthly basis. The minimum investment required for opening an account is Rs. 1 million. On maintaining an average monthly balance of Rs. 1 million, the customers can avail free cheque book and pay order facilities. There is no restriction on withdrawals or number of transactions and there is no deduction of service charges if the balance maintained is low.
Meezan Business Plus is a business account with several unique features that make it very suitable for use as a business account. On maintaining an average monthly balance of Rs. 100,000, the customer can avail a number of free services including free cheque books, free pay orders, free VISA Debit Card, free account statements, free Online Banking, free Internet Banking, free hold-mail facility, free SMS Alerts service, free inter-city clearing, etc. There is no restriction on withdrawals or number of transactions and there is no deduction of service charges if the balance maintained is low.
As the product is designed to provide free value added services, the share of profit will be minimal. However, as per the rule of Mudarabah, the customer would be liable to share the loss, if any.
Meezan Bank's Dollar Savings Account is a foreign currency savings account that can be opened by both individuals and businesses. Profit is calculated on daily balance and credited into the account on a monthly basis. The minimum investment required for opening an account is USD 100. There is no restriction on withdrawals or numbers of transactions and there is no deduction of service charges if the balance maintained is low.
Meezan Bank's Euro Savings Account & Pound Savings Account are foreign currency saving accounts that can be opened by both individuals and businesses. Profit is calculated on the daily balance and credited into the account on a monthly basis. The minimum investment required for opening an account is Euro/GBP 100. There is no restriction on withdrawals or numbers of transactions and there is no deduction of service charges if the balance maintained is low.
Certificates of Islamic Investment are Term Deposit certificates for investment periods ranging from 3 months to 5 years with profit payment on monthly, quarterly and maturity basis. Minimum investment required for quarterly and maturity profit payment option is Rs. 50,000. However, Rs. 200,000 is required as a minimum investment amount for a monthly profit payment option and there is no limit on maximum investment. Pre-mature withdrawals can be made as per the approved schedule.
Meezan Amdan Certificate is a Term Deposit certificate that offers a higher expected monthly profit to investors for periods of 51/2 and 7 years. It is ideal for those individuals and businesses who need a regular stream of monthly income. Minimum investment required is Rs. 100,000 for regular customers, while for widows and senior citizens, the minimum investment is Rs. 50,000. Pre-mature withdrawals can be made as per the approved schedule.
The Monthly Mudarabah Certificate is a short-term deposit product for an investment period of one month only. Profit is paid on maturity with a re-investment option available on a continuous basis. Minimum investment required is Rs. 100,000. Pre-mature withdrawals can be made as per the approved schedule.
Dollar Mudarabah Certificates are foreign currency Term Deposit certificates through which one can invest in US Dollars for defined periods ranging from 3 months to 3 years and earn profit six-monthly or at maturity. Minimum investment required is USD 10,000 and there is no maximum investment limit. Pre-mature withdrawals can be made as per the approved schedule.
Meezan Labbaik Savings Aasaan is a deposit product for individuals who wish to save for their spouse, children, parents or other family members for performing Hajj or Umrah on a future date. It is a Recurring Deposit Account, where the
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customer deposits contribution as per schedule. The minimum investment required for opening an account is Rs. 1,000. This is a non-checking account where no cheque book or VISA Debit Card is issued. Profit is calculated on the daily balance and credited into the account on a monthly basis. Apart from a regular contribution, the customer can also deposit additional amounts as per their convenience in order to complete the targeted deposit amount and make the desired journey earlier than initially planned. After accumulation of the desired deposit amount, the customer can avail any one of the packages offered by authorized travel agents through Meezan Bank or utilize the funds for alternate purposes.
Meezan Labbaik Travel Aasaan is a service that Meezan Bank provides to facilitate those customers who wish to perform Hajj or Umrah. The Bank's role is limited to sales and funds collection agent of selected travel agents while delivery of the selected package is the responsibility of the travel agent. Labbaik Travel Aasaan has two variants: 1. Customer can pay full price of the selected package upfront and travel right away after completion of all formalities. 2. Customer can pay a down payment and travel after completion of all travel arrangements. The remaining price of the package will be paid in 12 installments with no additional charges.
Car Ijarah
Meezan Bank's Car Ijarah is an auto finance facility based on the principles of Ijarah. Car Ijarah is a car rental agreement
under which the Bank purchases a new/used car of the customer's choice and rents it out to the customer for a period of 3 to 5 years, agreed at the time of the contract. The Bank offers a low monthly rental and quick processing and delivery. Rental payments start after delivery of vehicle to the customer. The Bank also provides Takaful cover of the car and free accidental death coverage upto Rs. 400,000.
Easy Home
Easy Home is Meezan Bank's Shariah-compliant home financing facility which is based on the principle of Diminishing Musharakah. With Meezan Easy Home, the customer can buy a house, build a house, renovate an existing house or replace the conventional house loan with Easy Home to enjoy the benefits of a Riba-Free and completely Halal financing facility. With flexible financing tailored to support the customer's need, Meezan Easy Home provides one of the best options to buy, build, renovate or replace a house with an absolutely hassle-free process with a quick turn-around time.
Laptop Ease
Meezan Laptop Ease is a laptop financing facility based on the concept of Musawamah which is a general and regular kind of sale. Through Meezan Laptop Ease, one can purchase a branded laptop equipped with all the latest features. The salient feature of this product is that a laptop can be purchased now and the price can be paid in easy monthly installments over a period of 3-24 months. Laptop Ease is a Shariah-compliant laptop finance facility _ one that is comprehensive, affordable and completely hassle-free.
Online Banking
Meezan Bank offers free Online Banking facility on all Pak Rupee Accounts to its customers. This enables the Bank's customers to access their accounts and conduct banking transactions from any of Meezan Bank's over 270 branches nationwide, regardless of which branch or city they have their account in. This facility provides great convenience for depositing and withdrawing cash, making pay orders and availing numerous other banking services. Meezan VISA Debit Card provides convenience to customers to access their money anytime and anywhere, at all outlets displaying the VISA symbol. Meezan VISA Debit Card is accepted at more than 30 million retail outlets worldwide. With Meezan VISA Debit Card, customers have access to the money in their account wherever they are, whenever they want, wherever they see the VISA symbol.
Internet Banking
Meezan Bank provides a smarter way to bank through its Internet Banking facility, providing customers global access to their account 24 hours a day, 7 days a week. Meezan Bank's Internet Banking offers the following facilities:
n View Account Statement n Utility Bill Payments n Mobile Prepaid and Postpaid Payments n Funds Transfer Facility n Balance Inquiry of Multiple Accounts n Real Time Cheque Status and Stop Payment Request n Cheque Book and Pay Order Request n Logging and Tracking Status of Complaints n Account Activity Alerts
SMS Alerts
Meezan Bank's SMS Alerts service keeps customers informed about activities in their accounts; enabling them to keep track of their financial transactions. Once the customer signs-up for SMS Alerts, he/she will receive an SMS whenever there is a debit or credit transaction in their account. The SMS will provide transaction details and the latest account balance. Meezan Bank offers a nationwide network of over 200 ATMs located at its branches and at prominent off-site locations across the country. The Bank also offers access to more than 2,000 ATM locations country-wide via 1-Link and MNET networks.
Meezan QuickPay
Meezan QuickPay is a facility that allows customers to pay utility bills, mobile phone bills and top-ups through Meezan Bank's ATMs, meaning that they no longer have to wait in queues to pay these bills. Customers can pay their telephone, gas and electricity bills of selected companies at any of Meezan Banks ATMs nationwide, 24 hours a day, 7 days a week.
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GRANITE
One of the key characteristics that defines Meezan Bank is Strength. For us, the word can be interpreted in many ways: the strength of our branch network or that of our Shariah Board, the strength of our offering of products and services or the strength that we find in the trust and loyalty of our customers. As the largest Islamic bank in Pakistan, we continue to invest in the development of this industry, both in terms of research as well as development of human resource. It is through this constant investment in the future that we can be certain that the times to come shall see a stronger, more prosperous Meezan Bank, InshaAllah. This dedication to strength and sustainability is the reason we have chosen granite to fortify Meezan House: so that it may constantly remind us of the values we stand for.
Chairmans Review
We believe that the success of the Bank has demonstrated the viability and credibility of the Islamic Banking industry as a whole.
Alhamdulillah, all praises and thanks to Allah. On January 31, 2002 the State Bank of Pakistan issued a license for the first scheduled Islamic Commercial Bank in the country to Meezan Bank Limited. At the ceremony, in which the license was handed over, the then Governor Dr. Ishrat Husain emphasized that he was entrusting Meezan Bank with a great responsibility the responsibility to make Islamic banking a viable, reliable and vibrant banking industry segment. Alhamdulillah, it is personally very gratifying for me to report that Meezan Bank has fulfilled the task entrusted by the Governor and established a strong foundation for Islamic banking in Pakistan. In doing so Meezan Bank has grown from being the smallest bank at the time to a bank with the ninth largest branch network in the country. The performance of the Bank has touched new heights. In many ways 2011 may be regarded as a watershed year in the history of the Bank. It has, by the Grace of Almighty Allah, laid the foundations from which it can catapult itself into the league of top-tier banks in Pakistan. The first pillar of this foundation is the investment in infrastructure. With a network of 275 branches in 83 cities, the Bank is now well positioned to take Islamic banking to every doorstep of the country from the northern reaches of Khyber Pakhtunkhwa to the bustling port city of Karachi. At the same time, the Bank has invested heavily in its technology backbone _ significant projects include the implementation of a new core banking solution; hardware upgrades at both the main Data-center and the secondary DR Site; complete revamp of the wide-area network using two separate service providers ensuring 100% redundancy at all locations. The second pillar is the strong financial footings of the Bank. Profitability was more than double the previous year and Return on Equity of the Bank is now one of highest in the banking industry in Pakistan. This profit has been made even after providing for all potential bad or doubtful financings _the coverage ratio (provision made compared to potential bad and doubtful financings) of the Bank is an impressive 114%. Deposits grew by 30% _more than double the industry average _to close at Rs. 170 billion. The total assets of the Bank crossed Rs. 200 billion placing it at the top end of mid-tier banks in the country. The Bank is very liquid and is well positioned to meet any eventuality. The third pillar is the impeccable Shariah credibility of the Bank. With a high-powered Shariah Board and a strong Shariah development and compliance team, the Bank prides itself as a 100% Shariah-compliant bank across all activities of the Bank. We are gratified to hear that the name Meezan Bank is now synonymous with Islamic Banking in Pakistan. That is indeed a commendable accolade for the Bank that was given the mandate by the Board of Directors to pursue the highest quality of Islamic banking. We believe that the success of the Bank has demonstrated the viability and credibility of the Islamic Banking industry as a whole. In addition to the excellent performance of the Bank, the asset management subsidiary Al Meezan Investment Management (AMIM) has also touched new milestones closing the year with total funds under management of Rs. 35 billion_ making it one of the largest asset management companies in Pakistan. AMIM is managing a family of 8 mutual funds that includes equity, cash, income, sovereign and pensions funds. It is one of the most respected asset management companies in the country and the only one that is operating exclusively under Islamic Shariah principles. The Board of Directors has approved the final payout of 12.5% bonus shares. This together with the interim cash dividend of 10% already paid earlier in the year brings the total payout for the year to 22.5%. I would like to express my gratitude to the State Bank of Pakistan, Ministry of Finance and the Securities and Exchange Commission of Pakistan for their continuous commitment to establish a viable Islamic financial system in the country. I would also like to thank our shareholders, members of the Shariah Supervisory Board, fellow Board Members and the Bank's staff for their unrelenting mission in making Meezan Bank the premier and fastest growing Islamic bank in Pakistan.
H.E. Sheikh Ebrahim Bin Khalifa Al-Khalifa Chairman February 19, 2012
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As Chairman and Managing Director of Noor Financial Investment Company, Kuwait _ the largest shareholder of Meezan Bank _ it gives me great pleasure to see that our investment in Pakistan is performing so well. In a short span of 10 years, Meezan Bank has established itself as the largest Islamic bank in Pakistan with a profitable track record. We are also delighted with excellent performance of the Bank in doubling its profitability for the year ended December 31, 2011. I have no doubt that the management will take the Bank to greater heights in the coming years, while we remain committed to the Vision of establishing Islamic Banking as banking of first choice.
The partnership with IBA for their National Talent Hunt Program (NTHP) entered its third year. Under this program, meritorious but needy students from remote and under-developed areas are provided fully-paid scholarships for the Bachelors and Masters Degree programs of IBA. Meezan Bank facilitated IBA in the selection process of NTHP 2011 by providing its branches and staff to conduct the selection interviews in all the major cities of the country. A total of 44 students were selected for the Orientation program and final admission test and out of these, 14 students were accepted by IBA for the Bachelors Program, all of whom have been provided full scholarships.
n
In order to promote and support excellence in higher education in Pakistan, the Bank sponsored Corporate Gold Medals for students at SZABIST's 7th and 8th Convocation in 2011. Several Gold Medals were awarded to students who attained the highest grades in the courses of Islamic Banking and Micro Finance.
The Bank teamed-up with Children Cancer Hospital on 4th February 2011 - World Cancer Day, to create awareness among its employees, customers and the general public about the perils of cancer and its prevention. This was done by disseminating information about cancer through flyers and detailed presentations about cancer and its prevention by email to all employees of Meezan Bank. Meezan Bank also facilitated Children Cancer Hospital (CCH) Karachi in their campaign for collection of Zakat. All the branches of Meezan Bank in Karachi displayed standees and distributed flyers of CCH during the month of Ramazan 2011, providing information about the organization and appealing to the public for donation and Zakat. This collaboration was of great help to CCH since substantial funds were collected through this campaign.
Meezan Bank has continued its support of Sindh Institute of Urology and Transplantation by providing its extensive branch network as an avenue for them to distribute their flyers and collect donations from general public.
n
In an effort to help cancer patients, Meezan Bank had signed an MOU with Shaukat Khanum Memorial Hospital for placing their collection boxes in all branches of Sindh and Baluchistan. The Bank continued its efforts in this initiative in Sindh and Baluchistan during 2011 as well. This cooperation, which started in 2010, is now yielding extremely positive results as the collections from this channel are increasing continuously and the hospital is now able to reach out in many areas where previously it had no presence and no mechanism for collection of funds.
This collaboration is also creating awareness about the hospital and cancer disease in Sindh and Baluchistan. The money so collected is deposited in the hospital's account with Meezan Bank and is available for withdrawal immediately by the hospital since all branches of Meezan Bank provide real-time free online account operation.
Trainings
As a part of its continuous efforts to increase awareness and understanding in the general public about Islamic banking, the Bank conducted 39 Islamic banking seminars across the country. The basic purpose of these seminars was to inform and educate the masses and external customers about Riba, its perils and the Halal Islamic banking products. These seminars were not only held in big cities like Karachi, Lahore and Islamabad but even in smaller cities like Jampur, Haroonabad, Hati (Mardan), Dadiyal etc. and were greatly appreciated by the participants.
n
A special half-day training seminar was conducted at The Citizens Foundation for their managers and executives. The basic purpose of the seminar was to educate them about Islamic banking and its applicability in various sectors of the economy.
Meezan Bank provided financial support to the efforts made by the Swat Open Scouts, a civilian association providing emergency assistance in case of a calamity or mishap.
n
Meezan Bank, in collaboration with the Thardeep Welfare Organization and Ihsan Trust provided flood relief in numerous areas of interior Sindh including Badin, Sanghar and Mirpurkhas which were affected by heavy rains in 2011. The Bank's staff personally managed and supervised the distribution of mosquito nets, dry food items and mineral water as part of the relief efforts.
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Meezan Bank offers a wide range of deposit products - current, saving and term deposit accounts - all designed with flexible features to meet the needs of our customers in a Shariah-compliant manner. The Bank continued with its aggressive branch expansion plan during 2011 and added 53 new branches to its network, thereby closing the year with 275 branches in 83 cities. As a result of its aggressive growth strategy, Meezan Bank now has the 9th largest (2011: 11th) branch network in Pakistan. This extensive network has further strengthened the Bank's ability to deliver comprehensive Islamic banking products and services to customers throughout the country. Deposit growth has also been impressive. Total deposits at December 31, 2011 crossed Rs. 170 billion compared to Rs. 130 billion for 2010, an increase of 30%, compared to the banking industry average of 14.6 %. Total customer base (number of accounts) increased by 33% from 366,583 to 487,574.
Branch Network
Branches
300
Deposits
Rupees in Billion
275 222
Cities
180 160
201
170.0
250 200
166
131.0
150 100 50 0
100 40 54 63 83
60 40 20 0
31
2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
Corporate Banking
The Corporate Banking department provides financing and financial services to large corporate and institutional clients, including public sector entities. The Bank offers a broad range of products to cater to short, medium and long-term financing needs along with Trade Finance facilities for imports and exports. Despite slow economic growth during 2011, the Bank was able to strengthen its Corporate business portfolio by deepening relationships with existing clients and expanding its customer base by booking new clients, including bluechip companies, in the energy, cement, telecommunications and textile sectors. The Bank has a wide range of products that service both short-term and long-term financing needs of customers. The total Corporate portfolio of the bank grew by 21.5% to reach Rs. 66.6 billion. In addition, the Bank also grew its Trade Finance (import and export) business by 26.3%, handling total trade business of Rs. 120 billion during 2011. The focus of the Bank's Corporate Banking business remained on targeting short-term working capital facilities including trade and seasonal financing. However, viable long-term deals were also booked after careful assessment.
Corporate Portfolio
Industry-wise Summary in %
Textile Independent Power Plant Food & Allied Fertilizer Oil & Gas Cement Miscellaneous Steel and Steel Products Chemicals Telecommunications Leather Service Engineering Auto & Allied Healthcare Trading
1% 1% 2% 2% 3% 3% 6% 6% 10% 13% 1% 1% 1% 27%
11%
13%
The Corporate Banking portfolio is well-diversified with a share in almost all major industrial sectors of the country. The Bank has maintained a prudent approach in building its exposure in different sectors and reviews its portfolio from time to time to ensure that a balanced portfolio is maintained. Looking ahead, the Bank plans to maintain its growth momentum by deepening its relationship with existing Corporate clients as well as building relationships with new names; the emphasis would, however, remain on the top quality and established names in the market.
Corporate Banking
Rupees in Billion
70 60 50 40 30 20 10 0 2007 2008 2009 2010 2011
28.5 31.4 40.7 53.0 66.6
Investment Banking
Investment Banking Department (IBD) provides a wide range of financing solutions including structured finance, project financing and advisory services to the Bank's extensive corporate client base. IBD is managed by a team of highly qualified and experienced professionals that include MBAs, ACAs, ACCAs, Engineers and CFA charter holders with a proven track record. The year 2011 proved to be a very successful year for IBD despite the difficult conditions that prevailed in the capital markets. IBD was able to deliver several high value transactions and added over Rs. 7 billion to the Bank's asset portfolio along with healthy fee income of over Rs. 50 million. The highlight for the year included successful issuance of the first ever short-term Sukuk in Pakistan for Kot Addu Power Company Limited. The development of the short-term Sukuk demonstrates IBD's resolve to develop unique and innovate Shariah-compliant financing solutions. Another significant achievement was the award, by the Ministry of Finance, GOP, of a joint financial advisory mandate for issuance of a series of sovereign Sukuks. In this regard, the first Sukuk auction amounting to Rs. 70.2 billion was completed during December 2011. Following are some notable transactions for the year 2011:
Government of Pakistan Kot Addu Power Company Limited Hub Power Company Limited
KAPCO
Sukuk Al Ijarah Rs. 235 billion Joint Financial Advisor Short Term Sukuk Rs. 1,500 million Lead Arranger
HUBCO
Short Term Sukuk Rs. 2,400 million Lead Arranger
The Investment Baking team is currently working with the State Bank of Pakistan to facilitate the floatation of a short-term sovereign Sukuk which will address the market's much awaited need for Shariah-compliant short-term government paper. During the year 2012, IBD's focus will be to promote Asset Backed Securitization transactions and build on its specialized project finance capability. The Bank stands committed to explore alternate avenues of Shariah-compliant financing while maintaining its position as a pioneer of the Islamic banking industry in Pakistan.
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6.6
4% 4% 4% 4% 5%
3%
2% 2% 2% 1% 2%
26%
60
48.4
40
23.0
38.4
20
12.4
14% 6% 7% 14%
2007
2008
2009
2010
2011
Consumer Banking
The Consumer Banking department is comprised of three consumer asset products - Car Ijarah (auto finance), Easy Home (housing finance) and Laptop Ease (laptop finance). These are managed through dedicated sales teams placed at select branches and sales and processing 'hubs' strategically located across Pakistan. Meezan Bank is the pioneer in providing Shariah-compliant consumer products of car finance, housing finance and laptop finance in the country. Despite the recession and economic uncertainties prevailing in the country during the year, Meezan Bank remained committed to the market and the needs of its customers; a strategic decision that has yielded positive business results.
Azaadi ka Mahina
Riba sey
During the month of Ramadan, which also happened to be August, the month of Azadi, Meezan Bank launched a phenomenal campaign for its customers: Riba Sey Azadi Ka Mahina. Whether customers were looking to open a bank account for business or for personal use, Meezan Bank understood that at least in that Holy month, what they needed was a pure, Riba-Free banking experience. It offered a complete range of Current and Savings Accounts, in local and foreign currencies, car financing and much more!
2.4
43
Rupees in Billion
Country Coverage
Sep-09
Nov-10
Dec-10
Mar-11
May-11
Dec-11
2007
2008
2009
2010
2011
The Chairman of the Bank visiting the new dealing room on the day of inauguration of Meezan House
Asset Management
The asset management business of Meezan Bank is managed by its subsidiary, Al Meezan Investment Management Limited (AMIM). The company has been in operations since 1995 and has one of the longest and most consistent track records among private sector companies managing mutual funds in Pakistan. It also has the distinction of being the only asset management company in Pakistan with the exclusive mandate of providing Shariah-compliant investment solutions to its investors. With assets under management of over Rs. 35 billion as at December 31, 2011, AMIM is one of the largest private sector asset management companies in Pakistan and is rated AM 2 by JCR-VIS Credit rating Company, denoting high management quality with a stable outlook.
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
The Product Development and Shariah Compliance team of Meezan Bank ensures compliance of funds under management of AMIM according to Shariah guidelines issued by the Shariah Advisor. The Product Development team at AMIM works proactively to introduce new Shariah-compliant investment structures. Name of Fund Type Net Assets Rs. million
(December 31, 2011)
Meezan Sovereign Fund (MSF) Meezan Capital Protected Fund - II Meezan Islamic Fund (MIF) Meezan Islamic Income Fund (MIIF) Al Meezan Mutual Fund (AMMF) Meezan Balanced Fund (MBF) Meezan Cash Fund (MCF) Meezan Tahaffuz Pension Fund Total
Open-End Income Fund Open-End Capital Protected Fund Open-End Equity Open-End Income Open-End Equity Closed-End Balanced Open-End Money Market Voluntary Pension Scheme
Following the success of Meezan Capital Protected Fund-I, Al Meezan Investments in partnership with Meezan Bank launched Meezan Capital Protected Fund-II. This was the second in series of Shariah-compliant Capital Protected Funds, offering protection and growth of funds in the form of 100% capital protection at maturity, competitive, equity market returns, tax credit and much more
45
Operations Review
The support units of Meezan Bank work together to ensure that all transactions undertaken by the business units are in accordance with the directives of its Shariah Advisor and the Shariah Supervisory Board (SSB) and the Banks Policies and Procedures. The support units are:
Facilitating new research & product development activities Refining existing products & procedures Providing Islamic banking training to new and existing staff members Facilitating learning of Islamic banking at universities and business schools Conducting regular Shariah audit and reviews of branches & departments Coordinating with the Bank's Shariah Supervisory Board Providing Islamic banking advisory services to both local and foreign institutions
Product Development and Research Meezan Bank strives to provide unique and innovative Shariah-compliant products and services to its customers. With this focus, the Bank executed Running Musharakah transactions with corporate clients such as Hubco, Lucky Cement etc. This new product, based on the concept of Musharakah, gives flexibility to the customer to manage cash-flows and is expected to play a significant role in addressing the short-term financing requirements of customers. During 2011, in addition, the Bank also provided tailor made financing solutions to blue chip multinationals like Linde Pakistan and Nestle Pakistan. In order to spread the benefits of Islamic banking at a grass root level, the Bank has developed a detailed Agricultural Finance Guide for accommodating the financing requirements of the Agricultural sector. Several amendments in the operational procedures of current financing products were also made during 2011 to make these products more customer-friendly while ensuring high levels of Shariah-compliance. Meezan Bank issued product guides for Murabaha and Istisna, covering various variants of these products with their accounting entries. The Shariah Supervisory Board of the Bank had also approved a financing product based on the concept of Toll Manufacturing. Apart from this, continuous research is being done for developing solutions for other industries such as gold, fisheries etc. As an ongoing activity, PDSC department approved more than 1,000 product structures and processes for its clients, as process flow for each and every financing customer is designed and approved by this department and is mandatory for all transactions. As per the instructions of the Bank's Shariah Advisor, new avenues for liquidity management were explored and the Bank actively participated in structuring and launch of Government of Pakistan Ijarah Sukuk. During the year, the Bank also structured the first ever Islamic short-term Sukuk based on Shirkat ul Aqd for energy sector clients KAPCO and Hubco. Product base of the Treasury department was enhanced during the year through development of a unique liquidity management product - Bai Muajjal of Sukuk. The Bank also developed product guidelines for trading in currencies. In Islamic structured finance, the Bank developed Shariah-compliant financing structures for different corporate clients such as SSGC, DG Khan Cement , JDW Sugar Mills, Dawood Hercules Fertilizers Limited, Mobilink (PMCL), SNGPL and Pak Telecom Mobile Limited. Meezan Bank's research team is also working with the State Bank of Pakistan (SBP) to develop a Shariah-compliant scheme for Islamic long-term finance facility (LTFF) for exporters - that will be the alternative to the conventional scheme currently available - and a SBP Islamic financing window for Islamic banks as an alternative to the conventional discount window.
Retail Banking Products A new saving account for children and teenagers is expected to be launched shortly. The Bank also introduced a brief Urdu summary of deposit account features along with complete Urdu translation of the Terms and Conditions for Mudarabah-based accounts. Over 750 customers traveled to perform the Holy journeys of Hajj and Umrah during 2011 through Labbaik, Meezan Banks Hajj & Umrah product for facilitating customers to perform the Holy journey.
Internal Training Providing continuous training to employees at all levels for enhancing their knowledge in Islamic banking & Shariah-compliance matters is a key priority at Meezan Bank. A multi-tier approach has been adopted for Islamic banking training, comprising basic orientation for all new staff, specialized functional modules, Certification programs and product training for different departments as well as advanced-level programs for senior staff members. PDSC staff was instrumental in conducting the Shariah-knowledge related sessions of these programs and also conducted numerous knowledge-sharing session at the branches to help improve their Shariah-audit ratings. Over 2,700 people benefited in terms of enhancement in their knowledge and skill set in dimensions of core and advanced Islamic finance during the year through the Banks regular learning programs as well as brief knowledge-sharing sessions. During the year, the Bank launched the advanced module of its Islamic Banker Certification course covering detailed topics such as risk management, Islamic accounting standards, pool management and Islamic treasury products. The Bank also conducted five comprehensive advanced-level 6 day courses for Branch Managers, Branch Operation Managers and senior front-office employees across the country. To provide hands-on access to Shariah-knowledge to its employees, the Bank introduced an Intranet based knowledge portal during the year. This knowledge portal is accessible to all employees of the Bank and contains product policies, guidelines, FAQs, presentations, videos, training audios, articles and other publications. Being cognizant of the importance of the spiritual motivation for an Islamic banker, the Bank also organized several inspirational talks and sessions for its staff by various religious scholars.
External Training & Awareness initiatives The Bank organised numerous training programs, workshops & seminars on Islamic banking, both locally and internationally. During the year, the Bank conducted 39 seminars and Corporate/SME workshops in 23 cities which were attended by more than 4,500 participants including customers, general public and professionals. The Bank supported the World Islamic Finance Summit held in Pakistan this year and also provided support for promotion of Islamic banking in Pakistan to institutions including SBP, National Institute of Banking and Finance (NIBAF) and Centre for Islamic Economics (CIE) in conducting Islamic banking training sessions. In addition, the Bank participated in various Islamic banking courses and degree programs at different educational institutions including IBA - Karachi, LUMS, Sukkur-IBA, Institute of Business Management, PAF-KIET, Sheikh Zayed Islamic Center (University of Karachi), and Riphah International University, Islamabad. Joint training sessions and workshops were also held with Riphah University, Bahauddin Zakaria University and University of Faisalabad. The Bank also developed self-explanatory educational brochures related to Import Murabaha financing and Istisna.
The World Islamic Finance Summit 2011 primarily focusing on Growth and Opportunities of Islamic Banking
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Shariah-compliance and Audit Shariah-compliance is taken very seriously at Meezan Bank and it has always adopted a policy of no compromise on Shariah principles. Shariah-compliance and audit starts at the time of the opening of a branch and go hand-in-hand at each step of every product offering so that every transaction is executed in true letter and spirit as per the instructions of the Shariah Supervisory Board. The Shariah Audit of over 210 branches was conducted during the year. This audit covers not only branch transactions but also the Shariah knowledge of staff. On the financing side, there is strong emphasis on the evaluation of customers' business activities before setting up or renewing any banking relationship. Furthermore, Shariah-compliance is ensured through customer meetings, factory visits and reviewing random transactions. This ensures that the Bank understands the customers' business cycle and processes and is able to develop tailor-made process flows for successfully providing Shariah-compliant financing solutions to the customers. For Murabaha transactions, the emphasis is on making direct payments to suppliers in order to ensure transparency of transactions. In addition, random physical inspections are undertaken to verify the relevant purchase evidences and invoices, thus further improving process controls. In Istisna & Tijarah transactions, Shariah-compliance is ensured by conducting physical inspections at the time of taking delivery of the goods.
Islamic banking & Shariah Advisory Services The Islamic Financial Advisory arm of Meezan Bank, with its wealth of experience and accumulated research, assists financial institutions, Mutual Funds, Stock Exchanges and businesses in converting from conventional to Shariah-compliant lines. Meezan Bank is playing a leading role in the development of Islamic capital markets in the country. The Bank provides Shariah Advisory services to leading asset management companies like Al Meezan Investment Management Limited, National Fullerton Asset Management Company Limited, KASB Funds Limited and AKD Investment Management Limited for establishment and launch of various types of Islamic Mutual Funds. The Bank also has a pivotal role in developing the first Shariah-compliant Index for benchmarking the performance of Islamic funds. In this context, Meezan Bank advises Al Meezan Investments and Karachi Stock Exchange for matters related to re-composition of the KMI - 30 Index (KSE Meezan Islamic Index). Meezan Bank has also expanded its advisory horizons beyond Pakistan by entering international financial markets through a 'Shariah Technical Services and Support' agreement with Amana Bank, Sri Lanka. The Bank is now receiving international enquiries for entering into similar advisory arrangements. This has further strengthened the Bank's position as the market leader in providing Shariah-compliant financial solutions. Meezan Bank also provides advisory services for Islamic consumer sales product to United Sales Pvt. Limited, a subsidiary of Dawlance group, under the umbrella of Diyanat financing.
Meezan Bank signs Shariah technical services and support agreement with Amana Bank, Sri Lanka
Operations
The Operations department is responsible for complete back-office processing for Branch Banking, SWIFT, Cash Houses, Trade Finance, Credit Administration, Treasury, Capital Market, Alternate Distribution Channels, Mutual Funds and Home Remittances. The primary function of the Operations department is to ensure that all transactions are accurately processed in line with SOPs, SBP regulations, the Bank's Shariah guidelines and all related legal requirements. Centralized Account Opening (CAO) Centres are operating at Karachi, Lahore, Faisalabad and Multan. CAO Centre for the North Region is being set up in Islamabad and will InshaAllah start functioning very soon.
Trade Finance
250
Trade Finance Business (Rupees in Billion) Trade Finance Income (Rupees in Million)
233 185 143 112
216
188
195
91
50 0
2007 2008 2009 2010 2011
Trade Finance is an important unit of the Bank's Operations department. Alhamdulillah, during the year, the total volume of business handled by the unit crossed Rs. 185 billion (2010: Rs. 143 billion). The Bank has recently set-up a Home Remittance Unit to facilitate foreign exchanged remittances into Pakistan. Supported by its strong technology backbone, the Bank ensures seamless delivery of remittances to customers efficiently and accurately. In the coming year, the Bank's Operations department has lined up projects for centralization of services; this would complement the Bank's expansion drive and introduce economies of scale which will enable the Bank to provide superior services with enhanced internal controls.
49
The Bank's IT department focused on the following key initiatives during 2011:
n
Business Intelligence Tools The Bank is in the process of implementing a number of new business intelligence tools that would improve the Banks ability to provide timely and accurate information for decision making at all levels. This is becoming increasingly more important in the light of increased competition and the growth of the Bank.
Improved Communication Consolidation of various geographically distributed departments into the Bank's new Head Office building has significantly improved the communication and coordination between departments. These synergies were further strengthened through provision of IP telephony and video conferencing facilities which facilitated efficient and smooth coordination between Head Office and the branch network.
Information Security The Bank focused on evaluating its security framework and organized itself by improving controls in high-risk areas. Detailed penetration testing was performed by reliable third party consultants and an Information Security Audit was also undertaken to identify areas for improvement in the system. The vision is to move from a reactive mode to a proactive mode during 2012.
Business Continuity Planning The Bank recognises the importance of Business Continuity Planning and now has dedicated resources working on various initiatives in this context. The objective is to be able to handle immediate, short-term and long-term business interruptions without impacting customer service. At the same time, critical business processes are being molded in such a way that the process itself has inbuilt 'shock-absorbers' to handle a number of unforeseen contingencies. Business processes are therefore being made more resilient and shock-proof.
Alternate Distribution Channels (ADC) offers an alternative to traditional 'brick and mortar' branches, through offering products that cater to customer needs with a focus on reliability, convenience, and 24/7 access currently available through the Bank's ATMs, Call Center, Internet Banking, SMS Alerts and Visa Debit Cards. In 2011, the overall customer base for ADC products grew by 74%. The Bank is in the continuous process of enhancing the availability and access of its ADC products to customers. The Bank's nationwide ATM network was further expanded in 2011 with the addition of 32 new ATMs, taking the total number of ATMs to 201. The ATMs offer high levels of convenience to customers through Utility Bill payments and mobile top-ups round the clock. Meezan Bank's Visa Debit Card continues to gain customer acceptance, with the card base growing to over 230,000 cards. To enhance the usage of this card, the Bank announced a number of promotions with well-reputed retailers such as KFC, Meat One, ChenOne, Pie in the Sky, Cotton & Cotton and Singer, offering complimentary benefits and discounts to customers. Gold card customers continued to enjoy complimentary access to CIP lounges at all airports in major cities of Pakistan.
Meezan Bank's Call Center handled more than 950,000 calls during the year and customers can avail its services 24/7 to access their account information or for carrying out banking transactions such as issuance of pay orders, ordering of cheque books and products-related inquiries. The Banks Internet Banking facility offers a reliable and convenient way of banking from home or on the go. Using this facility, customers can access a number of value-added services including Utility Bill payments, Mobile Top-ups and Mutual Fund transactions. The sign-up process for Internet Banking was also improved during the year as a result of which the subscriber-base grew by 42% during the year.
250,000 130,000
838,874 535,127
2010
2011
2010
2011
ATM Transactions
6,000,000
865,000
4,000,000
2010
2011
2010
2011
Meezan Bank's SMS Alerts service acts as both a convenient utility and a security feature. More than 39,000 new customers availed this facility during the year, taking the total to over 91,000 registered users. SMS Alerts service plays a vital role in instantly updating customers on all account activity which also serves as a useful tool in allowing customers to identify any possible fraudulent activity in their accounts. Meezan Bank's ADC department constantly strives to launch new and innovative products & services to make banking easier for the customers.
2010
230,000
2011
Internet Banking
SMS Alerts
51
Human Resources
The Bank closed the year with approximately 4,300 staff as compared to 3,900 the previous year. Additionally, the Bank has approximately 650 outsourced staff posted at branches across the country. The year saw execution of the first-ever Employee Satisfaction Survey (ESS) of Meezan Bank. This was conducted in-house by the HR department. More than 2,400 employees participated in the survey. In addition to the ESS, the Bank also participated in two salary surveys of the Banking sector of Pakistan. The first, conducted by Aon Hewitt Consulting was subscribed by sixteen banks while the second, commissioned by the State Bank of Pakistan, was subscribed by six banks. Meezan Bank initiated Health Takaful coverage for all employees and their families. This step was greatly appreciated by all employees and represents a major step towards employee well-being. Furthermore, the Life-Takaful coverage limits for employees were also upgraded in line with the market. The 'Disciplinary Action Committee' works actively to resolve the disciplinary cases of employees. In order to further improve the quality and transparency of this process a Disciplinary Action Review Committee was created in 2011 as a higher forum to review appeals of employees impacted by the decisions of the Disciplinary Action Committee. Meezan Bank arranged to have its job postings available on the career portals of a large number of universities in Pakistan. This initiative will contribute towards increasing the Banks outreach to quality Human Resources and enhance the quality of its HR pipeline.
Trainer' programs for the Bank's internal trainers were also conducted. The first Mock-branch, which is in final stages of being set-up will also provide a simulation center and will contribute towards enhancing staff operational understanding and capabilities. Once the Mock-branch becomes fully operational at Karachi, it is planned to further this concept to Lahore and Islamabad. Additionally, a relevant and complete soft skills suite is also being developed which will help the employees in delivering their best with limited resources. The classroom and rotational training programs have also been thoroughly revisited to make them more effective; reflecting the new paradigms being faced by the Bank. In view of the expansion plans of the Bank in 2012, the Department is also planning to induct and train a new Cash Officers batch on a pan-Pakistan basis. A modern and well equipped Library is also now functional at Meezan House, having catalogue of leading international business and Islamic magazines and journals. During early mornings, the Bank has also introduced sessions on 'Quran and its understanding' by renowned Shariah speakers and is further planning to offer Arabic Language programs to staff shortly. These initiatives will supplement the Islamic banking and Shariah-trainings being implemented across the country and enable achievement of the Bank's Vision, Mission and Corporate Values.
Service Quality
To ensure the promotion and implementation of its Service Mission at all levels, the Bank has in place a dedicated Service Quality department, which is a centralized unit comprising of a dedicated team of individuals who ensure that quality in service is delivered and maintained uniformly at all levels throughout the country. The Service Quality department has instituted Service Level Agreements with various departments with specifically defined Internal Service Measures (ISMs) for key activities. The ISMs have been developed focusing on the service recipients, their business needs and objectives. This initiative has proved to be very effective in improving the quality of service. The Customer Care Unit (CCU), which is an essential part of Service Quality looks into customer queries and strives for resolving customers issues on priority. The Dispute Resolution Unit, an addition to CCU, has been established to treat customers' financial issues with special attention. This department also conducts Customer Satisfaction Surveys and Mystery Shopping periodically through external agencies. This activity is carried out to obtain an unbiased picture of the Bank's overall performance and provides feedback for improving the Bank's service culture.
53
Economic Overview
Pakistan's economy, not being immune from the economic vagaries of the world, suffered and recorded low GDP growth of 2.4% for the fiscal year ended June 2011. Going forward, the economic planners of the country expect a modest improvement in GDP growth on the back of strong agricultural output as a result of higher crop yields experienced post the devastating floods of 2010. Worker remittances have also increased from US$ 10 billion in 2010 to US$ 11.2 billion in the current year while the total foreign exchange reserves stood at US$ 17 billion on December 31, 2011. At the same time, inflation, a consistent worry for the government, has not only been kept under check, but has reduced from a high of 15.5% in December 2010 to a level of 9.75% in December 2011. As a result, the State Bank of Pakistan (SBP) adopted a monetary easing stance, reducing the policy rate twice during the year by a total of 200 basis points, taking the discount rate to 12% from 14%. Going forward we expect the SBP to maintain this monetary stance and this should spurt economic activity. The energy crisis, that has plagued the country in recent years, remains a key concern. Other worries include the recent hike in international oil prices, a steady decline in cotton prices and the repayments associated with the IMF program commencing from 2012. These issues coupled with the expansion in current account (US $2.1 billion in 2H2011), absence of foreign inflows along with decline in foreign direct investment (by 37% YoY to US $532 million in 2H2011) has led to the recent deterioration in performance of the currency where Rupee lost 4.9% against the Dollar since June 2011. Pakistan's equity market remained very dull during the year and the benchmark KSE 100 index declined by 5.6% while average daily volumes also declined to a 13 year low on the back of bearish sentiment.
Operating Results
To realize our Vision of establishing 'Islamic banking as banking of first choice' we have consistently pursued the strategy of expanding our branch network throughout the country. With 275 branches spread over 83 cities of Pakistan supported by strong Alternate Delivery Channels including Internet Banking, 24/7 Call Center and ATMs, we are well positioned to deliver 100% Shariah-compliant products to our customers. Alhamdulillah, Meezan Bank recorded excellent all round results for the year ended December 31, 2011. The Bank's profit after tax more than doubled to Rs. 3,391 million from Rs. 1,650 million in the previous year reflecting a substantial increase of Rs. 1,741 million. The Bank's total assets crossed the Rs 200 billion mark in the current year _ an increase of Rs. 46 billion reflecting a 30% rise from the previous year. Income from core banking business before provisions grew to Rs. 11,871 million from Rs. 8,159 million in the previous year posting an impressive increase of 45% mainly on account of concerted efforts by the Bank to increase its asset portfolio without compromising on quality. The Bank continued to maintain a high level of liquidity, which is in line with the cautious financing policy adopted by the management and also consistent with the trend seen in other banks in Pakistan during 2011. Deposit growth has also been consistently strong, increasing from Rs. 131 billion to Rs. 170 billion. This growth of 30% is once again substantially higher than the average growth in deposits for the banking sector as a whole which stood
2008
2009
2010
2011
No. of Branches
Number of Branches
Rupees in Billion
175
at 14.6%. This growth has been achieved notwithstanding the fact that average cost of deposits has been maintained at levels very close to the previous year. The growth is attributable to consistent increase in our banking operations stemming directly as a result of our aggressive branch expansion strategy - the Bank established 53 new branches during the year, bringing the total to 275 branches in 83 cities. This is a conscious decision to invest in the future of the Bank which has paid off well in the current year and will, Insha'Allah yield even better results in the years to come. The investment portfolio touched record levels of Rs. 98 billion from Rs. 55 billion in the previous year. This growth of 78% was on account of Meezan Bank's aggressive participation in the 7th, 8th and 9th auction of the Government of Pakistan Ijarah Sukuk made during 2011. Subsequently the Bank is also playing its role as an active market maker in the Ijarah Sukuk. Faced with challenging economic circumstances, the total financing portfolio of the Banking industry as a whole declined by 0.05% during the year. Meezan Bank, while maintaining a cautious approach to financing activities, grew its financing portfolio by 9%. This growth is primarily attributed to the Corporate Banking business of the Bank which now represents almost 80% of the total asset portfolio of the Bank and includes top-tier local corporates and multinational companies.
100% 80% 70% 60% 50% 40% 30% 20% 10% 2005 2006
Financing
0%
The profit after tax has been arrived at after making specific provisions amounting to Rs. 948 million and general provision amounting to Rs. 523 million during the year ended December 31, 2011. The general provision has been made adopting prudent approach and to strengthen the asset quality against potential non-performing financings. This additional provision has increased coverage ratio to 114% of the non-performing financing portfolio. The Bank's revenues have increased to Rs. 10.48 billion from Rs. 6.66 billion, a growth of 57% while administrative and operating expenses increased to Rs. 5.96 billion from Rs. 4.46 billion, a rise of 34%. The rise in expenses is primarily due to higher staff expenses and rent & costs associated with branch expansion _ an investment which has borne fruit for the Bank, as evident from strong growth in deposits and profits over the year. The Trade Finance business volume handled by the Bank also grew by 31% from Rs. 143 billion in 2010 to Rs. 188 billion in 2011. The trade business is supported by the Bank's growing network of correspondent banking relationships around the world. The key business results achieved in 2011 are as under:
2011
Branch Network Presence Deposit Total Assets Profit After Tax Return on Equity Trade Finance Business (Import and Export) 275 Branches 83 Cities Rs. 170 Billion Rs. 201 Billion Rs. 3.39 Billion 28.2% Rs. 188 Billion
2010
222 Branches 63 Cities Rs. 131 Billion Rs. 155 Billion Rs. 1.65 Billion 16.6% Rs. 143 Billion
Growth
24% 32% 30% 30% 105% 70% 31%
90%
55
Financial Results
Rs. in million PROFIT AND LOSS ACCOUNT Profit/ return on financings, investments and placements Return on deposits and other dues expensed Net spreads before provisions Provision against non performing financings and investments Net spreads after provisions Fee, commission and brokerage income Dividend income Income from dealing in foreign currency Capital gain on investments Other income Core banking income Administrative and other expenses Profit before tax Taxation Profit after tax 2011 18,032 (8,666) 9,366 (1,389) 7,977 757 939 572 219 18 10,482 (6,126) 4,356 (965) 3,391 2010 12,290 (6,606) 5,684 (1,496) 4,188 616 322 1,381 97 59 6,663 (4,536) 2,127 (477) 1,650
The Islamic Banking industry continues to grow in Pakistan and five full-fledged Islamic banks and twelve conventional banks with Islamic windows are presently operating in the country. Islamic banks now account for over 8% (2010: 7%) of the total banking industry. This augurs well for the Islamic Banking sector and we are confident that Islamic banks will further increase their market share in the coming years. The Board, representing the shareholders of the Bank, reiterates its commitment to Pakistan in general and Meezan Bank in particular, to meet all its present and future capital needs.
Dividend
The Board has now recommended the issue of 12.5% Bonus Shares (2010: 15%) for year 2011. This declaration together with the earlier cash dividend of 10% paid in July 2011 brings the total payout for the year to 22.5% and maintains the Bank's unbroken payout record since the date of listing on the Stock Exchange. This will increase the Bank's paid up capital to Rs. 9 billion. Accordingly, the Bank will meet SBP minimum capital requirement for 2012 of Rs. 9 billion a year in advance.
Credit Rating
The JCR-VIS Credit Rating Company limited, an affiliate of Japan Credit Rating agency, has upgraded the Bank's shortterm rating from A-1 (A-One) to A-1+ (A-One Plus), the highest standard in short-term rating. The long-term entity rating has been maintained at AA- (Double A Minus) with stable outlook. The rating indicates sound performance indicators of the Bank.
1. Credit Committee 2. Asset Liability Management Committee (ALCO) 3. Internal Controls and Operational Risk Management Committee (ICORMC)
The Credit Committee is responsible for approving, monitoring and ensuring that financial transactions are within the acceptable risk rating criteria. ALCO is responsible for reviewing and recommending all market risk and liquidity risk policies and ensuring that sound risk measurement systems are established and comply with internal and regulatory requirements. The ICORMC ensures adequate internal controls and systems are in place thereby ensuring operating efficiency. While the RMC through the aforementioned specialized committees oversee the risk management framework of the Bank, the Risk Management Department (RMD) is mandated to implement this framework as a function independent of commercial lines of business.
57
Well defined policies, procedures and manuals are in place and authorities have been appropriately delegated to ensure credit quality, proper risk-reward trade off, industry diversification, adequate credit documentation and periodic credit reviews. The Bank applies Stress Testing and Value at Risk (VaR) techniques as market risk management tools. Contingency Funding Plan for managing liquidity crisis is in place. Liquidity management is done mainly through cash flow matching, interbank placements and investments in GOP Ijarah Sukuks. The Bank ensures that the key operational risks are measured and managed in a timely and effective manner through policies and procedures, enhanced operational risk awareness, segregation of duties, dual checks and improving early warning signals. The Scope of Risk Management Department has been enhanced in view of the regulatory requirements including Basel II, changing industry environment and significant growth of the Bank. Full-fledged credit risk function catering Corporate, Commercial and SME, Consumer, Financial Institutions and Investment Banking segments has been established. The role of treasury middle office in monitoring activities of treasury operations has been strengthened with necessary capacity building including implementation of treasury based module. Implementation of loss data management and mitigation system and placement of additional resources in the area of operational risk signifies the importance the Bank gives to operational risk management. Process of developing and updating policies and procedural manuals in major risk areas of the Bank has been expedited and further steps for better management information reports from risk perspective have already been initiated. The above mentioned elements collectively ensure that the Bank's risk profile is actively monitored and adjusted according to the Bank's strategy and the operating environment in a manner which ensures protection to the depositor and value to the shareholder.
Pattern of Shareholding
The pattern of Shareholding as at December 31, 2011 is annexed with the report.
Directors
During the year, Mr. Naser Abdul Mohsen Al-Marri and Mr. Hussam Fawzi Al-Kharafi resigned while Mr. Abdullateef A. Al-Asfour was appointed by the Board as Director to fill the casual vacancy. The Board welcomes the new Director and wishes to place on record its appreciation for the services rendered by the retiring Directors.
Auditors
The present auditors, KPMG Taseer Hadi & Co., Chartered Accountants, have completed their term of five years and are not eligible for reappointment as per the Code of Corporate Governance. The Board of Directors and Audit Committee place on record their appreciation for the services rendered by the retiring Auditors. On recommendation of the Audit Committee, the Board recommends appointment of A.F. Ferguson & Co., Chartered Accountants, as the statutory auditors of the Bank for the year ending December 31, 2012. A.F. Ferguson & Co. has previously been our statutory auditors.
To address these challenges, the Bank will undertake various initiatives and focus on providing value added services. At the same time efforts are being made via operational and technological improvements while simultaneously striving for disciplined expense growth and strengthening internal controls and regulatory compliance culture to gain market share. Some of the major initiatives for 2012 include: Branch Expansion: Despite the economic challenges, the Bank intends to continue its aggressive branch growth strategy and add 35 new branches during the year, bringing the total branch network to 310 branches. The Bank's priority is to ensure that Islamic banking products and services are made available across the length and breadth of Pakistan through an excellent branch network critical for effective market penetration. Deepening existing and adding new Alternate Delivery Channels: 100 new ATMs will be added to the existing network of 201 ATMs. Plans are underway to up-grade the Bank's 24 hour Call Centre and additional functionality including out-bound campaign-management will be added. Investing in Technology: The Bank recognizes the importance of a strong technology backbone to support its growing customer base and will accordingly continue to add to its hardware base and implement new software solutions to enhance the efficiency of transaction processing and quality of MIS. Improvement in systems and controls: Significant focus is being given to the improvement of systems and controls in the Bank. As a part of this initiative, an internal control unit has already been set-up. In addition, substantial investment is being made in new software applications including state of the art KYC and AML software. Improvements in training and development: As the Bank expands, sourcing and retaining the right quality of human resource is an increasingly significant challenge. Accordingly, the Bank will enhance on its existing training and development infrastructure, balancing Shariah-based training and branch banking and soft-skills training.
The Board is confident that Meezan Bank is well positioned to meet the challenges of the future and will, Insha'Allah, continue to play its leadership role in the Islamic Banking industry. Far more importantly, Meezan Banks endeavor towards its Vision _ of establishing Islamic banking as banking of first choice _ requires that we do not forget the broader picture. The Meezan family now has around 5,000 ambassadors of what the Bank stands for: 100% Shariah-compliance; integrity and fairness with efficiency; innovation with God-consciousness; and excellence with humility _ principles that if shared, will make our world a better place for all. In today's local and global market environments, where stories of failure far outweigh the legends of success, it is our firm belief that without the culture of humility and gratitude that we experience at Meezan Bank, the contents of this report would have been very different indeed. As one of Pakistan's fastest growing banks - Meezan Bank has gone from strength to strength over the past decade in, Alhamdulillah: its infrastructure; its brand image and credibility; its offerings; its team cohesion and culture, and its relationships. We can tire ourselves maintaining what we have achieved, or we can reinvigorate ourselves by reaching out to higher and newer horizons. The aspirations of every Meezan Bank employee and how we strive towards those aspirations will determine our destiny. May Allah help us all remain steadfast in His way, and help us ensure that every new day is better than the last, and every new year is better than the last.
Acknowledgement
The landmark achievements of Meezan Bank, in a short span of ten years, would not have been possible without the proactive support of our diversified customer base. We sincerely thank each one of our team members for their hard work and commitment. May Allah Almighty bestow His blessings on them and their families. We would like to express our gratitude to the State Bank of Pakistan, Ministry of Finance and the Securities and Exchange Commission of Pakistan for their continuous commitment to establish a viable Islamic Financial system in the country. We would also like to thank our shareholders and the Members of the Shariah Supervisory Board for their unrelenting efforts towards establishing Meezan Bank as the premier Islamic bank. On behalf of the Board.
59
Number of Number of Bonus Number of Number of Shares as at Shares Shares alloted Shares sold Shares as at Jan. 01, purchased during during Dec. 31, 2011 during the year the year the year 2011 NAME OF DIRECTORS H.E. Sheikh Ebrahim Bin Khalifa Al-Khalifa Mr. Rana Ahmed Humayun Mr. Mohammad Abdul Aleem Mr. Irfan Siddiqui Mr. Ariful Islam 4,669,701 933,757 128,355 153,941 2,400,000 1,440,155 700,455 140,063 19,253 23,091 (1,073,820) 5,370,156 147,608 2,577,032 1,440,155
CHIEF FINANCIAL OFFICER Mr. Shabbir Hamza Khandwala COMPANY SECRETARY Mr. Tasnimul Haq Farooqui
425,000
18,750
443,750
177
26
(203)
0.00
During the year, four meetings of the Board of Directors were held and attended as follows: NAME OF DIRECTOR H.E.Sheikh Ebrahim Bin Khalifa Al Khalifa-Chairman Mr. Abdullateef A. Al-Asfour- Vice Chairman* Mr. Naser Abdul Mohsen Al-Marri** Mr. Hussam Fawzi Al-Kharafi*** Mr. Rana Ahmed Humayun Mr. Mohammed Azzaroog Rajab Mr. Ahmed Abdul Rahim Mohamed Mr. Nawal Ahmed**** Mr. Alaa A. Al-Sarawi Mian Muhammad Younis Mr. Mohammad Abdul Aleem Mr. Irfan Siddiqui- President & CEO Mr. Ariful Islam Meetings Attended 4 2 1 N/A 3 0 4 0 3 4 4 4 4
* Appointed in place of Mr. Hussam Fawzi Al-Kharafi on June 07, 2011 ** Ceasing of Office due to change in nomination by sponsor shareholder on April 30, 2011. *** Appointed in place of Mr. Nawal Ahmed on March 26, 2011 and ceasing of office due to change in nomination by sponsor shareholder on April 30, 2011. **** Resigned on March 06, 2011
Administrative and other expenses Value allocated as follows: To Depositors/ Financial Institutions Return on deposits and other dues expensed To Employees Salaries, allowances and other benefits To Shareholders Dividend - Bonus Shares Dividend - Cash To Government Income Tax To Expansion Depreciation and amortisation Retained in Business
(2,858,855) 16,288,897
(17.6%) 100%
8,665,622 2,790,518 1,003,742 802,993 1,806,735 964,757 476,457 1,584,808 2,061,265 16,288,897
6% 11%
13%
53%
17%
61
Note: Administrative and operating expenses are paid by the Bank and not charged to the depositors` pool as per the guidelines of mudarabah.
By the Grace of Allah, the year under review was the tenth year of Islamic commercial banking for Meezan Bank. During this year, the Bank developed and executed a variety of new as well as established Islamic banking products and transactions after due approval from the Shariah Supervisory Board and/or Shariah Advisor. During the year, the Shariah Supervisory Board (SSB) of Meezan Bank held two meetings to review various products, concepts, transactions, processes and their Shariah-compliance, referred to them by the Shariah Advisor. As part of the Shariah-compliance framework a full fledged Product Development & Shariah Compliance (PDSC) department is working under my supervision. The role of this function is of facilitating new research & product development activities, refining existing products & procedures, providing Islamic banking training, performing Shariah audit & compliance reviews of branches and departments, coordinating with Bank's Shariah Supervisory Board and providing Islamic Financial Advisory services to both local and foreign institutions. Following were the major developments that took place during the year: 1. Research & New Product Development: It is encouraging that Meezan Bank has executed 'Running Musharakah' transactions. This new product of 'Running Musharakah' is based on the concepts of Musharakah (Shirkat ul Aqd). Also during the year 2011, Meezan Bank provided tailor made financing solutions to few blue chip multinationals, which shows the extension in reach of Islamic banking products & services. New avenues for liquidity management were also explored and the Bank actively participated in the structuring and launch of new Sukuk. In order to enhance the product base of Treasury department, Meezan Bank developed a new liquidity management product named as 'Bai Muajjal of Sukuk'. The Bank also developed product guidelines for trading in currencies and refined the product pricing of 'Bai Salam' which helped the Bank in enhancing its customer facilitation. During the year, Shariah Supervisory Board of the Bank had also approved a financing product based on the concept of 'Toll Manufacturing'. It is also heartening to note the progress of 'Meezan Labbaik' in terms of number of satisfied customers and improved product features. 2. Training & Development: During the year, more than 100 Islamic banking training sessions were held in which around 2,786 employees participated throughout Pakistan, as compared to 2,117 employees who participated in 85 Shariah trainings last year. In the year 2011, Meezan Bank conducted more than 39 seminars and Corporate/SME workshops in 23 cities which were attended by more than 4,540 participants representing customers, general public and professionals. One initiative taken in this field was Corporate/SME workshops which were focused towards enhancing the working and theoretical knowledge of the Bank's Corporate/SME financing customers. The bank also conducted five comprehensive advanced-level 6 days course for Branch Managers, Operation Managers and senior front end employees in all the 7 regions of the Bank. It is a matter of great pleasure that Intranet based Knowledge Portal is launched for employees of the Bank. This Knowledge Portal is accessible to each employee of the Bank and contains product policies, guidelines, FAQs, presentations, videos, training audios, articles and other publications. This would Insha'Allah increase the knowledge and understanding of all employees regarding Islamic banking and Meezan Bank products. The Bank also supported the World Islamic Finance Summit held in Pakistan and also continued its support for promotion of Islamic banking in Pakistan to institutions including SBP, National Institute of Banking and Finance (NIBAF) and Centre for Islamic Economics (CIE) in conducting Islamic banking training sessions. The Bank supported various Islamic banking courses and degree programs in different institutes including IBA - Karachi, LUMS, Sukkur-IBA, Institute of Business Management (IoBM), PAF-KIET, Sheikh Zayed Islamic Center (University of Karachi) and Riphah International University (Islamabad). 3. Shariah Advisory: During the year, Meezan Bank expanded its advisory wing, mainly with the intention of sharing its experience of successful Islamic banking, by entering new international financial markets through 'Shariah Technical Services and Support' agreement with Amana Bank, Sri Lanka. In the area of Islamic Capital Markets, Meezan Bank
63
continued to advise Al Meezan Investment Management Limited (AMIM), National Fullerton Asset Management Company Limited (NAFA), KASB Funds Limited and AKD Investment Management Limited for the establishment and launch of various types of Shariah-compliant mutual funds and for matters related to re-composition of KMI - 30 index (KSE Meezan Islamic Index) which is Pakistan's first ever Shariah-compliant Islamic index. Furthermore, Meezan Bank also continued to provide advisory for Islamic consumer sales product to United Sales (Pvt.) Limited (USL), a subsidiary of 'Dawlance' group under the umbrella of Diyanat financing.
Review of Assets
The Bank primarily used Murabaha, Ijarah, Diminishing Musharakah, Musawammah, Istisna, Tijarah, Running Musharakah and Salam for its financing activities during the year. It is encouraging to note that the share of Istisna increased to 15% from 11% and share of Diminishing Musharakah increased to 31% from 26% of the financing portfolio, hence the reliance on Murabaha has lowered to 27% from 33%. The shares of Ijarah and Tijarah transactions share moved downward from 13% & 3% to 11% & 1% respectively. The Bank's total financing portfolio reached Rs. 64.48 billion (gross) as of December 31, 2011. All these transactions were executed using Shariah-compliant financing agreements.
Review of Liabilities
On the liability side, the Bank offered different Shariah-compliant deposit products based on the mode of 'Mudarabah' and 'Qard'. The total deposits of the Bank observed a growth of 30% and reached a sum of Rs.170 billion as at December 31, 2011. During the year, the Bank accepted deposits on the modes of Musharakah for short-term liquidity management from inter-bank market and corporate clients. It is good to know that improved profit payment mechanism for Certificate of Islamic Investments (COIIs) and other Term Deposits has successfully been implemented at Meezan Bank, as directed by the Shariah Supervisory Board of the Bank. With this new mechanism the profit payment dates for all Mudarabah based saving products will be the same, based on the actual declared profit rates. Throughout the year, the process of the allocation of assets and funds to various deposit pools; announcement of overall profit sharing-ratios for Mudarabah based deposits; monthly allocation of the weightages and distribution of income to deposit accounts was monitored and reviewed in accordance with Shariah rules and principles.
To ensure that all the products and services being offered by the Bank strictly adhere to conjunctions of Shariah, the Bank's PDSC department actively monitored various operational activities of the Bank throughout the year. During the year, credit approvals, restructuring of financing facilities, customer specific transaction process flows, text of LGs and security documents were reviewed to ensure Shariah-compliance while offering financing products to the customers. As an ongoing activity, the PDSC Department approved more than 1,000 product structures and process flows for its clients. Moreover, random physical inspections and concrete measures are taken to verify the relevant purchase evidences/ invoices, thus further enhancing the controls. In Istisna and Tijarah transactions, existence of goods was ensured by conducting 100% physical inspections at the time of taking delivery of the goods. It is a matter of concern that during the year 2011, a decrease of 19% was registered in terms of direct payment for Murabaha financing as the overall percentage of direct payment decreased to 57% in the year 2011 against 76% in the year 2010. As a result of this decrease in customer wise break-up, a downward impact was witnessed in both Corporate and SME/Commercial side. It is highly recommended to make efforts to improve this percentage of direct payment in Murabaha transactions.
Customer-wise Segregation
Year-wise Trends in %
100% 80% 60% 40% 20% 0 Corporate SME/Commercial
75% 49% 81% 78%
2010
Year-wise Trends in %
76%
2010
2011
57%
Overall Portfolio
In addition to the above compliance measures, this year Shariah audit & compliance review of 210 branches and 4 departments was conducted in order to get first hand knowledge of the activities being carried out at these branches and departments. These audited branches constitute around 97% of the total branch network of the Bank at the start of the year 2011. Moreover, at the same time the basic understanding of the structures and concepts of Islamic banking & finance staff was also assessed through interviews of the concerned staff and training sessions were conducted there and then to overcome any shortcomings during the course of these Shariah audit & compliance reviews. The audit covered overall Shariah-compliance of the Bank's operations and their alignment with the guidelines given by Shariah Advisor and the SSB. In the process, following areas were checked:
n n n n n n n n n n n n
Invoices and other related purchase evidences were verified by confirmations and suppliers existence was also confirmed by visiting the suppliers premises on sample basis Genuine purchase evidences were provided to execute Murabaha transactions so that Murabaha disbursements are not availed to set off previous balances with the supplier Agreements for Murabaha, Ijarah, Diminishing Musharakah, Istisna, Tijarah and Bai Salam Declarations, description of assets, relevant purchase invoices, sequence and order of the documents and time difference between purchases and declaration in Murabaha Murabaha Monitoring Sheets (MMS) and Delayed Declaration Reports (DDR) Purchase deeds, treatment of ownership related cost & recovery of rentals in Ijarah transactions Ownership ratio in Diminishing Musharakah for housing and issuance of timely unit sale receipts Investment made in stock with reference to the stock screening criteria Import finance transactions and related documentation Extensive reviews of client payment, purchase cycle and periodic assessment of clients' processes Other related documents and procedures followed by different functional areas Profit sharing ratio, profit weightages, pool working, asset & deposit allocation for deposit products
During the year, in some of the Murabaha transactions the use of fabricated invoices as Murabaha purchase evidence was observed; in this regard related controls were suggested to avoid such mistakes in future. A detailed Shariah review is under process, the finalization of which will decide on the permissibility or otherwise of the income accrued of Rs. 10.95 million on such transactions. Pending finalization we have created a provision of Rs. 10.95 million. Moreover, an amount of Rs. 0.762 million was disbursed in charity account while a provision of Rs. 1.1396 million was also created for the fiscal year 2011 to eliminate the non-compliant portion and purify the dividend income earned from the investment made in Shariah-compliant stocks by the Bank. During the year, there were some transactions executed by the Treasury department where correct templates for alternate of future sale product were not followed. Moreover, some mistakes were also identified in recording of the Treasury transactions. Though these mistakes were not found to be of a nature to invalidate these transactions but the concerned departments must put more efforts in improving the controls related systems of Treasury function to avoid such mistakes in future. In addition to the above, as a normal course, the Bank transferred an amount of Rs. 27.01 million to charity account on account of non-timely payment by the customers, in various financial transactions.
Murabaha Monitoring System (MMS)
A system for continuous monitoring of Murabaha transactions is in place whereby the branches extending Murabaha financing are required to submit a monthly reporting sheet, after thorough review by the branch/departmental management, to PDSC for review and continuous monitoring of Murabaha transactions to avoid any mistakes/errors.
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During the year, an amount of Rs. 56.69 million was transferred to the Charity Account and an amount of Rs. 129.49 million was disbursed from charity saving account after the approval of the Shariah Advisor. Details of Charity are available in note # 18.4.
Charity
Recommendation
n
Based on the review of various transactions I recommend that: Due care regarding the mindset and commitment towards the cause of Islamic banking should be taken during the process of hiring of new staff. Moreover, it is recommended to increase the scope of Islamic banking knowledge assessment process already implemented for new branch and operation managers to area managers, department heads and new joiners at senior level. Additional checks and balances should be put in place to mitigate the risk of loss of income due to non Shariahcompliance, especially in crucial functions like Treasury. In this regard, related control clusters of the Bank be made responsible to ensure that all Shariah-related guidelines are adhered to in true letter and spirit. Considering the growing branch network and induction of new employees, the Bank should continue its focus on employees training related to Islamic banking products and services offered by the Bank with specific focus on frontline staff. The Corporate, Commercial & SME department and all Regions of the Bank should continue to organize special training workshops for the executives of their financing clients and continue conducting customer awareness seminars. The Bank needs to take immediate measures to improve the percentage of direct payments in Murabaha transactions. In order to have strong systems and controls for profit distribution and pool management, the Bank should accelerate the implementation process of IT-based pool management, asset allocation and profit distribution system.
n n n
Conclusion
As per the charter of the Bank, it is mandatory on the management and employees to ensure application of Shariah principles and guidelines issued by the Shariah Supervisory Board and Shariah Advisor and to ensure Shariah-compliance in all activities of the Bank. The prime responsibility for ensuring Shariah-compliance of the Bank's operations thus lies with the management. Based on the extensive reviews of sample cases for each class of transaction, related documentation, processes, the profit distribution mechanism for the depositors and management's representation made in this regard, in our opinion, the affairs, activities and transactions, performed by the Bank during the year comply with the rules & principles of Islamic Shariah in light of the guidelines and directives given by the Shariah Supervisory Board, Shariah Advisor of Meezan Bank and SBP guidelines related to Shariah-compliance. The non-compliant income identified during the review is being transferred to the charity account. May Allah bless us with the best Tawfeeq to accomplish His cherished tasks, make us successful in this world and in the Hereafter, and forgive our mistakes. Wassalam Alaikum Wa Rahmat Allah Wa Barakatuh.
Dr. Muhammad Imran Usmani Member Shariah Supervisory Board & Shariah Advisor Dated: 10th Rabi ul Awal 1433 H / February 3, 2012
67
2011
80% 70% 60% 50% 40% 30% 20% 10% 0%
2010
2011
76%
100% 80% 60% 40% 20% 0
49% 75%
2010
57%
78%
81%
2010 76%
-26% -3%
49% 78%
75% 81%
69
Note : Details of charity payments in excess of Rs. 100,000 are disclosed in note 18.4.1 to the financial statements of the Bank.
71
4. 5. 6.
7.
8.
9.
10. There was no new appointment of the Company Secretary, CFO or Head of Internal Audit during the year ended December 31, 2011. 11. The Directors' report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. 12. The financial statements of the Bank were duly endorsed by CEO and CFO before approval of the Board. 13. The Bank maintains a list of related parties which is updated on a regular basis. All transactions with the related parties' alongwith their pricing methods have been separately disclosed in the quarterly accounts approved by the Board after recommendation of the Audit Committee.
73
14. The directors, CEO and executives do not hold any interest in the shares of the Bank, other than that disclosed in the pattern of shareholdings. 15. The Bank has complied with all the corporate and financial reporting requirements of the Code. 16. The Board has formed an Audit Committee. It comprises of three members, all of whom are non-executive directors including the Chairman of the Committee. 17. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and final results of the Bank and as required by the Code. The terms of reference of the Committee have been formed, approved by the Board and advised to the Committee for compliance. 18. The Board has set-up an internal audit function, the members of which are considered suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the Bank. 19. The statutory auditors of the Bank have confirmed that they have been given a satisfactory rating under the quality control review programme of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Bank and that the firm and all its partners are in compliance with the International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants of Pakistan. 20. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. 21. We confirm that all other material principles contained in the Code have been complied with.
75
Ordinary Business
1. To confirm the minutes of the 15th Annual General Meeting held on March 28, 2011. 2. To receive, consider and adopt the Annual Audited Accounts of the Bank and Consolidated Audited Accounts of the Bank for the year ended December 31, 2011 together with the Auditors' and Directors' Reports thereon. 3. To appoint auditors of the bank for the year ending December 31, 2012 and to fix their remuneration. M/s. A. F. Ferguson & Co., Chartered Accounts has consented to act as auditors. The retiring auditors M/s KPMG Taseer Hadi & Co., Chartered Accountants have completed the period of five (5) years in accordance with the Clause (xii)(a) of the Code of Corporate Governance and therefore, are not eligible for re-appointment. 4. To approve interim Cash Dividend @ 10% (i.e. Rs. 1 per shares) already paid in August 2011.
Special Business
5. To consider, and approve the issuance of Bonus Shares as recommended by the Board of Directors and to pass the following resolution as an Ordinary Resolution: Resolved that: a. a sum of Rs 1,003,741,630 out of free reserves of the Bank for the issue of bonus shares be capitalized and applied for the issue of 100,374,163 ordinary shares of Rs 10/- each and allotted as fully paid bonus shares to those members of the Bank whose names appear in the Register of Members of the Bank on March 29, 2012 in the ratio of 12.5 ordinary shares for every 100 ordinary shares held (12.5%) and that such new shares shall rank pari passu in all respect with the existing ordinary shares. b. Members entitled to fraction of shares as a result of their holding shall be given the sale proceeds of their fractional entitlements for which purpose the fractions shall be consolidated into whole shares and sold on the Karachi Stock Exchange c. For the purpose of giving effect to the foregoing, the President/Chief Executive or the Company Secretary be and are hereby individually authorized to take any and all actions which may deemed fit for the issuance, allotment, distribution, etc. of the said bonus shares. 6. To approve the remuneration paid/payable to the Chairman and Non-Executive Directors of the Bank for the year ended December 31, 2011 for attending Board Meetings and Meetings of the Committees formed by the Board and to pass the following resolution as Ordinary Resolution: Resolved that the remuneration paid/payable to the Chairman and Non-Executive Directors of the Bank for the year ended December 31, 2011 for attending Board Meetings and Meetings of the Committees formed by the Board, as disclosed in note 35 of the Audited Financial Statements of the Bank, be and is hereby approved. 7. To transact any other business with the permission of the chair. A statement under section 160 (1) (b) of the Companies Ordinance, 1984 pertaining to special business is enclosed.
Notes:
i) The Members' Register will remain closed from March 19, 2012 to March 29, 2012 (both days inclusive) to determine the names of members entitled to receive bonus shares and to attend and vote in the meeting. ii) A member eligible to attend and vote at this meeting may appoint any person as proxy to attend and vote in the meeting. Proxies in order to be effective must be received at the Registered Office not less than forty eight (48) hours before the holding of the meeting. iii)An individual beneficial owner of the Central Depository Company, entitled to vote at this meeting must bring his/her Computerized National Identity Card alongwith the participant ID numbers and sub account numbers with him/her to prove his/her identity, and in case of proxy must enclose an attested copy of his/her Computerized National Identity Card. Representatives of corporate members should bring the usual documents required for such purpose.
Statement Under Section 160 (1) (B) of the Companies Ordinance, 1984
This statement sets out the material facts concerning the resolutions contained in item (5) and (6) of the Notice pertaining to the special business to be transacted at the Annual General Meeting of the Bank to be held on March 29, 2012. I) Issue of Bonus Shares In order to meet the requirement of State Bank of Pakistan to increase the paid up capital of the commercial banks to Rs. 9 billion by December 31, 2012, the Board of the Bank are of the view that Bank's financial position and its reserves justify the capitalization of free reserves amounting to Rs. 1,003,741,630 for the issue of 100,374,163 bonus shares of Rs. 10/each in the ratio of 12.5 ordinary shares of every 100 ordinary shares held i.e. 12.5%. The Directors of the Bank have no interest in the above special business save to the extent of their shareholding in the Bank. II)Directors' Remuneration The remuneration paid/payable to the non-executive directors was approved by the Board of Directors in terms of Article 52 of the Articles of Association of the Bank. The remuneration requires approval (which is permissible on post facto basis) of the shareholders in Annual General Meeting in terms of requirements of the Prudential Regulations for Corporate/Commercial Banking issued by the State Bank of Pakistan. The non-executive directors are interested in the payment of remuneration and the remaining members of the Board have no interest in the matter.
77
WATER
Being a service industry, banking is an ever-changing landscape. The fluidity of water is suggestive of the changing needs of our customers. Their constantly evolving needs require that we continue to research and develop new products and improve our existing products. By adapting and changing our product offering to reflect the needs of the times, we have been able to remain at the helm of the Islamic Banking industry. The various water bodies placed strategically around the office are home to many kinds of beautiful fish, whose constant movement in the water adds colour to our workplace and reminds us of the dynamic nature of the professional landscape in which we exist.
Financial Statements
Auditors Report to the Members Statement of Financial Position Profit and Loss Account Statement of Comprehensive Income Cash Flow Statement Statement of Changes in Equity Notes to and forming part of the Financial Statements 80 81 82 83 84 85 86
Note ASSETS Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Operating fixed assets Deferred tax assets Other assets including inventories LIABILITIES Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Deferred tax liabilities Other liabilities NET ASSETS REPRESENTED BY Share capital Reserves Unappropriated profit Surplus on revaluation of investments 19 20 14 15 16 7 8 9 10 11 12 17 13
2010
18
21
22
81
Note Profit / return earned on financings, investments and placements Return on deposits and other dues expensed Net spread earned Provision against non-performing financings (net) (Reversal) / provision for diminution in the value of investments (Reversal) / provision against off-balance sheet obligations (Reversal) / provision against amounts due from financial institutions Bad debts written off directly Net spread after provisions OTHER INCOME Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Capital gain on sale of investments - net Other income Total other income OTHER EXPENSES Administrative expenses Other provisions / write offs Other (reversals) / charges Total other expenses Extraordinary / unusual items PROFIT BEFORE TAXATION Taxation - Current - Prior years - Deferred PROFIT AFTER TAXATION 29 23 24
2011 Rupees in 000 18,032,152 8,665,622 9,366,530 1,471,614 (34,981) (6,113) (41,365) 1,389,155 7,977,375
2010 12,290,549 6,606,474 5,684,075 1,330,057 46,862 37,682 81,875 1,496,476 4,187,599
25 26
757,136 938,983 571,880 219,391 17,365 2,504,755 10,482,130 5,958,595 168,242 (1,007) 6,125,830 4,356,300 4,356,300 1,703,310 (220,027) (518,526) 964,757 3,391,543 Rupees
615,752 321,898 1,381,044 97,155 59,181 2,475,030 6,662,629 4,460,804 18,306 56,559 4,535,669 2,126,960 2,126,960 1,025,135 (332,808) (214,955) 477,372 1,649,588
27 28
Basic and diluted earnings per share The annexed notes 1 to 43 form an integral part of these financial statements.
30
4.22
2.05
2011 Rupees in 000 Profit for the year Other comprehensive income Comprehensive income transferred to equity Components of comprehensive income not transferred to equity Surplus on revaluation of investments Deferred tax on revaluation of investments Total comprehensive income 177,120 (59,310) 3,509,353 3,391,543 3,391,543
83
Note CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Dividend income Adjustments for non-cash charges Depreciation Amortization Provision against non-performing financings (net) (Reversal) / provision for diminution in the value of investments (Reversal) / provision against amounts due from financial institutions Loss / (gain) on sale of operating fixed assets
2011 Rupees in 000 4,356,300 (938,983) 3,417,317 436,739 39,718 1,471,614 (34,981) (41,365) 31,251 1,902,976 5,320,293 6,487,814 (6,432,036) (6,077,062) (6,021,284) 514,675 3,406,664 38,960,103 417,981 43,299,423 42,598,432 (1,692,067) 40,906,365
2010
2,126,960 (321,898) 1,805,062 359,075 33,810 1,330,057 46,862 81,875 (18,910) 1,832,769 3,637,831 23,893,145 (13,815,564) (453,313) 9,624,268 518,160 (2,639,129) 30,737,277 645,596 29,261,904 42,524,003 (1,266,434) 41,257,569
(Increase) / decrease in operating assets Due from financial institutions Financings Other assets including inventories Increase / (decrease) in operating liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities Income tax paid Net cash flow from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investments in - held to maturity securities - available for sale securities - listed associated undertakings - unlisted associated undertakings Dividends received Investments in operating fixed assets Sale proceeds of operating fixed assets disposed off Net cash flow from investing activities CASH FLOW FROM FINANCING ACTIVITIES Dividend paid Net cash flow from financing activities (Decrease) / increase in cash and cash equivalents Cash and cash equivalents as at January 1 Cash and cash equivalents as at December 31 The annexed notes 1 to 43 form an integral part of these financial statements. 31 31
Capital reserves Share capital Statutory reserve Reserve for issue of bonus shares
Total
Rupees in 000
Balance as at January 01, 2010 Total Comprehensive income for the year Profit after taxation for the year Transactions with owners recognised directly in equity Transfer to reserve for issue of bonus shares Issue of bonus shares Transfer to statutory reserve Balance as at December 31, 2010 Total Comprehensive income for the year Profit after taxation for the year Transactions with owners recognised directly in equity Transfer to reserve for issue of bonus shares Issue of bonus shares Cash dividend for the year 2011 Transfer to statutory reserve Balance as at December 31, 2011
6,650,048
983,326
66,766
1,390,395
9,090,535
1,649,588
1,649,588
329,918 1,313,244
332,502 (332,502) -
66,766
10,740,123
3,391,543
3,391,543
678,309 1,991,553
1,047,383 (1,047,383) -
66,766
85
1.
2.
BASIS OF PRESENTATION
These financial statements represent separate financial statements of the Bank. The consolidated financial statements of the group are being issued separately. The Bank provides financing mainly through Murabaha, Ijarah, Service Ijarah, Musharakah, Diminishing Musharakah, Running Musharaka, Istisna, Tijarah, Bai Muajjal, Musawammah and Export Refinance under Islamic Export Refinance Scheme as briefly explained in note 6.3. 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 profit thereon. The income on such financings is recognised in accordance with the principles of Islamic Shariah. However, income, if any, received which does not comply with the principles of Islamic Shariah is recognized as charity payable if so directed by the Shariah Advisor of the Bank.
Standards, interpretations and amendments to published approved accounting standards that are not yet effective:
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 amendment has no impact on financial statements of the Bank. 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 amendments may impact the financial statements of the Bank which has not yet been quantified. 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 amendments may impact the financial statements of the Bank which has not yet been quantified. 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. The amendments may impact the financial statements of the Bank which has not yet been quantified.
(Amendments to IAS 1) Presentation of Items of Other Comprehensive Income - (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 may impact the financial statements of the Bank which has not yet been quantified. 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 amendments has no impact on the financial statements of the Bank.
3.
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. 3.2 Through Finance Act, 2010, certain amendments were introduced in Seventh Schedule to the Income Tax Ordinance, 2001. The provision for financings and off balance sheet items in doubtful and loss categories were allowed upto 5% of total gross financing for consumer and Small and Medium Enterprises - SMEs (as defined in SBP Prudential Regulation). Through Finance Act, 2011, certain amendments have been introduced in Seventh Schedule to the Income Tax Ordinance, 2001. Provision in excess of prescribed limits of consumer and SME financings have now been allowed to be carried forward to subsequent years effective July 01, 2010. With reference to allowability of provision, the management has carried out an exercise at year end and concluded that full deduction of provision in succeeding years would be allowed and accordingly recognized deferred tax asset on such provision amounting to Rs.1,210 million (2010: Rs. 967 million).
4.
STATEMENT OF COMPLIANCE
4.1 These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards issued by the International Accounting Standards Board and Islamic Financial Accounting Standards issued by the Institute of Chartered Accountants of Pakistan, as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962, and the directives issued by the State Bank of Pakistan (SBP). In case requirements differ, the provisions of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962, and the directives issued by SBP shall prevail. SBP through BSD Circular No. 10 dated August 26, 2002, has deferred the implementation of International Accounting Standard, IAS 39 - "Financial Instruments: Recognition and Measurement" and IAS 40 - "Investment Property" for banks in Pakistan. Accordingly, the requirements of these Standards have not been considered in preparation of these financial statements.
4.2
87
5.
BASIS OF MEASUREMENT
5.1 These financial statements have been prepared under the historical cost convention except that certain investments and commitments in respect of certain foreign exchange contracts are valued at market rates in accordance with the requirements of SBP. Functional and presentation currency These financial statements have been presented in Pakistani Rupee, which is the Bank's functional and presentation currency. 5.3 Rounding off Figures have been rounded off to the nearest thousand rupees unless otherwise stated.
5.2
6.
6.3
Financings Murabaha In Murabaha transactions, the Bank purchases the goods and after taking the possession, sells them to the customer on cost plus profit basis either in a spot or credit transaction.
Ijarah In Ijarah, the Bank provides the asset on pre-agreed rentals for specific tenors to the customers. Istisna In Istisna financing, the Bank places an order to purchase some specific goods / commodities from its customers to be delivered to the Bank within an agreed time. The goods are then sold and the amount hence financed is paid back to the Bank. Tijarah In Tijarah financing, the Bank purchases specific goods / commodities on cash basis from its customers for onward sale and on subsequent sale, the financed amount is paid back by the customer. Diminishing Musharakah In Diminishing Musharakah based financing, the Bank enters into a Musharakah based on Shirkat-ul-milk for financing an agreed share of fixed asset (e.g. house, land, plant or machinery) with its customers and enters into periodic profit payment agreement for the utilization of the Banks Musharakah share by the customer. Running Musharakah In Running Musharakah based financing, the Bank enters into financing with the customer based on Shirkatul Aqd or Business Partnership in customers operating business. Under this mechanism the customer can withdraw and return funds to the Bank subject to his Running Musharakah financing limit during the musharakah period. At the end of each quarter / half year the customer pays the provisional profit as per the desired profit rate which is subject to final settlement based on the relevant quarterly / half yearly / annual accounts of the customer. Bai Muajjal In Bai Muajjal, the Bank sells Shariah compliant sukuk on a deferred payment basis to other financial institutions / customers. The credit price is agreed at the time of sale and proceeds are received at the end of credit period. Service Ijarah In Service Ijarah financing, the Bank provides financing by acquiring certain agreed services from the client. After the purchase of services, the Bank appoints the customer to sell these services in the market over a period who provides a sale confirmation of such sale. The profit is accrued from the date of receipt of such confirmation. 6.3.1 Financings are stated net of specific and general provisions against non-performing financings which are charged to the profit and loss account. Funds disbursed under financing arrangements for purchase of goods / assets are recorded as Advance against financings. On culmination i.e. sale of assets to customers, financings are recorded at the deferred sale price net of profit. Assets purchased but remaining unsold at the date of Statement of Financial Position are recorded as inventories. 6.3.2 The rentals received / receivable on Ijarahs are recorded as income / revenue. Depreciation on Ijarah assets is charged to profit and loss account by applying the accounting policy consistent with the policy for depreciation of operating fixed assets. Provision against non-performing financings The Bank determines provisions against financings on a prudent basis in accordance with the requirements of Prudential Regulations issued by SBP. Non-performing financings are written off only when all possible courses of action to achieve recovery have proved unsuccessful. The Bank determines write-offs in accordance with the criteria prescribed by SBP vide BPRD Circular No. 6 of 2007 dated June 05, 2007.
6.3.3
89
6.4
Investments 6.4.1 The Bank classifies its investments as follows: Held for trading These are investments acquired principally for the purpose of generating profit from short-term fluctuations in price. Held to maturity These are investments with fixed or determinable payments and fixed maturity and the Bank has positive intent and ability to hold them to maturity. Available for sale These are investments, other than those in subsidiaries and associates, which do not fall under the held for trading or held to maturity categories. 6.4.2 The Bank values its investments as follows: 6.4.3 Quoted securities, excluding investments categorized as held to maturity securities and investments in subsidiaries and associates, are stated at revalued amounts. Investments in quoted associates and strategic investments are stated at cost less impairment, if any. Unquoted securities including investments in associates and subsidiaries are stated at cost less impairment, if any. Investments in securities categorized as held to maturity are carried at amortized cost less impairment.
Any surplus / deficit arising as a result of revaluation of quoted securities categorized as available for sale is presented below the shareholders equity in the Statement of Financial Position, while any surplus / deficit arising as a result of revaluation of held for trading securities is credited / charged to the profit and loss account. Consistent with prior year, all purchases and sales of investments that require delivery within the time frame established by regulation or market convention are recognised at the trade date. Trade date is the date on which the Bank commits to purchase or sell the investment. Investments other than those classified as held for trading and investments in subsidiaries or associates, are initially recognised at fair value including transaction costs associated with such investments. Investments classified as held for trading are initially recognised at fair value. Cost of investment is determined on moving average basis. Premium or discount on acquisition of investments is amortized through the profit and loss account over the remaining period till maturity. Impairment loss is recognised whenever there is objective evidence of impairment and the carrying amount of an investment exceeds its expected recoverable amount. An impairment loss is recognised in profit and loss account currently. The Bank reviews the carrying value of its investments in associates for impairment at each reporting date if there are any indicators of impairment. The indicators include significant decline in market value of investment, prolonged decline in market value of investment, significant changes with an adverse impact on the entity, increase in market interest rates, carrying amount of net assets are in excess of its market capitalization etc. Considering the fact that these investments are held for long term and there are certain restrictions on their disposal for the purposes of determining significant or prolonged decline in fair value a higher threshold of upto 40% and for prolonged a threshold of upto 12 months may be used. However, the use of higher threshold should be justifiable in view of other factors present for the entity. The amount of impairment loss would be determined based on the higher of value in use and fair value less costs to sell.
6.4.4
6.5
Operating fixed assets 6.5.1 Tangible assets Tangible operating fixed assets are stated at cost less accumulated depreciation and any identified impairment losses (if any). Items of fixed assets costing Rs. 20,000 or less are not capitalized and are charged off in the month of purchase. Profit or loss on disposal of fixed assets is included in profit and loss account currently.
6.5.2
Intangible assets Intangible assets comprise of computer software. Intangible assets with definite useful lives are stated at cost less accumulated amortization and impairment losses (if any). Depreciation / amortization Depreciation / amortization is charged to the profit and loss account by applying the straight line method whereby the depreciable value of an asset is written off over its estimated service life. The Bank charges depreciation / amortization from the month of acquisition and upto the month preceding the disposal. Capital work-in-progress Capital work-in-progress is stated at cost less impairment. Useful lives and residual values Useful lives and residual values are reviewed at each balance sheet date, and adjusted if impact on depreciation is significant. Maintenance and normal repairs Maintenance and normal repairs are charged to profit and loss account as and when incurred. Impairment The Bank assesses at each balance sheet date whether there is any indication that the operating fixed assets may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amounts. Where carrying values exceed the respective recoverable amounts, assets are written down to their recoverable amounts and the resulting impairment charge is recognised in profit and loss account.
6.5.3
6.5.4
6.5.5
6.5.6
6.5.7
6.6
Ijarah Assets (IFAS 2) Ijarah assets are stated at cost less depreciation and are disclosed as part of 'Financings'. The rental received / receivable on Ijarah under IFAS 2 are recorded as income / revenue. Depreciation The Bank charges depreciation from the date of recognition of Ijarah of respective assets to mustajir. Ijarah assets are depreciated over the period of Ijarah using straight line method. Ijarah Rentals Ijarah rentals outstanding are disclosed in 'Other assets' on the Statement of Financial Position at amortized cost. Impairment Impairment of Ijarah asset is determined on same basis as that of operating fixed assets. Impairment of Ijarah rentals are determined in accordance with Prudential Regulations of SBP. The provision for impairment of Ijarah rentals is shown as part of 'Financings'.
6.7
Inventories The Bank values its inventories at the lower of cost and net realizable value. The net realizable value is the estimated selling price in the ordinary course of business less the estimated cost necessary to make the sale. Cost of inventories represents actual purchases made by the Bank / customers as an agent of the Bank for subsequent sale.
6.8
Deposits Deposits are generated on the basis of two modes Qard and Modaraba. Deposits taken on Qard basis are classified as Current Account and Deposits generated on Modaraba basis are classified as Saving Account and Fixed Deposit Account. No profit or loss is passed to current account depositors. Profit realized in investment pools are distributed in pre-agreed profit sharing ratio.
91
Rab-ul-Maal share is distributed among depositor according to weightages assigned at the inception of profit calculation period. Mudarib can distribute its share of profit to Rab-ul-Maal upto a maximum of 50% of their profit. Profits are distributed from the pool so the Depositors (remunerative) only bear the risk of assets in the pool during the profit calculation period. Asset pools are created at the Banks discretion and the Bank can add, amend, transfer asset to any other pool in the interest of the deposit holders. In case of loss in pool during the profit calculation period, the loss is distributed among the depositors (remunerative) according to their ratio of investments. 6.9 Taxation Current The charge for taxation is based on expected taxable income for the year at current rates of taxation, and any adjustments to tax payable in respect of previous years, after taking into consideration available tax credits, rebates, tax losses, etc. Deferred Deferred tax is provided using the balance sheet method, providing for temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences; the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits, and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized. 6.10 Staff retirement benefits Defined benefit plan The Bank operates a funded gratuity scheme for all its permanent employees who have completed the minimum qualifying eligible service of three years. The benefits under the gratuity scheme are payable on death, resignation or at retirement. The scheme was approved by the tax authorities in April 2000 and the last actuarial valuation was conducted as at December 31, 2011. The projected unit credit method was used for actuarial valuation. Actuarial gains or losses are recognised over the future expected average remaining working lives of employees, to the extent of the greater of ten percent of the present value of the defined benefit obligations at that date and ten percent of the fair value of plan assets at that date. Defined contribution plan The Bank also operates a recognised contributory provident fund for all permanent employees. Equal monthly contributions are made, both by the Bank and the employees, to the fund at a rate of 10% of basic salary. 6.11 Compensated absences The Bank recognizes liability in respect of employees compensated absences in the period in which these are earned upto the date of Statement of Financial Position. The provision has been recognised on the basis of actuarial valuation conducted as at December 31, 2011, on the basis of projected unit credit method.
6.12
Dividend and reserves Dividend declared and appropriations, except for transfer to statutory reserve, made subsequent to the date of Statement of Financial Position are recognised as liability and recorded as changes in reserves respectively in the period in which these are approved by the directors / shareholders as appropriate.
6.13
Foreign currency transactions Foreign currency transactions are recorded in rupees at exchange rates prevailing on the date of transaction. Monetary assets, monetary liabilities and contingencies and commitments in foreign currencies except forward contracts other than contracts with SBP at the year end are reported in Rupees at exchange rates prevalent on the date of the Statement of Financial Position. Forward contracts other than contracts with SBP relating to the foreign currency deposits are valued at forward rates applicable to the respective maturities of the relevant foreign exchange contracts. Forward contracts with SBP relating to foreign currency deposit are valued at spot rate prevailing at the balance sheet date. Exchange gains and losses are included in profit and loss account currently.
6.14
Provisions and contingent assets and liabilities Provisions are recognised when the Bank has a present legal or constructive obligation arising as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Provisions are reviewed at each date of Statement of Financial Position and are adjusted to reflect the current best estimate. Contingent assets are not recognised, and are also not disclosed unless an inflow of economic benefits is probable and contingent liabilities are not recognised, and are disclosed unless the probability of an outflow of resources embodying economic benefits are remote. Acceptances comprise undertakings by the Bank to pay bills of exchange drawn on customers. The Bank expects most acceptances to be settled simultaneously with the reimbursement from the customers. Acceptances are accounted for as off-balance sheet transactions and are disclosed as contingent liabilities and commitments.
6.15
Offsetting Financial assets and financial liabilities are offset and the net amount is reported in the Statement of Financial Position when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the approved accounting standards as applicable in Pakistan.
6.16
Segment reporting A segment is a distinguishable component of the Bank that is engaged in providing products 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. The Bank's primary format of reporting is based on business segments. 6.16.1 Business segments Corporate Financing It includes investment banking, syndications, IPO related activities (excluding investments), secondary private placements, underwriting and securitization. Trading and Sales It includes equity, foreign exchanges, commodities, own securities and placements. Retail Banking It includes retail financings, deposits and banking services offered to its retail customers and SMEs.
93
Commercial Banking It includes project finance, export finance, trade finance, ijarah, guarantees and bills of exchange relating to its corporate customers. Agency Services It includes depository receipts, custody, issuer and paying agents. Payment and Settlement It includes payments and collections, funds transfer, clearing and settlement. 6.16.2 Geographical segments The Bank operates only in Pakistan.
6.17
Impairment The carrying amount of the assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the relevant asset is estimated. An impairment loss is recognized whenever, the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in the profit and loss account. An impairment loss is reversed if the reversal can be objectively related to an event occurring after the impairment loss was recognized. Note 2011 Rupees in 000 2010
7.
3,384,647 16,641,160
1,841,512 12,780,806
7.1
These represent local and foreign currency amounts required to be maintained by the Bank with SBP as stipulated by SBP. These accounts are non-remunerative in nature.
Note
2010
8.
8.1
8.1
The return on these balances is around 0.18% (2010: 0.29%) per annum.
9.
9.4
The average return on these products is 11.30% (2010: 12.89%) per annum and will mature between January 2012 to February 2013. The average return on this product is 1.2% (2010: 0.9%) per annum (Euro) and will mature in January 2012.
2011 Rupees in 000 9.3 Particulars of due from financial institutions In local currency In foreign currencies 4,024,739 40,667 4,065,406 9.4 Provision against amounts due from financial institutions Opening balance Charge for the year Reversals Closing balance 94,500 (41,365) (41,365) 53,135
2010
95
10.
INVESTMENTS
10.1 Investments by types 2011 Note Held by the Bank Given as collateral Total Held by the Bank Rupees in 000 45,986,851 1,150,000 47,136,851 63,050 7,476,963 274,280 54,951,144 2010 Given as collateral Total
10.4 10.5
In related parties Subsidiary (unlisted) Associates (listed) Associates (unlisted) Investment at cost / carrying value Provision for diminution in value of investments Investments (net of provision) Surplus on revaluation of available for sale securities Total investments at market value
10.9
21
Rupees in 000 10.2 Investments by segments Federal Government Securities GOP Ijarah Sukuks Fully paid up Ordinary Shares - Listed Companies - Unlisted Companies WAPDA First Sukuk Certificates WAPDA Second Sukuk Certificates PIA Sukuks Sukuk Certificates Preference Shares Global Sukuk Bonds Units of Open-end Funds Society for Worldwide Interbank Financial Telecommunication SCRL (S.W.I.F.T. SCRL) Certificates of Closed-end Funds Total investment at cost / carrying value Provision for diminution in value of investments Investments (net of provision) Surplus on revaluation of available for sale securities Total investments at market value 10.2.1 75,655,305 923,973 313,272 1,260,309 1,730,000 1,500,000 5,120,224 2,656,985 8,938,400 897 161,345 98,260,710 (399,033) 97,861,677 626,897 98,488,574 32,446,557 1,032,031 313,272 1,258,708 1,750,000 1,500,000 5,211,350 146,280 2,915,086 8,168,661 897 208,302 54,951,144 (434,014) 54,517,130 449,777 54,966,907
10.9 21
10.2.1
The Bank purchased 22,000 certificates of WAPDA I Sukuk through a market based transaction for a cash consideration of Rs.110.346 million having face value of Rs. 110 million. These Certificates were available in the sellers CDC account and on completion of the transaction were transferred to the Banks CDC account. The periodic Ijarah rentals due since October 22, 2009 were not paid to the Bank as there was certain discrepancy in the Central Depository Register. The Bank through a legal notice has clarified the position that the Bank has purchased the aforesaid Sukuk Certificates from the market for a valuable consideration when these Sukuks were already entered in the Central Depository Register of seller's account. Though, the suit is pending in Sindh High Court, however, the Bank on prudent basis has recognised provision against these sukuks in the current year.
10.3
Investments in subsidiary and associates, except for Meezan Islamic Income Fund, Meezan Capital Protected Fund II and Meezan Sovereign Fund, form part of strategic investment of the Bank and cannot be sold for five years from the last date of purchase of such securities. Quality of available for sale securities The Bank holds investments in ordinary shares, sukuk certificates and other securities of a nominal value of Rs. 10 each, unless stated otherwise, in the following listed investee companies / funds:
10.4
2011 Note
2010
2011 Cost
Rupees in 000
Ordinary shares Automobile parts and accessories Agriauto Industries Limited Cement Attock Cement Pakistan Limited D.G. Khan Cement Company Limited Lucky Cement Company Limited Automobile assembler Indus Motor Company Limited Pak Suzuki Motor Company Limited Power generation and distribution The Hub Power Company Limited Oil and gas marketing Pakistan State Oil Company Limited Oil and gas exploration Pakistan Oilfields Limited Oil and Gas Development Company Limited Pakistan Petroleum Limited Attock Petroleum Limited Fertilizer Fauji Fertilizer Bin Qasim Limited Fauji Fertilizer Company Limited Paper and board Packages Limited Chemicals ICI Pakistan Limited Lotte Pakistan PTA Limited Technology and communication Pakistan Telecommunication Company Limited (A) Refinery National Refinery Limited Jute Thal Limited Miscellaneous Tri-Pack Films
Rupees in 000
10.4.1
190,542 190,737 1,252,089 26,360 2,261,651 569,676 888,431 1,127,139 15,000 1,489,429 595,489 223,616
324,000 200,737 115,000 1,092,326 738 30,700 1,300,000 494,446 531,676 621 904,490 2,482,500 1,445,543 250,783 505,489 978,530 2,801,100 99,936 9,200 223,616
11,969 8,372 88,806 2,248 83,703 166,177 125,171 181,579 4,953 143,709 81,984 25,302
20,352 8,811 3,068 75,589 106 2,618 46,652 144,138 120,911 84 139,117 79,644 151,733 46,826 66,286 12,896 67,539 19,780 579 25,302
10,956 9,728 93,957 1,556 77,348 197,364 134,704 189,720 6,188 222,729 71,619 35,846
Unrated Unrated Unrated Unrated AA+/A1+ Unrated AAA / A1+ Unrated Unrated Unrated Unrated A+/A1
24,689 12,668 3,470 82,787 186 2,143 48,633 145,951 157,355 106 196,410 88,700 181,936 32,253 72,912 13,406 54,397 27,361 1,198 27,317
Unrated Unrated Unrated Unrated Unrated Unrated AA+/A1+ AA+ / A1+ Unrated AAA / A1+ Unrated Unrated Unrated AA / A1+ Unrated Unrated Unrated Unrated Unrated A+/A1
97
2011 Note
2010
2011 Cost
Rupees in 000
Sukuk Certificates WAPDA First Sukuk Certificates WAPDA Second Sukuk Certificates Pakistan International Airlines - at cost Dawood Hercules Chemicals Limited - at cost Century Paper and Board Mills Limited - at cost Sui Southern Gas Company Limited - at cost Engro Fertilizers Limited - at cost Sitara Chemicals Industries Limited - at cost Quetta Textile Mills Limited - at cost Arzoo Textile Mills Limited - at cost Sitara Peroxide Limited - at cost Liberty Power Tech Limited - at cost Eden Builders Limited - at cost Maple Leaf Cement Factory Limited - at cost Maple Leaf Cement Factory Limited - at cost Amreli Steel Limited - at cost Kott Addu Power Company Limited - at cost The Hub Power Company Limited - at cost GOP Sukuks Ijarah Sukuk First Ijarah Sukuk Second Ijarah Sukuk Third Ijarah Sukuk Fourth Ijarah Sukuk Fifth Ijarah Sukuk Sixth Ijarah Sukuk Seventh Ijarah Sukuk Eighth Ijarah Sukuk Ninth Units of open-end funds United Islamic Saving Fund IGI Islamic Income Fund Pak Oman Advantage Islamic Income Fund HBL Islamic Money Market Fund Atlas Islamic Fund Sukuk Bonds Abu Dhabi Sukuk Bonds Central Bank of Bahrain International Sukuk Islamic Development Bank Trust Services Sukuk Malaysia Sukuk Global Qatar Islamic Bank Sukuk Wakala Global Sukuk Others Haleeb Foods Limited - at cost S.W.I.F.T. SCRL - at cost
Rupees in 000
10.4.2 10.4.3 10.4.4 10.4.5 10.4.6 10.4.7 10.4.8 10.4.9 10.4.10 10.4.11 10.4.12 10.4.13 10.4.14 10.4.15 10.4.16 10.4.17
22,000 346,000 300,000 125,000 200,000 150,000 30,000 10,000 30,000 18,140,480 14,400 40,000 1,500 50,000 100,000 125,000
22,000 350,000 300,000 20,000 125,000 200,000 150,000 29,600 30,000 10,000 30,000 16,680,930 14,400 40,000 1,500 50,000 -
110,309 1,730,000 1,500,000 375,000 166,670 750,000 135,000 50,000 140,625 1,755,269 40,500 199,660 7,500 250,000 500,000 750,000
108,708 1,750,000 1,500,000 904,800 500,000 500,002 750,000 37,000 145,000 50,000 140,625 1,668,093 58,500 199,830 7,500 250,000 -
110,309 Govt. Guaranteed 1,737,439 Govt. Guaranteed 1,506,000 Govt. Guaranteed 375,000 A+ 166,670 AA 750,000 AA135,000 BBB+ 50,000 Unrated 140,625 Unrated 1,755,269 AA 40,500 A 199,660 D 7,500 D 250,000 A500,000 AA+ 750,000 AA+
114,257 Govt. Guaranteed 1,760,850 Govt. Guaranteed 1,500,000 Govt. Guaranteed 904,800 Unrated 500,000 A+ 500,002 AA 750,000 AA37,000 AA145,000 BBB+ 50,000 Unrated 140,625 Unrated 1,668,093 AA58,500 A 199,830 BB+ 7,500 BB+ 250,000 A-
Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed
Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed -
7,946,976 1,099,617 -
800,000 100,000 -
807,715 110,521 -
Unrated Unrated -
BBB AAA A3 A A3
A2 A AAA A3 A -
10.4.29
2,786,000 5
2,786,000 5
Unrated Unrated
Unrated Unrated
10.4.1 10.4.2
The nominal value of these shares is Rs. 5 each. The paid up value of these sukuks is Rs. 5,000 per certificate. The return on these Sukuks - WAPDA is on a six monthly Karachi inter-bank offer rate plus a fixed credit spread of 35 basis points. These sukuks will mature in 2012. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The paid up value of these sukuks is Rs. 5,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The profit rate on these certificates is six monthly Karachi inter-bank offer rate minus 25 basis points. These sukuks will mature in 2017. The paid up value of these sukuks is Rs. 5,000 per certificate. The return on Sukuk - PIA is on a six monthly Karachi inter-bank offer rate plus a fixed credit spread of 175 basis points. These bonds will mature in 2014. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The paid up value of these sukuks is Rs. 3,000 per certificate. The tenure of these certificates is 7 years, with principal receivable in 2010 - 2014. The profit is calculated on the basis of six months Karachi inter-bank offer rate plus 135 basis points. The paid up value of these sukuks is Rs. 833 per certificate. The tenure of these certificates is 5 years, with principal receivable in 2009 - 2012. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 80 basis points. The paid up value of these sukuks is Rs. 5,000 per certificate. The tenure of these certificates is 8 years, with principal receivable in 2015. The profit is calculated on the basis of six months Karachi inter-bank offer rate plus 150 basis points. The paid up value of these sukuks is Rs. 4,500 per certificate. The tenure of these certificates is 7 years, with principal receivable in 2010-2015. The profit is calculated on the basis of six months Karachi inter-bank offer rate plus 150 basis points. The paid up value of these sukuks is Rs. 5,000 per certificate. The tenure of these certificates is 6 years, with principal receivable in 2009-2014. The profit is calculated on the basis of six months Karachi inter-bank offer rate plus 200 basis points from year 1 to 2 and plus 175 basis points from year 3 to year 6.
10.4.3
10.4.4
10.4.5
10.4.6
10.4.7
10.4.8
10.4.9
10.4.10 The paid up value of these sukuks is Rs. 4,687 per certificate. The tenure of these certificates is 8 years, with principal receivable in 2012-2016. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 110 basis points. 10.4.11 The paid up value of these sukuks is Rs. 96.76 per certificate. The tenure of these certificates is 12 years, with principal receivable in 2011-2021. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 300 basis points. 10.4.12 The paid up value of these sukuks is Rs. 2,813 per certificate. The tenure of these certificates is 5.5 years, with principal receivable in 2010-2014. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 230 basis points. 10.4.13 The paid up value of these sukuks is Rs. 4,996 per certificate. The tenure of these certificates is 11 years, with principal receivable in 2010 - 2018. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 100 basis points. 10.4.14 The paid up value of these sukuks is Rs. 5,000 per certificate. The tenure of these certificates is 2 years, with principal receivable in March 2012. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 100 basis points. 10.4.15 The paid up value of these sukuks is Rs. 5,000 per certificate. The tenure of these certificates is 7 years, with principal receivable in 2012 - 2016. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 250 basis points. 10.4.16 The paid up value of these sukuks is Rs. 5,000 per certificate. The tenure of these certificates is 6 month, with principal receivable in June 2012. The profit is calculated on the basis of six months Karachi inter-bank offer rate plus 110 basis points.
Annual Report 2011
99
10.4.17
The paid up value of these sukuks is Rs. 5,000 per certificate. The tenure of these certificates is 6 month, with principal receivable in February 2012. The profit is calculated on the basis of six months Karachi inter-bank offer rate plus 110 basis points. The paid up value of these sukuks is Rs. 100,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The profit rate on these certificates comprises of six months weighted average yield of six months market T-Bills plus zero basis points. These certificates will mature in 2012. The paid up value of these sukuks is Rs. 100,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The profit rate on these certificates comprises of six months weighted average yield of six months market T-Bills minus 5 basis points. These certificates will mature in 2012. The paid up value of these sukuks is Rs. 100,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The tenure of these certificates is 3 years, with principal receivable in 2013. The profit is calculated on the basis of six month weighted average yield of six month market T-Bills. The paid up value of these sukuks is Rs. 100,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The profit rate on these certificates comprises of six months weighted average yield of six months market T-Bills plus zero basis points. These certificates will mature in 2014. The paid up value of these sukuks is Rs. 100,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The profit rate on these certificates comprises of six months weighted average yield of six months market T-Bills plus zero basis points. These certificates will mature in 2014. The paid up value of these sukuks is Rs. 100,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The profit rate on these certificates comprises of six months weighted average yield of six months market T-Bills plus zero basis points. These certificates will mature in 2014. The paid up value of these sukuks is US$ 1 and will mature in 2014. The profit coupon is 6.25 percent per annum. These securities are held through a custodian. The paid up value of these sukuks is US$ 1 and will mature in 2014. The profit coupon is 3.17 percent per annum. These securities are held through a custodian. The paid up value of these sukuks is US$ 1 and will mature in 2015. The profit coupon is 3.93 percent per annum. These securities are held through a custodian. The paid up value of these sukuks is US$ 1 and will mature in 2015. The profit coupon is 3.86 percent per annum. These securities are held through a custodian. The paid up value of these sukuks is US$ 1 and will mature in 2016. The profit coupon is 2.99 percent per annum. These securities are held through a custodian. The Chief Executive of Haleeb Foods Limited is Mr. Mohammad Imran Amjad.
10.4.18
10.4.19
10.4.20
10.4.21
10.4.22
10.4.23
10.5
Held to maturity securities Name of the investee entity Sukuk Certificates WAPDA First Sukuk Certificates (Sukuk - WAPDA)
Note
2011
10.5.1
230,000
230,000
1,150,000 1,150,000
1,150,000 1,150,000
10.5.1
The paid up value of Sukuk -WAPDA is Rs. 5,000 per certificate. The return on Sukuk - WAPDA is on a six monthly Karachi inter-bank offer rate plus a fixed credit spread of 35 basis points. These bonds will mature in 2012. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee.
10.6
Subsidiary (unlisted) Particulars Note 2011 2010 2011 2010 Percentage of equity holding % Break up value per share Rupees Latest available audited financial statements Name of the chief executive
Number of Shares
Al-Meezan Investment Management Limited (ordinary shares)
Rupees in 000
10.6.1
3,250,000
3,250,000
63,050 63,050
63,050 63,050
65
226.78
10.6.1
The nominal value of these shares is Rs. 100 each. These shares are placed in custody account with the Central Depository Company of Pakistan Limited. These shares cannot be sold without the prior approval of SECP in accordance with SECP's circular No. 9 of 2006 dated June 15, 2006.
101
10.7
Associates (listed) The Bank holds investments in ordinary shares / units / certificates of Rs. 10 each, unless stated otherwise, in the following listed investee entities: Name of the investee entity Note 2011 2010 Percentage of direct equity holding %
4.04
2011
2010
5,561,607
46,957
13.44
161,345
161,345
Open end fund Open end fund Open end fund Open end fund Open end fund Open end fund
The nominal value of open end fund units is Rs. 50 each. The above associates are incorporated in Pakistan. Investments in listed associates have a market value of Rs. 8,021 million (2010: Rs. 7,530 million).
10.8
Associates (unlisted) The Bank holds investments in ordinary shares of Rs. 10 each, unless stated otherwise, in the following unlisted investee companies:
Particulars Note Number of shares / certificates
Plexus (Private) Limited Faysal Management Services (Private) Limited 1,499,980 1,499,980
2011
2010
2011
2010
Rupees in 000
15,000 15,000
10.8.1
540,000
540,000
54,000
54,000
30%
104.45
Blue Water (Private) Limited Falcon Greenwood (Private) Limited Ordinary Shares Preference Shares Advance against issue of Preference Shares Pak Kuwait Takaful Insurance Co. Limited
10.8.2
90,000
90,000
9,000
9,000
30%
104.58
June 30, 2010 10.8.2 250,000 250,000 1,432,800 25,000 25,000 143,280 25% N/A 95.27 N/A -
3,000
N/A
N/A
2,500,000
2,500,000
25,000 128,000
25,000 274,280
6%
4.73
The nominal value of these shares is Rs. 100 each. These shares cannot be sold without the prior approval of SECP in accordance with circular No. 10 of 2006 dated June 16, 2006. The nominal value of these shares is Rs. 100 each. The above associates are incorporated in Pakistan.
Provision for diminution in value of investments 2011 Others 118,803 250,581 250,581 369,384 2010 Others 88,640 30,163 30,163 118,803
Associates Opening balance (Reversal) / charge for the year - on associates (listed) - on associates (unlisted) - on available for sale investments Closing balance 315,211 (287,046) 1,484 (285,562) 29,649
Rupees in 000
103
10.9.1
Provision in respect of type and segment Associates - unlisted Fully paid-up ordinary shares Associates - listed Certificates Units Other - Available for sale investments Fully paid-up ordinary shares Sukuks
Note
2010
28,165
11.
FINANCINGS
In Pakistan - Murabaha financings - Net investment in Ijarah - Net book value of assets / investment in Ijarah under IFAS-2 - Financing under Islamic Export Refinance - Murabaha - Financing under Islamic Export Refinance - Istisna - Diminishing Musharakah financings - housing - Diminishing Musharakah financings - others - Running Musharakah financings - Musharakah financings - Istisna financings - Tijarah financings - Bai Muajjal financings - Service Ijarah financings - Musawammah financings (Laptop) - Labbaik (Qard for Hajj and Umrah) - Financings against bills - Salam - Financings against bills - Murabaha - Staff financings - Loans and running finances Gross financings Provision against non-performing financings Financings (net of provision) 11.1 11.2 11.2.1 11.3 11.4 17,409,279 2,387,178 4,699,578 1,702,554 4,107,184 2,426,619 17,257,712 750,000 70,531 9,888,822 485,970 999,306 2,732 25,683 7,545 744,819 54,180 710,111 746,917 64,476,720 (5,321,135) 59,155,585 19,321,616 4,193,128 3,467,234 2,041,370 2,846,176 2,680,995 13,096,430 70,531 6,565,529 1,468,736 4,547 744,180 100,717 580,105 865,015 58,046,309 (3,851,146) 54,195,163
11.9
11.12 11.10
11.1
Murabaha receivable - gross Deferred murabaha income Profit receivable shown in other assets Murabaha financings
11.1.1
11.1.1
11.2
Net investment in Ijarah 2011 Not later Later than than one one and less than five year years
Ijarah rentals receivable Residual value Minimum Ijarah payments Profits for future periods Present value of minimum Ijarah payments 989,745 411,643 1,401,388 (320,387) 1,081,001 2,259,445 230,343 2,489,788 (1,183,611) 1,306,177
2010 Over five years Total Not later Later than than one one and less year than five years Rupees in 000
1,504,997 1,097,254 2,602,251 (915,280) 1,686,971 2,264,784 1,027,304 3,292,088 (797,868) 2,494,220
Total
11.2.1
Net book value of assets / investments in Ijarah under IFAS-2 is net of depreciation of Rs 2,392.195 million (2010: Rs 960.456 million). Note 2011 2010 Rupees in 000 1,797,116 (52,256) (42,306) 1,702,554 4,161,103 (545) (53,374) 11.4.1 4,107,184 2,138,701 (50,291) (47,040) 2,041,370 2,857,792 (59) (11,557) 2,846,176
11.3
Financing under Islamic Export Refinance - Murabaha (gross) Deferred income Profit receivable shown in other assets Financing under Islamic Export Refinance - Murabaha
11.4
Financing under Islamic Export Refinance - Istisna (gross) Deferred income Profit receivable shown in other assets Financing under Islamic Export Refinance - Istisna 11.4.1
This includes advance against Export Refinance - Istisna amounting to Rs. 3,328.550 million (2010: Rs. 2,557.027 million). Note 2011 Rupees in 000 2010
11.5
Istisna financings - gross Deferred income Profit receivable shown in other assets Istisna financings 11.5.1 11.5.1
This includes advance against Istisna amounting to Rs. 8,911.059 million (2010: Rs. 5,787.777 million). 2011 Rupees in 000 2010
11.6
Tijarah financings - gross Deferred income Profit receivable shown in other assets Tijarah financings
11.7
Bai Muajjal financings - gross Deferred income Profit receivable shown in other assets Bai Muajjal financings
105
2011 Rupees in 000 11.8 Musawammah financings (Laptop) - gross Deferred income Profit receivable shown in other assets Musawammah financings (Laptop) 11.9 32,018 (6,324) (11) 25,683
2010 -
This includes Rs. 110.299 million (2010 : Rs. 95.711 million) representing mark up free financings to staff advanced under the Bank's Human Resource Policies. 2011 Rupees in 000 2010
11.10 Particulars of financings - net 11.10.1 In - local currency - foreign currencies 56,502,562 2,653,023 59,155,585 11.10.2 Short-term (for upto one year) Long-term (for over one year) 39,092,288 20,063,297 59,155,585 51,103,879 3,091,284 54,195,163 32,095,399 22,099,764 54,195,163
11.11 Financings include Rs. 4,647.792 million (2010: Rs. 4,318.323 million) which have been placed under non-performing status as detailed below: Category of classification Domestic Overseas 2011 Total Rupees in 000 Substandard Doubtful Loss 112,976 464,072 4,070,744 4,647,792 112,976 464,072 4,070,744 4,647,792 2010 Total Rupees in 000 Substandard Doubtful Loss 282,831 755,177 3,280,315 4,318,323 282,831 755,177 3,280,315 4,318,323 50,731 287,478 2,774,688 3,112,897 50,731 287,478 2,774,688 3,112,897 21,646 222,784 3,815,390 4,059,820 21,646 222,784 3,815,390 4,059,820 Provision required Provision held
Category of classification
Domestic
Overseas
Provision required
Provision held
11.12 Particulars of provision against non-performing financings: 2011 Specific General Total Specific Rupees in 000 Opening balance Charge for the year Reversals Amount written off note 11.13 Closing balance 11.12.1 3,112,897 1,295,292 (346,744) 948,548 (1,625) 4,059,820 738,249 528,833 (5,767) 523,066 1,261,315 3,851,146 1,824,125 (352,511) 1,471,614 (1,625) 5,321,135 2,443,282 926,331 (249,261) 677,070 (7,455) 3,112,897 85,262 652,987 652,987 738,249 2,528,544 1,579,318 (249,261) 1,330,057 (7,455) 3,851,146 2010 General Total
The Bank has maintained a general reserve (provision) in accordance with the applicable requirements of the Prudential Regulations for consumer financing issued by SBP. The Bank has also maintained a general provision of Rs 1,175 million against financings made on prudent basis, in view of prevailing economic conditions. This general provision is in addition to the requirements of the Prudential Regulations.
11.12.2
In accordance with BSD Circular No. 2 dated January 27, 2009 issued by the State Bank of Pakistan, the Bank has availed the benefit of FSV against the non-performing financings. Had the benefit of FSV not been availed by the Bank, the specific provision against non-performing financings would have been higher and consequently profit before taxation and financings (net of provisions) as at December 31, 2011 would have been lower by approximately Rs 68.001 million. The accumulated benefit availed as at December 31, 2011 amounts to Rs. 230.611 million. The increase in profit, due to availing of the benefit, is not available for distribution of cash and stock dividend to share holders. In 2011, the SBP has issued another circular which increases the benefit of FSV. The Bank has not taken the impact / benefit of this circular in these financial statements.
11.12.3 Particulars of provision against non-performing financings: 2011 Specific In local currency In foreign currencies 3,978,161 81,659 4,059,820 General 1,261,315 1,261,315 Total 5,239,476 81,659 5,321,135 Note 11.13 Particulars of write offs 11.13.1 Against provision Directly charged to profit and loss account 11.13.2 Write offs Rs. 500,000 and above Write offs below Rs. 500,000 11.12 1,625 1,625 1,625 1,625 7,455 7,455 7,455 7,455 Specific 3,090,952 21,945 3,112,897 Rupees in 000 738,249 738,249 2011 3,829,201 21,945 3,851,146 2010 General Total
11.13.3 Details of financings written off of Rs. 500,000 and above In term of sub-section (3) of section 33 A of the Banking Companies Ordinance, 1962, the statement in respect of written off financings or any other financial relief of five hundred thousand rupees or above allowed to any person during the year ended December 31, 2011 is given as Annexure - 1.
107
11.14 Particulars of financings to directors, associated companies, etc. Debts due by directors, executives or officers of the Bank or any of them either severally or jointly with any other persons. Note 2011 2010 Rupees in 000 Balance at the beginning of the year Additions / disbursements during the year Deletions / repayments during the year Balance at the end of the year 11.14.1 603,056 262,496 (137,543) 728,009 460,290 223,000 (80,234) 603,056
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. Note 2011 2010 Rupees in 000 Balance at the beginning of the year Additions / disbursements during the year Deletions / repayments during the year Balance at the end of the year 11.14.2 70,531 70,531 143,834 400,000 (473,303) 70,531
Debts due by subsidiary companies, controlled firms, managed Modarabas and other related parties. Note 2011 2010 Rupees in 000 270,628 (70,628) 200,000
Balance at the beginning of the year Additions / disbursements during the year Deletions / repayments during the year Balance at the end of the year 11.14.1 11.14.2 11.14.3
The maximum total amount of financings including temporary financings granted during the year were Rs. 262 million (2010: Rs. 223 million). The maximum amount has been calculated by reference to the month end balance. This represents a Musharakah facility outstanding at year end from Blue Water (Private) Limited (an associated company) amounting to Rs. 71 million (2010: Rs. 71 million). The Musharakah facility is secured against equitable mortgage over property. This represents a Murabaha facility outstanding at year end to Al Meezan Investment Management Limited amounting to Rs. 200 million.
11.14.3
11.14.4 Loans and financings to Executives and a Director Executives 2010 2011 Opening balance Financings disbursed during the year Financings repaid during the year Closing balance 321,851 163,964 (48,154) 437,661 251,840 99,110 (29,099) 321,851 Director 2011 2010 166 (133) 33 298 (132) 166
Rupees in 000
Note
2010
12.
12.1
175,200
852,774
12.2 12.4
12.1
Capital work-in-progress - Advances to suppliers and contractors for building renovation - Advances for computer hardware - Advances for purchase of vehicles - Advances for computer software - Advances for office machines - Advances for furniture and fixtures 107,902 7,406 14,911 18,169 26,512 300 175,200 722,248 7,588 12,348 27,151 57,256 26,183 852,774
109
12.2
2010 DEPRECIATION As at January 1, 2010 Rupees in 000 Charge / (on disposals) As at December 31, 2010 Net book value as at December 31, 2010 544,440 117,586 735,528 108,261 389,163 214,215 2,109,193 5 10 10 20 and 33 20 Rate of depreciation %
Leasehold land Buildings on leasehold land Leasehold improvements Furniture and fixtures Electrical, office and computer equipments Vehicles
12.3
Rupees in 000 At January 1, 2010 Cost Accumulated depreciation Net book value Year ended December 31, 2010 Additions Net book value of disposals Depreciation charge Net book value as at December 31, 2010 Year ended December 31, 2011 Additions Net book value of disposals Depreciation charge Net book value as at December 31, 2011 71,549 875,185 (32,480) 446,073 (48,642) (112,246) 74,318 (5,815) (20,732) 477,821 (1,225) (199,373) 123,492 2,068,438 (16,229) (71,911) (71,908) (436,739) 544,440 13,211 (8,100) 117,586 159,545 (91,803) 735,528 20,905 (15,491) 108,261 166,112 (479) (182,355) 389,163 103,190 (11,329) (61,326) 214,215 462,963 (11,808) (359,075) 2,109,193 544,440 544,440 139,125 26,650 112,475 861,336 193,550 667,786 141,984 39,137 102,847 846,337 440,452 405,885 294,736 111,056 183,680 2,827,958 810,845 2,017,113
615,989
960,291
1,020,713
156,032
666,386
249,570
3,668,981
12.3.1
Included in cost of property and equipment are fully depreciated items still in use aggregating Rs. 523 million (2010: Rs. 346 million).
111
12.3.2
Details of disposal of fixed assets to executives and other persons are as follows:
Description Cost Accumulated Net book depreciation value Rupees in 000 Sale proceeds Mode of disposal Particulars of purchaser
Items having book value in aggregate more than Rs. 250,000 or cost more than Rs. 1,000,000 Vehicles Honda Citi Honda Citi Honda Citi Honda Citi Honda Citi Honda Citi Honda Citi Honda City Honda City Honda Civic Honda Civic Honda Civic Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Toyota Corolla Toyota Corolla Toyota Corolla Electrical, office and computer equipments Computer equipments Computer equipments ATM Machine Split Air Conditioner Split Air Conditioner Split Air Conditioner Office Equipments 1,234 2,137 726 1,631 2,093 1,637 8,290 17,748 1,232 2,132 182 1,396 2,007 1,637 8,215 16,801 2 5 544 235 86 75 947 23 94 363 283 549 1,312 Negotiation Negotiation Insurance Claim Negotiation Negotiation Discarded Discarded Ali Brothers Shahjee's Computer Pak Kuwait Takaful Co. Ali Brothers Glacier Engineering 885 901 883 886 884 883 886 1,319 900 1,712 1,506 841 586 518 470 480 470 469 470 470 470 477 470 468 749 586 647 748 772 772 836 560 712 586 772 647 784 772 579 579 553 586 556 560 560 560 567 470 522 1,004 1,004 1,529 37,876 885 901 883 886 884 883 886 440 162 998 1,456 840 273 328 306 352 306 469 305 313 298 304 274 242 226 303 345 262 386 463 446 560 332 322 373 313 274 450 328 328 240 371 435 560 560 560 529 298 305 669 656 153 24,921 879 738 714 50 1 313 190 164 128 164 165 157 172 173 196 226 523 283 302 486 386 309 390 380 264 399 334 510 322 251 251 313 215 121 38 172 217 335 348 266 MBL Staff Policy .Mashkoor Hassan Siddiqui (Employee) Mr 286 MBL Staff Policy Mr.Mashkoor Khan A.G (Employee) 275 MBL Staff Policy Mr.Mateen Mahmood (Employee) 266 MBL Staff Policy Mr.Moazzam Saeed (Employee) 266 MBL Staff Policy Mr.Nasir Mian Mehmood (Employee) 265 MBL Staff Policy Mr.Omer Waqas (Employee) 266 MBL Staff Policy Mr.Tasweer Hassan (Employee) 1,100 Insurance Claim Pak Kuwait Takaful Co. 266 MBL Staff Policy Mr.Ameen Khowaja (Employee) 1,041 MBL Staff Policy Mr. Azhar Ali Naqvi (Ex-Employee) 522 MBL Staff Policy Mr.Arshad Majeed (Employee) 252 MBL Staff Policy Mr.Naeem Sarfaraz (Employee) 607 Negotiation Mr.Sohail Rashid 273 MBL Staff Policy Mr.Aneeq Ejaz Qureshi (Employee) 284 MBL Staff Policy Mr.Azfar Alam (Employee) 242 MBL Staff Policy Mr.Fayyaz Ahmed (Employee) 273 MBL Staff Policy Mr.Imran Khalid Shami (Employee) 141 MBL Staff Policy Mr.Muhammad Mohsin (Employee) 267 MBL Staff Policy Mr.Muhammad Zahid (Employee) 273 MBL Staff Policy Mr.Nasir Mehmood (Employee) 273 MBL Staff Policy Mr.Syed M. Fahad (Employee) 273 MBL Staff Policy Mr.Syed Zakaria Farooq (Employee) 284 MBL Staff Policy Mr.Tariq Mehmood Ansari (Employee) 284 MBL Staff Policy Mr.Zubair Ahmed (Employee) Ex-Gratia Mr.Anwar Raza (Employee - Late) 608 Negotiation Hira Foundation School 660 Negotiation Mr.Ali Samad Awan 710 Negotiation Mr.Ali Sarmad Awan 707 Negotiation Mr.Khurrm Shahzad 617 Negotiation Mr.M Farruk 650 Negotiation Mr.M Shoaib Shamim 603 Negotiation Mr.Muhammad Zafar 642 Negotiation Mr.Muhammad Zafar 633 Negotiation Mr.Nadeem Ahmed 702 Negotiation Mr.Nadeem Ahmed 646 Negotiation Mr.Nadeem Ahmed 741 Negotiation Mr.Noman Hasan Khan 656 Negotiation Mr.Wasim Mirza 646 Negotiation Mr.Zahid Qadri 606 Negotiation Mr.Zulfiqar A Khan 400 Insurance Claim Pak Kuwait Takaful Co. 351 MBL Staff Policy Mr.Ather Hassan (Employee) 246 MBL Staff Policy Mr.Kamal Hussain (Employee) 168 MBL Staff Policy Mr.Kazim Raza (Employee) 168 MBL Staff Policy Mr.Malik Asgar Khan (Employee) 168 MBL Staff Policy Mr.Nawaz (Employee) 201 MBL Staff Policy Mr.Omer Salim Ullah (Employee) 273 MBL Staff Policy Mr.Shahzad Charania (Employee) 284 MBL Staff Policy Mr.Wise ur Rehman (Employee) 1,118 Negotiation Mr.Khursheed Anwar 1,050 Negotiation Mr.Zaheer Baber (Ex-Employee) 1,529 Insurance Claim Pak Kuwait Takaful Co. 24,328
1,376 12,955
Description
Cost
Sale proceeds
Mode of disposal
Particulars of purchaser
Furniture and Fixtures Furniture and fixtures Leasehold Improvements Leasehold improvements Leasehold improvements Leasehold improvements 1,426 4,311 98,475 104,212 286 3,198 52,106 55,590 1,140 1,113 46,369 48,622 839 1,702 2,541 Insurance Claim Negotiation Discarded Pak Kuwait T Co. akaful Ali Brothers 9,842 4,611 5,231 Discarded
Items having book value in aggregate less than Rs. 250,000 or cost less than Rs. 1,000,000 Vehicles Electrical, office and computer equipments Furniture and Fixtures Leasehold improvements 11,923 4,035 2,248 30 187,914 8,649 3,757 1,664 10 116,003 3,274 278 584 20 71,911 12,043 434 2 40,660
12.4
Intangible assets COST As at Additions January during 1, 2011 the year As at December 31, 2011 AMORTIZATION As at Amortization As at during January December the year 1, 2011 31, 2011 Rupees in 000 Computer software 2010 216,640 173,914 76,652 42,726 293,292 216,640 112,507 78,697 39,718 33,810 152,225 112,507 141,067 104,133 20 Net book Rate of value amortias at zation December % 31, 2011
12.5
Intangible assets - Movement of net book value Year ended December 31, 2010 Net book value as at January 1, 2010 Computer software 95,217 Additon during the year Amortization charge for the year Net book value as at December 31, 2010 104,133 Year ended December 31, 2011 Addition during the year Amortization Net book charge for the value year as at December 31, 2011 39,718 141,067
113
Note
2010 2,069,082 13,238 416,672 91,214 3,821 2,461,097 2,494,424 396,437 718,123 16,968 19,813 234,917 66 50,919 8,986,791 (37,032) 8,949,759
13.1 13.2
410,666 129,347 6,486 4,758,438 4,741,141 559,510 646,509 516,298 21,487 82,162 360,401 69 72,686 15,270,228 (205,274) 15,064,954
13.3 13.4
13.5
This includes prepaid rent and prepaid insurance aggregating Rs. 187.939 million (2010: Rs. 193.679 million) and Rs. 146.019 million (2010: Rs. 139.543 million) respectively which are being amortized over a period of one year. This represents goods purchased for Murabaha, Istisna and Tijarah which remained unsold at the balance sheet date. This is net off loss on forward foreign exchange contracts of Rs. 347 million (2010: Rs. 233 million). The market value of the non-banking assets acquired in satisfaction of claims is Rs. 374 million. (2010: Rs. 248.64 million). Provision against other assets Opening balance Charge for the year Reversals during the year Closing balance 2011 Rupees in 000 37,032 172,077 (3,835) 205,274 18,727 30,000 (11,695) 37,032 2010
15.1
Particulars of due to financial institutions with respect to currencies In local currency In foreign currencies
Note
15.2
Details of due to financial institutions secured / unsecured Secured Musharakah from the State Bank of Pakistan under Islamic Export Refinance Scheme Unsecured Overdrawn nostro accounts Other Musharakah / Modarabas 15.2.1
15.2.1
These Musharakah are on a profit and loss sharing basis maturing between January 11, 2012 to June 27, 2012 and are secured against demand promissory notes executed in favour of SBP. A limit of Rs. 7,500 million (2010: Rs. 5,800 million) has been allocated to the Bank by SBP under Islamic Export Refinance Scheme for the financial year ending June 30, 2012. 2011 Rupees in 000 9,235,960 9,235,960 2010 5,829,296 5,829,296
15.3
Financial institutions - Remunerative deposits - Non-remunerative deposits 540,703 5,498 546,201 170,030,431 512,706 13,904 526,610 131,070,328
16.1
Particulars of deposits In - local currency - foreign currencies 162,518,193 7,512,238 170,030,431 124,387,769 6,682,559 131,070,328
115
17.
Note
2010
966,539 (160,927) (505,619) 48,698 33,075 57,357 12,961 452,084 (109,909) 342,175
18.2
18.1 18.2
This includes Rs. 116.446 million (2010: Rs. 115.971 million) in respect of return accrued on borrowings from SBP under the Islamic Export Refinance Scheme. This includes Rs. 3.585 million (2010: Rs. 2.520 million) in respect of payable to Al Meezan Investment Management Limited (Subsidiary).
18.3
Provision against off-balance sheet obligations Note Opening balance (Reversal) / charge for the year Closing balance 2011 Rupees in 000 39,282 (6,113) 33,169 1,600 37,682 39,282 2010
18.4
Reconciliation of charity payable Balance as at January 01 Additions during the year Less: Transferred to charity savings account (included in deposits and other accounts) Balance as at December 31 78,406 56,692 18.4.2 (129,494) 5,604 18,170 106,309 (46,073) 78,406
18.4.1
Charity paid through saving account during the year is Rs. 130.110 million (2010: Rs. 137.633 million). Charity in excess of Rs.100,000 was paid to the following individuals / organizations: Note 2011 Rupees in 000 2010
Ihsan Trust AKUH Rippah International University Al Shifa Trust SOS Children Villages of Sindh
18.4.1.1
130,110 -
18.4.1.1 One member of the Shariah Advisory Board of the Bank is the trustee of the Donee. 18.4.2 18.4.3 The balance in Charity's saving account is Rs. 12 million (2010: Rs. 10 million). Charity was not paid to any individual / organization in which a director or his spouse had any interest at any time during the year.
1,100,000,000
117
19. 2
Issued, subscribed and paid-up capital 2011 2010 Number of Shares Ordinary shares Fully paid in cash Issued as bonus shares Issued for consideration other than cash Note 2011 Rupees in 000 2010
20. RESERVES
Statutory reserve General reserve 20.1 20.1 1,991,553 66,766 2,058,319 1,313,244 66,766 1,380,010
Under section 21 of the Banking Companies Ordinance, 1962, an amount not less than 20% of the profit after tax is to be transferred to create a reserve fund till such time the reserve fund and the share premium account equal the amount of the paid up capital.
22.4
Note
Commitments for the acquisition of operating fixed assets Commitments in respect of financings Commitments in respect of purchase of sukuks Other commitments Bills for collection (inland) Bills for collection (foreign)
214,921 27,946,183 -
23.
24.1
24.1
This includes Rs. 482.609 million (2010: Rs. 376.212 million) paid / payable to SBP under IslamicExport Refinance Scheme.
25.
119
Note
27.2
This includes remuneration to Shariah Advisor amounting to Rs. 4.5 million (2010: Rs. 3.6 million). This includes fee charged by the subsidiary in respect of the management of investment portfolio of the Bank. This includes remuneration to Shariah Board amounting to Rs. 1 million (2010: Rs. 1 million). Auditors remuneration 2011 Rupees in 000 Audit fee Fee for interim review Special certifications and sundry advisory services Out of pocket expenses 2,300 661 4,807 595 8,363 2,000 575 4,004 518 7,097 2010
27.5
This represents accrual for contribution to Workers Welfare Fund as per the amendments made vide Finance Act, 2008 in the Workers Welfare Fund Ordinance, 1971.
29. TAXATION
Current - for the year - for prior years Deferred - for the year - for prior years 1,703,310 (220,027) 1,483,283 (317,675) (200,851) (518,526) 964,757 1,025,135 (332,808) 692,327 (342,233) 127,278 (214,955) 477,372
29.1
Relationship between tax expense and accounting profit Profit before taxation Effects of: -Tax calculated at the applicable rate of 35% - Income chargeable to tax at reduced rate - Prior year reversals - Permanent differences Tax charge for the year 4,356,300 1,524,705 (265,170) (420,878) 126,100 964,757 2,126,960 744,436 (89,642) (205,530) 28,108 477,372
30.1
There were no convertible dilutive potential ordinary shares outstanding on December 31, 2011 and 2010.
121
2011
The disclosures made in notes 33.1 to 33.13 are based on the information included in the actuarial valuation report of the Bank as of December 31, 2011. 33.2 Reconciliation of amount payable to defined benefit plan Present value of defined benefit obligations Fair value of plan assets Net actuarial losses not recognized Note 33.7 33.8 33.11 2011 Rupees in 000 247,137 (175,060) (7,362) 64,715 175,525 (115,564) (7,823) 52,138 2010
33.3
Movement in payable to defined benefit plan Opening balance Charge for the year Contribution made during the year Closing balance 52,138 64,715 (52,138) 64,715 40,347 52,138 (40,347) 52,138
33.4
33.4
Charge for defined benefit plan Current service cost Interest cost Expected return on plan assets Actuarial loss 60,309 22,015 (17,609) 64,715 19,710 43,918 20,235 (12,048) 33 52,138 12,931
33.5 33.6
Plan assets of gratuity fund includes Rs. 3.758 million (2010 : Rs. 6.387 million) kept in a savings account, Rs. 113.054 million (2010 : Rs. 107.803 million) placed in a Meezan Aamdan Certificate with the Bank, Rs. 56.787 million (2010 : Rs. Nil) in GOP Ijarah Sukuks and Rs. 1.461 million (2010 : Rs. 1.374 million) in Meezan Islamic Income Fund.
33.7
Reconciliation of present value of obligation Present value of obligation as at January 1 Current service cost Interest cost Benefits paid Actuarial loss / (gain) on obligation Present value of obligation as at December 31
33.8
Changes in the fair value of plan assets are as follows: Opening fair value of plan assets Expected return Contributions by the Bank Benefits paid Actuarial gain on plan assets Closing fair value of plan assets 115,564 17,609 52,138 (12,352) 2,101 175,060 69,791 12,048 40,347 (7,504) 882 115,564
33.9
2011
Rupees in 000
2010
%
Rupees in 000
Meezan Aamdan Certificates GOP Ijarah Sukuk Meezan Islamic Income Fund Savings account with Meezan Bank
33.10 Actuarial loss to be recognized Corridor Limit The limits of the corridor as at January 1 10% of obligations 10% of plan assets Which works out to Unrecognized actuarial losses as at January 1 Deficit / (Excess) Average expected remaining working lives in years Actuarial loss to be recognized 33.11 Unrecognized actuarial losses Unrecognized actuarial losses at January 1 Actuarial (loss) / gain on obligations Actuarial gain on assets Actuarial loss recognised Unrecognized actuarial losses as at December 31 33.7 33.8 33.10
Rupees in 000 17,553 11,556 17,553 (7,823) 9,730 6 12,263 6,979 12,263 (12,492) (229) 7 (33)
123
33.12 Amount for the current year and previous four years of the present value of the defined benefit obligation, the fair value of plan assets, surplus / deficit and experience adjustments arising thereon are as follows: 2011 Present value of defined benefit obligation Fair value of plan assets Deficit Actuarial loss /(gain) on obligation Actuarial gain /(loss) on plan assets 33.13 Expected gratuity expense for the next year The expected gratuity expense for the year ending December 31, 2012, works out to Rs. 80 million. 247,137 (175,060) 72,077 1,640 2,101 2010 175,525 (115,564) 59,961 (3,755) 882 2009 Rupees in 000 122,631 (69,791) 52,840 (1,477) 5,709 80,277 (32,507) 47,770 (4,978) (2,501) 48,929 (19,808) 29,121 (3,174) 969 2008 2007
Number of persons
* This includes amounts charged in these financial statements as fees to seven (2010: nine) non-executive directors.
35.1 35.2
Executives mean employees, other than Chief Executive and Directors, whose basic salary exceeds five hundred thousand rupees in a financial year. The CEO, the Executive Director and certain executives are provided with free use of the Bank cars.
2010 Total income Total expenses Net income (loss) Segment Assets (Gross) Segment Non Performing Loans Segment Provision Segment Liabilities Segment Return on Assets (ROA) (%) Segment Cost of funds (%)
7,292,477 2,011,997 4,291,025 (6,114,527) (1,524,476) (4,767,248) 1,177,950 487,521 (476,223) 90,973,438 11,215,421 45,583,423 777,528 3,540,795 483,215 3,266,931 7,596,666 131,070,328 5,005,440 1.29% 4.35% -1.04% 5.69% 5.69% 5.69%
38.2
125
38.3
Subsidiary company - Al-Meezan Investment Management Limited Key management personnel - President and Chief Executive Officer - Chief Operating Officer The volumes of related party transactions, outstanding balances at the year end, and related expense and income for the year are as follows:
Total 2011 2010 Subsidiary 2011 2010 Associates 2011 Rupees in 000 Key Management Personnel / Directors 2010 2011 2010 Other Related Parties 2011 2010
38.4
38.5
Financing At January 1, Addition during the year Deletion during the year At December 31 Deposits At December 31 Borrowing
144,132 200,000 670,628 200,000 (544,064) (200,000) 270,696 200,000 682,241 566,608 7,945 -
494,234
Balances pertaining to parties that were related at the beginning of the year but ceased to be related during any part of the current period are not reflected as part of the closing balance. However, new related parties have been added during the year. The same are accounted for through the movement presented above. Balances Profit receivable on financing Dividend receivable Transfer agency fee receivable Payable to defined benefit plan Accrued expenses Profit payable on borrowing Letters of credit (unfunded) Letters of Guarantee (unfunded) Prepaid Takaful Transactions, income and expenses Profit earned on financing Return on deposits / borrowing expensed Takaful insurance on assets including consumer financings Dividend income earned Capital gain - net Charge for defined benefit plan Contribution to defined contribution plan Fees expensed Fees earned Commission earned on letters of credit and guarantee 29,741 85,370 239,312 774,192 76,411 64,715 75,107 5,182 52,572 30,227 105,926 206,003 237,294 6,802 52,138 57,844 3,679 7,113 165 29,741 305 48,750 4,857 49,711 9,054 104 69,063 40,129 239,312 725,442 76,411 325 2,861 21,173 69,598 206,003 168,231 6,802 686 815 161 1,824 1,294 43,112 34,930 52,138 57,844 25,085 128,017 1,368 64,715 3,585 664 100 122,575 9,054 3,100 52,138 2,520 37,000 664 100 117,527 25,085 1,368 3,585 100 9,054 3,100 2,520 100 128,017 664 122,575 37,000 664 117,527 64,715 52,138 -
64,715 75,107 -
2,993 6,298 4
38.6
127
Tier I Capital Fully Paid-up capital General Reserves as disclosed on the Balance Sheet Unappropriated profits (Net of Losses) Less: Book value of Goodwill and Intangibles Other deductions* Total eligible Tier I capital Tier II Capital General Provisions or general reserves for loan losses-up to maximum of 1.25% of Risk Weighted Assets * Revaluation Reserves up to 45% under Basel II Less: Other deductions** Total eligible Tier II capital Tier III capital Total Supplementary Capital eligible for capital adequacy ratio (Maximum upto 100% of Total eligible Tier I capital) Total Regulatory Capital Base
2011 2010 Basel II Basel II Rupees in 000 8,029,933 2,058,319 3,240,421 (159,236) (31,525) 13,137,912 6,982,550 1,380,010 2,377,563 (131,284) (31,525) 10,577,314
1,288,149 14,426,061
859,665 11,436,979
*Under the standardized approach to credit risk, general provisions can be included in Tier - II capital subject to the limit of 1.25% of the risk weighted assets. **Investments in equity and other regulatory capital of majority owned securities or other financial subsidiaries not consolidated in the balance sheet. 39.3 Capital Adequacy The main objective of the capital management is to improve financial position and strengthen balance sheet of the Bank to support the growth in business, provide protection to depositors and enhance shareholders value. The Banks Board and the management is committed to provide sound balance between depositors liability and shareholders funds so that optimal capital / debt ratio is maintained. The optimal capital / debt ratio will provide reasonable assurance to depositor about safety and security of their funds and at the same time provide impetus to the management to invest their depositors funds into profitable venture without compromising the risk profile of the Bank. The capital requirement of the Bank has been determined based on the projected growth plan to achieve in next 3 to 5 years in all areas of business operation. Further, it also takes into account road map for capital enhancement as directed by the State Bank of Pakistan vide its various circulars issued from time to time. In addition, fixed and variable capital adequacy ratio has been taken into consideration in determining level of capital requirement by the Bank. Fixed CAR has been kept at a higher mandatory number as done in the past and same has been planned for the future to provide safe cushion. In addition, variable CAR has also been taken into account in planning capital need of the Bank.
The Bank prepares Annual Budget and Three Year Plan for purpose of the growth map and future direction. Bottom up approach is used to prepare annual budget and detailed deliberations are held while preparing Three Year Plan. The growth prospects takes into consideration prevailing economic and political factors in Pakistan and abroad. In implementing current capital requirements SBP requires banks to maintain a prescribed Capital Adequacy Ratio (CAR) of 10% as of December 31, 2011 of total risk weighted assets. As such Banks CAR stood at 14.89% at the year ended December 31, 2011. The Bank calculates capital adequacy ratio for credit risk, market risk and operational risk based on requirements under Basel II and as per guidelines issued by the State Bank of Pakistan from time to time in this regard. Major credit risk in respect of on and off-balance sheet exposures are mainly claims on banks, corporates, retail customers, residential mortgages, quoted and unquoted associated undertakings and Sukuks (other than foreign sukuks). Market risk exposures are mainly in foreign sukuks, equity and foreign exchange positions. The Banks potential risk exposures shall remain in these exposure types. Sensitivity and stress testing of the Bank under different risk factors namely yield rate, forced sale value of collateral, nonperforming financings and foreign exchange rate depicts that the Banks capital adequacy ratio is above the regulatory requirements. The Bank has taken into account credit risk, market risk and operational risk when planning its assets. The Banks sponsors are well reputed financial institution in Pakistan and abroad. The Bank has never faced in the past any difficulty in raising capital whenever it required. The shareholders and Board in its meeting held on October 2008 has reaffirmed in principal commitment to meet the increased Capital requirement of the Bank over next five years. The Banks economic capital requirement assessment based on economic capital model is same as determined by the Banks management as it has taken into account all factors which are required to be considered in an economic model.
129
Capital requirements 2011 Credit Risk Portfolios subject to standardized approach Portfolios subject to on-balance sheet exposure (Simple approach) Banks Corporate Retail Residential mortgage Past due loans Investments Fixed assets All other assets Portfolios subject to off-balance sheet exposure - non market related (Simple approach) Banks Corporate Retail Others Portfolios subject to off-balance sheet exposures - market related (Current exposure method) Banks Customers Market Risk Capital Requirement for portfolios subject to Standardized Approach Interest rate risk Equity position risk Foreign exchange risk Operational Risk Capital Requirement for operational risk TOTAL 1,193,220 9,690,514 872,885 9,212,742 46,270 18,774 7,135 10,611 6,698 498,901 45,203 5,082 7,166 605,138 28,926 4,298 137,417 4,725,420 278,665 97,761 57,709 915,929 382,601 464,535 415,250 4,135,119 313,904 102,758 135,338 755,909 293,482 711,912 2010
Rupees in 000
462,697 187,739
71,346 106,106
11,932,200 96,905,139
8,728,850 92,127,424
Capital Adequacy Ratio Total eligible regulatory capital held Total Risk Weighted Assets Capital Adequacy Ratio (a) (b) (a) / (b)
2011 2010 Rupees in 000 14,426,061 96,905,139 14.89% 11,436,979 92,127,424 12.41%
40
RISK MANAGEMENT
The wide variety of the Banks business activities require the Bank to identify, assess, measure, aggregate and manage risks effectively which are constantly evolving as the business activities expand in response to the Bank's strategy and growth. The Bank manages the risk through a framework of risk management, policies and principles, organizational structures and risk measurement and monitoring processes and techniques that are closely aligned with the business activities of the Bank. Risk management principles The Board of Directors (the Board) provides overall risk management supervision. The Risk Management Committee regularly reviews the Banks risk profile. The Bank has set up objectives and policies to manage the risks that arise in connection with the Banks activities. The risk management framework and policies of the Bank are guided by specific objectives to ensure that comprehensive and adequate risk management policies are established to mitigate the salient risk elements in the operations of the Bank. The establishment of the overall financial risk management objectives is consistent and in tandem with the strategy to create and enhance shareholders value, whilst guided by a prudent and robust framework of risk management policies. The structure of risk management function is closely aligned with the organizational structure of the Bank. The risk management function is independent of the Banks operation.
Risk management organization The Risk Management Committee comprises of two non-executive directors and one executive director. One of the non-executive directors of the Bank chairs the Risk Management Committee. The Committee is responsible to review risk profile, policies, tools and techniques so as to ensure effective management of risks of the Bank. The management has delegated some of its tasks of risk management to sub-committees which are as follows: Name of the committee Credit Committee Asset and Liability Management Committee (ALCO) Internal Controls and Operational Risk Management Committee (ICORMC) Chaired by President & CEO President & CEO COO
The Credit Committee is responsible for approving and monitoring financing transactions and also ensuring the overall quality of the financing portfolio. For this purpose it has formulated credit policy so as to effectively monitor the risk profile of the Banks asset portfolio and to ensure strict adherence to the SBPs Prudential Regulations, the Banking Companies Ordinance, 1962, and any other regulatory requirement. The ALCO is responsible for monitoring, measuring and managing market risk and liquidity risk and ensuring compliance with internal and regulatory requirement. The ICORMC ensures adequate internal controls and systems are in place thereby ensuring operating efficiency. The Board has constituted a full functional Audit Committee. The Audit Committee works to ensure that the best practices of the Code of Corporate Governance are being complied by the Bank and that the policies and procedures are being
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The Banks risk management, compliance, internal audit and legal departments support the risk management function. The role of the risk management department is to quantify the risk and ensure the quality and integrity of the Banks risk-related data. The compliance department ensures that all the directives and guidelines issued by SBP are being complied with in order to mitigate the compliance and operational risks. Internal audit department reviews the compliance of internal control procedures with internal and regulatory standards. 40.1 Credit risk The Bank manages credit risk by effective credit appraisal mechanism, approving and reviewing authorities, limit structures, internal credit risk rating system, collateral management and post disbursement monitoring so as to ensure prudent financing activities and sound financing portfolio under the umbrella of a comprehensive Credit Policy approved by the Board of Directors. The Bank also ensures to diversify its portfolio into different business segments, products and sectors. The Bank takes into account the risk mitigating effect of the eligible collaterals for the calculation of capital requirement for credit risk. Use of Credit Risk Mitigation (CRM) resulted in the total credit risk weighted amount of Rs. 76,810 million. Thus, use of CRM resulted in capital adequacy ratio of the Bank of 14.89%. 40.1.1 Segmental information 40.1.1.1 Segment by class of business 2011 Financings (Gross) Rupees in 000 Agriculture, forestry, hunting and fishing Textile Automobile and transportation equipment Financial institutions Insurance Electronics and electrical appliances Construction Power (electricity), gas and water Exports / imports Transport, storage and communication Chemical and pharmaceuticals Sugar Footwear and leather garments Wholesale and retail trade Cement Services Individuals Others 10,482 15,454,919 1,263,587 1,201,150 20,879 4,570,465 503,784 6,783,383 2,188,871 882,545 16,643 3,653,156 6,576,420 21,350,436 64,476,720 % Deposits Rupees in 000 1,642,645 3,251,376 188,576 487,720 75,932 599,022 1,036,889 145,730 987,579 887,040 897,799 130,480 373,297 13,695,854 19,182 16,949,833 116,952,964 11,708,513 170,030,431 % Contingencies and commitments Rupees in 000 0.97 1.91 0.11 0.29 0.04 0.35 0.61 0.09 0.58 0.52 0.53 0.08 0.22 8.05 0.01 9.97 68.78 6.89 100 2,108,409 16,424,205 929,328 54,200,963 81,590 883,660 902,308 4,598,632 906,398 476,923 6,747,046 1,252,616 1,388,972 517,035 2,193,568 417,636 4,034,891 15,975,676 114,039,856 %
0.02 23.97 1.96 0.00 0.00 1.86 0.03 7.09 0.78 0.00 10.52 3.39 1.37 0.03 5.67 0.00 10.20 33.11 100
1.85 14.40 0.81 47.53 0.07 0.77 0.79 4.03 0.79 0.42 5.92 1.10 1.22 0.45 1.92 0.37 3.54 14.02 100
40.1.1.2
2011 Deposits Rupees in 000 897,727 169,132,704 170,030,431 % 0.53 99.47 100.00 Contingencies and commitments Rupees in 000 114,039,856 114,039,856 % 100 100
40.1.1.3
Details of non-performing financings and specific provisions by class of business segment: 2011 Classified financings 2010 Specific Classified Specific provisions financings provisions held held Rupees in 000 1,782,783 19,873 158,742 140,376 80,903 561,210 165,790 1,150,143 4,059,820 13,576 1,746,863 11,021 238,167 150,000 593,223 351,423 1,214,050 4,318,323 11,076 1,487,171 1,304 77,857 150,000 591,140 156,769 637,580 3,112,897
Agriculture, forestry, hunting and fishing Textile Chemical and pharmaceuticals Cement Sugar Footwear and leather garments Automobile and transportation equipment Electronics and electrical appliances Construction Power (electricity), gas, water Wholesale and retail trade Exports / imports Transport, storage and communication Financial institutions Insurance Services Individuals Others
40.1.1.4
Details of non-performing financings and specific provisions by sector: 2011 Classified financings 2010 Specific Classified Specific provisions financings provisions held held Rupees in 000 4,059,820 4,318,323 3,112,897 4,059,820 4,318,323 3,112,897
4,647,792 4,647,792
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Rupees in 000 Pakistan Asia Pacific (including South Asia) Europe United States of America and Canada Middle East Others 4,356,300 4,356,300 200,550,394 200,550,394 13,786,351 13,786,351 114,039,856 114,039,856
40.1.2
Credit Risk - General Disclosures Basel II Specific The Bank is operating under standardized approach of Basel II for credit risk. As such risk weights for the credit risk related assets (on-balance sheet and off-balance sheet-market and non market related exposures) are assigned on the basis of standardized approach. The Bank is committed to further strengthen its risk management framework that shall enable the Bank to move ahead for adopting Foundation IRB approach of Basel II; meanwhile none of our assets class is subject to the foundation IRB or advanced IRB approaches. 40.1.2.1 Credit Risk: Disclosures for portfolio subject to the Standardized Approach and supervisory risk weights in the IRB Approach-Basel II Specific The Bank used ratings assigned by JCR-VIS and PACRA as External Credit Assessment Institutions (ECAIs) for the purpose of risk weighing its exposures against corporates and banks. Use of both JCR-VIS and PACRA as the rating agencies is due to the fact that corporate and banks are rated by either of these two agencies. In case of foreign currency exposures against banks, ratings assigned by S&P, Fitch and Moodys have been applied. In case of exposure against banks, some banks have multiple ratings but those ratings do not result in mapping with different risk weights. The alignment of the alphanumerical scale of each agency used with risk buckets is as per instructions laid down by SBP under Basel II requirements.
Types of Exposure and ECAIs used 2011 Exposures JCR-VIS PACRA OTHER (Specify) S & P, FITCH and MOODYS
Corporates Banks
3 3
3 3
Credit Exposure subject to standardized approach Rupees in 000 2011 Exposures Banks Rating Category 0% 20% 50% 100% 150% Unrated 0% 20% 50% 100% 150% Unrated 0% 20% 50% 75% Amount Outstanding 4,025,170 40,667 11,703,370 6,296,096 531,066 40,807,146 5,127,818 68,531,333 Deduction CRM 933,999 1,412,286 2,346,285 Net amount 4,025,170 40,667 11,703,370 6,296,096 531,066 39,873,147 3,715,532 66,185,048
Corporates
Retails
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40.1.2.2 Credit Risk: Disclosures with respect to Credit Risk Mitigation for Standardised and IRB Approaches-Basel II Specific Bank obtains capital relief for its both on-balance and off-balance sheet non-market related exposures by using simple approach for Credit Risk Mitigation (CRM). Off-balance sheet items under the simplified standardized approach are converted into credit exposure equivalents through the use of credit conversion factors. Under the standardized approach the Bank has taken advantage of the cash collaterals available with the Bank in the form of security deposits, cash margins, Certificate of Islamic Investment, shares and units of mutual funds, Monthly Modaraba Certificate and saving accounts. Valuation and management of eligible collaterals for CRM is being done in line with the conditions laid down by SBP. Since eligible collaterals for CRM purposes are all in the form of cash collaterals, they generally do not pose risk to the Bank in terms of change in their valuation due to changes in the market condition. The credit equivalent amount of an off-balance sheet market related foreign exchange contracts are determined by using the current exposure (mark to market) method. The Bank mainly takes the benefit of CRM against its claims on corporate and retail portfolio. Under the standardized approach for on-balance sheet exposures, the corporate portfolio of Rs. 59,338 million is subject to the CRM of Rs. 934 million whereas a claim on retail portfolio of Rs. 5,128 million is subject to CRM of Rs. 1,412 million. The total benefit of Rs. 2,346 million was availed through CRM against total on-balance sheet exposure of Rs. 195,356 million. Under off-balance sheet, non-market related exposures; the corporate portfolio of Rs. 51,009 million is subject to the CRM of Rs. 1,451 million whereas a claim on retail portfolio of Rs. 1,342 million is subject to CRM of Rs. 97 million. Total benefit of Rs. 1,549 million was availed by the Bank through CRM against total offbalance sheet, non-market related exposure of Rs. 53,787 million. In year 2011, total amount of cash collateral used for CRM purposes was Rs. 3,895 million as against amount of Rs. 4,772 million in year 2010. The difference in the value of cash collateral is due to the changes in the exposure amounts and resultant amount of cash collateral obtained. 40.2 Equity position risk in the banking book-Basel II Specific The Bank makes investment in variety of products / instruments mainly for the following objectives; - Investment for supporting business activities of the Bank and generating revenue in short term or relatively short term tenure. - Strategic Investments which are made with the intention to hold it for a longer term and are marked as such at the time of investment. Classification of equity investments The Bank classify its equity investment portfolio in accordance with the directives of SBP as follows: - Investments - Held for trading - Investments - Available for sale - Investments in associates - Investment in subsidiary Some of the above mentioned investments are listed and traded in public through stock exchanges, while other investments are unlisted. Policies, valuation and accounting of equity investments The accounting policies for equity investments are designed and their valuation is carried out under the provisions and directives of State Bank of Pakistan, Securities and Exchange Commission of Pakistan and the requirements of approved International Accounting Standards as applicable in Pakistan. The investments in listed equity securities are stated at the revalued amount using market rates prevailing on the balance sheet date, while the investment in unquoted securities are stated at lower of cost or break-up value.
The unrealized surplus / (deficit) arising on revaluation of the held for trading investment portfolio is taken to the profit and loss account. The surplus / (deficit) arising on revaluation of quoted securities classified as available for sale is kept in a separate account shown in the balance sheet below equity. The surplus / (deficit) arising on these securities is taken to the profit and loss account when actually realized upon disposal. The carrying value of equity investments are assessed at each balance sheet date for impairment. If the circumstances exist which indicate that the carrying value of these investments may not be recoverable, the carrying value is written down to its estimated recoverable amount. The resulting impairment loss is charged to profit and loss account. Composition of equity investments Held for trading Available for Sale Rupees in 000 Equity investments - quoted Equity investments - unquoted Total value 40.3 Market risk The Bank is exposed to market risk which is the risk that the value of on and off balance sheet exposures of the Bank will be adversely affected by movements in market rates or prices such as benchmark rates, profit rates, foreign exchange rates, equity prices and market conditions resulting in a loss to earnings and capital. The Market risk charge consists of two components. The general risk describes value changes due to general market movements, while the specific risk has issuer related causes. The capital charge for market risk has been calculated by using Standardized Approach. The Bank applies Stress Testing and Value at Risk (VaR) techniques as risk management tool. Stress testing enables the Bank to estimate changes in the value of the portfolio, if exposed to various risk factor. VaR quantifies the maximum loss that might arise due to change in risk factors, if exposure remains unchanged for a given period of time. 40.3.1 Foreign exchange risk The foreign exchange risk is the risk that the value of a financial instruments will fluctuate due to the changes in foreign exchange rates. The Bank does not take any currency exposure except to the extent of statutory net open position prescribed by SBP. Foreign exchange open and mismatch position are controlled through close monitoring and are marked to market on a daily basis to contain forward exposures. 2011 Assets Liabilities Off-balance sheet items Net foreign currency exposure 23,657,622 (7,750,387) (925,303) 1,977 (1,242,317) 4,998 1,841 10,517 1,487 2,167 23,749 13,786,351 2,023,973 123,119 2,147,092 7,999,745 191,050 8,190,795 Subsidiary and Associates
Rupees in 000 Pakistan Rupees United States Dollars Great Britain Pounds Japanese Yen Euro Singapore Dollars Australian Dollars Canadian Dollars United Arab Emirates Dirham Swiss Francs Saudi Riyal 195,497,767 4,601,930 213,225 1,977 186,267 4,998 8,234 10,809 1,487 11,719 11,981 200,550,394 168,002,728 16,156,791 1,138,528 1,465,704 292 186,764,043 (3,837,417) 3,804,474 37,120 (6,393) (9,552) 11,768 -
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40.3.2
Equity position risk Equity position risk is the risk arising from taking long positions, in the trading book, in the equities and all instruments that exhibit market behaviour similar to equities. Counterparty limits, as also fixed by SBP, are considered to limit risk concentration. The Bank invests in those equities which are Shariah compliant as advised by the Shariah advisor.
40.3.3
Yield / Interest Rate Risk in the Banking Book (IRRBB) - Basel II Specific IRRBB includes all material yield risk positions of the Bank taking into account all relevant repricing and maturity data. It includes current balances and contractual yield rates. Bank understands that its financings shall be repriced as per their respective contracts. The Bank estimates changes in the economic value of equity due to changes in the yield rates of on-balance sheet positions by conducting duration gap analysis. It also assesses yield rate risk on earnings of the Bank by applying upward and downward shocks.
40.3.4
On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Other assets including inventories
16,641,160 2,348,076 4,065,406 98,488,574 59,155,585 14,419,989 195,118,790 2,282,045 9,235,960 170,030,431 4,389,062 185,937,498 9,181,292
16,641,160 2,347,645 10,935,999 698,352 3,198,094 33,821,250 2,282,045 48,276,050 4,389,062 54,947,157 (21,125,907)
Liabilities Bills payable Due to financial institutions 10.23 Deposits and other accounts 5.57 Sub-ordinated loan Liabilities against assets subject to finance lease Other liabilities On-balance sheet gap NON FINANCIAL ASSETS - Operating fixed assets - Deferred tax assets - Other assets including trade inventories NON FINANCIAL LIABILITIES - Deferred tax liabilities - Other liabilities TOTAL NET ASSETS Off-balance sheet financial instruments Forward lendings Forward borrowings Off-balance sheet gap Total Yield Risk Sensitivity Gap Cumulative Yield Risk Sensitivity Gap
(109,495,486) (109,495,486)
40,647,924 (68,847,562)
82,786,551 13,938,989
10,596,281 24,535,270
651,442 25,186,712
2,620,892 27,807,604
2,499,346 30,306,950
249 30,307,199
2010 Effective yield rate % Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Exposed to yield risk Over 6 Over 1 Months to to 2 1 Year Years Rupees in 000
On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Other assets including inventories
12,780,806 9,939,660 10,511,855 54,966,907 54,195,163 8,280,462 150,674,853 1,767,370 5,829,296 131,070,328 4,041,658 142,708,652 7,966,201
2,009,835 18,500 2,357,860 32,483,555 12,239,329 1,999,952 2,420,796 19,027,820 34,502,007 2,552,924 2,552,924 16,474,896 34,502,007
12,780,806 2,544,773 108,708 3,364,668 4,708,547 9,974,040 6,102,505 7,877,910 2,945,860 2,162,183 96,401 2,210,381 6,211,213 11,242,578 7,654,407 2,162,183 27,606,401 6,211,213 11,242,578 7,654,407 2,162,183 1,767,370 83,803 37,634,150 4,041,658 43,526,981 (15,920,580)
Liabilities Bills payable Due to financial institutions 9.24 Deposits and other accounts 5.49 Sub-ordinated loan Liabilities against assets subject to finance lease Other liabilities On-balance sheet gap NON FINANCIAL ASSETS - Operating fixed assets - Deferred tax assets - Other assets including trade inventories NON FINANCIAL LIABILITIES - Deferred tax liabilities - Other liabilities TOTAL NET ASSETS Off-balance sheet financial instruments Forward lendings Forward borrowings Off-balance sheet gap Total Yield Risk Sensitivity Gap Cumulative Yield Risk Sensitivity Gap
(75,048,685) (75,048,685)
16,360,975 (58,687,710)
16,474,896 (42,212,814)
34,502,007 (7,710,807)
4,327,207 (3,383,600)
6,211,213 2,827,613
11,242,578 14,070,191
7,654,407 21,724,598
Yield Risk is the risk of decline in earnings due to adverse movement of the yield curve. Profit rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market profit rates. The Bank takes on exposure to the effects of fluctuations in the prevailing levels of market profit rates on both its fair value and cash flow risks. Profit margins may increase as a result of such changes but may reduce to losses in the event that unexpected movements arise. 40.4 Liquidity risk Liquidity risk is the risk that the Bank either does not have sufficient financial resources available to meet its obligations and commitments as they fall due or can fulfil them only at excessive cost that may affect the Banks income and equity. The Bank seeks to ensure that it has access to funds at reasonable cost even under adverse conditions, by managing its liquidity risk across all class of assets and liabilities in accordance with regulatory guidelines and to take advantage of any lending and investment opportunities as they arise.
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40.4.1 Maturities of assets and liabilities 40.4.1.1 Maturities of assets and liabilities based on expected maturities
Over 1 to 3 Months Over 3 to 6 Months 2011 Over 6 Over 1 Over 2 Over 3 Months to to 2 to 3 to 5 to 10 Years Years Years 1 Year Rupees in 000 Over 5 Above 10 Years
Total
Upto 1 Month
Years
Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Other assets including inventories Deferred tax assets Operating fixed assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of investments
16,641,160 2,348,076 4,065,406 98,488,574 59,155,585 15,064,954 801,391 3,985,248 200,550,394 2,282,045 9,235,960 170,030,431 5,215,607 186,764,043 13,786,351 8,029,933 2,058,319 3,240,421 457,678 13,786,351
16,641,160 2,348,076 4,052,406 9,437,613 3,650,031 36,129,286 2,282,045 3,468,885 10,195,903 635,682 16,582,515 19,546,771
2,000 4,246,374 11,725,969 4,563,649 20,537,992 2,831,289 23,149,730 889,963 26,870,982 (6,332,990)
3,000 8,000 2,720,325 12,168,893 26,428,554 14,256,488 3,672,218 3,689,073 5,822,202 80,865 180,201 200,348 200,348 552,293 377,094 22,802,015 16,682,617 30,875,270 2,935,786 13,543,340 1,324,351 17,803,477 4,998,538 22,863,037 824,409 23,687,446 (7,004,829)
46,220,671 2,070,759 3,782,769 5,511,414 7,409,343 1,615,207 568,006 200,000 200,348 200,347 377,094 754,187 828,445 52,877,533 10,634,636 6,226,421
17,288,576 14,581,686 24,884,587 25,728,282 461,527 440,279 639,396 17,750,103 15,021,965 25,523,983 25,728,282 13,125,167 37,855,568 (14,889,347) (19,501,861)
17,795,290
17,795,290 (14,010,666)
Total
Upto 1 Month
Over 1 to 3 Months
Over 3 to 6 Months
2010 Over 6 Over 1 Over 2 Over 3 Months to to 2 to 3 to 5 to 10 Years Years Years 1 Year Rupees in 000
Years
Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Other assets including inventories Deferred tax assets Operating fixed assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of investments
12,780,806 9,939,660 10,511,855 54,966,907 54,195,163 8,949,759 342,175 3,066,100 154,752,425 1,767,370 5,829,296 131,070,328 5,005,440 143,672,434 11,079,991 6,982,550 1,380,010 2,377,563 339,868 11,079,991
12,780,806 6,939,660 5,478,320 7,407,853 2,216,650 34,823,289 1,767,370 670,424 28,329,636 1,347,399 32,114,829 2,708,460
3,000,000 3,005,200 557,227 10,448,265 3,293,965 20,304,657 2,605,949 26,930,093 1,192,763 30,728,805 (10,424,148)
2,009,835 18,500 4,831,921 32,484,452 12,239,329 1,999,952 2,982,004 457,140 85,544 1,084,534 22,063,089 36,130,122 2,552,923 17,526,694 20,079,617 1,983,472 22,003,316 346,161 22,349,477 13,780,645
10,360,899
Regarding behaviour of non-maturity deposits (non-contractual deposits), the Bank conducted a behavioural study based on 3 years data. On the basis of its findings 43.5% of current accounts and 22.7.% of saving accounts are bucketed into 'Upto 1-Year maturity' whereas, 56.5% of current accounts and 77.3% of saving accounts are bucketed into maturities of above 1-Year.
Total
Upto 1 Month
Years
Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Other assets including inventories Deferred tax assets Operating fixed assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of investments
16,641,160 2,348,076 4,065,406 98,488,574 59,155,585 15,064,954 801,391 3,985,248 200,550,394 2,282,045 9,235,960 170,030,431 5,215,607 186,764,043 13,786,351 8,029,933 2,058,319 3,240,421 457,678 13,786,351
16,641,160 2,348,076 4,052,406 9,437,613 3,650,031 36,129,286 2,282,045 3,468,885 111,872,640 635,682 118,259,252 (82,129,966)
2,000 4,246,374 11,725,969 4,563,649 20,537,992 2,831,289 15,281,451 889,963 19,002,703 1,535,289
3,000 8,000 2,720,325 12,168,893 26,428,554 14,256,488 3,672,218 3,689,073 5,822,202 80,865 180,201 200,348 200,348 552,293 377,094 22,802,015 16,682,617 30,875,270 2,935,786 6,224,343 1,324,351 10,484,480 12,317,535 12,512,412 824,409 13,336,821 3,345,796 2,650,582 -
46,220,671 2,070,759 3,782,769 5,511,414 7,409,343 1,615,207 568,006 200,000 200,348 200,347 377,094 754,187 828,445 52,877,533 10,634,636 6,226,421 3,349,558 7,073,001 11,066,444 639,399 7,712,400 11,066,4442,922,236 (4,840,023) -
3,784,624
Current and Saving deposits have been classified under maturity upto one month as these do not have any contractual maturity. Further, the bank estimates that these deposits are a core part of its liquid resources and will not fall below the current year's level.
Over 1 to 3 Months Over 3 to 6 Months 2010 Over 6 Over 1 Over 2 Over 3 Months to to 2 to 3 to 5 to 10 Years Years Years 1 Year Rupees in 000 Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Other assets including inventories Deferred tax assets Operating fixed assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of investments 12,780,806 9,939,660 10,511,855 54,966,907 54,195,163 8,949,759 342,175 3,066,100 154,752,425 1,767,370 5,829,296 131,070,328 5,005,440 143,672,434 11,079,991 6,982,550 1,380,010 2,377,563 339,868 11,079,991 12,780,806 6,939,660 5,478,320 7,407,853 2,216,650 34,823,289 1,767,370 670,424 82,420,246 1,347,399 86,205,439 (51,382,150) 3,000,000 3,005,200 557,227 10,448,265 3,293,965 20,304,657 2,605,949 14,447,645 1,192,763 18,246,357 2,058,300 2,009,835 18,500 4,831,921 32,484,452 12,239,329 1,999,952 2,982,004 457,140 85,544 1,084,534 22,063,089 36,130,122 2,552,923 5,044,246 7,597,169 14,465,920 9,520,868 346,161 9,867,029 26,263,093 1,412,302 2,914,905 85,544 231,760 4,644,511 1,993,228 1,993,228 2,651,283 85,544 231,760 6,528,517 108,708 6,102,505 3,364,668 7,877,910 85,543 463,521 11,791,642 4,708,548 2,945,860 451,291 8,105,699 8,211,120 8,211,120 (105,421) Over 5 Above 10 Years
Total
Upto 1 Month
Years
10,360,899
Current and Saving deposits have been classified under maturity upto one month as these do not have any contractual maturity. Further, the bank estimates that these deposits are a core part of its liquid resources and will not fall below the current year's level.
141
40.5
Operational risk The Bank uses Basic Indicator Approach (BIA) for assessing the capital charge for operational risk.Under BIA the capital charge is calculated by multiplying average positive annual gross income of the Bank over past three years with 15% as per guidelines issued by SBP under Basel II. To reduce losses arising from operational risk, the Bank has strengthened its risk management framework by developing policies, guidelines and manuals. It also includes set up of fraud and forgery management unit, defining responsibilities of individuals, enhancing security measures, improving efficiency and effectiveness of operations, outsourcing and improving quality of human resources through trainings.
Annexure -I Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December 31, 2011
Rupees in 000
S. Name and No. address of the borrower 1 2 1 Fateh Textile Mills Ltd.
Name of director (with NIC No.) 3 Mr Inayat Ullah (451-40-027107) Mr Gohar Ullah (451-64-027111) Mr Asad Ullah Barkat (451-71-027113) Mr Humayun Barkat (451-89-027114) Mr Maqsood Ahmed Khan (449-42-176221) Mr Muhammad Saleem (501-55-166315) Mr Muhammad Shafi (501-47-013051)
Outstanding Exposures at beginning of year Principal Profit Others Total (5+6+7) 5 6 7 8 19,733 22,071 41,804
Principal written-off 9 -
Mr Inayat Ullah
Mr Inayat Ullah
Mr Inayat Ullah
Mr Noor Muhammad
Amir Majeed Kaludi Abdul Majeed (42301-6831572-5) Kaludi Muhammad Akram (34101-2511309-3) N/A
9,125
4,782
13,907
1,625
4,782
6,407
1,048
195
3,253
4,496
195
3,253
3,448
143
Note ASSETS Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Operating fixed assets Deferred tax asset Other assets including inventories LIABILITIES Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Deferred tax liabilities Other liabilities NET ASSETS REPRESENTED BY Share capital Reserves Unappropriated profit NON CONTROLLING INTEREST Surplus on revaluation of investments 19 20 15 16 17 7 8 9 10 11 12 13 14
2010
18
21 22
23
The annexed notes 1 to 44 form an integral part of these consolidated financial statements.
147
Note Profit / return earned on financings, investments and placements Return on deposits and other dues expensed Net spread earned Provision against non-performing financings (net) Provision for diminution in the value of investments (Reversal) / provision against amounts due from financial institutions (Reversal) / provision against off balance sheet obligations Bad debts written off directly Net spread after provisions OTHER INCOME Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Capital gain on sale of investments - net Unrealized gain on held for trading investments Other income Total other income OTHER EXPENSES Administrative expenses Other provisions / write offs Other (reversals) / charges Total other expenses Share of results of associates before taxation Extraordinary / unusual items PROFIT BEFORE TAXATION Taxation - Current - Prior years - Deferred PROFIT AFTER TAXATION Share of profit attributable to non-controlling interest PROFIT ATTRIBUTABLE TO SHAREHOLDERS Basic and diluted earnings per share 31 30 11.12 10.8 & 10.10 9.4 18.2 24 25
2011 Rupees in 000 18,006,812 8,665,317 9,341,495 1,471,614 249,397 (41,365) (6,113) 1,673,533 7,667,962 1,097,350 170,815 571,880 388,080 35,224 2,263,349 9,931,311
2010 12,284,569 6,606,370 5,678,199 1,330,057 46,405 81,875 37,682 1,496,019 4,182,180 888,660 189,105 1,381,044 137,885 28,669 61,911 2,687,274 6,869,454 4,637,393 18,306 67,898 4,723,597 2,145,857 297,425 2,443,282 2,443,282 1,060,692 (332,808) (184,384) 543,500 1,899,782 (74,027) 1,825,755 Rupees 2.27
26 27
28 29
6,164,075 168,242 (859) 6,331,458 3,599,853 521,582 4,121,435 4,121,435 1,750,029 (218,205) (456,446) 1,075,378 3,046,057 (100,179) 2,945,878 3.67
The annexed notes 1 to 44 form an integral part of these consolidated financial statements.
2011 Rupees in 000 Profit for the year Other comprehensive income Comprehensive income transferred to equity Components of comprehensive income not transferred to equity Surplus on revaluation on investments Deferred tax on revaluation of investments 177,120 (59,310) 3,046,057 3,046,057
322,896 (76,952)
3,163,867
2,145,726
The annexed notes 1 to 44 form an integral part of these consolidated financial statements.
149
Note CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Dividend income Adjustments for non-cash charges Depreciation Amortization Provision against non-performing financings (net) Provision for diminution in the value of investments (Reversal) / provision against amounts due from financial institutions Loss / (gain) on sale of operating fixed assets Unrealized gain on held for trading investments Share of results of associates
2011 Rupees in 000 4,121,435 (170,815) 3,950,620 446,036 40,525 1,471,614 249,397 (41,365) 30,148 (521,582) 1,674,773 5,625,393 6,487,814 3,497 (6,432,036) 2,636,605 2,695,880 514,675 3,406,664 38,954,490 (2,158,727) 40,717,102 49,038,375 (1,733,809) 47,304,566
2010 2,443,282 (189,105) 2,254,177 366,404 34,685 1,330,057 46,405 81,875 (19,216) (28,669) (297,425) 1,514,116 3,768,293 23,893,145 27,929 (13,615,564) (8,910,968) 1,394,542 518,160 (2,764,129) 30,736,548 3,178,816 31,669,395 36,832,230 (1,303,835) 35,528,395
(Increase) / Decrease in operating assets Due from financial institutions Held for trading securities Financings Other assets including inventories Increase / (decrease) in operating liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities
Income tax paid Net cash flow from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investments in - held to maturity securities - available for sale securities - listed associated undertakings - unlisted associated undertakings Dividend received Investments in operating fixed assets Sale proceeds of operating fixed assets disposed off Net cash flow from investing activities CASH FLOW FROM FINANCING ACTIVITIES Dividend paid Dividend paid to Non Controlling Interest Net cash flow from financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents as at January 1, Cash and cash equivalents as at December 31, 32 32
(42,933,064) (6,197,614) 146,330 207,682 (1,484,586) 42,354 (50,218,898) (802,023) (26,250) (828,273) (3,742,605) 22,738,708 18,996,103
16,848 (25,948,914) 356,647 879 212,719 (1,072,238) 31,696 (26,402,363) (37,187) (37,187) 9,088,845 13,649,863 22,738,708
The annexed notes 1 to 44 form an integral part of these consolidated financial statements.
Capital reserves Share capital Statutory reserve Reserve for issue of bonus shares
Revenue reserves General reserve Unappro-priated profit Non controlling interest Total
Rupees in 000
Balance as at January 01, 2010 Total Comprehensive income for the year Profit after taxation for the year ended December 31, 2010 Share of profit attributable to non controlling interest Transactions with owners recognised directly in equity Dividend payout by AMIML Transfer to reserve for issue of bonus shares Issue of bonus shares Transfer to statutory reserve Balance as at December 31, 2010 Total Comprehensive income for the year Profit after taxation for the year ended December 31, 2011 Share of profit attributable to non controlling interest Transactions with owners recognised directly in equity Dividend payout by AMIML Transfer to reserve for issue of bonus shares Issue of bonus shares Cash dividend for the year 2011 Transfer to statutory reserve Balance as at December 31, 2011
6,650,048
983,326
91,082
2,089,956
302,987 10,117,399
1,899,782 (74,027)
74,027
1,899,782 -
329,918 1,313,244 -
332,502 (332,502) -
91,082
(37,187) -
69,063 -
339,827 12,086,244
3,046,057 (100,179)
100,179
3,046,057 -
678,309 1,991,553 -
1,047,383 (1,047,383) -
91,082
(26,250) -
48,750 -
(802,993) (802,993) -
413,756 14,378,058
The annexed notes 1 to 44 form an integral part of these consolidated financial statements.
151
1.
Open end scheme established under a trust deed executed between AMIML as the management company and CDC as the Trustee. Open end scheme established under a trust deed executed between AMIML as the management company and CDC as the Trustee. Closed end scheme established under a trust deed executed between AMIML as the management company and CDC as the Trustee. Open end scheme established under a trust deed executed between AMIML as the management company and CDC as the Trustee. Open end scheme established under a trust deed executed between AMIML as the management company and CDC as the Trustee.
Pakistan
N/A
N/A
N/A
Pakistan
13.45
3.18
15.52
Al Meezan Mutual Fund (AMMF) Meezan Capital Protected Fund II (MCPF II)
Pakistan
N/A
N/A
N/A
Pakistan
N/A
N/A
N/A
Entity / fund Meezan Sovereign Fund (MSF) Meezan Tahaffuz Pension Fund (MTPF) Blue Water (Private) Limited (BWL) Falcon Greenwood (Private) Limited (FGL)
Nature of business
Open end scheme established under a trust deed executed between AMIML as the management company and CDC as the Trustee. Open end scheme established under a trust deed executed between AMIML as the management company and CDC as the Trustee. Business of purchase and sale of land.
Pakistan
N/A
N/A
N/A
Pakistan
30
13
43
Pakistan
25
25
Pakistan
Floatation and management of modarabas under Modarabas Companies and Modarabas (Floatation and Control) Ordinance, 1980. Business of development and export of IT enabled services and internet solutions.
30
30
Pakistan
50
50
2.
Entity
Meezan Islamic Fund (MIF)
Source of information
Financial statements for the half year ended December 31, 2011 and 2010, unaudited but subject to a limited review by its statutory auditors, and audited financial statements for the year ended June 30, 2011. Financial statements for the half year ended December 31, 2011 and 2010, unaudited but subject to a limited review by its statutory auditors, and audited financial statements for the year ended June 30, 2011.
153
Entity
Meezan Balanced Fund (MBF)
Source of information
Financial statements for the half year ended December 31, 2011 and 2010, unaudited but subject to a limited review by its statutory auditors, and audited financial statements for the year ended June 30, 2011. Financial statements for the period ended August 5 to December 31 2011 and 2010, unaudited but subject to a limited review by its statutory auditors, and audited financial statements for the year ended June 30, 2011. Financial statements for the period ended July 5 to December 31, 2011 unaudited but subject to a limited review by its statutory auditors. Financial statements for the half year ended December 31, 2011 unaudited but subject to a limited review by its statutory auditors, and audited financial statements for the year ended June 30, 2011. Financial statements for the half year ended December 31, 2011 unaudited but subject to a limited review by its statutory auditors, and audited financial statements for the year ended June 30, 2011. Unaudited financial statements for the half year ended December 31, 2011 and 2010, and audited financial statements for the year ended June 30, 2011. Unaudited financial statements for the half year ended December 31, 2011 and 2010, and audited financial statements for the year ended June 30, 2011. Unaudited financial statements for the year ended December 31, 2011. Unaudited financial statements for the half year ended December 31, 2011 and 2010, and audited financial statements for the year ended June 30, 2011.
Meezan Capital Protected Fund II (MCPF II) Meezan Sovereign Fund (MSF)
Falcon Greenwood (Private) Limited (FGL) Faysal Management Services (Private) Limited (FMSL) Plexus (Private) Limited (PL)
2.1.3
MBL provides financing mainly through Murabaha, Ijarah, Service Ijarah, Musharakah, Diminishing Musharakah, Running Musharakah, Istisna, Tijarah, Bai Muajjal, Musawammah and Export Refinance under Islamic Export Refinance Scheme as briefly explained in note 6.3. The purchases and sales arising under these arrangements are not reflected in these consolidated financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of profit thereon. The income on such financings is recognised in accordance with the principles of Islamic Shariah. However, income, if any, received which does not comply with the principles of Islamic Shariah is recognized as charity payable if so directed by the Shariah Advisor of MBL. Standards, interpretations and amendments to published approved accounting standards that are not yet effective: Amendments to IAS 12 deferred tax on investment property (effective for annual periods beginning on or after 1 January 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 amendment has no impact on Group's financial statements. IAS 27 Separate Financial Statements (2011) - (effective for annual periods beginning on or after 1 January 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 1 January 2013. IAS 27 (2011) carries forward the existing accounting and disclosure requirements for separate financial statements, with some minor clarifications. The amendments may impact the consolidated financial statements of the Group which has not yet been quantified.
IAS 28 Investments in Associates and Joint Ventures (2011) - (effective for annual periods beginning on or after 1 January 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 amendments may impact the consolidated financial statements of the Group which has not yet been quantified. IAS 19 Employee Benefits (amended 2011) - (effective for annual periods beginning on or after 1 January 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. The amendments may impact the consolidated financial statements of the Group which has not yet been quantified. (Amendments to IAS 1) Presentation of Items of Other Comprehensive Income - (effective for annual periods beginning on or after 1 July 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 may impact the consolidated financial statements of the Group which has not yet been quantified. IFRIC 20 - Stripping cost in the production phase of a surface mining (effective for annual periods beginning on or after 1 January 2013). The interpretation requires production stripping cost in a surface mine to be capitalized if certain criteria are met. The amendment has no impact on Group's financial statements.
2.2
Basis of Consolidation Subsidiaries are those enterprises in which the Holding company directly or indirectly exercise control over the financial and operating policies, and / or beneficially owns or holds more than 50 percent of the voting securities or otherwise, has power to elect and appoint more than 50 percent of its directors. The financial statements of the subsidiaries are included in the consolidated financial statements from the date when the control commenced. The financial statements of AMIML have been consolidated on a line-by-line basis. The Group applies uniform accounting policies for like transactions and events in similar circumstances except where specified otherwise. Associates are entities over which MBL has a significant influence but not control over the financial and operating policies. The Group's share in an associate is the aggregate of the holding in that associate by the Holding company and by the Subsidiary. Investments in associates are accounted for by the equity method of accounting and are initially recognized at cost, thereafter for the post acquisition change in the Group's share of net assets of the associates. The consolidated financial statements include the Group's share of income and expenses of associates from the date that significant influence commences until the date that such influence ceases. Non-controlling interest is that part of the net results of operations and of net assets of the subsidiary attributable to interest which are not owned by MBL. All material inter-group balances, transactions and resulting profits / losses have been eliminated.
3.
155
Staff retirement benefits (notes 6.10 and 34). Depreciation and amortisation methods of operating fixed assets (notes 6.5.3 and 12). Assumption and estimation in recognition of provision for taxation (current and prior years) and deferred taxation (notes 3.2, 6.9, 13 and 30). Measurement of share based payments (notes 6.20, 18.5 and 23.9). Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
3.2
Through Finance Act, 2010, certain amendments were introduced in Seventh Schedule to the Income Tax Ordinance, 2001. The provision for financings and off balance sheet items in doubtful and loss categories were allowed upto 5% of total gross financing for consumer and SMEs (as defined in SBP Prudential Regulation). Through Finance Act, 2011, certain amendments have been introduced in Seventh Schedule to the Income Tax Ordinance, 2001. Provision in excess of prescribed limits of consumer and SME financings have now been allowed to be carried forward to subsequent years effective July 1, 2010. With reference to allowability of provision, the management has carried out an exercise at year end and concluded that full deduction of provision in succeeding years would be allowed and accordingly recognized deferred tax asset on such provision amounting to Rs. 1,210 million (2010: Rs. 967 million).
4.
STATEMENT OF COMPLIANCE
4.1 These consolidated financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards issued by the International Accounting Standards Board and Islamic Financial Accounting Standards issued by the Institute of Chartered Accountants of Pakistan, as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984, and the Banking Companies Ordinance, 1962, and the directives issued by the State Bank of Pakistan (SBP). In case the requirements of provisions and directives issued under the Companies Ordinance, 1984, and the Banking Companies Ordinance, 1962, and the directives issued by SBP differ, the provisions of and the directives issued under the Companies Ordinance, 1984, and the Banking Companies Ordinance, 1962, and the directives issued by SBP shall prevail. SBP through its BSD Circular No. 10 dated August 26, 2002, has deferred the implementation of International Accounting Standard (IAS) 39 - "Financial Instruments: Recognition and Measurement" and IAS 40 - "Investment Property" for banks in Pakistan. Accordingly, the requirements of those IASs have not been considered in preparation of these consolidated financial statements to the extent relevant to the Holding Company's financial positions and results.
4.2
5.
BASIS OF MEASUREMENT
5.1 These consolidated financial statements have been prepared under the historical cost convention except that certain investments and commitments in respect of certain foreign exchange contracts are valued at market rates in accordance with the requirements of SBP. Functional and Presentation Currency These consolidated financial statements have been presented in Pakistani Rupee, which is the Group's functional and presentation currency. 5.3 Rounding off Figures have been rounded off to the nearest thousand rupees unless otherwise stated.
5.2
6.
6.2
Revenue recognition i) ii) Profit on Murabaha and Commodity Murabaha is recognised on accrual basis. Profit on murabaha transactions for the period from the date of disbursement to the date of culmination of murabaha is recognised immediately upon the later date. The Group follows the finance method in recognising income on Ijarah contracts written upto December 31, 2008. Under this method the unearned income i.e. the excess of aggregate Ijarah rentals over the cost of the asset and documentation charges under Ijarah facility is deferred and then amortised over the term of the Ijarah, so as to produce a constant rate of return on net investment in the Ijarah. Gains / losses on termination of Ijarah contracts are recognised as income on a receipt basis. Income on Ijarah is recognised from the date of delivery of the respective assets to the mustajir. Rentals on Ijarah contracts written subsequent to December 31, 2008 are recognised as income on accrual basis. Profit on Bai Muajjal is recognised on accrual basis. Profit on Diminishing Musharakah financings is recognised on accrual basis. Profit on Musharakah financings is recognised on declaration of profit by Musharakah partners. Profit on Tijarah and Istisna financings are recognised on accrual basis commencing from time of sale of goods till the realisation of sale proceeds. Profit on Service Ijarah is recognised on accrual basis. Profit on Sukuks is recognised on accrual basis. Commission on letters of credit, acceptances and guarantees is recognized on receipt basis, except for commission on guarantees in excess of Rs. 50,000 which is recognized over the period of the guarantee. Fee and brokerage income are recognised when earned. Dividend income is recognised when the Groups right to receive dividend is established. Purchase and sale of investments are recorded on the dates of contract. Gains and losses on sale of investments are also recorded on those dates. Advisory fee and commission income are recognized by AMIML as and when services are provided. Performance fee related to advisory services are recorded on confirmation. Remuneration from Al Meezan Mutual Fund, Meezan Balance Fund, Meezan Islamic Fund, Meezan Islamic Income Fund, Meezan Tahaffuz Pension Fund, Meezan Capital Protected Fund II and Meezan Sovereign Fund is recognised on the basis of average annual net assets value of the funds. Return on deposits is recognised on receipt basis except for return on fixed deposits which is recognised on accrual basis. Sales load is recognised on accrual basis. Consistent with prior years, profit required to be suspended in compliance with the Prudential Regulations issued by SBP is recorded on receipt basis.
6.3
Financings Murabaha In Murabaha transactions, MBL purchases the goods and after taking the possession, sells them to the customer on cost plus profit basis either in a spot or credit transaction. Ijarah In Ijarah, MBL provides the asset on pre-agreed rentals for specific tenors to the customers. Istisna In Istisna financing, MBL places an order to purchase some specific goods / commodities from its customers to be delivered to MBL within an agreed time. The goods are then sold and the amount hence financed is paid back to MBL.
157
Tijarah In Tijarah financing, MBL purchases specific goods / commodities on cash basis from its customers for onward sale and on subsequent sale, the financed amount is paid back by the customer. Diminishing Musharakah In Diminishing Musharakah based financing, MBL enters into a Musharakah based on Shirkat-ul-milk for financing an agreed share of fixed asset (e.g. house, land, plant or machinery) with its customers and enters into period profit payment agreement for the utilization of MBLs Musharakah share by the customer. Running Musharakah In Running Musharakah based financings, MBL enters into financing with the customer based on Shirkat-ul Aqd or Business Partnership in customers operating business. Under this mechanism the customer can withdraw and return funds to the Bank subject to his Running Musharakah Financing limit during the Musharakah period. At the end of each quarter / half year the customer pays the provisional profit as per the desired profit rate which is subject to final settlement based on the relevant quarterly / half yearly / annual accounts of the customer. Bai Muajjal In Bai Muajjal, MBL sells Shariah Compliant sukuk on a deferred payment basis to other Financial Institutions / customers. The credit price is agreed at the time of sale and proceeds are received at the end of credit period. Service Ijarah In Service Ijarah financing, MBL provide financing by acquiring certain agreed services from the client. After the purchases of services, the Bank appoints the customer to sell these services in the market over a period and provides a sale confirmation of such sale. The profit is accrued from the date of receipt of such confirmation. 6.3.1 Financings are stated net of specific and general provisions against non-performing financings which are charged to the profit and loss account. Funds disbursed under financing arrangements for purchase of goods / assets are recorded as Advance against Financings. On culmination i.e. sale of assets to customers, financings are recorded at the deferred sale price net of profit. Assets purchased but remaining unsold at the date of Statement of Financial Position are recorded as inventories. 6.3.2 The rentals received / receivable on Ijarahs are recorded as income / revenue. Depreciation on Ijarah assets is charged to profit and loss account by applying the accounting policy consistent with the policy for depreciation of operating fixed assets. Provision against non-performing financings Provisions are determined against financings on a prudent basis in accordance with the requirements of the Prudential Regulations issued by SBP. Non-performing financings are written off only when all possible courses of action to achieve recovery have proved unsuccessful. Write-offs are determined in accordance with the criteria prescribed by SBP vide BPRD Circular No. 6 of 2007 dated June 05, 2007. 6.4 Investments 6.4.1 MBL classifies its investments as follows: Held for trading These are investments acquired principally for the purpose of generating profit from short-term fluctuations in price. Held to maturity These are investments with fixed or determinable payments and fixed maturity and MBL has positive intent and ability to hold them to maturity. Available for sale These are investments, other than those in subsidiaries and associates, which do not fall under the held for trading or held to maturity categories.
6.3.3
6.4.2
AMIML classify their investments as follows: Financial assets at fair value through profit and loss This category has two sub categories: 'financial assets held for trading', and those designated at fair value through profit and loss' at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Since the financial asset classifed by AMIML as 'investments at fair value through profit and loss' are of the same nature as that of financial asset classified as 'held for trading' by MBL, the two categories have been classified as 'held for trading' in these consolidated financial statements. Available for sale Available for sale financial assets are non derivatives that are either designated in this category or not classified in any of the other categories
6.4.3
Investments are valued as follows: Quoted securities, excluding investments categorised as held to maturity securities and investments in subsidiary and associates, are stated at revalued amounts. Unquoted investments are carried at cost less impairment loss. Investments in associates are accounted for under equity method. Investments in securities categorised as held to maturity are carried at amortised cost less impairment.
6.4.4
Any surplus / deficit arising as a result of revaluation of quoted securities categorised as available for sale is presented below the shareholders equity in the Consolidated Statement of Financial Posiotion, while any surplus / deficit arising as a result of revaluation of held for trading securities is credited / charged to the Consolidated Profit and Loss Account. Consistent with prior year, all purchases and sales of investments that require delivery within the time frame established by regulation or market convention are recognised at the trade date. Trade date is the date on which the Group commits to purchase or sell the investment. Cost of investment is determined on moving average basis. Premium or discount on acquisition of investments is amortised through the Consolidated Profit and Loss Account over the remaining period till maturity. Impairment loss is recognised by the Group whenever there is objective evidence of impairment and the carrying amount of an investment exceeds its expected recoverable amount. An impairment loss is recognised in income currently. The Group reviews the carrying value of its investments in associates for impairment at each reporting date if there are any indicators of impairment. The indicators include significant decline in market value of investment, prolonged decline in market value of investment, significant changes with an adverse impact on the entity, increase in market interest rates, carrying amount of net assets are in excess of its market capitalization etc. Considering the fact that these investments are held for long term and there are certain restrictions on their disposal, for the purposes of determining significant or prolonged decline in fair value a higher threshold of upto 40% and for prolonged a threshold of upto 12 months may be used. However, the use of higher threshold should be justifiable in view of other factors present for the entity. The amount of impairment loss would be determined based on the higher of value in use and fair value less costs to sell.
6.4.5
6.5
Operating fixed assets 6.5.1 Tangible assets Tangible operating fixed assets are stated at cost less accumulated depreciation and any identified impairment. Items of fixed assets costing Rs. 20,000 or less are not capitalised by MBL and are charged off in the month of purchase. Profit or loss on disposal of fixed assets is included in income currently.
159
6.5.2
Intangible assets Intangible assets comprise of computer software. Intangible assets with definite useful lives are stated at cost less accumulated amortisation and impairment losses (if any).
6.5.3
Depreciation / amortisation Depreciation / amortisation is charged to the profit and loss account by applying the straight line method whereby the depreciable value of an asset is written off over its estimated service life. The Group charges depreciation / amortisation from the month of acquisition and upto the month preceding the disposal.
6.5.4
6.5.5
Useful lives and residual values Useful lives and residual values are reviewed at each balance sheet date, and adjusted if impact on depreciation is significant.
6.5.6
Maintenance and normal repairs Maintenance and normal repairs are charged to profit and loss account as and when incurred.
6.5.7
Impairment The Group assesses at each balance sheet date whether there is any indication that the operating fixed assets may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amounts. Where carrying values exceed the respective recoverable amounts, assets are written down to their recoverable amounts and the resulting impairment charge is recognised in income.
6.6
Ijarah Assets (IFAS 2) Ijarah assets are stated at cost less depreciation and are disclosed as part of 'Financings'. The rental received / receivable on Ijarah under IFAS 2 are recorded as income / revenue. Depreciation The Group charges depreciation from the date of recognition of Ijarah of respective assets to mustajir. Ijarah assets are depreciated over the period of Ijarah using straight line method. Ijarah Rentals Ijarah rentals outstanding are disclosed in 'Other Assets' on the Statement of Financial Position at amortised cost. Impairment Impairment of Ijarah Asset is determined on same basis as that of Operating Fixed Assets. Impairment of Ijarah Rentals are determined in accordance with Prudential Regulations of SBP. The provision for impairment of Ijarah Rentals is shown as part of 'Financings'.
6.7
Inventories Inventories are valued at the lower of cost and net realisable value. The net realizable value is the estimated selling price in the ordinary course of business less the estimated cost necessary to make the sale. Cost of inventories represents actual purchases made by the Group / customers as an agent of the Group for subsequent sale.
6.8
Deposits Deposits are generated on the basis of two modes Qard and Modaraba. Deposits taken on Qard basis are classified as Current Account and Deposits generated on Modaraba basis are classified as Saving Account and Fixed Deposit Account. No profit or loss is passed to current account depositors. Profit realized in Investment Pools are distributed in pre-agreed profit sharing ratio. Rab-ul-Maal share is distributed among depositor according to weightages assigned at the inception of profit calculation period. Mudarib can distribute its share of profit to Rab-ul-Maal upto a maximum of 50% of their profit. Profits are distributed from the pool so the Depositors (remunerative) only bear the risk of assets in the pool during the profit calculation period. Assets pools are created at MBL's discretion and MBL can add, amend, transfer asset to any other pool in the interest of the deposit holders. In case of loss in pool during the profit calculation period, the loss is distributed among the depositors (remunerative) according to their ratio of investments.
6.9
Taxation Current The Group charge for taxation is based on expected taxable income for the year at current rates of taxation, and any adjustments to tax payable in respect of previous years, after taking into consideration available tax credits, rebates, tax losses, etc. Deferred The Group accounts for deferred tax using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences; the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits, and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realised.
6.10
Staff retirement benefits Defined benefit plan MBL operates a funded gratuity scheme for all its permanent employees who have completed the minimum qualifying eligible service of three years. The benefits under the gratuity scheme are payable on death, resignation or at retirement. The scheme was approved by the tax authorities in April 2000 and the last actuarial valuation was conducted as at December 31, 2011. The Projected Unit Credit method was used for actuarial valuation. Actuarial gains or losses are recognised over the future expected average remaining working lives of employees, to the extent of the greater of ten percent of the present value of the defined benefit obligations at that date and ten percent of the fair value of plan assets at that date. AMIML operates a funded gratuity scheme for all its permanent employees. Employees are entitled to benefits under the scheme on the completion of a minimum eligibility period of service under the rules of the fund. The 'Projected Unit Credit Method' was used for actuarial valuation. Actuarial gains or losses are recognised over the expected average remaining working lives of employees by the Group.
161
Defined contribution plan The Group also operates a recognised contributory provident fund for all permanent employees. Equal monthly contributions are made both by the Group and the employees, to the fund at a rate of 10% of basic salary. 6.11 Compensated absences The Group recognises liability in respect of employees compensated absences in the period in which these are earned upto the balance sheet date. The provision has been recognised on the basis of actuarial valuation conducted as at December 31, 2011 for MBL, and as at June 30, 2011 for AMIML, on the basis of Projected Unit Credit method. 6.12 Dividend and reserves Dividend declared and appropriations, except for transfer to statutory reserve, made subsequent to the balance sheet date are recognised as liability and recorded as changes in reserves respectively in the period in which these are approved by the directors / shareholders as appropriate. 6.13 Foreign currency transactions Foreign currency transactions are recorded in rupees at exchange rates prevailing on the date of transaction. Monetary assets, monetary liabilities and contingencies and commitments in foreign currencies except forward contracts other than contracts with SBP at the year end are reported in Rupees at exchange rates prevalent on the balance sheet date. Forward contracts other than contracts with SBP relating to the foreign currency deposits are valued at forward rates applicable to the respective maturities of the relevant foreign exchange contracts. Forward contracts with SBP relating to foreign currency deposit are valued at spot rate prevailing at the balance sheet date. Exchange gains and losses are included in income currently. 6.14 Provisions and contingent assets and liabilities Provisions are recognised when the Group has a present legal or constructive obligation arising as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate. Contingent assets are not recognised by the Group and are also not disclosed unless an inflow of economic benefits is probable and contingent liabilities are not recognised, and are disclosed unless the probability of an outflow of resources embodying economic benefits are remote. Acceptances comprise undertakings by MBL to pay bills of exchange drawn on customers. The Group expects most acceptances to be settled simultaneously with the reimbursement from the customers. Acceptances are accounted for as off-balance sheet transactions and are disclosed as contingent liabilities and commitments. 6.15 Offsetting Financial assets and financial liabilities are offset by the Group and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis by the Group only when permitted by the approved accounting standards as applicable in Pakistan.
6.16
Segment reporting A segment is a distinguishable component of the Group that is engaged in providing products 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. The Group's primary format of reporting is based on business segments. 6.16.1 Business segments Corporate financing It includes investment Banking, syndications, IPO related activities, secondary private placements, underwriting and securitization. Trading and sales It includes equity, foreign exchanges, commodities, own securities and placements. Retail banking It includes retail financings, deposits and Banking services offered to its retail customers and small and medium enterprises. Commercial banking It includes project finance, export finance, trade finance, Ijarah, guarantees and bills of exchange relating to its corporate customers. Agency services It includes depository receipts, custody, issuer and paying agents. Payment and settlement It includes payments and collections, funds transfer, clearing and settlement. 6.16.2 Geographical segments The Group operates only in Pakistan.
6.17
Impairment The carrying amount of the assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the relevant asset is estimated. An impairment loss is recognized whenever, the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in Consolidated Profit and Loss Account. An impairment loss is reversed if the reversal can be objectively related to an event occurring after the impairment loss was recognized.
6.18
Fiduciary assets Assets held in trust or in a fiduciary capacity by the Group are not treated as assets of the Group and accordingly are not included in these Consolidated Financial Statements.
163
6.19
Transactions involving financial instruments sold on deferred settlement basis The Group enters into certain transactions involving purchase of a security in the ready market and sale of the same security on deferred settlement basis. Securities purchased in the ready market are carried on the balance sheet, till their eventual disposal and sale of those securities in the futures market is accounted for separately as a 'derivative'.
6.20
Share-based compensation The fair value of the amount payable to the employees of AMIML in respect of senior executive bonus incentive scheme (which are settled in cash), is recognised as an expense, with a corresponding increase in liability, over the period that the employees become entitled to payment. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognised as personnel expense in income statement.
Note
2010
7.
These represent local and foreign currency amounts required to be maintained by the MBL with SBP as stipulated by SBP. These accounts are non-remunerative in nature. Note 2011 Rupees in 000 2010
8.
8.1
8.1
The return on these balances is around 0.18% (2010: 0.29%) per annum.
Note
2010
9.
The average return on these products is 11.30% (2010: 12.89%) per annum and will mature between January 2012 to February 2013. The average return on this product is 1.2% (2010: 0.9%) per annum (Euro) and will mature in January 2012. 2011 Rupees in 000 2010
9.2
9.3
Particulars of due from financial institutions In local currency In foreign currencies 4,024,739 40,667 4,065,406 10,466,080 45,775 10,511,855
9.4
Provision against amounts due from financial institutions Opening balance Charge for the year Reversals Closing balance 94,500 (41,365) (41,365) 53,135 12,625 81,875 81,875 94,500
165
10.
INVESTMENTS
10.1 Investments by types 2011 Note Held by the Group Given as collateral Total Held by the Group Rupees in 000 3,501 45,986,851 1,150,000 47,140,352 2,796,436 265,999 50,202,787 2010 Given as collateral Total
Held for trading securities Available for sale securities Held to maturity securities In related parties Associates (listed) Associates (unlisted) Investment at cost / carrying value Provision for diminution in value of investments Investments (net of provision) Deficit on revaluation of held for trading securities Surplus on revaluation of available for sale securities Total investments at market value
10.6 10.7
10.8
10.9 22
10.2
Investments by segments Federal Government Securities GOP Ijarah Sukuks Fully paid up Ordinary Shares - Listed companies - Unlisted companies WAPDA First Sukuk Certificates WAPDA Second Sukuk Certificates PIA Sukuks Sukuk Certificates Preference shares Global Sukuk Bonds Units of Open-end Funds Society for Worldwide Interbank Financial Telecommunication SCRL (S.W.I.F.T. SCRL) Certificates of Closed-end Fund Total investment at cost / carrying value Provision for diminution in value of investments and impairment Investments (Net of Provision) Deficit on revaluation of held for trading securities Surplus on revaluation of available for sale securities Total investments at market value
Rupees in 000 75,655,305 923,973 247,386 10.2.1 1,260,309 1,730,000 1,500,000 5,120,224 2,656,985 10,389,437 897 220,700 99,705,216 10.8 (382,571) 99,322,645 626,897 99,949,542 32,446,557 1,032,031 241,941 1,258,708 1,750,000 1,500,000 5,214,851 146,280 2,915,086 2,991,624 897 704,812 50,202,787 (133,174) 50,069,613 (4) 449,777 50,519,386
10.9 22
10.2.1
MBL purchased 22,000 certificates of WAPDA I Sukuk through a market based transaction for a cash consideration of Rs.110.346 million having face value of Rs. 110 million. These Certificates were available in the sellers CDC account and on completion of the transaction were transferred to the Banks CDC account. The periodic Ijarah rentals due since October 22, 2009 were not paid to the Bank as there was certain discrepancy in the Central Depository Register. MBL through a legal notice has clarified the position that the Bank has purchased the aforesaid Sukuk Certificates from the market for a valuable consideration when these Sukuks were already entered in the Central Depository Register of seller's account. Though, the suit is pending in Sindh High Court, however, MBL on prudent basis has recognised provision against these sukuks in the current year.
10.2.2
Investments in associates except Meezan Islamic Income Fund and Meezan Sovereign Fund form part of strategic investment of the Group and cannot be sold for five years from the last date of purchase of such securities.
10.3
Held for Trading Securities The Group holds investments in sukuks in the following investee companies: Name of the investee companies 2011 2010 2011 2010
(Number of sukuks) Unquoted Sukuk Bonds Sitara Chemical Industries Limited Arzoo Textile Mills Limited Total 240 1,000
167
10.4 Quality of Available for Sale Securities The Group holds investments in ordinary shares, sukuk certificates and other securities of a nominal value of Rs. 10 each, unless stated otherwise, in the following listed investee companies / funds: Name of the investee company / fund 2011 Note 2010 2011 Cost 2010 2011 Market Entity rating value long term / short term Market value Rupees in '000 2010 Entity rating long term / short term
Rupees in '000
Ordinary shares Automobile parts and accessories Agriauto Industries Limited Cement Attock Cement Pakistan Limited D.G. Khan Cement Company Limited Lucky Cement Company Limited Automobile assembler Indus Motor Company Limited Pak Suzuki Motor Company Limited Power generation and distribution The Hub Power Company Limited Oil and gas marketing Pakistan State Oil Company Limited Oil and gas exploration Pakistan Oilfields Limited Oil and Gas Development Company Limited Pakistan Petroleum Limited Attock Petroleum Limited Fertilizer Fauji Fertilizer Bin Qasim Limited Fauji Fertilizer Company Limited Paper and board Packages Limited Chemicals ICI Pakistan Limited Lotte Pakistan PTA Limited Technology and communication Pakistan Telecommunication Company Limited (A) Refinery National Refinery Limited Jute Thal Limited
10.4.1
190,542
324,000
11,969
20,352
10,956
Unrated
24,689
Unrated
190,737 1,252,089
8,372 88,806
9,728 93,957
Unrated Unrated
26,360
738 30,700
2,248
106 2,618
1,556
Unrated
186 2,143
Unrated Unrated
2,261,651
1,300,000
83,703
46,652
77,348
AA+/A1+
48,633
AA+/A1+
494,446
144,138
145,951
AA+ / A1+
120,911
139,117 -
1,489,429
2,482,500 1,445,543
143,709
79,644 151,733
222,729
Unrated
88,700 181,936
Unrated Unrated
250,783
46,826
32,253
AA / A1+
595,489 -
505,489 978,530
81,984 -
66,286 12,896
71,619 -
Unrated -
72,912 13,406
Unrated Unrated
2,801,100
67,539
54,397
Unrated
99,936
19,780
27,361
Unrated
9,200
579
1,198
Unrated
2011 Note
2010
2011 Cost
2010
2011 Market Entity rating value long term / short term Market value
Rupees in '000
Miscellaneous Tri-Pack Films Sukuk Certificates WAPDA First Sukuk Certificates WAPDA Second Sukuk Certificates Pakistan International Airlines - at cost Dawood Hercules Chemicals Limited - at cost Century Paper and Board Mills Limited - at cost Sui Southern Gas Company Limited - at cost Engro Fertilizers Limited - at cost Sitara Chemicals Industries Limited - at cost Quetta Textile Mills Limited - at cost Arzoo Textile Mills Limited - at cost Sitara Peroxide Limited - at cost Liberty Power Tech Limited - at cost Eden Builders Limited - at cost Maple Leaf Cement Factory Limited - at cost Maple Leaf Cement Factory Limited - at cost Amreli Steel Limited - at cost Kott Addu Power Company Limited - at cost The Hub Power Company Limited - at cost GOP Sukuk Ijarah Sukuk First Ijarah Sukuk Second Ijarah Sukuk Third Ijarah Sukuk Fourth Ijarah Sukuk Fifth Ijarah Sukuk Sixth Ijarah Sukuk Seventh Ijarah Sukuk Eighth Ijarah Sukuk Ninth Units of open-end funds United Islamic Saving Fund IGI Islamic Income Fund Pak Oman Advantage Islamic Income Fund HBL Islamic Money Market Fund Atlas Islamic Fund 223,616 223,616 25,302 25,302 35,846 A+/A1
Rupees in '000
27,317 A+/A1
10.4.2 10.4.3 10.4.4 10.4.5 10.4.6 10.4.7 10.4.8 10.4.9 10.4.10 10.4.11 10.4.12 10.4.13 10.4.14 10.4.15 10.4.16 10.4.17
22,000 346,000 300,000 125,000 200,000 150,000 30,000 10,000 30,000 18,140,480 14,400 40,000 1,500 50,000 100,000 125,000
22,000 110,309 108,708 110,309 Govt. Guaranteed 350,000 1,730,000 1,750,000 1,737,439 Govt. Guaranteed 300,000 1,500,000 1,500,000 1,506,000 Govt. Guaranteed 20,000 904,800 125,000 375,000 500,000 375,000 A+ 200,000 166,670 500,002 166,670 AA 150,000 750,000 750,000 750,000 AA29,600 37,000 30,000 135,000 145,000 135,000 BBB+ 10,000 50,000 50,000 50,000 Unrated 30,000 140,625 140,625 140,625 Unrated 16,680,930 1,755,269 1,668,093 1,755,269 AA 14,400 40,500 58,500 40,500 A 40,000 199,660 199,830 199,660 D 1,500 7,500 7,500 7,500 D 50,000 250,000 250,000 250,000 A500,000 500,000 AA+ 750,000 750,000 AA+
114,257 1,760,850 1,500,000 904,800 500,000 500,002 750,000 37,000 145,000 50,000 140,625 1,668,093 58,500 199,830 7,500 250,000 -
Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Unrated A+ AA AAAABBB+ Unrated Unrated AAA BB+ BB+ A-
Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed
Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed Govt. Guaranteed -
7,946,976 1,099,617 -
800,000 100,000 -
807,715 110,521 -
Unrated Unrated -
Sukuk Bonds Abu Dhabi Sukuk Bonds Central Bank of Bahrain International Sukuk Islamic Development Bank Trust Services Sukuk Malaysia Sukuk Global Qatar Islamic Bank Sukuk Wakala Global Sukuk Others Haleeb Foods Limited - at cost S.W.I.F.T. SCRL - at cost
BBB AAA A3 A A3
A2 A AAA A3 A -
10.4.29
2,786,000 5
2,786,000 5
Unrated Unrated
Unrated Unrated
169
10.4.1 10.4.2
The nominal value of these shares is Rs. 5 each. The paid up value of these sukuks is Rs. 5,000 per certificate. The return on these Sukuks - WAPDA is on a six monthly Karachi inter-bank offer rate plus a fixed credit spread of 35 basis points. These sukuks will mature in 2012. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The paid up value of these sukuks is Rs. 5,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The profit rate on these certificates is six monthly Karachi inter-bank offer rate minus 25 basis points. These sukuks will mature in 2017. The paid up value of these sukuks is Rs. 5,000 per certificate. The return on Sukuk - PIA is on a six monthly Karachi inter-bank offer rate plus a fixed credit spread of 175 basis points. These bonds will mature in 2014. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The paid up value of these sukuks is Rs. 3,000 per certificate. The tenure of these certificates is 7 years, with principal receivable in 2010-2014. The profit is calculated on the basis of six months Karachi inter-bank offer rate plus 135 basis points. The paid up value of these sukuks is Rs. 833 per certificate. The tenure of these certificates is 5 years, with principal receivable in 2009-2012. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 80 basis points. The paid up value of these sukuks is Rs. 5,000 per certificate. The tenure of these certificates is 8 years, with principal receivable in 2015. The profit is calculated on the basis of six months Karachi inter-bank offer rate plus 150 basis points. The paid up value of these sukuks is Rs. 4,500 per certificate. The tenure of these certificates is 7 years, with principal receivable in 2010-2015. The profit is calculated on the basis of six months Karachi inter-bank offer rate plus 150 basis points. The paid up value of these sukuks is Rs. 5,000 per certificate. The tenure of these certificates is 6 years, with principal receivable in 2009-2014. The profit is calculated on the basis of six months Karachi inter-bank offer rate plus 200 basis points from year 1 to 2 and plus 175 basis points from year 3 to year 6.
10.4.3
10.4.4
10.4.5
10.4.6
10.4.7
10.4.8
10.4.9
10.4.10 The paid up value of these sukuks is Rs. 4,687 per certificate. The tenure of these certificates is 8 years, with principal receivable in 2012-2016. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 110 basis points. 10.4.11 The paid up value of these sukuks is Rs. 96.76 per certificate. The tenure of these certificates is 12 years, with principal receivable in 2011-2021. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 300 basis points. 10.4.12 The paid up value of these sukuks is Rs. 2,813 per certificate. The tenure of these certificates is 5.5 years, with principal receivable in 2010-2014. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 230 basis points. 10.4.13 The paid up value of these sukuks is Rs. 4,996 per certificate. The tenure of these certificates is 11 years, with principal receivable in 2010-2018. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 100 basis points. 10.4.14 The paid up value of these sukuks is Rs. 5,000 per certificate. The tenure of these certificates is 2 years, with principal receivable in March 2012. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 100 basis points. 10.4.15 The paid up value of these sukuks is Rs. 5,000 per certificate. The tenure of these certificates is 7 years, with principal receivable in 2012-2016. The profit is calculated on the basis of three months Karachi inter-bank offer rate plus 250 basis points.
10.4.16 The paid up value of these sukuks is Rs. 5,000 per certificate. The tenure of these certificates is 6 month, with principal receivable in June 2012. The profit is calculated on the basis of six months Karachi inter-bank offer rate plus 110 basis points. 10.4.17 The paid up value of these sukuks is Rs. 5,000 per certificate. The tenure of these certificates is 6 month, with principal receivable in February 2012. The profit is calculated on the basis of six months Karachi inter-bank offer rate plus 110 basis points. 10.4.18 The paid up value of these sukuks is Rs. 100,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The profit rate on these certificates comprises of six months weighted average yield of six months market T-Bills plus zero basis points. These certificates will mature in 2012. 10.4.19 The paid up value of these sukuks is Rs. 100,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The profit rate on these certificates comprises of six months weighted average yield of six months market T-Bills minus 5 basis points. These certificates will mature in 2012. 10.4.20 The paid up value of these sukuks is Rs. 100,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The tenure of these certificates is 3 years, with principal receivable in 2013. The profit is calculated on the basis of six month weighted average yield of six month market T-Bills. 10.4.21 The paid up value of these sukuks is Rs. 100,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The profit rate on these certificates comprises of six months weighted average yield of six months market T-Bills plus zero basis points. These certificates will mature in 2014 . 10.4.22 The paid up value of these sukuks is Rs. 100,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The profit rate on these certificates comprises of six months weighted average yield of six months market T-Bills plus zero basis points. These certificates will mature in 2014. 10.4.23 The paid up value of these sukuks is Rs. 100,000 per certificate. These sukuk certificates are backed by the Government of Pakistan's sovereign guarantee. The profit rate on these certificates comprises of six months weighted average yield of six months market T-Bills plus zero basis points. These certificates will mature in 2014. 10.4.24 The paid up value of these sukuks is US$ 1 and will mature in 2014. The profit coupon is 6.25 percent per annum. These securities are held through a custodian. 10.4.25 The paid up value of these sukuks is US$ 1 and will mature in 2014. The profit coupon is 3.17 percent per annum. These securities are held through a custodian. 10.4.26 The paid up value of these sukuks is US$ 1 and will mature in 2015. The profit coupon is 3.93 percent per annum. These securities are held through a custodian. 10.4.27 The paid up value of these sukuks is US$ 1 and will mature in 2015. The profit coupon is 3.86 percent per annum. These securities are held through a custodian. 10.4.28 The paid up value of these sukuks is US$ 1 and will mature in 2016. The profit coupon is 2.99 percent per annum 10.4.29 The Chief Executive of Haleeb Foods Limited is Mr. Mohammad Imran Amjad.
171
10.5
Held to maturity securities Note Name of the investee entity Sukuk Certificates WAPDA First Sukuk Certificates (Sukuk - WAPDA) 10.5.1 230,000 230,000 1,150,000 1,150,000 1,150,000 1,150,000 2011 2010 Number of Certificates 2011 2010
10.5.1
The paid up value of Sukuk -WAPDA is Rs. 5,000 per certificate. The return on Sukuk - WAPDA is on a six monthly Karachi inter-bank offer rate plus a fixed credit spread of 35 basis points. These bonds will mature in 2012. These sukuk certificates are backed by Government of Pakistan sovereign guarantee.
10.6
Associates (listed) The Group holds investments in ordinary shares / units / certificates of Rs. 10 each, unless stated otherwise, in the following listed investee entities:
Ordinary Shares of closed end mutual fund Al-Meezan Mutual Fund Limited Certificate of closed end fund Meezan Balanced Fund Units of open end funds Meezan Islamic Fund - note 10.6.1 Meezan Islamic Income Fund Meezan Sovereign Fund Meezan Capital Protected Fund - I Meezan Capital Protected Fund - II Al-Meezan Mutual Fund Meezan Cash Fund Meezan Tahaffuz Pension Equity Fund Meezan Tahaffuz Pension Debt Fund Meezan Tahaffuz Pension Money Market Fund 39,477,157 20.07 469,765
19,956,292
19,956,292
15.52
220,700
235,047
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
The nominal value of open end fund units is Rs. 50 each. The above associates are incorporated in Pakistan. Investments in listed associates have a market value of Rs. 9,243 million (2010: Rs. 2,570 million).
Associates (unlisted) The Group holds investments in ordinary shares of Rs. 10 each, unless stated otherwise, in the following unlisted investee companies:
Particulars Note 2011 2010 2011 Carrying amount Rupees in 000 2010 Precentage of effective holding % 50 Break up value per share Rupees 3.41 Latest available audited financial statement Name of the chief executive
1,499,980
1,499,980
10.7.1
540,000
540,000
60,388
55,217
30
101.82
10.7.2
150,000
150,000
16,313
15,904
43
102.40
Falcon Greenwood (Private) Limited Ordinary shares Preference shares Advance against issue of preference share Pak Kuwait Takaful Insurance Co. Limited Total 10.7.2 250,000 250,000 1,432,800 23,463 23,598 143,280 25 N/A 95.37 N/A
3,000
N/A
N/A
2,500,000
2,500,000
25,000 125,164
25,000 265,999
6.25
9.69
10.7.1
The nominal value of these shares is Rs. 100 each. These shares are in custody of SECP and cannot be sold without the prior approval of SECP in accordance with circular No. 10 of 2006 dated June 16, 2006, in addition to mandatory holding period of 5 years from the last date of purchase of these shares. The nominal value of these shares is Rs. 100 each. The above associates are incorporated in Pakistan.
10.7.2 10.7.3
173
10.8
Provision for diminution in value of investments and impairment 2011 Others 121,103 250,582 (2,300) 248,282 369,385 2010 Others 88,890 30,163 2,050 32,213 121,103
Associates Opening balance Charge for the year - on associates (unlisted) - on available for sale investments - on held for trading investments Closing balance 12,071 1,115 1,115 13,186
Rupees in 000
10.8.1
Provision in respect of type and segment Associates - unlisted Fully paid-up ordinary shares Other - Held for trading investments Sukuks Other - Available for sale investments Fully paid-up ordinary shares Sukuks
2010
12,071
2,300
10.9
Deficit on revaluation of held for trading securities Deficit on listed shares / Sukuks 4
Opening - January 01, 2010 Investment / (redemption) during the year Share of profit in associates Taxation Dividend received Provision for dimunition in value of investments Closing - December 31, 2010 Investment / (redemption) during the year Share of profit / (loss) in associates Taxation Dividend received Closing - December 31, 2011
23,832 292,028 584,885 108,617 (20,800) 73,847 (4,727) 23,598 469,765 637,577 222,333 (158,850) (126,270) (22,816) (89,059) 73,492
200,000 6,560 -
- 75,015 20 - 75,035
324,704
- 1,073,464 55,879
(756,761) (55,879) 7,630,617 7,000,264 74,955 610 - (66,158) 310,848 75,565 60,303 - 605,083 521,582 (50) -
206,560
175
11.
FINANCINGS
Note 2011 Rupees in 000 In Pakistan - Murabaha financings - Net investment in Ijarah - Net book value of assets/investment in Ijarah under IFAS-2 - Financing under Islamic Export Refinance - Murabaha - Financing under Islamic Export Refinance - Istisna - Diminishing Musharakah financings - housing - Diminishing Musharakah financings - others - Running Musharakah financings - Musharakah financings - Istisna financings - Tijarah financings - Bai Muajjal financings - Service Ijarah financings - Musawammah financings (Laptop) - Labbaik (Qard for Hajj and Umrah) - Financings against bills - Salam - Financings against bills - Murabaha - Staff financings - Loans and running finances Gross financings Less: Provision against non-performing financings Financings (net of provision) 2010
11.9
11.12 11.10
17,209,279 2,387,178 4,699,578 1,702,554 4,107,184 2,426,619 17,257,712 750,000 70,531 9,888,822 485,970 999,306 2,732 25,683 7,545 744,819 54,180 710,111 746,917 64,276,720 (5,321,135) 58,955,585
19,121,616 4,193,128 3,467,234 2,041,370 2,846,176 2,680,995 13,096,430 70,531 6,565,529 1,468,736 4,547 744,180 100,717 580,105 865,015 57,846,309 (3,851,146) 53,995,163
11.1
Murabaha receivable - gross Deferred murabaha income Profit receivable shown in other assets Murabaha financings 11.1.1 Murabaha Sale Price Murabaha Purchase Price
11.1.1
11.2
Net investment in Ijarah 2011 Not later Later than than one one and less year than five years Ijarah rentals receivable Residual value Minimum ijarah payments Profits for future periods Present value of minimum Ijarah payments 989,745 411,643 1,401,388 (320,387) 1,081,001 2,259,445 230,343 2,489,788 (1,183,611) 1,306,177 Over five years Total 2010 Not later Later than than one one and less year than five years Rupees in 000 1,504,997 1,097,254 2,602,251 (915,280) 1,686,971 2,264,784 1,027,304 3,292,088 (797,868) 2,494,220 Over five years Total
11.2.1
Net book value of assets / investments in Ijarah under IFAS-2 is net of depreciation of Rs 2,392.195 million (2010: Rs 960.456 million). 2011 Rupees in 000 2010
11.3
Financing under Islamic Export Refinance - Murabaha - gross Deferred income Profit receivable shown in other assets Financing under Islamic Export Refinance - Murabaha
11.4
Financing under Islamic Export Refinance - Istisna - gross Deferred income Profit receivable shown in other assets Financing under Islamic Export Refinance - Istisna 11.4.1
This includes advance against Export Refinance - Istisna amounting to Rs. 3,328.550 million (2010: Rs. 2,557.027 million). 2011 Rupees in 000 2010 6,596,552 (7,708) (23,315) 6,565,529
11.5
Istisna Financings - gross Deferred income Profit receivable shown in other assets Istisna financings 11.5.1
This includes advance against Istisna amounting to Rs. 8,911.059 million (2010: Rs. 5,787.777 million).
177
2011 Rupees in 000 11.6 Tijarah Financings - gross Deferred income Profit receivable shown in other assets Tijarah financings Bai Muajjal financings - gross Deferred income Profit receivable shown in other assets Bai Muajjal financings Musawammah financings (Laptop) - gross Deferred income Profit receivable shown in other assets Musawammah financings (Laptop) 489,702 (830) (2,902) 485,970 1,019,133 (19,166) (661) 999,306 32,018 (6,324) (11) 25,683
11.7
11.8
11.9
This includes Rs. 110.299 million (2010 : Rs. 95.711 million) representing mark up free financings to staff advanced under the Group's Human Resource Policies. 2011 2010 Rupees in 000
11.10.2
Short-term (for upto one year) Long-term (for over one year)
11.11 Financings include Rs. 4,647.792 million (2010: Rs. 4,318.323 million) which have been placed under non-performing status as detailed below: 2011 Provision Provision Category of classification Domestic Overseas Total required held Rupees in 000 Substandard Doubtful Loss 112,976 464,072 4,070,744 4,647,792 112,976 464,072 4,070,744 4,647,792 2010 Category of classification Domestic Overseas Total Rupees in 000 Substandard Doubtful Loss 282,831 755,177 3,280,315 4,318,323 282,831 755,177 3,280,315 4,318,323 50,731 287,478 2,774,688 3,112,897 50,731 287,478 2,774,688 3,112,897 Provision required Provision held 21,646 222,784 3,815,390 4,059,820 21,646 222,784 3,815,390 4,059,820
11.12 Particulars of provision against non-performing financings: 2011 Specific General Total Specific Rupees in 000 Opening balance Charge for the year Less: Reversals Amount written off - note 11.13 Closing balance 11.12.1 3,112,897 1,295,292 (346,744) 948,548 (1,625) 4,059,820 738,249 528,833 (5,767) 523,066 1,261,315 3,851,146 1,824,125 (352,511) 1,471,614 (1,625) 5,321,135 2,443,282 926,331 (249,261) 677,070 (7,455) 3,112,897 85,262 652,987 652,987 738,249 2,528,544 1,579,318 (249,261) 1,330,057 (7,455) 3,851,146 2010 General Total
MBL has maintained a general reserve (provision) in accordance with the applicable requirements of the Prudential Regulations for consumer financing issued by SBP. MBL has also maintained a general provision of Rs. 1,175 million against financings made on prudent basis, in view of prevailing economic conditions. This general provision is in addition to the requirements of the Prudential Regulations.
11.12.2
In accordance with BSD Circular No. 2 dated January 27, 2009 issued by the State Bank of Pakistan, MBL has availed the benefit of FSV against the non-performing financings. Had the benefit of FSV not been availed by MBL, the specific provision against non-performing financings would have been higher and consequently profit before taxation and financings (net of provisions) as at December 31, 2011 would have been lower by approximately Rs 68.001 million. The accumulated benefit availed as at December 31, 2011 amounts to Rs 230.611 million. The increase in profit, due to availing of the benefit, is not available for distribution of cash and stock dividend to share holders. In 2011, the SBP has issued another circular which increases the benefit of FSV. MBL has not taken the impact / benefit of this circular in these financial statements.
11.12.3 Particulars of provision against non-performing financings: 2011 Specific In local currency In foreign currencies 3,978,161 81,659 4,059,820 General 1,261,315 1,261,315 Total 5,239,476 81,659 5,321,135 Note Specific 3,090,952 21,945 3,112,897 2011 Rupees in 000 11.12 1,625 1,625 1,625 1,625 7,455 7,455 7,455 7,455 Rupees in 000 738,249 738,249 3,829,201 21,945 3,851,146 2010 2010 General Total
11.13.1
11.13.2
Write offs Rs. 500,000 and above Write offs below Rs. 500,000
179
11.13.3 Details of financings written off of Rs. 500,000 and above In term of sub-section(3) of section 33 A of the Banking Companies Ordinance, 1962, the statement in respect of written off financings or any other financial relief of five hundred thousand rupees or above allowed to any person during the year ended December 31, 2011 is given as Annexure - 1. 11.14 Particulars of loans and financings to directors, associated companies, etc. Debts due by directors, executives or officers of MBL or any of them either severally or jointly with any other persons. Note 2011 Rupees in 000 Balance at the beginning of the year Additions / disbursements during the year Deletions / repayments during the year Balance at the end of the year 603,106 262,446 (137,543) 728,009 460,340 223,000 (80,234) 603,106 2010
11.14.1
Debts due by companies or firms in which the directors of MBL are interested as directors, partners or in the case of private companies as members. Note 2011 Rupees in 000 2010
Balance at the beginning of the year Additions / disbursements during the year Deletions / repayments during the year Balance at the end of the year
11.14.2
70,531 70,531
Debts due by controlled firms, managed Modarabas and other related parties. Balance at the beginning of the year Additions / disbursements during the year Deletions / repayments during the year Balance at the end of the year 70,628 (70,628) -
11.14.1 The maximum total amount of financings including temporary financings granted by MBL during the year were Rs. 262 million (2010: Rs. 223 million). The maximum amount has been calculated by reference to the month end balance. 11.14.2 This represents a Musharakah facility outstanding from Blue Water (Private) Limited (an associated company) amounting to Rs. 71 million (2010: Rs. 71 million). The Musharakah facility is secured against equitable mortgage over property. 11.14.3 Loans and financings to executives and a director of MBL Executives 2010 2011 Opening balance Financings disbursed during the year Financings repaid during the year Closing balance 321,851 163,964 (48,154) 437,661 251,840 99,110 (29,099) 321,851 Director
2011
166 (133) 33
2010
298 (132) 166
Rupees in 000
Note
2010
181,959
859,533
12.2
Intangible assets
12.4
12.1
Capital work-in-progress Advances to suppliers and contractors for building renovation Advances for computer hardware Advances for purchase of vehicles Advances for computer software Advances for other office machines Advances for furniture and fixtures 107,902 7,406 14,911 24,928 26,512 300 181,959 722,248 7,588 12,348 33,910 57,256 26,183 859,533
12.2
181
2010 DEPRECIATION As at January 1, 2010 Rupees in 000 Charge / (on disposals) As at December 31, 2010 Net book value as at December 31, 2010 544,440 117,586 735,528 110,006 395,410 227,367 2,130,337 Rate of depreciation % 5 10 10 20 and 33 20
Leasehold Land Buildings on lease hold land Leasehold improvements Furniture and fixtures Electrical, office and computer equipments Vehicles
12.3
Rupees in 000 At January 1, 2010 Cost Accumulated depreciation Net book value Year ended December 31, 2010 Additions Net book value of disposals Depreciation charge Net book value as at December 31, 2010 Year ended December 31, 2011 Additions Net book value of disposals Depreciation charge Net book value as at December 31, 2011 71,549 615,989 875,185 (32,480) 960,291 446,073 (48,642) (112,246) 1,020,713 74,521 (5,815) (21,647) 157,065 482,797 (1,238) (202,187) 674,782 135,383 2,085,508 (16,807) (72,502) (77,476) (446,036) 268,467 3,697,307 544,440 13,211 (8,100) 117,586 159,545 (91,803) 735,528 21,914 (16,301) 110,006 168,819 (503) (184,769) 395,410 109,252 (11,977) (65,431) 227,367 472,741 (12,480) (366,404) 2,130,337 544,440 544,440 139,125 (26,650) 112,475 861,336 (193,550) 667,786 153,530 (49,137) 104,393 862,719 315,699 2,876,849 (450,856) (120,176) (840,369) 411,863 195,523 2,036,480
12.3.1
Included in cost of property and equipment are fully depreciated items still in use aggregating Rs. 523 million (2010: Rs. 346 million).
12.3.2
Details of disposal of fixed assets to executives and other persons are as follows:
Description Cost Accumulated Net book Sale depreciation value proceeds Rupees in 000
Items having book value in aggregate more than Rs. 250,000 or cost more than Rs. 1,000,000
Mode of disposal
Particulars of purchaser
Vehicles
Suzuki Cultus Honda City Toyota Corolla Honda City Honda Civic Honda Civic Suzuki Alto Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Toyota Corolla Suzuki Cultus Honda Citi Honda Citi Honda Citi Honda Citi Honda Citi Honda Citi Honda Citi Honda Civic Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Alto Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Toyota Corolla Suzuki Alto Suzuki Cultus Suzuki Cultus Toyota Corolla Toyota Corolla 749 1,319 1,529 900 1,712 1,506 586 586 647 748 772 772 836 560 712 586 772 647 784 772 579 579 1,004 553 885 901 883 886 884 883 886 841 518 470 480 470 469 470 470 470 477 470 468 586 556 560 560 560 567 470 522 1,004 486 570 570 879 893 41,274 226 440 153 162 998 1,456 273 303 345 262 386 463 446 560 332 322 373 313 274 450 328 328 669 240 885 901 883 886 884 883 886 840 328 306 352 306 469 305 313 298 304 274 242 371 435 560 560 560 529 298 305 656 300 456 428 879 759 27,743 523 879 1,376 738 714 50 313 283 302 486 386 309 390 380 264 399 334 510 322 251 251 335 313 1 190 164 128 164 165 157 172 173 196 226 215 121 38 172 217 348 187 114 143 134 13,533 Ex-Gratia Insurance Claim Insurance Claim 266MBL Staff Policy 1,041 MBL Staff Policy 522 MBL Staff Policy 607Negotiation 608Negotiation 660Negotiation 710Negotiation 707Negotiation 617Negotiation 650Negotiation 603 Negotiation 642Negotiation 633Negotiation 702Negotiation 646Negotiation 741Negotiation 656Negotiation 646Negotiation 606Negotiation 1,118 Negotiation 400Insurance Claim 266 MBL Staff Policy 286 MBL Staff Policy 275 MBL Staff Policy 266 MBL Staff Policy 266 MBL Staff Policy 265 MBL Staff Policy 266 MBL Staff Policy 252 MBL Staff Policy 273MBL Staff Policy 284MBL Staff Policy 242MBL Staff Policy 273MBL Staff Policy 141 MBL Staff Policy 267MBL Staff Policy 273MBL Staff Policy 273MBL Staff Policy 273MBL Staff Policy 284MBL Staff Policy 284MBL Staff Policy 351MBL Staff Policy 246MBL Staff Policy 168 MBL Staff Policy 168 MBL Staff Policy 168 MBL Staff Policy 201 MBL Staff Policy 273MBL Staff Policy 284MBL Staff Policy 1,050 Negotiation 186AMIML Staff Policy 114AMIML Staff Policy 143AMIML Staff Policy 1,105 Negotiation 134AMIML Staff Policy 26,010 1,100 1,529 Mr.Anwar Raza (Employee - Late) Pak Kuwait Takaful Co. Pak Kuwait Takaful Co. Mr.Ameen Khowaja (Employee) Mr. Azhar Ali Naqvi (Ex-Employee) Mr.Arshad Majeed (Employee) Mr.Sohail Rashid Hira Foundation School Mr.Ali Samad Awan Mr.Ali Sarmad Awan Mr.Khurrm Shahzad Mr.M Farruk Mr.M Shoaib Shamim Mr.Muhammad Zafar Mr.Muhammad Zafar Mr.Nadeem Ahmed Mr.Nadeem Ahmed Mr.Nadeem Ahmed Mr.Noman Hasan Khan Mr.Wasim Mirza Mr.Zahid Qadri Mr.Zulfiqar A Khan Mr.Khursheed Anwar Pak Kuwait Takaful Co. Mr.Mashkoor Hassan Siddiqui (Employee) Mr.Mashkoor Khan A.G (Employee) Mr.Mateen Mahmood (Employee) Mr.Moazzam Saeed (Employee) Mr.Nasir Mehmood (Employee) Mr.Omer Waqas (Employee) Mr.Tasweer Hassan (Employee) Mr.Naeem Sarfaraz (Employee) Mr.Aneeq Ejaz Qureshi (Employee) Mr.Azfar Alam (Employee) Mr.Fayyaz Ahmed (Employee) Mr.Imran Khalid Shami (Employee) Mr.Muhammad Mohsin (Employee) Mr.Muhammad Zahid (Employee) Mr.Nasir Mehmood (Employee) Mr.Syed M. Fahad (Employee) Mr.Syed Zakaria Farooq (Employee) Mr.Tariq Mehmood Ansari (Employee) Mr..Zubair Ahmed (Employee) Mr.Ather Hassan (Employee) Mr.Kamal Hussain (Employee) Mr.Kazim Raza (Employee) Mr.Malik Asgar Khan (Employee) Mr.Nawaz (Employee) Mr.Omer Salim Ullah (Employee) Mr.Shahzad Charania (Employee) Mr.Wise ur Rehman (Employee) Mr.Zaheer Baber (Ex-Employee) Mr.Asim Zafar (Employee) Mr.Anas Rehan (Employee) Mr.Talha Anwer (Employee) Mr.Zahaid Mr.Faisal Hafeez (Employee)
183
Description
Cost
Mode of disposal
Particulars of purchaser
Electrical, office and computer equipments Computer equipments Computer equipments ATM Machine Split Air Conditioner Split Air Conditioner Split Air Conditioner Office Equipments Split Air Conditioner Office Equipments Furniture and Fixtures Furniture and Fixtures Leasehold Improvements Leasehold improvements Leasehold improvements Leasehold improvements Items having book value in aggregate less than Rs. 250,000 or cost less than Rs. 1,000,000 Vehicles Electrical, office and computer equipments Furniture and Fixtures Leasehold improvements 11,923 4,035 2,248 30 191,348 8,645 3,758 1,664 10 118,846 3,278 277 584 20 72,502 12,044 434 2 42,354 1,426 4,311 98,475 104,212 286 3,198 52,106 55,590 1,140 1,113 46,369 48,622 839 1,702 2,541 Insurance Claim Negotiation Discarded Pak Kuwait Takaful Co. Ali Brothers 1,234 2,137 726 1,631 2,093 1,637 8,290 25 11 17,784 9,842 1,232 2,132 182 1,396 2,007 1,637 8,215 19 3 16,823 4,611 2 5 235 86 75 6 8 961 23 94 283 549 5 6 1,323 Negotiation Negotiation 363Insurance Claim Negotiation Negotiation Discarded Discarded Discarded Insurance Claim Ali Brothers Shahjee's Computer Pak Kuwait Takaful Co. Ali Brothers Glacier Engineering
544
5,231
Discarded
12.4
Intangible assets COST As at Additions January during 1, 2011 the year As at December 31, 2011 AMORTIZATION As at Amortization As at January charge for December the year 1, 2011 31, 2011 Rupees in 000 Computer software 2010 221,953 177,944 76,652 44,009 298,605 221,953 115,926 81,241 40,525 34,685 156,451 115,926 142,154 106,027 20 Net book Rate of value amortias at zation December % 31, 2011
12.5
Intangible assets - Movement of net book value Year ended December 31, 2010 Net book value as at January 1, 2010 Computer software 96,703 Additon during the year Amortization charge for the year Net book value as at December 31, 2010 106,027 Year ended December 31, 2011 Addition during the year Amortization Net book charge for the value year as at December 31, 2011 40,525 142,154
Note
2010
966,539 (160,927) (505,619) 48,698 (100,429) 33,075 57,357 12,961 351,655 (109,909) 241,746
14.3 14.4
14.5
185
This includes prepaid rent and prepaid insurance aggregating Rs. 187.939 million (2010: Rs. 193.679 million) and Rs. 146.019 million (2010: Rs. 139.543 million) respectively which are being amortized over a period of one year. This represents goods purchased for Murabaha, Istisna and Tijarah which remained unsold at the balance sheet date. This is net off loss on forward foreign exchange contracts of Rs. 347 million (2010: Rs. 233 million). The market value of the non-banking assets acquired in satisfaction of claims is Rs. 374 million. (2010: Rs. 248.64 million). Note 2011 Rupees in 000 37,032 172,077 (3,835) 168,242 205,274 18,727 30,000 (11,695) 18,305 37,032 2010
14.5
Provision against other assets Opening balance Charge for the year Reversals during the year Closing balance
16.2.1
6,030,013
4,678,884
16.2.1
These Musharakah are on a profit and loss sharing basis maturing between January 11, 2012 to June 27, 2012 and are secured against demand promissory notes executed in favour of SBP. A limit of Rs. 7,500 million (2010: Rs. 5,800 million) has been allocated to the Bank by SBP under Islamic Export Refinance Scheme for the financial year ending June 30, 2012. Note 2011 Rupees in 000 9,235,960 9,235,960 5,829,296 5,829,296 2010
16.3
17.1
Particulars of deposits In - local currency - foreign currencies 162,510,248 7,512,238 170,022,486 124,385,437 6,682,559 131,067,996
187
18.1 18.2
This includes Rs. 116.446 million (2010: Rs. 115.971 million) in respect of return accrued on borrowings from SBP under the Islamic Export Refinance Scheme. 2011 2010 Rupees in 000 Provision against off-balance sheet obligations Opening balance Charge for the year Closing balance 39,282 (6,113) 33,169 1,600 37,682 39,282
18.3
This includes Rs. 88 million (2010: Rs. 62 million) payable in respect of Senior Executive Bonus Incentive Scheme (SEBIS) to employees of Al Meezan Investment Management Limited. Note 2011 Rupees in 000 78,406 56,692 18.4.2 (129,494) 5,604 18,170 106,309 (46,073) 78,406 2010
18.4
Reconciliation of charity payable Balance as at January 1, Additions during the year Less: Transferred to charity savings account (included in deposits and other accounts) Balance as at December 31, 18.4.1
Charity paid through saving account during the year is Rs. 130.11 million (2010: Rs.137.63 million). Charity in excess of Rs. 100,000 was paid to the following individuals / organizations: Note 2011 Rupees in 000 Ihsan Trust AKUH Rippah International University Al Shifa Trust SOS Children Villages of Sindh 18.4.1.1 130,110 135,000 1,590 692 200 150 2010
18.4.1.1 One member of the Shariah Advisory Board of MBL is the trustee of the Donee. 18.4.2 18.4.3 18.5 The balance in Charity's saving account is Rs. 12 million (2010: Rs. 10 million). Charity was not paid to any individual / organization in which a director or his spouse had any interest at any time during the year.
Share Based Payments Senior Executive Bonus Incentive Scheme (SEBIS) On July 01, 2007, AMIML introduced a senior executive bonus incentive scheme (SEBIS) for all the confirmed employees who are designated as Assistant Vice President and above. The policy is premised on the concept of phantom (notional) shares; these notional shares are termed as BIS Units. In the first year the accumulated deferred bonus of eligible employees is utilized in allocating the initial BIS Units. To the extent that any eligible employee does not have sufficient funds in his / her deferred bonus account to meet the notional acquisition cost of his / her initial allotment of BIS units, his / her SEBIS account is debited with the notional funding (classified in prepayments and other receivables) for the shortfall. The cost of funding and any excess is determined at the prevailing SBP discount rate plus 125 basis points. Deferred bonus will be utilized to adjust the shortfall in SEBIS account if any and any excess will be utilized to issue additional BIS units. The employee can redeem 25%, 60% and 100% in cash of the total BIS units after the first, second and third year of the grant date respectively. Furthermore, these BIS units will incorporate the impact of bonus and right issue of the shares of AMIML. Units outstanding at each reporting date are revalued at the prevailing break up value of the shares of AMIML and any difference in the fair value is recognized in the income statement of AMIML.
Issued, subscribed and paid-up capital 2011 2010 (Number of Shares) 456,353,635 346,639,675 802,993,310 456,353,635 241,901,418 698,255,053 Ordinary shares Fully paid in cash Issued as bonus shares Issued for consideration other than cash 4,563,536 3,466,397 8,029,933 4,563,536 2,419,014 6,982,550
20. RESERVES
Statutory reserve General reserve 20.1 1,991,553 91,082 2,082,635 1,313,244 91,082 1,404,326
20.1
Under section 21 of the Banking Companies Ordinance, 1962 an amount not less than 20% of the profit of MBL is to be transferred to create a reserve fund till such time the reserve fund and the share premium account equal the amount of the paid up capital. 2011 Rupees in 000 2010
189
2011 23.2 Transaction related contingent liabilities Guarantees favouring - Government - Banks - Others 23.3 Trade related contingent liabilities Import letters of credit Acceptances 23.4 Commitments in respect of forward exchange contracts Purchases Sales 23.5 23.6 23.7 23.8 Commitments for the acquisition of operating fixed assets Commitments in respect of financings Commitments in respect of purchase of sukuks Other commitments Bills for collection (inland) Bills for collection (foreign) 672,538 6,706,421 7,378,959 26,464,759 26,421,847 133,017 33,360,587 867,436 11,636,339 2,888,504 14,524,843 Rupees in 000
2010
23.9
Senior Executive Bonus Incentive Scheme (SEBIS) Notional Funding under SEBIS: Opening balance Additions during the year (Repayments) / adjustments during the year Closing balance Liability under SEBIS: Opening balance Additions / (reductions) during the year (Repayments) / adjustments during the year Closing balance 20,886 (11,955) 8,931 61,574 26,643 88,217 28,454 (7,568) 20,886 48,349 13,225 61,574
23.10 WAPDA Sukuk - MIIF MIIF's management company AMIML had invested in WAPDA Sukuk certificates aggregating to Rs. 180 Million through purchase from secondary market which were subsequently sold in the secondary market. In 2009, it was claimed by WAPDA that the Sukuks purchased by the Fund and later sold in secondary market were not genuine, as these were fraudulently entered in the records of WAPDA. The fund and the Company along with other defendants had filed a suit in the High Court of Sindh against WAPDA. AMIML and its legal counsel are of the view that the fund was the legitimate and bonafide holder of the Sukuk certificates from the date of acquisition till such time these were sold in the normal course of business.
23.11 Workers Welfare Fund - MIIF, MBF, MIF, AMMF, MCPF II and MSF The Finance Act, 2008, has amended the Workers' Welfare Fund Ordinance, 1971, (the WWF Ordinance) whereby the definition of 'Industrial Establishment' has been made applicable to any establishment to which West Pakistan Shops and Establishment Ordinance, 1969, applies. As a result of this amendment all Collective Investment Scheme (CIS) whose income exceeds Rs. 0.5 million in a tax year have been brought within the purview and scope of the WWF Ordinance, thus rendering them liable to pay two percent of their total income to the WWF. During the period ended December 31, 2009, the Mutual Fund Association of Pakistan (MUFAP), of which AMIML, the management company of the associated funds, is a member, has filed a constitutional petition in the High Court of Sindh (SHC) requesting it to declare that CIS are not liable to pay contribution to the WWF on the ground that CIS do not have any workers or employees. During the year a clarification was issued by the ministry of labour and manpower (the Ministry) which stated that mutual funds are not liable to contribute to WWF on the basis of their income In December 2010 the Ministry filed its responses against the Constitutional Petition requesting the Court to dismiss the same, whereafter, show cause notices were issued by the Federal Board of Revenue (FBR) to several mutual funds for the collection of WWF. In respect of such show cause notices, certain mutual funds have been granted stay by Honourable Sindh High Court (SHC) on the basis of the pending Constitutional Petition as referred above. No such notice was received by the fund. During the current year the Honourable Lahore High Court (LHC) in a Constitutional Petition relating to the ammendments brought in the WWF ordinance, 1971 through the Finance Act , 2006 and Finance Act, 2008 has declared the said ammendements as unlawful and unconstitutional. AMIML is hopeful that the decision of the LHC , will lend further support to the Constitutional Petition which is pending in the SHC. AMIML is confident of a favorable outcome based on the advice of the MUFAP's legal counsel accordingly no provision in this financial report has been made. 2011 2010 Rupees in 000
7,099,169
5,824,187
25.1
This includes Rs. 483 million (2010: Rs. 376 million) paid / payable to SBP under Islamic Export Refinance Scheme.
191
Note
2010
28.1 28.2
This includes remuneration to the Shariah Advisor amounting to Rs. 4.5 million (2010: Rs. 3.6 million). This includes remuneration to Shariah Board amounting to Rs. 1 million (2010: Rs. 1 million).
2011 28.3 Auditors remuneration Audit fee Fee for interim review Special certifications and sundry advisory services Out of pocket expenses 28.4 Rupees in 000 2,550 810 4,918 605 8,883
2010
This represents accrual for contribution to Workers Welfare Fund as per the amendments made vide Finance Act, 2008 in the Workers Welfare Fund Ordinance, 1971. 2011 Rupees in 000 2010
30. TAXATION
Current - for the year - for prior years Deferred - for the year - for prior years 1,750,029 (218,205) 1,531,824 (255,595) (200,851) (456,446) 1,075,378 30.1 Relationship between tax expense and accounting profit Profit before taxation Effects of: - Tax calculated at the applicable rate of 35% - Income chargeable to tax at reduced rate - Tax effect of exempt income - Prior year reversals - Permanent differences - Others Tax charge for the year 4,121,435 1,442,502 (190,988) (102,663) (419,056) 127,100 218,483 1,075,378 2,443,282 855,149 (99,629) (41,886) (205,530) 28,108 7,288 543,500 1,060,692 (332,808) 727,884 (311,662) 127,278 (184,384) 543,500
193
Note
2010
1,825,755
802,993,310 (Rupees)
802,993,310
31.1
3.67
2.77
31.1
There were no convertible dilutive potential ordinary shares outstanding on December 31, 2011 and 2010.
Note
2010
Number of staff 3,081 1,250 4,331 672 5,003 2,714 1,147 3,861 590 4,451
The disclosures made in notes 34.1 to 34.13 are based on the information included in the actuarial valuation report of MBL as of December 31, 2011.
Note 34.2 Reconciliation of amount payable to defined benefit plan Present value of defined benefit obligations Fair value of plan assets Net actuarial losses not recognised 34.3 Movement in payable to defined benefit plan Opening balance Charge for the year Contribution made during the year Closing balance 34.4 Charge for defined benefit plan Current service cost Interest cost Expected return on plan assets Actuarial loss 34.5 34.6 Actual return on plan asset 34.4 34.7 34.8 34.11
2010
Plan assets of gratuity fund includes Rs. 3.758 million (2010: Rs. 6.387 million) kept in a savings account, Rs. 113.054 million (2010: Rs. 107.803 million) placed in a Meezan Aamdan Certificate with MBL, Rs. 56.787 million (2010: Rs. Nil) in GOP Ijarah Sukuks and Rs. 1.461 million (2010: Rs. 1.374 million) in Meezan Islamic Income Fund. 2011 2010 Rupees in 000 175,525 60,309 22,015 (12,352) 1,640 247,137 122,631 43,918 20,235 (7,504) (3,755) 175,525 Reconciliation of present value of obligation Present value of obligation as at January 1 Current service cost Interest cost Benefits paid Actuarial loss / (gain) on obligation Present value of obligation as at December 31
34.7
34.8
Changes in the fair value of plan assets are as follows: Opening fair value of plan assets Expected return Contributions by MBL Benefits paid Actuarial gain on plan assets Closing fair value of plan assets 2011
Rupees in 000
34.9
The plan assets comprise as follows: Meezan Aamdan Certificates GOP Ijarah Sukuk Meezan Islamic Income Fund Savings account with MBL 113,054 56,787 1,461 3,758 175,060 64.58 32.44 0.83 2.15 100.00 107,803 1,374 6,387 115,564 93.28 1.19 5.53 100.00
195
34.10 Actuarial loss to be recognized Corridor Limit The limits of the corridor as at January 1 10% of obligations 10% of plan assets Which works out to Unrecognized actuarial losses as at January 1 Deficit / (Excess) Average expected remaining working lives in years Actuarial loss to be recognized 34.11 Unrecognized actuarial losses Unrecognized actuarial losses at January 1 Actuarial (loss) / gain on obligations Actuarial gain on assets Subtotal Actuarial loss recognised Unrecognized actuarial losses as at December 31
2010
34.12 Amount for the current year and previous four years of the present value of the defined benefit obligation, the fair value of plan assets, surplus / deficit and experience adjustments arising thereon are as follows: 2011 Present value of defined benefit obligation Fair value of plan assets Deficit Actuarial loss / (gain) on obligation Actuarial gain / (loss) on plan assets 34.13 Expected gratuity expense for the next year The expected gratuity expense for the year ending December 31, 2012, works out to Rs. 80 million. 247,137 (175,060) 72,077 1,640 2,101 2010 175,525 (115,564) 59,961 (3,755) 882 2009 Rupees in 000 122,631 (69,791) 52,840 (1,477) 5,709 80,277 (32,507) 47,770 (4,978) (2,501) 48,929 (19,808) 29,121 (3,174) 969 2008 2007
Fees* Managerial remuneration Charge for defined benefit plan Contribution to defined contribution plan House rent Utilities Medical Conveyance Others
Number of persons
* This includes amounts charged in these consolidated financial statements as fees to seven (2010: nine) non-executive directors. 36.1 36.2 Executives mean employees, other than Chief Executive and Directors, whose basic salary exceeds five hundred thousand rupees in a financial year. The CEO, the Executive Director and certain executives are provided with free use of MBL cars.
37.
197
2011 Total income Total expenses Net income / (loss) Segment Assets (Gross) Segment Non Performing Loans Segment Provision Segment Liabilities Segment Return on Assets (ROA) (%) Segment Cost of funds (%) 2010 Total income Total expenses Net income / (loss) Segment Assets (Gross) Segment Non Performing Loans Segment Provision Segment Liabilities Segment Return on Assets (ROA) (%) Segment Cost of funds (%)
Rupees in 000
5.75% -
110,341 941,311 3,706,481 110,341 1,018,776 4,302,359 9,235,960 172,312,476 5,215,607 2.33% 5.75% 3.89% -1.19% 5.75%
5.69%-
1.29% 5.69%
39.2
39.3
39.4
The volumes of related party transactions, outstanding balances at the year end, and related expense and income for the year are as follows:
Key Management Personnel / Directors 2011 2010 Other Related Parties 2011 2010
Associates 2011
Financings At January 1, Addition/ disbursed during the year Deletion/ repaid during the year At December 31, Deposits At December 31, Borrowing 901,632 679,909 566,608 352,177 267,597 55,221 566,608 29,610 494,234 382,702 70,696 (133) 70,563 144,132 470,628 (544,064) 70,696 70,531 143,834 165 400,000 (473,303) (133) 70,531 70,531 32 298 (133) 165 70,628 (70,628) -
Balances pertaining to parties that were related at the beginning of the year but ceased to be related during any part of the current period are not reflected as part of the closing balance. However, new related parties have been added during the year. The same are accounted for through the movement presented above. Balances Dividend Receivable Payable to defined benefit plan Profit payable on borrowing Letters of credit (unfunded) Prepaid Takaful Transactions, income and expenses Profit earned on financing Return on deposits / borrowing expensed Takaful insurance on assets including consumer financings Dividend income earned Capital gain - net Charge for defined benefit plan Contribution to defined contribution plan Fees expensed Fees earned Commission earned on letters of credit and guarantee 85,065 239,312 725,442 76,411 65,969 78,737 325 2,861 21,173 105,822 206,003 168,231 6,802 53,153 60,898 686 815 161 40,129 239,312 725,442 76,411 325 2,861 21,173 69,598 1,824 206,003 168,231 6,802 686 815 161 1,294 43,112 67,278 78,737 34,930 54,052 60,898 128,017 65,969 664 122,575 53,153 37,000 664 117,527 128,017 664 122,575 37,000 664 117,527 65,969 53,153 -
39.5
199
Fully Paid-up capital/Capital deposited with SBP General Reserves as disclosed on the Consolidated Balance Sheet Unappropriated profits (Net of Losses) Non Controling interest Less: Book value of goodwill and intangibles Other deductions Total eligible Tier I capital Tier II Capital General Provisions or general reserves for loan losses-up to maximum of 1.25% of Risk Weighted Assets * Revaluation Reserves up to 45% under Basel II Less : Other deductions Total eligible Tier II capital Eligible Tier III capital Total Supplementary Capital eligible for capital adequacy ratio (Maximum upto 100% of Total eligible Tier I capital) Total Regulatory Capital Base
1,105,440 15,078,031
656,307 12,367,731
*Under the standardised approach to credit risk, general provisions can be included in Tier-II capital subject to the limit of 1.25% of the risk weighted assets.
201
40.3 Capital Adequacy The main objective of the capital management is to improve financial position and strengthen financial position of the Group to support the growth in business, provide protection to depositors, and enhance shareholders value. The Group's Board and the management is committed to provide sound balance between depositors liability and shareholders funds so that optimal capital / debt ratio is maintained. The optimal capital / debt ratio will provide reasonable assurance to depositor about safety and security of their funds and at same time provide impetus to the management to invest their depositors funds into profitable venture without compromising the risk profile of the Group. The capital requirement of the Group has been determined based on the projected growth plan to achieve in next 3 to 5 years in all areas of business operation. Further, it also takes into account road map for capital enhancement as directed by the State Bank of Pakistan vide its various circulars issued from time to time. In addition, fixed and variable capital adequacy ratio has been taken into consideration in determining level of capital requirement by the Group. Fixed CAR has been kept at a higher mandatory number as done in the past and same has been planned for the future to provide safe cushion. In addition, variable CAR has also been taken into account in planning capital need of the Group. The Group prepares Annual Budget and Three Year Plan for purpose of the growth map and future direction. Bottom up approach is used to prepare annual budget and detailed deliberations are held while preparing Three Year Plan. The growth prospects takes into consideration prevailing economic and political factors in Pakistan and abroad. In implementing current capital requirements SBP also requires Banks to maintain a prescribed Capital Adequacy Ratio (CAR) of 10% as of December 31, 2011. As such the Group's CAR stood at 15.26% at the year ended December 31, 2011. The Group calculates capital adequacy ratio for credit risk, market risk and operational risk based upon requirements under Basel II and as per guidelines issued by the State Bank of Pakistan from time to time in this regard. Major credit risk in respect of on and off-balance sheet exposures are mainly claims on banks, corporates, retail customers, residential mortgages, quoted and unquoted associated undertakings, GOP Ijarah Sukuks and Corporate Sukuks (other than foreign sukuks). Market risk exposures are in foreign sukuks, equity and foreign exchange positions. The Group potential risk exposures shall remain in these exposure types. Sensitivity and stress testing of the Group under different risk factors namely yield rate, forced sale value of collateral, non-performing financings and foreign exchange rate depicts that the Group's capital adequacy ratio is above the regulatory requirements. The Group has taken into account credit risk, market risk and operational risk when planning its assets. The Group's sponsors are well reputed financial institution in Pakistan and abroad. The Group has never faced in the past any difficulty in raising capital whenever it required. The shareholders and the Board in its last meeting held on October 2008 has reaffirmed in principal commitment to meet the increased Capital requirement of the Bank over next five years.
Rupees in 000
2011 2010 Rupees in 000 15,078,031 98,837,195 15.26% 12,367,731 96,122,982 12.87%
203
Risk management organization The Risk Management Committee comprises of two non-executive directors and one executive director. One of the non-executive directors of the Group chairs the risk management committee. The Committee is responsible to review risk profile, policies, tools and techniques so as to ensure effective management of risks of the Group. The management has delegated some of its tasks of risk management to sub- committees which are as follows: Name of the committee Credit Committee Asset and Liability Management Committee (ALCO) Internal Controls and Operational Risk Management Committee Chaired by President & CEO President & CEO COO
The Credit Committee is responsible for approving and monitoring financing transactions and also ensuring the overall quality of the financing portfolio. For this purpose it has formulated credit policy so as to effectively monitor the risk profile of the Groups asset portfolio and to ensure strict adherence to the SBPs Prudential Regulations, the Banking Companies Ordinance, 1962, and any other regulatory requirement. The ALCO is responsible for monitoring, measuring and managing market risk and liquidity risk and ensuring compliance with internal and regulatory requirement. The Internal Controls and Operational Risk Management Committee ensures adequate internal controls and systems are in place there by ensuring operating efficiency. The Board has constituted a full functional Audit Committee. The Audit Committee works to ensure that the best practices of the Code of Corporate Governance are being complied by the Group and that the policies and procedures are being complied with.
The Groups risk management, compliance, internal audit and legal departments support the risk management function. The role of the risk management department is to quantify the risk and ensure the quality and integrity of the Groups risk-related data. The compliance department ensures that all the directives and guidelines issued by SBP are being complied with in order to mitigate the compliance and operational risks. Internal audit department reviews the compliance of internal control procedures with internal and regulatory standards. 41.1 Credit risk The Group manages credit risk by effective credit appraisal mechanism, approving and reviewing authorities, limit structures, internal credit risk rating system, collateral management and post disbursement monitoring so as to ensure prudent financing activities and sound financing portfolio under the umbrella of a comprehensive Credit Policy approved by the Board of Directors. The Group also ensures to diversify its portfolio into different business segments, products and sectors. Group takes into account the risk mitigating effect of the eligible collaterals for the calculation of capital requirement for credit risk. Use of credit risk mitigation (CRM) resulted in the total credit risk weighted amount of Rs. 78,051 million. Thus, use of CRM resulted in capital adequacy ratio of 15.26% of the Group. 40.1.1 Segmental information 40.1.1.1 Segment by class of business Financings (Gross) Rupees in 000 Agriculture, forestry, hunting and fishing Textile Automobile and transportation equipment Financial institutions Insurance Electronics and electrical appliances Construction Power (electricity), gas and water Exports / imports Transport, storage and communication Chemical and pharmaceuticals Sugar Footwear and leather garments Wholesale and retail trade Cement Services Individuals Others 10,482 15,454,919 1,263,587 1,201,150 20,879 4,570,465 503,784 6,783,383 2,188,871 882,545 16,643 3,653,156 6,576,420 21,150,436 64,276,720 % 2011 Deposits Rupees in 000 1,642,645 3,251,376 188,576 487,720 75,932 599,022 1,036,889 145,730 987,579 887,040 897,799 130,480 373,297 13,695,854 19,182 16,949,833 116,952,964 11,700,568 170,022,486 % Contingencies and commitments Rupees in 000 2,108,409 16,424,205 0.00 929,328 54,200,963 81,590 883,660 902,308 4,598,632 906,398 476,923 6,747,046 1,252,616 1,388,972 517,035 2,193,568 417,636 4,034,891 15,975,776 114,039,956 0.81 47.53 0.07 0.77 0.79 4.03 0.79 0.42 5.92 1.10 1.22 0.45 1.92 0.37 3.54 14.02 100 %
0.02 24.04 0.00 1.97 0.00 0.00 1.87 0.03 7.11 0.78 0.00 10.55 3.41 1.37 0.03 5.68 0.00 10.23 32.91 100
0.97 1.91 0.00 0.11 0.29 0.04 0.35 0.61 0.09 0.58 0.52 0.53 0.08 0.22 8.06 0.01 9.97 68.79 6.87 100
1.85 14.40
205
41.1.1.2 Segment by sector 2011 Financings (Gross) Rupees in 000 Public / Government Private 2,706,306 61,570,414 64,276,720 % 2 98 100 Deposits Rupees in 000 897,727 169,124,759 170,022,486 % 1 99 100 Contingencies and commitments Rupees in 000 114,039,956 114,039,956 % 100 100
41.1.1.3 Details of non-performing financings and specific provisions by class of business segment: 2011 Classified financings 2010 Specific Classified Specific provisions financings provisions held held Rupees in 000 1,782,783 19,873 158,742 140,376 80,903 561,210 165,790 1,150,143 4,059,820 13,576 1,746,863 11,021 238,167 150,000 593,223 351,423 1,214,050 4,318,323 11,076 1,487,171 1,304 77,857 150,000 591,140 156,769 637,580 3,112,897
Agriculture, forestry, hunting and fishing Textile Chemical and pharmaceuticals Cement Sugar Footwear and leather garments Automobile and transportation equipment Electronics and electrical appliances Construction Power (electricity), gas, water Wholesale and retail trade Exports / imports Transport, storage and communication Financial institutions Insurance Services Individuals Others
41.1.1.4 Details of non-performing financings and specific provisions by sector: 2011 Classified financings 2010 Specific Classified Specific provisions financings provisions held held Rupees in 000 4,059,820 4,059,820 4,318,323 4,318,323 3,112,897 3,112,897
4,647,792 4,647,792
41.1.1.5 Geographical segment analysis Profit before taxation 2011 Total assets employed Net assets Contingencies employed and commitments Rupees in 000 14,835,736 114,039,956 14,835,736 114,039,956
Pakistan Asia Pacific (including South Asia) Europe United States of America and Canada Middle East Others
4,121,435 4,121,435
201,735,722 201,735,722
41.1.2
Credit Risk-General Disclosures Basel II Specific The Group is operating under standardized approach of Basel II for credit risk. As such risk weights for the credit risk related assets (on-balance sheet & off-balance sheet-market and non market related exposures) are assigned on the basis of standardized approach. The Group is committed to further strengthen its risk management framework that shall enable the Group to move ahead for adopting Foundation IRB Approach of Basel II; meanwhile none of our assets class is subject to the Foundation IRB or Advanced IRB approaches. 41.1.2.1 Credit Risk: Disclosures for portfolio subject to the Standardized Approach & supervisory risk weights in the IRB Approach-Basel II Specific The Group used ratings assigned by JCR-VIS and PACRA as External Credit Assessment Institutions (ECAIs) for the purpose of risk weighing its exposures against corporate and banks. Use of both JCR-VIS and PACRA as the rating agencies is due to the fact that corporate and banks are rated by either of these two agencies. In case of foreign currency exposures against the bank, ratings assigned by S&P, Fitch and Moodys have been applied. In case of exposure against banks, some banks have multiple ratings but those ratings do not result in mapping with different risk weights. The alignment of the alphanumerical scale of each agency used with risk buckets is as per instructions laid down by SBP under Basel II requirements.
207
Types of Exposure and ECAIs used 2011 Exposures JCR-VIS PACRA OTHER (Specify) S & P, FITCH and MOODYS
Corporate Banks
Credit Exposure subject to standardized approach Rupees in 000 2011 Exposures Banks Rating Category 0% 20% 50% 100% 150% Unrated 0% 20% 50% 100% 150% Unrated 0% 20% 50% 75% Amount Outstanding 4,032,002 40,667 11,703,370 6,296,096 531,066 40,607,146 5,127,818 68,338,165 Deduction CRM 933,999 1,412,286 2,346,285 Net amount 4,032,002 40,667 11,703,370 6,296,096 531,066 39,673,147 3,715,532 65,991,880
Corporate
Retail
41.1.2.2 Credit Risk: Disclosures with respect to Credit Risk Mitigation for Standardised and IRB Approaches-Basel II Specific The Group obtains capital relief for its both on-balance and off-balance sheet non-market related exposures by using simple approach for credit risk mitigation (CRM). Off-balance sheet items under the simplified standardized approach are converted into credit exposure equivalents through the use of credit conversion factors. Under the standardized approach the Group has taken advantage of the cash collaterals available with the Group in the form of security deposits, cash margins, Certificate of Islamic Investment, Shares, Units of Mutual Funds, Monthly Mudarabah Certificates and saving accounts. Valuation and management of eligible collaterals for CRM is being done in line with the conditions laid down by SBP. Since eligible collaterals for CRM purposes are all in the form of cash collaterals, they generally do not pose risk to the Group in terms of change in their valuation due to changes in the market condition.
The credit equivalent amount of an off-balance sheet market related foreign exchange contracts are determined by using the current exposure (mark to market) method. The Group takes the benefit of CRM against its claims on corporate and retail portfolio. Under the standardized approach for on-balance sheet exposures, the corporate portfolio of Rs. 59,138 million is subject to the CRM of Rs. 934 million whereas a claim on retail portfolio of Rs. 5,128 million is subject to CRM of Rs. 1,412 million. The total benefit of Rs. 2,346 million was availed through CRM against total on-balance sheet exposure of Rs. 196,596 million. Under off-balance sheet, non-market related exposures; the corporate portfolio of Rs. 51,099 million is subject to the CRM of Rs. 1,451 million whereas a claim on retail portfolio of Rs. 1,342 million is subject to CRM of Rs. 97 million. Total benefit of Rs. 1,549 million was availed by the Group through CRM against total off-balance sheet, non-market related exposure of Rs. 53,787 million. In year 2011, total amount of cash collateral used for CRM purposes was Rs. 3,895 million as against amount of Rs.4,772 million in year 2010. The difference in the value of cash collateral is due to the changes in the exposure amounts and resultant amount of cash collateral obtained. 41.2 Equity position risk in the Banking book-Basel II Specific The Group makes investment in variety of products / instruments mainly for the following objectives: - Investment for supporting business activities of the Group and generating revenue in short term or relatively short term tenure. - Strategic Investments which are made with the intention to hold it for a longer term and are marked as such at the time of investment. Classification of equity investments The Group classifies its equity investment portfolio in accordance with the directives of SBP as follows: - Investments - Held for trading - Investments - Available for sale - Investments in associates Some of the above mentioned investments are listed and traded in public through stock exchanges, while other investments are unlisted. Policies, valuation and accounting of equity investments The accounting policies for equity investments are designed and their valuation is carried out under the provisions and directives of the State Bank of Pakistan, the Securities and Exchange Commission of Pakistan and the requirements of approved International Accounting Standards as applicable in Pakistan. The investments in listed equity securities are stated at the revalued amount using market rates prevailing on the balance sheet date, while the investment in unquoted securities are stated at lower of cost or break-up value. The unrealized surplus / (deficit) arising on revaluation of the held for trading investment portfolio is taken to the profit and loss account. The surplus / (deficit) arising on revaluation of quoted securities classified as available for sale is kept in a separate account shown in the consolidated balance sheet below equity. The surplus / (deficit) arising on these securities is taken to the consolidated profit and loss account when actually realised upon disposal. The carrying value of equity investments are assessed at each balance sheet date for impairment. If the circumstances exist which indicate that the carrying value of these investments may not be recoverable, the carrying value is written down to its estimated recoverable amount. The resulting impairment loss is charged to consolidated profit and loss account.
209
During the year unrealised gain of Rs. Nil (2010: Rs. 28.665 million) has been taken to consolidated profit and loss account on held for trading investments. 41.3 Market risk The Group is exposed to market risk which is the risk that the value of on and off balance sheet exposures of the Group will be adversely affected by movements in market rates or prices such as benchmark rates, profit rates, foreign exchange rates, equity prices and market conditions resulting in a loss to earnings and capital. The Market risk charge consists of two components. The general risk describes value changes due to general market movements, while the specific risk has issuer related causes. The capital charge for market risk has been calculated by using Standardized Approach. The Group applies Stress Testing and Value at Risk (VaR) techniques as risk management tool; Stress testing enables the Group to estimate changes in the value of the portfolio, if exposed tovarious risk factor. VaR quantifies the maximum loss that might arise due to change in risk factors, if exposure remains unchanged for a given period of time. 41.3.1 Foreign exchange risk The foreign exchange risk is the risk that the value of a financial instruments will fluctuate due to the changes in foreign exchange rates. The Group does not take any currency exposure except to the extent of statutory net open position prescribed by SBP. Foreign exchange open and mismatch position are controlled through close monitoring and are marked to market on a daily basis to contain forward exposures. 2011 Assets Liabilities Off-balance sheet items Net foreign currency exposure 24,707,007 (7,750,387) (925,303) 1,977 (1,242,317) 4,998 1,841 10,517 1,487 2,167 23,749 14,835,736
Rupees in 000 Pakistan Rupees United States Dollars Great Britain Pounds Japanese Yen Euro Singapore Dollars Australian Dollars Canadian Dollars United Arab Emirates Dirham Swiss Francs Saudi Riyal 196,683,095 4,601,930 213,225 1,977 186,267 4,998 8,234 10,809 1,487 11,719 11,981 201,735,722 168,138,671 16,156,791 1,138,528 1,465,704 292 186,899,986 (3,837,417) 3,804,474 37,120 (6,393) (9,552) 11,768 -
41.3.2
Equity position risk Equity position risk is the risk arising from taking long positions, in the trading book, in the equities and all instruments that exhibit market behaviour similar to equities. Counter parties limits, as also fixed by SBP, are considered to limit risk concentration. The Group invests in those equities which are Shariah compliant as advised by the Shariah advisor.
41.3.3
Yield / Interest Rate Risk in the Banking Book (IRRBB) - Basel II Specific IRRBB includes all material yield risk positions of the Group taking into account all relevant repricing and maturity data. It includes current balances and contractual yield rates. The Group understands that its financings shall be repriced as per their respective contracts. The Group estimates changes in the economic value of equity due to changes in the yield rates on on-balance sheet positions by conducting duration gap analysis. It also assesses yield rate risk on earnings of the Group by applying upward and downward shocks.
211
41.3.4
On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks 0.02 Due from financial institutions 12.73 Investments 13.14 Financings 13.29 Other assets including trade inventories Liabilities Bills payable Due to financial institutions 10.23 Deposits and other accounts 5.57 Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities On-balance sheet gap NON FINANCIAL ASSETS - Operating fixed assets - Deferred taxation - Other assets including trade inventories NON FINANCIAL LIABILITIES - Deferred taxation - Other liabilities TOTAL NET ASSETS Off-balance sheet financial instruments Forward Lending Forward borrowings Off-balance sheet gap Total Yield Risk Sensitivity Gap Cumulative Yield Risk Sensitivity Gap
16,641,195 2,354,908 431 4,065,406 4,052,406 2,000 3,000 8,000 99,949,542 23,857,011 61,039,774 1,535,835 1,119,147 58,955,585 8,467,266 15,798,282 20,294,545 10,580,194 651,442 1,085,057 1,380,198 14,418,667 3,207,677 3,621,111 4,385,020 8,088 196,385,303 15,727,780 43,278,404 85,722,339 10,596,282 651,442 2,620,892 2,499,345 2,282,045 9,235,960 3,468,885 2,831,289 2,935,786 170,022,486 121,746,436 4,497,862 186,038,353 125,215,321 2,831,289 2,935,786 10,346,950 (109,487,541) 40,447,115 82,786,553 10,596,282 651,442 2,620,892 2,499,345
16,641,195 2,354,477 12,397,775 698,352 3,196,771 35,288,570 2,282,045 48,276,050 4,497,862 55,055,957 (19,767,387)
(109,487,541) (109,487,541)
40,447,115 (69,040,426)
82,786,553 13,746,127
10,596,282 24,342,409
651,442 24,993,851
2,620,892 27,614,743
2,499,345 30,114,088
(19,767,387) 10,346,950
2010 Effective yield rate % Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Exposed to yield risk Over 6 Over 1 Months to to 2 1 Year Years Rupees in 000
On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks 3.75 Due from financial institutions 11.73 Investments 12.21 Financings 13.04 Other assets including trade inventories Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities On-balance sheet gap NON FINANCIAL ASSETS - Operating fixed assets - Deferred taxation - Other assets including trade inventories NON FINANCIAL LIABILITIES - Deferred taxation - Other liabilities TOTAL NET ASSETS Off-balance sheet financial instruments Forward Lending Forward borrowings Off-balance sheet gap Total Yield Risk Sensitivity Gap Cumulative Yield Risk Sensitivity Gap
12,780,951 9,957,757 4,413,478 3,000,000 10,511,855 5,478,320 3,005,200 2,009,835 18,500 50,519,386 557,227 2,617,581 32,484,758 1,412,302 53,995,163 7,468,167 10,674,391 13,252,226 1,879,691 2,628,012 14,496,682 152,261,794 17,359,965 17,236,818 17,879,642 34,382,949 4,040,314 1,767,370 5,829,296 131,067,996 586,620 93,433,846 2,605,949 2,605,949 14,630,869 2,552,924 2,552,924 15,326,718 34,382,949 4,040,314
12,780,951 2,544,279 5,265,598 1,877,713 96,399 14,496,682 1,877,713 35,183,909 1,767,370 83,803 37,634,150 -
9.24 5.49 -
3,095,897 241,746 3,210,574 6,548,217 961,938 961,938 12,426,112 (76,480,501) (76,480,501) 14,630,869 15,326,718 34,382,949 (61,849,632) (46,522,914) (12,139,965) 4,040,314 5,815,716 (8,099,651) (2,283,935) 10,937,370 8,653,435 7,367,398 1,877,713 16,020,833 17,898,546 (11,058,713) 6,839,833
Yield Risk is the risk of decline in earnings due to adverse movement of the yield curve. Profit rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market profit rates. The Group takes on exposure to the effects of fluctuations in the prevailing levels of market profit rates on both its fair value and cash flow risks. Profit margins may increase as a result of such changes but may reduce losses in the event that unexpected movements arise. 41.4 Liquidity risk Liquidity risk is the risk that the Group either does not have sufficient financial resources available to meet its obligations and commitments as they fall due or can fulfill them only at excessive cost that may affect the Groups income and equity. The Group seeks to ensure that it has access to funds at reasonable cost even under adverse conditions, by managing its liquidity risk across all class of assets and liabilities in accordance with regulatory guidelines and to take advantage of any lending and investment opportunities as they arise.
213
41.4.1 Maturities of Assets and Liabilities 41.4.1.1 Maturities of assets and liabilities based on expected maturities
Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months 2011 Over 6 Months to to 2 1 Year Years Rupees in 000 Over 1 to 3 Years Over 2 to 5 Years Over 3 to 10 Above 10 5 Over Years Years
Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Other assets including trade inventories Deferred tax asset Operating fixed assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities Net assets Share capital / Head office capital account Reserves Unappropriated / Unremitted profit Surplus on revaluation of assets Non controlling interest
16,641,195 2,354,908 4,065,406 99,949,542 58,955,585 15,108,784 638,882 4,021,420 201,735,722 2,282,045 9,235,960 170,022,486 5,359,495 186,899,986 14,835,736 8,029,933 2,082,635 3,851,734 413,756 457,678 14,835,736
16,641,195 2,354,908 4,052,406 9,437,613 3,736,627 36,222,749 2,282,045 3,468,885 10,195,402 658,839 16,605,171 19,617,578
2,000 4,246,374 11,525,969 4,808,357 20,582,700 2,831,289 23,149,328 936,275 26,916,892 (6,334,192)
3,000 8,000 2,720,325 13,678,477 26,428,554 14,256,488 3,672,218 3,689,073 6,082,002 92,333 180,201 159,721 159,721 564,832 382,872 23,061,815 18,175,581 30,840,421 2,935,786 13,542,966 1,252,743 17,731,495 5,330,320 22,862,508 970,440 23,832,948 (5,657,367)
46,220,671 2,070,759 5,511,414 7,409,343 209,264 159,721 159,719 382,873 765,746 52,483,943 10,405,567
17,287,828 14,581,112 24,883,677 25,726,610 461,526 440,279 639,393 17,749,354 15,021,391 25,523,070 25,726,610 13,091,067 37,462,552 (15,117,503) (19,499,672)
17,793,055
17,793,055 (14,057,047)
Total
Upto 1 Month
Over 1 to 3 Months
Over 1 to 3 Years
Over 2 to 5 Years
Over 3 to 10
Rupees in 000 Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Other assets including trade inventories Deferred tax asset Operating fixed assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities Net assets Share capital Reserves Unappropriated profit Non Controlling Interest Surplus on revaluation of investments 12,780,951 9,957,757 10,511,855 50,519,386 53,995,163 17,707,256 241,746 3,095,897 158,810,011 1,767,370 5,829,296 131,067,996 7,719,237 146,383,899 12,426,112 6,982,550 1,404,326 3,359,541 339,827 339,868 12,426,112 12,780,951 6,957,757 5,478,320 7,468,166 17,707,256 50,392,450 1,767,370 670,424 28,327,303 1,712,032 32,477,129 17,915,321 3,000,000 3,005,200 557,227 10,674,391 17,236,818 2,605,949 26,930,093 1,202,756 30,738,798 (13,501,980) 2,009,835 3,931,919 13,252,226 19,193,980 2,552,923 17,526,694 20,079,617 (885,637) 18,500 33,385,655 1,879,691 241,746 35,525,592 22,003,316 76,511 22,079,827 13,445,765 1,412,302 2,628,012 4,040,314 10,314,861 10,314,861 (6,274,547) 108,708 3,364,668 5,707,008 7,572,702 3,095,897 5,815,716 14,033,267 11,443,999 6,310,609 2,119,117 11,443,999 8,429,726 (5,628,283) 5,603,541 4,708,544 3,050,363 2,154,113 2,658,854 7,367,398 5,204,476 8,211,1212,608,821 8,211,121 2,608,821 (843,723) 2,595,655
Regarding behaviour of non-maturity deposits (non-contractual deposits), the Bank conducted a behavioural study based on 3 years data. On the basis of its findings 43.5% of current accounts and 22.7.% of saving accounts are bucketed into 'Upto' 1-Year maturity' whereas, 56.5% of current accounts and 77.3% of saving accounts are bucketed into maturities of above 1-Year.
Total
Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Financings Other assets Operating fixed assets Deferred tax assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities Net assets Share capital / Head office capital account Reserves Unappropriated / Unremitted profit Surplus on revaluation of assets Non controlling interest
16,641,195 2,354,908 4,065,406 99,949,542 58,955,585 15,108,784 4,021,420 638,882 201,735,722 2,282,045 9,235,960 170,022,486 5,359,495 186,899,986 14,835,736 8,029,933 2,082,635 3,851,734 457,678 413,756 14,835,736
16,641,195 2,354,908 4,052,406 9,437,613 3,736,627 36,222,749 2,282,045 3,468,885 111,864,695 658,839 118,274,464 (82,051,715)
2,000 4,246,374 11,525,969 4,808,358 20,582,701 2,831,289 15,281,451 936,275 19,049,015 1,533,686
3,000 8,000 2,720,325 13,678,478 26,428,554 14,256,488 3,672,218 3,689,073 6,082,002 92,332 180,200 564,832 382,872 159,721 159,721 23,061,815 18,175,581 30,840,420 2,935,786 6,224,343 1,252,743 10,412,872 12,648,943 12,512,412 970,440 13,482,852 4,692,729 2,650,582 -
46,220,671 2,070,758 5,511,414 7,409,342 209,265 382,873 765,746 159,721 159,719 52,483,944 10,405,565 3,349,558 -
3,736,009
Current and Saving deposits have been classified under maturity upto one month as these do not have any contractual maturity. Further, the bank estimates that these deposits are a core part of its liquid resources and will not fall below the current year's level.
Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Months to 1 Year 2010 Over 6 to 2 Years Over 1 to 3 Years Over 2 to 5 Years Over 3 to 10 Above 10 5 Over Years Years
Total
Rupees in 000 Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Financings Other assets including trade inventories Deferred tax asset Operating fixed assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities Net assets Share capital Reserves Unappropriated profit Non Controlling Interest Surplus on revaluation of investments 12,780,951 9,957,757 10,511,855 50,519,386 53,995,163 17,707,256 241,746 3,095,897 158,810,011 1,767,370 5,829,296 131,067,996 7,719,237 146,383,899 12,426,112 6,982,550 1,404,326 3,359,541 339,827 339,868 12,426,112 12,780,951 6,957,757 5,478,320 7,468,166 17,707,256 50,392,450 1,767,370 670,424 28,327,303 1,712,032 32,477,129 17,915,321 3,000,000 3,005,200 557,227 10,674,391 17,236,818 2,605,949 26,930,093 1,202,756 30,738,798 (13,501,980) 2,009,835 3,931,919 13,252,226 19,193,980 2,552,923 17,526,694 20,079,617 (885,637) 18,500 33,385,655 1,879,691 241,746 35,525,592 22,003,316 76,511 22,079,827 13,445,765 1,412,302 2,628,012 4,040,314 10,314,861 10,314,861 (6,274,547) 108,708 3,364,668 5,707,008 7,572,702 3,095,897 5,815,716 14,033,267 11,443,999 6,310,609 2,119,117 11,443,999 8,429,726 (5,628,283) 5,603,541 4,708,544 2,658,854 7,367,398 8,211,1212,608,821 8,211,121 (843,723)
3,050,363 1,974,113
5,024,476
2,608,821 2,415,654
215
41.5
Operational risk The Group uses Basic Indicator Approach (BIA) for assessing the capital charge for operational risk. Under BIA the capital charge is calculated by multiplying average positive annual gross income of the Group over past three years with 15% as per guidelines issued by SBP under Basel II. To reduce losses arising from operational risk, the Group has strengthened its risk management framework by developing polices, guidelines and manuals. It also includes set up of fraud and forgery management unit, defining responsibilities of individuals, enhancing security measures, improving efficiency and effectiveness of operations, outsourcing and improving quality of human resources through trainings.
Annexure -I Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December 31, 2011
Rupees in 000
S. Name and No. address of the borrower 1 2 1 Fateh Textile Mills Ltd.
Name of director (with NIC No.) 3 Mr Inayat Ullah (451-40-027107) Mr Gohar Ullah (451-64-027111) Mr Asad Ullah Barkat (451-71-027113) Mr Humayun Barkat (451-89-027114) Mr Maqsood Ahmed Khan (449-42-176221) Mr Muhammad Saleem (501-55-166315) Mr Muhammad Shafi (501-47-013051)
Outstanding Exposures at beginning of year Principal Profit Others Total (5+6+7) 5 6 7 8 19,733 22,071 41,804
Principal written-off 9 -
Mr Inayat Ullah
Mr Inayat Ullah
Mr Inayat Ullah
Mr Noor Muhammad
Amir Majeed Kaludi Abdul Majeed (42301-6831572-5) Kaludi Muhammad Akram (34101-2511309-3) N/A
9,125
4,782
13,907
1,625
4,782
6,407
1,048
195
3,253
4,496
195
3,253
3,448
217
Pattern of Shareholding
as at December 31, 2011
No. of Shareholders
254 321 243 573 145 87 43 34 23 18 13 4 10 5 9 12 4 6 4 4 7 2 3 1 1 2 2 1 3 2 3 3 3 2 1 1 2 1 1 1 1 2 1 1 1 1 1 1 1 1 4 2 1 1 1 1 1 2 1 1 1 1 4 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 1921
From
1 101 501 1,001 5,001 10,001 15,001 20,001 25,001 30,001 35,001 40,001 45,001 50,001 55,001 60,001 65,001 70,001 75,001 80,001 85,001 90,001 95,001 100,001 110,001 120,001 130,001 135,001 145,001 150,001 155,001 160,001 170,001 175,001 185,001 195,001 210,001 235,001 245,001 260,001 275,001 290,001 300,001 305,001 315,001 320,001 345,001 360,001 370,001 375,001 380,001 400,001 415,001 440,001 450,001 465,001 530,001 560,001 565,001 570,001 585,001 595,001 600,001 605,001 640,001 645,001 665,001 705,001 715,001 745,001 755,001 775,001 805,001 810,001 865,001 930,001 1,010,001 1,090,001 1,245,001 1,255,001 1,275,001 1,325,001 1,440,001 1,530,001 1,625,001 2,165,001 2,285,001 2,310,001 2,345,001 2,575,001 3,780,001 3,945,001 4,070,001 5,370,001 11,735,001 74,870,001 240,895,001 394,380,001
Having Shares
To
Shares held
7,471 85,918 183,459 1,362,719 1,066,667 1,076,386 752,959 764,970 630,331 584,346 486,727 173,093 482,075 263,889 514,900 741,667 269,220 431,320 308,517 330,565 611,588 187,571 300,000 105,000 113,000 248,830 265,659 137,948 443,718 304,471 469,583 486,624 523,650 353,710 185,064 197,139 426,698 237,348 245,871 262,000 280,000 584,313 303,076 307,344 316,788 320,115 350,000 364,500 375,000 378,905 1,530,693 805,872 416,022 443,750 452,064 465,038 534,456 1,122,110 569,328 575,000 585,263 600,000 2,416,106 609,011 642,034 646,405 665,817 708,280 716,203 750,000 755,421 780,000 808,595 812,475 867,505 934,600 1,012,455 1,094,815 1,250,000 1,257,774 1,280,000 1,327,224 1,440,155 1,531,269 1,626,292 2,168,211 2,286,064 2,314,468 2,349,822 2,577,032 3,781,286 3,947,797 4,075,000 5,370,156 11,738,256 74,870,599 240,897,991 394,381,884 802,993,310
Percentage
0.00% 0.01% 0.02% 0.17% 0.13% 0.13% 0.09% 0.10% 0.08% 0.07% 0.06% 0.02% 0.06% 0.03% 0.06% 0.09% 0.03% 0.05% 0.04% 0.04% 0.08% 0.02% 0.04% 0.01% 0.01% 0.03% 0.03% 0.02% 0.06% 0.04% 0.06% 0.06% 0.07% 0.04% 0.02% 0.02% 0.05% 0.03% 0.03% 0.03% 0.03% 0.07% 0.04% 0.04% 0.04% 0.04% 0.04% 0.05% 0.05% 0.05% 0.19% 0.10% 0.05% 0.06% 0.06% 0.06% 0.07% 0.14% 0.07% 0.07% 0.07% 0.07% 0.30% 0.08% 0.08% 0.08% 0.08% 0.09% 0.09% 0.09% 0.09% 0.10% 0.10% 0.10% 0.11% 0.12% 0.13% 0.14% 0.16% 0.16% 0.16% 0.17% 0.18% 0.19% 0.20% 0.27% 0.28% 0.29% 0.29% 0.32% 0.47% 0.49% 0.51% 0.67% 1.46% 9.32% 30.00% 49.11% 100.00%
100 500 1,000 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 75,000 80,000 85,000 90,000 95,000 100,000 105,000 115,000 125,000 135,000 140,000 150,000 155,000 160,000 165,000 175,000 180,000 190,000 200,000 215,000 240,000 250,000 265,000 280,000 295,000 305,000 310,000 320,000 325,000 350,000 365,000 375,000 380,000 385,000 405,000 420,000 445,000 455,000 470,000 535,000 565,000 570,000 575,000 590,000 600,000 605,000 610,000 645,000 650,000 670,000 710,000 720,000 750,000 760,000 780,000 810,000 815,000 870,000 935,000 1,015,000 1,095,000 1,250,000 1,260,000 1,280,000 1,330,000 1,445,000 1,535,000 1,630,000 2,170,000 2,290,000 2,315,000 2,350,000 2,580,000 3,785,000 3,950,000 4,075,000 5,375,000 11,740,000 74,875,000 240,900,000 394,385,000
Categories of Shareholders
as at December 31, 2011
Particulars Directors, Chief Executive, their spouse and minor children Associated Companies, undertakings and related parties Banks, Development Financial Institutions and Non Banking Finance Companies Insurance Companies Modaraba and Mutual Funds General Public a.Local b.Foreign Others Total
Shares held
Percentage
221
Country
Argentina Australia
Bank
BNP Paribas - Succursale de Beunos Aires Deutsche Bank AG HSBC Bank Argentina SA ABN Amro Bank (now Royal Bank of Scotland) Bank of America, N.A. Bank of Western Australia BNP Paribas Australia Commonwealth Bank of Australia HSBC Bank J.P.Morgan Chase Bank NA National Australia Bank Royal Bank of Scotland Commerz Bank Deutsche Bank Deutsche Bank AG Oberbank AG Raiffeisenlandesbank Oberoesterreich AG Unicredit Bank Austria AG (formerly Bank Austria Creditanstalt) Vorarlberger Landes- und Hypothekenbank ABC Islamic Bank (E.C) Al Baraka Islamic Bank BSC BNP Paribas Manama Citibank NA Gulf International Bank B.S.C. Shamil Bank of Bahrain Standard Chartered Bank United Bank Limited Woori bank CitiBank N.A. Habib Bank Limited HSBC Bank Woori Bank Standard Chartered Bank Bank of America, N.A. BNP Paribas Fortis (formerly Fortis Banque S.A./N.V) BNP Paribas S.A. Belgium - Belgium branch Commerzbank Deutsche Bank AG Dexia Bank SA Habib Bank Limited Ing Belgium Nv/Sa KBC Bank NV Santander Benelux SA Firstrand Bank Ltd Banco do Brasil S.A. Banco BNP Paribas Brasil S/A Deutsche Bank S.A. - Banco Alemao HSBC Bank Brazil S.A. Unicredit Bulbank Bank of America, N.A. Habib Canadian Bank HSBC Bank Royal Bank of Canada Toronto Dominion Bank Aib Bank (Ci) Limited Banco Itau ABN Amro Bank (now Royal Bank of Scotland) Agricultural Bank of China, The Bank of China Bank of Communications Bank of New York China Citic Bank (formerly Citic Industrial Bank) Citibank NA Bank of Jiangsu
Country
Bank
Commerzbank Deutsche Bank AG HSBC Bank Industrial Bank of Korea J.P.Morgan Chase Bank NA Laiwu City Commercial Bank Co. Ltd. Mizuho Corporate Bank (China) Ltd. Socit Gnrale Standard Chartered Bank The Korea Development Bank Wenzhou City Commercial Bank Yantai City Commercial Bank Deutsche Bank Bank of Cyprus Public Company Limited Commerzbank Komercni Banka A.S. Unicredit Bank Czech Republic Danske Bank A/S Nordea Bank Sweden AB (publ) Skjern Bank Al Baraka Bank Egypt (formerly Egyptian Saudi Finance Bank) Arab International Bank Bank of Alexandria Sae BNP Paribas Le Caire Albaraka Bank, Egypt HSBC Bank Egypt Mashreq Bank Limited AS Unicredit Bank Eesti Filiaal Nordea Bank Sweden AB (publ) Commercial Bank of Ethiopia Dashen Bank SC Nordea Bank Sweden AB (publ) Danske Bank Pohjola Pankki OVJ (Pohjola Bank PLC) Markets/ Clearing & Settlement Sampo Bank (part of Danske bank group) Bank of America, N.A. BNP-Paribas SA BNP-Paribas Securities Services Commerzbank Credit Agricole CIB Credit Agricole SA Credit Industriel et Commercial Deutsche Bank Habib Bank Limited HSBC France National Bank of Pakistan Socit Gnrale Sumitomo Mitsui Banking Corporation, The U.B.A.F. Commerzbank Deutsche Asset Management International Gmbh Deutsche Bank AG Deutsche Bank AG, Frankfurt,(Central Entry Point Europe) Dresdner Bank (now part of Commerzbank) DWS Investment Gmbh ING Bank N.V. JP Morgan Chase Bank Landesbank Baden-Wuerttemberg National Bank of Pakistan National-Bank AG Nordea Bank Sweden AB (publ) Sparkasse Dortmund Sparkasse ko elnborn
Austria
Bahrain
Bangladesh
Belgium
France
Botswana Brazil
Bulgaria Canada
Germany
Country
Bank
Sparkasse Westmunsterland Standard Chartered Bank Sumitomo Mitsui Banking Corporation, The Unicredit Bank AG (formely Hypo and Vereinsbank HVB) Volksbank Bocholt EG Standard Chartered Bank Ghana Limited Bank of America, N.A. Egnatia Bank S.A. Geniki Bank (General Bank of Greece, SocGen group) Hellenic Bank Ltd Probank SA ABN Amro Bank (now Royal Bank of Scotland) Bank of America, N.A. BNP Paribas Citibank NA Commerzbank Commonwealth Bank of Australia DBS Bank Hong Kong Ltd Deutsche Bank AG Habib Bank Limited Hang Seng Bank Limited HBZ Finance Limited HSBC Bank J.P.Morgan Chase Bank NA KBC Bank NV Kookmin Bank, Hong Kong Mashreq Bank Limited National Bank of Pakistan Standard Chartered Bank Sumitomo Mitsui Banking Corporation, The U.B.A.F. Wachovia Bank, NA Woori bank CIB Bank Zrt (Central-European International Bank Ltd.) Commerzbank Deutsche Bank ZRT K and H Bank NYRT.(FORMERLY KERESKEDELMI ES HITELBBANK RT) Unicredit Bank Hungary ZRT Bank of America, N.A. Bank of Ceylon BNP Paribas India Citibank NA Deutsche Bank J.P.Morgan Chase Bank NA Mashreq Bank Limited Punjab National Bank Standard Chartered Bank State Bank of India ABN Amro Bank (now Royal Bank of Scotland) Bank Central Asia Bank of America, N.A. Bank Syariah Mandiri Deutsche Bank AG HSBC Bank J.P.Morgan Chase Bank NA PT Bank Mandiri (Persero) Tbk PT Bank SBI Indonesia Standard Chartered Bank Woori Bank AIB Bank Bank of America, N.A. Bank of Ireland International Banking Citibank HSBC Bank Plc National Irish Bank San Paolo IMI SpA
Country
Italy
Bank
Banca Delle Marche Spa Banca di Credito Cooperativo di Fornacette Banca di Roma Banca Intesa Spa Banca Monte Dei Paschi di Siena SpA Banca Nazionale del Lavoro SpA Banca Popolare dellEmilia Romagna Societa Banca Popolare Di Sondrio Banca Popolare di Vicenza SCPARL Banca UBAE SpA Banco di Napoli Banco Popolare Banco Popolare di Verona e Novara SCRL Bank of America, N.A. Bayerische Hypo und Vereinsbank (HVB) Milan Bipop Carire Spa Cassa di Risparmio del Veneto S.p.A. Cassa di Risparmio di Parma e Piacenza S.p.A. Cassa di Risparmio di Pistoia e Pescia S.p.A. Cassa di Risparmio di Venezia S.p.A. Cassa di Risparmio in Bologna S.p.A.-Carisbo Spa Commerzbank Deutsche Bank AG HSBC Bank Mizuho Corporate Bank Ltd. Socit Gnrale Unicredit Banca D'Impresa SPA Unicredit Banca SPA Unicredit Private Banking SPA Unicredito Italiano Unione di Banche Italiane Scpa (UBI Banca) ABN Amro Bank (now Royal Bank of Scotland) Bank of America, N.A. Bank of New York Citibank NA Commerzbank Commonwealth Bank of Australia Credit Agricole Indosuez Deutsche Bank AG HSBC Bank JP Morgan Chase Mizuho Corporate Bank Ltd. National Bank of Pakistan (Tokyo & Osaka) Socit Gnrale Standard Chartered Bank Sumitomo Mitsui Banking Corporation U.B.A.F. Wachovia Bank, NA Woori Bank Housing Bank for Trade & Finance Jordan Islamic Bank for Finance & Investment Standard Chartered Bank Jordan Gulf African Bank Ltd. Habib Bank AG Zurich Kenya Commercial Bank Limited ABN Amro Bank (now Royal Bank of Scotland) Bank of New York Daegu Bank Ltd., The Deutsche Bank AG Hana Bank HSBC Industrial Bank of Korea J.P.Morgan Chase Bank NA Kookmin Bank Korea Exchange Bank Kyongnam Bank
Ghana Greece
Hong Kong
Japan
Hungary
India
Indonesia
Ireland
223
Country
Bank
National Bank of Pakistan Pusan Bank Standard Chartered Bank Sumitomo Mitsui Banking Corporation, The U.B.A.F. Wachovia Bank, NA Woori bank Burgan Bank, SAK Citibank NA Commercial Bank of Kuwait, SAK HSBC Bank Middle East Kuwait Finance House National Bank of Kuwait Noor Financial Investment Company AS Unicredit Bank, Latvia Nordea Bank Sweden AB (publ) Lebanon and Gulf Bank SAL Nordea Bank Sweden AB (publ) BNP Paribas Luxumbourg Commerzbank ABN Amro Bank (now Royal Bank of Scotland) Al-Rajhi Bank Ambank Berhad Bank of America, N.A. CIMB Islamic Bank Citibank NA Deutsche Bank AG HSBC Bank J.P.Morgan Chase Bank Berhad Malayan Banking Berhad (Maybank) RHB Bank Berhad Standard Chartered Bank Credit Europe Bank NV Malta Branch Mauritius Post and Cooperative Bank Ltd HSBC Bank (Mauritius) Limited Banca del Bajio S.A. Bank of America, N.A. BNP Paribas SA HSBC Trade & Development Bank of Mongolia Attijariwafa Bank Banque Marocaine du Commerce Exterieur Socit Gnrale Bank of Kathmandu Ltd Himalayan Bank Limited NABIL Nepal Arab Bank Ltd Nepal Industrial and Commercial Bank Ltd Standard Chartered Bank Bank of America, N.A. Commerzbank Credit Europe Bank N.V. Deutsche Bank AG Finansbank (Holland) N.V. Fortis Bank (Netherlands) N.V. Habib Bank Limited ING Bank N.V. KBC Bank NV Lanschot Bankiers NV F. van Rabobank Nederland Royal Bank of Scotland (formerly ABN Amro Bank N.V.) Bank of New Zealand HSBC New Zealand Standard Chartered Bank DNB NOR Bank ASA Fokus Bank, part of Danske Bank Group Nordea Bank Sweden AB (publ)
Country
Oman Pakistan
Bank
HSBC Bank Middle East BankMuscat SAOG Oman International Bank Al Baraka Islamic Bank BSC Allied Bank Limited Askari Commercial Bank Ltd Bank Islami Pakistan Bank Al Habib Limited Bank AlFalah Limited Bank of Khyber Bank of Punjab Citibank NA Deutsche Bank AG Dawood Islamic Bank Dubai Islamic Bank Faysal Bank Faysal Bank (formerly RBS and ABN Amro) Habib Metropolitan Bank Habib Bank Limited (HBL) HSBC Bank Middle East KASB Bank Limited MCB Bank Limited National Bank of Pakistan NIB Bank Oman International Bank Samba Bank Limited Silk Bank Limited Sindh Bank Limited Soneri Bank Limited Standard Chartered Bank Summit Bank Limited United Bank Limited Bank of South Pacific Ltd Asian Development Bank Banco de Oro Universal Bank Bank of America, N.A. Deutsche Bank AG HSBC Bank BPH SA Bank Polska Kasa Opieki SA Deutsche Bank AG Deutsche Bank Polska S.A. Nordea Bank Sweden AB (publ) Socit Gnrale Banco Espirito Santo SA Caixa Geral De Depositos Montepio Geral - Caixa Economica Barwa Bank Mashreq Bank Limited Qatar International Islamic Bank United Bank Limited Citibank Europe Plc, Dublin-Sucursala Romania MKB Nextebank SA (formerly Romexterra Bank) Romanian Bank for Development (BRD) Groupe Societe Generale Unicredit Tiriac Bank SA Bank for Foreign Trade Bank of Moscow Commerzbank Credit Bank of Moscow (Open Joint Stock Company) Deutsche Bank AG International Moscow Bank Al Inma Bank Al Rajhi Bank Bank Al Bilad Bank Al Jazira
Kuwait
Poland
Portugal Qatar
Netherlands
Romania
Russian Federation
Saudi Arabia
Country
Bank
Banque Saudi Fransi BNP Paribas Saudi Arabia Deutsche Bank AG, Riyadh Branch Gulf International Bank B.S.C. Islamic Development Bank JP Morgan Chase Bank National Bank of Pakistan, Riyadh National Commercial Bank Riyad Bank Saudi Hollandi Bank The Saudi British Bank (HSBC group) ABN Amro Bank (now Royal Bank of Scotland) Bank of America, N.A. BNP Paribas - Singapore branch Citibank NA Commerzbank Commonwealth Bank of Australia DBS Bank Ltd. Deutsche Bank AG Fortis Bank Habib Bank Limited Hana Bank HSBC Bank Ing Bank NV JP Morgan Chase Bank KBC Bank NV Mizuho Corporate Bank Ltd National Bank of Kuwait Nordea Bank Sweden AB (publ) PT Bank Mandiri (Persero) Tbk Rabobank Asia Ltd Socit Gnrale Standard Chartered Bank Sumitomo Mitsui Banking Corporation, The U.B.A.F. Woori bank Commerzbank SKB Banka dd Unicredit Bank Slovenija Citibank NA Firstrand Bank Ltd Habib Overseas Bank Limited HBZ Bank Limited (Habib Bank AG Zurich) Banco de Sabadell SA Banco Espanol de Credito Banco Pastor SA Bank of America, N.A. Bilbao Bizkaia Kutxa BNP Paribas S.A. Sucursal En Espana Caja De Ahorros de Galicia (Caixa Galicia) Caja De Ahorros Del Mediterrneo Commerzbank Deutsche Bank AG HSBC Bank Bank of Ceylon Deutsche Bank AG Habib Bank Limited Hatton National Bank HSBC Bank MCB Bank Standard Chartered Bank Danske Bank A/S Nordea Bank Sweden AB (publ) Skandinaviska Enskilda Banken (SEB Bank) Svenska Handelsbanken Banco Santander (Suisse) SA
Country
Bank
Banque Cantonale Vaudoise Banque de Commerce et de Placements BNP Paribas (Suisse) SA Commerzbank (Schweiz) AG Credit Agricole Indosuez Deutsche Bank AG Zurich Deutsche Bank AG, Frankfurt, Central Entry Point Europe Habib Bank AG Zurich HSBC Private Bank (Suisse) S.A. ING Belgium NV/SA, Geneva Branch Merrill Lynch Bank (Suisse) S.A. United Bank Limited AG Zurich Zuercher Kantonalbank Bank of America, N.A. Bank of New York Chinfon Commercial Bank Citibank NA Citibank Taiwan Ltd (formerly Bank of Overseas Chinese) Deutsche Bank AG J.P.Morgan Chase Bank NA Mega International Commercial Bank (International Commercial Bank of China) Socit Gnrale Standard Chartered Bank Sumitomo Mitsui Banking Corporation, The Tainan Business Bank Taiwan Cooperative Bank Union Bank of Taiwan Habib African Bank Bangkok Bank Public Company Limited Bank of America, N.A. Citibank NA Deutsche Bank AG HSBC Bank J.P.Morgan Chase Bank NA Standard Chartered Bank Sumitomo Mitsui Banking Corporation, The Arab Tunisian Bank Citibank NA Socit Tunisienne de Banque Aktif Yatirim Bankasi A.S. Al Baraka Turkish Finance House Asya Katilim Bankasi A.S. Citibank NA Denizbank A S Deutsche Bank AG Habib Bank Limited HSBC Bank ING Bank A.S. (formerly Oyak Bank A.S.) Kuveyt Turk Evkaf Finans Kurumu A.S Tekstilbank Turkiye Finans Katilim Bankasi AS Trkiye Garanti Bankasi AS Turkiye Halk Bankasi AS Turkiye Is Bankasi AS Turkiye Vakiflar Bankasi T.A.O Turkland Bank (T-Bank) Yapi Ve Kredi Bankasi A.S. Prominvest Bank Abu Dhabi Commercial Bank Abu Dhabi Islamic Bank Ajman Bank BNP Paribas SA Citibank NA Credit Europe Bank (Dubai) Ltd. Deutsche Bank Abu Dhabi
Singapore
Taiwan
Tanzania Thailand
Tunisia
Turkey
Spain
Sri Lanka
Ukraine UAE
Sweden
Switzerland
225
Country
Bank
Dubai Islamic Bank Emirates Bank International, PJSC (now Emirates NBD) First Gulf Bank Habib Bank AG Zurich Habib Bank Limited HSBC Bank Middle East Kuwait Turkesh Participation Bank Dubai Limited Mashreq Bank Limited National Bank of Abu Dhabi National Bank of Dubai (now Emirates NBD) National Bank of Fujairah Noor Islamic Bank Royal Bank of Scotland Standard Chartered Bank Union National Bank United Arab Bank United Bank Limited (UBL) AIB Bank Bank Mandiri (Europe) Ltd. Bank of America, N.A. Citibank NA Commerzbank Commonwealth Bank of Australia Deutsche Bank AG European Islamic Investment Bank (EIIB) Gulf International Bank B.S.C. Habib Bank AG Zurich Habib Bank Limited Habibsons Bank Limited HSBC Bank JPMorgan Chase Bank KBC Bank NV Korea Exchange Bank Mashreq Bank Limited Merrill Lynch International Bank Limited Mizuho Corporate Bank Ltd., London National Westminster Bank plc Nordea Bank Sweden AB (publ) Northern Bank Limited (Danske group) Royal Bank of Scotland Standard Chartered Bank Sumitomo Mitsui Banking Corporation, The United National Bank (UBL & NBP) Woori bank Prominvestbank Banco Itau Abacus Federal Savings Bank Banco do Brasil S.A. Bangkok Bank Public Company Limited Bank of America, N.A. Bank of New York BNP Paribas USA - New York branch Branch Banking & Trust Co Brown Brothers Harriman and Co. Calyon (formerly Credit Lyonnais) Capital One, NA Cathay Bank Citibank NA Commerzbank Commonwealth Bank of Australia Deutsche Bank Deutsche Bank Trust Company Americas Doha Bank First Tennessee Bank, N.A. Fortis Bank Gulf International Bank B.S.C.
Country
Bank
Habib American Bank Habib Bank Limited Hana Bank HSBC Bank InterBusiness Bank, N.A. International Finance Corporation (IFC) Israel Discount Bank of New York JPMorgan Chase Bank KeyBank National Association Malayan Banking Berhad Mashreq Bank Limited Mizuho Corporate Bank Ltd. National Bank of Pakistan National City Bank New York Commercial Bank Nordea Bank Sweden AB (publ) PNC Bank Regions Bank (formerly Union Planters) Royal Bank of Scotland (formerly ABN Amro Bank) Santander Central Hispano Socit Gnrale Standard Chartered Bank Sumitomo Mitsui Banking Corporation, The Suntrust Bank U.S. Bank NA United Bank Limited AG Zurich Wells Fargo Bank NA (formerly Wachovia Bank) Woori bank Deutsche Bank J.P.Morgan Chase Bank NA Vietnam Bank for Agriculture Woori bank Saba Islamic Bank Shamil Bank of Yemen and Bahrain United Bank Limited
UK
Vietnam
Yemen
Branch Network
Alhamdulillah, Meezan Bank has established 275 branches in 83 cities across Pakistan. This is a milestone that is not only the success story of Meezan Bank but also the continuing success story of Islamic banking in Pakistan. With this extensive network, our existing and potential customers are now closer than ever in attaining Islamic banking at their doorstep. All branches provide real time online banking facilities to customers. As the first and largest dedicated Islamic bank in Pakistan, Meezan Banks team continues to build on its Vision of establishing "Islamic banking the banking of first choice". One of the key objectives of the Bank is to have its footprint strategically placed throughout the country enabling the public to avail the benefits of Shariah-compliant banking in their neighbourhood. The Bank is currently segmented into three major Regions of Pakistan. The cities in which the Bank presently operates are as follows: Southern Region
Hub (Lasbela) Hyderabad Karachi Mirpurkhas Moro Muslim Bagh Nawabshah Quetta Sakrand Sanghar Shahdadpur Sukkur Tando Adam Tando-Allah-Yar
Central Region
Ahmedpur East Arifwala Bahawalnagar Bahawalpur Burewala Chichawatni Chiniot Cishtian Daska Dera Ghazi Khan Faisalabad Gojra Gujranwala Gujrat Hafizabad Haroonabad Hasilpur Jampur Jhang Kabirwala Kasur Khanewal Khanpur Kharian Khushab Lahore Lalamusa Lodhran Mandi Bahauddin Mian Channu Mianwali Multan Muzaffargarh Okara Pattoki Pirmahal Rahim Yar Khan Sadiqabad Sahiwal Sargodha Sheikhupura Sialkot Toba Tek Singh Vehari Wazirabad
Northern Region
Abbottabad Attock Chakwal Charsadda Dadyal Dera Ismail Khan Dina Gujar Khan Haripur Havelian Islamabad Jhelum Kohat Mansehra Mardan Mirpur Azad Kashmir Muzaffarabad Nowshera Peshawar Rawalpindi Swabi Swat Timergara Wah Cantt
For 2012 Meezan Bank has planned to open an additional 35 branches in Pakistan. Meezan Bank's mission is to provide its customers dedicated and pure Islamic banking facilities with the greatest of convenience and personalized services. It remains the Bank's endeavour to establish solid foundations of Islamic banking in Pakistan.
227
Branch Network
Southern Region Hub (Lasbela) Hub Chowki Branch Hub City, District Lasbela, Balochistan. Tel: (92-853) 310252-3 Hyderabad Auto Bhan Branch Shop No 6 & 7 Boulevard Enclave Auto Bhan Road Latifabad No 3, Hyderabad Tel: (92-22) 3821291-98 Cloth Market Branch C/916/18, Guru Nagar,Hyderabad. Tel: (92-22) 2621341-2 Gari Khata Branch City Survey No. F/1054, Ward - F, Gari Khata, Hyderabad. Tel: (92-22) 2725671-2 Hyderabad Branch Saddar Bazar Cantonment, Hyderabad. Tel: (92-22) 2782772 Latifabad Branch 3/D Commercial Area, Latifabad # 7, Hyderabad. Tel: (92-22) 3866964-65 Market Road Branch Market Road Hyderabad, Survey No. 2669,2669/1, Ward "A", Market Road, Hyderabad. Tel: (92-22) 2638362-6 Qasimabad Branch Plot # QEA/R-6/03-4,11-12, Housing Scheme No. 1, Main Road Qasimabad, Hyderabad. Tel: (92-22) 2670511-15 Karachi Abdullah Haroon Road Branch S/1, Plot No. P.R 2/31/5, Preedy Quarters, Abdullah Haroon Road, Karachi. Tel: (92-21) 3270-0143-5, 3270-0106, 3270-0109 Abul Hasan Isphani Road Branch Plot # 25-A, Main Abul Hasan Isphani Road, Azeem Khan Goth, Gulshan-e-Iqbal, Block 4-A, Karachi. Tel: (92-21) 34810729-32, 34810734-5 Al-Azam Plaza Super highway Branch Shop# 5(A,B) & 6(A,B), Ground Floor Sector 1-A, Gulzar-e-Hijri, Karachi. Tel: (92-21) 36365780 Al-Hilal Society Branch Nafees Arcade, Plot No.SC-14, Chandni Chowk, KDA Scheme No.7, Main University Road, Karachi. Tel: (92-21) 34124111 - 115 Al Tijarah Centre Branch S-8, Ground Floor, Al-Tijarah Centre, Block-6, PECHS, Shahrah-e-Faisal, Karachi. Tel: (92-21) 34169030-34
Alamgir Road Branch Z-484, Block 3, Bahaduryar Jang Cooperative Housing Society, Alamgir Road, Karachi. Tel: (92-21) 34140968 Allama Iqbal Road Branch Mono Tower, Allama Iqbal Road, PECHS, Block 2, Karachi. Tel: (92-21) 34300996-7 Babar Market Landhi Branch 2-A/167,168 & 169, Baber Market, Landhi Township, Karachi. Tel: (92-21) 35011071-75 Bahadurabad Branch Adam Arcade, Plot No. 28, BMCH Society, Karachi. Tel: (92-21) 34145021, 34145017 Bait Ul Mukarram Branch Shop No. S - 3 & S - 4, Yasir Apartments, FL - 6, Block 16, Gulshan-e-Iqbal, Karachi. Tel: (92-21) 34839021-3 Barakat-e-Hyderi-Branch D10, Block H, North Nazimabad, Karachi. Tel: (92-21) 36705159 Bilawal Chowk Branch Plot No. Commercial 7/1, Green Belt Residency, Shop No. 4 & 5, Block 2, Scheme 5, Clifton, Karachi. Tel: (92-21) 35830628, 35830634, 35832083 Bin Qasim National Highway Branch Survey No.435, Deh Landhi, Taluka Bin Qasim Town, Karachi. Tel: (92-21) 35012376, 35012355, 35012357 Block-E North Nazimabad Branch Plot No.ST-4, Shop No A/D-66 & 67, Block E Hyderi, North Nazimabad Karachi. Tel: (92-21) 36724294-96 Boat Basin Branch Shop # 40-43, Commercial Sub Plot # FL-7/C/4 of Plot # 7, Block No. 5, Clifton, Karachi. Tel: (92-21) 35870330, 35870608, 35870697, 35870687, 35870698 Bohrapir Branch Ranchore Quarter, Prince Street, Bohrapir, Karachi. Tel: (92-21) 32712915-918, 32712909 Buffer Zone Branch R-914, Sector-15-A/1, Buffer Zone, North Karachi, Karachi Tel: (92-21) 36965851-5 Clifton Branch Ground Floor, Al-Karam Centre, BC1, Block-7 Clifton, Main Clifton Road, Karachi. Tel: (92-21) 3537 2060-64
Cloth market Branch Atique Market, Bunder Quarters,Karachi. Tel: (92-21) 32418137-9 Dalton Market Branch Plot No.4-C, Dalton Market, Khayaban-e-Shamsheer, DHA Phase V, Karachi. Tel: (92-21) 35240811-815 DHA Phase I Branch Ground Floor, Plot No. 119, DHA Phase I, Korangi Road, Karachi. Tel: (92-21) 35396854-58 DHA Phase II-Extention Branch Plot # 69 & 71, Garibsons Building, 12th Commercial Street, DHA Phase II Extension, Karachi. Tel: (92-21) 35311953-8 DHA Phase IV Branch Plot No. 57/C, 9th Commercial Street, DHA Phase IV , Karachi. Tel: (92-21) 35314861-4 Dhoraji Branch 35/182, C.P. & Bearar Housing Society, Karachi. Tel: (92-21) 34860861-4 F.B Area Branch C-12, Block 10, F.B Area, Karachi. Tel: (92-21) 36805370-6 FTC Branch Ground Floor, Block B, FTC Building, Shahrah-e-Faisal, Karachi. Tel: (92-21) 35650771 Garden West Branch Shop # 9,10,11 & 12 (Amin Centre), Plot Survey # 130/1, Sheet No. G-R.2, Garden West, Karachi. Tel: (92-21) 32241383-87 Gizri Branch Plot No. K-7/9 Gizri Chaudhry Khalique-uz-zaman Colony Bakhshan village Bazar Area Clifton Karachi. Tel: (92-21) 35865670-674 Gulbai SITE Area Branch Plot # C-25, Gulbai, SITE Area, Karachi. Tel: (92-21) 32594711-5 Gulberg Branch Shop No.7, A-94, Block-18, F.B. Area, Karachi. Tel: (92-21) 36829112-4 Gulistan-e-Jauher Branch Plot # ST -9, Block 15, Scheme 36, Gulistan-e-Jauher, Karachi. Tel: (92-21) 34030251-54 Gulshan Block 2 Branch Ground Floor Arif Residency, Plot # SB 08, Gulshan -e-Iqbal Block 2, Near Rab Medical Centre, Karachi. Tel: (92-21) 34971232
Branch Network
Gulshan Chowrangi Branch Sub Plot No 5-A/1-10, Plot # FL-5, Block 3, Gulistan-e-Erum, Gulshan-e-Iqbal, Karachi. Tel: (92-21) 34811849, 34813967 Gulshan-e-Iqbal Branch B-41, Block No. 13-A, KDA Scheme 24, University Road, Gulshan-e-Iqbal, Karachi. Tel: (92-21) 34811901-6 Gulshan-e-Maymar Branch A-102 Shop # 1 & 2 SB, 1 Sector X - IV, Opposite Roman Fountain Park. Scheme -4, Gulshan-e-Maymar, Karachi. Tel: (92-21) 36350513-4-5 Hub River Road Branch Building No 06 Commercial Sector No 04 Haroon Bahria Co Operative Housing Society Hub River Road Karachi Tel: (92-21) 32364236-39 Hussainabad Branch Block 3,Pakistan Memon Education & Welfare Society, Hussainabad, Karachi. Tel: (92-21) 36320461-62 & 36320467 I.I. Chundrigar Road Branch Shop No. 9 & 10, Gul Tower, I.I. Chundrigar Road, Karachi. Tel: (92-21) 32423676 Jamshed Road Branch Plot No. 713/6, Shaheen Tower, Jamshed Quarters, M.A Jinnah Road Karachi. Tel: (92-21) 34923281-85 Jodia Bazar Branch H-91 A, Darya Lal Street, Jodia Bazaar, Karachi. Tel: (92-21) 32473326-9 Joffa Towers Branch SB-23 & 24,Office # G2, 102, 103 & 104, Joffa Towers, Main University Road, Block-13 C, Gulshan-e-Iqbal, Karachi. Tel: (92-21) 34830141-45 Katchi Gali No.2 Branch No. G-1, situated at Katchi Gali No. 2, Marriot Road, Karachi. Tel: (92-21) 32443526-27 K.A.E.C.H.S Branch Plot No. SA/49 (Commercial), Block-4, Karachi Administration Employees Cooperative Housing Society, Karachi. Tel: (92-21) 34302911-5 Kharadar Branch Shop No.1, Ground Floor, Al-Fatima Plaza, Paria Street, Ghulam Hussain Kassam Quarters, Kharadar. Tel: (92-21) -3231-6510-14 Khayaban-e-Bukhari Branch Shop # 1-2 & Mezanine Floor, Plot No. 22-C, Khayaban-e-Bokhari, Phase VI, DHA, Karachi Tel: (92-21) 35243561-65
Khayaban-e-Sehar Branch 9-C, Shahbaz Commercial. Lane 1, Khayaban-e-Sehar, Phase VI, DHA, Karachi. Tel: (92-21) 35349307-13, 35349316-18 Khayaban-e-Shamsheer Branch 3-C, Khayaban-e-Shamsheer, Phase V Ext., D.H.A, Karachi. Tel: (92-21) 35247600-4 Korangi Branch Plot No. LS 3, ST-3/1, Sector No. 15, Korangi Industrial Area, Karachi. Tel: (92-21) 35114324-5, 35114281, 35114279 Korangi II Branch Q 37, Sector 33-A, Main Road Korangi, Karachi. Tel: (92-21) 35059215-16 Lea Market Branch Plot No. 3/20, Khajoor Bazar, Lea Market, Karachi. Tel: (92-21) 32521650-4 Liaquatabad Branch No.18, Plot No. 1/19, S.M.Taufiq Road, Liaquatabad, Karachi. Tel: (92-21) 34125673 Marriott Hotel Branch Marriott Hotel, Abdullah Haroon Road, Karachi. Tel: (92-21) 35683491 Model Colony Branch Plot No.06, Survey No.N-55, Tina Square, Model Colony, Malir, Karachi. Tel: (92-21) 34492445-7 Muhammad Ali Society Branch Fatima Jinnah Street, Muhammad Ali Housing Society, Karachi. Tel: (92-21) 34301863-4 Nazimabad No. 3 Branch 3-A-1/13 Nazimabad No. 3, Karachi. Tel: (92-21) 36707431-34 New Challi Branch Fakhri Trade Centre, Plot No. SR 6/10, Shahra-e-Liaquat, New Challi, Karachi. Tel: (92-21) 32602121-126 North Karachi Branch Plot # SA-6 (ST-8), 11-C-1, North Karachi, Karachi. Tel: (92-21) 36965051-55 North Karachi Industrial Area Branch Plot No.1-A, Sector 12-C, North Karachi Township, Karachi. Tel: (92-21) 36963117-21 North Napier Road Branch Shop No.12, Poonawala Trade Tower, Main North Napier Road, Karachi. Tel: (92-21) 32713530-34
North Nazimabad Block-M Branch Plot No.SB-2, Block-M, North Nazimabad, Karachi. Tel: (92-21) 36627054-55 North Nazimabad Branch Shop# 9-12, Sub-plot# SC14-3, plot# SC-14, Block-F, KDA Scheme NO.2, Samar Residency, North Nazimabad, Karachi. Tel: (92-21) 36723549-554 Orangi Town Branch Plot # LS-15, Sector 6-E, Orangi Town, Karachi Tel: (92-21) 36694370-74 Pakistan Chowk Branch Ground Floor, Plot # 08, Survey Sheet # RB-5, Pakistan Chowk Arambagh Road, Karachi. Tel: (92-21) 32219651-656 Plaza Quarters Branch Plaza Square Karachi, Bombay Building, City Survey No. 37/22, Off M.A. Jinnah Road, Karachi. Tel: (92-21) 32751560, 32751124, 32751132, 32751106 PNSC Branch Ground floor at 37- A, Lalazar Area, Off M.T. Khan Road, Karachi. Tel: (92-21) 35636240-54 Rashid Minhas Road Branch Ground Floor, Aqsa Tower, Block-C, Rashid Minhas Road, KDA Scheme No.33, Karachi. Tel: (92-21) 34978062, 34978064, Saddar Branch Saddar Bazar Quarters, Raja G. Ali Khan Road, Karachi. Tel: (92-21) 35224601-05 Safora Chowk Shop # 3, 4, 5 & 6, Ground Floor, Prime Tower, Plot # SB-20, Block 7, KDA Scheme No 36, Safora Chowk, Gulistan-e-Jauhar, Karachi. Tel: (92-21) 34660661-65 Shahrah-e-Faisal Branch 29-A, Ground Floor, Sabah Palace, P.E.C.H.S. Block 6, Shahrah-e-Faisal, Karachi. Tel: (92-21) 34322186-90 Shah Faisal Colony Branch CB-33, Al Falah Society, Shah Faisal Colony, Karachi Tel: (92-21) 34686271-3, 34600601-2 Shamsi Society Branch CM 44 & 45, Ground floor, Shamsi Cooperative Housing Society, Malir Halt, Karachi. Tel: (92-21) 34682405-07 Shireen Jinnah Colony Branch Plot no ST-4B block 1, Shireen Jinnah Colony, Karachi. Tel: (92-21) 35833025, 35836758, 35836780
229
Branch Network
Sir Syed Road Branch Plot no. 152-S, Ground Floor, Sir Syed Road, Block 2, PECHS, Karachi Tel: (92-21) 35143500-04 S.I.T.E Branch Plot No. B/9-C, Estate Avenue, SITE Area, Karachi. Tel: (92-21) 32550328-31 SITE II Branch Property # H-6 Site Survey Sheet No 21, Survey Sheet No 35 P/1-35 L/ 13, SITE, Karachi. Tel: (92-21) 32584850-53, 58-59 Urdu Bazar Branch Shops No. 11 & 12, Anfal Centre, Plot No. RB-9/1, Rambagh Quarters, Urdu Bazar, Karachi. Tel: (92-21) 32603031-35 Water Pump Branch Plot No. BS-13, Block-14, Federal B. Area, Karachi. Tel: (92-21) 36332443, 36332523 Mirpurkhas Mirpurkhas Branch Plot # 15, Ward No. A, Adam Mohallah Town at Umerkot Road, Mirpurkhas. Tel: (233) 876103,08 Moro Moro Branch Property No. 60 Ward 13 Main Road National Highway Moro. Tel: (92-242) 411008-14 Muslim Bagh Muslim Bagh Branch Shop No 40 - 41, School Road Muslim Bagh. Tel: (92-823) 669592-593 Nawabshah Nawabshah Branch Plot # 573, Ground Floor, Ward B, Katcheri Road, Nawabshah. Tel: (92-244) 330902-6 Quetta Liaquat Bazar Branch Khasra No. 155, Ward 22, Tappa Urban 1, Najeebullah Street, Liaquat Bazar, Quetta. Tel: (92-81) 2840195-16 Mannan Chowk Branch Mannan Chowk, Jinnah Road, Quetta. Tel: (92-81) 2829470-2 Mission Road Branch Shop No 1-30/51 & 1-30/52 Misssion Road Opposite Palace Bakery Quetta Tel: (92-81) 2832851-55
Munsafi Road Branch 2-17/16 Munsafi Road, Quetta. Tel: (92-81) 2845593-4 Sirki Road Branch Shop No. 1 & 2, Kasi Complex, Sirki Road, Quetta. Tel: (92-81) 2454222-3 Shahdadpur Shahdadpur Branch Property No.293/1,Ward-C, Station Road Shahdadpur. Tel: (92-235) 842952-53 Sakrand Sakrand Branch Deh. 18, Taluka City Sakrand, District Nawabshah. Tel: (92-244) 322047-54-56-57 Sanghar Sanghar Branch Property No.124 / A-1, Housing Society Town, Sanghar. Tel: (92-235) 543662-3 Sukkur March Bazar Branch C-45, Station Road, Sukkur. Tel: (92-71) 5620771-3 Sukkur Branch 3-45, Ward-C, Station Road, Sukkur. Tel: (92-71) 5617192-94 Tando Adam Tando Adam Branch Muhammad Chowk, Tando Adam, District Sanghar. Tel: (92-235) 576565-66 Tando Allahyar Tando Allahyar Branch Survey No. 1610/07, Opposite General Bus Stand, Tando Allahyar. Tel: (92-22) 3892021, 3891242 Central Region Ahmed Pur East Ahmed Pur East Branch Property # 338, Block # IV, Kutchery Road, Ahmed Pur East. Tel: (92-62) 2273261-62 Arifwala Arifwala Branch 3-A, Lakkar Mandi, City Road, Arifwala. Tel: (92-457) 834502-3 Bahawalnagar Bahawalnagar Branch Shop # 12 Grain Market, Minchanabad Road Bahawalnagar. Tel: (92-63) 22 71611- 612
Bahawalpur Bhawalpur Branch Milad Chowk, Eidgah Road, Bahawalpur. Tel: (92-62) 2732145-7 Burewala Burewala Branch Multan Road, Opp. College Road, Burewala. Tel: (92-67) 3773751-4 Chichawatni Chichawatni Branch Property No. 278-279, Adjacent National Saving Centre,G.T. Road, Chichawatni. Tel: (92-405) 487601-03 Chiniot Sharah-e-Quaid-e-Azam Chiniot Branch P-468, AI-469 II, Shahrah-e-Quaid-e-Azam, Chiniot. Tel: (92-47) 6331103-4 Chishtian Chishtian Branch Plot # 109, B- Block, Opposite Ghalla Mandi Gate, Chishtian. Tel: (92-63) 2509301-302 Daska Daska Branch Rest House Chowk, Gujranwala Road, Daska. Tel: (92-52) 6612837-41 Dera Ghazi Khan Dera Ghazi Khan Branch Jampur Road, Dear Ghazi Khan. Tel: (92-64) 2474255-7 Faisalabad Bhowana Bazar Branch 150-D .B V, Gole Bhowana Bazar, Faisalabad. Tel: (92-41) 2633042-4 Clock Tower Branch P-175 Clock Tower, Karkhana Bazar, Faisalabad. Tel: (92-41) 2606085-87 Dijkot Road Branch Shops# 68 & 69, Dijkot Road, Adjacent to Grain Market, Faisalabad. Tel: (92-41) 2416141-4 Gole Cloth Katchery Bazar Branch P-54 Gole Cloth, Katchery Bazar, Faisalabad. Tel: (92-41) 2610373-4 Jhang Road Branch Plot # S-29-30, Near Ayub Colony, Opposite Motor Market, Jhang Road Faisalabad. Tel: (92-41) 2650854-56 Madina Town Susan Road Branch Plot # 98/23, Madina Town, Susan Road, Faisalabad. Tel: (92-41) 8557141-43
Branch Network
Millat Chowk Branch 158-B-1 Gulistan Colony No 2, Millat Chowk, Faisalabad Tel: (92-41) 8784346-7 Kotwali Road Branch P-63 Kotwali Road, Faisalabad. Tel: (92-41) 2602587 Peoples Colony Branch 1/A-II, Peoples Colony-1, Faisalabad. Tel: (92-41) 8555002-4 Sargodha Road Branch Plot No.654-656, Near Hafeez Plaza, Ali Town Sargodha Road, Faisalabad. Tel: (92-41) 8785151- 53 Satyana Road Branch P 719 Batala Colony, Main Satyana Road. Tel: (92-41) 8500715-20 Serena Hotel Branch Serena Hotel, Club Road, Faisalabad. Tel: (92-41) 2602595-7 Gojra Gojra Branch Ex Al Khalid Shopping Centre, Opposite Suriya Hospital, Tahsil Office Road, Gojra. Tel: (92-46) 3516272-3 Gujranwala Dal Bazar Branch Property # BII-19S-31, Near Chowk Chashma, Dal Bazar, Gujranwala. Tel: (92-55) 4227592-6 Kashmir Plaza Branch Kashmir Plaza, Near Ghalla Mandi G.T Road, Gujranwala. Tel: (92-55) 3847205-8 Wapda Town Gujranwala Branch Block No.13, Wapda Town, Gujranwala. Tel: (92-55) 4283902-5 Gujrat Gujrat Branch Amin Fan Building, G.T Road, Gujrat. Tel: (92-53) 3538104-7 Hafizabad Hafizabad Branch Sagar Road Branch, Hafizabad. Tel: (92-54) 7540811-2 Haroonabad Haroonabad Branch 14-C, Grain Market, Haroon Abad. Tel: (92-63) 2251751-2 Hasilpur Hasil Pur Branch 68/B, Baldia Road, Hasil Pur. Tel: (92-62) 2443300-1
Jampur Jampur Branch Indus Highway, Dera Road, Opposite Nadra Office, Jampur. Tel: (92-604) 569446-8 Jhang Rail Bazar Chowk Branch P-864, Block-9, Circular Road, Rail Bazar Chowk, Jhang Tel: (92-47) 7652203-4 Yousaf Shah Road Branch P- 5 Yousaf Shah Road , Near Church Chowk, Jhang. Tel: (92-47) 7652101-3 Kabirwala Kabirwala Branch Property No. 162, Khanewal Road, Opposite PSO petrol Pump, Kabirwala. Tel: (92-65) 2400721-23 Kasur Kasur Branch 216-9R-IV, Railway Road, Kasur. Tel: (92-492)2764999 Khanewal Khanewal Branch Plot No. 624-625, Block # 8, Sir Syed Road, Khanewal Tel: (92-65) 2556625-27 Khanpur Khanpur Branch Kutchery Road, Khanpur. Tel: (92-68) 5577127-8 Kharian G.T Road Kharian Branch Ground Floor, Barakat Plaza, Main G.T Road, Kharian. Tel: (92-537) 533497-498 Khushab Katha Chowk Khushab Branch P-4106-27-1, Sargodha Road, Katha Chowk, Khushab. Tel: (92-454) 711683-84 Lahore Akbar Chowk Branch 885-D, Akbar Chowk, Faisal Town, Lahore. Tel: (92-42) 35201425-26 Akbari Mandi Branch Outside Akbari Mandi, Circular Road, Lahore. Tel: (92-42) 37660967,69-70 Allama Iqbal Town Branch 8, Hunza Block, Allama Iqbal Town, Lahore. Tel: (92-42) 35296701-5 Azam Cloth Market Branch 19-Bismillah Block, Azam Cloth Market, Lahore Tel: (92-42) 37642011-13
Bedian Road Branch Khasra # 3799, Mauza LIDHAR, Main Bedian Road, Lahore. Tel: (92-42) 35749607-10 Brandrath Road Branch 46 Brandrath Road, Lahore. Tel: (92-42) 37676388-92 Bund Road Branch Property No. SW XI 1-S-1/B/6, Main Bund Road Lahore. Tel: (92-42) 37482671-73 Canal Bank Road, Mughalpura Lahore Branch Plot # 125, St # 33, Naya Pul, Punj Pir Road, Canal Bank Road, Mughalpura Lahore. Tel: (92-42) 365543-44 Cavalry Ground Branch 72-Commercial Area, Cavalry Ground, Lahore Cantt. Tel: (92-42) 36619780-3 Circular Road Branch 141-Circular Road, Out side ShahAlam Gate, Lahore. Tel: (92-42) 37642001-4 College Road Branch 6-2/C-1, College Road Township , Lahore. Tel: (92-42) 35157184-6 Cloth Market Branch 73-B, Kashmir Block, Azam Cloth Market, Lahore. Tel: (92-42) 37380461-5 G.T Road Daroghawala Branch Plot No.329-F, Main G.T Road, Daroghawala Lahore. Tel: (92-42) 36550501-3 DHA Phase I Branch 167- G, DHA Phase I, Lahore. Tel: (92-42) 35742891-2 DHA Phase III Branch Plot No. 97-Y, DHA Phase III Commercial, Opposite Sheba Park, Lahore. Tel: (92-42) 35742582-3 DHA Phase IV Branch Plot # 85-CCA, Phase IV (Comm.), Defense Housing Authority, Lahore. Tel: (92-42) 35747761-2 EME Housing Society Branch Plot No.1 & 37, Block-D Commercial, EME Sector, DHA Lahore. Tel: (92-42) 37498956-8 Gulberg Branch 60 - Main Boulevard Gulberg, Lahore. Tel: (92-42) 35879870-2
231
Branch Network
Gulshan-e-Ravi Branch Plot # 9, Block F, Gulshan-e-Ravi, Lahore. Tel: (92-42) 37404822-25 Hall Road Branch S-50-R-19, Hall Road, Lahore. Tel: (92-42) 37211806-8 Ichra Branch 156-Main Ferozepur Road, Ichra, Lahore. Tel: (92-42) 37522989-91 Islampura Branch Property # 61 Main Bazar, Islampura, Lahore Tel: (92-42) 37117463-64 Johar Town Branch 63/R-1, M.A Johar Town Branch, Lahore. Tel: (92-42) 35314631-34 Karim Block Branch Baig Plaza, 21 Commercial Zone, Karim Block, Allama Iqbal Town, Lahore. Tel: (92-42) 35296701-5 Main Boulevard Branch Shop # 5 & 6, Ground Floor, Usman Arcade, Main Boulevard, DHA, Lahore. Tel: (92-42) 36621482-4 McLeod Road Branch SE-10-R-2/12, Nihal Chand Building, Mc'leod Road Lahore. Tel: (92-42) 36284501-04 Model Town C Block Branch 181-Model Town, C Block, Lahore. Tel: (92-42) 345844201-4 Model Town, Link Road Branch 39-40, New Liberty Tower(opp. Pace), Model Town Link Road, Lahore. Tel: (92-42) 35942356-7 Moon Market Allama Iqbal Town Branch Plot No 9, Al-Faisal Plaza Moon Market Allama Iqbal Town, Lahore. Tel: (92-42) 35427936-40 New Garden Town Branch Ground Floor, Ibrahim Centre, 1-Aibak Block, New Garden Town, Lahore. Tel: (92-42) 35941474-77 Peco Road Badami Bagh Branch, 35-Peco Road, Badami Bagh, Lahore. Tel: (92-42) 37369610-13 Punjab Cooperative Housing Society Branch 66-F, Phase I, Punjab Co-operative Housing Society, Ghazi Road, Lahore Cantt. Tel: (92-42) 35924683-4 Q-Block DHA Phase II Branch 295-Q Commercial Area, Phase II DHA, Lahore. Tel: (92-42) 35708324-7
Qartaba Chowk Branch Qartaba Chowk, Temple Road, Rehman Chamber, Lahore. Tel: (92-42) 37112404, 37112406-10 Quaid-e-Azam Industrial Estate Branch 169 - S, Quaid-e-Azam Industrial Estate, Kot Lakhpat, Lahore. Tel: (92-42) 35215765 Ravi Road Branch 33, Main Ravi Road, Opposite Bilal Masjid, Lahore. Tel: (92-42) 37706835-37 Saddar Bazar Lahore Branch Property No. 1184 Dubai Chowk, Main Tufail Road Saddar Bazar Lahore. Tel: (92-42) 36622824-26 Samanabad Branch Plot No.210, Main Poonch Road, Samanabad Lahore. Tel: (92-42) 37587213 - 215 Shad Bagh Branch 13-A, Tajpura Chowk, Near PTCL exchange, Shad Bagh, Lahore. Tel: (92-42) 37600667-9 Shadman Colony Branch 91 Shadman Colony - 1 , Shadman, Lahore. Tel: (92-42) 37522976 - 9 Shahdra Branch 113 G.T. Road, Lahore. Tel: (92-42) 37921266-7 Shahalam Market Branch D-2050, Fawara Chowk, Inside Shahalam Market, Lahore. Tel: (92-42) 37377340 - 43 Shalimar Garden Branch Chowk Shalimar Bagh, G.T Road, Baghban Pura, Lahore Tel: (92-42) 36846584-8 Thokar Niaz Baig Branch Ahmed Centre, 1.5 KM Raiwand Road, Lahore. Tel: (92 42) 37516128-30 Urdu Bazar Branch 4-Kabeer Street, Urdu Bazar, Lahore. Tel: (92-42) 37116684-7 Walton Road Branch E-29/21-A, Bank Stop, Walton Road, Lahore. Tel: (92-42) 36626602-5 WAPDA Town Chowk Branch Plot No. 429, Block-E, Main Boulevard, P.I.A Employees Co-operative Housing Society, Wapda Town Chowk, Lahore. Tel: (92-42) 35211591-94
Zarrar Shaheed Road Branch Khasra #3939 / 3296, Block-B, Al-Faisal Town, Zarrar Shaheed Road, Lahore Cantt. Tel: (92-42) 36674862 Lalamusa Lalamusa Branch Col. Plaza, Plot No.9, Camping Ground, G.T. Road, Lalamusa. Tel: (92-53) 513022, 7513032 Lodhran Lodhran Branch Plot No.493-A, A-1, A-2/5H, Ghosia Chowk, Multan Bahawalpur Road, Lodhran. Tel: (92-608) 364797-98 Mandi Bahauddin Mandi Bahauddin Branch Plot No 5/181 ward No 5, Outside Ghallah Mandi, Near Tawakli Masjid, Mandi Bahauddin. Tel: (92-546) 520931-33 Mian Channu Mian Channu Branch 17-B, Ghazi More, G.T. Road, Mian Channu. Tel: (92-65) 2662001-3 Mianwali Mianwali Branch Property No.D-3-4/A, Ballo Khel Road, Mianwali. Tel: (92-459) 233305-9 Multan Bosan Road Branch Chungi No. 9, Lawyers Colony, Bosan Road, Multan. Tel: (92-61) 6210090-92 Chowk Shaheedan Branch Property # 3493, Chowk Shaheedan, Multan. Tel: (92-61) 4502906-09 Gulgasht Branch 437/C Gulgashat Colony, Multan. Tel: (92-61) 6511931-2 Hussain Agahi Branch Property # 2560, Ward # 10, Hussain Agahi Road, Multan. Tel: (92-61) 4512206-07 Old Bahawalpur Road Branch Mehar Fatima Tower, Opp. Multan High Court, Old Bahawalpur Road, Multan. Tel: (92-61) 4785604-7 Shah Rukn-e-Alam Branch Shop # 26-27, Block F, Main Market, T-Chowk, Shah Rukn-e-Alam Colony, Multan. Tel: (92-61) 6784324-5
Branch Network
Vehari Road Branch Rehman Commercial Centre, Near Grain Market, Vehari Road, Multan. Tel: (92-61) 6244153-5 Muzaffargarh Muzaffar Garh Branch Property No. 470, Block # IV, Hakeem Plaza, Multan Road, Muzaffargarh. Tel: (92-662) 428708-10 Okara Okara Branch MA Jinnah Road, Okara. Tel: (92-44) 2521935-7 Pattoki Pattoki Branch Shop No. 09-11, Abdullah Centre, Opposite Ghalla Mandi, Shahrah-e-Quaid-e-Azam, Pattoki. Tel: (92-49) 4421025-28 Pir Mahal Pir Mahal Branch Plot No. P-10-11, Kousar Abad, Chak Abadi 779-GB, Qasba Pir Mahal. Tel: (92-46) 3367601-607 Rahim Yar Khan Rahim Yar Khan Branch 17, 18 City Centre, Rahim Yar Khan. Tel: (92-68) 5887603-4 Sadiqabad Sadiqabad Branch 31-D Main Bazar, Sadiqabad. Tel: (92-68) 5701207-8 Sahiwal Sahiwal Branch 276-B-I, Alpha Tower, High Street, Sahiwal. Tel: (92-40) 4465009 / 4466592 Sargodha Muslim Bazar Branch 12-Block Chowk, Muslim Bazar, Sargodha. Tel: (92 48) 3741609-13 Sargodha Branch 91 Civil Lines, University Road, Sargodha. Tel: (92-48) 3741608-10 Satellite Town Branch Plot No. 34 Block-C, Main Chowk, Satellite Town, Sargodha Tel: (92-48) 3223731-35 Sheikhupura Sheikhupura Branch Civic Center, Sargodha Road, Sheikhupura. Tel: (92-56) 3813360-2 Sialkot Kashmir Road Branch Kashmir Road, Sialkot. Tel: (92-52) 4295301-3
Kutchery Road Branch Kutchery Road, Sialkot. Tel: (92-52) 4263461 Toba Tek Singh Toba Tek Singh Branch P-103 Farooq Road, Toba Tek Singh Tel: (92-46) 2513765-6 Vehari Karkhana Bazar Vehari Road Branch Plot No. 23, Block-A, Karkhana Bazar, Vehari. Tel: (92-67) 3366031-33 Wazirabad Wazirabad Branch Plot No.I-14S-37, Sialkot Road Wazirabad. Tel: (92-55) 6600313-14 Northern Region Abbottabad Abbottabad Branch Plot No. 843-846, Manshera Road, Abbottabad. Tel: (92-992) 344701-3 Abbotabad Branch PMC Chowk, Main Bazar, Abbottabad. Tel: (92-992) 341990 - 92 Attock Attock Branch B-143, Fawwara Chowk, Civil Bazar, Attock. Tel: (92-572) 701003-5 Charsadda Main Tangi Road Charsadda Branch Shop No. 1-2 Gul Market, Near Singer Pakistan Outlet, Main Tangi Road Charsadda. Tel: (92-91) 9220171-3 Chakwal Chakwal Branch B VI/4-A Bab-e-Chakwal, Talagang Road, Chakwal. Tel: (92-543) 543381-4 Dadyal Dadyal Branch Plot No. 313, Hussain Shopping Centre, Main Bazar Dadyal, Mirpur Azad Kashmir. Tel: (92-5827) 465881-83 Dera Ismail Khan Dera Ismail Khan Branch East Circular Road, Dera Ismail Khan. Tel: (92-966) 717257-8 Dina Dina Branch Al-Bilal Shoping Centre, Main Chowk, G.T. Road, Dina, Distt. Jehlum. Tel: (92-544) 636119-21 Gujar Khan Gujar Khan Branch B-III, 215-E, G.T. Road, Gujar Khan. Tel: (92-51) 3515679-83
Haripur Haripur Branch Rehana Plaza, G.T. Road, Haripur. Tel: (92-995) 627250 - 3 Main Bazar Branch Main Bazar, Near Sheranwala Gate, Haripur. Tel: (92-995) 615-103, 615-322 Havelian Havelian Branch Near Old TMA Office, Main Bazar Havelian, Distt.Abbottabad Tel: (92-992) 811501-03 Islamabad Aabpara Branch Plot # Ramna 6/1-4, Aabpara Market, Sector G-6, Islamabad. Tel: (92-51) 2603061-64 Barakahu Branch Fazal ul Haq Plaza, Main Murree Road, Baharakahu, Islamabad. Tel: (92-51) 2232881-82 F-6 Markaz Branch Ground & First Floor, Sethi Plaza, Super Market, F-6 Markaz, Islamabad. Tel: (92-51) 2601791-5 F-7 Jinnah Super Market Branch Unit No. 14, Plot No. 12-B, F-7 Markaz, Jinnah Super Market, Islamabad. Tel: (92-51) 2655001-04 F-8 Branch Panther Plaza, F-8 Markaz, Islamabad. Tel: (92-51) 2817403-05 F-10 Markaz Branch Plot No. 2-F, F-10 Markaz, Islamabad. Tel: (92-51) 2112762-63 , 2112769 , 2112733 F-11 Branch Shops# 2,3,9,10,11 &12, Ground Floor, Sardar Arcade, F-11 Markaz, Islamabad. Tel: (92-51) 2228384-5, 2228388-89 G-9 Markaz Branch 21-B, G-9 Markaz, Islamabad. Tel: (92-51) 2285849-51 G-11 Branch Plot No.15, Penorama Arcade, G-11 Markaz, Islamabad. Tel: (92-51) 2830513-16 I-8 Branch Plot No.25, VIP Square, I-8 Markaz, Islamabad. Tel: (92-51) 4861389-92 I-9 Branch Plot No. 2/A, Industrial Area, I-9, Islamabad. Tel: (92-51) 4859644-47
233
Branch Network
I-10 Branch Shop # 7-10, Ground Floor, Ahmadal Plaza, Plot # 3-I, Sector I-10 Markaz, Islamabad. Tel: (92-51) 4432711-13 Jinnah Avenue Branch Plot # 37-B, Tahir Plaza, Jinnah Avenue, Blue Area, Islamabad. Tel: (92-51) 2276712-5, 2801112-5 Jhelum Jhelum Branch B-VI-24-S.II, Meher Plaza, Civil Lines, Jhelum. Tel: (92-544) 611751-5 Kohat Kohat Branch 1st Floor, Jinnah Municipal Plaza, TMA, Near King Gate, Bannu Road-Kohat. Tel: (92-922) 523037-40 Mansehra Lari Adda Branch Near Madni Masjid, Lari Adda, Karakuram Highway, Mansehra. Tel: (92-997) 307640-42 Mansehra Branch Meezan Plaza, Near Markazi Jamia Masjid, Abbottabad Road. Tel: (92-997) 308315-18 Mardan Mardan Branch Bank Road, Mardan. Tel: (92-937) 9230561-3 Par Hoti Branch Malik Khalid Khan Market, Par Hoti, Mardan. Tel: (92-937) 560013-4 Mirpur Azad Kashmir Mirpur Branch Plot No. 123, Sector F/1, Sultan Plaza, Kotli Road, Mirpur Azad Kashmir. Tel: (92-5827) 438891-93 Muzaffarabad Madina Market Muzaffarabad A.K. Branch Mohallah Madina Market, Muzaffarabad. Tel: (92-5822) 920457-9, 920458-60 Muzaffarabad Branch (AJK) Secretariat Road, Sathra Muzaffarabad, Azad Jammu & Kashmir (AJK). Tel: (92-58810) 42154-56 Nowshera Nowshera Branch Shobra Hotel, G.T Road, Nowshera Cantt. Tel: (92-3) 613174-76
Peshawar Charsada Road Branch Property No.190, Opposite Al Hajj Market, Mirch Mandi, Charsadda Road, Peshawar. Tel: (92-91) 5270543-45 Chowk Yadgar Branch Mohmand Plaza, Naz Cinema Road, Peshawar City, Peshawar. Tel: (92-91) 9213950-2 G.T. Road Branch Al-Arif House, Near Al-Amin Hotel, GT Road, Peshawar. Tel: (92-91) 9214001-4 Hayatabad Township Branch Plot No. 08, Bilal Market, Sector D-1, Phase 1, Hayatabad, Peshawar. Tel: (92-91) 5816163-65 Karkhano Market Branch Royal Shopping Plaza, Hayatabad, Peshawar. Tel: (92-91) 5893471-4 Khyber Bazar Branch Plot # 78, Shoba Chowk , Khyber Bazar, Peshawar. Tel: (92-91) 2564019-21 Saddar Road Branch 6 Saddar Road, Peshawar Cantt, Peshawar. Tel: (92-91) 9213471-5 University Road Branch Khattak Plaza, University Road, Peshawar. Tel: (92-91) 5703400-02 Rawalpindi Adyala Road Branch Ground Floor, Daulat Plaza, Near Dhaman Morh, Main Adyala Road Rawalpindi. Tel: (92-51) 5574880-82 Bahria Town Branch Bahria Heights, Bahria Town, Phase-1 Rawalpindi. Tel: (92-51) 5730171-3 Bank Road Branch No. 47/62, Bank Road Saddar, Rawalpindi. Tel: (92-51) 9273404-6 Bohar Bazar Branch D-327, Hakim Muhammad Amjal Khan Road, Bohar Bazar, Rawalpindi. Tel: (92-51) 5778875, 5778834 Chaklala Scheme III Branch Plot # 38, Bazar Area, Chaklala Housing Scheme No.III, Rawalpindi Cantt. Tel: (92-51) 5766435-8 Chandni Chowk Branch Umer Farooq Plaza, Block C, Satellite Town, Chandni Chowk, Murree Road, Rawalpindi. Tel: (92-51) 4851046-49
G.T Road Tarnol Branch Khan Malook, Wazir Plaza, G.T. Road, Turnol, Rawalpindi. Tel: (92-51) 2226406 Jinnah Road Branch Property No. 167, Commercial Area, Mohan Pura, Jinnah Road - City Saddar Road, Rawalpindi City. Tel: (92-51) 5778511-12 Kalma Chowk Branch Ground Floor, Rajco Plaza, Kalma Chowk, Kamala Abad, Rawalpindi. Tel: (92-51) 568-4491-2 Muslim Town Branch B-IV, 628-629 Chirah road , Muslim Town, Rawalpindi. Tel: (92-51) 4476013 Peshawar Road Branch 61-A, Chour Chowk, Rawalpindi. Tel: (92-51) 5469543-4 Saidpur Road Branch Plot NO CA-294/A Chistiabad, Shabbir Plaza, Near Siddiqui Chowk, Saidpur Road Rawalpindi. Tel: (92-51) 4416215-17 Sawabi Sawabi Branch Amjad Mughalbaz Khan Plaza, Near TMA Office Mardan Road, Sawabi Tel: (92-938) 222704-6 Swat Mingora Branch Makanbagh Chowk, Mingora Swat. Tel: (92-946) 714316-18 Timergara Timergara Branch Al-Imran Hotel G.T Road Timergara Bazar, Timergara. Tel: (92-945) 825271-73 Wah Cantt Wah Cantt Branch Ground Floor, Mall View Plaza, Mall Road, Wah Cantt. Tel: (92-51) 4530584-6
The Company Secretary Meezan Bank Limited Meezan House, C-25, Estate Avenue S.I.T.E., Karachi.
of
ordinary shares as per Share Register Folio No. and Sub Account No. of of
behalf at the 16th Annual General Meeting of Meezan Bank Ltd. to be held on Thursday, March 29, 2012 at Meezan House, C-25, Estate Avenue S.I.T.E., Karachi, and at any adjournment thereof.
Signed this
day of
2012.
Witness:
Signature: Please affix Rupees five revenue stamp Signature of Member(s) CNIC or Passport No.
Name:
Address:
NOTES: 1. 2. Proxies in order to be effective, must be received by the company not less than 48 hours before the meeting. CDC Shareholders and their Proxies are each requested to attach an attested photocopy of their Computerized National Identity Card (CNIC) or Passport with this proxy form before submission to the company.
Head Office: Meezan House, C-25, Estate Avenue, SITE, Karachi - Pakistan. PABX: (92-21) 38103500 UAN: 111-331-331
www.meezanbank.com