Faysal Bank: Annual Report - 2017 (2024)

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Faysal Bank: Annual Report - 2017 (1)

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6 years ago

Faysal Bank: Annual Report - 2017

Arif, Ijara, Islam, Islamic banking, Mudarib, Mufti, Murabaha, Musharakah, Riba, Salam, Shariah, Shariah advisor, Shariah compliant, Sukuk, Takaful, Zakat, Credit Risk, Hashimi, Mark-Up, Masih, Net Assets, Participation, Provision, Reserves, Sales, Specific Provision

Organisation Tags (9)

KPMG

BankIslami Pakistan

Ithmaar Bank

National Bank of Bahrain

United Bank Limited

Salaam Takaful

Al Hilal Bank

Askari Bank

State Bank of Pakistan Fixed Rental Rate GOP Ijara Sukuk (FRR-GIS) 03-Feb-2019

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  1. CONTENTS Introduction02 Chairman ’s Message 04 Corporate DNA 06 Board of Directors – Profiles 10 Company Information 14 Board Meeting Attendance 16 Senior Management – Profiles 24 Shariah Board – Profiles 27 Senior Management and Internal Committees 29 Corporate Social Responsibility 32 Organisational Structure 34 Six Year Financial Summary 36 Statement of Value Added 46 Notice of the 23rd Annual General Meeting 48 Report of the Board Audit and Corporate Governance Committee 54 Auditors’ Review Report on Compliance with Code of Corporate Governance 56 Statement of Compliance with Code of Corporate Governance 57 Shariah Board’s Report 60 Other Information Consumer Grievances Handling Mechanism Pattern of Shareholding Branch Network – Conventional Branch Network – Islamic Code of Conduct Glossary of Terms Form of Proxy 193 195 202 217 234 245 251 Faysal Bank Financials Directors’ Report Statement of Internal Control Auditors’ Report to the Members Statement of Financial Position Profit and Loss Account Statement of Comprehensive Income Statement of Changes in Equity Cash Flow Statement Notes to the Financial Statements Annexures Annual Report 2017 64 74 75 76 77 78 79 80 81 173 01
  2. 02 Annual Report 2017
  3. Annual Report 2017 03
  4. CHAIRMAN ’S MESSAGE Assalam o Alaikum During 2017, Faysal Bank celebrated several significant milestones, including the successful completion of 30 years of presence in Pakistan. This journey, which started in 1987 with one branch was marked with numerous challenges, however the strong consistent support of our valued customers and stakeholders allowed the Bank to grow. Now, after thirty years, Faysal Bank has a country-wide presence of 405 conventional and Islamic branches spread across 124 cities. Furthermore, the addition of 50 Islamic Banking branches during 2017 has increased the Islamic branch network to 197 branches, making it the largest network of dedicated Islamic Branches amongst all conventional banks in the country. The Bank also underwent a transition in leadership with the appointment of Mr. Yousaf Hussain as President and Chief Executive Officer. Mr. Hussain is a senior banking professional with over 23 years of diversified financial sector experience with a number of leading financial institutions including ABN Amro, Samba and Mashreq Bank. He has been associated with Faysal Bank since 2008 and has served the franchise in several senior roles including Chief Risk Officer, Corporate Banking Head - North and Head of Special Assets Management Group. This internal elevation is a testament to Faysal Bank’s culture of growth from within and our firm resolve of providing a progressive career path to our staff. From a macro-economic perspective, the GDP grew at a rate of 5.3% during 2016-2017, the highest rate recorded in a decade. Inflation, however, remained under targeted levels and as a result, the discount rate remained flat during 2017 which caused a compression in banking spreads and posed a challenge for the entire Banking Sector. To mitigate the effect of lower spreads, Faysal Bank increased focus on growing its portfolio of advances particularly on the Institutional Banking and Consumer Finance front and increased its gross ADR to 68.1, one of the highest amongst its peers. Furthermore, the Bank also enhanced its efforts on recovery of non-performing loans and was able to augment its profitability through effective remedial management. To capitalise on its branch expansion strategy and improve overall efficiency under the prevailing low interest rate environment, significant emphasis was also placed on branch level productivity improvements. Targets for sale of multiple products were assigned to branches and a number of new initiatives are underway to allow the Bank to realise the true potential of the branch network. These actions, along with an overall control on costs, allowed the Bank to meet its business objectives, despite the challenging business environment. For the fiscal year 2018, the Government has set a GDP growth target of 5.8% and it is expected that, barring unforeseen events, the current pace of GDP growth will continue. Average CPI inflation rate is projected to remain in the range of 4.5% to 5.5% during FY-18, based on encouraging trends in Private Sector credit. Real economic activity is expected to continue to benefit from accommodative macroeconomic policies, CPEC related activity, reduction in energy shortages and an overall improvement in the security situation. This in turn has positive implications for the Banking Industry as it will provide the necessary impetus for growth in the financial sector as well. For Faysal Bank, the current year will be one of sustained growth. The Bank will continue to expand its network footprint and country-wide presence by opening additional branches and will also accelerate its conversion to a fully Islamic franchise through increased emphasis on asset conversions. Additionally, in-line with the changing customer needs, Faysal Bank has also placed significant emphasis on digital banking and during the 01 04 Annual Report 2017
  5. CHAIRMAN ’S MESSAGE year will be taking concrete steps to improve the overall customer experience through process automation and roll out of digital banking offerings. We are confident that these steps along with our overall focus on high quality differentiated service will allow us to deliver on our aspiration of providing an exceptional experience to our valued clients. I have faith in the ability of our teams to stand strong and steadfast to raise the bar higher in 2018 and continue to deliver above the expectations of the stakeholders. Further, I would like to acknowledge the positive contribution of the Board Members who have been instrumental in helping us achieve our objectives. Key focus agenda items of the BOD have been digitisation of the banking processes to ensure seamless service and product delivery, branch network expansion and conversion into an Islamic Bank, whilst adding value to the Bank’s profitability. On behalf of the Board of Directors, I would also like to extend my gratitude to our customers, the State Bank of Pakistan and the Securities & Exchange Commission of Pakistan for their continued support and guidance on our path to progress. Farooq Rahmatullah Khan Chairman of the Board Annual Report 2017 02 05
  6. CORPORATE DNA Our Vision Excellence in all that we do Our Values Our daily code of conduct is exemplified by eight core values : Four threshold values - values at the heart of our brand Four differentiator values - values that set our brand apart Threshold Values Values at the heart of our brand 01 06 Integrity: Teamwork: We are recognised by our reliability, credibility and character We believe in ethical, honourable, time-proven principles of uprightness We stand for and abide by honesty, truth and transparency We function as a team. Within functions, we cooperate Between functions, we collaborate Together, we aim for excellence and leadership in our chosen markets Our Integrity: Our Identity Our Team: Our Asset Respect: Professionalism: We hold our customers, investors and regulators in high esteem We uphold our customers’ rights to demand efficient service We appreciate and respect our profession and, above all, our Bank We are proficient and efficient in all that we do We provide banking services knowledgeably and skilfully We uphold regulatory obligations Our Respect: Our Duty Our Professionalism: Our Competence Annual Report 2017 2017
  7. CORPORATE DNA Our Mission Achieve leadership in providing financial services in chosen markets through innovation Differentiator Values Values that set our brand apart Passion Innovation We bring zeal and enthusiasm for banking to work We are excited to provide customers with the best or the best-suited We go the extra mile in legitimate , acceptable ways We pioneer novel and more efficient ways to deliver solutions We are dedicated to a culture of improvement and modernisation We stand for originality, in thought, in action and in belief Our Passion: Our Worth Our Innovation: Our Strength Responsiveness Compassion We are receptive to the need for change and improvement We are proactive and anticipate our customers’ needs and wants We act quickly to modify, adjust or prepare for new realities Our concern for our colleagues, our customers, our communities, and our country sets us apart To each other, we are a family For each other, we are a meaningful source of shared humanity Our Responsiveness: Our Distinguisher Our Compassion: Our Gift Annual Report 2017 02 07
  8. BOARD OF DIRECTORS Left - Right : Abdulelah Ebrahim Mohamed08 AlQasimi Director Imtiaz Ahmad Pervez Director Juma Hasan Ali Abul Director Ahmed Abdulrahim Farooq Rahmatullah Khan Mohamed Abdulla Bucheery Annual Chairman Report 2017 Vice Chairman
  9. Yousaf Hussain President & Chief Executive Officer Fuad Azim Hashimi Mian Muhammad Younis Director Annual Report 2017Director Ali Munir Director Abdulla Abdulaziz Ali Taleb Director 09
  10. BOARD OF DIRECTORS DIRECTORS –_ PROFILES Farooq Rahmatullah Khan Chairman Mr. Farooq Rahmatullah is a Law graduate. He joined Burma Shell Oil & Distribution Company in 1968 and worked in different roles in Chemicals, Human Resources, Marketing, Supply, Distribution, Retail, etc. He was transferred to Shell International London in 1994 as a Manager in the Business Strategy Division and was involved in various portfolios covering over 140 countries. On his return in 1998, he was appointed as Head of Operations of Shell Pakistan and was looking after Middle East and South Asia (MESA). In 2001, he was appointed as Chairman of Shell Companies in Pakistan and Managing Director of Shell Pakistan Limited. He is currently leading an Expert Energy group which has developed a 25-year Integrated Energy Plan (first time ever in the history of energy planning) for the country. This plan has been in principle accepted by the Government, Pakistan Business Council, international agencies and some other stakeholders. The Expert Energy group continues to work in updating and revising the energy plan on an annual basis and engaging political leadership and other stakeholders. Key Positions Held: • Chairman of Shell Companies in Pakistan and Managing Director of Shell Pakistan Limited • Founding Member of PAPCO (Pak Arab Pipeline Company Limited) • Director General of Civil Aviation Authority of Pakistan • Chairman of Oil and Gas Development Company Limited • Chairman of LEADS Pakistan • Chairman of Pakistan Refinery Limited • Founding Member of Pakistan Human Development Fund • Member of the Economic Advisory Council, Ministry of Finance, Government of Pakistan • Member of National Commission of Government Reforms • Director on the Boards of PCB, PIA and Pakistan Stone Development Company He is serving on the Boards of Directors of: • Faysal Bank Limited • Society for Sustainable Development 01 10 • Resource Development Committee of Aga Khan University Hospital • Pakistan Refinery Limited Director and Chairman of the Board • Hascol Oil Company He is also a Trustee of Legends Trust (Formed by the Government of Sindh) Ahmed Abdulrahim Mohamed Abdulla Bucheery Vice Chairman Mr. Ahmed Abdulrahim holds an MBA from the University of Glamorgan, Wales (UK), and is an Associate Financial Accountant from the Institute of Financial Accountants, London (UK). He also holds an Executive Management Diploma from the University of Bahrain and an Advance Banking Diploma from the Bahrain Institute of Banking and Finance. He is also a certified Director from the Pakistan Institute of Corporate Governance. Ahmed Abdulrahim is the Chief Executive Officer of Ithmaar Group, including Ithmaar Bank. He started his career in the Accounting Department with Aluminum Bahrain followed by Chase Manhattan Bank (currently J.P. Morgan) as Head of Financial Control. He then joined the National Bank of Bahrain where he served for 28 years in various executive levels and in different capacities, including Manager of Foreign Exchange and Funding, Chief Internal Auditor and Assistant General Manager of Corporate Services Group. Ahmed Abdulrahim held the dual roles of Deputy Chief Executive Officer at Shamil Bank and Chief Operating Officer at Ithmaar Bank for approximately four years. In 2013 he was appointed as CEO, Ihtmaar Bank. Currently serves as Vice Chairman of Faysal Bank Limited (Pakistan), Vice Chairman of Solidarity Group (Bahrain) and member of the Board of Directors of Ithmaar Development Company (Bahrain), The Benefit Company (Bahrain) and Injaz Bahrain. Yousaf Hussain President & CEO Mr. Yousaf Hussain has over 23 years of professional experience, primarily at ABN AMRO Bank where he held multiple senior managerial positions including Annual Annual Report 2017 2017
  11. BOARD OF DIRECTORS _ PROFILES BOARD OF DIRECTORS – PROFILES those within the Corporate / Credit and Transaction Banking functions. He has been with Faysal Bank Limited since August 2008, with a significant contribution to the franchise in his previous positions as Chief Risk Officer, Regional Corporate Banking Head-North and Head of Special Assets Management Group. His experience also includes a senior role with Samba Bank and earlier assignments with Mashreq Bank and Mobilink / Motorola. Yousaf has a Bachelor of Science degree in Electrical Engineering and has done his MBA from Lahore University of Management Sciences. Mian Muhammad Younis Director Mian Mohammad Younis possesses 38 years of experience in Public Banking and Financial Sectors with extensive knowledge of Corporate Sector Governance, Rules, Regulations and Audit Procedures. During his career, he was Head, Inter-Governmental Finance Wing (IGF), Regulation Wing (RW), and Human Resource Wing (HRW) of Finance Division as Additional Finance Secretary (AFS). He performed as Secretary to National Finance Commission (NFC) from 2003 to 2010. He was the first Chief Operating Officer (COO) of Khushal Pakistan Fund Limited (KPF) under Finance Division. Mian Younis established new ventures in the financial & public sector entities through mergers along with a team of experts. He contributed towards policy formulation as a member of boards of various Corporate Sector entities and banks. He carried out the financial restructuring of a number of Non-banking Financial Institutions (NBFI) as a member of Financial Sector Reforms Committee. Affected recovery of loans extended to Provincial Governments and other Public Sector entities by the Federal Government and also assisted State Bank of Pakistan (SBP) in managing the overdraft position of provinces, AJK, and various Public Sector Corporations from 2003 to 2011. He supervised not only the Expenditure Budget of the Federal Government but also implemented Social Sector Programs from 2001 to 2011. He was on the Board of Directors of Meezan Bank Limited and also its Chairman Board Audit Committee & member Risk Management Committee, for about three years. He completed the process of liquidation of Federal Bank for Cooperative (FBC) and Agriculture Annual Report 2017 Marketing and Storage Limited (AMSL) as liquidator. Mian Younis served in the Public Sector for a long time, while holding positions in different Government, Semi Government and Autonomous Bodies i.e. FBR, Economic Affair Division (EAD), M/O F&A, BOI, Pakistan Software Export Board (PSEB) and Finance Division. He gained vast experience in HR management through formulation of HR Policies, Rules, Regulations Procedures and their implementation. He was the Head of regulation wing of Finance Division, mandated for fixation of remuneration, perks and privileges of Parliamentarians, Judiciary, Public Sector Entities and their HR Policies, Rules and Regulations. He established various Funds including “Relief Funds” and was instrumental in framing their accounting procedures, Financial / Investment Rules in consultation with Controller General Accounts (CGA) and Auditor General of Pakistan’s Office. At present, he is on the Board of Directors of Faysal Bank Limited since April 2014, Chairman Board Audit and Corporate Governance Committee and member Remuneration and HR Committee. He holds a Master’s Degree in Economics and is also qualified in Project Appraisal & Risk Management (Duke, USA), Assessing Financial System Stability (IMF Institute, Singapore), Promotion of Direct Foreign Investment (Osaka, Japan), Promotion of Agro Based Industry (Manila Philippines), and Islamic Banking (Kuala Lumpur, Malaysia). He is a certified expert in Corporate Governance & Leadership Skills from Pakistan Institute of Corporate Governance (PICG) and has attended a number of workshops and seminars on Anti-Money Laundering & Corporate Governance. Imtiaz Ahmad Pervez Director Mr. Imtiaz Ahmad Pervez has more than 35 years of banking experience. He was on the Board of Ithmaar Bank BSC, Bahrain till December 2016. His recent position, from which he resigned in March 2012, was Director of the Al Barka Bank Pakistan Limited. He was, earlier, also a board member of the Faysal Islamic Bank of Bahrain, Faysal Investment Bank of Bahrain EC, Faysal Bank Limited Pakistan, Faysal Investment Bank Limited Pakistan, Trust Leasing Corp. Limited and Namco Management Company Limited. From 1959 to 1994, he held many senior positions in the banking industry including that of Chief Operating Officer 02 11
  12. BOARD OF DIRECTORS _ – PROFILES of Faysal Islamic Bank of Bahrain EC. He was also the CEO of Al Faysal Investment Bank Limited Pakistan in the year 1990. He holds a B.A. degree from University of the Punjab, Pakistan and is a Fellow of the Institute of Islamic Banking & Insurance, London. Juma Hasan Ali Abul Director Mr. Juma Hasan Ali Abul is a fellow member of the Association of Chartered Certified Accountants, England, certified Director from the Pakistan Institute of Corporate Governance and holds a Bachelors Degree in Accounting, from Cairo (1980). Key Positions Held: • Fellow member of the Chartered Association of Certified Accountants, England • Certified Director from the Pakistan Institute of Corporate Governance • Bachelor Degree in Accounting, Cairo (1980). • Executive General Manager, Ithmaar Bank BSC, Bahrain (2010-2013). • General Manager MFAI (Jersey) (2000 - 2010), then (2013 - Present), wholly owned subsidiary of the DMI Group. • Executive Senior Manager, Shamil Bank of Bahrain BSC (formerly, Faysal Islamic Bank of Bahrain) 1988-2000 • Board Memberships : Faysal Bank, Pakistan; CITIC International Asset Management, Hong Kong; United Bank of Albania (until 2011); Gulf Investors Asset Management Co., Saudi Arabia; Chairman Gulf Co. for Financial Investments; Chairman, Egypt; Egyptian Investments Co; in addition to entities ranging from trading, industrial, real estate development in Bahrain, Cayman, Egypt and U.S.A. • Worked with Touché Ross, London (now Deloitte), and Peat Marwick Mitchell Bahrain (now KPMG) – Chartered Accountants • Lead restructuring of Group institutions as well as major Mergers & Acquisitions 01 12 Abdulelah Ebrahim Mohamed AlQasimi Director Mr. Abdulelah AlQasimi has more than 31 years of diversified management experience. His previous positions include Chief Executive of the Labor Fund (Tamkeen), from which he resigned in May 2010, Deputy Chief Executive Officer of Labor Fund Project at the Bahrain Economic Development Board, Assistant Undersecretary for Training at the Bahrain Ministry of Labor and Social Affairs, Director of Engineering and Maintenance at the Bahrain Ministry of Health. He has also served as the Chairman of the Bahrain Qualifications Framework Steering Committee and the Steering Committee of Career Expo and was a Board member of the Bahrain Society of Engineers and the Bahrain Consumer Protection Society. He is currently a Member of the Board of Ithmaar Holding, Ithmaar Bank, IB Capital, Solidarity Group Holding, Saudi Solidarity Takaful Co., Al Ahlia Insurance Co., Naseej BSC, Faysal Bank Limited (Pakistan) and a member of the Board of Trustees of Arabian Pearl Gulf School. Abdulelah AlQasimi holds a BSc in Civil Engineering from Queen Mary University of London, UK, and MSc in Health Facility Planning from the University of North London, UK, and a Diploma in Health Care Management from the Royal College of Surgeons in Ireland, Bahrain. He is also a certified Director from the Pakistan Institute of Corporate Governance. Abdulla Abdulaziz Ali Taleb Director Mr. Abdulla Abdulaziz Ali Taleb has more than 17 years of experience in banking and currently he is heading Commercial and Financial Institutions Department of Ithmaar Bank, Bahrain. Besides that, he has a strong work experience in a number of banking functions; including Islamic financial services, corporate banking, capital markets and credits. Prior to joining Ithmaar Bank, he held senior positions in various banks and financial institutions including BMI Bank, First Investment Bank, Shamil Bank and Khaleej Finance & Investments. Annual Annual Report 2017 2017
  13. BOARD OF OF DIRECTORS DIRECTORS –_ PROFILES PROFILES BOARD Abdulla Taleb has a Bachelors Degree in Banking & Finance from Kingdom University and Associate Diploma in Economics Banking and Finance from University of Bahrain. He also holds an Advanced Diploma in Islamic Banking from Bahrain Institute of Banking and Finance. currency notes and security paper) and Burj Bank Limited, since merged with Al Baraka Bank (an Islamic Bank in which Islamic Development Bank held equity interest through its investment company, ICD, where he was additionally the Chairman of their Audit Committees. Fuad Azim Hashimi Ali Munir Mr. Fuad Azim Hashimi is a fellow of the Institute of Chartered Accountants in England and Wales and currently heads Pakistan Business Council’s Centre of Excellence in Responsible Business. Through leadership of the Pakistan Institute of Corporate Governance from 2007 till 2016, he played a key role to further Corporate Governance practices in Pakistan. He is a member of the Private Sector Advisory Group of International Finance Corporation, World Bank Group and the United Nations ESACP Business Advisory Council and its Sustainable Business Network as well as a regular participant, moderator and speaker at OECD’s Asian Roundtable on Corporate Governance. Mr. Ali Munir has a BA degree from Government College Lahore and an LLB Degree From The University of Punjab, Lahore. He has over thirty years’ experience as a Chartered Accountant. He is a member of the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Pakistan. He was also a member of Investment Management Regulatory Organisation and the Securities Association (now known as the SFA) in England. He joined MCB Bank Ltd. in 1999 and has previously held senior positions at Citibank, Saudi American Bank and Habib Bank. In 2005, he was awarded the M.A Mozaffar Memorial Gold Medal from the SBP and Institute of Bankers in relation to his services to banking reforms in Pakistan and Agriculture Finance. He was previously the Chairman of the SBP Committee for Agricultural Finance and also the Chairman of the SBP Committee for Islamic Banking. Director His career over the past 53 years has provided him with a strong foundation in Public Accounting (he was a partner for 10 years in A. F. Ferguson & Co., a member firm of PricewaterhouseCoopers) as well as management of diversified business and commercial ventures in Pakistan and abroad, ranging from banking, office automation and information technology to mutual funds. He has an added experience with a development finance institution providing venture capital to the private sector that involved monitoring industrial projects to ensure correct use of the funds provided by World Bank and Asian Development Bank. Director Hashimi’s other appointments include Directorship on the Board of Directors of International Industries Limited (the premium producer of steel tubing, galvanised iron pipes and polyethylene pipes in Pakistan) and being a member of the Public / Sector Committee of the Institute of Chartered Accountants of Pakistan. He has previously held directorships on the boards of Clariant Pakistan Limited (the Pakistan subsidiary of a global chemical company), Indus Valley School of Art and Architecture, National Refinery Limited (the largest refinery in Pakistan producing Lube Base Oils), Pakistan Cables Limited (the premier cable manufacturer and market leader in Pakistan now part of General Cables Group), and of Pakistan Security Printing Corporation of Pakistan (the state-owned enterprise that produces Annual Report 2017 02 13
  14. COMPANY INFORMATION AS OF DECEMBER 31 , 2017 Board of Directors Farooq Rahmatullah Khan Chairman / Non-Executive Director Ahmed Abdulrahim Mohamed Abdulla Bucheery Vice Chairman / Non-Executive Director Yousaf Hussain President & CEO Mian Muhammad Younis Independent Director Imtiaz Ahmad Pervez Non-Executive Director Juma Hasan Ali Abul Non-Executive Director Abdulelah Ebrahim Mohamed AlQasimi Non-Executive Director Abdulla Abdulaziz Ali Taleb Non-Executive Director Fuad Azim Hashimi Independent Director Ali Munir Independent Director Board Audit and Corporate Governance Committee Mian Muhammad Younis Chairman Juma Hasan Ali Abul Member Ali Munir Member Board Risk Management Committee Imtiaz Ahmad Pervez Chairman Abdulelah Ebrahim Mohamed AlQasimi Member Abdulla Abdulaziz Ali Taleb Member Yousaf Hussain Member Recruitment, Nomination and Remuneration Committee Ahmed Abdulrahim Mohamed Abdulla Bucheery Chairman Juma Hasan Ali Abul Member Mian Muhammad Younis Member Fuad Azim Hashimi Member Ali Munir Member 01 14 Annual Report 2017 2017
  15. COMPANY INFORMATION AS OF DECEMBER 31 , 2017 Board Strategy Committee Farooq Rahmatullah Khan Chairman Ahmed Abdulrahim Mohamed Abdulla Bucheery Member Juma Hasan Ali Abul Member Fuad Azim Hashimi Member Yousaf Hussain Member Board IT Committee Ali Munir Chairman Abdulelah Ebrahim Mohamed AlQasimi Member Abdulla Abdulaziz Ali Taleb Member Yousaf Hussain Member Syed Majid Ali Chief Financial Officer Aurangzeb Amin Company Secretary & Head of Legal M/s. A. F. Ferguson & Co. Chartered Accountants Auditors M/s. Mohsin Tayebaly & Co. Advocate Legal Advisors Registered Office Share Registrar Faysal Bank Limited Faysal House, St-02, Commercial Lane, Main Shahrah-e-Faisal, Karachi-Pakistan M/s. Central Depository Company of Pakistan Limited (Share Registrar Department) CDC House, 99-B, Block-B, SMCHS, Main Shahrah-e-Faisal, Karachi-74400 UAN: (92-21) 111-747-747 Tel: (92-21) 3279-5200 Fax: (92-21) 3279-5226 Website: www.faysalbank.com Annual Report 2017 Tel: Fax: Email: (92-21) 111-111-500 (92-21) 34326053 info@cdcpak.com 02 15
  16. ATTENDANCE OF BOARD OF DIRECTORS MEETINGS DURING THE YEAR 2017 ATTENDED BY / MEETING DATE 26-01-17 27-04-17 05-05-17 15-05-17 23-08-17 25-10-17 6-11-17 & 12-11-17 Farooq Rahmatullah Khan* Ahmed Abdulrahim Mohamed Abdulla Bucheery* Yousaf Hussain** Mian Muhammad Younis* Juma Hasan Ali Abul* Imtiaz Ahmad Pervez* Abdulelah Ebrahim Mohamed AlQasimi* Abdulla Abdulaziz Ali Taleb* Fuad Azim Hashimi* Ali Munir* *** Nauman Ansari** * ** *** The Board of Directors was elected in the AGM held on March 29, 2017. Mr. Nauman Ansari retired on May 14, 2017, Mr. Yousaf Hussain was appointed on August 15, 2017 as the President and CEO. Leave of Absence Granted to Mr. Ali Munir in the Meeting of Board of Directors Session Two held on November 12, 2017. 16 Annual Report 2017 2017
  17. ATTENDANCE OF BOARD AUDIT & CORPORATE GOVERNANCE COMMITTEE MEETINGS DURING THE YEAR 2017 25-01-17 ATTENDED BY / MEETING DATE 27-04-17 04-05-17 22-08-17 23-10-17 Mian Muhammad Younis* Juma Hasan Ali Abul* Ali Munir* Ahmed Abdulrahim Mohamed Abdulla Bucheery* * The Board Audit & Corporate Governance Committee had been Re-Constituted in the Board of Directors Meeting held on April 27, 2017. Annual Report 2017 02 17
  18. ATTENDANCE OF BOARD RISK MANAGEMENT COMMITTEE MEETINGS DURING THE YEAR 2017 ATTENDED BY / MEETING DATE 25-01-17 04-05-17 22-08-17 23-10-17 Imtiaz Ahmad Pervez* Abdulelah Ebrahim Mohamed AlQasimi* Abdulla Abdulaziz Ali Taleb* Nauman Ansari** * ** The Board Risk Management Committee had been Re-Constituted in the Board of Directors Meeting held on April 27, 2017. Mr. Nauman Ansari retired on May 14, 2017. 01 18 Annual Report 2017 2017
  19. ATTENDANCE OF RECRUITMENT , NOMINATION AND REMUNERATION COMMITTEE MEETINGS DURING THE YEAR 2017 26-01-17 ATTENDED BY / MEETING DATE 13-02-17 03-05-17 15-05-17 27-07-17 22-08-17 24-10-17 Ahmed Abdulrahim Mohamed Abdulla Bucheery* Juma Hasan Ali Abul* Mian Muhammad Younis* Fuad Azim Hashimi* Ali Munir* Nauman Ansari** Farooq Rahmatullah Khan* * ** The Recruitment, Nomination and Remuneration Committee had been Re-Constituted in Board of Directors Meeting held on April 27, 2017. Mr. Nauman Ansari retired on May 14, 2017. Annual Report 2017 02 19
  20. ATTENDANCE OF BOARD STRATEGY COMMITTEE MEETINGS DURING THE YEAR 2017 ATTENDED BY / MEETING DATE 25-01-17 03-05-17 27-07-17 21-08-17 24-10-17 Farooq Rahmatullah Khan* Ahmed Abdulrahim Mohamed Abdulla Bucheery* Juma Hasan Ali Abul* Fuad Azim Hashimi* Nauman Ansari** * ** The Board Strategy Committee had been Re-Constituted in Board of Directors Meeting held on April 27, 2017. Mr. Nauman Ansari retired on May 14, 2017. 01 20 Annual Report 2017 2017
  21. ATTENDANCE OF BOARD IT COMMITTEE MEETINGS DURING THE YEAR 2017 23-10-17 ATTENDED BY / MEETING DATE Ali Munir Abdulelah Ebrahim Mohamed AlQasimi Abdulla Abdulaziz Ali Taleb Yousaf Hussain Note: The Board IT Committee had been Constituted by the Board of Directors held on October 16, 2017. Annual Report 2017 02 21
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  23. Annual Report 2017 23
  24. SENIOR MANAGEMENT – - PROFILE PROFILES Yousaf Hussain President & CEO Mr. Yousaf Hussain has over 23 years of professional experience, primarily at ABN AMRO Bank where he held multiple senior managerial positions including those within the Corporate / Credit and Transaction Banking functions. He has been with Faysal Bank since August 2008, with a significant contribution to the franchise in his previous positions as Chief Risk Officer, Regional Corporate Banking Head-North and Head of Special Assets Management Group. His experience also includes a senior role with Samba Bank and earlier assignments with Mashreq Bank and Mobilink / Motorola. Yousaf has a Bachelors of Science degree in Electrical Engineering and has done his MBA from Lahore University of Management Sciences. Raheel Ijaz Chief Operating Officer Mr. Raheel Ijaz has more than 38 years of work experience. Before assuming this position, he accumulated a rich banking experience in institutions like MCB Bank Limited as Group Head Compliance and Controls, Country Head Sri Lanka, Head Corporate North & Public Sector, United Bank Limited as Regional Chief Executive North and also held key positions in Faysal Bank, Prime Commercial Bank, and Emirates Bank International. His last role with Faysal Bank Limited was as Head Compliance. Raheel holds an MBA degree from Quaid-e-Azam International University. associated with MCB Bank Limited as Global Treasurer and Head Investment Banking Group. His past experience has been with organisations such as ANZ Grindlays, American Express, Bank of America, Mashreq Bank, United Bank Limited & MCB Bank Limited. He holds an MBA Degree from Grand Valley State University, USA. Syed Majid Ali Chief Financial Officer Syed Majid Ali has over 28 years of diversified experience, progressively responsible in the Accounts and Finance disciplines of banking with exposure in IT and HR activities. He has been associated as CFO with Emirates Bank International and Saudi Pak Commercial Bank, as well as KPMG as a partner. Majid is a fellow member of the Institute of Chartered Accountants of Pakistan. Nasir Islam Head, Internal Audit Mr. Nasir Islam is a qualified Chartered Accountant with over 25 years of multifaceted experience. His first assignment was as Manager Finance in ANZ Grindlays (Karachi), after which he was posted at the ANZ HO (Melbourne, Australia), as Manager Commercial Banking System (CBS) Project. He returned to Pakistan in 1997 as Manager Audit, joined ABN AMRO Pakistan as Audit Manager in 2000, and was appointed as Country Head of Compliance in 2004. Salman Ahmed Usmani Tahir Yaqoob Bhatti Mr. Salman Usmani has a rich experience of over three decades in the local as well as multinational banking sector. His broad expertise covers Treasury and Risk Management, Asset and Liability Management, Strategic Planning, Corporate Restructuring, Strategic Negotiations, Acquisitions and Strategic Alliances and International Operations. His vast skill set has been instrumental in the design and implementation of the in-house developed Treasury System which is capable of meeting front, middle and back office business requirements and generates a host of MIS while retaining the flexibility to adapt to an evolving product suite. Prior to joining Faysal Bank Limited, he was Mr. Tahir Yaqoob Bhatti has over 30 years of diverse experience in Retail, Commercial, Corporate, Operations, Special Assets Management and Digital Banking. He has previously been associated mainly with Allied Bank, Askari Bank and National Bank of Pakistan. Prior to joining Faysal Bank Limited, his last assignment was Business Head – Wholesale and Private Banking at JS Bank. Head, Treasury & ECM 01 24 Head, Retail Banking Tahir Bhatti holds an MBA Finance from IBA, Lahore and a Masters in Commerce from Hailey College. He also qualified DCMA and holds a Banking Diploma from the Institute of Bankers in Pakistan. Annual Annual Report 2017
  25. SENIOR MANAGEMENT - PROFILE SENIOR MANAGEMENT – PROFILES Abadullah Head, Compliance Mr. Abadullah brings with him over 32 years of diversified experience of Branch Banking, Trade, Cash Management and Operations. Prior to joining Faysal Bank Limited, Abadullah has worked with Standard Chartered, ANZ Grindlays and United Bank Limited. His last assignment with SCB was as Head Cash Management Operations & Cash Product Service Delivery. Abadullah started his career from United Bank Limited. He holds a Master of Business Administration (Finance) degree from IBA, University of Punjab. Ali Waqar Head, Corporate & Investment Banking Mr. Ali Waqar has over 16 years of professional experience, primarily in the field of Corporate & Investment Banking, and Commercial Banking. Throughout his professional career, Ali Waqar has been instrumental in driving the organisation’s profitability through a diverse mix of transactions including Structured Finance, Project Finance, Mergers & Acquisitions and Derivatives. He has served at key positions in leading multinationals as well as local organisations including ABN AMRO Bank N.V., Barclays Bank Plc. and Faysal Bank Limited. Prior to his current assignment, Ali Waqar spearheaded Faysal Bank’s Regional Corporate Banking franchise for 9 years as the ‘Corporate Head-Central’ where he contributed significantly towards sustainable portfolio and revenue growth. Ali holds an M.Sc degree in Economics and Finance from Lahore School of Economics. Mian Salman Ali Chief Risk Officer Mian Salman Ali brings with him a banking experience of over 15 years in large local and multinational banks. During his career, he has held various leadership / supervisory roles in business and control functions. He has a diversified experience in the field of Corporate Banking, Commercial / SME Banking & Credit / Risk Management. Prior to joining Faysal Bank Limited, he has been associated with ABN AMRO Pakistan and Annual Report 2017 Allied Bank Limited. Mian Salman holds a Master of Business Administration degree from Lahore School of Economics. He is also a certified Islamic Banking Professional from NIBAF. Zahid Anjum Head, Special Assets Management & Government Relations Mr. Zahid Anjum has over 25 years of diversified banking experience with a proven record of superior performance throughout his career. He has strong skills of credit structuring & workout plans of intensive & delinquent SME, Commercial & Corporate relationships. Zahid joined Faysal Bank in 2012 as Regional Head, Central & North and was elevated as Head, SAM during 2014 in recognition of his excellent performance. Due to his strong relationship management and problem solving skills, he has been given the extended role of handling government relations. Before joining Faysal Bank Limited in 2012, he was associated with Askari Bank Ltd and Prime Bank Ltd and held senior level positions in branch banking, credits & remedial management. Zahid holds an MBA from National College of Business Administration & Economics & a law degree from University of Punjab. Mohammed Zahid Ahmed Head, Strategy Mr. Mohammed Zahid Ahmed brings with him over 21 years of experience in both the financial and non-financial sectors where he has held leadership roles in Finance and Strategy. Prior to joining Faysal Bank, Zahid Ahmed has been associated with organisations such as Allergan Pharmaceuticals Inc., Pak Kuwait Investment Company, ABN Amro Bank, Dubai Islamic Bank, GIGA Group of Companies, Silk Bank and Meezan Bank. His last assignment was Head of Business Analytics, Strategy & Internal Control at Meezan Bank. Zahid Ahmed is a Chartered Accountant from the Institute of Chartered Accountants of Pakistan. 02 25
  26. SENIOR MANAGEMENT – - PROFILE PROFILES Monis Mirza Muhammad Faisal Shaikh Mr. Monis Mirza has over 22 years of leadership experience in Human Capital Management, Mergers & Acquisitions, Cultural Integration and Business Growth in multiple geographies. During his career, he has held key positions in Procter and Gamble (P&G), Standard Chartered Bank in Pakistan and Tenova Canada. He remained Director of Human Resources and a Management Committee member for SCB Pakistan for over a decade, and helped the bank manage organic and inorganic business growth, drive productivity through engagement and organisational design efficiencies. Mr. Muhammad Faisal Shaikh is a graduate of Institute of Business Administration (IBA), Karachi with over 17 years of experience in the field of Shariah Structuring and Shariah Compliant Product Development. Prior to joining Faysal Bank Limited, he was associated with BankIslami Pakistan Limited and Meezan Bank Limited. He has been instrumental in the development of various pioneering Islamic Corporate & Consumer Banking Products and Sukuks structures in Pakistan including Islamic Export Refinance Scheme of State Bank of Pakistan and Pakistan’s inaugural sovereign International Sukuk. He led the team which converted conventional assets and liabilities of KASB Bank Limited after its acquisition by BankIslami Pakistan Limited. Prior to this, his team structured acquisition and conversion of Citibank’s conventional housing finance portfolio by BankIslami Pakistan Limited. He was an active member of the team responsible for conversion and merger of Pakistan operations of Societe Generale into Meezan Bank Limited. He has also served as a member of different advisory committees of State Bank of Pakistan on Islamic Banking. Head, Human Resources His last assignment was with HRS Global as Chief Executive Officer – Recruiting. Monis Mirza acquired his B.E. Electrical Engineering degree from University of Buffalo, USA and MBA degree in Human Resources from Institute of Business Administration, Karachi. He has also completed an advance diploma in Human Resources from McMaster University, Canada. Aneeq Malik Head, Operations Mr. Aneeq Malik is a solutions-focused banker with over 16 years of rich experience overseeing the compliance function and branch operations. Prior to joining Faysal Bank Limited, Aneeq has been associated with banks like ABN AMRO and MCB. Aneeq is recognized for being both reactive to develpments in the regulatory and governance environment and proactive in areas related to compliance education and training. Highly adept in indentifying gaps and / or risk exposure in operations as well as developing and implementing strong systems of check and balances. Aneeq holds a graduation degree from Punjab University, Lahore. He is a certified expert in Corporate Governance & Leadership Skills from Pakistan Institute of Corporate Governance (PICG). He is also certified from NIBAF in Islamic Banking. He is on the board of directors of M/s. 1Link (Guarantee) Ltd as a nominee director from Faysal Bank Limited as well. 01 26 Head, Islamic Banking Muhammad Aurangzeb Amin Company Secretary & Head, Legal Mr. Aurangzeb Amin brings with him over 22 years of experience in the Financial Sector and Legal Consultancies both in Pakistan and in the USA. During his career he has worked with NIB Bank and Pak-Kuwait Investment Co. as Company Secretary and Head Legal. He has also worked with law firms locally and internationally, namely Orr, Dignam & Co. and Surridge & Beecheno. He has a Masters of Laws degree from Temple University, USA. Annual Annual Report 2017
  27. SHARIAH BOARD – PROFILES Mufti Muhammad Mohib ul Haq Siddiqui Chairman – Shariah Board Mufti Mohib ul Haq is a prominent and a well-recognised Shariah scholar of international repute. His credentials include a specialised degree in Shahadat-ul-Aalamia (Masters in Arabic and Islamic Studies) and Takhassus fial-Iftaa’ (Specialisation in Islamic Jurisprudence and Fatwa) from the esteemed Jamia Darul Uloom, Karachi. Mufti Mohib ul Haq has been associated with Faysal Barkat Islamic Banking since 2011 as the Shariah Advisor prior to his appointment as the Chairman of Shariah Board. He is also a Shariah Board Member of Bank Alfalah and Bank Al Habib. Previously, he has served as the Shariah Advisor / Shariah Board Member at various Financial Institutions which include: • • • Bank Al Habib Limited Takaful Pakistan Limited Royal Bank of Scotland Berhad, Malaysia He has over 14 years of teaching experience at renowned institutions and is also a Faculty Member / Visiting Faculty Member of various well known Institutions such as: • • • • Jamia Darul Uloom, Karachi Centre for Islamic Economics (CIE) National Institute of Banking and Finance (NIBAF) – SBP Institute of Cost and Management Accountants of Pakistan (ICMA) Dr. Mufti Khalil Ahmad Aazami Shariah Board Member Dr. Mufti Khalil Ahmad Aazami is a renowned Shariah Scholar in the Islamic Banking industry. Dr. Aazami has graduated from Jamia Darul Uloom, Karachi. He obtained his Shahadat-ul-Aalamia (Masters in Arabic and Islamic Studies) and Takhassus fi al-Iftaa’ (Specialisation in Islamic Jurisprudence and Fatwa) from Jamia Darul Uloom, Karachi. Dr. Aazami holds a Doctorate degree in “Islamic Jurisprudence” from University of Karachi. Dr. Aazami is working with Bank Alfalah Islamic Banking since 2003 in the capacity of Shariah Advisor and now serving Bank Alfalah as Chairperson Shariah Board since 2015. He is also a Shariah Board Member of National Bank of Pakistan and Faysal Bank Limited. Dr. Aazami has served as an Advisor / Shariah Board Member in different financial institutions including: • • Takaful Pakistan Limited (2005 - 2014) Alfalah GHP Islamic Fund (2007 - 2014) 01 Annual Report 2017 Annual Report 2017 27
  28. SHARIAH BOARD – PROFILES Dr. Aazami has 19 years of research experience related to Islamic Finance and other Shariah related subjects. Furthermore, he is the member of AAOIFI Shariah Standards Committee (Karachi). He is an author of numerous publications. He is also an experienced lecturer and trainer in the field of Islamic Finance, Economics, Fiqh, Islamic Financial Laws and General Islamic Science at various institutions which include: • • • • • Jamia Darul Uloom, Karachi Centre for Islamic Economics (CIE) National Institute of Banking and Finance (NIBAF) – SBP Sheikh Zaid Islamic Research Centre - University of Karachi IBA CEIF Mufti Khawaja Noor ul Hassan Resident Shariah Board Member Mufti Khawaja Noor ul Hassan has 13 years plus professional experience including 10 years of extensive experience in Shariah Compliance and Governance, Product Development and Research, Credit / Financing appraisal & administration. Prior to joining Faysal Bank Limited, he was associated with prestigious Islamic Financial Institutions like Meezan Bank Limited and Al Baraka Bank (formerly Emirates Global Islamic Bank). His past experience also includes working as an Assistant Company Secretary for a number of public and private limited companies. Mufti Khawaja Noor ul Hassan possesses both contemporary as well as religious academic qualifications. He has obtained the Shahadat-ul-Aalamia (Masters in Arabic and Islamic Studies) and Takhassus fi al-Iftaa’ (Specialisation in Islamic Jurisprudence and Fatwa) from Jamia Farooqia and Jamia Darul Uloom, Taleem ul Quran, Karachi. He also holds a Bachelor’s Degree in Law (LLB), a Master’s Degree in Islamic Studies and a Master’s degree in Islamic History from University of Karachi and Federal Urdu University, Karachi, respectively. He is associated with Jamia Yousufia Binoria and also conducts Islamic Banking trainings at different banks and institutions. He is actively involved in Islamic Banking and Finance as a researcher, trainer and consultant as well. 28 Annual Report 2017 02 Annual Report 2017
  29. SENIOR MANAGEMENT ANDCOMMITTEES INTERNAL COMMITTEES SENIOR MANAGEMENT AND INTERNAL Senior Management Asset & Liability Committee Compliance Committee Yousaf Hussain Yousaf Hussain Yousaf Hussain Raheel Ijaz Salman Ahmed Usmani Raheel Ijaz Syed Majid Ali Syed Majid Ali Abadullah Salman Ahmed Usmani Mian Salman Ali Syed Majid Ali Tahir Yaqoob Bhatti Ali Waqar Mian Salman Ali Ali Waqar Tahir Yaqoob Bhatti Mohammed Zahid Ahmed Zahid Anjum Mohammed Zahid Ahmed Head Special Assets Management & Govt. Relations Member Aneeq Malik Abadullah Member President & Chief Executive Officer Chief Operating Officer Chief Financial Officer Head Treasury & ECM Head Retail Banking Head Corporate & Investment Banking Head Compliance Chairman Member & Secretary Member Member Member Member Chairman Member Member & Secretary Member Member Member Member Syed Muhammad Fraz Zaidi Mian Salman Ali Chief Risk Officer Mohammed Zahid Ahmed Head Strategy Aneeq Malik Head Operations Monis Mirza Head Human Resources Muhammad Faisal Shaikh Head Islamic Banking Nasir Islam Head Internal Audit Muhammad Aurangzeb Amin Company Secretary & Head Legal 01 Annual Report 2017 Annual Report 2017 29
  30. SENIOR MANAGEMENT ANDCOMMITTEES INTERNAL COMMITTEES SENIOR MANAGEMENT AND INTERNAL IT Steering Committee Investment Committee Enterprise Risk Management Committee Yousaf Hussain Yousaf Hussain Yousaf Hussain Raheel Ijaz Salman Ahmed Usmani Raheel Ijaz Imran Saeed Chaudhry Syed Majid Ali Syed Muhammad Fraz Zaidi Syed Majid Ali Mian Salman Ali Salman Ahmed Usmani Mian Salman Ali Ali Waqar Syed Majid Ali Tahir Yaqoob Bhatti Syed Muhammad Fraz Zaidi Mian Salman Ali Chairman Chairman Member Member & Secretary Member & Secretary (Acting) Member Member Member Member Member Member Member Chairman Member Member & Secretary Member Member Member Mohammed Zahid Ahmed Ali Waqar Aneeq Malik Tahir Yaqoob Bhatti Abadullah Aneeq Malik Muhammad Maad Abadullah Member Member Member Member Member Member Member Member Muhammad Maad Member 30 Annual Report 2017 02 Annual Report 2017
  31. SENIOR MANAGEMENT AND INTERNAL SENIOR MANAGEMENT ANDCOMMITTEES INTERNAL COMMITTEES Country Credit Committee Yousaf Hussain Chairman Mian Salman Ali Member Ali Waqar Member Tahir Yaqoob Bhatti Member 01 Annual Report 2017 Annual Report 2017 31
  32. CORPORATE SOCIAL RESPONSIBILITY Faysal Bank strongly believes in giving back to the community and our CSR spend is , therefore, focused on projects such as those related to literacy, healthcare, poverty alleviation and environment sustainability so that they may provide long term sustainable value and benefits to the community at large. We have recently established relationships with numerous new NPOs. Some noteworthy names of the organizations with which we started working relationships are Bait ul Sukoon Cancer Hospital, Old Associates of Kinnaird Society, Layton Rahmatulla Benevolent Trust, etc. while strengthening our ties with charities we have already been working with. In 2017, our contribution was made for machine(s)/ equipment sponsorship, students’ sponsorships in educational & vocational institutions, construction of infrastructure, patients’ welfare, transport vehicles, etc. We contributed more than 23 million to the NPOs mentioned hereunder: • • • • • • • • • • • Memon Medical Institute Hospital Rehnuma Public School (Path Education Society) Old Associates of Kinnaird Society (National Institute of Child Health) The Lahore Businessmen Association for Rehabilitation of the Disabled Bait ul Sukoon Cancer Hospital Patients’ Aid Foundation (Jinnah Hospital) Professional Education Foundation Layton Rahmatulla Benevolent Trust Marie Adelaide Leprosy Centre Karigar Training Institute Child Aid Association (National Institute of Child Health) Faysal Bank remains focused towards including its employees in collective philanthropy. We, therefore, organized a blood donation drive in partnership with The Indus Hospital wherein our employees enthusiastically donated blood to save precious human lives. 32 Annual Report 2017
  33. Annual Report 2017 33
  34. ORGANISATIONAL STRUCTURE Board of Directors Company Secretary & Legal President & CEO CEO Secretariat Treasury & ECM Special Assets Management Retail Banking Corporate & Investment Banking Islamic Banking “Blue positions” are Country MT positions. 01 34 Annual Report 2017
  35. Shariah Board Audit Committee Shariah Compliance Internal Audit Chief Operating Officer Risk Management Human Resources Compliance Financial Control Unit Annual Report 2017 Strategy Information Technology Operations 02 35
  36. SIX YEAR FINANCIAL SUMMARY 2017 2016 2015 2014 OPERATIONAL RESULTS Mark-up / return / interest earned Mark-up / return / interest expensed Fee, commission, brokerage, FX income and other income Dividend and capital gains Total income (Reversals) / Provisions / Write-offs Operating expenses Operating profit before tax and provision Profit before taxation Profit after taxation Cash dividend Bonus shares 2013 2012 (Rupees in Million) % % 28,791 14,831 26,201 14,134 32,313 18,358 32,313 18,480 27,790 16,945 28,802 19,839 4,609 1,005 19,574 (496) 12,779 6,773 7,269 4,515 15.0 4,586 2,369 19,021 564 11,776 7,223 6,659 4,302 10.0 3,507 2,057 19,519 1,426 11,166 8,346 6,920 4,222 10.0 - 3,731 643 18,207 2,359 12,295 5,911 3,552 2,477 15.0 3,740 786 15,371 2,116 11,101 4,277 2,161 1,850 12.5 3,635 1,646 14,245 1,401 11,004 3,236 1,835 1,420 12.5 BALANCE SHEET (Rupees in Million) Shareholders’ equity Revaluation reserves Deposits Borrowings from financial institutions Advances - net Investments - net Total assets 33,662 5,571 373,081 54,789 231,532 179,706 488,027 29,142 5,867 340,306 52,806 204,831 170,210 444,465 26,059 4,294 292,130 90,565 181,090 195,516 430,073 21,832 4,470 283,346 60,927 182,656 155,211 388,126 CASHFLOWS 20,588 1,578 271,134 45,447 184,190 113,319 355,280 18,788 2,249 240,708 35,568 172,299 88,019 313,123 (Rupees in Million) Operating activities Investing activities Financing activities Cash and cash equivalents at end of the year (16,826) 19,956 (1,497) 39,489 (4,856) 19,065 (2,689) 37,856 67,214 (61,543) (1) 26,336 13,479 (20,929) (500) 20,666 28,733 (25,110) (700) 28,617 (4,809) 7,692 (200) 25,694 160,121 77,754 3,977 405 119,397 80,838 3,611 355 98,591 53,150 3,141 280 120,614 59,719 3,036 274 157,183 88,128 3,610 269 120,269 83,525 3,465 265 % % 25.25 48.49 25.42 46.06 21.42 43.19 10.99 42.81 7.78 39.02 6.37 31.12 % % % Times 2.56 14.38 0.97 1.53 2.64 15.59 0.98 1.62 3.17 17.63 1.03 1.75 1.72 11.68 0.67 1.48 1.13 9.40 0.55 1.38 1.15 7.76 0.47 1.29 OTHER KEY INFORMATION Imports Exports Number of employees Number of branches Rs. Mln Rs. Mln PROFITABILITY RATIOS Profit before tax ratio Gross spread ratio (Net mark up income / gross mark-up income) Return on capital employed Return on average equity (ROE) Return on average assets (ROA) Income to expense ratio 36 Annual Report 2017
  37. SIX YEAR FINANCIAL SUMMARY 2017 2016 2015 2014 2013 2012 LIQUIDITY RATIOS Current ratio CASA to total deposits Gross advances to deposit ratio (average) Net advances to deposit ratio (average) Non-performing loans to gross advances ratio Specific provision to non-performing loans ratio Times % % % % % 1.13 70.04 68.08 61.17 10.68 86.84 0.88 67.12 68.85 61.02 13.07 81.67 0.80 67.25 71.30 63.21 14.82 79.10 0.90 65.66 73.77 66.16 14.31 78.56 1.02 64.90 77.21 69.65 13.52 71.50 0.98 60.95 78.26 70.38 14.44 66.31 % Rs. Rs. Rs. Rs. 6.23 3.42 21.30 29.90 17.32 6.68 3.26 21.78 24.50 12.86 4.82 3.20 15.43 20.07 13.54 9.70 1.88 18.20 19.25 11.48 8.13 1.40 11.39 12.50 8.15 9.90 1.08 10.65 14.12 8.38 Rs. 25.51 24.29 21.72 20.93 19.73 20.26 Rs. 26.45 26.00 22.81 22.30 19.56 20.70 Rs. 29.73 29.18 25.30 25.21 21.25 22.68 15.90 3.35 37.71 14.60 3.55 36.70 14.41 4.27 37.92 12.22 5.33 33.62 11.29 5.24 34.66 10.75 6.60 28.83 29.73 86.11 29.18 85.51 25.30 87.63 25.21 87.05 21.25 83.84 22.68 83.18 INVESTMENT / MARKET RATIOS Price earning ratio Earning per share (EPS) Market value per share Market value per share - high Market value per share - low Book value per share - excluding surplus / (deficit) on revaluation of assets Book value per share - excluding surplus on revaluation of fixed assets Book value per share - including surplus / (deficit) on revaluation of assets CAPITAL STRUCTURE RATIOS Capital adequacy ratio % Weighted average cost of deposit % Total assets turnover to fixed assets turnover ratio Times (Total assets / Fixed assets) Net assets per share Rs. Earning asset to total asset ratio % NET ASSETS MATURITY WISE (based on expected withdrawal pattern) Upto one month Over one month to three months Over three months to six months Over six months to one year Over one year to two years Over two years to three years Over three years to five years Over five years to ten years Over ten years Total net assets Annual Report 2017 60,084 34,959 6,643 2,899 7,432 5,328 (18,545) (60,173) 606 39,233 (33,399) 23,162 48,146 22,701 16,221 8,667 11,597 (63,074) 987 35,008 (Rupees in Million) (85,534) 53,767 5,606 100,217 16,103 (1,738) 14,891 (66,060) 4,940 42,192 (60,796) 27,569 29,650 37,653 15,016 11,530 (10,065) (30,792) 6,538 26,303 (16,197) 45,394 18,264 4,165 3,036 (5,978) (14,836) (16,962) 5,281 22,167 (28,485) 8,976 3,729 30,994 (2,525) 6,153 (5,183) (397) 7,774 21,037 37
  38. TOTAL ASSETS AND SHAREHOLDERS ’ EQUITY Total Assets 500,000 Rupees in Million 430,073 450,000 400,000 350,000 355,280 444,465 488,027 388,126 313,123 300,000 250,000 200,000 150,000 100,000 50,000 - 2012 2013 2014 2015 2016 2017 Shareholders' Equity Rupees in Million 35,000 29,142 30,000 26,059 25,000 20,000 33,661 18,788 20,588 21,833 15,000 10,000 5,000 2012 38 2013 2014 2015 2016 2017 Annual Report 2017
  39. GROSS ADVANCES AND DEPOSITS Gross - Advances Rupees in Million 300 ,000 255,827 229,826 250,000 200,000 190,851 204,343 204,676 205,624 2013 2014 2015 150,000 100,000 50,000 - 2012 2016 2017 Deposits Rupees in Million 373,081 400,000 340,306 350,000 300,000 250,000 271,134 283,346 292,130 2014 2015 240,708 200,000 150,000 100,000 50,000 - 2012 2013 Annual Report 2017 2016 2017 39
  40. PROFIT AFTER TAX AND EPS Profit after Tax 5 ,000 Rupees in Million 4,222 4,500 4,302 4,515 4,000 3,500 3,000 2,477 2,500 2,000 1,850 1,420 1,500 1,000 500 - 2012 2013 2014 2015 2016 3.20 3.26 2015 2016 2017 Earning Per Share In Rupees 3.50 3.42 3.00 2.50 1.88 2.00 1.50 1.40 1.08 1.00 0.50 - 40 2012 2013 2014 2017 Annual Report 2017
  41. QUARTERLY PERFORMANCE 2017 AND 2016 STATEMENT OF FINANCIAL POSITION ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets - net Other assets LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities - net Other liabilities REPRESENTED BY Share capital Reserves Unappropriated profit Surplus on revaluation of assets Profit and Loss Account Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income (Reversals) / provision and write offs Non mark-up / interest income Non mark-up / interest expenses Share of (loss) / profit on associate Profit before taxation Taxation Profit after taxation 2017 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 31,879 1,711 8,577 190,661 214,275 12,115 2,133 11,361 472,712 36,408 2,019 4,598 195,233 213,809 12,151 2,018 12,346 478,582 32,895 1,380 185,660 198,957 12,209 2,552 9,860 443,513 37,239 1,139 5,000 170,210 204,831 12,112 2,264 11,669 444,464 7,304 54,789 373,081 - 5,985 57,630 358,826 749 7,383 69,890 354,499 749 5,990 53,447 337,643 1,497 13,621 448,795 39,232 11,535 434,725 37,987 8,844 441,365 37,217 13,197 7,936 12,528 33,661 5,571 39,232 13,197 7,065 12,664 32,926 5,061 37,987 13,197 7,096 11,681 31,974 5,243 37,217 4th Qtr 3rd Qtr 37,862 1,873 9,010 179,706 231,532 12,940 1,608 13,496 488,027 2016 2nd Qtr 1st Qtr 31,489 1,103 149,660 180,730 10,768 2,451 10,280 386,481 27,186 1,244 397 205,646 195,295 10,658 3,034 12,410 455,870 24,174 800 2,491 156,784 180,641 10,715 3,172 8,846 387,623 5,982 52,806 340,306 1,497 4,901 23,015 314,467 2,246 6,869 90,843 315,083 2,246 6,363 41,118 296,718 2,994 8,598 407,175 36,338 8,864 409,455 35,009 8,685 353,314 33,167 8,570 423,611 32,259 9,861 357,054 30,569 11,998 8,327 10,671 30,996 5,342 36,338 11,998 7,158 9,986 29,142 5,867 35,009 11,998 6,329 10,262 28,589 4,578 33,167 11,998 6,360 9,319 27,677 4,582 32,259 11,998 6,392 7,844 26,234 4,335 30,569 ------------------------------------------------Rupees in Million------------------------------------------ 7,485 3,884 3,601 268 1,288 3,699 (3) 919 229 690 Annual Report 2017 7,126 3,777 3,349 (240) 1,092 3,172 (1) 1,508 543 965 7,272 3,775 3,497 (247) 1,238 3,061 (9) 1,912 920 992 6,909 3,396 3,513 (278) 1,996 2,847 (9) 2,931 1,063 1,868 6,641 3,474 3,167 279 1,342 3,358 (12) 860 306 554 6,279 3,441 2,838 (156) 1,295 2,854 1,435 505 930 6,513 3,597 2,916 350 2,636 2,922 (3) 2,277 816 1,461 6,768 3,623 3,145 91 1,681 2,641 (7) 2,087 730 1,357 41
  42. HORIZONTAL ANALYSIS STATEMENT OF FINANCIAL POSITION 2016 2017 2015 2014 2013 2012 2017 vs 2016 vs 2015 vs 2014 vs 2013 vs 2012 vs 2016 2015 2014 2013 2012 2011 Rupees in Million Variance % ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions 37,862 37,239 26,084 20,286 28,422 24,509 2 43 29 (29) 16 33 1,873 1,139 1,068 1,423 1,012 1,209 64 7 (25) 41 (16) (74) 9,010 5,000 250 - 300 - 80 1,900 - (100) 100 - Investments 179,706 170,210 195,516 155,211 113,319 88,019 6 (13) 26 37 29 (6) Advances 231,532 204,831 181,090 182,656 184,190 172,299 13 13 (1) (1) 7 16 12,940 12,112 11,343 11,543 10,251 10,860 7 7 (2) 13 (6) - 1,608 2,264 3,087 2,429 3,981 4,387 (29) (27) 27 (39) (9) (15) Operating fixed assets Deferred tax assets - net Other assets 13,496 11,669 11,635 14,579 13,804 11,839 16 - (20) 6 17 - 488,027 444,464 430,073 388,127 355,279 313,122 10 3 11 9 13 7 LIABILITIES Bills payable 7,304 5,982 6,009 5,348 4,969 4,244 22 - 12 8 17 38 Borrowings 54,789 52,806 90,565 60,927 45,447 35,568 4 (42) 49 34 28 (10) 373,081 340,306 292,130 283,346 271,134 240,708 10 16 3 5 13 12 - 1,497 2,994 2,995 3,495 4,195 (100) (50) - (14) (17) (5) - - - - - - - - - - - - - - - - - - - - - - - - Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities - net Other liabilities 13,621 8,864 8,022 9,209 8,068 7,370 54 10 (13) 14 9 (36) 448,795 409,455 399,720 361,825 333,113 292,085 10 2 10 9 14 7 39,232 35,009 30,353 26,302 22,166 21,037 12 15 15 19 5 9 13,197 11,998 11,998 10,433 10,433 9,274 10 - 15 - 12 13 7,936 7,158 6,423 5,703 6,554 6,309 11 11 13 (13) 4 (4) REPRESENTED BY Share capital Reserves Unappropriated profit Surplus on revaluation of assets 42 12,528 9,986 7,638 5,696 3,601 3,205 25 31 34 58 12 8 33,661 29,142 26,059 21,832 20,588 18,788 16 12 19 6 10 6 5,571 5,867 4,294 4,470 1,578 2,249 (5) 37 (4) 183 (30) 58 39,232 35,009 30,353 26,302 22,166 21,037 12 15 15 19 5 9 Annual Report 2017
  43. HORIZONTAL ANALYSIS PROFIT AND LOSS ACCOUNT 2016 2017 2015 2014 2013 2012 Rupees in Million Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income (Reversal) / provision against nonperforming loans and advances - net Provision / (reversal) for consumer and small enterprise loans - general Provision against off balance sheet obligations Provision / (reversal) for diminution in value of investments - net Recoveries against written-off debts - net Net mark-up / interest income after provisions Non mark-up / interest income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities - net Unrealised (loss) / gain on revaluation of investments classified as held for trading Other income Total non mark-up / interest income Non mark-up / interest expenses Administrative expenses Other provisions / (reversal) - net Other charges Total non mark-up / interest expenses Share of loss of associate Extraordinary / unusual items Profit before taxation Taxation - Current Taxation - Prior years Taxation - Deferred Profit after taxation Basic earnings per share 2017 vs 2016 2016 vs 2015 2015 vs 2014 vs 2014 2013 Variance % 2013 vs 2012 2012 vs 2011 28,791 26,201 32,313 32,313 27,790 28,802 10 (19) - 16 (4) - 14,831 13,960 14,134 12,067 18,358 13,955 18,480 13,833 16,945 10,845 19,839 8,963 5 16 (23) (14) (1) 1 9 28 (15) 21 1 (3) (691) 626 1,058 2,094 1,906 964 (210) (41) (49) 10 98 192 104 32 (7) 33 123 25 225 (557) (121) (73) 392 (132) 5 4 20 7 11 40 25 (80) 186 (36) (73) 100 183 (17) 455 397 111 415 (1,176) (104) 15 258 (73) 1 (98) (497) (81) 564 (99) 1,427 (134) 2,397 (34) 2,117 (42) 1,402 21 (188) (18) (60) (26) (40) 294 13 (19) 51 (227) 102 14,457 11,503 12,528 11,436 8,728 7,561 26 (8) 10 31 15 (11) 3,087 160 2,715 276 2,303 319 2,076 182 2,237 479 1,858 432 14 (42) 18 (13) 11 75 (7) (62) 20 11 5 (30) 1,385 846 1,368 2,093 965 1,739 1,073 460 949 306 769 1,215 1 (60) 42 20 (10) 278 13 50 23 (75) (10) (575) (4) 141 11 492 (27) 266 31 551 (19) 575 43 967 (136) (71) (141) 85 (187) (52) (263) (4) (144) (41) (174) (15) 5,615 20,072 6,955 18,458 5,565 18,093 4,373 15,809 4,527 13,255 5,284 12,845 (19) 9 25 2 27 14 (3) 19 (14) 3 30 2 12,608 5 166 11,661 (28) 144 10,591 354 221 12,162 (127) 222 11,079 (95) 117 10,810 91 103 8 (118) 15 10 (108) (35) (13) (379) - 10 34 90 2 (204) 14 (60) 61 12,779 7,293 (23) 7,270 11,777 6,681 (22) 6,659 11,166 6,927 (7) 6,920 12,257 3,552 (1) 3,551 11,101 2,154 7 2,161 11,004 1,841 (5) 1,836 9 9 5 9 5 (4) 214 (4) (9) 95 600 95 10 65 (114) 64 1 17 (240) 18 (1) 25 (100) 24 2,648 (882) 989 2,755 4,515 2,263 (901) 995 2,357 4,302 3,039 265 (606) 2,698 4,222 1,712 (813) 175 1,074 2,477 1,078 (1,613) 846 311 1,850 268 (227) 375 416 1,420 17 (2) (1) 17 5 (26) (440) (264) (13) 2 78 (133) (446) 151 70 59 (50) (79) 245 34 302 611 126 (25) 30 (32) (179) (177) 110 11 3.42 3.26 3.20 1.88 1.40 1.08 5 2 70 34 30 11 Annual Report 2017 43
  44. VERTICAL ANALYSIS STATEMENT OF FINANCIAL POSITION 2016 2017 2015 2014 2013 2012 2016 2017 2015 Rupees in Million 2014 2013 2012 Variance (%) ASSETS Cash and balances with treasury banks 37,862 37,239 26,084 20,286 28,422 24,509 8 8 6 5 8 8 Balances with other banks 1,873 1,139 1,068 1,423 1,012 1,209 - - - - - - Lendings to financial institutions 9,010 5,000 250 - 300 - 2 1 - - - - Investments 179,706 170,210 195,516 155,211 113,319 88,019 37 38 45 40 32 28 Advances 231,532 204,831 181,090 182,656 184,190 172,299 47 46 42 47 52 55 12,940 12,112 11,343 11,543 10,251 10,860 3 3 3 3 3 3 1,608 2,264 3,087 2,429 3,981 4,387 - 1 1 1 1 1 13,496 11,669 11,635 14,579 13,804 11,839 3 3 3 4 4 4 488,027 444,464 430,073 388,127 355,279 313,122 100 100 100 100 100 100 Bills payable 7,304 5,982 6,009 5,348 4,969 4,244 1 1 1 1 1 1 Borrowings 54,789 52,806 90,565 60,927 45,447 35,568 11 12 21 16 13 11 373,081 340,306 292,130 283,346 271,134 240,708 76 77 68 73 76 77 - 1,497 2,994 2,995 3,495 4,195 - - 1 1 1 1 - - - - - - - - - - - - - - - - - - - - - - - - 13,621 8,864 8,022 9,209 8,068 7,370 3 2 2 3 3 1 448,795 409,455 399,720 361,825 333,113 292,085 92 92 93 93 94 93 39,232 35,009 30,353 26,302 22,166 21,037 8 8 7 7 6 7 13,197 11,998 11,998 10,433 10,433 9,274 3 3 3 3 3 3 7,936 7,158 6,423 5,703 6,554 6,309 2 2 2 1 2 2 12,528 9,986 7,638 5,696 3,601 3,205 3 2 2 1 1 1 33,661 29,142 26,059 21,832 20,588 18,788 7 7 6 6 6 6 5,571 5,867 4,294 4,470 1,578 2,249 1 1 1 1 - 2 39,232 35,009 30,353 26,302 22,166 21,037 8 8 7 7 6 7 Operating fixed assets Deferred tax assets - net Other assets LIABILITIES Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities - net Other liabilities REPRESENTED BY Share capital Reserves Unappropriated profit Surplus on revaluation of assets 44 Annual Report 2017
  45. VERTICAL ANALYSIS PROFIT AND LOSS ACCOUNT Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income 2017 2016 2015 2014 2013 2012 2016 28,791 26,201 32,313 32,313 27,790 28,802 100 100 100 100 100 100 14,831 14,134 18,358 18,480 16,945 19,839 57 57 61 69 12,067 13,955 13,833 10,845 8,963 52 54 13,960 48 46 43 43 39 31 (691) 626 1,058 2,094 1,906 964 (2) 2 3 6 7 3 104 32 (7) 33 123 25 - - - - - - 5 4 20 7 11 40 - - - - - - 183 (17) 455 397 111 415 1 - 1 1 - 1 2017 Rupees in Million 2015 2014 2013 2012 Variance (%) (Reversal) / provision against nonperforming loans and advances - net Provision / (reversal) for consumer and small enterprise loans - general Provision against off balance sheet obligations Provision / (reversal) for diminution in value of investments - net Recoveries against written-off debts - net (81) (99) (134) (34) (42) - - - - - (497) 564 1,427 2,397 2,117 1,402 (1) 2 4 7 7 4 14,457 11,503 12,528 11,436 8,728 7,561 49 44 39 36 32 27 3,087 2,715 2,303 2,076 2,237 1,858 7 6 8 6 276 319 182 479 432 11 10 160 1 1 1 1 2 1 1,385 1,368 965 1,073 949 769 3 3 3 3 2,093 1,739 460 306 1,215 5 5 846 3 8 5 1 1 4 - - - - 11 (27) 31 (19) 43 - - (4) - - - - - 492 266 551 575 967 - 2 1 2 2 3 20 26 17 13 16 18 69 70 56 49 48 45 44 45 33 38 40 38 - 1 - - - (98) Net mark-up / interest income after provisions - Non mark-up / interest income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities - net Unrealised (loss) / gain on revaluation of investments classified as held for trading Other income Total non mark-up / interest income Non mark-up / interest expenses Administrative expenses Other provisions / (reversal) - net Other charges Total non mark-up / interest 141 6,955 5,565 4,373 4,527 5,284 20,072 18,458 18,093 15,809 13,255 12,845 12,608 11,661 10,591 12,162 11,079 10,810 (28) 354 (127) (95) 91 166 144 221 222 117 103 1 1 1 1 - - 12,779 45 5,615 5 11,777 11,166 12,257 11,101 11,004 7,293 6,681 6,927 3,552 2,154 1,841 (23) (22) (7) (1) 7 (5) - - - - - Profit before taxation - 7,270 6,659 6,920 3,551 2,161 1,836 Taxation - Current 2,648 expenses Share of loss of associate Extraordinary / unusual items Taxation - Prior years Taxation - Deferred Profit after taxation - 2,263 3,039 1,712 1,078 268 (882) (901) 265 (813) (1,613) (227) 995 (606) 175 846 375 2,755 4,515 2,357 4,302 2,698 4,222 1,074 2,477 311 1,850 416 1,420 989 Annual Report 2017 - 46 35 39 40 38 24 24 21 10 8 7 - - - - - - - - - - - - 24 24 21 10 8 7 9 9 5 4 1 (3) (3) 1 (3) (6) (1) 4 (2) 1 3 1 9 15 10 14 8 13 3 7 1 7 1 6 9 3 45
  46. STATEMENT OF VALUE ADDED 2017 Rupees ‘000 % 2016 Rupees ‘000 % 29,264,855 106 25,614,563 99 3,086,639 11 2,715,435 10 159,514 1 276,301 1 1,385,057 5 1,368,290 5 982,866 3 2,594,432 10 34,878,931 126 32,569,021 125 7,288,001 (26) 6,597,073 (25) 27,590,930 100 25,971,948 100 To Employees As remuneration 5,438,396 20 5,126,656 20 To Government As income tax 2,754,526 10 2,356,865 9 To Depositors As profit on investments 11,526,804 42 10,730,708 41 To Finanacial Institutions As profit on borrowings 3,304,119 12 3,403,576 13 52,299 - 52,371 - To Shareholders As dividends / bonus 1,979,604 7 1,199,760 5 Retained in Business As reserves and retained profits 2,535,182 9 3,102,012 12 27,590,930 100 25,971,948 100 Mark-up / return / interest earned - net of provisions Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Derivative income, gain on sale of investments etc. Administrative and other expenses Value Added Distributed as follows: To Society As donations 46 Annual Report 2017
  47. STATEMENT OF VALUE ADDED Income 106 .07% -26.41% 3.56% 5.02% 0.58% 11.19% Mark-up / return / interest earned - net of provisions Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Derivative income, gain on sale of investments etc. Administrative expenses Distribution 9.19% 19.71% 7.17% 9.98% 0.19% 11.98% 41.78% To Depositors To Finanacial Institutions To Shareholders To Government To Society To Employees Retained in Business Annual Report 2017 47
  48. NOTICE OF THE TWENTY THIRD ANNUAL GENERAL MEETING Notice is hereby given that the 23rd Annual General Meeting of Faysal Bank Limited (“FBL”) will be held on March 28 2018 at 9:00 a.m. at Acquires Hall, Beach Luxury Hotel, M.T. Khan Road, Karachi to transact the following business: ORDINARY BUSINESS 1. To confirm the minutes of the 22nd Annual General Meeting held on March 29, 2017. 2. To receive and adopt Annual Audited Accounts, Statement of Compliance with Code of Corporate Governance of FBL for the year ended December 31, 2017 together with the Directors’ and Auditors’ Reports thereon. 3. To consider and approve as recommended by the Board of Directors to issue of Bonus Shares in the proportion of 15 shares for every 100 shares held by the Shareholders i.e. 15% for the year ended December 31, 2017. 4. To appoint External Auditors for the ensuing year 2018 at a mutually agreed rate of remuneration. The present Auditors, A.F. Ferguson & Company, Chartered Accountants, being eligible, offer themselves for reappointment. 5. Any other business with the permission of the Chair. SPECIAL BUSINESS 6. To approve disposal of fractional shares created out of the issuance of bonus shares by the Bank for the year 2017 by passing the following resolution as ordinary resolution with or without amendments: “RESOLVED that in the event of any member holding fraction of a Share, the Company Secretary be and is hereby authorised to consolidate such Fractional entitlement and sell in the stock market and the proceeds of the sale (less expenses) when realized, be donated to a Charitable Trust namely: “Waqf Faisal”. 7. To consider and approve the amount of remuneration paid to the Non-Executive/ Independent Directors of FBL during the year 2017 for attending the Board meetings/Sub-Committees and revised scale of Remuneration to be paid to the each Non-Executive/Independent Directors of FBL for attending the Board Sub-Committee Meetings and in that connection to pass the following resolutions as an Special Resolutions, with or without modification, addition or deletion: RESOLVED THAT: I. “The remuneration paid to the Chairman, Non-Executive and Independent Directors of Faysal Bank Limited for attending Board meetings and meetings of the Board Committees i.e. Recruitment, Nomination and Remuneration Committee; Board Risk Management Committee; Board Audit & Corporate Governance Committee; Board Strategy Committee and Board IT Committee as disclosed in Note 39 of the Audited Financial Statements is submitted to the shareholders for approval on a post facto basis, be and is hereby approved.” 48 Annual Report 2017
  49. NOTICE OF THE TWENTY THIRD ANNUAL GENERAL MEETING II . “The revised scale of the remuneration of US$ 3,000/- (net of taxes) paid/to be paid to the NonExecutive and Independent Directors as Chairman and Members of all Board Sub-Committees is submitted to the shareholders for approval on a post facto basis, be and is hereby approved. 8. To transact any other Business with the permission of the Chairman. By the order of the Board Aurangzeb Amin Karachi dated: March 6, 2018 Company Secretary & Head of Lega Notes: 1. The Share Transfer Books of the Bank shall remain closed from March 22, 2018 to March 28, 2018 (both days inclusive). Transfer received at the Share Registrar of the Bank, by the close of business on March 21, 2018 will be treated in time for the purpose of entitlement of aforesaid Bonus Shares. 2. A member entitled to attend and vote at the Meeting may appoint another Member as per his/her proxy to attend and vote for him/her provided that a corporation may appoint as its proxy a person who is not a member, but is duly authorized by the corporation. Proxies must be received at the Registered Office of the Bank not less than 48 hours before the time of the holding of the Meeting. 3. Members are required to timely notify any change in their address to Bank’s Shares Registrar M/s. Central Depository Company of Pakistan Limited, CDC House, 99-B, Block-B, S.M.C.H.S., Main Shahrah-eFaisal, Karachi. 4. CDC Account Holders will further have to follow the under mentioned guidelines as laid down in Circular 1 dated January 26, 2000 issued by the Securities and Exchange Commission of Pakistan. A. B. For attending the Meeting i) In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and their registration detail are uploaded as per the regulations, shall authenticate his/her identity by showing his/her original Computerized National Identity Card (CNIC) or original passport at the time of attending the Meeting. ii) In case of corporate entity, the Board of Directors’ resolution/power of attorney with specimen signature of the nominee shall be produced (unless it has been provided earlier) at the time of Meeting. For appointing proxies i) In case of individuals, the account holder or sub-account holder and /or the person whose securities are in group account and their registration details are uploaded as per the regulations, shall submit the proxy form as per the above requirement. Annual Report 2017 49
  50. NOTICE OF THE TWENTY THIRD ANNUAL GENERAL MEETING 5 . ii) The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned on the form. iii) Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form. iv) The proxy shall produce his/her original CINC or original passport at the time of the Meeting. v) In case of corporate entity, the Board of Directors’ resolution/power of attorney with specimen signature shall be submitted (unless it has been provided earlier) along with proxy form to the Company. Computerized National Identity Card (CNIC) / National Tax Number (NTN) With reference to the Securities and Exchange Commission of Pakistan (SECP) Notifications SRO 19(I)/2014 dated January 10, 2014 and SRO 831 (I) 2012 dated July 05, 2012, which mandates that the dividend warrants should bear CNIC number of the registered member or their authorized person, except in case of minor(s) and corporate members. All those individual members holding physical shares who have not yet recorded their CNIC No. are once again reminded to immediately submit the copy of their CNIC to Company’s Share Registrar M/s. Central Depository Company of Pakistan Limited, CDC House, 99-B, Block-B, S.M.C.H.S., Main Shahrah-e-Faisal, Karachi; Members while sending CNIC must quote their respective folio numbers. The corporate members having CDC accounts are required to have their NTN updated with their respective participants, whereas corporate entities having physical shares should send a copy of their NTN certificate to Company’s Share Registrar. The corporate members while sending NTN or NTN certificates, as the case may be, must quote the company name and their respective folio numbers. 6. Availability of Audited Financial Statements on Company’s Website The Company has placed the Audited Annual Financial Statements for the year ended December 31, 2017 along with Auditors and Directors Reports thereon on its website: www.faysalbank.com 7. Transmission of Financial Statements to the Members through e-mail In pursuance of SECP notification S.R.O 787 (I)/2014 dated September 08, 2014, the companies have been allowed to circulate their Annual Balance Sheet and Profit and Loss Account, Auditor’s Report and Director’s Report (Annual Financial Statements) along with Notice of Annual General Meeting (Notice) through e-mail to the members of the Company. Members desiring to avail this facility may provide the requisite information to the Company Share Registrar, M/s. Central Depository Company of Pakistan Limited, CDC House, 99-B, Block-B, S.M.C.H.S., Main Shahrah-e-Faisal, Karachi for which form may be downloaded from the Company’s website: www.faysalbank.com 8. 5% Witholding Tax on Bonus Shares Pursuant to the provisions of Section 236M of the Income Tax Ordinance, 2001, Bonus Shares is subject to withholding tax at the rate of 5%, The shareholders who will deposit 5% tax amount on Bonus Shares equal to five percent of the value of the total bonus shares issued to the shareholder determined on the 50 Annual Report 2017
  51. NOTICE OF THE TWENTY THIRD ANNUAL GENERAL MEETING basis of the day end price on the first day of closure of books are entitled for 100 % of the approved Bonus Shares. In case the shareholders fail to pay the said tax to the company within the prescribed time, the company is required to deposit the bonus shares withheld from its shareholders in Central Depository Company of Pakistan Limited in terms of the order of the Federal Board of Revenue, Government of Pakistan dated March 19, 2015. The letters for collection of tax amount on 5% Bonus Shares will be dispatched to all entitled shareholders separately within the specified time frame bound by FBR. 9. Consent for Video Conference Facility Members can also avail video conference facility. In this regard, please fill the following and submit to the registered address of the Company 10 days before holding of the AGM. If the Company receives consents from members holding in aggregate 10% or more shareholding residing at a geographical location, to participate in the Meeting through video conference at least 10 days prior to date of the Meeting , the Company will arrange video conference facility in the city subject to availability of such facility in that city. The Company will intimate members regarding venue of the video conference facility at least 10 days before the date of AGM along with complete information necessary to enable them to access such facility. “I/We________ of_______ being a member of Faysal Bank Limited, holder of _____ Ordinary Shares as per registered Folio # CDC ID & A/C No. _____ hereby opt for video conference facility at ________. My email address___________” Signature of Shareholder For any query/problem/information, members may contact our Share Registrar M/s. Central Depository Company of Pakistan Limited, CDC House, 99-B, Block-B, S.M.C.H.S., Main Shahrah-e-Faisal, Karachi. Statement of Material Facts under Section 134 (3) of the Companies Act 2017 relating to the Special Business referred in the Notice above: Agenda Item No. 6 “RESOLVED that in the event of any member holding fraction of a Share, the Company Secretary be To approve disposal of fractional shares created out of the issuance of bonus shares by the Bank for the year 2017 by passing the following resolution as ordinary resolution with or without amendments: Annual Report 2017 51
  52. NOTICE OF THE TWENTY THIRD ANNUAL GENERAL MEETING and is hereby authorized to consolidate such Fractional entitlement and sell in the stock market and the proceeds of sell (less expenses) when realized, be donated to a Charitable Trust namely; “Waqf Faisal”. Agenda Item No. 7 To consider and approve the amount of remuneration paid to the Non-Executive/ Independent Directors of FBL during the year 2017 for attending the Board meetings/Sub-Committees and revised scale of Remuneration to be paid to the each Non-Executive/Independent Directors of FBL for attending the Board Sub-Committee Meetings and in that connection to pass the following resolutions as an Special Resolutions, with or without modification, addition or deletion: RESOLVED THAT: I. “The remuneration paid to the Chairman, Non-Executive and Independent Directors of Faysal Bank Limited for attending Board meetings and meetings of the Board Committees i.e. Recruitment, Nomination and Remuneration Committee; Board Risk Management Committee; Board Audit & Corporate Governance Committee; Board Strategy Committee and Board IT Committee as disclosed in Note 39 of the Audited Financial Statements Statement is submitted to the shareholders for approval on post facto basis, be and is hereby approved.” II. “The revised scale of the remuneration of US$ 3,000/- (net of taxes) paid/to be paid to the NonExecutive and Independent Directors as Chairman and Members of all Board Sub-Committees is submitted to the shareholders for approval on a post facto basis, be and is hereby approved. 52 Annual Report 2017
  53. Annual Report 2017 53
  54. REPORT OF THE BOARD AUDIT AND CORPORATE GOVERNANCE COMMITTEE The Board Audit and Corporate Governance Committee (BACGC) comprises of three Directors having vast experience and knowledge of banking, finance, asset management, audit and accounting. The Chairman is an Independent Director, whilst another member is an Independent Director and one is a Non-Executive Director. The BACGC has updated its Terms of Reference (TORs) as per the guidelines issued by the Regulators and approved by the Board of Directors. The Committee focused on the effectiveness of the Internal Control, Compliance, Operational Risk Management Framework and application of Corporate Governance best practices as well as budgeting and accounting standards at Faysal Bank Limited (FBL) and fully complied with its TORs. The Committee approved the Internal Audit plan for 2017 and revised the Audit Manual and Charter as per the requirements of the Code of Corporate Governance (COCG). The provision of resources with complete independence to the Head of Internal Audit along with free access to the BACGC was ensured. The Committee convened 5 meetings during the year 2017 and the following major activities were undertaken to improve the overall performance of FBL: • BACGC reviewed / examined the quarterly, half yearly and annual financial statements for the year 2017 along with Director’s Review Reports of FBL with its recommendation to the Board for approval of these financial statements / reports. • BACGC also held detailed discussions with external auditors on major observations made in their management letters and reviewed it along with management’s response thereto. The Committee also recommended the appointment of external auditors for the year 2017 and their fee to the Board. • BACGC reviewed / analysed the performance of Internal Audit Department (IAD), reviewed high risk observations and ensured monitoring and timely implementation of IAD observations. An assurance is given to BACGC that policies adopted by the Bank are sufficient and appropriate and information provided by the management is reliable. The Committee also reviewed the adequacy and quality of IAD resources and ensured any addition to these resources during the year. • BACGC reviewed quarterly update of Fraud and Forgery cases and major findings of internal investigations in the area along with management’s action thereon and noted with satisfaction the tangible reduction in these cases. • The Committee also reviewed quarterly update of the Whistle Blow Committee (WBC) cases and internal investigation findings along with timely actions taken by the management. • BACGC reviewed related party transactions with assurance from management that all transactions were undertaken at arm’s length and recommended the same for Board’s approval. • BACGC not only reviewed the Institutional Risk Assessment Framework (IRAF) – Self Assessment Questionnaire but also the implementation of Internal Controls over Financial Reporting (ICFR) program across the Bank. 01 54 Annual Report 2017
  55. REPORT OF THE BOARD AUDIT AND CORPORATE GOVERNANCE COMMITTEE • BACGC reviewed the quarterly Compliance of the SBP inspection report and SBP’s thematic review reports along with monitoring the compliance status of these reports. The Committee also reviewed statement on internal control system and recommended the same for endorsement by the Board. • BACGC conducted self-assessment of its performance for the year 2017 to comply with SECP (COGC) and presented it to the Board. The Board appreciated the performance of the Committee in its annual evaluation. Mian Muhammad Younis Chairman - BACGC Report 2017 Annual Report 02 55
  56. AUDITORS ’ REVIEW REPORT TO THE MEMBERS ON THE STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of Corporate Governance (the Code), prepared by the Board of Directors of Faysal Bank Limited (the Bank) for the year ended December 31, 2017 to comply with the requirements of Rule 5.19 of the Pakistan Stock Exchange Limited Regulations issued by the Pakistan Stock Exchange where the Bank is listed. The responsibility for compliance with the Code is that of the Board of Directors of the Bank. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Bank’s compliance with the provisions of the Code and report if it does not and to highlight any non-compliance with the requirements of the Code. A review is limited primarily to inquiries of the Bank’s personnel and review of various documents prepared by the Bank to comply with the Code. As part of our audit of the financial statements, we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of Directors’ statement on internal control covers all risks and controls, or to form an opinion on the effectiveness of such internal controls, the Bank’s corporate governance procedures and risks. The Code requires the Bank to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval its related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm’s length transactions and transactions which are not executed at arm’s length price and recording proper justification for using such alternate pricing mechanism. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm’s length price or not. Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Bank’s compliance, in all material respects, with the best practices contained in the Code as applicable to the Bank for the year ended December 31, 2017. Chartered Accountants Dated: March 06, 2018 Karachi 56 Annual Report 2017
  57. STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE Name of Company : Faysal Bank Limited Year Ended: December 31, 2017 This statement is being presented to comply with the Code of Corporate Governance (CCG) contained in Regulation No. 5.19 of listing regulations of the Pakistan Stock Exchange issued by the Pakistan Stock Exchange Limited where the Bank is listed for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance. Faysal Bank Limited (the Bank) has applied the principles contained in the Code of Corporate Governance in the following manner: 1. The Bank encourages representation of independent, non-executive directors and directors representing minority interests on its Board of Directors. At present, the Board includes: Category 2. The directors have confirmed that none of them is serving as a director on more than seven listed companies, including the Bank. 3. All the resident directors of the Bank are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a Development Financial Institution or a Non-Banking Financial Institution or being a broker of a stock exchange, has been declared as a defaulter by that stock exchange. 4. No casual vacancy occurred during the year 2017. 5. The Bank has prepared a ‘Code of Conduct’ and has ensured that appropriate steps have been taken to disseminate it throughout the Bank along with its supporting policies and procedures. 6. The Board has developed a vision / mission statement, overall corporate strategy and significant policies of the Bank. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained. All policies are subject to periodical review of the Board of Directors. 7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of President & CEO, other executive and non-executive directors, have been taken by the board / shareholders. 8. The meetings of the Board were presided over by the Chairman and in his absence, by a director elected by the Board for this purpose. The Board of Directors met seven (07) times in the year 2017, once in every quarter and in three (03) additional meetings held during the year. Written notice of the Board meetings, along with agenda and working papers, were circulated at least seven days before the Names Independent Directors Mian Muhammad Younis Mr. Fuad Azim Hashimi Mr. Ali Munir Executive Director Mr. Yousaf Hussain, President & CEO NonExecutive Directors Mr. Farooq Rahmatullah Khan Mr. Ahmed Abdulrahim Mohamed Abdulla Bucheery Mr. Juma Hasan Ali Abul Mr. Imtiaz Ahmad Pervez Mr. Abdulelah Ebrahim Mohamed AlQasimi Mr. Abdulla Abdulaziz Ali Taleb The independent directors meet the criteria of independence under clause 5.19.1(b) of the CCG. Annual Report 2017 57
  58. STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE and final results of the Bank as required by the CCG . The terms of reference have been formed and advised to the committee for compliance. meetings. The minutes of the meetings were appropriately recorded and circulated. 9. The Board arranged an orientation workshop for its directors on May 3, 2017. 10. The Board arranged two training programs for the directors during the year; at August 23, 2017 on new Islamic product and at October 25, 2017 on Companies Act, 2017 by PwC. The Bank is in compliance with the certification requirement for Directors’ Training Program prescribed by the CCG. 11. The Board had approved the appointment of CFO, Company Secretary and Head of Internal Audit including their remuneration and terms and conditions of employment. 12. The Directors’ Report for this year has been prepared in compliance with the requirements of the CCG and fully describes the salient features required to be disclosed. 13. The financial statements of the Bank were duly endorsed by the President & CEO and CFO before approval of the Board. 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 shareholding. 15. The Bank has complied with all corporate and financial reporting requirements of the CCG. 16. The Board has formed a Board Audit & Corporate Governance Committee. It comprises of three members, of whom two are Independent and one is a Non-executive Director. The Chairman of the Committee is an Independent Director. 17. The Board Audit & Corporate Governance Committee (BACGC) held five (05) meetings, one in every quarter prior to approval of interim 58 18. The Board has formed a Recruitment, Nomination and Remuneration Committee (RNRC). It comprises of five members, of whom two are non-executive and three are Independent directors. The Chairman of the Committee is a Non-executive Director. 19. The Board has formed a Board IT Committee. It comprises of four members, of whom two are non-executive, one is independent and one is an executive director. The Chairman of the Committee is an Independent Director. 20. The Board has set up an Internal Audit function. The staff of Internal Audit Department are suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the Bank. Internal Audit Department is reporting to Board Audit & Corporate Governance Committee. 21. The statutory auditors of the Bank have confirmed that they have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan (ICAP); that they or any of the partners of the firm, their spouses and minor children do not hold shares of Faysal Bank Limited or its associates and the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP. 22. 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. 23. The ‘closed period’ prior to the announcement of interim / final results, and business decisions, which may materially affect the market price Annual Report 2017
  59. STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE of the Bank ’s securities, was determined and intimated to directors, employees and stock exchange. 24. 25. The Bank has complied with the requirements relating to maintenance of register of persons having access to inside information by designated senior management officer in a timely manner and maintained proper record including basis for inclusion or exclusion of names of persons from the said list. 26. We confirm that all other material principles envisaged in the CCG have been complied with. Material / price sensitive information has been disseminated among all market participants at once through stock exchange. Yousaf Hussain President & CEO Karachi Dated: February 28, 2018 Annual Report 2017 59
  60. SHARIAH BOARD ’S REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 By the Grace of Allah Subhanahu-wa-Taa’la, Faysal Bank Limited has completed another year of successful operations of its Islamic Banking, functioning under the name of Barkat Islamic Banking. Faysal Bank is continuously expanding its Islamic Branch network, and with an addition of 50 branches in 2017, the total branch network has reached to 197 branches. During the year, the Shariah Board (“SB”) held four meetings to review various existing and new products, policies, standard operating procedures, transactions, processes and their Shariah Compliance. As required under Shariah Governance Framework, the SB also met with BOD twice this year to have a detailed briefing on Shariah Compliance environment. Shariah Board appreciates the vision of the BOD and Management to convert the Bank’s entire operations to Islamic Banking. Following is the overview of the year 2017: Shariah Compliance Department Shariah Compliance Department (SCD) working under the guidance of the Shariah Board, carried out Shariah Compliance review on sample basis, to assess the compliance of different departments with the approved process flows, policies and procedures. Reviews were carried out for Trade Business and Services, Consumer Finance, Credit Administration Department, Service Quality, Call Centre, Complaint Centre and Branches. Furthermore, SCD also reviewed the profit distribution mechanism and calculations on monthly basis to ensure the mechanism is being followed as per the Shariah Board’s guidelines. While reviewing, interactive sessions were also conducted with the above mentioned departments to assess the capacity building requirements. Furthermore, as per directives of Shariah Board, Head SCD & RSBM visited different regional offices and Islamic Branches in Lahore, Multan and Karachi, where interactive awareness sessions were arranged with the Bank’s front and back office staff. During the year, SCD obtained approval for 82 customer specific process flows and approval for syndicate participations of 21 transactions were also processed. Subsequently, random physical inspections are also made by the SCD team to assess the on-ground practices being followed. Since the formation of Shariah Board, the process had been initiated for the separation of Bank vide Policies and Procedures for Islamic Banking from that of Conventional side; and during this year 28 existing and new policies / procedures have been reviewed by SCD and approved by the Shariah Board. SCD also plays a pivotal role in the capacity building of the staff, wherein, the Shariah Compliance team has facilitated through improvement of training material as well as conducting various trainings. Shariah Advisory Services During the year, the Bank has provided Shariah Advisory services for different Islamic Transactions, which included transactions related to various industries like sugar mill, cement industry, chemical industry and power sector, wherein, the volumes aggregated to around PKR 9,572 million with FBL Barkat’s participation of PKR 3,522 million. 60 01 Annual Report Report 2017 2017 Annual
  61. SHARIAHBOARD ’S BOARD’SREPORT REPORT SHARIAH FOR THE YEAR ENDED DECEMBER 31, 2017 Shariah Home In order to ensure availability of sufficient avenues for the aptitude development of staff at all levels with regards to Islamic Finance, Shariah Home is developed by the SCD, which is available on the Bankopedia (Bank’s intranet portal) and being enriched on continuous basis. The portal is updated on a regular basis with department wise Shariah Board Resolutions, RSBM Reports on Shariah Compliance Environment of the Bank, Shariah Compliance Review Reports and Annual Shariah Board Reports. Additionally, the portal is also enriched with latest training presentations and content related to Islamic Finance. Product Development Under the guidance of Shariah Board, Product Development team has worked for the improvement of existing products as well as development of new products along with their related documents and agreements. During the year, Faysal Barkat Islamic Banking further enriched its asset side product menu through introduction of Running Musharakah (product variants) and addition of different variants of Home Finance. In order to facilitate its customers in the Holy Pilgrimage, Hajj and Umrah facility was also approved during the year. In affiliation with the PayPak, Faysal Barkat Islamic Banking also launched Barkat PayPak Debit Card; a domestic payment scheme. A dedicated liability product to cater the financial needs of the senior population of 55 years and above was introduced, under the brand name of “Life Plus Saving Account”. In liaison with the Cash Management team a payroll product “Barkat PayCheq Plus” has also been introduced for payroll management. Faysal Bank also launched its Solitaire Preferred Islamic Banking Centre in Karachi, which is designed to deliver an exclusive experience to the customer. Internal Shariah Audit The work of Internal Shariah Audit Unit (ISAU) has been appreciable in strengthening of overall Shariah Compliance environment of the Bank. The ISAU team carried out Shariah Audit Reviews in Trade Finance, Corporate & Syndicated transactions, Branch Banking, Retail Banking, Treasury Products and Pool Management. Charity The opening balance of the charity fund was PKR 4.844 million and during the year an amount of PKR 7.548 million was recovered from the customers in lieu of delayed payments made by them. Furthermore, during the reviews conducted by Shariah Compliance Department and Internal Shariah Audit, various transactions were referred to Shariah Board where due to violations of the Shariah guidelines under the approved process and policies were observed. PKR 0.556 million was attributed to such cases, which was transferred to charity funds. During this period an amount of PKR 4.800 million was distributed among various charitable organisations as per directives of Shariah Board and delegated authorities of the Bank. For details of charity refer to Note No. A-2.2 of Annexure III of the financial statements. Learning and Development Trained human capital is the key to the success of Islamic Banking Industry. During the year the Bank took an initiative to have an in-depth training program arranged in liaison with the NIBAF for the Bank’s Senior Management. Furthermore, as per the directives of SBP, staff for newly opened branches undergoes a 05 days Islamic Banking Certification Program. Advanced Islamic Banking courses were also introduced during the year, especially aimed at capacity building of the staff, including front office and support departments. The Bank’s L&D department also arranged Islamic Banking trainings for selective staff through various external training institutes. Annual Report Report 2017 2017 Annual 61 02
  62. SHARIAH SHARIAH BOARD ’S BOARD’SREPORT REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 Opinion of Shariah Board While the Board of Directors and Executive Management are solely responsible to ensure that the operations of Faysal Bank Limited, Barkat Islamic Banking are conducted in a manner that comply with Shariah principles at all times, we are required to submit a report on the overall Shariah compliance environment of Faysal Bank Limited, Barkat Islamic Banking. To form our opinion as expressed in this report, the Shariah Compliance Department of the Bank carried out reviews, on test check basis, of each class of transactions, the relevant documentation and process flows. Further, we have also reviewed the reports of the internal Shariah audit and external Shariah audit. Based on above, we are of the view that: 1. In our opinion, the Islamic Banking Division of the Bank by and large complied with the Shariah rules and principles in the light of Fatawa, Rulings and Guidelines issued by the Shariah Board. 2. During review, any matter requiring corrective measures have been noted and were resolved by the management or ensured to be rectified in future. Subject to the foregoing, in our opinion, the affairs of the Barkat Islamic Banking Division have been carried out in accordance with the directives, regulations, instructions and guidelines related to Shariah compliance issued by the SBP. 3. The Bank has a comprehensive mechanism in place to ensure Shariah compliance in their overall operations. 4. Bank has a well-defined system in place in the form of Shariah Compliance Review and Internal Shariah Audit to ensure that the earnings realised from sources or means prohibited by Shariah are credited to charity account and properly utilised for charitable purposes. 5. The allocation of funds, profit and loss distribution and pool management is in accordance with Shariah Rules & Principles and Pool Management guidelines of State Bank of Pakistan. 6. Though L&D department of the Bank actively pursuing the training and development of human capital on the Islamic Finance & Finance through various training programs, however, considering the challenge of conversion, increased efforts are required on this front to enhance the awareness of staff and management for the products and processes of the Bank and importance of Shariah Compliance in the same. 7. The Shariah Board has been provided with adequate resources, enabling it to discharge its duties effectively. Recommendations from Shariah Board Based on the above, we recommend that: 1. The efforts of the Management and other support teams are commendable; however, the conversion process needs to be addressed more aggressively, wherein, all the concerned departments are required to put their maximum efforts for the cause with close coordination with Shariah. 2. With the growth in Islamic portfolio, resources should be dedicated within the existing teams specifically for the Islamic Transactions. Meanwhile, preference should also be given to experienced and trained Islamic Finance Professionals, with Islamic mindset while hiring new staff members. 62 01 Annual Report Report 2017 2017 Annual
  63. SHARIAH BOARD ’S REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 3. Staff Capacity building should be addressed through frequent refreshers, as the Bank needs strong skills and mind set in Islamic Banking to smoothly execute the expansion and conversion process. The training calendar should contain ample training for the back office staff and refresher courses for the Executive Management should also be made part of regular training calendar. Furthermore, awareness sessions should also be arranged for customers and general public. 4. Keeping in view the continuous branch expansion of Barkat Islamic Banking, the emphasis should be increased towards marketing of the Barkat Islamic products and provision of dominant positioning for Barkat Islamic in all the marketing platforms. And Allah Subhanahu-wa-Taa’la knows the Best Mufti Muhammad Mohib ul Haq Siddiqui Chairman Shariah Board Dr. Mufti Khalil Ahmad Aazami Member Shariah Board Mufti Khawaja Noor ul Hassan Resident Shariah Board Member Dated: February 16, 2018 | Jumad al Oola 29, 1438 A.H. Annual Annual Report Report 2017 2017 63 02
  64. DIRECTORS ’ REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 On behalf of the Board of Directors, we are pleased to present the Directors’ Report of Faysal Bank Limited along with Audited Financial Statements and the Auditors’ Report thereon for the year ended December 31, 2017. Economic Update: Pakistan’s economy during Calendar Year 2017 (CY ’17) remained robust despite external headwinds. Real GDP growth gained momentum and is set to achieve its highest level in eleven years, whereas headline inflation remains contained. It is important to highlight the successful issuance of $2.5 billion worth of 10-year Eurobond and Sukuk in international markets at the lowest ever rate for Pakistan. The cumulative order book of $8 billion by foreign investors for Pakistan’s sovereign papers signifies an encouraging stance on Pakistan’s debt market and overall economic prospects. Remittances have grown marginally during the year whereas exports receipts, have shown considerable improvement. However, the massive import bill poses increasing concern and is taking its toll on the current account. All three main segments of the economy; agriculture, industry and services are poised to perform well and contribute towards broad-based growth. In agriculture sector, sufficient water availability, enhanced yields and government support have provided impetus to the growth. Major Kharif crops (except maize) have surpassed their Fiscal Year 2017 levels. Large Scale Manufacturing (LSM) has also recorded robust performance with better energy supplies, low interest rates. These factors have contributed favorably towards growth of the industrial sector. The construction segment has benefited from infrastructure-related projects under Public Sector Development Plan (PSDP) and China Pakistan Economic Corridor (CPEC), which has led to a higher demand for cement and steel. In the services sector, healthy growth by commodity producing sectors and an overall increase in trade activities are likely to provide growth impetus. Considering performance of all sectors, SBP projects a real GDP growth of 5.8% for Fiscal Year 2018 (FY ’18). The policy rate during CY’ 17 was maintained at 5.75% as the headline inflation remained benign. During 1H-FY ’18, Consumer Price Index (CPI) stood at 3.75% compared to 3.88% during the corresponding period last year. However, core inflation - measured by non-food non-energy CPI - Dec’17 figure of 5.5% continues to inch upwards. Higher international crude prices, imposition of import duties and overall increase in import bills, dwindling output gap and lagged PKR depreciation are expected to push CPI towards 6% in the medium term. Responding to this, the SBP raised the policy rate by 25bps to 6% in January ’18. Fiscal deficit remains one of the major concerns which requires broad-based policy reforms and better tax collection. 1H-FY ‘18 fiscal deficit is expected to edge close to 2.5% of GDP. Despite an increase in overall quantum of tax collection; increasing expenditure on account of infrastructure spending, interest payments and defence has resulted in a significant gap between receipts and expenditures. As a result, fiscal deficit target stands revised from 4.1% to 5% of GDP. On the external, remittances increased by 2.52% during Jul-Dec FY ‘18 whereas export receipts posted a growth of 10.8%. A high import bill undermined the positives on Pakistan’s balance of payments. The current account deficit stands at $7.4 billion during first half of FY18, compared to $4.7 billion in the corresponding period last year. Going forward, lagged impact of PKR depreciation, export package & import duties are expected to keep the deteriorating current account deficit in check. Increase in international oil prices, however, remains a major concern to this assessment. 64 Annual Report 2017
  65. DIRECTORS ’ REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 Company Profile: Faysal Bank Limited (FBL) was incorporated in Pakistan on 3rd October, 1994 as a public limited company. Currently, the Bank’s shares are listed on the Pakistan Stock Exchange. FBL has increased its branch network by 50 branches in 2017. The Bank’s footprint now spreads over to 124 cities with 405 branches. The Bank has 207 conventional branches, 197 Islamic branches and 01 sub-branch. The Bank’s total assets are in excess of PKR 488 billion. FBL is engaged in Commercial, Retail, Corporate and Islamic banking activities and strives to provide quality service to its customers to meet their financial needs. Branches have been transformed to multi-product selling hubs through which customers can access a wide variety of products and services relevant to them. Furthermore, there is a great deal of focus on realizing synergies between its various operating units to ensure maximum value creation and holistic customer solutions. FBL is in process of being transformed into an Islamic Financial Institution and the transformation process is being implemented in a well planned and structured manner to preserve business growth and profitability of the Bank. Environmental Stewardship: The Bank is aware of its responsibilities with regard to protection of the environment and has undertaken the task of developing a comprehensive environmental policy. The Bank ensures due care, with regards to environmental hazards, is taken while undertaking new projects. Additionally, FBL has taken initiatives to reduce its energy consumption and carbon emission footprint and save precious energy resources. Bank’s Performance: The Bank is pursuing a well-defined strategy which emphasizes technological advancement to support digital banking, asset growth, cost efficiency and transformation to Islamic banking. Some of the notable milestones achieved during the period under review are as follows: Project Financing & Syndication: • FBL, acting as a Lead Advisor & Arranger among six other leading banks of Pakistan, has arranged a long term financing of PKR 144 billion under the conventional and Islamic mode of financing. The proceeds will be used for financing the state-owned 2,160 MW Hydropower Project. • FBL has successfully arranged and closed as Joint Mandated Lead Arranger PKR 18 billion conventional and Islamic mode of financing for the exclusive provider of transmission lines. The financing will be used for the construction and development of transmission interconnection for dispersal of electricity from Thar Coal Based power plants. • FBL participated in syndicated long term financing of PKR 13.0 billion with an amount of PKR 1.50 billion for a renowned cement plant arranged under Islamic mode of financing. The proceeds will be utilized for setting up a third production line of 6,700 tons of clinker per day at the existing plant location. • FBL acted as co-arranger in syndicated long term financing facility of PKR 26.75 billion, with participation of PKR 2.95 billion, arranged for a leading telecom operator under a combination of both conventional and Islamic modes of financing. Annual Report 2017 65
  66. DIRECTORS ’ REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 • FBL acted as Joint Lead Arranger and Shariah Structuring Advisor for PKR 1.0 billion syndicated facility arranged under mix of Islamic & Conventional modes of financing. The facility is being utilized to finance the procurement and installation of Waste Heat Recovery System at a leading cement manufacturer’s plant. • FBL acted as Shariah Structuring Advisor for PKR 4.0 billion syndicated facility arranged under mix of Islamic & Conventional modes of financing. The facility is being utilized to finance the Balancing, Modernization, Rehabilitation and Expansion (BMRE) requirements of a leading cement plant. • FBL acted as Joint Arranger and Shariah Structuring Advisor for PKR 4.48 billion syndicated facility arranged under mix of Islamic & Conventional modes of financing. The facility is being utilized to partially finance acquisition of tangible assets of a sugar mill. • FBL acted as Joint Arranger for PKR 16.19 billion syndicated Islamic facility. The facility will be utilized for setting up second cement production plant of 7,700 metric tons per day. • FBL acted as Mandated Lead Advisor & Arranger, Shariah Structuring Advisor and Issue Agent for Rated, Secured, Long-Term, Privately Placed Syndicated Sukuk Issue of PKR 7.0 billion. The Sukuk is being issued by a pioneer in the hospitality sector for meeting their development, expansion, capital expenditure, Balancing, Modernization & Replacement and refurbishment activities. Product Development & New Initiatives: • BTF product has been repositioned as Faysal Flexi Credit with improved features and benefits. • An innovative home improvement proposition was introduced by the name of ‘Home Styles’ under the platform of PIL and Credit Cards with over 28 partners from leading lifestyle brands • First Shariah compliant tele-sales Takaful product, Takaful Shield Plan was launched in collaboration with IGI life Assurance to cater to protection needs of Islamic Banking customers. • Housing Finance strategic Alliance with Zameen.com primarily for Brand strengthening, Brand awareness and Lead Generation. • Digital Marketing Campaign for Faysal Car Finance was launched. • With an objective to consolidate core processing systems, all Islamic products have been encompassed under the main core banking system, SYMBOLS. • The Bank implemented a dedicated Code of Conduct applicable on Branch staff selling wealth management products. Training & Development: • 4,175 participants were trained in 4th quarter and cumulative total of 21,964 participants were trained in 2017. Total training man hours for 2017 clocked in at 178,920. • Islamic Banking & Finance Course was completed for Senior Management. 66 Annual Report 2017
  67. DIRECTORS ’ REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 • 796 participants were trained on the mandatory Islamic Banking Certification Program for Branch Expansion. • Mandatory online Islamic Banking training has been completed by 76% of our Bank Staff. • 65 BSO trainee officers were placed in branches post six-month training program • Ethics & Values training program and Service Soft Skills was conducted for more than 800 participants on pan county basis. • More than 1,900 participants were trained in Bank’s induction programs for 2017. • 19 sessions were conducted through Faysal Bank’s field trainers on SBP’s National Financial Literacy Program. • The Bank attended career fairs organized by renowned educational institutions and also conducted campus drives for Trainee Officers Program. Corporate Social Responsibility: • Donated operating microscope and slit lamp to a well renowned NGO for their Turbat Eye Center. • Sponsored students in following education institutions - Rehnuma Public School - Professional Education Foundation - Karigar Training Institute Investment in Faysal Asset Management Limited: Subsequent to the year end, the Board of Directors’ approved an investment of Rs. 225 million in Faysal Asset Management Limited (FAML) to increase its shareholding from 30% to 80% through acquisition of 50% shareholding of FAML from Islamic Investment Company of the Gulf (Bahamas) Limited. The Bank had sought State Bank of Pakistan (SBP) approval on this transaction. The SBP has declined approval, however, the Bank is planning to file a review application to SBP for reconsidering this decision. Future Outlook: The Bank is in the process of being transformed into an Islamic Bank. Considerable work on capacity building in the areas of Human Resources, Technology & Product development has been completed and now the Bank is poised to start conversion of branches and borrowing customers. Bank also plans to develop a Digital Banking Strategy in order to provide secure, state of the art user-friendly banking services to its customers and will continue its effort in rationalization of cost. Annual Report 2017 67
  68. DIRECTORS ’ REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 Financial Highlights: 2016 2017 PKR in Million Total revenue 19,552 18,999 (12,779) (11,776) 6,773 7,223 686 (577) Provision for diminution in value of investments (183) 17 Provision against off balance sheet obligations (6) (4) 497 (564) 7,270 6,659 (2,755) (2,357) Profit after tax 4,515 4,302 Un-appropriated profit brought forward 9,986 7,638 14,501 11,940 - (1,200) (1,200) - (903) (860) 105 89 25 17 (1,973) (1,954) 12,528 9,986 3.42 3.26 Operating expenses Profit before provision Provision for non-performing advances Profit before tax Provision for taxation Appropriations/ Transfers: Final Cash Dividend @ 10% Final Bonus share issued @ 10% Transfer to statutory reserve Transfer from surplus on revaluation of Fixed Assets & NBA - net of tax Re measurement of post-employment obligation – net of tax Un-appropriated Profit carried forward Earnings per share – Rupees The bank has earned healthy Profit after Tax (PAT) of PKR 4.51 billion during 2017 as against PKR 4.30 billion for 2016, registering a 5% increase in profit from previous year. Historically low interest rates since last 3 years have eroded banking spreads and profitability creating challenges for the entire industry. Faysal Bank has taken timely and effective measures to strengthen its revenue streams and control cost to offset the impact of low interest rates. As a result, it was not only able to maintain its profitability levels but also improve it over last year. 68 Annual Report 2017
  69. DIRECTORS ’ REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 On the balance sheet side, total assets of the Bank have increased by PKR 43.5 billion or 9.8% i.e. from PKR 444.5 billion to PKR 488.0 billion. Net Advances increased to PKR 231.5 billion registering a 13.0% growth. Bank is maintaining a healthy Advances to Deposit Ratio of 68.1% which is significantly better than the other industry players. Deposits increased from PKR 340.3 billion to PKR 373.1 billion, depicting an increase of about 10% over last year. Bank made concerted efforts to mobilize low cost Current and Saving Accounts (CASA) deposits to protect and improve earning spread. CASA deposits increased by 14.4% from PKR 228.4 billion to PKR 261.3 billion. Consequently, cost of deposit of the Bank also dropped by 20 bps. The Bank has been efficiently managing its non-performing loans portfolio and it has been a consistent source of income by way of reversal of provisions. During the year under review, the Bank was able to reverse provisions to the extent of PKR 2.027 billion through recoveries of non-performing loans and, on an overall basis, posted a net reversal of provisions of PKR 496.6 million as compared to a net provision of PKR 564.1 million in 2016. NPL coverage has increased from 81.7% to 86.8% indicating that adequate provision on impaired assets have been taken. The Bank continues to focus on the non-funded business. Fee & commission increased by 13.6% as compared to the last year. Trade & consumer business volumes have shown healthy growth and it is expected that income from these revenue streams will further improve in coming years. Through efficient cost management, administrative expenses were kept under strict control. New initiatives go through a challenging evaluation process, including cost and benefit analysis. The cost increase over last year mainly reflects the impact of inflation and the cost incurred for branch network expansion. Resultantly, the Bank’s EPS has increased from PKR 3.26 in 2016 to PKR 3.42 in 2017, an increase of 5%. The Board of Directors has recommended final stock dividend of 15% for the year 2017. Credit Rating: JCR-VIS Credit Rating Company Limited (JCR) and Pakistan Credit Rating Agency Limited (PACRA) have re-affirmed the following entity ratings as on December 31, 2016: Long-Term AA Short-Term A1+ Stable outlook has been assigned to the ratings by both the rating agencies. Definitions of JCR-VIS for the assigned ratings are reproduced below: “AA: High credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. A1+: High certainty of timely payment. Short term liquidity including internal operating factors and/or access to alternative sources of funds; is outstanding and safety is just below risk free Government of Pakistan short-term obligations.” Annual Report 2017 69
  70. DIRECTORS ’ REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 Definitions of PACRA for the assigned ratings are reproduced below: “AA: Very high credit quality. “AA” rating denotes a very low expectation of credit risk. It indicates very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. A1+: Obligations supported by the highest capacity for timely repayment.” Corporate Governance: The Bank has implemented the requirements of the Code of Corporate Governance (the Code) relevant to the year ended December 31, 2017. SECP has issued Code of Governance for listed companies which will be applicable from January 01, 2018. A prescribed statement by the management along with the auditor’s review report thereon forms part of this Annual Report. Statement under clause xix of the code: a. The financial statements prepared by the management of the bank present fairly the state of affairs, the results of its operations, cash flows and changes in equity; b. Proper books of account of the bank have been maintained; c. Appropriate accounting policies have consistently been applied in preparation of the financial statements. Accounting estimates are based on reasonable and prudent judgment; d. Approved accounting standards, as applicable to banks in Pakistan, have been followed in preparation of financial statements; e. The system of internal control is sound in design and has been effectively implemented and monitored. f. There are no significant doubts about the bank continuing as a going concern; g. There has been no material departure from the best practices of corporate governance as detailed in the listing regulations; h. Summarized key operating and financial data of the last six years is tabulated on the initial pages of this Annual Report; i. The value of investment of provident and gratuity funds are PKR 973.131 million and PKR 449.605 million respectively as per the latest audited financial statements. j. The details of the Board and Committees’ Meetings held and attended by the directors form part of this Annual Report; k. The Bank is in compliance with certification requirement for Directors’ training program prescribed by the Code of Corporate Governance. l. The prescribed pattern of shareholding is given as a part of this Annual Report. 70 Annual Report 2017
  71. DIRECTORS ’ REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 m. No trades in the shares of the Bank were carried out by the Directors, CEO, CFO, Company Secretary, Head of Internal Audit and their spouses and minor children during the year 2017 except: Sr. No. Director Mr. Abdulelah Ebrahim Mohamed AlQasimi 1. Mr. Abdulla Abdulaziz Ali Taleb 2. No of shares 500 500 Purchase Date March 30, 2017 March 30, 2017 The above shares were purchased by these directors as qualification shares. Performance Evaluation of Board of Directors: In line with the best practices of the corporate governance FBL’s Board since 2012 has conducted self-evaluation exercise on an annual basis by engaging Pakistan Institute of Corporate Governance (PICG) as an external facilitator which is the lead on Corporate Governance and has a team of consultants to conduct board evaluations for companies and banks. SBP Guidelines on Performance Evaluation of Board of Directors were implemented in August 2016 and subsequently, FBL’s Board in compliance thereof has conducted its self-evaluation for the year 2017 by engaging PICG. The evaluation consists of various aspects of the performance of the Board including but not limited to: Board’s role, Committees, Training, Strategy, Risk Management, and Board Meetings. The evaluation covered: - The Board as a whole - Individual Director (Independent, Non-Executive and CEO) - Board Committees The evaluation was carried out using quantitative method, based on subjective assessment, and was conducted via questionnaires developed by the consultants in conformance with the State Bank of Pakistan’s Guidelines on Performance Evaluation of Board of Directors. The quantitative technique has the advantage of being specific and measurable. Measurement scale used in FBL’s board evaluation is the summated rating scale, board members have to rate on a scale on 1-10 depending on how strongly they agree or disagree with a given statement. The use of this method ensures specific and measurable data that can be benchmarked over time. Statement of Internal Control: The Board of Directors is pleased to endorse the statement made by the management relating to internal controls. The system of internal controls is sound in design and has been effectively implemented and monitored. The management’s statement on internal controls is included in this Annual Report. Risk Management Framework: Risk Management Group (RMG) is organized under the Chief Risk Officer (CRO). CRO has been authorized by the Board of Directors (BoD) to implement a Risk Management Framework across the Bank. Risk Management Framework is elaborated under Note 44 of the Financial Statements. Annual Report 2017 71
  72. DIRECTORS ’ REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 Holding Company: Ithmaar Bank B.S.C (closed), a banking entity regulated by the Central Bank of Bahrain is the parent company holding directly and indirectly, 66.78% (2016: 66.78%) of the shareholding in the Bank. Ithmaar Bank B.S.C. (closed) is a wholly owned subsidiary of Ithmaar Holding B.S.C. and Dar Al-Maal Al-Islami Trust (DMIT), (ultimate parent of the Bank) is the holding company of Ithmaar Holding B.S.C. Auditors: The present auditors, A F Ferguson & Co., Chartered Accountants, will retire on the date of next Annual General Meeting and are eligible for re-appointment. The Board of Directors endorses the recommendation of the Audit Committee for the appointment of A. F. Ferguson & Co., Chartered Accountants, as the auditors of the Bank for the financial year 2018. Acknowledgement: On behalf of the Board & Management of the Bank, I would like to take this opportunity to thank the shareholders and clients for the trust they have reposed in the Bank. I am also grateful to the State Bank of Pakistan, Securities and Exchange Commission of Pakistan for their continued support and guidance and to our valued customers for their patronage. I would also like to express sincere appreciation for the Shariah Board and employees of the Bank for their dedication and hard work. President & CEO Chairman Karachi Dated: February 28, 2018 72 Annual Report 2017
  73. Annual Report 2017 73
  74. STATEMENT ON INTERNAL CONTROLS This statement is presented to comply with the requirements of the State Bank of Pakistan (SBP) issued vide BSD Circular No. 07 dated May 27, 2004 “Guidelines on Internal Controls” and OSED Circular No. 01 of 2014 dated February 07, 2014 “Instructions on Internal Controls over Financial Reporting (ICFR)”. The Management of Faysal Bank Limited is responsible for establishing and maintaining adequate and effective internal control system in the Bank. The management of the Bank fully recognizes this responsibility, appreciates its value and significance and therefore, has designed the Bank’s Internal Control Program to provide reasonable assurance on the reliability of financial reporting, effectiveness of the operations and compliance with applicable laws and regulations. However, the Internal Controls Program is effectively implemented and monitored, there are inherent limitations in the effectiveness of any system, including the possibility of human error or system failure, circumvention and overriding of controls. Accordingly, even an effective internal control system can provide reasonable but not absolute assurance that the system’s objective will be achieved. Accordingly, policies and procedures encompassing various business and operational areas are in place, kept updated and communicated across all pertinent levels of the organization. The policies are approved by the Board of Directors and the procedures are approved by the Senior Management. The Bank’s internal audit function keeps monitoring of compliance with these policies and procedures and regularly apprises the management and the Board on the same through Board’s Audit and Corporate Governance Committee. The management of the Bank has instituted an Internal Control and Monitoring Unit (ICMU) for the conduct of on-site and off-site reviews of the processes in head office as well as in the branches. ICMU monitors and identifies gaps in the day to day operations and ensures prompt corrective actions. Further ICMU ensure compliance of policies approved by the Board of Directors and the procedures as approved by the senior management and implements sound control procedures to maintain a suitable control environment. The management takes remedial measures to address weaknesses identified by ICMU, internal and external auditors. These remedial measures, which include improvements in internal controls to ensure non recurrence of those exceptions, are monitored by the Compliance Committee. Additionally, the Bank has completed all stages of the ICFR roadmap, issued vide BSD Circular No. 05 dated February 24, 2009 of the State Bank of Pakistan (SBP). The Bank has adopted the “COSO Internal Control Integrated Framework” in relation to its internal control program in order to ensure consistency in the process of compliance with SBP’s Internal Control Guidelines involving documentation, risk assessment, gap analysis, controls testing and controls implementation. In the year 2017 State Bank of Pakistan granted exemption for submission of Long form Report through external auditors. Furthermore, as per the instructions of State Bank of Pakistan on the subject, the Board Audit Committee will submit the Long Form Report to State Bank of Pakistan on review of the ICFR program for the year ended December 31, 2017 within the regulatory timeline. The management feels confident that through adoption of these measures, the Bank’s internal control environment is maintained at a satisfactory level. The Board of Directors endorses the above stated management’s evaluation of internal controls and ICFR program. Yousaf Hussain President & CEO Karachi Dated: February 28, 2018 74 Annual Report 2017
  75. AUDITORS ’ REPORT TO THE MEMBERS We have audited the annexed statement of financial position of Faysal Bank Limited (the Bank) as at December 31, 2017 and the related profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof (here-in-after referred to as the ‘financial statements’) for the year then ended, in which are incorporated the unaudited certified returns from the branches except for thirty five branches which have been audited by us and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. It is the responsibility of the Bank’s management to establish and maintain a system of internal control, and prepare and present the financial statements in conformity with the approved accounting standards and the requirements of the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984). Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the International Standards on Auditing as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion and after due verification, which in the case of loans and advances covered more than sixty percent of the total loans and advances of the Bank, we report that: (a) in our opinion, proper books of accounts have been kept by the Bank as required by the Companies Ordinance, 1984 (XLVII of 1984), and the returns referred to above received from the branches have been found adequate for the purposes of our audit; (b) in our opinion: (i) the statement of financial position and profit and loss account together with the notes thereon have been drawn up in conformity with the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984), and are in agreement with the books of accounts and are further in accordance with accounting policies consistently applied; (ii) the expenditure incurred during the year was for the purpose of the Bank’s business; and (iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the Bank and the transactions of the Bank which have come to our notice have been within the powers of the Bank; (c) in our opinion and to the best of our information and according to the explanations given to us the statement of financial position, profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and give the information required by the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984), in the manner so required and give a true and fair view of the state of the Bank’s affairs as at December 31, 2017, and its true balance of the profit, its comprehensive income, its cash flows and changes in equity for the year then ended; and (d) in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980) was deducted by the Bank and deposited in the Central Zakat Fund established under section 7 of that Ordinance. Chartered Accountants Engagement Partner: Shahbaz Akbar Dated: March 06, 2018 Karachi Annual Report 2017 75
  76. STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31 , 2017 Note 2016 2017 ------------ Rupees ‘000---------- ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets - net Other assets 8 9 10 11 12 13 14 15 37,861,767 1,872,771 9,010,335 179,706,358 231,532,160 12,939,625 1,607,625 13,496,266 488,026,907 37,239,302 1,139,375 5,000,000 170,210,137 204,830,997 12,111,881 2,264,212 11,668,757 444,464,661 16 17 18 19 7,304,326 54,788,547 373,081,163 13,620,595 448,794,631 39,232,276 5,982,285 52,806,084 340,306,404 1,497,000 8,864,563 409,456,336 35,008,325 13,197,361 7,936,338 12,527,973 33,661,672 5,570,604 39,232,276 11,997,601 7,158,248 9,985,870 29,141,719 5,866,606 35,008,325 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities - net Other liabilities 20 NET ASSETS REPRESENTED BY Share capital Reserves Unappropriated profit 21 22 Surplus on revaluation of assets - net of tax 23 CONTINGENCIES AND COMMITMENTS 24 The annexed notes 1 to 48 and Annexures I to IV form an integral part of these financial statements. PRESIDENT & CEO CHIEF FINANCIAL OFFICER 76 DIRECTOR DIRECTOR DIRECTOR Annual Report 2017
  77. PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31 , 2017 Note Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income 2016 2017 ----------Rupees ‘000------------ 26 27 (Reversal of provision) / provision against non-performing loans and advances - net 12.4 Provision for consumer and small enterprise loans - general - net 12.4 & 12.5 Provision against off balance sheet obligations 20.2 Provision / (reversal of provision) for diminution in value of investments - net 11.3 Recoveries against written-off debts - net 12.7.1 Net mark-up / interest income after provisions Non mark-up / interest income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies - net Gain on sale of securities - net Unrealised (loss) / gain on revaluation of investments classified as held for trading - net Other income Total non mark-up / interest income Non mark-up / interest expenses Administrative expenses Other provisions / (reversals) - net Other charges Total non mark-up / interest expenses Share of loss of associate Extraordinary / unusual items Profit before taxation 28 29 30 15.3 31 11.8.2 Taxation - Current Taxation - Prior years Taxation - Deferred 32 32 32 Profit after taxation 28,791,306 14,830,923 13,960,383 26,200,691 14,134,284 12,066,407 (690,700) 104,409 5,152 625,813 31,585 4,209 182,943 (98,216) (496,412) 14,456,795 (16,930) (80,599) 564,078 11,502,329 3,086,639 159,514 1,385,057 845,659 2,715,435 276,301 1,368,290 2,092,759 (3,853) 141,060 5,614,076 20,070,871 11,107 490,566 6,954,458 18,456,787 12,607,943 4,610 166,143 12,778,696 7,292,175 (22,863) 7,269,312 11,660,533 (28,298) 143,865 11,776,100 6,680,687 (22,050) 6,658,637 2,647,657 (882,491) 989,360 2,754,526 2,262,905 (901,138) 995,098 2,356,865 4,514,786 4,301,772 --------------Rupees-------------33 Earnings per share - basic 3.26 3.42 The annexed notes 1 to 48 and Annexures I to IV form an integral part of these financial statements. PRESIDENT & CEO CHIEF FINANCIAL OFFICER Annual Report 2017 DIRECTOR DIRECTOR DIRECTOR 77
  78. STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31 , 2017 Note Profit after taxation for the year 2017 2016 -----------Rupees ‘000------------4,514,786 4,301,772 Other comprehensive income: Items that will not be reclassified to profit and loss account Components of comprehensive income reflected in equity - Remeasurement of defined benefit plan - Tax liability on remeasurement of defined benefit plan Comprehensive income transferred to equity 37.5 39,039 (13,664) 25,375 4,540,161 25,722 (9,003) 16,719 4,318,491 Items that may be reclassified subsequently to profit and loss account Components of comprehensive income not reflected in equity - Net change in value of available for sale securities - Deferred tax asset on change in value of available for sale securities (1,205,154) 421,803 (783,351) 3,756,810 Total comprehensive income (815,851) 285,547 (530,304) 3,788,187 The annexed notes 1 to 48 and Annexures I to IV form an integral part of these financial statements. PRESIDENT & CEO CHIEF FINANCIAL OFFICER 78 DIRECTOR DIRECTOR DIRECTOR Annual Report 2017
  79. STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31 , 2017 Reserves Capital Particulars Balance as at January 1, 2016 NonUnapprodistributable Statutory Reserve Reserve priated Total capital reserve Total for issue Share arising on profit reserve of bonus premium amalgama- (note 22.1) (NCR) - gain shares tion on bargain purchase -------------------------------------------------------------- Rupees ‘000 ------------------------------------------------------------------11,997,601 10,131 1,006,607 23,952 5,382,071 6,422,761 7,638,330 26,058,692 Share capital Profit after taxation for the year - - - - - - - 4,301,772 4,301,772 - - - - - - - 25,722 (9,003) 16,719 25,722 (9,003) 16,719 Final cash dividend - December 31, 2015 declared subsequent to the year end at Rs. 1 per share - - - - - - - - - - - - - - - - (1,199,760) (1,199,760) Amortisation of intangible assets customer relationship - net of tax (note 22.2) - - - (124,867) - - (124,867) - (124,867) Transfer to statutory reserve - - - - - 860,354 860,354 (860,354) - Transfer from surplus on revaluation of fixed assets - net of tax - - - - - - - 89,163 89,163 11,997,601 - 10,131 881,740 23,952 6,242,425 7,158,248 9,985,870 29,141,719 - - - - - - - 4,514,786 4,514,786 - - - - - - - 39,039 (13,664) 25,375 39,039 (13,664) 25,375 1,199,760 1,199,760 1,199,760 (1,199,760) - - - - - 1,199,760 (1,199,760) - (1,199,760) (1,199,760) - - - - (124,867) - - (124,867) - (124,867) Transfer to statutory reserve - - - - - 902,957 902,957 (902,957) - Transfer from surplus on revaluation of fixed assets - net of tax - - - - - - - 70,166 70,166 Transfer from surplus on revaluation of non-banking assets - net of tax - - - - - - - 34,493 34,493 Balance as at December 31, 2017 13,197,361 - 10,131 756,873 23,952 7,145,382 7,936,338 12,527,973 33,661,672 Other comprehensive income for the year - Remeasurement of defined benefit plan - Tax on remeasurement of defined benefit plan Transactions with owners recognised directly in equity - Transfer to reserve for issue of bonus shares - Bonus shares issued Balance as at December 31, 2016 Profit after taxation for the year Other comprehensive income for the year - Remeasurements of defined benefit plan - Tax on remeasurements of defined benefit plan Transactions with owners recognised directly in equity - Transfer to reserve for issue of bonus shares - Bonus shares issued Amortisation of intangible assets customer relationship - net of tax (note 22.2) The annexed notes 1 to 48 and Annexures I to IV form an integral part of these financial statements. PRESIDENT & CEO CHIEF FINANCIAL OFFICER Annual Report 2017 DIRECTOR DIRECTOR DIRECTOR 79
  80. CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31 , 2017 Note CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Less: dividend income 2016 2017 ----------------Rupees ‘000---------------7,269,312 (159,514) 7,109,798 6,658,637 (276,301) 6,382,336 783,471 184,929 14,032 154,382 (690,700) 104,409 182,943 4,610 5,152 3,853 (21,765) (2,040) 114,616 15,602 58,936 22,863 935,293 8,045,091 579,133 235,175 12,050 131,621 (225,195) 625,813 31,585 (16,930) (28,298) 4,209 (11,107) (56,816) 89,404 30,431 (11,524) 22,050 1,411,601 7,793,937 (4,010,335) (31,859,677) (26,137,086) (1,097,560) (63,104,658) (4,750,000) 5,133,970 (24,398,591) 1,649,682 (22,364,939) 1,322,041 2,259,574 32,774,759 4,793,679 41,150,053 (13,909,514) (2,852,893) (63,197) (16,825,604) (26,953) (37,465,314) 48,176,146 850,254 11,534,133 (3,036,869) (1,819,140) (4,856,009) CASH FLOWS FROM INVESTING ACTIVITIES Net divestment in available for sale securities Net divestment in held to maturity securities Dividend income received Investment in operating fixed assets Proceeds realised on disposal of operating fixed assets Proceeds realised on disposal of non-banking assets Net cash generated from investing activities 13,419,207 7,529,436 164,124 (1,255,243) 37,035 61,200 19,955,759 4,870,692 14,490,979 269,255 (1,110,975) 544,718 19,064,669 CASH FLOWS FROM FINANCING ACTIVITIES Payments of sub-ordinated loan Dividends paid Net cash used in financing activities (1,497,000) (183) (1,497,183) (1,497,000) (1,191,597) (2,688,597) Increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year 1,632,972 37,855,935 11,520,063 26,335,872 39,488,907 37,855,935 Adjustments for non-cash and other items: Depreciation Amortisation Depreciation on non-banking assets Workers’ Welfare Fund Provision written back (Reversal of provision) / provision against non-performing loans and advances - net Provision for consumer and small enterprise loans - general - net Provision / (reversal of provision) for diminution in value of investments - net Other provisions / (reversal) - net Provision against off balance sheet obligations Unrealised loss / (gain) on revaluation of investments classified as held for trading - net Net gain on disposal of property and equipment Net gain on disposal of non-banking assets Charge for defined benefit plan Amortisation of prepaid employee benefits Loss / (income) from derivative contracts - net Share of loss from associate 15.2 Decrease / (increase) in operating assets Lendings to financial institutions Held for trading securities Advances - net Other assets Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities Income tax paid Contribution to gratuity fund Net cash used in operating activities 34 Cash and cash equivalents at the end of the year The annexed notes 1 to 48 and Annexures I to IV form an integral part of these financial statements. PRESIDENT & CEO CHIEF FINANCIAL OFFICER 80 DIRECTOR DIRECTOR DIRECTOR Annual Report 2017
  81. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 1 STATUS AND NATURE OF BUSINESS 1.1 Faysal Bank Limited (the Bank) was incorporated in Pakistan on October 3, 1994 as a public limited company under the provisions of the Companies Ordinance, 1984. Its shares are listed on Pakistan Stock Exchange Limited. The Bank is mainly engaged in Corporate, Commercial and Consumer banking activities. The Bank has a network of 405 branches (2016: 355); including 197 Islamic banking branches (2016: 146) and 1 Islamic sub-branch (2016: 1) in Pakistan. The Registered Office of the Bank is located at Faysal House, ST-02, Shahra-e-Faisal, Karachi. Ithmaar Bank B.S.C (closed), a fully owned subsidiary of Ithmaar Holding B.S.C is the parent company of the Bank, holding directly and indirectly 66.78% (2016: 66.78%) of the shareholding of the Bank. Dar Al-Maal Al-Islami Trust (DMIT), (ultimate parent of the Bank) is the holding company of Ithmaar Holding B.S.C. 1.2 Based on the financial statements of the Bank for the year ended December 31, 2016, the Pakistan Credit Rating Agency Limited (PACRA) and JCR-VIS Credit Rating Company Limited have determined the Bank’s long-term rating as ‘AA’ (December 31, 2015: ‘AA’) and the short term rating as ‘A1+’ (December 31, 2015: ‘A1+’). 2 BASIS OF PRESENTATION 2.1 In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, the State Bank of Pakistan (SBP) has issued various circulars from time to time. Permissible forms of trade related modes of financing include purchase of goods by banks from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these financial statements as such but are restricted to the amount of facility actually utilised and the appropriate portion of mark-up thereon. 2.2 The financial results of the Islamic banking branches have been consolidated in these financial statements for reporting purposes only. Inter branch transactions and balances have been eliminated. 2.3 In accordance with the directives issued by the SBP, the statement of financial position and the profit and loss account of Islamic banking branches of the Bank are disclosed in Annexure III to these financial statements. 3 STATEMENT OF COMPLIANCE 3.1 These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan. The approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) and Islamic Financial Accounting Standards (IFASs) issued by the Institute of Chartered Accountants of Pakistan, as are notified under the Companies Ordinance, 1984, the requirements of the Companies Ordinance, 1984, the requirements of the Banking Companies Ordinance, 1962, or the directives issued by the SECP and the SBP. Wherever the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962, the IFAS notified under the Companies Ordinance, 1984 or the directives issued by the SECP and the SBP differ with the requirements of IFRSs, the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962, IFAS notified under the Companies Ordinance, 1984 or the requirements of the said directives issued by the SECP and the SBP prevail. The Companies Ordinance, 1984 has been repealed after the enactment of the Companies Act, 2017. However, as allowed by the SECP vide its Circular No 23 dated October 04, 2017, these financial statements have been prepared in accordance with the provisions of the repealed Companies Ordinance, 1984. Annual Report 2017 81
  82. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 3.2 The SBP has deferred the applicability of International Accounting Standard (IAS) 39, ‘Financial Instruments: Recognition and Measurement’ and International Accounting Standard (IAS) 40, ‘Investment Property’ for Banking Companies through BSD Circular Letter No. 10 dated August 26, 2002 till further instructions. Further, the SECP has also deferred the applicability of International Financial Reporting Standard (IFRS) 7, ‘Financial Instruments: Disclosures’ through its S.R.O. 633(I)/2014 dated July 10, 2014. Accordingly, the requirements of these standards have not been considered in the preparation of these financial statements. However, investments have been classified and valued in accordance with the requirements prescribed by the SBP through various circulars. 3.3 IFRS 8, ‘Operating Segments’ is effective for the Bank’s accounting period beginning on or after January 1, 2009. All banking companies in Pakistan are required to prepare their annual financial statements in line with the format prescribed under BSD Circular No. 4 dated February 17, 2006, ‘Revised Forms of Annual Financial Statements’, effective from the accounting year ended December 31, 2006. The management of the Bank believes that as the SBP has defined the segment categorisation in the above mentioned circular, the SBP’s requirements prevail over the requirements specified in IFRS 8. Accordingly, segment information disclosed in these financial statements is based on the requirements laid down by the SBP. 3.4 As per the directive of the SBP through its letter BPRD (R&P-02)/625-99/2011/3744 dated March 28, 2011, gain arising on bargain purchase of Pakistan operations of Royal Bank of Scotland (ex-RBS Pakistan) was credited directly into equity as Non-Distributable Capital Reserve (NCR). The SBP allowed the Bank to adjust the amortisation of intangible assets against the portion of reserve which arose on account of such assets. Accordingly, during the year ended December 31, 2017 the Bank has adjusted amortisation of intangible assets amounting to Rs. 124.867 million (net of tax) from the Non-distributable Capital Reserve. 3.5 The SBP vide its BPRD Circular No. 04 dated February 25, 2015 has clarified that the reporting requirements of IFAS-3 for Institutions offering Islamic Financial Services (IIFS) relating to annual, half yearly and quarterly financial statements would be notified by SBP through issuance of specific instructions and uniform disclosure formats in consultation with IIFS. These reporting requirements have not been ratified to date. Accordingly, the disclosure requirements under IFAS 3 have not been considered in these financial statements. 3.6 The SBP vide its BSD Circular No. 07 dated April 20, 2010 has clarified that for the purpose of preparation of the financial statements in accordance with International Accounting Standard - 1 (Revised), ‘Presentation of Financial Statements’, two statement approach shall be adopted i.e. separate ‘Profit and Loss Account’ and ‘Statement of Comprehensive Income’ shall be presented, and Balance Sheet shall be renamed as ‘Statement of Financial Position’. Furthermore, only the surplus / (deficit) on revaluation of available for sale (AFS) securities, may be included in the ‘Statement of Comprehensive Income’. However, it should continue to be shown separately in the statement of financial position below equity. Accordingly, the above requirements have been adopted in the preparation of these financial statements. 3.7 The SECP has directed that the requirements of IFRS 10, ‘Consolidated Financial Statements’ are not applicable in case of investments by Companies in mutual funds established under Trust Deed structure. Accordingly, implications of IFRS 10 in respect of mutual funds are not considered in these financial statements. 3.8 Standards, interpretations and amendments to published approved accounting standards that are effective in the current year 3.8.1 The Bank has applied the following amendments for the first time for their accounting period commencing January 01, 2017: 82 Annual Report 2017
  83. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 - Disclosure Initiative- Amendments to IAS 7. The amendments to IAS 7 require disclosure of changes in liabilities arising from financing activities. This has been disclosed in note 35 to the financial statements. 3.8.2 In addition to the above there are certain new and amended standards and interpretations that are mandatory for the Bank’s accounting periods beginning on or after January 1, 2017 but are considered not to be relevant or do not have any significant effect on the Bank’s operations and are, therefore, not disclosed in these financial statements. 3.9 Standards, interpretations and amendments to published approved accounting standards that are not yet effective: 3.9.1 The following revised standards, amendments and interpretations with respect to the approved accounting standards would be effective from the dates mentioned below against the respective standard, amendments or interpretation: Standard, Interpretations or Amendments - IFRS 9 - ‘Financial Instruments’ IFRS 15 - ‘Revenue from contracts with customers’ with amendments IFRS 16 - ‘Leases’ IFRIC 22 - ‘Foreign currency transactions and advance consideration’ IFRIC 23 - ‘Uncertainty over income tax treatments’ Effective date (accounting periods beginning on or after) July 01, 2018 July 01, 2018 January 01, 2019 January 01, 2018 January 01, 2019 The management is in the process of assessing the impact of these standards and interpretations on the financial statements of the Bank. 3.9.2 The SBP vide its Circular No. 02 of 2018 dated January 25, 2018 has specified the new reporting format for financial statements of Banking Companies. The new format has revised the disclosure requirements and will become applicable for the annual financial statements of the Bank for the year ending December 31, 2018. 3.9.3 There are certain other new and amended standards, interpretations and amendments that are mandatory for the Bank’s accounting periods beginning on or after January 1, 2018 but are considered not to be relevant or will not have any significant effect on the Bank’s operations and are therefore not detailed in these financial statements. 4 BASIS OF MEASUREMENT These financial statements have been prepared under the historical cost convention, except that certain fixed assets and non-banking assets acquired in satisfaction of claims are carried at revalued amounts, certain investments and derivative contracts have been marked to market and are carried at fair value. In addition, obligations in respect of staff retirement benefits are carried at present value. 5 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of the financial statements in conformity with the approved accounting standards requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and income and expenses. It also requires management to exercise judgments Annual Report 2017 83
  84. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 in application of its accounting policies. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods. Significant accounting estimates and areas where judgments were made by the management in the application of the accounting policies are as follows: i) ii) iii) iv) v) vi) vii) viii) ix) x) 6 classification and provisioning against investments (notes 7.4 and 11). income taxes (notes 7.8, 14 and 32). classification and provisioning against advances (notes 7.5 and 12). depreciation / amortisation of operating fixed assets (notes 7.6 and 13). accounting for non-banking assets acquired in satisfaction of claims (note 7.9) accounting for defined benefit plan (notes 7.11 and 37). impairment of intangible assets (note 7.6 and 13.3). impairment of assets (note 7.7) Provisions and contingent assets and liabilities (note 7.10) Staff retirement benefits (note 7.11) FUNCTIONAL AND PRESENTATION CURRENCY Items included in the financial statements are measured using the currency of the primary economic environment in which the Bank operates. The financial statements are presented in Pakistani Rupees, which is the Bank’s functional and presentation currency. 7 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years. 7.1 Business Combination Business combinations are accounted for by applying the acquisition method. The cost of acquisition is measured as the fair value of assets given, equity instruments issued and the liabilities incurred or assumed as at the date of acquisition. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement, if any. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values as at the acquisition date. The excess of the consideration transferred over the fair value of the Bank’s share of identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets acquired in the case of a bargain purchase, the difference is recognised directly in the profit and loss account. However, as more fully described in note 22.2 to these financial statements, the gain on bargain purchase arising on an acquisition made in 2010 has been recognised directly in equity as per the directives of the SBP. Goodwill acquired in a business combination is measured, subsequent to initial recognition, at its cost less accumulated impairment losses, if any. Goodwill acquired in a business combination is tested for impairment annually or whenever there is an indication of impairment as per the requirements of International Accounting Standard (IAS) 36, ‘Impairment of Assets’. Impairment charge in respect of goodwill is recognised in the profit and loss account and is not subsequently reversed. 84 Annual Report 2017
  85. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Acquisition of non-controlling interests (NCI) is measured at the proportionate share of the NCI in the fair value of the net assets acquired by the Bank. The excess of the fair value of consideration transferred over the proportionate share of the NCI in the fair value of the net assets acquired is recognised in equity. 7.2 Cash and cash equivalents For the purpose of the cash flow statement, cash and cash equivalents comprise of cash in hand, balances with treasury banks, balances with other banks in current and deposit accounts, national prize bonds, if any, and overdrawn nostro accounts. 7.3 Lendings to / borrowings from financial institutions The Bank enters into repurchase agreement (repo) and reverse repurchase agreements (reverse repos) at contracted rates for a specified period of time. These are recorded as under: (a) Sale of securities under repurchase agreements Securities sold subject to a repurchase agreement (repo) are retained in the financial statements as investments and the counter party liability is included in borrowings. The difference between the sale and contracted repurchase price is accrued over the period of the contract and recorded as an expense. (b) Purchase of securities under repurchase agreements Securities purchased under agreement to resell (reverse repo) are not recognised in the financial statements as investments and the amount extended to the counter party is included in lendings. The difference between the purchase and contracted resale price is accrued over the period of the contract and recorded as income. (c) Musharaka / Mudaraba Placements In Musharaka / Mudaraba, the Bank invests in the Shari’ah compliant business pools of the financial institutions at the agreed profit and loss sharing ratio. (d) Bai Muajjal Bai Muajjal transactions with the SBP and other financial institutions are classified under lendings. In Bai Muajjal, the Bank sells Shari’ah compliant instruments on credit to other financial institutions. The credit price is agreed at the time of sale and such proceeds are received at the end of the credit period. The difference between the sale and the credit price is recognised over the credit period and recorded as income. 7.4 Investments The Bank classifies its investments as follows: (a) Held for trading These are securities, which are either acquired for the purpose of generating profit from short-term fluctuations in market prices, interest rate movements, or dealer’s margin or are securities included in the portfolio in which a pattern of short-term profit making exists. Annual Report 2017 85
  86. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 (b) Held to maturity These are securities with fixed or determinable payments and maturity that the Bank has a positive intent and ability to hold to maturity. (c) Available for sale These are investments, other than those, in associates, that do not fall under either held for trading or held to maturity categories. (d) Associates Associates are all entities over which the bank has significant influence but not control. Initial recognition and measurement: All purchases and sales of investments that require delivery within the time frame established by the regulations 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 are initially recognised at fair value which includes transaction costs associated with the investments. Investments classified as ‘held for trading’ are initially recognised at fair value and transaction costs associated with the transactions are expensed in the profit and loss account. Subsequent measurement: Held for trading These are measured at subsequent reporting dates at fair value. Gains and losses on re-measurement are included in the profit and loss account. Held to maturity These are measured at amortised cost using the effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts. Available for sale Quoted securities classified as available for sale investments are measured at subsequent reporting dates at fair value. Any surplus or deficit arising thereon is kept in a separate account shown in the statement of financial position below equity and is taken to the profit and loss account when realised upon disposal or when the investment are considered to be impaired. Unquoted equity securities are valued at the lower of cost and break-up value. The break-up value of these securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements. A decline in the carrying value is charged to the profit and loss account. A subsequent increase in the carrying value, upto the cost of the investment, is credited to the profit and loss account. Investments in other unquoted securities are valued at cost less impairment, if any. 86 Annual Report 2017
  87. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Impairment Impairment loss in respect of investments classified as available for sale (except term finance certificates and sukuk certificates) and held to maturity is recognised based on management’s assessment of objective evidence of impairment as a result of one or more events that may have an impact on the estimated future cash flows of the investments. A significant or prolonged decline in the fair value of a listed equity investment below its cost is also considered an objective evidence of impairment. Provision for diminution in the value of term finance certificates and sukuk certificates is made as per the requirements of the Prudential Regulations issued by the SBP. In case of impairment of available for sale securities, the cumulative loss that has been recognised directly in surplus / deficit on revaluation of securities on the statement of financial position below equity is removed therefrom and recognised in the profit and loss account. For investments classified as held to maturity, the impairment loss is recognised in the profit and loss account. Gain or loss on sale of investments is included in the profit and loss account currently. Premium or discount on acquisition of investments is amortised through the profit and loss account over the remaining period till maturity using the effective interest method. Investment in associates Investments in associates, where the Bank has significant influence, are accounted for using the equity method of accounting. Under the equity method of accounting, the investment in associate is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of net assets after the date of acquisition. The Bank’s share of post acquisition profit and loss of associates is accounted for in the profit and loss account with a corresponding adjustment to the carrying amount of the investment. When the Bank’s share of losses in associates equals or exceeds its interest in the associates, including any other unsecured receivables, the Bank does not recognise further losses, unless it has incurred legal or constructive obligation or made payments on behalf of the associates. Profit and losses resulting from upstream and downstream transactions between the Bank and its associates are recognised in the Bank’s financial statements only to the extent of unrelated investor’s interests in the associates. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Bank. Dilution gains and losses arising on investments in associates are recognised in the profit and loss account. 7.5 Advances 7.5.1 Advances are stated net of specific and general provisions. Specific provision for advances is made in accordance with the requirements of the Prudential Regulations and other directives issued by the SBP. The amount of provision is charged to the profit and loss account. General provision against consumer and small enterprises financings portfolio is maintained as per the requirements of the Prudential Regulations issued by the State Bank of Pakistan. Advances are written off when there is no realistic prospect of recovery. In addition to conventional products, the Bank also offers various Islamic financing products the details of which are as follows: (a) 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. Annual Report 2017 87
  88. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 (b) Diminishing Musharaka It is a form of partnership in which bank and the customer create co-ownership in the asset by purchasing it jointly. Bank then rents out its share of the asset to the customer. Besides the payment of rentals, customer also purchases the asset from the Bank in installments. Hence at the end of the tenure, customer becomes sole owner of the asset. (c) Running Musharaka In Running Musharakah financing, the Bank enters into financing with the customer based on Shirkatul Aqd or Business Partnership in the customer’s operating business. Under this mechanism the customer can withdraw and return funds to the Bank subject to its Running Musharakah Financing limit during the Musharakah period. At the end of each period 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. (d) Ijarah Ijarah is a contract whereby the owner of an asset (other than consumables) transfers its usurfruct to another person for an agreed period and for an agreed consideration. Ijarah assets are stated at cost less accumulated depreciation and impairment losses, if any. Depreciation is charged from the date of recognition of Ijarah assets on a straight line basis over the period of Ijarah. Impairment of Ijarah assets is determined on the same basis as that of operating fixed assets. Ijarah income is recognised in income on accrual basis as and when the rental becomes due. Impairment of ijarah rental is determined in accordance with the requirements of the Prudential Regulations and other directives issued by the SBP and charged to the profit and loss account. In Service Ijarah financing, the Bank provides financing by acquiring certain agreed services from the customer. After the purchase of services, the Bank appoints the customer to sell these services in the market over a period and provide a sale confirmation of such sale. The profit is only accrued from the date of receipt of such confirmation. (e) Istisna Istisna is a mode of sale at an agreed price, whereby the buyer places an order to or cause to manufacture, assemble or construct anything to be delivered at a future date. Funds disbursed, under Istisna are recorded as ‘Advance against Istisna’. On execution of Goods Receiving Note & receipt of manufactured goods the same will be recorded at the Balance sheet as inventories of the Bank at cost price & after sale of goods by the customer to its ultimate buyers, Istisna financing will be settled. (f) Musawamah In Musawamah financing, the Bank purchases the goods and after taking the possession, sells them to the customer either in spot or credit transaction, without disclosing the cost. 88 Annual Report 2017
  89. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 7.5.2 Net investment in finance lease Leases where the Bank transfers substantially all the risks and rewards incidental to the ownership of an asset are classified as finance lease. A receivable is recognised on the commencement of lease term at an amount equal to the present value of the minimum lease payments, including guaranteed residual value, if any. Unearned finance income is recognised over the term of the lease, so as to produce a constant periodic return on the outstanding net investment in lease. Specific and general provisions for net investment in finance lease are made in accordance with the requirements of the Prudential Regulations and other directives issued by the SBP and charged to the profit and loss account. 7.6 Fixed assets and depreciation (a) Tangible assets - owned Operating fixed assets other than land and buildings are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Buildings are carried at revalued amount less any accumulated depreciation and subsequent impairment losses, if any. Land is carried at revalued amount less any subsequent impairment losses, if any. Depreciation on operating fixed assets (excluding land which is not depreciated) is charged using the straight line method in accordance with the rates specified in note 13.2 to these financial statements after taking into account residual value, if significant. The asset’s residual values and useful lives are reviewed and adjusted, if required, at each balance sheet date. Depreciation on additions is charged from the month the assets are available for use. No depreciation is charged in the month of disposal. Subsequent costs are included in the asset’s carrying amounts or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. All other repairs and maintenance expenditure are charged to the profit and loss account as and when incurred. Land and buildings are revalued by professionally qualified valuers with sufficient regularity to ensure that the net carrying amount does not differ materially from their fair value. Surplus arising on revaluation is credited to the surplus on revaluation of fixed assets account. Deficit arising on subsequent revaluation of fixed assets is adjusted against the balance in the above mentioned surplus account as allowed under the provisions of the Companies Ordinance, 1984. The surplus on revaluation of fixed assets to the extent of incremental depreciation charged on the related assets is transferred to unappropriated profit. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains / losses on disposal of fixed assets, if any, are taken to the profit and loss account in the period in which they arise except that the related surplus on revaluation of fixed assets (net of deferred taxation) is transferred directly to unappropriated profit. (b) Tangible assets - leased Leases are classified as finance lease wherever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating lease. Lease payments, if any, under operating lease are charged to income on a straight line basis over the lease term. Annual Report 2017 89
  90. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Assets held under finance lease are stated at the lower of their fair value or present value of minimum lease payments at inception less accumulated depreciation and accumulated impairment losses, if any. Leasehold land and buildings on leasehold land are subsequently revalued. The outstanding obligations under the lease agreements, if any, are shown as a liability net of finance charges allocable to the future periods. The finance charges are allocated to the accounting periods in a manner so as to provide a constant periodic rate of return on the outstanding liability. Depreciation on assets held under finance lease, subsequent costs and gains / losses are recognised in a manner consistent with that for depreciable and other fixed assets which are owned by the Bank. (c) Capital work in progress Capital work-in-progress is stated at cost less accumulated impairment losses, if any. All expenditure connected with specific assets incurred during installation and construction period are carried under this head. These are transferred to specific assets as and when assets become available for use. (d) Intangible assets Intangible assets having definite lives are stated at cost less accumulated amortisation and accumulated impairment losses, if any. The intangible assets include directly attributable cost that are capitalised as part of the intangible asset. Amortisation, except for customer relationship is charged applying the straight-line method over the useful lives of the assets. Amortisation is calculated so as to write-off the assets over their expected economic lives at rates specified in note 13.3 to these financial statements. Amortisation is charged from the month in which the asset is available for use. No amortisation is charged for the month in which the asset is disposed of. The intangible asset comprising customer relationship is being amortised over the life expectancy of the deposits. The residual values and useful lives of intangible assets are reviewed and adjusted, if appropriate, at each balance sheet date. Subsequent costs are included in the asset’s carrying amounts or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. Intangible assets having an indefinite useful life are stated at acquisition cost less accumulated impairment losses, if any. Gains and losses on disposals, if any, are taken to the profit and loss account in the period in which they arise. 7.7 Impairment The carrying amount of assets is reviewed at each balance sheet date for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. If any such indication exists, and where the carrying value exceeds the estimated recoverable amount, assets are written down to their recoverable amount. The resulting impairment loss is taken to the profit and loss account except for impairment loss on revalued assets, which is adjusted against related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of asset. An impairment loss is reversed except for impairment loss relating to goodwill, if there has been a change in the estimate used to determine the recoverable amount. Such reversals are only made to the extent that the asset’s carrying amount does not exceed the amount that would have been determined if no impairment loss had been recognised. 90 Annual Report 2017
  91. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 7.8 Taxation Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity or below equity, in which case it is recognised in equity or below equity. Current Provision for current taxation is based on taxable income for the year. Tax charge for the current year is determined in accordance with the prevailing laws for taxation. The charge for the current tax is calculated using tax rates enacted or substantively enacted at the balance sheet date. The charge for the current tax also includes adjustments relating to prior years, if necessary, arising from assessments finalised during the year. Deferred Deferred tax is recognised using the balance sheet liability method on all temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and amounts used for taxation purposes. In addition, the Bank also records deferred tax asset on available tax losses. Deferred tax is calculated using the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefits will be realised. The carrying amount of the deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilised. The Bank also recognises deferred tax asset / liability on deficit / surplus on revaluation of securities, fixed assets and assets acquired in satisfaction of claims which is adjusted against the related deficit / surplus in accordance with the requirements of International Accounting Standard (IAS-12) Income Taxes. 7.9 Assets acquired in satisfaction of claims Non-banking assets acquired in satisfaction of claims are carried at revalued amounts less accumulated depreciation and accumulated impairment (if any). These assets are revalued by professionally qualified valuers with sufficient regularity to ensure that their net carrying value does not differ materially from their fair value. Legal fees, transfer costs and direct costs of acquiring title to the non-banking assets are charged to the profit and loss account and these are not capitalised as part of non-banking assets. A surplus arising on revaluation of non-banking assets acquired in satisfaction of claims is credited to the ‘surplus on revaluation of assets account. Any deficit arising on revaluation is first set off against the surplus account for that non-banking asset, if any, or if no surplus exists, is charged to the profit and loss account. These assets are disclosed in other assets as specified by the SBP. 7.10 Provisions and contingent assets and liabilities Provisions are recognised when the Bank has a legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates. Annual Report 2017 91
  92. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Contingent assets are not recognised and are also not disclosed unless an inflow of economic benefits is probable. Contingent liabilities are not recognised and are disclosed unless the probability of an outflow of resources embodying economic benefits is remote. 7.11 Staff retirement benefits a) Defined contribution plan The Bank operates a contributory provident fund for all its permanent employees to which equal monthly contributions at the rate of 10 percent of basic salary are made both by the Bank and the employees. b) Defined benefit scheme The Bank operates an approved funded gratuity scheme for all its permanent eligible employees and eligible employees who are on contractual service and are employed under non-management cadre. Contributions to the fund are made on the basis of actuarial recommendations. Projected Unit Credit Method is used for the actuarial valuation. Amounts arising as a result of “Remeasurements”, representing the actuarial gains and losses and the differences between the actual investment returns and the return implied by the net interest cost are recognised in the Statement of Financial Position immediately, with a charge or credit to “Other Comprehensive Income” in the periods in which they occur. Staff retirement benefits are payable to staff on completion of prescribed qualifying period of service under these schemes. 7.12 Borrowings / deposits and their costs Borrowings / deposits are recorded at the proceeds received. Borrowing / deposit costs are recognised as an expense in the period in which these are incurred to the extent that they are not directly attributable to the acquisition of or construction of qualifying assets. Borrowing cost that is directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) is capitalised as part of the cost of the asset. 7.13 Subordinated loans Subordinated loans are initially recorded at the amount of proceeds received. Mark-up on subordinated loans is charged to the profit and loss account over the period on an accrual basis and is recognised separately as part of other liabilities. 7.14 Revenue recognition and other items - 92 Mark-up income / interest / profits on advances and returns on investments are recognised on a time proportion basis except that mark-up income / interest / returns / profits on non-performing advances and investments are recognised on receipt basis in accordance with the requirements of the Prudential Regulations issued by the State Bank of Pakistan. Interest / returns / mark-up income/ profits on rescheduled / restructured advances and investments are recognised as permitted by the State Bank of Pakistan, except where, in the opinion of the management, it would not be prudent to do so. Annual Report 2017
  93. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 - Profit on Murabaha and Musawamah transactions is recognised on accrual basis for the period from the date of sale of goods to customer to the date of culmination of Murahaba / Musawamah. However, no profit can be accrued in excess of selling price determined at the time of executing the Murahaba / Musawamah transaction. - Profit on Istisna transactions is recognised on accrual basis for the period from the date of sale of goods by the Banks customer to its ultimate buyer to the date of culmination of transaction. - Ijarah rentals once due are recognised as income on accrual basis over the corresponding rental period. - Rental on Diminishing Musharaka financing once due is recognised on accrual basis over the corresponding rental period. - Profit on Running Musharaka is recognised on accrual basis and is adjusted upon declaration of profit by the customer. - Financing method is used in accounting for income from lease financing. Under this method, the unearned finance income (excess of the sum of total lease rentals and estimated residual value over the cost of leased assets) is taken to income over the term of the lease so as to produce a constant periodic rate of return on the outstanding net investment in lease. - Unrealised finance income in respect of non-performing lease finance is held in suspense account, where necessary, in accordance with the requirements of the Prudential Regulations issued by the SBP. Gains / losses on termination of lease contracts, documentation charges, front-end fee and other lease income are recognised as income when they are realised. - Premium or discount on acquisition of debt investments is capitalised and amortised through the profit and loss account over the remaining period till maturity. - Dividend income from investments is recognised when the Bank’s right to receive the dividend is established. - Fee, commission on letters of credit / guarantee, other commission and brokerage income is recognised on accrual basis. - Financial advisory fee is recognised when the right to receive the fee is established. - Rent and other income is recognised on accrual basis. - Profits on Bai Muajjal lendings are recognised on straight line basis. 7.15 Proposed dividend and transfer between reserves Dividends and appropriations to reserves, except appropriations which are required by law, made subsequent to the balance sheet date are considered as non-adjusting events and are recorded in the financial statements in accordance with the requirements of International Accounting Standard (IAS) 10, ‘Events after the Balance Sheet Date’ in the year in which they are approved / transfers are made. Annual Report 2017 93
  94. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 7.16 Foreign currencies (a) Foreign currency transactions Transactions in foreign currencies are translated into rupees at the foreign exchange rates prevailing at the transaction date. Monetary assets and liabilities in foreign currencies are expressed in rupee terms at the rates of exchange prevailing at the balance sheet date. Foreign bills purchased and forward foreign exchange contracts are valued at rates determined with reference to their respective maturities. Forward purchase contracts with the State Bank of Pakistan relating to foreign currency deposits are valued at the spot rate prevailing on the balance sheet date. The forward cover fee, if any, payable on contracts with the SBP is amortised over the term of the contract. (b) Translation gains and losses Translation gains and losses are included in the profit and loss account. 7.17 Commitments Commitments for outstanding forward foreign exchange contracts are disclosed in the financial statements at committed amounts. Commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in rupee terms at the rates of exchange prevailing at the reporting date. 7.18 Acceptances Acceptances comprise undertakings by the Bank to pay bills of exchange drawn on customers. The Bank expects most acceptances to be simultaneously settled with the reimbursement from the customers. Acceptances are accounted for as off balance sheet transactions and are disclosed as contingent liabilities. 7.19 Financial instruments Financial assets and financial liabilities Financial instruments carried on the balance sheet include cash and balances with treasury banks, balances with other banks, lendings to financial institutions, investments, advances, certain other assets, bills payable, borrowings, deposits, liabilities against assets subject to finance lease and certain other liabilities. The particular recognition methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with these assets and liabilities. Derivative financial instruments Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value using appropriate valuation techniques. All derivative financial instruments are carried as assets when the fair value is positive and the liability when the fair value is negative. Any change in the fair value of derivative financial instruments is taken to the profit and loss account. Offsetting Financial assets and financial liabilities are set off and the net amount is reported in the financial statements only when the Bank has a legally enforceable right to set off and the Bank intends to either settle on a net basis, or to realise the assets and to settle the liabilities simultaneously. Income and expense items of such assets and liabilities are also offset and the net amount is reported in the financial statements only when permitted by the approved accounting standards as applicable in Pakistan. 94 Annual Report 2017
  95. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 7.20 Earnings per share The Bank presents basic and diluted Earnings Per Share (EPS) for its shareholders. Basic EPS is calculated by dividing the profit attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, if any. 7.21 Segment reporting Segment reporting is based on operating (business) segments of the Bank. An operating segment is a component of the Bank that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Bank’s other components. The segment’s results are reviewed regularly, which have been presented according to the functional basis and the guidance of the SBP, to make decisions about resources to be allocated to the segment and assess its performance, and for which financial information is available. These have been presented as per the Bank’s functional structure and guidance of the SBP. The segments of the Bank are as follows: (a) Business Segments (i) Corporate finance This includes investment banking activities such as mergers and acquisitions, underwriting, privatisation, securitisation, Initial Public Offers (IPOs), secondary private placements and etc. (ii) Trading and Sales It includes fixed income, equity, foreign exchanges, funding, own position securities, lendings and repos. (iii) Retail banking Retail banking provides services to small borrowers i.e. consumers, small enterprises, medium enterprises and agriculture sector. It includes loans, deposits, other transactions and balances with retail customers. (iv) Corporate and commercial banking This includes strategic partnership with Corporate and Commercial entities to provide working capital financing, trade financing, cash management services, project finance, export finance, leasing, guarantees, bills of exchange, deposits and other short term and long term finance. (b) Geographical segment The operations of the Bank are currently based only in Pakistan. Annual Report 2017 95
  96. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Note 8 CASH AND BALANCES WITH TREASURY BANKS In hand - local currency - foreign currencies With the State Bank of Pakistan in - local currency current accounts - foreign currency current accounts - foreign currency deposit accounts With the National Bank of Pakistan in - local currency current accounts National prize bonds 8.1 8.2 8.3 2016 2017 ---------Rupees ‘000------------- 7,863,300 2,092,970 8,140,945 1,699,075 17,001,165 1,399,538 4,073,487 17,533,966 1,156,859 3,430,526 5,417,796 5,262,880 13,511 15,051 37,861,767 37,239,302 8.1 These include local currency current accounts maintained with the SBP as per the requirements of Section 36 of the State Bank of Pakistan Act, 1956. This section requires banking companies to maintain a local currency cash reserve in a current account with SBP at a sum not less than such percentage of the Bank’s time and demand liabilities in Pakistan as may be prescribed by the SBP. 8.2 This represents cash reserve of 5% maintained with the SBP in US dollars current account on deposits held under the New Foreign Currency Accounts (FE-25 deposits) as per BSD Circular No. 14 and 15 dated June 21, 2008. 8.3 These represent special cash reserve of 15% maintained with the SBP in US dollars deposit account under the requirements of BSD Circular No.14 dated June 21, 2008, local US dollars clearing account maintained with the SBP to facilitate US dollars clearing and 6% special cash reserve requirement on FE-25 deposits maintained by Islamic Banking Branches under the requirements of BSD Circular No. 15 dated June 21, 2008. Profit rates on these balances are ranging from 0.06% to 0.37% (2016: Nil) per annum on monthly basis by the SBP. 9 BALANCES WITH OTHER BANKS In Pakistan - Current accounts Outside Pakistan - Current accounts 96 2016 2017 ---------Rupees ‘000------------- 1,488,379 699,488 384,392 1,872,771 439,887 1,139,375 Annual Report 2017
  97. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Note 10 2016 2017 ---------Rupees ‘000------------- LENDINGS TO FINANCIAL INSTITUTIONS Call money lending Repurchase agreement lendings 10.2 10.3 3,000,000 6,010,335 9,010,335 5,000,000 5,000,000 9,010,335 9,010,335 5,000,000 5,000,000 10.1 Particulars of lendings In local currency In foreign currency 10.2 This represents lendings to a commercial bank which carry mark-up at the rate of 6.05% per annum (2016: Nil) with maturity in January, 2018. 10.3 This represents lendings to a commercial bank which carry mark-up at the rate of 5.75% per annum (2016: 5.9%) maturing in January, 2018. 10.4 Securities held as collateral against lendings to financial institutions 2016 2017 Held by Bank Given as collateral (note 10.4.1) Total Held by Bank Given as collateral Total ------------------------------------------ Rupees ‘000 ------------------------------------------ Pakistan Investment Bonds 1,924,000 4,076,000 6,000,000 5,000,000 - 5,000,000 10.4.1 This represents PIBs sold by the Bank with a commitment to settle the lendings and return the collateral on the maturity date. Annual Report 2017 97
  98. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 11. INVESTMENTS Investments by type and segments, details of strategic investments and particulars of provisions are given below. The complete break down of available for sale investments is given in Annexure I, which forms an integral part of these financial statements. 11.1 Investments by type 2016 2017 Note Held by Bank Given as collateral Total Held by Bank Given as collateral Total ------------------------------------------------ Rupees ‘000 -------------------------------------------------Held for trading securities Market Treasury Bills Pakistan Investment Bonds Available for sale securities Market Treasury Bills Pakistan Investment Bonds GOP Ijara Sukuk Bonds Sukuk Units of open end mutual funds - Faysal Balanced Growth Fund * - Faysal Income Growth Fund * - Faysal Savings Growth Fund * - Faysal Islamic Savings Growth Fund * - Faysal Money Market Fund * - Faysal Financial Sector Opportunity Fund * Fully paid up ordinary shares / modaraba certificates / certificates of closed end mutual funds Fully paid up preference shares Term finance certificates Held to maturity securities Pakistan Investment Bonds Term finance certificates Sukuk Associate * Fully paid up ordinary shares of Faysal Asset Management Limited 11.2.1 11.2.2 30,128,496 3,434,749 33,563,245 - 30,128,496 3,434,749 33,563,245 533,530 1,170,038 1,703,568 - 533,530 1,170,038 1,703,568 11.2.1 11.2.2 11.2.3 11.2.4 67,292,593 19,232,587 6,312,055 6,187,132 26,426,198 - 93,718,791 19,232,587 6,312,055 6,187,132 59,502,461 41,351,395 4,474,967 2,900,000 29,646,237 2,074,936 - 89,148,698 43,426,331 4,474,967 2,900,000 37,480 257,544 680,606 189,432 200,000 15,000 - 37,480 257,544 680,606 189,432 200,000 15,000 37,480 257,544 680,606 189,432 - - 37,480 257,544 680,606 189,432 - 11.6&11.7 5,376,689 22,490 620,926 106,424,534 26,426,198 5,376,689 22,490 620,926 132,850,732 4,370,242 22,490 762,149 114,548,766 31,721,173 4,370,242 22,490 762,149 146,269,939 11.2.2 1,924,910 14,794,241 16,719,151 - 1,924,910 14,794,241 16,719,151 9,931,757 2,455,213 11,861,617 24,248,587 - 9,931,757 2,455,213 11,861,617 24,248,587 23,169 - 23,169 46,032 - 46,032 156,730,099 26,426,198 183,156,297 140,546,953 31,721,173 172,268,126 (3,448,776) - (3,448,776) (3,265,833) - (3,265,833) 153,281,323 26,426,198 179,707,521 137,281,120 31,721,173 169,002,293 11.2.4 11.8 Investments Less: provision for diminution in the value of investments 11.3 & 12.4.1 Investments (net of provisions) (Deficit) / surplus on revaluation of investments classified as held for trading - net 11.5 (3,392) - (3,392) 461 - 461 Surplus / (deficit) on revaluation of investments classified as available for sale - net 23.2 2,282 (53) 2,229 1,227,520 (20,137) 1,207,383 153,280,213 26,426,145 179,706,358 138,509,101 31,701,036 170,210,137 Total investments - net * related parties 98 Annual Report 2017
  99. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 11.1.1 Strategic Investments Note 2016 2017 ------------Rupees ‘000-----------Available for sale securities - Listed Units of open end mutual funds 7,480 7,480 11.6 &11.7 618,755 568,755 11.8.2 23,169 46,032 649,404 622,267 (568,755) (568,755) 80,649 53,512 28 1,285 80,677 54,797 Available for sale securities - Unlisted Fully paid up ordinary shares Associate - unlisted Provision for diminution in the value of investments Surplus on revaluation of strategic investments classified as available for sale Strategic investments are those investments which the Bank makes with the intention of holding them for a long term duration and are marked as such at the time of investment. Disposals of such investments can only be made subject to the fulfilment of the requirements prescribed by the SBP. The overall exposure limit for equity investments prescribed by the SBP does not apply to these investments. Further, as per the SBP’s instructions in BPD Circular Letter No. 16 of 2006 dated August 01, 2006, investments marked as strategic have a minimum retention period of 5 years from the original purchase date. However, these can be sold before the stipulated period with the prior permission of the SBP. Annual Report 2017 99
  100. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 11.2 Investments by segments Federal Government Securities - Market Treasury Bills - Pakistan Investment Bonds - GOP Ijara Sukuk Bonds Fully Paid up Ordinary Shares / Modaraba Certificates / Closed end Mutual Fund Units - Listed companies / modarabas / mutual funds - Unlisted companies Note 11.2.1 11.2.2 11.2.3 11.6 &11.7 Fully Paid up Preference Shares - Listed companies Term Finance Certificates - Listed - Unlisted Units of Open end Mutual Funds Sukuk Bonds 11.2.4 2016 2017 ----------Rupees ‘000-------------123,847,287 22,667,336 6,312,055 152,826,678 89,682,228 54,528,126 4,474,967 148,685,321 4,677,022 699,667 5,376,689 3,720,575 649,667 4,370,242 22,490 22,490 5,399,179 4,392,732 112,615 2,433,221 2,545,836 120,851 3,096,511 3,217,362 1,380,062 1,165,062 20,981,373 14,761,617 Associate - Faysal Asset Management Limited 11.8 23,169 46,032 Total investments Less: provision for diminution in the value of investments 11.3 183,156,297 (3,448,776) 172,268,126 (3,265,833) 179,707,521 169,002,293 Investments (net of provisions) (Deficit) / surplus on revaluation of investments classified as held for trading - net 11.5 (3,392) 461 Surplus on revaluation of investments classified as available for sale - net 23.2 2,229 1,207,383 179,706,358 170,210,137 Total investments - net 11.2.1 Market Treasury Bills have tenures of three months to one year. The Bank’s return on these instruments ranges from 5.90% to 6.05% per annum (2016: 5.80% to 6.25% per annum) with maturities up to August 2018. 11.2.2 Pakistan Investment Bonds have tenures of 3 to 10 years. The Bank’s return on these instruments ranges from 5.98% to 12% per annum (2016: 5.88% to 12.59% per annum) with maturities from March 2018 to March 2025. 11.2.3 GoP Ijara Sukuk bonds have tenures of 3 years. The Bank’s return on these instruments ranges from 4.65% to 5.24% per annum (2016: 4.75% to 6.19% per annum) with maturities up to June 2020. 11.2.4 These Sukuks have tenures ranging from 5 to 15 years. The Bank’s return on these instruments ranges from 6.17% to 9.15% per annum (2016: 5.82% to 9.04% per annum) with maturities up to 2032. 100 Annual Report 2017
  101. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 11.3 Particulars of provision for diminution in the value of investments 2016 2017 ------------Rupees ‘000------------ Opening balance 3,265,833 3,282,763 Charge for the year Reversals during the year 241,861 (58,918) 182,943 3,448,776 75,478 (92,408) (16,930) 3,265,833 657,804 649,666 499,066 649,666 Closing balance 11.3.1 Particulars of provision for diminution in the value of investments by type and segment Available for sale securities - Fully Paid up Ordinary Shares / Modaraba Certificates / Certificates of Closed end Mutual Funds - Listed companies / modarabas / mutual funds - Unlisted companies - Fully Paid up Preference Shares - Listed companies 22,490 22,490 - Units of Open end Mutual Funds 856 856 - Term Finance Certificates - Listed - Unlisted 51,476 508,311 59,686 508,311 999,172 999,172 559,001 3,448,776 526,586 3,265,833 Held to maturity securities - Term Finance Certificates - Unlisted - Sukuk Bonds 11.4 Quality of available for sale securities The details regarding the quality of available for sale securities and their mark-up / interest and other terms are contained in Annexure I, which forms an integral part of these financial statements. 11.5 (Deficit) / surplus on revaluation of investments classified as held for trading - net Market Treasury Bills Pakistan Investment Bonds Annual Report 2017 2016 2017 ------------Rupees ‘000------------ (807) (2,585) (3,392) (23) 484 461 101
  102. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 11.6 These include an investment of the Bank in unlisted shares of DHA Cogen Limited (DHA) (a related party of the Bank) representing 19.1% (2016: 19.1%) equity holding of DHA. The Bank acquired these equity shares in 2013 by exercising its rights over pledged shares of DHA after eventual non-compliance by DHA in respect of ‘Rehabilitation and Standstill Agreement’ made between the consortium banks (including the Bank) and DHA for repayment of liabilities. 11.7 These include an amount of Rs 50 million issued to 1Link (Guarantee) Limited as part of the Bank’s commitment towards capital injection on its conversion to a private limited company subject to regulatory approvals. 11.8 This represents investment of the Bank in Faysal Asset Management Limited (FAML). This has been accounted for under the equity method of accounting as per the requirement of IAS 28. The Bank’s share of post acquisition profit or loss is recognised using the latest available unaudited financial statements of FAML which relate to the period ended December 31, 2017 with a corresponding adjustment to the carrying amount of investment. 11.8.1 Faysal Asset Management Limited (the Company) was incorporated in Pakistan under the requirements of the Companies Ordinance, 1984 on August 6, 2003 as an unlisted public limited company. The Company commenced its operations on November 14, 2003. The Company is a Non-Banking Finance Company (NBFC). The Company has obtained license to carry out asset management and investment advisory services under the requirements of Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 and the Non-Banking Finance Companies and Notified Entities Regulations, 2008. The Company is non-compliant with the minimum equity requirements prescribed for an NBFC. The shareholders of the Bank in the last Annual General Meeting, had approved a sub-ordinated loan of Rs 180 million to be given to FAML for complying with the minimum equity requirements subject to all regulatory approvals. 11.8.2 The details of the Bank’s investment and post acquisition changes relating to FAML are as under: Faysal Asset Management Limited - percentage holding 30% (2016: 30%) At January 1 2016 2017 ------------Rupees ‘000------------46,032 68,082 (22,863) (22,050) At December 31 23,169 46,032 Cost of investment 45,000 45,000 Revenue 127,835 139,032 Net loss (76,211) (73,499) Total assets 122,220 166,896 Liabilities 44,991 13,456 Net assets 77,229 153,440 30% 30% 23,169 46,032 Post acquisition changes during the year - Recognised in the profit and loss account 11.8.3 Particulars of the assets and liabilities of the associate Percentage (%) holding of the Bank Share of net assets of the Bank 102 Annual Report 2017
  103. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 12 ADVANCES Note Loans, cash credits, running finances, etc. – in Pakistan Net investment in finance lease – in Pakistan 12.2 2016 2017 -----------Rupees ‘000-----------195,457,819 8,151,355 203,609,174 180,518,663 10,431,613 190,950,276 4,981,410 1,256,750 6,238,160 45,891,693 88,200 255,827,227 5,289,466 909,279 6,198,745 32,588,297 88,200 229,825,518 Provision against non-performing advances 12.4, 12.4.1 & 12.4.2 Provision against consumer and small enterprise loans - general 12.4, 12.4.2 & 12.5 (23,726,401) (24,530,264) (568,666) (24,295,067) (464,257) (24,994,521) Advances - net of provision 231,532,160 204,830,997 12.1.1 In local currency In foreign currency 254,757,442 1,069,785 255,827,227 228,942,957 882,561 229,825,518 12.1.2 Short term (upto one year) Long term (over one year) 131,881,662 123,945,565 255,827,227 120,859,203 108,966,315 229,825,518 Assets under Ijarah Opening balance Disbursed during the year Disposals during the year Closing balance 1,228,156 1,149,623 78,533 1,188,039 40,117 1,228,156 Accumulated depreciation Opening balance Charged during the year Reversal on disposal during the year Closing balance 734,595 433,579 1,107,307 60,867 239,658 494,937 734,595 17,666 493,561 Bills discounted and purchased (excluding government treasury bills) - Payable in Pakistan - Payable outside Pakistan Islamic financing and related assets Margin financing / reverse repo transactions Gross advances 12.1 (A3.1) Particulars of advances (Gross) 12.1.3 Net investment in Ijarah - Ijarah accounted for under IFAS-2 Movement in the net book value of Ijarah assets Net investment in Ijarah Annual Report 2017 12.1.4 103
  104. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 12.1.4 Ijarah rentals receivable 2016 2017 Later than Not later one and Over five than one less than years year five years Later than Not later one and than one less than year five years Total Over five years Total -------------------------------------------------- Rupees ‘000 --------------------------------------------------Ijarah rentals receivable 18,994 - - 453,374 18,994 53,862 - 507,236 The difference between net investment in Ijarah and Ijarah rental receivable represents element of profit in receivable. 12.2 Net investment in finance lease 2016 2017 Not later than one year Later than one and less than five years Over five years Not later than one year Total Later than one and less than five years Over five years Total ------------------------------------------------- Rupees ‘000 -------------------------------------------------Lease rentals receivable Residual value Minimum lease payment Finance charge for future periods Present value of minimum lease payment 12.3 4,638,224 1,655,364 6,293,588 (21,168) 6,272,420 2,890 1,280 4,170 4,170 5,959,573 2,311,079 8,270,652 (119,297) 8,151,355 1,305,035 591,185 1,896,220 (60,285) 1,835,935 7,368,009 2,346,548 9,714,557 (1,118,879) 8,595,678 - 8,673,044 2,937,733 11,610,777 (1,179,164) 10,431,613 Advances includes Rs. 27,321 million (2016: Rs. 30,036 million) which have been placed under non-performing status as detailed below: Note Category of classification 2017 Classified Advances Provision required Provision held Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total ------------------------------------------------------------- Rupees ‘000 --------------------------------------------------------------------------- Other Assets Especially Mentioned (OAEM) 12.3.1 216,407 Substandard 1,145,491 Doubtful 872,296 25,086,882 Loss 27,321,076 Note Category of classification - 216,407 1,145,491 872,296 25,086,882 27,321,076 198,828 281,053 23,246,520 23,726,401 - 198,828 281,053 23,246,520 23,726,401 198,828 281,053 23,246,520 23,726,401 - 198,828 281,053 23,246,520 23,726,401 2016 Classified Advances Provision required Provision held Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total ------------------------------------------------------------- Rupees ‘000 --------------------------------------------------------------------------- Other Assets Especially Mentioned (OAEM) 12.3.1 351,337 Substandard 2,201,772 Doubtful 1,822,574 25,660,377 Loss 30,036,060 104 1,318,459 654,435 1,972,894 (98,129) 1,874,765 - 351,337 2,201,772 1,822,574 25,660,377 30,036,060 403,413 552,258 23,574,593 24,530,264 - 403,413 552,258 23,574,593 24,530,264 403,413 552,258 23,574,593 24,530,264 - 403,413 552,258 23,574,593 24,530,264 Annual Report 2017
  105. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 12.3.1 This represents non-performing portfolio of agricultural, housing and small enterprise financing classified as OAEM as per the requirements of the Prudential Regulations for agricultural, housing and small and medium enterprise financing issued by the SBP. 12.4 Particulars of provision against non-performing advances and general provision 2016 2017 Specific General Total General Total Note 12.5 Note 12.5 -------------------------------------- Rupees ‘000 ------------------------------------------Specific Opening balance 24,530,264 464,257 24,994,521 24,101,547 432,672 24,534,219 - Charge for the year - Reversals during the year Net charge Amounts written off - note 12.7.1 Transfer of provision Closing balance 1,335,926 (2,026,626) (690,700) (135,377) 22,214 23,726,401 127,943 (23,534) 104,409 568,666 1,463,869 (2,050,160) (586,291) (135,377) 22,214 24,295,067 1,991,115 (1,365,302) 625,813 (197,096) 24,530,264 31,585 31,585 464,257 2,022,700 (1,365,302) 657,398 (197,096) 24,994,521 12.4.1 As allowed by the SBP the Bank has availed benefit of Forced Sale Value (FSV) of collaterals held as security of Rs 1,799.678 million (2016: Rs 2,193.458 million) relating to advances and Rs Nil (2016: Rs 2.884 million) relating to investments while determining the provisioning requirement against non-performing financing (including investments) as at December 31, 2017. The additional profit arising from availing the FSV benefit - net of tax as at December 31, 2017 which is not available for distribution as either cash or stock dividend to shareholders and bonus to employees approximately amounted to Rs 1,169.791 million (2016: Rs 1,427.622 million). 12.4.2 Particulars of provision against non-performing advances 2016 2017 Specific General Total Specific General Total ---------------------------------------- Rupees ‘000 --------------------------------------------In local currency In foreign currency Total 12.5 23,726,401 23,726,401 568,666 568,666 24,295,067 24,295,067 24,530,264 24,530,264 464,257 464,257 24,994,521 24,994,521 As per the Prudential Regulations, SBP has specified that general provision against consumer financing should be maintained at varying percentages based on the non-performing loan ratio present in the portfolio. These percentages range from 1% to 2.5% for secured and 4% to 7% for unsecured portfolio. The Bank also maintains general provision in accordance with the applicable requirements of the Prudential Regulations for Housing Finance issued by the SBP. The provision ranges between the 0.5% to 1.5% based on the non-performing loan ratio present in the portfolio. During the year, the SBP revised the Prudential Regulations for Small and Medium Enterprise financing thereby abolishing the requirements of general provision against secured Small Enterprise financing portfolio. As per the revised regulations, the Bank is required to maintain a general provision of 1% against un-secured Small Enterprise financing portfolio. Had the SBP not issued these revised regulations, the provision against consumer loans and Small Enterprises would have been higher by Rs 23.534 million and profit before tax would have been lower by the same amount. Annual Report 2017 105
  106. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 12.6 Although the Bank has made provision against its non-performing portfolio as per the category of classification of the loans, however, the Bank still holds enforceable collateral against certain non-performing loans in the event of recovery through litigation. These securities comprise of charge against various tangible assets of the borrower including land, building and machinery, stock in trade, etc. Note 12.7 Particulars of write-offs 12.7.1 Against provisions Bad debts written-off directly Recoveries against written-off debt Net recoveries against written-off debt credited to profit and loss account 12.7.2 Write-offs of Rs. 500,000 and above Write-offs below Rs. 500,000 Recoveries against write-offs 12.8 12.9 12.8 2016 2017 -----------Rupees ‘000-----------135,377 197,096 7,119 (105,335) 22,340 (102,939) (98,216) (80,599) 37,161 116,497 119,672 22,824 (105,335) 37,161 203,107 16,329 (102,939) 116,497 Details of loan write-offs of Rs 500,000 and above In terms of sub-section (3) of section 33A of the Banking Companies Ordinance, 1962, the statement in respect of written off loans or any other financial relief of five hundred thousand rupees or above allowed to a person(s) during the year ended December 31, 2017 is given in Annexure - II to these financial statements. However, the write-off of loans does not affect the Bank’s right to recover the outstanding loans from these customers. 2016 2017 -----------Rupees ‘000-----------Particulars of loans and advances 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 * Balance at beginning of the year Loans granted during the year Repayments during the year Balance at end of the year 2,364,926 993,034 (696,551) 2,661,409 2,368,153 709,309 (712,536) 2,364,926 Debts due by companies or firms in which the directors of the Bank are interested as directors, partners or in the case of private companies as members ** Balance at beginning of the year Loans granted during the year Repayments during the year Balance at end of year 3,186,506 792,376 (143,089) 3,835,793 3,238,082 (51,576) 3,186,506 800,735 800,735 800,735 800,735 Debts due by subsidiary companies, controlled firms, managed modarabas and other related parties ** Balance at beginning of the year Loans granted during the year Repayments during the year Balance at end of the year * These represent loans given by the Bank to its employees as per the terms of their employment. ** Provision held against the loans provided to related parties amounted to Rs 2,762.997 million (2016: Rs 2,994.048 million). 106 Annual Report 2017
  107. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 12.9.1 Balances pertaining to parties that were related at the beginning of the year but ceased to be so related during any part of the current period are not reflected as part of the closing balance. The same are accounted for through the movement presented above. 12.9.2 Maximum total amount of advances (including temporary advances) outstanding at the end of any month during the year 2016 2017 -----------Rupees ‘000------------ Debts due by directors, executives or officers of the Bank or any of them either severally or jointly with any other persons 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 Debts due by subsidiary companies, controlled firms, managed modarabas and other related parties Note 13 2,408,382 4,589,675 3,238,082 800,735 800,735 2016 2017 -----------Rupees ‘000------------ OPERATING FIXED ASSETS Capital work-in-progress Tangible fixed assets Intangible assets 13.1 2,674,493 13.1 13.2 13.3 514,958 11,127,768 1,296,899 12,939,625 513,696 9,991,126 1,607,059 12,111,881 113,297 54,028 199,198 148,435 514,958 129,865 56,886 63,866 263,079 513,696 Capital work-in-progress Civil works Equipment Intangible assets Advances to suppliers and contractors Annual Report 2017 107
  108. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 13.2 Tangible fixed assets Particulars Owned Freehold land 2017 COST ACCUMULATED DEPRECIATION Book value Additions / Rate of As at As at As at On As at at revaluation Deletions / Additions/ depreciation January 1, December January 1, deletions / December 31, December surplus / write-off adjustments* (%) 2017 31, 2017 2017 write-off 2017 31, 2017 adjustments* -----------------------------------------------------------------------------------------Rupees 000----------------------------------------------------------------------------------1,059,888 50,614 - - 1,110,502 - - - - 1,110,502 - 2,811,950 247,966 - - 3,059,916 - - - - 3,059,916 - 168,824 15,888 (8,664) - 176,048 - 8,664 (8,664) - - 176,048 2 to 6 Buildings on leasehold land 4,309,701 433,806 (144,695) - 4,598,812 - 144,695 (144,695) - - - 4,598,812 2 to 20 Leasehold property and improvement 2,026,383 388,685 1,302* (16,212) (39,863) 2,360,295 1,414,804 125,181 150* (16,212) (39,784) 1,484,139 876,156 10 to 33 Office furniture, fixtures, equipment and computers 5,513,981 763,549 (1,302)* (128,718) (8,639) 6,138,871 4,579,446 479,966 (150)* (128,125) (8,595) 4,922,542 1,216,329 10 to 50 242,814 34,875 - (45,580) 232,109 148,165 24,965 - (31,026) - 142,104 90,005 20 16,133,541 1,782,024 (239,012) 17,676,553 6,142,415 630,112 (223,742) 6,548,785 11,127,768 Leasehold land Buildings on freehold land Vehicles Total Owned Particulars Owned Freehold land 2016 COST ACCUMULATED DEPRECIATION Book value Additions / Rate of As at As at As at On As at at revaluation Deletions / Additions/ depreciation January 1, December January 1, deletions / December 31, December surplus / write-off adjustments* (%) 2016 31, 2016 2016 write-off 2016 31, 2016 adjustments* -----------------------------------------------------------------------------------------Rupees 000----------------------------------------------------------------------------------1,348,838 166,050 - (455,000) 1,059,888 - - - - 1,059,888 - 2,495,430 316,520 - - 2,811,950 - - - - 2,811,950 - 195,243 21,376 (47,795) - 168,824 40,399 7,396 (47,795) - - - 168,824 2 to 6 Buildings on leasehold land 4,155,058 648,293 (493,650) - 4,309,701 371,944 121,706 (493,650) - - - 4,309,701 2 to 20 Leasehold property and improvement 1,695,638 324,949 19,496* (381) (13,319) 2,026,383 1,346,632 63,806 18,066* (381) (13,319) 1,414,804 611,579 10 to 33 Office furniture, fixtures, equipment and computers 5,397,779 758,928 (20,906)* (16,713) (605,107) 5,513,981 4,864,527 353,895 (18,640)* (16,515) (603,821) 4,579,446 934,535 10 to 50 294,096 10,104 - (61,386) 242,814 145,803 32,330 - (29,968) 148,165 94,649 20 15,582,082 1,703,365 (1,151,906) 16,133,541 6,769,305 37,114 (664,004) 6,142,415 9,991,126 Leasehold land Buildings on freehold land Vehicles Total Owned 13.2.1 Included in cost of operating fixed asset are fully depreciated items still in use having cost of Rs 4,811.021 million (2016: Rs 4,944.583 million). 108 Annual Report 2017
  109. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 13.2.2 The Bank’s freehold / leasehold land and buildings on freehold / leasehold land were revalued by Iqbal A. Nanjee Co. (Private) Limited on December 31, 2017 on the basis of professional assessments of the market value. As a result of the revaluation of these assets, the market value of freehold / leasehold land and buildings on freehold / leasehold land were determined at Rs 8,945.278 million. The results of this revaluation exercise have determined a further surplus of Rs 748.274 million. Had there been no revaluation, the carrying amount of revalued assets as at December 31, 2017 would have been Rs 3,386.299 million (2016: Rs 3,431.710 million). 13.3 Intangible assets 2017 COST ACCUMULATED AMORTISATION As at As at As at Additions/ January 1, Deletions December 31, January 1, adjustments 2017 2017 2017 Particulars Rate of Book value at Charge to profit and amortisation As at December 31, Charge on loss account / % per December 31, 2017 adjustments / deletions annum 2017 transferred to equity -------------------------------------------------------------------------Rupees 000-----------------------------------------------------------------------------Computer software 1,895,918 66,872 - 1,962,790 1,645,383 184,929 Customer relationship 2,557,167 - - 1,830,312 132,478 17 to 33 - 1,392,746 1,164,421 Note 13.3.2 - 3,223,058 1,296,899 - 2,557,167 1,200,643 - - note 13.3.2 192,103 4,453,085 66,872 - 4,519,957 2,846,026 184,929 192,103 2016 COST ACCUMULATED AMORTISATION As at Additions/ Deletions January 1, adjustments 2016 Particulars As at December 31, 2016 As at January 1, 2016 Rate of Book value at Charge to profit and amortisation As at December 31, Charge on loss account / % per December 31, 2016 adjustments / deletions annum 2016 transferred to equity -------------------------------------------------------------------------Rupees 000-----------------------------------------------------------------------------Computer software 1,764,112 130,396 - 1,895,918 1,409,634 1,410 Customer relationship 2,557,167 - 235,175 - 1,645,383 250,535 17 to 33 - 1,200,643 1,356,524 Note 13.3.2 - 2,846,026 1,607,059 574 - 2,557,167 1,008,540 - note 13.3.2 192,103 4,321,279 131,806 - 4,453,085 2,418,174 235,749 192,103 13.3.1 The intangible assets include fully amortised items still in use having cost of Rs 1,221.485 million (2016: Rs 1,149.284 million). Annual Report 2017 109
  110. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 13.3.2 The intangible asset - Customer relationship comprises of core deposits which were recognised at the time of acquisition of Ex-RBS Pakistan. These core deposits represent the funding benefit that would be available to the Bank on account of availability of funding through deposit customers rather than from the wholesale or interbank market. This benefit also considers the fact that the economic life time of these deposits is longer than their contractual life. Based on this assumption, this intangible asset has been valued using certain valuation techniques and is being amortised over the life expectancy of these deposits. As more fully explained in note 22.2 to the financial statements the SBP allowed the Bank to adjust the amortisation charge arising on this intangible assets against non-distributable capital reserve. 13.4 Details of disposal of fixed assets to executives, and other persons having cost of more than Rs 1 million or net book value of Rs 250,000 or above are disclosed in Annexure IV to these financial statements. 14 DEFERRED TAX ASSETS - NET Deferred credits arising due to: - Accelerated tax depreciation - Surplus on revaluation of securities - Fair value adjustments relating to net assets acquired upon amalgamation - Surplus on revaluation of fixed assets - Surplus on revaluation of non banking assets - Share of loss from associate Note 23.2 23.1 Deferred debits arising due to: - Provision against non-performing advances - Provision for diminution in the value of investments - Provision against other assets - Share of loss from associate 15 Less: provision held against other assets Other assets (net of provisions) 110 (139,037) (780) (88,821) (422,583) (407,550) (1,228,159) (23,751) - (474,784) (1,108,548) (24,878) (362) 2,700,846 476,211 222,205 7,640 1,607,625 3,553,726 609,871 220,591 2,264,212 3,459,328 48,335 1,016,200 3,102,087 3,980,853 71,030 855,656 2,168,742 1,229,356 3,130,557 303,283 86,317 46,005 66,688 1,258,090 13,746,246 (249,980) 13,496,266 3,202,821 272,007 13,120 90,927 409,979 82,290 807,186 11,954,611 (285,854) 11,668,757 3,143,415 3,202,821 OTHER ASSETS Income / mark-up accrued in local currency Income / mark-up accrued in foreign currencies Advances, deposits, advance rent and other prepayments Taxation (payments less provisions) Unrealised gain on revaluation of forward foreign exchange contracts 15.1 & 15.4 Non-banking assets acquired in satisfaction of claims Credit cards and other products fee receivable Fair value of derivative contracts 25.3 Dividend receivable Receivable from brokers against sale of shares Prepaid employee benefits 15.2 Others 15.1 2016 2017 -----------Rupees ‘000------------ Market value of non-banking assets acquired in satisfaction of claims - determined by professional valuers 15.3 Annual Report 2017
  111. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 15.2 The prepaid employee benefits represent the impact of fair value adjustment on employee loans and advances which was determined at the time of acquisition of Ex-RBS Pakistan and is being amortised over the loan periods. The movement of prepaid employee benefits is as follows: Prepaid employee benefits at beginning of the year Employee benefits expensed during the year Prepaid employee benefits at the end of the year 2016 2017 -----------Rupees ‘000-----------82,290 (15,602) 66,688 112,721 (30,431) 82,290 Opening balance 285,854 605,377 Charge for the year Reversals during the year 4,622 (12) 4,610 (40,484) 249,980 53,388 (81,686) (28,298) (243,228) (47,997) 285,854 15.3 Provision against other assets Provision written off Transfer of provision Closing balance 15.4 On one of these properties is a claim by an institution to the extent of Rs 35 million (2016: Rs 35 million). 16 BILLS PAYABLE In Pakistan Outside Pakistan 17 2016 2017 -----------Rupees ‘000-----------7,304,326 7,304,326 5,982,285 5,982,285 52,224,155 2,564,392 54,788,547 52,283,342 522,742 52,806,084 52,224,155 2,564,392 54,788,547 52,283,342 522,742 52,806,084 BORROWINGS In Pakistan Outside Pakistan 17.1 Particulars of borrowings with respect to currencies In local currency In foreign currencies Annual Report 2017 111
  112. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Note 17.2 Details of borrowings secured / unsecured 2016 2017 ------------Rupees ‘000----------- Secured Borrowings from the State Bank of Pakistan - Under export refinance scheme - Part I and II - Under long term financing facility - Under long term financing facility for Renewable Power Energy (RPE) - Under scheme of financing facility for storage of agricultural produce - Islamic export refinance scheme Repurchase agreement borrowings 17.2.1 17.2.2 15,244,983 1,514,292 13,701,772 1,672,688 17.2.3 971,213 - 17.2.4 17.2.5 131,223 450,000 200,518 200,000 17.2.6 26,412,444 44,724,155 31,703,539 47,478,517 17.2.7 3,500,000 245,631 4,000,000 2,318,761 10,064,392 4,804,825 522,742 5,327,567 54,788,547 52,806,084 Unsecured Call borrowings Overdrawn nostro accounts Musharaka Other borrowings 17.2.8 17.2.9 17.2.1 In accordance with the Export Refinance (ERF) scheme, the Bank has entered into agreements for financing with the SBP for extending export finance to customers. As per the agreement, the Bank has granted the SBP a right to recover the outstanding amount from the Bank at the maturity date of finances by directly debiting the current account of the Bank maintained with the SBP. Borrowings from the SBP under the export refinance scheme is secured by the Bank’s cash and security balances held by the SBP. The mark-up rate on this facility is 1% to 2% per annum (2016: 2.05% to 3% per annum) payable on quarterly basis with maturities upto 180 days from the date of grant. 17.2.2 These represent borrowings from the SBP under scheme for long term financing facility. The mark-up rates on these facilities are ranging from 2% to 8.4% per annum (2016: 2% to 10.10% per annum), payable on quarterly basis, with maturities upto April 2026. As per the agreement, the Bank has granted the SBP a right to recover the outstanding amount from the Bank at the maturity date of finances by directly debiting the current account of the Bank maintained with the SBP. 17.2.3 These represent borrowings from the SBP under scheme for long term financing facility for Renewable Power Energy (RPE). The mark-up rates on these facilities are 2% per annum, payable on quarterly basis, with maturities upto December 2028. As per the agreement, the Bank has granted the SBP a right to recover the outstanding amount from the Bank at the maturity date of finances by directly debiting the current account of the Bank maintained with the SBP. 17.2.4 These represent borrowings from the SBP under scheme of financing facility for storage of agricultural produce. The mark-up rates on these facilities are ranging from 2.5% to 3.5% per annum (2016: 2.5% to 3.5% per annum) payable on quarterly basis with maturities upto December 2022. As per the agreement, the Bank has granted the SBP a right to recover the outstanding amount from the Bank at the maturity date of finances by directly debiting the current account of the Bank maintained with the SBP. 112 Annual Report 2017
  113. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 17.2.5 In accordance with the Islamic Export Refinance Scheme (IERS), the Bank has entered into agreements for Islamic financing with the SBP for extending export finance to customers. As per the agreement, the Bank has granted the SBP the right to recover the outstanding amount from the Bank at the date of maturity of the finance by directly debiting the current account maintained by the Bank with the SBP. The mark-up rate on this facility is 1.85% per annum (2016: 1.89%) payable on quarterly basis with maturity upto 180 days from the date of grant. 17.2.6 These represent collateralised borrowings against market treasury bills. The mark-up rate on these borrowings ranges from 5.86% to 6.00% per annum (2016: 5.75% to 5.86% per annum). These are payable by January 2018. 17.2.7 These borrowings are from the financial institutions. The mark-up rates on these borrowings are ranging from 5.85% to 6.00% per annum (2016: 5.60% to 5.66% per annum) payable on maturity with maturities upto January 2018. 17.2.8 These Musharaka deals are on profit and loss sharing basis. The expected rates on these deals are expected to range between 5.80% to 5.85% per annum (2016: Nil). These deals have maturities upto February 2018. 17.2.9 This represents borrowings from a foreign financial institution. The mark-up rate on this borrowing is 2.15% per annum (2016: Nil) with maturity in February 2018. 18 DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Saving deposits Current accounts – Remunerative Current accounts – Non-remunerative Margin accounts Financial institutions Remunerative deposits Non-remunerative deposits 18.1 Particulars of deposits In local currency In foreign currencies 19 2016 2017 ------------Rupees ‘000----------103,749,523 121,356,347 4,830,709 121,781,059 2,529,087 354,246,725 101,774,589 107,940,436 3,076,212 108,820,931 2,970,671 324,582,839 18,275,265 559,173 18,834,438 373,081,163 15,537,363 186,202 15,723,565 340,306,404 344,514,692 28,566,471 373,081,163 316,751,218 23,555,186 340,306,404 SUB-ORDINATED LOANS These represent rated and un-secured Term Finance Certificates (TFCs) issued by the Bank. These TFCs have matured during the year. 2016 2017 ------------Rupees ‘000----------Outstanding amount - 1,497,000 Total issue amount - 3,000,000 Annual Report 2017 113
  114. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 20 Note OTHER LIABILITIES Mark-up / return / interest payable in local currency Mark-up / return / interest payable in foreign currencies Unearned commission / income Accrued expenses Unclaimed dividends Branch adjustment account Unrealised loss on revaluation of forward foreign exchange contracts Fair value of derivative contracts Withholding tax payable Federal excise duty payable Security deposits against finance leases Provision against off-balance sheet obligations Payable to brokers against purchase of shares Short sale of Pakistan Investment Bonds Others 25.3 20.1 20.2 2016 2017 -----------Rupees ‘000--------1,547,046 12,849 40,121 1,224,475 47,739 3,900 1,393,934 11,733 20,482 1,132,153 47,922 7,261 469,392 65,668 116,310 35,981 3,009,411 101,090 57,399 4,245,132 2,644,082 13,620,595 100,352 107,514 35,010 3,827,339 118,152 38,867 2,023,844 8,864,563 20.1 These represent interest free security deposits received from lessees against lease contracts and are adjustable against residual value of leased assets at the expiry of the respective lease terms. 20.2 Provision against off-balance sheet obligations Opening balance Charge for the year Transfer of provision Closing balance 21 2016 2017 -----------Rupees ‘000--------118,152 5,152 (22,214) 101,090 113,943 4,209 118,152 SHARE CAPITAL 21.1 Authorised share capital 2016 2017 Number of Shares 1,800,000,000 1,800,000,000 2016 2017 -----------Rupees ‘000--------Ordinary shares of Rs. 10 each 18,000,000 18,000,000 2,014,514 11,008,125 174,722 13,197,361 2,014,514 9,808,365 174,722 11,997,601 21.2 Issued, subscribed and paid-up capital 2016 2017 Number of shares 201,451,420 1,100,812,463 17,472,226 1,319,736,109 114 201,451,420 980,836,453 17,472,226 1,199,760,099 Ordinary shares Fully paid in cash Issued as bonus shares Issued on amalgamation Annual Report 2017
  115. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 21.3 As at December 31, 2017, Ithmaar Bank B.S.C. (closed) (the holding company of the Bank) through its subsidiaries and nominees held 881,281,492 ordinary shares of Rs. 10 each (2016: 801,164,993 ordinary shares). These include 4,005,826 shares in respect of withholding tax on bonus shares issued by the Bank during the period. These shares have not been released by the Bank to the Government Treasury based on a stay order issued by the Honorable High Court of Sindh. 21.4 The movement in the issued, subscribed and paid-up capital during the year was as follows: 2016 2017 Number of shares 1,199,760,099 119,976,010 1,319,736,109 1,199,760,099 1,199,760,099 2016 2017 -----------Rupees ‘000--------Opening balance at January 1 11,997,601 Bonus shares issued during the year 1,199,760 13,197,361 Closing balance at December 31 Note 22 RESERVES Statutory reserve Capital reserve Reserve arising on amalgamation Share premium Non-distributable capital reserve - gain on bargain purchase 22.1 22.2 11,997,601 11,997,601 2016 2017 -----------Rupees ‘000--------7,145,382 6,242,425 23,952 10,131 756,873 7,936,338 23,952 10,131 881,740 7,158,248 22.1 Appropriations are made to statutory reserve, as required by section 21 of the Banking Companies Ordinance, 1962, at the rate 20% of profit after tax for the year. 22.2 NON-DISTRIBUTABLE CAPITAL RESERVE- GAIN ON BARGAIN PURCHASE As per the directive of the SBP through its letter BPRD (R&P-02)/625-99/2011/3744 dated March 28, 2011, gain arising on bargain purchase of Pakistan operations of Royal Bank of Scotland (ex-RBS Pakistan) was credited directly into equity as Non-Distributable Capital Reserve (NCR). The SBP allowed the Bank to adjust the amortisation of intangible assets against the portion of reserve which arose on account of such assets. Accordingly, the Bank has adjusted amortisation of intangible assets amounting to Rs. 124.867 million (2016: Rs. 124.867 million) (net of tax) from the Non-distributable Capital Reserve. Note 23 SURPLUS ON REVALUATION OF ASSETS - NET OF TAX Surplus / (deficit) arising on revaluation of: - Fixed assets - Available for sale securities - Non-banking assets acquired in satisfaction of claims Annual Report 2017 23.1 23.2 23.3 2016 2017 -----------Rupees ‘000--------- 4,330,820 1,449 1,238,335 5,570,604 3,810,105 784,800 1,271,701 5,866,606 115
  116. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 23.1 Surplus on revaluation of fixed assets Surplus on revaluation of fixed assets at January 1 4,918,653 3,884,740 Surplus on revaluation of fixed assets recognised during the year 748,274 1,152,240 Transferred to un-appropriated profit in respect of incremental depreciation charged during the year (70,166) (54,163) (37,782) (107,948) 5,558,979 (29,164) (83,327) (35,000) 4,918,653 (1,108,548) (906,063) (157,393) (231,649) 37,782 (1,228,159) 29,164 (1,108,548) 4,330,820 3,810,105 Related deferred tax liability in respect of incremental depreciation charged during the year Transferred to un-appropriated profit in respect of sale of land Related deferred tax liability on surplus at January 1 Related deferred tax liability on surplus recognised during the year Related deferred tax liability in respect of incremental depreciation charged during the year 23.2 Surplus / (deficit) on revaluation of investments classified as available for sale - net Federal Government Securities - Market Treasury Bills - Pakistan Investment Bonds - GOP Ijara Sukuk Bonds 2016 2017 ------------Rupees ‘000----------(1,151) 76,573 (3,454) (9,724) 306,561 2,718 (158,876) 30,346 911,013 - 1,088 - 1,608 1,396 Units of Open end Mutual Funds (2,220) (6,189) Sukuk Bonds 59,923 2,229 (780) 1,449 1,207,383 (422,583) 784,800 Fully Paid up Ordinary Shares / Modaraba Certificates / Units of Closed end Mutual Funds - Listed companies / modarabas / mutual funds - Unlisted companies / modarabas / mutual funds Term Finance Certificates - Listed - Unlisted Related deferred tax liability 116 2016 2017 ------------Rupees ‘000----------- Annual Report 2017
  117. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 23.3 Surplus on revaluation of non banking assets acquired in satisfaction of claims Surplus on revaluation of non banking assets at January 1 Surplus on revaluation of non banking assets recognised during the year Transferred to un-appropriated profit in respect of sale of non banking assets Related deferred tax liability on surplus at January 1 Related deferred tax liability on surplus recognised during the year Related deferred tax liability in respect of sale of non-banking assets 24 CONTINGENCIES AND COMMITMENTS 24.1 Direct credit substitutes Contingent liability in respect of guarantees favouring: - Government - Banking companies and other financial institutions - Others Acceptances - Others 24.2 1,296,579 - - 1,296,579 (34,493) 1,262,086 1,296,579 (24,878) - (24,878) 1,127 (23,751) (24,878) 1,238,335 1,271,701 33,820 994,368 1,984 1,030,172 32,037 413,984 37,745 483,766 6,892,781 7,558,310 12,937,583 183,831 2,494,089 15,615,503 10,688,334 225,272 2,369,202 13,282,808 14,127,754 18,854,054 32,981,808 8,078,616 9,057,727 17,136,343 Transaction-related contingent liabilities Contingent liability in respect of performance bonds, bid bonds, shipping guarantees and standby letters of credit etc. favouring: - Government - Banking companies and other financial institutions - Others 24.3 2016 2017 ------------Rupees ‘000----------- Trade-related contingent liabilities Letters of credit - Government - Others Annual Report 2017 117
  118. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 24.4 Other contingencies (i) (ii) Suit filed by a customer for recovery of alleged losses suffered which is pending in the High Court of Sindh. The Bank’s legal advisors are confident that the Bank has a strong case Indemnity issued favouring the High Court in one of the cases 2016 2017 ------------Rupees ‘000----------2,510,000 2,510,000 457,543 457,543 There are certain claims against the Bank not acknowledged as debt amounting to Rs 31,628 million (2016: Rs 31,576 million). These mainly represent counter claims filed by the borrowers for restricting the Bank from disposal of assets (such as mortgaged / pledged assets kept as security), cases where the Bank was proforma defendant for defending its interest in the underlying collateral kept by it at the time of financing, certain cases filed by ex-employees of the Bank for damages sustained by them consequent to the termination from the Bank’s employment and cases for damages towards opportunity losses suffered by customers due to non disbursements of running finance facility as per the agreed terms. The above also includes an amount of Rs 25,299 million in respect of a suit filed against the Bank for declaration, recovery of monies, release of securities, rendition of account and damages. The Executive Officer, Karachi Cantonment Board (KCB), vide its notice CBR No. 1 dated March 03, 2017 has proposed revised rates for assessment of shops and flats “A” category in which a fresh sub-category “Banks (self-occupied)” has been introduced for the purpose of cantonment tax in the limit of KCB. This has resulted in additional demand of Rs 171 million by KCB which includes demand on reassessment for the years from 2013 to 2017. On the basis of legal grounds agreed in consultation with legal counsel, the Bank has filed a suit in the Honorary High Court of Sindh against such levy of tax. A stay order has been granted by the Honorary High Court of Sindh in respect of payment of this additional demand. Based on legal advice and / or internal assessments, management is confident that the above matters will be decided in the Bank’s favour and the possibility of any outcome against the Bank is remote and accordingly no provision has been made in these financial statements. (iii) Income tax assessments of the Bank have been finalised upto the tax year 2017 (Accounting year 2016). The department and the Bank have disagreements on a matter relating to taxability of gain on bargain purchase on the acquisition of Ex-RBS Pakistan. The additional tax liability on the matter amounts to Rs. 1,154.701 million (2016: Rs. 1,154.701 million). During the year, the Commissioner Income Tax Appeals (CIT(A)) has deleted the said additional tax liability however the Income Tax Department has filed an appeal against the order of CIT(A) in front of Income Tax Appellate Tribunal. The management and tax advisors of the Bank are confident that the matter will be decided in the Bank’s favor and accordingly, no provision has been recorded in these financial statements in respect of the matter. 24.5 Commitments to extend credits The Bank makes commitments to extend credit (including to related parties) in the normal course of its business but these being revocable commitments do not attract any significant penalty or expense if the facility is unilaterally withdrawn except for Rs 32,457 million (2016: Rs 22,799 million) which are irrevocable in nature. 118 Annual Report 2017
  119. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 24.6 Commitments in respect of forward exchange contracts Purchase - Customers - Banks Sale - Customers - Banks 24.7 Commitments for the acquisition of operating fixed assets 24.8 Commitments in respect of repo transactions Repurchase Resale 25 2016 2017 ------------Rupees ‘000----------441,297 33,153,378 33,594,675 627,720 25,971,518 26,599,238 342,751 9,915,624 10,258,375 87,256 9,325,891 9,413,147 197,878 156,240 26,440,962 31,743,703 6,384,415 5,312,485 2,361,939 877,690 DERIVATIVE INSTRUMENTS Cross currency swaps (notional principal) Derivative instruments, such as Forward Rate Agreement, Interest Rate Swaps, Cross Currency Swaps and FX Options, are forward transactions that provide market making opportunities / hedge against the adverse movement of interest and exchange rates. Derivatives business provides risk solutions for the existing and potential customers of the Bank. All Derivative transactions are governed by the Financial Derivative Business Regulations (FDBR) issued by the State Bank of Pakistan (SBP). 25.1 Derivative Risk Management The Bank’s derivatives risk management is performed under Market Risk Management which is an independent unit reporting to the Chief Risk Officer. The risk management policies are governed by regulatory and internal guidelines. Risk management department of the Bank reviews credit risk, market risk and other risks associated with the derivative transactions or related area of the activity and assigns limits within which the transactions / area of activity can be carried out. Adherence to these limits is ensured through independent monitoring and control functions. There are a number of risks undertaken by the Bank, which need to be monitored and assessed. The management of risks includes the following primary components: - Comprehensive risk measurement approach; Detailed structure of limits, guidelines and other parameters used to govern risk taking; and Strong management information system for controlling, monitoring and reporting risks. Major risks associated with the derivative instruments are market risk, credit risk and liquidity risk. The Bank uses SunGard-Sierra to measure and manage these risks which provides end-to-end capability with respect to transaction life cycle. Annual Report 2017 119
  120. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Market risk The risk that the value of a derivative contract will be adversely affected by movements in equity prices, interest rates, currency exchange rates and commodity prices. The authority for approving policies, limits and periodic reviews rest with the Board of Directors. The critical measures used to manage market risks are Interest Rate Delta, Currency Delta Basis and Value-at-Risk. These measures involve extreme shifts in a variety of parameters, such as FX rates, interest rates, equity prices, implied volatility levels and combinations of the above. These measures are calculated through the relevant systems. Credit risk The risk that a party to a derivative contract will fail to perform its obligation. There is a settlement risk associated with the derivative transactions. Settlement risk is monitored on daily basis. Risk management department of the Bank sets the policies and limits for counterparty risk based on a pre-defined criteria linked with the internal risk rating of the customer. Liquidity risk Liquidity risk is managed as part of the overall liquidity risk of the Bank. The risk management policies related to liquidity risk are explained in note 44.7 to these financial statements. 25.2 2016 Cross Currency Swaps Cross Currency Swaps No. of Contracts Notional Principal Rupees ‘000 No. of Contracts Notional Principal Rupees ‘000 With Banks for Hedging Market Making 2 1,435,424 - - With other entities for Hedging Market Making 2 926,515 2 877,690 4 4 2,361,939 2,361,939 2 2 877,690 877,690 Counterparties Total Hedging Market Making 120 2017 Product analysis Annual Report 2017
  121. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 25.3 Maturity analysis Cross currency swaps Remaining maturity No. of Contracts Upto 1 month 1 to 3 months 3 to 6 months 6 months to 1 year 1 to 2 years 2 to 3 years 3 to 5 years 5 to 10 years Cross currency swaps Remaining Maturity 2 2 4 No. of Contracts Upto 1 month 1 to 3 months 3 to 6 months 6 months to 1 year 1 to 2 years 2 to 3 years 3 to 5 years 5 to 10 years 26 2 2 2017 Notional Mark to Market Negative Positive Net Principal -------------------------- Rupees ‘000 ----------------------------1,435,424 926,515 2,361,939 (1,555,054) (926,876) (2,481,930) (36,928) (28,740) (65,668) 2016 Notional Mark to Market Negative Positive Net Principal -------------------------- Rupees ‘000 ----------------------------877,690 877,690 (878,178) (878,178) MARK-UP / RETURN / INTEREST EARNED a) On financing to: i) customers ii) financial institutions b) On investments in: i) held for trading securities ii) available for sale securities iii) held to maturity securities c) On deposits with treasury bank and financial institutions d) On securities purchased under resale agreements Annual Report 2017 1,518,126 898,136 2,416,262 891,298 891,298 13,120 13,120 2016 2017 -----------Rupees ‘000-----------16,970,173 229,321 14,593,436 151,409 1,576,504 7,979,228 1,816,058 400,975 7,874,945 3,144,653 67,371 9,473 152,651 25,800 28,791,306 26,200,691 121
  122. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 2016 2017 -----------Rupees ‘000-----------27 MARK-UP / RETURN / INTEREST EXPENSED Deposits Securities sold under repurchase agreements Other short term borrowings SBP borrowings Bai Muajjal Short sale of Pakistan Investment Bonds Sub-ordinated loans 28 5,144 203,548 59,179 1,573,504 603,211 (841) 34,597 845,659 458,543 1,533 2,092,759 152,468 21,765 2,040 838 22,885 (58,936) 141,060 181,270 56,816 490 225,195 15,271 11,524 490,566 OTHER INCOME Rent on property Net gain on disposal of operating fixed assets Net gain on disposal of non-banking assets Income from disposal of scrap Provision written back Miscellaneous charges recovered (Loss) / gain on derivative contracts - net 122 10,730,708 1,849,400 951,644 379,108 223,424 14,134,284 GAIN ON SALE OF SECURITIES - NET Gain / (loss) on sale of: Federal government securities - Market Treasury Bills - Pakistan Investment Bonds Fully paid up ordinary shares / modaraba certificates / units of closed end mutual funds GOP Ijara Sukuk Short sale of Pakistan Investment Bonds Units of closed end mutual funds 29 11,526,804 1,806,091 907,087 347,702 49,351 101,079 92,809 14,830,923 Annual Report 2017
  123. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Note 30 2016 2017 -----------Rupees ‘000------------ ADMINISTRATIVE EXPENSES Salaries, allowances and other employee benefits Charge for defined benefit plan Contribution to defined contribution plan Non-executive directors’ fees Rent, taxes, insurance, electricity, etc. Legal and professional charges Communications Repairs and maintenance Stationery and printing Advertisement and publicity Donations Auditors’ remuneration Depreciation Amortisation Depreciation on non-banking assets License and technical fee Travelling, conveyance and entertainment Vehicle running expenses Books, periodicals and subscription Brokerage and commission Bank fees and charges Security expenses Public relation and sponsorship Fee and documentation charges Others 30.1 & 30.2 & 30.3 37.7 38 30.4 30.5 13.2 13.3 5,186,664 114,616 137,116 89,062 2,358,489 139,897 399,561 1,055,127 279,182 360,716 52,299 48,396 783,471 184,929 14,032 21,132 173,877 175,163 80,200 30,980 96,350 491,730 77,612 150,063 107,279 12,607,943 4,908,601 89,404 128,651 54,266 2,108,997 154,554 321,601 1,114,570 261,308 398,567 52,371 51,007 579,133 235,175 12,050 19,675 173,670 157,342 69,886 46,938 99,369 414,620 67,603 98,421 42,754 11,660,533 30.1 This includes charge amounting to Rs 15.602 million (2016: Rs 30.431 million) in respect of amortisation of prepaid employee benefits as disclosed in note 15.2 to these financial statements. 30.2 The Bank operates a performance management scheme which includes performance bonus for all employees including President and Chief Executive Officer (P&CEO) of the Bank. Under this scheme, the bonus for all employees, including the P&CEO of the Bank is determined on the basis of employees’ performance and the Bank’s performance during the year. The aggregate amount paid to eligible employees in respect of the above scheme relating to all Executives and the Ex-P&CEO of the Bank amounted to Rs 279.293 million and Rs 36 million respectively (2016: Rs 298.025 million and Rs 36 million respectively). 30.3 This includes accrual of employee benefit in the form of bonus to all permanent employees including President and Chief Executive Officer amounting to Rs 406.891 million (2016: Rs 400 million). Annual Report 2017 123
  124. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 30.4 Donations made during the year were as follows: 2016 2017 -----------Rupees ‘000------------ Donee Patients Aid Foundation The Citizens Archive of Pakistan The Health Foundation The Citizens Foundation The Layton Rahmatulla Benevolent Trust OGS Trust Waqf Faisal (Trust) 52,299 52,299 1,000 975 671 500 200 180 48,845 52,371 Directors or their spouse have no interest in any of the donee other than ‘Waqf Faisal (Trust)’ (a charitable public welfare project), where the President and Chief Executive Officer of the Bank is acting as trustee. 30.5 Auditors’ remuneration Statutory audit fee Fee for quarterly and annual group reporting Fee for the review of the half yearly financial statements Tax services Special certifications and sundry advisory services Out-of-pocket expenses 31 3,300 12,033 900 8,675 20,488 3,000 48,396 3,300 14,440 900 8,700 21,667 2,000 51,007 11,761 154,382 166,143 12,244 131,621 143,865 2,647,657 (103,014) 2,544,643 2,262,905 21,688 2,284,593 (882,491) 1,092,374 209,883 2,754,526 (901,138) 973,410 72,272 2,356,865 Profit before tax 7,269,312 6,658,637 Tax calculated at the rate of 35% (2016: 35%) Effect of: permanent differences prior year charge others Tax charge for the year 2,544,259 2,330,522 4,116 209,883 (3,732) 2,754,526 (14,964) 72,272 (30,965) 2,356,865 OTHER CHARGES Penalties imposed by the State Bank of Pakistan Workers’ Welfare Fund 32 TAXATION For the year Current Deferred For prior years Current Deferred 32.1 124 2016 2017 -----------Rupees ‘000------------ Relationship between tax expense and accounting profit Annual Report 2017
  125. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 33 2016 2017 -----------Rupees ‘000------------ EARNINGS PER SHARE 4,514,786 Profit after tax for the year 4,301,772 Number of shares in thousands Weighted average number of ordinary shares outstanding during the year 1,319,736 1,319,736 --------------Rupees--------------3.42 Earnings per share - basic 3.26 33.1 Diluted earnings per share has not been presented as the Bank does not have any convertible instruments in issue at December 31, 2017 and December 31, 2016 which would have any effect on the earnings per share if the option to convert is exercised. 34 CASH AND CASH EQUIVALENTS Cash and balances with treasury banks Balances with other banks Overdrawn nostros Note 8 9 17.2 2016 2017 -----------Rupees ‘000-----------37,861,767 1,872,771 (245,631) 39,488,907 37,239,302 1,139,375 (522,742) 37,855,935 Other liabilitiesmark-up payable* -----------Rupees ‘000------------ Sub-ordinated loans 35 NET DEBT RECONCILIATION Net debt as at January 01, 2017 Other non-cash movement Mark-up accrued Cash flows Principal paid Mark-up paid Net debt as at December 31, 2017 1,497,000 1,378 - 92,809 (1,497,000) - (94,187) - - * Mark-up is covered under cashflow from operating activities. 36 STAFF STRENGTH Permanent Temporary / on contractual basis Bank’s own staff strength at the end of the year Outsourced Total staff strength Annual Report 2017 Note 36.1 2016 2017 Number of employees 3,959 18 3,977 3,053 7,030 3,592 19 3,611 2,784 6,395 125
  126. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 36.1 Outsourced staff are employees hired by outside contractors / agencies and posted in the Bank to perform various tasks / activities of the Bank. 36.2 The Bank has classified the following outsourcing arrangements as material in compliance with ‘Framework for Risk Management in Outsourcing Arrangements by Financial Institutions’ issued by the SBP vide Circular No. 6 of 2017 dated June 20, 2017: S.No Name of Outsourced Agency Nature of Service 1 E Services (Singapore) Private Limited Credit Card Hosting and Processing System 2 Euronet Pakistan Private Limited Technical consolidation of Cards Platform 37 DEFINED BENEFIT PLAN 37.1 General description Estimated Cost (Rupees) 92,400,000 163,350,000 The Bank operates an approved funded gratuity scheme for all its permanent employees and employees who are on contractual service in non-management cadre. During the year the Bank has bifurcated the approved funded gratuity scheme into 2 sub-funds that is conventional and Islamic within a single scheme. The benefits under the gratuity schemes are payable on retirement at the age of 60 years or earlier cessation of service in lump sum. The benefits are equal to one month’s last drawn basic salary for each year of eligible service or part thereof. The minimum qualifying eligible service for gratuity is 1 year for employees who became members of the Funds before November 12, 2002. In the case of other members of the Funds the minimum qualifying eligible service is 5 years. The minimum qualifying eligible service for contractual employees not employed under the management cadre is 6 months. The latest actuarial valuation of the Bank’s defined benefit plan, based on the Projected Unit Credit Actuarial Cost Method, was carried out as at December 31, 2017. The Gratuity scheme exposes the Bank to the following risks: Mortality risks The risk that the actual mortality experience is different. The effect depends on the beneficiaries’ service / age distribution and the benefit. Investment risks The risk of the investment underperforming and not being sufficient to meet the liabilities. This is managed by formulating proper investment plan in consultation with the investment advisors of the Fund. 126 Annual Report 2017
  127. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Risk of insufficiency of assets This is managed by making regular contribution to the Fund as advised by the actuary. Final salary risks The risk that the final salary at the time of cessation of service is higher than what we assumed. Since the benefit is calculated on the final salary, the benefit amount increases similarly. Withdrawal risks The risk of higher or lower withdrawal experience than assumed. The final effect could go either way depending on the beneficiaries’ service / age distribution and the benefit. 37.2 Principal actuarial assumptions Discount factor used (% per annum) Expected rate of salary increase (% per annum) Normal retirement age (years) 37.3 9.50 9.50 60 9.50 9.50 60 9.50 9.50 60 The amount recognised in the statement of financial position are determined as follows: Note Present value of defined benefit obligations Fair value of plan assets 37.4 2016 2017 Conventional Islamic 37.5 37.5 2016 2017 Conventional Islamic Total ---------------------------Rupees ‘000--------------------------324,113 (374,804) (50,691) 325,926 (315,129) 10,797 592,711 (644,985) (52,274) 650,039 (689,933) (39,894) Plan assets consist of the following: Balance with banks and financial institutions Debit instruments: - Government - Corporate 2017 2016 NonNonNonNonQuoted Quoted Quoted Quoted Quoted Quoted Quoted Quoted Conventional Islamic Total Total ------------------------------------------------Rupees ‘000--------------------------------------------------- 20,147 - 315,129 - 355,276 - 212,069 354,362 295 354,657 20,147 - 315,129 354,362 295 354,657 355,276 170,431 262,485 432,916 212,069 Annual Report 2017 127
  128. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 37.5 The movement in the defined benefit obligation over the year is as follows: 2017 Present value of obligation Fair value of plan assets Present value of obligation Fair value of plan assets Total Conventional Islamic ------------------------------------Rupees ‘000-----------------------------------At January 1 Transfer during the year Current service cost Interest expense / (income) Remeasurements: - Return on plan assets, excluding amounts included in interest (income) / expense - Gain / (loss) from change in financial assumptions - Experience (gains) / losses Contribution Benefit payments At December 31 592,711 (644,985) - - (52,274) (315,000) 315,000 315,000 (315,000) - 92,472 45,926 138,398 (49,381) (49,381) 26,889 14,606 41,495 (15,896) (15,896) 119,361 (4,745) 114,616 416,109 (379,366) 356,495 (330,896) 62,342 - (1,558) - 15,767 14,209 (22,679) (22,679) (69,317) 324,113 (1,558) (63,197) 69,317 (374,804) (30,569) (30,569) 325,926 15,767 (315,129) (53,248) (39,039) (63,197) (39,894) 2016 Present value of obligation Fair value of plan assets Total ------------------Rupees ‘000-----------------At January 1 504,297 (620,253) (115,956) Current service cost Interest expense / (income) 100,460 53,882 154,342 (64,938) (64,938) 100,460 (11,056) 89,404 658,639 (685,191) (26,552) (2,831) (4,501) (7,332) (18,390) (18,390) (18,390) (2,831) (4,501) (25,722) (58,596) 592,711 58,596 (644,985) (52,274) Remeasurements: - Return on plan assets, excluding amounts included in interest (income) / expense - Gain / (loss) from change in financial assumptions - Experience (gains) / losses Contribution Benefit payments At December 31 128 Annual Report 2017
  129. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 37.6 An analysis of present value of defined benefit obligation Split by type of members (i) Active employees (ii) Deferred (iii) Retired members Split by vested / non-vested (i) Vested benefits (ii) Non-vested benefits Split by cadre of members (i) Management (ii) Non-Management (Contractual) Split by benefits earned to date (i) Present value of guaranteed benefits (ii) Present value of benefits attributable to future increase in salary 37.7 Charge for defined benefit plan Current service cost Net interest cost 2016 2017 Conventional Islamic ------------------Rupees ‘000----------------324,113 324,113 325,926 325,926 592,711 592,711 263,723 60,390 324,113 270,064 55,862 325,926 480,070 112,641 592,711 321,187 2,926 324,113 357,161 (31,235) 325,926 584,753 7,958 592,711 141,082 183,031 324,113 142,327 183,599 325,926 254,138 338,573 592,711 92,472 (3,455) 89,017 26,889 (1,290) 25,599 100,460 (11,056) 89,404 37.8 The plan assets and defined benefit obligations are based in Pakistan. 37.9 Assumptions regarding future mortality are set based on the actuarial advice in accordance with published statistics and experience in Pakistan. The rates assumed are based on the adjusted SLIC 2001 - 2005 mortality tables with one year age set back. 37.10 The sensitivities of the defined benefit obligation to changes in the weighted principal assumptions are as under: Change in assumption Discount rate Salary increase rate 1% 1% Impact on defined benefit obligation - Increase / (decrease) Conventional Islamic Increase in Decrease in Increase in Decrease in assumption assumption assumption assumption -------------------------------Rupees ‘000------------------------------(32,009) 35,814 37,826 (30,938) (31,813) 35,429 37,443 (30,733) Increase Decrease Increase Decrease by 1 year in by 1 year in by 1 year in by 1 year in assumption assumption assumption assumption Conventional Islamic -------------------------------Rupees ‘000------------------------------Life expectancy / withdrawal rate Annual Report 2017 (7,602) 6,795 (7,805) 6,999 129
  130. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 The above analysis is based on a change in an assumption while holding all other assumptions constant. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the gratuity liability recognised within the statement of financial position. 37.11 The weighted average duration of the defined benefit obligation is 9.88 years and 10.56 for conventional and Islamic fund respectively. 37.12 Expected maturity analysis of the undiscounted defined benefit obligation for the gratuity scheme is as follows: At December 31, 2017 Less than a year Between 1-2 years Between 2-5 years Over 5 years Total --------------------------------------- Rupees ‘000 --------------------------------------- 37.13 Gratuity - Conventional 16,951 53,453 145,877 9,111,509 9,327,790 Gratuity - Islamic 25,056 42,586 113,753 5,467,090 5,648,485 Historical information Defined benefit obligation Fair value of plan assets Surplus / (deficit) Remeasurement of plan liabilities Remeasurement of plan assets 2016 2015 2014 2013 2017 ------------------------- Rupees ‘000 ------------------------(650,039) 689,933 39,894 (592,711) 644,985 52,274 (504,297) 620,253 115,956 (528,773) 602,394 73,621 (541,719) 639,308 97,589 53,248 7,332 130,961 32,878 16,818 (14,209) 18,390 (15,863) 8,588 (23,823) 37.14 Funding levels are monitored on an annual basis and are based on actuarial recommendations. Gratuity cost comprising the service cost and the net interest cost of conventional banking and Islamic banking for the next year works out to Rs 68.787 million and Rs 54.835 million respectively, as per the actuarial valuation report of the Bank as at December 31, 2017. 37.15 The disclosure made in notes 37.2 to 37.14 are based on the information included in the actuarial valuation report of the Bank as at December 31, 2017. 38 DEFINED CONTRIBUTION PLAN The Bank operates an approved funded contributory provident fund for all its permanent employees to which equal monthly contributions are made both by the Bank and the employees at the rate of 10% of the basic salary. The financial statements of the fund are separately prepared and are not included as part of these financial statements. 130 Annual Report 2017
  131. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 39 COMPENSATION OF DIRECTORS AND EXECUTIVES Particulars Managerial remuneration Fees Charge for defined benefit plan Contribution to defined contribution plan Rent and house maintenance Utilities Medical Leave fare assistance Others Number of persons * President & Chief Directors Executives Executive Officer 2016 2016 2016 2017 2017 2017 --------------------------- Rupees ‘000 ----------------------------------22,001 1,833 2,497 3,183 279 310 30,103 34,678 2,890 3,468 5,292 1,195 29 894 48,446 88,971 88,971 54,266 54,266 777,316 57,267 65,172 299,168 68,578 47,073 102,047 536,590 1,953,211 743,301 54,780 61,282 285,522 65,152 43,928 96,971 488,842 1,839,778 2* 1 10 8 688 633 During the year, Mr Nauman Ansari vacated his office as the President and CEO with effect from May 15, 2017 and Mr Yousaf Hussain was appointed the President and CEO of the Bank with effect from August 15, 2017. Amounts reported include remuneration of both the current and former President and CEO. 39.1 Executives mean employees, other than the chief executive and directors, whose basic salary exceeds five hundred thousand rupees in a financial year. 39.2 The President & Chief Executive and certain senior executives are provided with the Bank’s maintained cars in accordance with the terms of their employment. 39.3 In addition to the above, all executives, including the President & Chief Executive Officer of the Bank are also entitled to bonus which is disclosed in note 30.2 to these financial statements. 40 FAIR VALUE DISCLOSURES Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 40.1 Fair value hierarchy The table below analyses financial and non-financial assets carried at fair value, by valuation method. The different levels have been defined as follows: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). - Inputs for the assets or liabilities that are not based on observable market data (i.e. unobservable inputs e.g. estimated future cash flows) (Level 3). Annual Report 2017 131
  132. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Recurring fair value measurements 2017 Level 1 Level 2 Level 3 Total -------------------------------- Rupees ‘000 ------------------------------ Financial assets Investments - net Market Treasury Bills Pakistan Investment Bonds GOP Ijara Sukuk Bonds Fully paid up ordinary shares Term Finance Certificates Units of open end mutual funds Sukuk certificates Commitments in respect of forward exchange contracts Forward purchase of foreign exchange Forward sale of foreign exchange Derivative instruments 3,860,342 1,376,986 - 123,845,329 22,741,324 6,308,601 30,346 62,227 6,247,055 - 123,845,329 22,741,324 6,308,601 3,890,688 62,227 1,376,986 6,247,055 - 34,751,660 10,655,396 - 34,751,660 10,655,396 - 2,361,939 - 2,361,939 - 4,245,132 - 4,245,132 - - 8,945,278 3,143,415 8,945,278 3,143,415 Financial liability Other Liabilities Pakistan Investment Bonds Non-recurring fair value measurements Non-financial assets Operating fixed assets (land and buildings)** Non banking assets * Recurring fair value measurements 2016 Level 1 Level 2 Level 3 Total -------------------------------- Rupees ‘000 ------------------------------ Financial assets Investments - net Market Treasury Bills Pakistan Investment Bonds GOP Ijara Sukuk Bonds Fully paid up ordinary shares Term Finance Certificates Units of open end mutual funds Sukuk certificates Commitments in respect of forward exchange contracts Forward purchase of foreign exchange Forward sale of foreign exchange Derivative instruments 4,132,522 1,158,017 - 89,672,481 44,903,414 4,477,685 197,156 2,900,000 - 89,672,481 44,903,414 4,477,685 4,132,522 197,156 1,158,017 2,900,000 - 26,508,068 9,422,329 - 26,508,068 9,422,329 - 877,690 - 877,690 - - - - - - 8,350,363 3,202,821 8,350,363 3,202,821 Financial liability Other Liabilities Pakistan Investment Bonds Non-recurring fair value measurements Non-financial assets Operating fixed assets(land and buildings)** Non banking assets * * The Bank carries Non banking assets as per the accounting policy disclosed in note 7.9 to these financial statements. ** The Bank carries out periodic revaluation of these assets as per the accounting policy disclosed in note 7.6 to these financial statements. The Bank’s policy is to recognise transfers into and out of the different fair value hierarchy levels at the date when the event or change in circumstances require Bank to exercise such transfers. There were no transfers between levels 1 and 2 during the year. 132 Annual Report 2017
  133. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Valuation techniques used in determination of fair values within level 2 Item Valuation approach and input used Pakistan Investment Bonds / Market Fair values of Pakistan Investment Bonds and Treasury Bills are Treasury Bills derived using the PKRV rates. GOP Ijara Sukuk Fair values of GoP Ijarah Sukuk are derived using the PKISRV rates announced by the Financial Market Association (FMA) through Reuters. These rates denote an average of quotes received from eight different pre-defined / approved dealers / brokers. Unlisted ordinary shares Break-up value determined on the basis of the NAV of a company using the latest available audited financial statements. Term Finance Certificates (TFCs) and Fair values of TFCs and Sukuk certificates are determined using Sukuk Certificates the MUFAP rates. Forward foreign exchange contracts The valuation has been determined by interpolating the mid rates announced by the State Bank of Pakistan. Derivative instruments The Bank enters into derivative contracts with various counterparties. Derivatives that are valued using valuation techniques with market observable inputs are mainly interest rate swaps, cross currency swaps and forward foreign exchange contracts. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. Valuation techniques used in determination of fair values within level 3 Item Valuation approach and input used Operating fixed assets (land and building) Land and buildings are revalued by professionally qualified valuers as per the accounting policy disclosed in note 7.6. Non banking assets NBAs are valued by professionally qualified valuers as per the accounting policy disclosed in note 7.9. The valuations, mentioned above, are conducted by the valuation experts appointed by the Bank which are also on the panel of State Bank of Pakistan. The valuation experts use a market based approach to arrive at the fair value of the Bank’s properties. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable or similar properties. These values are adjusted to reflect the current condition of the properties. The effect of changes in the unobservable inputs used in the valuations cannot be determined with certainty, accordingly a quantitative disclosure of sensitivity has not been presented in these financial statements. Annual Report 2017 133
  134. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 40.2 Fair value of financial instruments The book value and fair value of the Bank’s assets, liabilities and off-balance sheet items are given below: Book Value On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Other assets Fair Value 2016 2016 2017 2017 ------------------------------------- Rupees ‘000 ---------------------------------37,861,767 1,872,771 9,010,335 179,706,358 231,532,160 6,180,734 466,164,125 37,239,302 1,139,375 5,000,000 170,210,137 204,830,997 5,410,164 423,829,975 37,861,767 1,872,771 9,010,335 179,759,728 231,101,672 6,180,734 465,787,007 37,239,302 1,139,375 5,000,000 170,560,812 204,830,997 5,410,164 424,180,650 7,304,326 54,788,547 373,081,163 12,729,642 447,903,678 5,982,285 52,806,084 340,306,404 1,497,000 8,395,089 408,986,862 7,304,326 54,788,547 373,081,163 12,729,642 447,903,678 5,982,285 52,806,084 340,306,404 1,509,133 8,395,089 408,998,995 Forward purchase of foreign exchange 33,594,675 26,599,238 34,751,660 26,508,068 Commitments in respect of repurchase transactions 26,440,962 31,743,703 26,440,962 31,743,703 Forward sale of foreign exchange 10,258,375 9,413,147 10,655,396 9,422,329 Commitments in respect of resale transactions 6,384,415 5,312,485 6,384,415 5,312,485 Derivative financial instruments 2,361,939 877,690 2,416,262 891,298 Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities Off-balance sheet financial instruments The fair value of quoted investments is based on quoted market prices. Unquoted equity securities are valued at lower of cost and break-up value as per the latest available audited financial statements. Other unquoted securities are valued at cost less impairment losses. The provision for impairment in the value of investments has been determined in accordance with the accounting policy as stated in note 7.4 to these financial statements. In the opinion of the management, the fair value of remaining financial assets and liabilities are not significantly different from their carrying values since these assets and liabilities are short term in nature or in the case of financings and deposits are frequently repriced. 134 Annual Report 2017
  135. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 41 SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES Primary segment information The Bank is organised into four major business segments: - Corporate Finance Trading and Sales Retail Banking Corporate & Commercial Banking All assets, liabilities, off balance sheet items and items of income and expense are distributed in primary segments in accordance with the core functions performed by the business groups. Corporate & Commercial Total Banking ------------------------------------ Rupees ‘000 ------------------------------------- Corporate Finance December 31, 2017 Total income *** Total expenses Net income Segment assets (Gross) Segment non performing loans Segment provision required against loans ** Segment liabilities 229,647 (148,922) 80,725 Trading & Sales 5,253,772 (4,296,047) 957,725 Retail Banking 25,270,586 (23,172,580) 2,098,006 - 186,246,334 - 105,912,738 4,475,747 - (3,566,897) (37,997,772) (374,881,766) 3,628,514 (2,250,184) 1,378,330 34,382,519 (29,867,733) 4,514,786 223,861,658 22,845,329 516,020,730 27,321,076 (20,728,170) (35,915,093) (24,295,067) (448,794,631) Segment return on assets (ROA) (%) * - 0.50% 2.60% 0.75% Segment cost of funds (%) * - 5.01% 3.47% 5.82% December 31, 2016 Total income*** Total expenses Net income Segment assets (Gross) Segment non performing loans Segment provision required against loans ** Segment liabilities 404,743 (168,689) 236,054 - 7,317,911 (4,577,603) 2,740,308 182,933,264 - 22,403,734 (21,517,059) 886,675 87,843,586 5,721,586 (3,702,010) (38,102,146) (334,741,785) 3,006,711 (2,567,976) 438,735 202,234,019 24,314,474 (21,292,511) (36,612,405) Segment return on assets (ROA) (%)* - 1.58% 1.10% (0.26%) Segment cost of funds (%)* - 4.77% 3.75% 5.55% 33,133,099 (28,831,327) 4,301,772 473,010,869 30,036,060 (24,994,521) (409,456,336) * These percentages have been computed based on average balances. ** Includes general provision. *** Net of share of loss of associate. Annual Report 2017 135
  136. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 42 RELATED PARTY TRANSACTIONS The Bank has related party relationships with its holding company, associated undertakings, associated company, group companies, retirement benefit plans, directors, key management personnel and entities over which the directors or key management personnel are able to exercise significant influence. Banking transactions with the related parties are executed substantially on the same terms, except transactions with directors and key management personnel that are as per their terms of employment, including mark-up rates and collateral, as those prevailing at the time of comparable transactions with unrelated parties and do not involve more than a normal risk. 2017 Directors and key management personnel Retirement Benefit Plans Associate Group Companies Other Related Parties -------------------------------------------- Rupees ‘000 ------------------------------------------Deposits Balance at the beginning of the year 76,655 921,493 3,173 981,862 1,891,917 Placements during the year 1,157,248 2,690,833 5,068,336 1,758 56,979,416 Balance at end of the year (1,100,474) 133,409 (2,148,553) 1,463,773 (5,068,708) 2,801 Withdrawals during the year (982,998) 622 (57,196,262) 1,675,071 Advances * Balance at the beginning of the year 84,388 - - - Disbursements during the year 151,533 - - - 792,376 Balance at end of the year (81,199) 154,722 - - - (143,089) 4,636,528 - - 46,032 - 3,567,571 - - - - 367,999 Balance at end of the year - - (22,863) 23,169 - (152,999) 3,782,571 Commission income receivable - - 12,000 - Repayments during the year 3,987,241 Investments ** Balance at the beginning of the year Disbursements / purchases during the year Repayments / sales / share of loss during the year - * Provision held against advances in respect of other related parties amounted to Rs 2,762.997 million. ** Provision held against investments in respect of other related parties amounted to Rs 2,317.947 million. 136 Annual Report 2017
  137. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 2016 Directors and key management personnel Deposits Balance at the beginning of the year Placements during the year Withdrawals during the year Balance at end of the year Advances * Balance at the beginning of the year Disbursements during the year Repayments during the year Balance at end of the year Investments ** Balance at the beginning of the year Disbursements / purchases during the year Repayments / sales / share of loss during the year Balance at end of the year Commission income receivable Retirement Benefit Plans Associate Group Companies Other Related Parties ----------------------------------------- Rupees ‘000 -------------------------------------55,474 1,187,752 (1,166,571) 76,655 63,045 36,731 (15,388) 84,388 517,875 1,231,961 (828,343) 921,493 2,265 4,420,973 (4,420,065) 3,173 315 10,466,848 (9,485,301) 981,862 517,814 26,973,329 (25,599,226) 1,891,917 - - - 4,038,817 (51,576) 3,987,241 - - 68,082 - - 3,642,469 764,219 - - (22,050) 46,032 - (839,117) 3,567,571 - - 810 - - * Provision held against advances in respect of other related parties amounted to Rs 2,994.048 million. ** Provision held against investments in respect of other related parties amounted to Rs 2,234.844 million. 42.1 Balances pertaining to parties that were related at the beginning of the year but ceased to be so related during any part of the current period are not reflected as part of the closing balance. The same are accounted for through the movement presented above. 42.2 Details of outstanding investments and donations made during the year relating to related parties are given in notes 11 and 30.4 to these financial statements. Details of advances to the companies or firms in which the directors of the Bank are interested as directors, partners or in case of private companies as members, loans due by directors, executives, subsidiary companies and other related parties are given in note 12.9 to these financial statements. Contributions to and accruals in respect of retirement benefit plans are made in accordance with the actuarial valuations / terms of the contribution plan (refer notes 37 and 38 to these financial statements for the details of the plans). Remuneration of the President and Chief Executive Officer, directors’ fee and certain related information are disclosed in note 39 and 30.2 to these financial statements. Such remuneration is determined in accordance with the terms of their employment. Details of disposal of vehicles to key management personnel and other executives are disclosed in Annexure IV to these financial statements. Details of shares held by the holding company are disclosed in note 21.3 to these financial statements. Details of assets held under trust arrangement on behalf of the related parties are given in note 45 to these financial statements. Annual Report 2017 137
  138. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 2017 Particulars Directors Retirement and key Benefit management Plans personnel Associate Group Companies Other related parties --------------------------------- Rupees ‘000 --------------------------------Shares / units purchased during the year Shares / units sold during the year Government securities purchased during the year Government securities sold during the year Profit paid / accrued Profit return / earned Remuneration of the key management personnel - Salaries and other short-term employee benefits - Post-employment benefits Contribution / charge relating to staff retirement benefits Dividend income Capital loss - net Guarantees issued favouring related parties or on their behalf Trade related commitments Share of loss from associate Commission income earned Dividend paid Shares issued as fully paid up bonus shares (note 21.3) 348,535 355,850 1,410 5,387 574,589 1,213,591 43,025 - 302 - - 367,999 149,460 861,693 75,582 43,388 314,788 15,597 111 251,732 - 22,863 18,643 - 801,165 57,379 3,539 29,397* 1,114,678 63,532 2016 Particulars Directors Retirement and key Benefit management Plans personnel Associate Group Companies Other related parties --------------------------------- Rupees ‘000 --------------------------------Shares / units purchased during the year Shares / units sold during the year Government securities purchased during the year Government securities sold during the year Profit paid / accrued Profit return / earned Remuneration of the key management personnel - Salaries and other short-term employee benefits - Post-employment benefits Contribution / charge relating to staff retirement benefits Dividend income Capital loss Guarantees issued favouring related parties or on their behalf Trade related commitments Share of loss from associate Commission income earned Dividend paid Shares issued as fully paid up bonus shares 517,092 473,929 1,726 4,290 189,940 37,241 - 279 - 314,650 19,252 915 120 - 218,055 - 22,050 10,000 - 801,165 - 764,219 844,970 2,987 1,509,202 27,402 61,922 86,933 (5,559) 29,397* 1,900,000 63,532 - * represents outstanding guarantee 138 Annual Report 2017
  139. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 43 CAPITAL - ASSESSMENT AND ADEQUACY BASEL SPECIFIC The State Bank of Pakistan (SBP) has introduced new guidelines with respect to disclosure of capital adequacy related information in the financial statements of Banks vide its communication dated November 05, 2014. These disclosures are based on the requirements of Basel III which were introduced earlier by the SBP in August 2013 for implementation by Banks in Pakistan. Basel III instructions have become effective from December 31, 2013. However, there is a transitional phase for implementation of Basel III requirements whereas the complete requirements would become applicable with full implementation by December 31, 2019. The Basel III Capital Regulation (Basel III) is applicable to the Bank and its associate Faysal Asset Management Limited (FAML). The Bank has no subsidiary therefore as per regulatory guidelines, consolidation is not required for reporting / disclosure purpose. Under Basel III framework, the Bank’s regulatory capital has been analyzed into two tiers as follows: - Tier 1 capital (going concern capital) which is sub divided into: a) Common Equity Tier 1 (CET1), which includes fully paid up capital, reserve for bonus issue, general reserves and un-appropriated profits (net of losses), etc. after deductions for investments in majority owned securities (to the extent of 10%, during transition phase), threshold deductions on deferred tax assets, reciprocal crossholdings and deduction for book value of intangibles. b) Additional Tier 1 capital (AT1), which includes instruments issued by the Bank which meet the specified criteria. Presently the Bank does not have any AT1 capital. - Tier II capital, which includes general provisions for loan losses (upto a maximum of 1.25% of credit risk weighted assets), reserves on revaluation of fixed assets and available for sale investments after deduction of deficit on available for sale investments (as per Basel III phase in approach requirement). - The deductions from Tier II capital mainly involves reciprocal crossholdings and investment in majority owned securities (to the extent of 10%, during transition phase). Banking operations are categorized in either the trading book or the banking book and risk weighted assets are determined according to the specified requirements that seek to reflect the varying levels of risk attached to assets and off balance sheet exposures. Capital Management The objective of capital management is to ensure the Bank’s ability to operate as a going concern by maintaining appropriate capital base in line with minimum regulatory requirements. The Bank has implemented the applicable requirements of Basel III capital adequacy framework that applies to all Banks as prescribed under BPRD Circular No. 06 of August 15, 2013 and amendments made by the State Bank of Pakistan through various circulars. The Bank has adopted Standardized Approach for Credit and Market Risks and Basic Indicator Approach for Operational Risk. Annual Report 2017 139
  140. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 The Bank ensures that it: a) b) c) complies with the capital requirements set by the State Bank of Pakistan; safeguards the Bank’s ability to continue as a going concern so that it can continue to provide returns to shareholders and benefits to other stakeholders; and maintains a strong capital base to support the developments of its business. Capital adequacy is regularly monitored by the Bank’s management, employing techniques based on the guidelines developed by the Basel Committee, as per the requirements of the SBP. The required information is submitted to the SBP on a quarterly basis. As at December 31, 2017 the SBP requires each bank or banking group to: (a) hold the minimum level of the paid-up capital of Rs 10 billion; (b) maintain a ratio of total regulatory capital to the risk-weighted assets at or above the required minimum level of 10.00%; and (c) maintain Common Equity Tier I (CET1) ratio and Tier 1 ratio of 6.0% and 7.5% respectively. With effect from December 31, 2017, an additional Capital Conservation Buffer (CCB) of 1.275% (to be met from CET1) has to be maintained over and above the minimum required level. The paid-up capital of the Bank for the year ended December 31, 2017 stood at Rs 13.197 billion (2016: Rs 11.998 billion). As at December 31, 2017, the Bank’s CAR stood at 15.90% whereas CET1 and Tier 1 ratios both stood at 14.00%. The Bank is also in compliance with the CCB requirements. Book value of intangible assets including software are deducted from Tier 1 capital whereas investment in associate as disclosed in Note 11.1 is deducted from Tier 1 and Tier 2 capital to arrive at the regulatory capital. The SBP through BPRD Circular No. 06 of August 15, 2013 has introduced new capital deductions under Basel III framework, such as Deferred Tax Asset (DTA), surplus on revaluation of assets etc. The newly prescribed deductions are applicable in a phased manner requiring 20% of applicable deductions from December 31, 2014. The deductions will increase by 20% each year and will be fully implemented from December 31, 2019. The risk-weighted assets are measured by means of a hierarchy of risk weights classified according to the nature and reflection of an estimate of credit, market and operational risks associated with each asset and counterparty, taking into account any eligible collaterals or guarantees. A similar treatment is adopted for off balance sheet exposures, with some adjustments to reflect the more contingent nature of the associated risks. The Bank will continue to maintain the required regulatory capital either through its risk management strategies or by increasing the capital requirements in line with the business and capital needs. The required capital adequacy ratio is achieved by the Bank through: (a) (b) (c) (d) 140 Adequate level of paid up capital; Adequate risk profile of asset mix; Ensuring better recovery management; and Maintaining acceptable profit margins. Annual Report 2017
  141. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 43.1 Capital adequacy ratio The capital to risk weighted assets ratio, calculated in accordance with the SBP guidelines on capital adequacy, under Basel III and Pre-Basel III treatment using Standardized Approach for Credit and Market Risks and Basic Indicator Approach for Operational Risk is presented below: Particulars Common Equity Tier 1 capital (CET1): Instruments and reserves - Fully paid-up capital / capital deposited with the SBP - Balance in share premium account - Reserve for issue of bonus shares - Discount on issue of shares - General / statutory reserves - Gains / (losses) on derivatives held as cash flow hedge - Unappropriated profit - Minority interests arising from CET1 capital instruments issued to third party by consolidated bank subsidiaries (amount allowed in CET1 capital of the consolidation group) CET 1 before regulatory adjustments Total regulatory adjustments applied to CET1 (Note 43.1.1) Common Equity Tier 1 (a) 2016 Amount --------- Rupees ‘000 ---------2017 13,197,361 10,131 7,926,207 12,527,973 33,661,672 1,090,867 32,570,805 11,997,601 10,131 7,148,117 9,985,870 29,141,719 1,264,805 27,876,914 Additional Tier 1 (AT 1) Capital - Qualifying Additional Tier-1 instruments plus any related share premium of which: - classified as equity - classified as liabilities - Additional Tier-1 capital instruments issued by consolidated subsidiaries and held by third parties of which: instrument issued by subsidiaries subject to phase out AT1 before regulatory adjustments Total regulatory adjustment applied to AT1 capital (Note 43.1.2) Additional Tier 1 capital after regulatory adjustments Additional Tier 1 capital recognised for capital adequacy (b) Tier 1 Capital (CET1 + admissible AT1) (c=a+b) Annual Report 2017 - - 32,570,805 - - 27,876,914 141
  142. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Particulars 2016 Amount ----------- Rupees ‘000 ---------2017 Tier 2 Capital - Qualifying Tier 2 capital instruments under Basel III - - - - 568,666 464,257 3,854,430 1,290 4,424,386 2,317 4,422,069 4,422,069 2,971,880 612,144 4,048,281 9,206 4,039,075 4,039,075 36,992,874 31,915,989 232,685,032 218,344,080 - Tier 2 capital instruments subject to phase out arrangement - - Tier 2 capital instruments issued to third party by consolidated subsidiaries of which: - instruments issued by subsidiaries subject to phase out - General provisions or general reserves for loan losses-up to maximum of 1.25% of credit risk weighted assets - Revaluation reserves of which: - revaluation reserves on fixed assets - unrealized gain / (loss) on AFS - Foreign exchange translation reserves - Undisclosed / other reserves (if any) T2 before regulatory adjustments Total regulatory adjustment applied to T2 capital (Note 43.1.3) Tier 2 capital (T2) after regulatory adjustments Portion of Tier 1 capital recognised in Tier 2 capital Total Tier 2 capital admissible for capital adequacy (d) TOTAL CAPITAL (T1 + admissible T2) (e=c+d) Total risk weighted assets (for details refer note 43.4) Particulars Capital ratios and buffers (in percentage of risk weighted assets) - CET1 to total RWA (a / i) - Tier-1 capital to total RWA (c / i) - Total capital to RWA (e / i) - Bank specific buffer requirement (minimum CET1 requirement plus capital conservation buffer plus any other buffer requirement) of which: capital conservation buffer requirement counter cyclical buffer requirement Domestic Systemically Important Banks (SIB) or Global SIB buffer requirement - CET1 available to meet buffers (as a percentage of risk weighted assets) National minimum capital requirements prescribed by the SBP - CET1 minimum ratio - Tier 1 minimum ratio - Total capital minimum ratio 142 2017 Percentage 14.00% 14.00% 15.90% 2016 12.77% 12.77% 14.62% - 6.65% 0.65% - - - 6.72% 6.12% 6.00% 6.00% 7.50% 10.65% 7.275% 1.275% 7.50% 11.275% Annual Report 2017
  143. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 2016 2017 Particulars Pre - Basel III treatment* Amount Pre - Basel III treatment* Amount ----------------------- Rupees ‘000 -------------------------43.1.1 Common Equity Tier 1 capital: Regulatory adjustments Goodwill (net of related deferred tax liability) All other intangibles (net of any associated deferred tax liability) Shortfall in provisions against classified assets - - - - 1,088,550 - 1,196,144 - - - - - Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related tax liability) Defined-benefit pension fund net assets - - - - - - - - Reciprocal cross holdings in CET1 capital instruments of banking, - - 59,455 - Cash flow hedge reserve financial and insurance entities - - - - Investment in own shares / CET1 instruments - - - - Securitization gain on sale - - - - Capital shortfall of regulated subsidiaries - - - - Deficit on account of revaluation from bank’s holdings of fixed assets / AFS - - - - - - - - - - - - - - - - - - - - of which: significant investments in the common stocks of financial entities - - - - of which: deferred tax assets arising from temporary differences - - - - Investments in TFCs of other banks exceeding the prescribed limit - - - - Any other deduction specified by SBP - - - - 2,317 2,317 9,206 9,206 1,090,867 2,317 1,264,805 9,206 Investment in mutual funds exceeding the prescribed limit - - - - Investment in own AT1 capital instruments - - - - - - - - - - - - - - - - Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) Significant investments in the common stocks of banking, financial and insurance entities that are outside the scope of regulatory consolidation (amount above 10% threshold) Deferred tax assets arising from temporary differences (amount above 10% threshold, net of related tax liability) Amount exceeding 15% threshold National specific regulatory adjustments applied to CET1 capital Adjustment to CET1 due to insufficient AT1 and Tier 2 to cover deductions Total regulatory adjustments applied to CET1 43.1.2 Additional Tier-1 & Tier-1 Capital: regulatory adjustments Reciprocal cross holdings in Additional Tier 1 capital instruments of banking, financial and insurance entities Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) Significant investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation Portion of deduction applied 50:50 to Tier-1 and Tier-2 capital based on pre-Basel III treatment - - - - Adjustments to additional Tier 1 due to insufficient Tier 2 to cover deductions - - - - Total regulatory adjustment applied to AT1 capital - - - - which, during transitional period, remain subject to deduction from additional tier-1 capital Annual Report 2017 143
  144. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 2016 2017 Particulars Amount Pre - Basel III treatment* Pre - Basel III treatment* Amount ----------------------- Rupees ‘000 -------------------------43.1.3 Tier 2 Capital: regulatory adjustments Portion of deduction applied 50:50 to Tier-1 and Tier-2 capital based on pre-Basel III 2,317 2,317 9,206 9,206 Reciprocal cross holdings in Tier 2 instruments of banking, financial and insurance entities treatment which, during transitional period, remain subject to deduction from tier-2 capital - - - - Investment in own Tier 2 capital instrument - - - - - - - - Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) Significant investments in the capital instruments issued by banking, financial and insurance entities that are outside the scope of regulatory consolidation Total regulatory adjustment applied to T2 capital * - - - - 2,317 2,317 9,206 9,206 This column highlights items that are still subject to Basel II treatment during the transitional period. 43.1.4 Additional Information “Risk weighted assets” subject to pre-Basel III treatment Risk weighted assets in respect of deduction items (which during the transitional period will be risk weighted subject to Pre-Basel III Treatment) of which: deferred tax assets of which: defined-benefit pension fund net assets of which: recognized portion of investment in capital of banking, financial and insurance entities where holding is less than 10% of the issued common share capital of the entity of which: recognized portion of investment in capital of banking, financial and insurance entities where holding is more than 10% of the issued common share capital of the entity Amounts below the thresholds for deduction (before risk weighting) Non-significant investments in the capital of other financial entities Significant investments in the common stock of financial entities Deferred tax assets arising from temporary differences (net of related tax liability) Applicable caps on the inclusion of provisions in Tier 2 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to standardized approach (prior to application of cap) Cap on inclusion of provisions in Tier 2 under standardized approach Provisions eligible for inclusion in Tier 2 in respect of exposures subject to internal ratings-based approach (prior to application of cap) Cap for inclusion of provisions in Tier 2 under internal ratings-based approach 144 2016 2017 --------- Rupees ‘000 -------- - - - - - - 1,277,205 18,535 2,015,172 1,466,384 27,619 2,738,996 568,665 2,352,986 464,256 2,065,837 - - Annual Report 2017
  145. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 43.2 Capital Structure Reconciliation 43.2.1 Reconciliation of each financial statement line item to item under regulatory scope of reporting 2017 Particulars Under regulatory scope of reporting ----------- Rupees ‘000 --------Balance sheet Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets - net Other assets Total assets 37,861,767 1,872,771 9,010,335 179,706,358 231,532,160 12,939,625 1,607,625 13,496,266 488,026,907 37,861,767 1,872,771 9,010,335 179,706,358 231,532,160 12,939,625 1,607,625 13,496,266 488,026,907 Liabilities and equity Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities - net Other liabilities Total liabilities 7,304,326 54,788,547 373,081,163 13,620,595 448,794,631 7,304,326 54,788,547 373,081,163 13,620,595 448,794,631 13,197,361 7,936,338 12,527,973 5,570,604 39,232,276 13,197,361 7,936,338 12,527,973 5,570,604 39,232,276 488,026,907 488,026,907 Represented by: Share capital Reserves Unappropriated profit Surplus on revaluation of assets - net of tax Total liabilities and equity Annual Report 2017 145
  146. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 43.2.2 Reconciliation of balance sheet to eligible regulatory capital Particulars Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments of which: - non-significant capital investments in capital of other financial institutions exceeding 10% threshold - significant capital investments in financial sector entities exceeding regulatory threshold - mutual funds exceeding regulatory threshold - reciprocal crossholding of capital instrument - others Advances - shortfall in provisions / excess of total EL amount over eligible provisions under IRB - general provisions reflected in Tier 2 capital Operating fixed assets of which: - Intangibles Deferred tax assets of which: - DTAs that rely on future profitability excluding those arising from temporary differences - DTAs arising from temporary differences exceeding regulatory threshold Other assets of which: - goodwill - defined-benefit pension fund net assets Total assets Liabilities and Equity Bills payable Borrowings Deposits and other accounts Sub-ordinated loans of which: - eligible for inclusion in AT1 - eligible for inclusion in Tier 2 Liabilities against assets subject to finance lease Deferred tax liabilities of which: - DTLs related to goodwill - DTLs related to intangible assets - DTLs related to defined pension fund net assets - other deferred tax liabilities Other liabilities Total liabilities Reference a b c d e f g k h i j l m n o p q r Share capital - of which: amount eligible for CET1 s - of which: amount eligible for AT1 t Reserves of which: - portion eligible for inclusion in CET1 - Statutory reserves u - portion eligible for inclusion in CET1 - General and other reserves - portion eligible for inclusion in Tier 2 v Unappropriated profit w Minority Interest of which: - portion eligible for inclusion in CET1 x - portion eligible for inclusion in AT1 y - portion eligible for inclusion in Tier 2 z Surplus on revaluation of assets of which: - Revaluation reserves on fixed assets - Revaluation reserves on non banking assets acquired in satisfaction of claims - Unrealized gains / (losses) on AFS securities aa - In case of deficit on revaluation (deduction from CET1) ab Total liabilities and equity 146 Balance sheet Under regulatory as in published scope of financial reporting statements --------------Rupees ‘000--------------37,861,767 1,872,771 9,010,335 179,706,358 37,861,767 1,872,771 9,010,335 179,706,358 231,532,160 568,666 12,939,625 1,088,550 1,607,625 13,496,266 488,026,907 231,532,160 568,666 12,939,625 1,088,550 1,607,625 13,496,266 488,026,907 7,304,326 54,788,547 373,081,163 13,620,595 448,794,631 7,304,326 54,788,547 373,081,163 13,620,595 448,794,631 13,197,361 13,197,361 7,936,338 7,145,382 790,956 12,527,973 5,570,604 4,330,820 1,238,335 1,449 488,026,907 13,197,361 13,197,361 7,936,338 7,145,382 790,956 12,527,973 5,570,604 4,330,820 1,238,335 1,449 488,026,907 Annual Report 2017
  147. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 43.2.3 Basel III Disclosure (with added column) Particulars 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Common equity Tier 1 capital (CET1): instruments and reserves Fully paid-up capital Balance in share premium account Reserve for issue of bonus shares General / statutory reserves Gain / (losses) on derivatives held as cash flow hedge Unappropriated profit Minority interests arising from CET1 capital instruments issued to third party by consolidated bank subsidiaries (amount allowed in CET1 capital of the consolidation group) CET 1 before Regulatory Adjustments Common Equity Tier 1 capital: Regulatory adjustments Goodwill (net of related deferred tax liability) All other intangibles (net of any associated deferred tax liability) Shortfall of provisions against classified assets Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related tax liability) Defined-benefit pension fund net assets Reciprocal cross holdings in CET1 capital instruments Cash flow hedge reserve Investment in own shares / CET1 instruments Securitization gain on sale Capital shortfall of regulated subsidiaries Deficit on account of revaluation from bank’s holdings of fixed assets / AFS securities Investments in the capital instruments of banking, financial and insurance - entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) Significant investments in the capital instruments issued by banking, - financial and insurance entities that are outside the scope of regulatory consolidation (amount above 10% threshold) Deferred tax assets arising from temporary differences (amount above 10% threshold, net of related tax liability) Amount exceeding 15% threshold of which: - significant investments in the common stocks of financial entities - deferred tax assets arising from temporary differences National specific regulatory adjustments applied to CET1 capital of which: - investment in TFCs of other banks exceeding the prescribed limit - any other deduction specified by the SBP Regulatory adjustment applied to CET1 due to insufficient AT1 and - Tier 2 to cover deductions Total regulatory adjustments applied to CET1 Common equity tier 1 Additional Tier 1 (AT 1) Capital Qualifying additional Tier-1 instruments plus any related share premium of which: - classified as equity - classified as liabilities Additional Tier-1 capital instruments issued by consolidated subsidiaries and held by third parties - of which: instrument issued by subsidiaries subject to phase out AT1 before regulatory adjustments Annual Report 2017 Component Source based on of regulatory reference capital reported number from by the Bank 43.2.2 ----Rupees ‘000---(s) (u) (w) (x) (j) - (s) (k) - (p) (f) 13,197,361 10,131 7,926,207 12,527,973 33,661,672 1,088,550 - (ab) - (a) - (ac) - (ae) - (b) - (ad) - (af) - (i) * 60% - (h) - (r) * 60% (l) - (q) * 60% (d) 2,317 1,090,867 32,570,805 (t) (m) - (y) - 147
  148. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Particulars 30 31 32 33 34 35 36 37 38 39 Additional Tier 1 Capital: regulatory adjustments Investment in mutual funds exceeding the prescribed limit (SBP specific adjustment) Investment in own AT1 capital instruments Reciprocal cross holdings in additional Tier 1 capital instruments Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the Bank does not own more than 10% of the issued share capital (amount above 10% threshold) Significant investments in the capital instruments issued by banking, financial and insurance entities that are outside the scope of regulatory consolidation Portion of deduction applied 50:50 to core capital and supplementary capital based on pre-Basel III treatment which, during transitional period, remain subject to deduction from tier-1 capital Regulatory adjustments applied to additional Tier 1 due to insufficient Tier 2 to cover deductions Total of regulatory adjustment applied to AT1 capital Additional Tier 1 capital Additional Tier 1 capital recognised for capital adequacy Source based on reference number from 43.2.2 (ac) - (ad) 32,570,805 Tier 1 Capital (CET1 + admissible AT1) 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 Tier 2 Capital Qualifying Tier 2 capital instruments under Basel III Capital instruments subject to phase out arrangement from Tier 2 Tier 2 capital instruments issued to third party by consolidated subsidiaries - of which: instruments issued by subsidiaries subject to phase out General Provisions or general reserves for loan losses-up to maximum of 1.25% of Credit Risk Weighted Assets Revaluation reserves eligible for Tier 2 of which: - portion pertaining to fixed assets - portion pertaining to AFS securities Foreign exchange translation reserves Undisclosed / other reserves (if any) T2 before regulatory adjustments Tier 2 Capital: regulatory adjustments Portion of deduction applied 50:50 to core capital and supplementary capital based on pre-Basel III treatment which, during transitional period, remain subject to deduction from tier-2 capital Reciprocal cross holdings in Tier 2 instruments Investment in own Tier 2 capital instruments Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the Bank does not own more than 10% of the issued share capital (amount above 10% threshold) Significant investments in the capital instruments issued by banking, financial and insurance entities that are outside the scope of regulatory consolidation Amount of regulatory adjustment applied to T2 capital Tier 2 capital (T2) Tier 2 capital recognised for capital adequacy Excess additional Tier 1 capital recognised in Tier 2 capital Total Tier 2 capital admissible for capital adequacy TOTAL CAPITAL (T1 + admissible T2) 148 Component of regulatory capital reported by the Bank ----Rupees ‘000---- (n) (z) (g) (v) 568,666 3,855,720 3,854,430 1,290 4,424,386 2,317 (d) - (ae) - (af) 2,317 4,422,069 4,422,069 4,422,069 36,992,874 Annual Report 2017
  149. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 43.3 Main features of regulatory capital instruments S. No. Main Features 1 Issuer 2 Unique identifier (eg KSE Symbol or Bloomberg identifier etc.) 3 Governing law(s) of the instrument Common Shares Faysal Bank Limited FABL Relevant Capital Market Laws Regulatory treatment 4 Transitional Basel III rules Common Equity Tier 1 5 Post-transitional Basel III rules Common Equity Tier 1 6 Eligible at solo / group / group & solo 7 Instrument type 8 Amount recognised in regulatory capital (Currency in PKR thousands, as of reporting date) 9 Par value of instrument 10 Accounting classification Shareholders’ equity 11 Original date of issuance Various 12 Perpetual or dated 13 Original maturity date 14 Issuer call subject to prior supervisory approval No 15 Optional call date, contingent call dates and redemption amount N/A 16 Subsequent call dates, if applicable N/A Solo Ordinary shares 13,197,361 10 Perpetual No maturity Coupons / dividends 17 Fixed or floating dividend / coupon N/A 18 Coupon rate and any related index / benchmark N/A 19 Existence of a dividend stopper No 20 Fully discretionary, partially discretionary or mandatory 21 Existence of step up or other incentive to redeem 22 Non-cumulative or cumulative Non - Cumulative 23 Convertible or non-convertible Non - Convertible 24 If convertible, conversion trigger (s) N/A 25 If convertible, fully or partially N/A 26 If convertible, conversion rate N/A 27 If convertible, mandatory or optional conversion N/A 28 If convertible, specify instrument type convertible into N/A 29 If convertible, specify issuer of instrument it converts into N/A 30 Write-down feature No 31 If write-down, write-down trigger(s) N/A 32 If write-down, full or partial N/A 33 If write-down, permanent or temporary N/A 34 If temporary write-down, description of write-up mechanism N/A 35 Position in subordination hierarchy in liquidation 36 Non-compliant transitioned features N/A 37 If yes, specify non-compliant features N/A Annual Report 2017 Fully Discretionary No Common equity (ranks after all creditors including depositors) 149
  150. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 43.4 Risk Weighted Assets Credit risk On-Balance sheet Portfolios subject to standardized approach (Comprehensive) - Sovereign - Public Sector entities - Banks - Corporate - Retail - Residential Mortgages - Past Due loans - Operating Fixed Assets - Other assets Off-Balance sheet Non-market related - Loan Repayment Guarantees - Purchase and Resale Agreements - Performance Bonds etc - Revolving underwriting Commitments - Stand By Letters of Credit Market related - Derivative Instruments - Foreign Exchange Contracts Equity Exposure Risk in the Banking Book Under simple risk weight method - Listed Shares - Unlisted Shares Total Credit Risk-Weighted Exposures Market Risk - capital requirement for portfolios subject to standardised approach - Interest rate risk - Equity position risk - Foreign exchange risk Total market risk Operational Risk - Capital requirement for operational risks Total operational risk Capital Adequacy Ratio Capital Requirements Risk Weighted Assets 2016 2016 2017 2017 -------------------------- Rupees ‘000 --------------------------------- 10,604 342,412 244,232 11,111,157 3,188,861 168,135 404,923 1,290,258 1,386,806 18,147,388 10,495 530,425 109,186 9,119,572 2,191,855 141,704 662,960 1,111,962 1,346,555 15,224,714 94,051 3,036,917 2,166,136 98,546,844 28,282,584 1,491,217 3,591,339 11,443,527 12,299,828 160,952,443 98,541 4,980,516 1,025,223 85,629,788 20,580,796 1,330,552 6,224,977 10,440,955 12,643,710 142,955,058 1,307,153 12,392 305,702 892,906 363,851 1,220,045 10,393 197,722 512,209 243,113 11,593,377 109,909 2,711,326 7,919,348 3,227,063 11,455,820 97,590 1,856,548 4,809,476 2,282,749 9,974 68,496 2,960,474 7,406 21,512 2,212,400 88,458 607,502 26,256,983 69,543 201,989 20,773,715 102,484 13,589 116,073 21,223,935 163,816 163,816 17,600,930 908,947 120,519 1,029,466 188,238,892 1,538,182 1,538,182 165,266,955 406,949 856,716 18,241 1,281,906 1,355,498 811,816 4,946 2,172,260 3,609,303 7,598,370 161,781 11,369,454 12,727,683 7,622,690 46,438 20,396,811 3,729,396 26,235,237 3,480,453 23,253,643 33,076,686 232,685,032 32,680,314 218,344,080 2016 2017 ------------------------- Rupees ‘000 -------------------------------- Total Eligible Regulatory Capital held Required Actual Required Actual CET1 to total RWA 6.00% 14.00% 6.00% 12.77% Tier-1 capital to total RWA 7.50% 14.00% 7.50% 12.77% 11.275% 15.90% 10.65% 14.62% Total capital to total RWA 150 31,915,989 36,993,057 Annual Report 2017
  151. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 43.5 The SBP through its letter BPRD (R&P-02)/625-99/2011/3744 dated March 28, 2011 has advised the Bank that the deduction of intangible assets, as appearing under Tier-I capital, would be limited to the extent of the amount of the intangible assets recognized as negative goodwill. Whereas, the portion of Deferred Tax Liabilities (DTL) created due to such intangible assets would not be netted against Deferred Tax Assets (DTA) for calculation of CAR. 43.6 In accordance with the Regulatory Capital Framework under Basel III issued by the SBP, Banks are required to deduct from Common Equity Tier I capital - regulatory adjustments, any shortfall in provisions required against classified assets irrespective of any relaxation allowed by the SBP. 43.7 The benefit of the FSV allowed by the SBP has not been deducted from Common equity Tier I capital - regulatory adjustments of the Bank based on a clarification issued by the SBP through its letter BSD/ BAI-1/220/452/2009 dated April 27, 2009 in accordance with section 1.1 of the SBP Capital adequacy guidelines. 43.8 Leverage Ratio SBP vide BPRD Circular No. 06 dated August 15, 2013 introduced leverage ratio (Tier 1 Capital to total exposure) under Basel III Framework. Banks are required to maintain minimum leverage ratio of 3% and to disclose the same from December 31, 2015. At Present, the leverage ratio is on parallel run till December 31, 2017. Based on the results of the parallel run period, the SBP intends to make any final adjustments to the definition and calibration of the leverage ratio with a view to set the leverage ratio requirements as a separate capital standard on December 31, 2018. The leverage ratio of the Bank for the year ended December 31, 2017 stood at 5.24% (2016: 5.08%). Particulars On balance sheet exposures On-balance sheet items (excluding derivatives but including collateral) Derivatives A) Total on balance sheet exposures Off balance sheet exposures Off-balance sheet items (excluding derivatives) Commitment in respect of derivatives (derivatives having negative fair value are also included) B) Total off balance sheet exposures 2016 2017 ---------Rupees ‘000-----------486,936,040 1,157,061 488,093,101 443,186,739 97,309 443,284,048 132,891,442 104,751,059 447,305 133,338,747 359,525 105,110,584 32,570,805 27,876,914 621,432,038 548,394,632 5.24% 5.08% Capital and total exposures Tier 1 capital Total exposure (A+B) Leverage ratio 44 RISK MANAGEMENT Risk Management Group (RMG) has been organized under the Chief Risk Officer (CRO). It has been authorized by the Board of Directors (BoD) to monitor the implementation of various risk policies via implementation of an integrated risk management framework across the Bank. As an ongoing exercise to integrate Risk related functions, RMG has been expanded, strengthened and entrusted to monitor the risk areas across the organisation, including adoption & convergence towards Regulatory & Basel guidelines on Risk Management. Annual Report 2017 151
  152. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 The primary objective of this architecture is to inculcate risk management into the organisation flows to ensure that risks are timely & accurately identified and assessed, properly documented, approved and adequately monitored and managed in order to ensure that risk taking activities are in line with the guidelines approved by the BoD and to protect the interests of the Bank’s depositors and shareholders. The “Risk Management Framework” at the Bank encompasses: - Scope of risks to be managed; - Process, systems and procedures to manage risk; and - Roles and responsibilities of individuals involved in risk management. The Bank has adopted an approach that gives an integrated view of the risks faced by the organisation. This calls for aligning strategic vision, policy objectives and business processes / procedures with the Risk Management framework. The management of risk is integrated with the Bank’s management of capital and strategy. This ensures that risks taken in pursuit of the Bank’s strategic objectives are consistent with the policies, translating into targeted shareholder return as well as the Bank’s desired credit rating and risk appetite. With this in view, the risk management framework endeavours to be a comprehensive and evolving guidelines to cater to changing business dynamics. The risk management framework includes: - Clearly defined risk management policies; - Well constituted organisational structure; and - Mechanism for ongoing review of credit policies and procedures and risk exposures. The “Risk Management Framework” is built on the following elements: - Comprehensive risk governance; and - Effective risk processes. The Bank has developed and implemented a governance and management structure, processes surrounding each risk area, including credit risk, market risk, liquidity risk, capital management, operational risk and information security risk. The essential components which contribute in effective management of all these risks are as follows: - Active Board / senior management strategic direction and centralized RMG oversight; Sufficient policies, procedures and limits; Adequate risk measurement, monitoring and management information systems; and Comprehensive internal controls. The Board of Directors (BoD) monitoring and oversight is facilitated through the Board Risk Management Committee (BRMC), comprising of Directors including the President & CEO. It is appointed and authorized by the BoD to assist in the design, regular evaluation and timely updation of the Risk Management framework. The BRMC has further authorized management committees such as Country Credit Committee (CCC), Enterprise Risk Management Committee (ERMC) and Assets & Liabilities Committee (ALCO) to supervise risk management activities within their respective areas. In order to have an effective and efficient risk assessment, and to closely align its functions with Business, RMG has separate Risk management functions for Credit Risk Management, based on the specialised skill sets & required specific experience in various business segments. These functions comprise of Corporate Risk, CBSME, Agri and Retail Risk Management. The common responsibilities of all Credit Risk Management functions include: - Conduct a thorough and independent due diligence of the proposed / existing exposures in the respective Risk portfolios. 152 Annual Report 2017
  153. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 - Work with Compliance to ensure conformity to the relevant Government regulations, SBP PRs as well as internal policies. - Work with Relationship teams to structure exposures such that they mitigate key risks, cater to customer requirements, remain economical in terms of risk weighted assets / capital allocation to ensure adequate risk coverage. The Risk Management architecture is further fostered by Enterprise Risk Management, Credit Administration, Risk Policy & Portfolio Management and Information Security functions. - The Enterprise Risk Management function is responsible for managing and controlling Market, Operational and Liquidity Risks at an enterprise level and monitoring regulatory capital requirements of the Bank. - Credit Administration Department looks after the security, loan documentation, disbursement and post disbursement monitoring aspects of the credit portfolio. - Risk Policy & Analytics department serves as an independent check in Risk Management function. It performs periodic review of all credit related portfolios (Corporate, CBSME, Retail, Agri, SAM) and analyzes portfolio compositions, risk rating distributions, emerging trends of NPLs, renewal status of RAs as per policy and other policy related matters. It also formulates / updates credit policies (along with various limits prescribed therein) in line with regulatory environment, business strategy, BoD approvals and best practices. - The Information Security Risk function is responsible for Information Security Risk identification, monitoring and reporting. 44.1 Credit Risk Credit risk is the identification of probability that a counterparty will cause a financial loss to the Bank due to its inability or unwillingness to meet its contractual obligation. This credit risk arises mainly from both direct lending activities as well as contingent liabilities. The Bank’s credit risk philosophy is based on the Bank’s overall business strategy and direction as established and approved by the Board of Directors. The Bank is committed to the appropriate level of due diligence to ensure that credit risks have been properly analyzed, fully disclosed to the approving authorities and appropriately rated, structured, priced and documented. The Bank deals with many different types of borrowers and borrowing structures across the corporate, commercial, SME and Retail segments. The Bank manages customer credit risk exposures within appropriate limits to ensure that it does not provide a disproportionate level of credit to a single customer or group of connected clients. The Bank follows aggregation principles – summing of credit risk limits to the same customer, or group of connected clients – to identify and manage effectively all significant credit risk exposures to a single customer within an individual business and, where appropriate, across other business segments. The Bank has well-defined credit approval and review processes under which senior officers with the requisite credit background, critically scrutinize, assess & discuss associated risks and advise/ recommend / review / approve credit facilities & financing, through respective Credit Committees. Besides financial, industry and transaction analysis, in order to quantify risks of counterparty, the credit evaluation also includes risk rating model to evaluate risk rating of the customers which is then monitored on a portfolio basis to gauge the Bank’s credit portfolio quality. To avoid risk concentration, counterparty limits, counterparty group limits and industry concentration limits are also established, monitored and assessed in the light of changing counterparty and market conditions. Annual Report 2017 153
  154. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 With a view to develop and effectively manage a diversified credit portfolio within each Business segment (as an integral part of the Credit Risk Management process), the Bank has adopted the concept of an industry / sector-wise exposure concentration grid which dictates target market exposures. As part of the Bank’s portfolio strategy and planning activity, these industry concentration limits are continually overseen by the management against the Bank’s approved exposures in these sectors and reviewed by the Board Risk Management Committee (BRMC) in its meetings with an aim to monitor the overall risk and to avoid high exposure to a single group or industry. 44.1.1 Segment by class of business Credit Risk Management (CRM) Framework covers three business segments: Corporate Risk Management, Commercial Banking & SME (including Agri) Risk Management and Retail Risk Management. Based on overall guidance provided by a recognized & established external consultant, in line with global best practices while ensuring regulatory compliance and alleviation of any (perceived) conflicts of interest, credit management process has been segregated into two distinct categories: - Independent Risk Advice by Risk Management function - Credit Approvals by Credit Committee(s), while taking into consideration the Business Unit recommendations / approvals and independent Risk Advice. With this segregation, the role of Risk Management function in credit approval process is focused to provide Risk Advice only, based on key risk parameters; whereas relevant Credit Committees are responsible for providing Credit related Approvals. The common responsibilities of Corporate Risk Management and Commercial Banking & SME (including Agri) Risk Management include: - Conduct a thorough and independent due diligence of the proposed / existing exposures in the credit portfolio. - Work with the relationship team to advise on structure of exposures such that they mitigate key risks, cater to customer requirements, remain economical in terms of risk weighted assets/ capital allocation to ensure risk coverage. - Work with Compliance to ensure conformity to the relevant Government regulations, SBP Prudential Regulations as well as internal policies. - Work with the independent Credit Risk Review team (under Internal Audit) for effective and periodic review of the credit portfolio. Retail Risk Management is responsible for managing the credit risk of consumer finance credit products, with credit facilities extended to individual (non-corporate) customers. The Consumer Finance / Retail Finance function operates on product program approach, which are approved by the Country Credit Committee & subsequently by the BoD. The Retail Risk Management provides its input on risk parameters in terms of ‘Risk Advice’, at the time of approval/ changes in product programs. Retail Risk Management also ensures that all the ongoing individual credit approvals are within pre-defined risk parameters as per the approved product programs. 154 Annual Report 2017
  155. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Segmental information in respect of the class of business, by sector including related provision and classified advances and geographical distribution of advances, deposits, and contingencies and commitments is given below: Chemical and pharmaceuticals Agriculture Textile Cement Sugar Construction Ready made garments Footwear and leather garments Automobile and transportation equipment Financial Oil refining / marketing Distribution / trading Electronics and electrical appliances Production and transmission of energy Iron and steel Food and allied Synthetic and rayon Paper and board Individuals Telecommunication Transportation, road and air Mining and quarrying Others Advances (Gross) Rupees ‘000 Percent 2017 Deposits Rupees ‘000 Percent Contingent liabilities * Rupees ‘000 Percent 9,394,865 22,130,158 27,303,613 3,639,678 7,939,423 6,546,600 3,228,267 1,462,689 471,975 3,687,306 7,512,086 19,179 6,395,397 44,279,918 6,164,702 10,942,641 1,835,019 1,052,927 28,959,322 5,621,713 15,103,424 6,996,065 35,140,260 255,827,227 5,090,760 8,132,256 2,480,338 4,163,777 70,705 6,476,000 641,470 181,834 4,407,175 20,061,063 7,056,748 50,521,624 1,451,360 4,003,230 705,549 3,320,371 57,309 137,871 121,279,857 420,036 1,900,996 109,373 130,411,461 373,081,163 4,700,200 1,664,572 3,008,728 1,580,542 71,358 1,728,443 499,222 387,686 377,269 2,136,464 5,620,432 4,130,346 753,942 2,591,906 1,866,227 1,174,055 1,939,095 709,197 796,126 2,618,554 2,183,602 284,125 16,155,716 56,977,807 3.67 8.65 10.67 1.42 3.10 2.56 1.26 0.57 0.18 1.44 2.94 0.01 2.50 17.31 2.41 4.28 0.72 0.41 11.32 2.20 5.90 2.73 13.75 100.00 Advances (Gross) Rupees ‘000 Percent Chemical and pharmaceuticals Agriculture Textile Cement Sugar Construction Ready made garments Footwear and leather garments Automobile and transportation equipment Financial Oil refining / marketing Distribution / trading Electronics and electrical appliances Production and transmission of energy Iron and steel Food and allied Synthetic and rayon Paper and board Individuals Telecommunication Transportation, road and air Mining and quarrying Others 9,838,269 34,578,371 23,901,174 2,160,572 5,676,693 6,514,081 2,815,800 1,171,931 573,499 2,528,589 8,951,056 11,217 4,685,132 39,175,968 5,217,059 7,425,868 1,654,293 1,209,691 20,390,495 2,888,385 14,030,225 4,083,548 30,343,602 229,825,518 4.28 15.05 10.40 0.94 2.47 2.83 1.23 0.51 0.25 1.10 3.89 2.04 17.05 2.27 3.23 0.72 0.53 8.87 1.26 6.10 1.78 13.20 100.00 1.36 2.18 0.66 1.12 0.02 1.74 0.17 0.05 1.18 5.38 1.89 13.54 0.39 1.07 0.19 0.89 0.02 0.04 32.51 0.11 0.51 0.03 34.96 100.00 2016 Deposits Rupees ‘000 Percent 10,003,779 7,391,593 2,327,674 233,261 87,671 5,720,291 692,604 158,128 4,024,968 16,950,190 5,877,957 58,610,052 953,249 2,969,772 634,694 3,631,426 55,546 143,677 108,933,737 477,690 681,358 76,345 109,670,742 340,306,404 2.94 2.17 0.68 0.07 0.03 1.68 0.20 0.05 1.18 4.98 1.73 17.22 0.28 0.87 0.19 1.07 0.02 0.04 32.01 0.14 0.20 0.02 32.22 100.00 8.25 2.92 5.28 2.77 0.13 3.03 0.88 0.68 0.66 3.75 9.86 7.25 1.32 4.55 3.28 2.06 3.40 1.24 1.40 4.60 3.83 0.50 28.36 100.00 Contingent liabilities * Rupees ‘000 Percent 2,585,621 159,457 2,580,647 441,636 28,821 1,095,831 128,550 333,491 310,315 1,071,377 6,435,852 3,031,839 359,324 2,427,655 976,118 1,421,047 1,021,550 297,232 993,415 2,794,921 2,929,918 4,019 7,490,134 38,918,770 6.64 0.41 6.63 1.13 0.07 2.82 0.33 0.86 0.80 2.75 16.54 7.79 0.92 6.24 2.51 3.65 2.62 0.76 2.55 7.18 7.53 0.01 19.26 100.00 * Contingent liabilities in this note are presented at cost and includes direct credit substitutes, transaction related contingent liabilities, trade related contingent liabilities and indemnity issued. Annual Report 2017 155
  156. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 44.1.2 Segment by sector Advances (Gross) Rupees ‘000 Percent Public / Government Private 44,391,189 211,436,038 255,827,227 17.35 82.65 100.00 Advances (Gross) Rupees ‘000 Percent Public / Government Private 51,407,749 178,417,769 229,825,518 22.37 77.63 100.00 2017 Deposits Rupees ‘000 Percent 39,900,140 333,181,023 373,081,163 10.69 89.31 100.00 2016 Deposits Rupees ‘000 Percent 21,603,435 318,702,969 340,306,404 6.35 93.65 100.00 Contingent liabilities * Rupees ‘000 Percent 14,641,340 42,336,467 56,977,807 25.70 74.30 100.00 Contingent liabilities * Rupees ‘000 Percent 7,360,128 31,558,642 38,918,770 18.91 81.09 100.00 * Contingent liabilities in this note are presented at cost and includes direct credit substitutes, transaction related contingent liabilities, trade related contingent liabilities and indemnity issued. 44.1.3 Details of non-performing advances and specific provisions by class of business segment 2016 Specific Specific Classified Classified Provision Provision Advances Advances Held Held ------------------------------ Rupees ‘000 -------------------------------2017 Chemical and Pharmaceuticals Agriculture Textile Cement Sugar Construction Ready made garments Footwear and leather garments Automobile and transport equipment Financial Oil refining / marketing Distribution / trading Electronics and electrical appliances Production and transmission of energy Iron and steel Food and allied Synthetic and rayon Paper and board Transportation, road and air Telecommunications Individuals Mining and quarrying Others 756,335 1,491,871 7,429,963 56,084 538,707 1,672,612 532,073 182,265 50,853 80,366 1,421,886 2,934,005 770,967 1,288,221 482,083 204,967 312,871 12,855 2,397,785 3,451 4,700,856 27,321,076 643,333 868,923 6,946,915 56,084 527,886 1,543,046 233,667 163,567 50,309 80,366 1,407,453 2,934,005 647,115 967,576 482,083 147,452 267,471 9,269 1,889,705 3,451 3,856,725 23,726,401 815,720 1,665,290 7,709,641 51,054 21,078 586,115 1,879,782 213,830 203,883 105,853 261,594 1,636,437 2,934,005 2,075,835 1,363,168 482,083 232,847 125,270 12,855 2,287,527 13,673 5,358,520 30,036,060 633,712 821,169 6,917,514 51,054 546,309 1,743,340 145,578 185,185 105,309 261,594 1,518,987 2,934,005 919,589 949,436 482,083 137,616 96,497 3,317 1,830,358 9,387 4,238,225 24,530,264 27,321,076 27,321,076 23,726,401 23,726,401 30,036,060 30,036,060 24,530,264 24,530,264 44.1.4 Details of non-performing advances and specific provisions by sector Public / Government Private 156 Annual Report 2017
  157. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 44.1.5 Geographical segment analysis 2017 Profit before Total assets Net assets Contingent taxation employed employed liabilities * -------------------------------- Rupees ‘000 ----------------------------Pakistan Asia Pacific (including South Asia) Europe United States of America and Canada Middle East Others 7,269,312 7,269,312 488,026,907 488,026,907 39,232,276 39,232,276 56,977,807 56,977,807 2016 Profit before Total assets Net assets Contingent taxation employed employed liabilities * -------------------------------- Rupees ‘000 ----------------------------Pakistan Asia Pacific (including South Asia) Europe United States of America and Canada Middle East Others 6,658,637 6,658,637 444,464,661 444,464,661 35,008,325 35,008,325 38,918,770 38,918,770 * Contingent liabilities for the purpose of this note are presented at cost and includes direct credit substitutes, transaction related contingent liabilities, trade related contingent liabilities and indemnity issued. 44.2 Credit Risk: General disclosures Basel II specific The Bank has adopted the Standardized Approach under Basel. According to the regulatory statement submitted under the Standardized Approach, the portfolio has been divided into claims on public sector entities in Pakistan (PSEs), claims on corporate (excluding equity exposure) and claims categorized as retail portfolio. Claims on corporate constitute 63.33% (2016: 63.07%) of the total risk weighted assets, 3.21% (2016: 3.40%) represents claims on PSEs and 16.56% (2016: 13.91%) pertains to claims categorized as retail portfolio. Annual Report 2017 157
  158. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 44.2.1 Credit Risk: Disclosures for portfolio subject to Standardised Approach For domestic claims, External Credit Assessment Institutions (ECAIs) recommended by the SBP, namely Pakistan Credit Rating Agency Limited (PACRA) and JCR-VIS Credit Rating Company Limited (JCR-VIS) are used. For claims on foreign entities, ratings assigned by Standard and Poor’s, Fitch and Moody’s are used. Exposures not rated by any of the aforementioned rating agencies are categorized as unrated. Types of exposure for which each agency is used in the year ended December 31, 2017 are as follows; Exposures Corporate Banks Sovereigns PSEs PACRA JCR-VIS Standard and Poor’s Moody’s Fitch 4 4 4 4 4 4 4 4 - 4 - 4 - The SBP indicative mapping process as instructed in the SBP’s circular “Minimum Capital Requirements for Banks and DFIs” (indicated in table below) was used to map alpha numeric ratings of PACRA, JCR-VIS, S&P’s. Moody’s, Fitch Ratings, and numeric scores of ECAs, to the SBP’s rating grades. Long Term Rating Grades Mapping SBP Rating ECA Scores PACRA JCR-VIS S&P AA- and above AA- and above Moody’s Fitch 1 0,1 AA- and above Aa3 and above AA- and above 2 2 A+ to A- A+ to A- A+ to A- A1 to A3 A+ to A- 3 3 BBB+ to BBB- BBB+ to BBB- BBB+ to BBB- Baa1 to Baa3 BBB+ to BBB- 4 4 BB+ to BB- BB+ to BB- BB+ to BB- Ba1 to Ba3 BB+ to BB- 5 5,6 B+ to B- B+ to B- B+ to B- B1 to B3 B+ to B- 6 7 CCC+ & Below Caa1 & Below CCC+ & Below CCC+ & Below CCC+ & Below Short Term Rating Grades Mapping 158 SBP Rating PACRA JCR-VIS S&P Moody’s Fitch S1 A-1 & above A-1 & above A-1 & above P-1 F1 S2 A-2 A-2 A-2 P-2 F2 S3 A-3 A-3 A-3 P-3 F3 S4 Others Others Others Others Others Annual Report 2017
  159. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 For exposure amounts after risk mitigation subject to the standardized approach, amount of Bank’s / DFI’s outstanding (rated and unrated ) in each risk bucket as well as those that are deducted are as follows: Exposures Rating Amount Deduction Net Amount Category Outstanding CRM --------------------------- Rupees ‘000 --------------------------- - Cash and Cash Equivalent 9,956,270 - 9,956,270 1 2 3,4 5,6 Unrated Unrated-2 36,213,330 19,278,101 29,301,515 43,464,719 10,364 844,666 893,950 36,213,330 19,267,737 28,456,849 42,570,769 - Public Sector Entities 1 2,3 Unrated 11,422,885 1,504,681 - 11,422,885 1,504,681 - Banks 1,2,3 4,5,6 Unrated 10,168,501 3,140 12,861 - 10,168,501 3,140 12,861 - Sovereigns etc. 1 2 3 4,5 6 Unrated 94,051 - - 94,051 - 97,396,393 5,378,974 42,390,759 4,276,107 3,127,964 320,933 - 5,979,277 4,680,646 15,486 246,475 6,318 - 91,417,116 5,378,974 37,710,113 4,260,621 2,881,489 314,615 - 80,346 908,947 11,443,527 7,215,559 - 80,346 908,947 11,443,527 7,215,559 335,993,271 12,677,182 323,316,089 - Corporate - Government of Pakistan SBP Retail Residential Mortgage Past Dues Loans Past Dues against Residential Mortgage Significant investment in Commercial entities Significant investment and DTAs above 15% threshold Unlisted Equity Investments Listed Equity Investments Operating Fixed Assets Other Assets Annual Report 2017 2,033,708 - 2,033,708 159
  160. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 The Bank has adopted the Comprehensive Approach of Credit Risk Mitigation for the Banking Book. Under this approach, cash, lien on deposits, government securities and eligible guarantees etc. are considered as eligible collateral. Where the Bank’s exposure to an obligor is secured by eligible collateral, the Bank reduces its exposure for the calculation of capital requirement by the realizable amount of the collateral, adjusted for any applicable haircuts. Collaterals used by the Bank for Credit Risk Mitigation (CRM) were as follows: 44.3 Cash margin Government securities Guarantees of governments and banks Shares listed on recognized stock exchange. Market risk It is the risk that the value of on-balance sheet and off-balance sheet positions of the Bank will be adversely affected by movements in market rates or prices such as interest rates, equity prices and/ or commodity prices resulting in a loss to earnings and capital. Market risks arise generally from trading activities, open foreign currency positions, holding common equity and other products. All such instruments and transactions are exposed to general and specific market movements. The Bank seeks to mitigate market risk by employing strategies that correlate price, rate and spread movements of its earning assets, liabilities and trading activities. Treasury front office, market risk management and treasury middle office perform market risk management activities within the Bank. The Bank has Enterprise Risk Management Committee which is responsible for recommending market risk policies and strategies for the Board approval and its subsequent implementation and review. 44.4 Foreign exchange risk / currency risk Foreign exchange risk / currency risk is the current or prospective risk to earnings and capital arising from adverse movements in currency exchange rates. It refers to the impact of adverse movements in currency exchange rates on the value of open foreign currency positions. Changes in currency rates affect the value of assets and liabilities denominated in foreign currencies and may affect revenues from foreign exchange dealing. The Bank undertakes currency risk mostly to support its trade services and maintains overall foreign exchange risk position to the extent of statutory Foreign Exchange Exposure Limit (FEEL) prescribed by the SBP. Foreign exchange risk exposures are managed by matching future maturities. Exposure limits such as counterparty, gap, net open position, dealer and bucket-wise currency delta limits are in place in accordance with the Bank’s approved policies in order to manage associated risk and concentration at the acceptable tolerance levels. 160 Annual Report 2017
  161. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 44.4.1 Currency Risk Pakistan Rupee United States Dollar Great Britain Pound Japanese Yen Euro Other Currencies 2017 Off-balance Net currency Assets Liabilities sheet items exposure -------------------------------- Rupees ‘000 -----------------------------478,456,207 8,102,417 1,041,286 156 397,891 28,950 488,026,907 415,063,972 28,149,258 3,716,589 3,589 1,858,856 2,367 448,794,631 (24,061,325) 19,888,492 2,701,527 1,471,306 - 39,330,910 (158,349) 26,224 (3,433) 10,341 26,583 39,232,276 2016 Off-balance Net currency sheet items exposure -------------------------------- Rupees ‘000 -----------------------------Pakistan Rupee United States Dollar Great Britain Pound Japanese Yen Euro Other Currencies 44.5 Assets Liabilities 436,374,105 6,615,994 1,143,721 3,091 302,461 25,289 444,464,661 384,340,805 20,159,500 3,066,201 526 1,889,304 409,456,336 (17,013,383) 13,497,068 1,928,019 468 1,587,828 - 35,019,917 (46,438) 5,539 3,033 985 25,289 35,008,325 Equity position risk Equity position risk is the risk arising from unfavourable fluctuations in prices of shares in which the Bank carries long positions as part of its trading book. It is a risk to earnings or capital that results from adverse changes in the value of equity related portfolios of the Bank. Price risk associated with equities could be systematic or unsystematic. Systematic risk is due to sensitivity of portfolio’s value to changes in overall level of equity prices, while unsystematic risk is associated with price volatility that is determined by the specific characteristics of the investee company. The Bank’s equity position is governed by position limits imposed by State Bank of Pakistan for overall investment and per scrip exposure. Additionally, there are internal limits set to manage overall earnings in the form of stop loss limits and maintain a diverse portfolio through sector concentration limits. Annual Report 2017 161
  162. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 44.6 Mismatch of Interest Rate Sensitive Assets and Liabilities / Yield / Interest Rate Risk 2017 Exposed to Yield / Interest risk Effective Yield / Interest rate Over one month to three months Upto one month Total Over three months to six months Over six months to one year Over one year to two years Over two Over three years to years to three years five years Over five years to ten years Non-interest bearing financial instruments Over ten years ---------------------------------------------------------------------------------------- Rupees ‘000 -----------------------------------------------------------------------------------On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks 37,861,767 - - - - - - - - - 37,861,767 1,872,771 - - - - - - - - - 1,872,771 Lendings to financial institutions 5.8 9,010,335 9,010,335 - - - - - - - - - Investments 6.5 179,706,358 79,342,482 54,052,050 4,500,155 2,500,669 6,432,057 10,686,636 8,050,476 7,746,302 1,054,688 5,340,843 Advances 7.5 231,532,160 76,281,751 86,466,163 39,118,748 24,761,557 739 497,160 608,968 198,781 3,618 3,594,675 6,180,734 - - - - - - - - - 6,180,734 466,164,125 164,634,568 140,518,213 43,618,903 27,262,226 6,432,796 11,183,796 8,659,444 7,945,083 1,058,306 54,850,790 Other assets Liabilities Bills payable 7,304,326 - - - - - - - - - 7,304,326 Borrowings 4.8 54,788,547 33,377,996 15,171,185 3,421,534 50,950 14,250 223,003 782,628 571,157 930,213 245,631 Deposits and other accounts 3.4 373,081,163 32,730,014 35,396,206 21,002,269 30,713,574 12,673,694 15,686,037 31,815,531 44,477,149 Sub-ordinated loans Other liabilities On-balance sheet gap 19,055,987 129,530,702 - - - - - - - - - - - 12,729,642 - 4,245,132 - - - - - - - 8,484,510 447,903,678 66,108,010 54,812,523 24,423,803 30,764,524 12,687,944 15,909,040 32,598,159 45,048,306 18,260,447 98,526,558 85,705,690 19,195,100 (3,502,298) (6,255,148) (4,725,244) (23,938,715) (37,103,223) (18,927,894) (90,714,379) 19,986,200 145,565,169 Off-balance sheet financial instruments Forward lending Cross currency and interest rate swaps Forward foreign exchange contracts - - - - - - - - - - - 33,594,675 17,665,705 15,316,474 612,496 - - - - - - - 33,594,675 17,665,705 15,316,474 612,496 - - - - - - - Forward borrowing Cross currency and interest rate swaps 2,361,939 - - - 184,029 500,417 831,668 448,747 397,078 - - 10,258,375 5,824,045 3,542,879 891,451 - - - - - - - 12,620,314 5,824,045 3,542,879 891,451 184,029 500,417 831,668 448,747 397,078 - - 20,974,361 11,841,660 11,773,595 (278,955) (184,029) (500,417) (831,668) (448,747) (397,078) - - Total Yield / Interest Risk Sensitivity Gap 110,368,218 97,479,285 Cumulative Yield / Interest Risk Sensitivity Gap 110,368,218 207,847,503 226,763,648 223,077,321 216,321,756 210,764,844 186,377,382 148,877,081 129,949,187 Forward foreign exchange contracts Off-balance sheet gap 162 18,916,145 (3,686,327) (6,755,565) (5,556,912) (24,387,462) (37,500,301) (18,927,894) Annual Report 2017
  163. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 2016 Exposed to Yield / Interest risk Effective Yield / Interest rate Over one month to three months Upto one month Total Over three months to six months Over six months to one year Over one year to two years Over two years to three years Over three years to five years Over five years to ten years Non-interest bearing financial instruments Over ten years ---------------------------------------------------------------------------------------- Rupees ‘000 -----------------------------------------------------------------------------------On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks 37,239,302 - - - - - - - - - 37,239,302 1,139,375 - - - - - - - - - 1,139,375 Lendings to financial institutions 5.9 5,000,000 5,000,000 - - - - - - - - - Investments 7.3 170,210,137 221,288 40,229,736 53,458,010 19,798,213 17,670,639 6,384,724 16,667,019 10,443,935 - 5,336,573 Advances 7.1 204,830,997 54,159,756 71,437,582 31,273,223 18,380,975 3,135,650 7,312,196 7,277,629 4,734,140 1,505,500 5,614,346 5,410,164 - - - - - - - - - 5,410,164 59,381,044 111,667,318 84,731,233 38,179,188 20,806,289 13,696,920 23,944,648 15,178,075 1,505,500 54,739,760 Other assets 423,829,975 Liabilities Bills payable 5,982,285 - - - - - - - - - 5,982,285 Borrowings 3.9 52,806,084 31,935,634 11,143,078 7,335,040 8,418 121,742 31,367 1,109,720 583,889 14,453 522,743 Deposits and other accounts 3.6 340,306,404 32,502,276 32,555,433 25,838,206 26,349,658 8,633,442 12,663,341 25,195,155 47,271,047 Sub-ordinated loans 8.7 1,497,000 - - 748,500 748,500 - - - - - - 8,395,089 - - - - - - - - - 8,395,089 408,986,862 64,437,910 43,698,511 33,921,746 27,106,576 8,755,184 12,694,708 26,304,875 47,854,936 14,843,113 (5,056,866) 67,968,807 50,809,487 11,072,612 12,051,105 1,002,212 Other liabilities On-balance sheet gap 14,288,790 115,009,056 14,303,243 129,909,173 (2,360,227) (32,676,861) (12,797,743) (75,169,413) Off-balance sheet financial instruments Forward lending Cross currency and interest rate swaps Forward foreign exchange contracts - - - - - - - - - - - 26,599,238 12,731,798 12,245,365 1,074,224 547,851 - - - - - - 26,599,238 12,731,798 12,245,365 1,074,224 547,851 - - - - - - Forward Borrowing Cross currency and interest rate swaps 877,690 - - - - - - - 877,690 - - 9,413,147 4,106,388 4,977,800 328,959 - - - - - - - 10,290,837 4,106,388 4,977,800 328,959 - - - - 877,690 - - 16,308,401 8,625,410 7,267,565 745,265 547,851 - - - (877,690) - - Total Yield / Interest Risk Sensitivity Gap 3,568,544 75,236,372 51,554,752 11,620,463 12,051,105 1,002,212 Cumulative Yield / Interest Risk Sensitivity Gap 3,568,544 78,804,916 130,359,668 141,980,131 154,031,236 155,033,448 152,673,221 119,118,670 106,320,927 Forward foreign exchange contracts Off-balance sheet gap (2,360,227) (33,554,551) (12,797,743) 44.6.1Yield curve risk is the risk that a financial instrument will suffer either a decline in income or capital because future changes in prevailing interest rates impact assets more or less than they impact liabilities. Annual Report 2017 163
  164. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 44.6.2 The interest rate risk of the Bank arises when there is a mismatch between contractual maturities, which are subject to interest rate adjustment within a specified period or re-pricing of on and off-balance sheet assets and liabilities. Risk is addressed by Asset and Liability Management Committee that reviews the interest rate dynamics at regular intervals and decides re-pricing of assets and liabilities to ensure that the spread of the Bank remains at an acceptable level. 44.6.3 Major sources of Interest rate risk are; i) ii) iii) iv) v) 44.7 differences between the timing of rate changes and the timing of the cash flows (re-pricing risk); changing rate relationships among different yield curves affecting Bank’s activities (basis risk); changing rate relationships across the range of maturities (yield curve risk); interest-related options embedded in the Bank’s products (options risk); and changes in marked-to-market value of financial instruments which occur when interest rate changes (price risk). Liquidity Risk Liquidity Risk is the risk that the Bank will be unable to meet its payment obligations associated with its financial liabilities when they fall due and to replenish funds when they are withdrawn. Liquidity risk management framework is governed by the liquidity risk management policy. The policy provides specific directives for measuring and managing liquidity risk; identifies responsible personnel; and defines their respective roles and responsibilities relating to liquidity risk management. Management of liquidity risk is accomplished through a formal structure which includes: - Board of Directors (BoD) Board Risk Management Committee (BRMC) Asset and Liability Committee (ALCO) Enterprise Risk Management Committee (ERMC) Treasury Risk Management (Enterprise Risk Management) Finance The BoD approves the liquidity policy including risk limits and ensures, through quarterly reviews by the BRMC, that the Bank’s liquidity risk is being managed prudently. BRMC plays a strategic role in liquidity risk management by overseeing the liquidity risk profile of the Bank. ERMC defines the risk tolerance levels and sets risk limits for effective liquidity risk management. ALCO ensures adherence with policy requirements and risk limits so that the Bank remains sufficiently liquid at all times. The Bank ensures to maintain a diversified portfolio of liquid assets and funding base. Sources of funding comprise of a good mix of core deposits. Concentration of deposit, especially large volume deposits, is closely monitored to anticipate any potential liquidity issues in case of their withdrawals. 164 Annual Report 2017
  165. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Various tools and techniques are used to measure and monitor the possible liquidity risk. These include monitoring of different liquidity ratios like liquid assets to liquid liabilities, liquid assets to total deposits, large volume deposits to total deposits, advances to deposits, liquid assets to volatile assets and liabilities. The Bank also ensures that statutory cash and liquidity requirements are maintained at all times. In addition, the Bank has also implemented SBP Basel II liquidity standards for ensuring compliance with the requirements of LCR, NSFR and other monitoring tools. The Bank performs liquidity stress testing on periodic basis in order to ensure sufficient liquidity is always available to meet financial obligations/ commitments. Stress testing aims to quantify the potential impact of extreme yet plausible events or movements on the value of portfolio. Shocks include withdrawal of deposits, withdrawal of wholesale / large deposits, withdrawal of top deposits, etc. The results of stress testing are shared with relevant forums on a periodic basis. Contingency Funding Plan (CFP) is a part of liquidity risk management policy of the Bank. CFP provides a set of several early warning indicators of a possible liquidity shortfall situation; describes the action taken to manage it and the roles and responsibilities of relevant authorities. Liquidity coverage ratio measures the liquidity of the Bank to convert High Quality Liquid Assets (HQLA) in cash to meet the immediate liquidity requirements in the next thirty days period. HQLA are assets which can be readily sold or used as collaterals to obtain funds at little or no loss of value under the stress conditions. HQLA comprise of cash and treasury balances, un-encumbered investments in government securities, other rated debt instruments and equities of non-financial instruments. 44.7.1 Liquidity Coverage Ratio (LCR) According to Basel III instructions issued by State Bank of Pakistan vide its BPRD Circular No. 08 dated June 23, 2016, it is mandatory for all the banks to calculate and report the LCR statement on monthly frequency with the minimum benchmark of 90% as of December 31, 2017. The Liquidity Coverage Ratio (LCR) is a quantitative requirement which aims to ensure that the Bank maintains an adequate level of unencumbered high quality liquid assets which can easily be converted into cash at little or no loss of value in private markets, to withstand an acute liquidity stress scenario over a 30-day horizon at both the entity and consolidated level. The LCR has two components: a) Value of the stock of High Quality Liquid Assets (HQLA) in stressed conditions; and b) Total net cash outflows, calculated according to the stress scenario for which the Bank would need sufficient liquidity on hand to survive for up to 30 days. Annual Report 2017 165
  166. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Particulars HIGH QUALITY LIQUID ASSETS 1 Total high quality liquid assets (HQLA) CASH OUTLFLOWS 2 Retail deposits and deposits from small business customers of which: 2.1 stable deposit 2.2 Less stable deposit 3 Unsecured wholesale funding of which: 3.1 Operational deposits (all counterparties) 3.2 Non-operational deposits (all counterparties) 3.3 Unsecured debt 4 Secured wholesale funding 5 Additional requirements of which: 5.1 Outflows related to derivative exposures and other collateral requirements 5.2 Outflows related to loss of funding on debt products 5.3 Credit and Liquidity facilities 6 Other contractual funding obligations 7 Other contingent funding obligations 8 TOTAL CASH OUTFLOWS CASH INFLOWS 9 Secured lending 10 Inflows from fully performing exposures 11 Other cash inflows 12 TOTAL CASH INLFOWS Total Total Weightedb Unweighteda Value (average) Value (average) -------------(Rupees ‘000)------------158,597,029 115,895,154 115,895,154 234,367,012 22,685,554 195,399,424 16,282,034 50,731,529 50,731,529 10,733,965 185,493,357 11,589,515 11,589,515 67,120,201 5,671,389 45,166,778 16,282,034 194,475 5,072,845 5,072,845 10,733,965 5,663,845 100,374,846 2,263,392 42,193,406 2,335,742 46,792,540 21,871,590 882,120 22,753,710 TOTAL ADJUSTED VALUE 21 22 23 TOTAL HQLA TOTAL NET CASH OUTFLOWS LIQUIDITY COVERAGE RATIO 158,597,029 77,621,136 2.118 a unweighted values are calculated as outstanding balances maturing or callable within 30 days (for inflows and outflows). b Weighted values are calculated after the application of respective haircuts (for HQLA) or inflow and outflow rates (for inflows and outflows). c Adjusted values must be calculated after the application of both (i) haircuts and inflow and outflow rates and (ii) any applicable caps (i.e. cap on level 2B and level 2 assets for HQLA and cap on inflows). 44.7.2 Net Stable Funding Ratio (NSFR) According to Basel III instructions issued by State Bank of Pakistan BPRD Circular No. 08 dated June 23, 2016, it is mandatory for all the banks to calculate and report the Net Stable Funding Ratio (NSFR) on a quarterly basis with the minimum of 100% on an ongoing basis from December 31, 2017. 166 Annual Report 2017
  167. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 The purpose of the NSFR is to ensure that Bank holds a minimum amount of stable funding based on the liquidity characteristics of its assets and off-balance sheet activities over a one year horizon. The NSFR limits overreliance on short-term wholesale funding, encourages better assessment of funding risk across all on- and off-balance sheet items and promotes funding stability. The objective is to reduce maturity mismatches between the asset and liability items on the balance sheet and thereby reduce funding and rollover risk. Unweighted value by residual maturity Particulars No maturity < 6 months 6 months to < 1 year Weighted value ≥ 1 year ----------------------------------------(Rupees ‘000)------------------------------------Available Stable Funding (ASF) Item 1 Capital: 2 Regulatory capital 3 Other capital instruments 4 Retail deposits and deposit from small business 5 Stable deposits 6 Less stable deposits 7 Wholesale funding: 8 Operational deposits 9 Other wholesale funding 10 Other liabilities: 11 NSFR derivative liabilities 12 All other liabilities and equity not included in other 13 Total ASF customers: categories 33,661,677 - - 225,885,348 259,547,025 - - - 225,885,348 225,885,348 33,661,677 - - - 33,661,677 - - 52,011,179 - 46,810,061 - - 52,011,179 - 46,810,061 - - - 13,291,622 - 26,583,244 26,583,244 - 73,141,268 - 73,141,268 - - - 68,669,201 - 68,669,201 - - - - - - - 4,329,288 2,547,599 4,329,288 65,668 2,481,931 - 47,626,223 34,334,601 2,164,644 - 2,164,644 356,147,953 Required Stable Funding (RSF) Item 14 Total NSFR high-quality liquid assets (HQLA) 15 Deposits held at other financial institutions for 16 Performing loans and securities: 17 Performing loans to financial institutions secured 18 Performing loans to financial institutions secured by operational purposes by Level 1 HQLA 200,957,709 2,761,690 1,872,771 - - - 936,386 6,010,335 - - - 601,034 - 3,350,852 221,719 - 613,487 - - - 65,419,655 55,606,707 - - - 53,748,773 34,936,702 - - - - - non-Level 1 HQLA and unsecured performing loans to financial institutions 19 Performing loans to non- financial corporate clients, loans to retail and small business customers, and loans to sovereigns, central banks and PSEs, of which: 20 With a risk weight of less than or equal to 35% under the Basel II Standardised Approach for credit risk 21 Securities that are not in default and do not qualify 22 Other assets: 23 Physical traded commodities, including gold - - - - - 24 Assets posted as initial margin for derivative contracts - - - - - 25 NSFR derivative assets - 2,416,263 - 26 NSFR derivative liabilities before deduction of 27 All other assets not included in the above categories 28 Off-balance sheet items 29 Total RSF as HQLA including exchange-traded equities. variation margin posted 30 Net Stable Funding Ratio (%) Annual Report 2017 142,723,867 - - 2,481,931 - 15,546,128 105,234,222 13,236,619 213,926,847 166.48% 167
  168. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 44.8 Maturities of Assets and Liabilities (based on contractual maturities) 2017 Total Upto one month Over one Over three Over six Over one Over two Over three Over five month to months to months to year to years to years to years to three six months one year two years three years five years ten years months Over ten years -------------------------------------------------------------------- Rupees ‘000 -------------------------------------------------------------------Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets - net Other assets 37,861,767 1,872,771 9,010,335 179,706,358 231,532,160 12,939,625 1,607,625 13,496,266 488,026,907 37,861,767 1,872,771 9,010,335 79,342,482 87,220,999 27,171 3,535,678 218,871,203 55,367,093 29,675,799 39,196 1,568,598 86,650,686 5,815,197 15,973,170 263,542 2,812,002 24,863,911 5,130,751 12,266,124 281,360 796,393 18,474,628 6,432,057 20,639,460 304,014 1,362,746 28,738,277 10,686,636 19,805,611 521,242 109,387 31,122,876 8,050,476 25,237,737 762,979 3,177,712 37,228,904 7,803,809 13,262,740 1,413,884 1,607,625 133,750 24,221,808 1,077,857 7,450,520 9,326,237 17,854,614 7,304,326 54,788,547 373,081,163 13,620,595 448,794,631 7,304,326 33,623,627 293,399,120 916,751 335,243,824 15,171,185 34,091,542 5,511,010 54,773,737 3,421,534 18,366,587 1,864,078 23,652,199 50,950 25,310,423 2,351,727 27,713,100 14,250 1,182,117 1,469,562 2,665,929 223,003 636,287 1,505,563 2,364,853 782,628 95,087 1,904 879,619 571,157 571,157 930,213 930,213 Net assets 39,232,276 (116,372,621) 31,876,949 1,211,712 (9,238,472) 26,072,348 28,758,023 36,349,285 23,650,651 16,924,401 Share capital Reserves Unappropriated profit 13,197,361 7,936,338 12,527,973 33,661,672 5,570,604 39,232,276 Over two years to three years Over three years to five years Over five years to ten years Over ten years Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities Surplus on revaluation of assets - net 2016 Total Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets - net Other assets Over three months to six months Over six months to one year Over one year to two years -------------------------------------------------------------------- Rupees ‘000 -------------------------------------------------------------------- 37,239,302 1,139,375 5,000,000 170,210,137 204,830,997 12,111,881 2,264,212 11,668,757 444,464,661 37,239,302 1,139,375 5,000,000 221,288 42,197,946 9,515 2,656,854 88,464,280 41,550,180 28,487,345 4,229 1,410,112 71,451,866 54,778,454 23,915,621 266,646 2,739,641 81,700,362 22,439,101 24,774,263 301,795 1,055,586 48,570,745 17,670,639 17,670,450 287,958 398,711 36,027,758 6,384,724 22,644,758 482,502 891,262 30,403,246 16,675,784 26,040,111 762,586 2,305,418 45,783,899 10,443,935 15,437,998 760,849 2,264,212 211,173 29,118,167 46,032 3,662,505 9,235,801 12,944,338 5,982,285 52,806,084 340,306,404 1,497,000 8,864,563 409,456,336 5,982,285 32,458,377 260,381,428 741,204 299,563,294 11,143,078 31,557,486 912,253 43,612,817 7,335,040 23,581,485 748,500 1,344,690 33,009,715 8,418 22,641,377 748,500 2,492,015 25,890,310 121,742 853,990 1,458,447 2,434,179 31,367 1,050,864 1,914,280 2,996,511 1,109,720 189,774 1,674 1,301,168 583,889 50,000 633,889 14,453 14,453 Net assets 35,008,325 (211,099,014) 27,839,049 48,690,647 22,680,435 33,593,579 27,406,735 44,482,731 28,484,278 12,929,885 Share capital Reserves Unappropriated profit 11,997,601 7,158,248 9,985,870 29,141,719 5,866,606 35,008,325 Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities Surplus on revaluation of assets - net 168 Upto one month Over one month to three months Annual Report 2017
  169. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 44.9 Maturities of Assets and Liabilities (based on expected withdrawal pattern) In line with SBP BSD Circular Letter No. 02 and 03 of 2011 on “Maturity and Interest Rate Sensitivity Gap Reporting”, deposit withdrawal pattern analysis on Current and Saving Accounts (CASA) is conducted on four years weekly data. The outliers (seasonal variations) are adjusted from data using fourth spread statistical methodology. Subsequently, the data is analysed though regression analysis so as to capture the deposit withdrawal behaviour in higher maturity time bands. The regression analysis is used to investigate the relationship between time, the amount of deposits and deposits withdrawal in order to arrive at an estimated deposits withdrawal pattern. This methodology is in line with industry best practices and regulatory guidance. 2017 Upto one month Total Over one Over three Over six Over one Over two Over three Over five month to months to months to year to years to years to years to three six months one year two years three years five years ten years months Over ten years ----------------------------------------------------------------------- Rupees ‘000 ------------------------------------------------------------------------------Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions 37,861,767 204,455 412,693 836,745 1,699,993 3,564,685 4,590,739 9,414,328 14,400,723 2,737,406 1,872,771 1,872,771 - - - - - - - - 9,010,335 9,010,335 - - - - - - - - Investments 179,706,358 79,342,482 55,367,093 5,815,197 5,130,751 6,432,057 10,686,636 8,050,476 7,803,810 1,077,856 Advances 231,532,160 43,944,264 35,161,393 26,276,906 34,304,250 22,765,658 23,128,692 25,237,737 13,262,740 7,450,520 12,939,625 27,171 39,196 263,542 281,360 304,014 521,242 762,979 1,413,884 9,326,237 1,607,625 - - - - - - - 1,607,625 - 13,496,266 3,535,678 1,568,598 2,812,002 796,393 1,362,746 109,387 3,177,712 133,750 - 488,026,907 137,937,156 92,548,973 36,004,392 42,212,747 34,429,160 39,036,696 46,643,232 38,622,532 20,592,019 Operating fixed assets Deferred tax assets - net Other assets Liabilities Bills payable 7,304,326 7,304,326 - - - - - - - - Borrowings 54,788,547 33,623,627 15,171,185 3,421,534 50,950 14,250 223,003 782,628 571,157 930,213 373,081,163 36,008,411 36,907,525 24,075,709 36,911,252 25,513,557 31,980,344 64,404,145 98,224,233 19,055,987 - Deposits and other accounts Sub-ordinated loans - - - - - - - - - 13,620,595 916,751 5,511,010 1,864,078 2,351,727 1,469,562 1,505,563 1,904 - - 448,794,631 77,853,115 57,589,720 29,361,321 39,313,929 26,997,369 33,708,910 65,188,677 98,795,390 19,986,200 Net assets 39,232,276 60,084,041 34,959,253 6,643,071 2,898,818 7,431,791 5,327,786 (18,545,445) (60,172,858) 605,819 Share capital 13,197,361 Other liabilities Reserves 7,936,338 Unappropriated profit 12,527,973 33,661,672 Surplus on revaluation of assets - net 5,570,604 39,232,276 Annual Report 2017 169
  170. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 2016 Total Over one month to three months Upto one month Over three months to six months Over six months to one year Over one year to two years Over two years to three years Over three years to five years Over five years to ten years Over ten years ---------------------------------------------------------------- Rupees ‘000 ----------------------------------------------------------------------Assets Cash and balances with treasury banks 37,239,302 227,159 312,810 679,617 1,282,894 3,748,136 4,012,535 6,494,534 18,135,541 Balances with other banks 1,139,375 1,139,375 - - - - - - - 2,346,076 - Lendings to financial institutions 5,000,000 5,000,000 - - - - - - - - Investments 170,210,137 221,288 41,550,180 54,778,454 22,439,101 17,670,639 6,384,724 16,675,784 10,443,935 46,032 Advances 204,830,997 32,841,471 25,391,848 26,807,851 31,275,649 19,196,814 24,176,750 26,040,111 15,437,998 3,662,505 12,111,881 9,515 4,229 266,646 301,795 287,958 482,502 762,586 760,849 9,235,801 2,264,212 - - - - - - - 2,264,212 - 11,668,757 2,656,854 1,410,112 2,739,641 1,055,586 398,711 891,262 2,305,418 211,173 - 444,464,661 42,095,662 68,669,179 85,272,209 56,355,025 41,302,258 35,947,773 52,278,433 47,253,708 15,290,414 Operating fixed assets Deferred tax assets - net Other assets Liabilities Bills payable 5,982,285 5,982,285 - - - - - - - - Borrowings 52,806,084 32,458,377 11,143,078 7,335,040 8,418 121,742 31,367 1,109,720 583,889 14,453 39,569,680 109,743,651 14,288,790 340,306,404 36,313,234 33,451,740 27,698,043 30,405,448 23,500,936 25,334,882 Sub-ordinated loans Deposits and other accounts 1,497,000 - - 748,500 748,500 - - - - - Other liabilities 8,864,563 741,204 912,253 1,344,690 2,492,015 1,458,447 1,914,280 1,674 - - 409,456,336 75,495,100 45,507,071 37,126,273 33,654,381 25,081,125 27,280,529 40,681,074 110,327,540 14,303,243 Net assets 35,008,325 (33,399,438) 23,162,108 48,145,936 22,700,644 16,221,133 8,667,244 11,597,359 (63,073,832) 987,171 Share capital 11,997,601 Reserves Unappropriated profit 7,158,248 9,985,870 29,141,719 Surplus on revaluation of assets - net 5,866,606 35,008,325 44.10 Operational risk Operational risk is the risk of direct or indirect losses resulting from inadequate or failed internal processes or systems, human factors or from external events. The Bank’s businesses are dependent on the ability to process a large number of transactions efficiently and accurately. Operational risks and losses originate from business / operational process failure, IT security failure, natural disasters, dependence on key suppliers, fraud, service quality compromises, regulatory non-compliance, loss of key staff and social and environmental impacts. The Operational Risk Management function is primarily responsible for the oversight of operational risk management across the Bank. The operational risk management framework of the Bank is governed by the Operational Risk Management Policy and Procedures, while the implementation is supported by an operational risk management system and designated operational risk coordinators within different units across the bank. The framework is in line with international best practices, flexible enough to implement in stages and permits the overall approach to evolve in response to organizational learning and future requirements. 170 Annual Report 2017
  171. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 The Bank has implemented an effective Operational Risk Management (ORM) framework for managing operational risk. Each department has processes and system controls in place to address operational risks within their area. Operational loss data is collected through a well defined program implemented across the Bank. Periodic workshops are conducted for Risk & Control Self Assessment and key risk exposures are identified and assessed against existing controls to evaluate improvement opportunities. Key Risk Indicators are also defined for monitoring of risk exposures. New products, systems, activities and processes, are subject to comprehensive operational risk assessments, before implementation. Regular updates on operational risk status is presented to Enterprise Risk Management Committee (ERMC) and the Board of Directors through the Board Risk Management Committee (BRMC). 45 TRUST ACTIVITIES The Bank commonly acts as trustees and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions. These are not assets of the Bank and, therefore, are not included in the statement of financial position. The following is the list of assets held under trust: 2017 Securities Held (Face Value) Category No. of IPS Accounts Pakistan Market Investment Treasury Bills Bonds Government Ijara Sukuks Total --------------------------- Rupees ‘000 ---------------------------Corporate Insurance companies Asset management companies Employees funds Charitable institution / NGO’S Individuals Related parties Others 36 1 46 154 21 408 9 6 681 1,583,000 211,500 2,278,030 887,410 699,435 557,485 6,216,860 2016 Category No. of IPS Accounts 3,892,400 3,051,800 32,700 377,850 147,600 7,502,350 - 5,475,400 211,500 5,329,830 920,110 1,077,285 705,085 13,719,210 Securities Held (Face Value) Market Treasury Bills Pakistan Investment Bonds Government Ijara Sukuks Total --------------------------- Rupees ‘000 ---------------------------Corporate Insurance companies Asset management companies Employees funds Charitable institution / NGO’S Individuals Related parties Others Annual Report 2017 32 2 45 153 19 328 9 6 594 1,039,815 91,000 637,850 445,500 547,125 189,360 2,950,650 1,002,100 3,727,700 633,000 494,850 589,200 6,446,850 - 2,041,915 91,000 4,365,550 1,078,500 1,041,975 778,560 9,397,500 171
  172. NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 46 DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on February 28, 2018 by the Board of Directors of the Bank. 47 GENERAL 47.1 Comparative information has been re-classified, re-arranged or additionally incorporated in these financial statements, wherever necessary, to facilitate comparison and to conform with changes in presentation in the current year. 47.2 Figures have been rounded off to the nearest thousand rupees unless other wise stated. 47.3 Captions as prescribed in BSD circular No. 4 dated February 17, 2006 issued by the State Bank of Pakistan in respect of which no amounts are outstanding have not been reproduced in these financial statements except in the statement of financial position and the profit and loss account. 48 NON-ADJUSTING EVENTS AFTER THE BALANCE SHEET DATE The Board of Directors in its meeting held on February 28, 2018 has proposed a stock dividend of 15% amounting to Rs 1,979.604 million (2016: 10% stock dividend amounting to Rs 1,199.760 million). The Board of Director have also proposed the transfer of Rs 1,979.604 million to “Reserve for Bonus issue” from “Unappropriated Profit”. The financial statements for the year ended December 31, 2017 do not inculde the effect of this proposed distribution which will be accounted for in the financial statements for the year ending December 31, 2018. PRESIDENT & CEO CHIEF FINANCIAL OFFICER 172 DIRECTOR DIRECTOR DIRECTOR Annual Report 2017
  173. ANNEXURE I TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 QUALITY OF AVAILABLE FOR SALE SECURITIES 1. Details of investments in Government securities (Pakistan Investment Bonds, Market Treasury Bills and Ijara Sukuk Bonds) are as follows: 2017 2017 2016 At Cost 2017 2016 Market Values -----------Rupees ‘000----------- -----------Rupees ‘000----------- 2016 Medium to Long Term Rating Assigned (where available) Market Treasury Bills 93,718,791 89,148,698 93,717,640 89,138,974 N/A N/A Pakistan Investment Bonds 19,232,587 43,426,331 19,309,160 43,732,892 N/A N/A 6,312,055 4,474,967 6,308,601 4,477,685 N/A N/A 119,263,433 137,049,996 119,335,401 137,349,551 Ijara Sukuk Bonds 2. Details of investments in fully paid-up shares of listed companies / modaraba certificates / certificates of closed end mutual funds are as follows: 2016 2017 2017 Name of company / modaraba / mutual fund Ordinary shares / certificates 2017 2016 At Cost 2017 2016 Medium to Long Term Rating Assigned (where available) Market Values -----------Rupees ‘000----------- 2016 -----------Rupees ‘000----------- Banks / Financial Services 1,762,772 1,762,772 533,200 415,536 Prudential Investment Bank Limited * / ** Habib Bank Limited 12,528 12,528 - - 106,102 81,517 89,092 113,545 - - AAA AAA AAA 262,700 250,000 MCB Bank Limited 52,670 51,735 55,776 59,455 AAA 328,100 - United Bank Limited 67,523 - 61,673 - AAA - 24,844,797 - Bank of Punjab Limited 298,138 - 204,721 - AA - Construction, Materials, Paints and Cements 10,600 10,600 193,900 641,500 Dadabhoy Construction Technology Limited ** Akzo Nobel Pakistan Limited 16 16 1 1 - - 48,008 104,398 41,301 150,124 - - 790,300 594,100 D.G Khan Cement Company Limited 122,675 104,106 105,679 131,730 - - 392,950 648,200 Lucky Cement Limited 219,510 388,930 203,316 561,510 - - - A - 201,900 - 20,221 - 35,139 732,600 - International Steels Limited Cherat Cement Company Limited 80,055 - 77,927 - A+ - 1,000 1,000 Quality Steel Works Limited 13 13 - - - - - 105,260 - 18,481 - 29,042 - AA- Bestway Cement Limited 1,630,000 - Fauji Cement Limited 49,989 - 40,766 - - - 1,073,000 - Maple Leaf Cement Factory Limited 74,872 - 73,436 - A+ - 1,132,099 781,945 953,688 1,080,546 Balance carried forward * The Bank holds more than 10% of investees’ capital in Prudential Investment Bank Limited – 17.10% (2016: 17.10%) ** Delisted companies. However, in certain cases last available market value has been disclosed in the current and previous year. Annual Report 2017 173
  174. ANNEXURE I TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 2016 2017 2017 Name of company / modaraba / mutual fund Ordinary shares / certificates Balance brought forward 2016 2017 2016 2017 At Cost Market Values --------Rupees ‘000---------- --------Rupees ‘000---------- 1,132,099 781,945 953,688 2016 Medium to Long Term Rating Assigned (where available) 1,080,546 Oil and Gas 589,080 150,800 Pakistan State Oil Limited 196,042 52,998 172,665 65,479 AA 420,250 611,300 Pakistan Oilfields Limited 230,064 194,579 249,738 326,813 - - 1,330,100 1,261,200 Oil & Gas Development Company Limited 199,977 175,699 216,527 208,539 AAA AAA AA 1,654,000 100,000 49,741 2,938 50,430 3,635 A+ A+ 1,023,500 - Pakistan Petroleum Limited 187,361 - 210,749 - - - 818,900 - Sui Northern Gas Co Limited 84,106 - 77,476 - AA- 96,700 - National Refinery Limited 50,728 - 41,665 - - - 34,261,500 17,548,500 249,267 137,914 216,190 164,429 AA AA - 960,500 Nishat Chunian Power Limited - 52,598 - 53,289 - A+ 824,300 195,000 Pak Elektron Limited 48,828 12,189 39,146 13,900 A+ A+ Sui Southern Gas Co Limited Electricity and Energy K-Electric Limited 1,823,900 1,119,500 Hub Power Company Limited 191,293 123,523 165,975 138,236 AA+ AA+ 2,924,000 1,280,500 Kot Addu Power Company Limited 196,709 99,445 157,604 100,903 AA+ AA+ 53,500 53,500 27 27 - - - - 1,500 1,500 3 3 - - - - 178,645 178,645 80 80 41,600 41,600 8,500 8,500 Personal Goods, Textile & Spinning Colony Sarhad Textile Limited ** Al-Qaim Textile Mills Limited ** 1,239 1,239 - - - - Fateh Textile Mills Limited ** 29 29 6 6 - - Hakkim Textile Mills Limited ** 10 10 - - - - 2 2 13 13 - - Crown Textile Mills Limited ** Mehr Dastgir Textile Mills Limited ** 69,000 69,000 Sunshine Cotton Mills Limited ** 69 69 - - - - 79,300 79,300 Zahoor Cotton Mills Limited ** 22 22 - - - - 2,500 2,500 - - - - 99,533 108,863 106,190 152,270 AA AA - 70,270 - 101,386 - AA+ 126 126 97 97 - - 117 117 - - - - 1,817,105 2,658,159 2,409,541 2,567,046 2,567,046 Zahoor Textile Mills Limited ** 710,300 1,000,000 Nishat Mills Limited - 1,367,500 9,500 9,500 Morafco Industries Limited ** 9,000 9,000 Suraj Ghee Industries Limited ** 2,919,892 Non Life Insurance Adamjee Insurance Company Limited Food Producers Balance carried forward ** 174 Delisted companies. However, in certain cases last available market value has been disclosed in the current and previous year. Annual Report 2017
  175. ANNEXURE I TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 2016 2017 2017 Name of company / modaraba / mutual fund Ordinary shares / certificates Balance brought forward 2016 2017 2016 2017 Medium to Long Term Rating Assigned (where available) At Cost Market Values --------Rupees ‘000---------- --------Rupees ‘000---------- 2,919,892 1,817,105 2016 2,658,159 2,409,541 Chemicals and Fertilizers 17,539,528 17,539,528 Agritech Limited 578,399 578,399 85,418 222,401 - - 2,379,000 700,000 Engro Fertilizers Limited 143,608 43,174 161,106 47,586 AA- AA- 1,558,800 948,100 Fauji Fertilizer Company Limited 124,257 100,288 123,317 98,953 AA AA 366,699 378,271 341,542 387,147 AA AA 50,244 65,471 52,422 64,755 - - 1,243,100 1,224,800 Engro Corporation Limited 1,475,000 1,264,500 Fauji Fertilizer Bin Qasim Limited Transportation and Automobiles 23,920 100,000 3,692,500 6,816,500 Indus Motor Company Limited 40,252 106,734 40,190 161,453 - - Pakistan International Bulk Terminal 88,129 212,020 55,203 224,876 - - 38 38 - - - - Health Care Equipment and Services 48,000 48,000 Medi Glass Limited ** 346,230 210,000 The Searle Company Limited 99,715 108,124 109,014 137,296 - - 96,000 176,500 Abbot Laboratories (Pakistan) Limited 76,067 150,070 66,971 168,926 - - - 1,342,500 - 24,381 - 23,064 - - 900 900 - - 11,331 7,345 - - 102,500 102,500 1,789 1,789 - - - AA- - 26,000 Hashmi Can Company Limited ** - 156 - - - - 30,258 39,018 Siemens Pakistan Engineering Company Limited 38,452 49,584 28,401 55,196 - - 214,450 125,000 133,111 68,596 109,333 106,256 AA AA Pharmaceuticals Fixed Line Telecommunication Pakistan Telecommunication Limited General Industrials / Others 223 223 1,630,500 1,630,500 ** VISA Incorporation - Class C Shares Fatima Enterprises Limited ** Packages Limited Syed Match Company Limited ** Dolmen City REIT 3 3 3 3 16,367 16,372 17,932 17,724 4,677,022 3,720,575 3,860,342 4,132,522 - - RR1 RR1 Delisted companies. However, in certain cases last available market value has been disclosed in the current and previous year. Provision for diminution in the value of investments against above shares amounts to Rs 657.804 million (2016: Rs 499.066 million) Note: The Bank hold various delisted and non-traded shares, certificates of modarabas and units of closed end mutual funds having Nil carrying value which have not been disclosed individually. Annual Report 2017 175
  176. ANNEXURE I TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 3. Details of investments in unlisted companies classified as available for sale are as follows: 2016 2017 Al Hamra Avenue (Private) Limited **/ * / + 2017 2017 2016 At Cost Market Values --------Rupees ‘000---------- --------Rupees ‘000---------- 2016 Medium to Long Term Rating Assigned (where available) 265,937 265,937 Not Applicable - - 5 5 Not Applicable - - 325,000 325,000 Not Applicable - - 1,037 1,037 Not Applicable - - 52,000 52,000 Not Applicable - - 5,688 5,688 Not Applicable - - 50,000 - Not Applicable - - - - 30,346 - 699,667 649,667 30,346 - 28,812,500 (2016: 28,812,500 ) ordinary shares of Rs 10 each The Bank holds 17.99% (2016: 17.99%) of investee’s capital. Chief Executive: Mr. Habib Ahmed Break up value per share: Rs. 12.41 (2016: Rs 12.41) Period of financial statements: June 30, 2012 (audited) Al Hamra Hills (Private) Limited * / + 500 (2016: 500 ) ordinary shares of Rs 10 each DHA Cogen Limited * / + 63,694,475 (2016: 63,694,475 ) ordinary shares of Rs 10 each The Bank holds 19.10% (2016: 19.10%) of investee’s capital. Chief Executive: Siraj ul Haq Break up value per share: Rs. (29.1) (2016: Rs (29.1)) Period of financial statements: December 31, 2013 (audited) Himont Chemical (Private) Limited * 810,000 (2016: 810,000) ordinary shares of Rs 10 each Pace Barka Properties Limited * 5,200,000 (2016: 5,200,000) ordinary shares of Rs 10 each The Bank holds 1.70% (2016: 1.70%) of investee’s capital. Chief Executive: Aamna Taseer Break up value per share: Rs. 17.336 Period of financial statements: June 30, 2012 (audited) Pakistan Export Finance Guarantee Agency Limited * 568,044 (2016: 568,044) ordinary shares of Rs 10 each 1 Link (Gurantee) Limited *** / + 5000,000 (2016: Nil) ordinary shares of Rs 10 each Chief Executive: Mr Najeeb Agrawala ISE Towers REIT Management Company Limited - - 3,034,603 (2016: Nil) ordinary shares of Rs 10 each Chief Executive: Aamna Taseer * Fully provided investments + Strategic investments ** Includes 24,375,000 shares of Al Hamra Avenue (Private) Limited classified as strategic investment *** This represents an amount of Rs 50 million issued to 1Link (Guarantee) Limited as part of the Banks commitment towards capital injection on its conversion to a private limited company subject to regulatory approvals. This amount has been recorded under “advance against shares” by 1Link (Guarantee) Limited. Provision for diminution in the value of investments against above shares amounts to Rs 649.666 million (2016: Rs 649.666 million) 176 Annual Report 2017
  177. ANNEXURE I TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 4. Preference shares – Listed companies 2017 2016 No. of Shares 2,249,000 2016 2017 Name of Company 2,249,000 Azgard Nine Limited Rate 8.95% Cumulative 2016 2017 2017 At Cost Market Values --------Rupees ‘000---------- --------Rupees ‘000---------- 2016 Medium to Long Term Rating Assigned (where available) 22,490 22,490 - - 22,490 22,490 - - - - Provision for diminution in the value of investments against above shares amounts to Rs 22.490 million (2016: Rs 22.490 million) 5. Details of investments in open ended mutual funds: 2016 2017 2017 2016 Name of the Fund 2016 2017 2017 At Cost Net Asset Values --------Rupees ‘000---------- --------Rupees ‘000---------- 2016 Medium to Long Term Rating Assigned (where available) Open ended Mutual funds 2,413,740 2,413,740 Faysal Income Growth Fund 257,544 257,544 261,239 257,763 6,478,942 6,478,942 Faysal Savings Growth Fund 680,606 680,606 674,587 669,404 1,818,788 1,818,788 Faysal Islamic Savings Growth Fund 189,432 189,432 190,445 190,809 556,181 556,181 37,480 37,480 34,244 39,978 Faysal Balanced Growth Fund 4,602 4,602 1,941,182 - Faysal Money Market Fund First Capital Mutual Fund 142,925 - Faysal Financial Sector Opportunity Fund - - 45 63 200,000 - 201,611 - 15,000 - 14,813 - 1,380,062 1,165,062 1,376,984 1,158,017 A(f) A(f) AA-(f) AA-(f) 2-Star 2-Star AA (f) - A+(f) 2-Star A(f) - AA-(f) - 2017 2016 Provision for diminution in the value of investments against the units of above funds amounts to Rs 0.856 million (2016: Rs 0.856 million) 6. Term Finance Certificates - Listed Azgard Nine Limited * 2016 2017 2016 2017 At Cost Market / Carrying Values --------Rupees ‘000---------- --------Rupees ‘000---------- Medium to Long Term Rating Assigned (where available) 51,476 51,476 - - - D - 8,211 - - - - 31,640 (2016: 31,640) certificates of Rs 5,000 each Mark-up: Different spread over six months KIBOR rate in different years with no floor and cap Redemption: 12 unequal semi annual installments, 2012-2015: 47% and 2016-2017: 53% of the outstanding amount Maturity: September 2017 Chief Executive Officer: Mr. Ahmed H. Shaikh Telecard Limited * 70,233 (2016: 70,233) certificates of Rs 5,000 each Mark-up: 5.04% above three months KIBOR rate, with no floor and no cap Redemption: 10 unequal semi-annual installments commencing 18 months from the last date of public subscription. Maturity: May 2015 Chief Executive Officer: Mr. Syed Aamir Hussain Annual Report 2017 177
  178. ANNEXURE I TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 2016 2017 Bank Alfalah Limited - Fifth Issue 2016 2017 At Cost Market / Carrying Values --------Rupees ‘000---------- --------Rupees ‘000---------- 2017 2016 Medium to Long Term Rating Assigned (where available) 61,139 61,164 62,227 62,772 112,615 120,851 62,227 62,772 AA AA 2017 2016 12,250 (2016: 12,250) certificates of Rs. 5,000 each Mark-up: 1.25% above six months KIBOR rate with no floor and cap Redemption: 0.30% semi annually in first 90 months, balance of 99.70% at maturity in the 96th Month Maturity: February 2021 Chief Executive Officer: Mr. Nauman Ansari * Fully provided investments Provision for diminution in the value of investments against above TFCs amounts to Rs 51.476 million (2016: Rs 59.687 million) 7. Term Finance Certificates - Unlisted Dewan Cement Limited * 2016 2017 2016 2017 At Cost Market / Carrying Values --------Rupees ‘000---------- --------Rupees ‘000---------- Medium to Long Term Rating Assigned (where available) 500,000 500,000 - - - - - 132,987 - 134,383 - AA- 8,311 8,311 - - - - 508,311 641,298 - 134,383 100,000 (2016: 100,000) certificates of Rs. 5,000 each Chief Executive Officer: Mr. Syed Muhammad Anwer Bank Alfalah Limited - Fourth Issue 40,000 (2016: 40,000) certificates of Rs. 5,000 each Mark-up: 2.50% above six months KIBOR rate with no floor and cap Redemption: Three equal semi annual instalments commencing 84 months after the issue date Maturity: December 2017 Chief Executive Officer: Mr. Nauman Ansari Dewan Sugar Mills Limited * 10,000 (2016: 10,000) certificates of Rs 5,000 each Mark-up: SBP discount rate less 2% p.a. with 6% floor and 12% cap Maturity: June 2008 Chief Executive Officer: Mr. Ghzanfar Baber Siddiqi * Fully provided investments Provision for diminution in the value of investments against above TFCs amounts to Rs 508.311 million (2016: Rs 508.311 million) 178 Annual Report 2017
  179. ANNEXURE I TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 8. Sukuks - Unlisted Fatima Fertiliser Limited 2016 2017 2017 2016 At Cost Market / Carrying Values --------Rupees ‘000---------- --------Rupees ‘000---------- 2017 2016 Medium to Long Term Rating Assigned (where available) 1,316,132 2,400,000 1,352,326 2,400,000 AA- AA- 500,000 500,000 522,618 500,000 AA- AA- 171,000 - 172,112 - A - 4,200,000 - 4,200,000 - A+ - 6,187,132 2,900,000 6,247,056 2,900,000 480,000 (2016: 480,000) certificates of Rs. 5,000 each Mark-up: 1.1% above six months KIBOR rate with no floor and cap Redemption: 10 equal semi annual instalments Maturity: December 2021 Chief Executive Officer: Mr. Fawad Ahmed Meezan Bank Limited 5,000 (2016: 5,000) certificates of Rs. 1 Million each Mark-up: 0.50% above six months KIBOR rate with no floor and cap Redemption: Bullet at maturity Maturity: September 2026 Chief Executive Officer: Mr. Irfan Siddiqi AGP Private Limited 1,900 (2016: Nil) certificates of Rs. 100,000 each Mark-up: 1.3% above three months KIBOR rate with no floor and cap Redemption: Payable in 20 equal quarterly installments Maturity: June 2022 Chief Executive Officer: Mr. Nusrat Munshi Sui Southern Gas Company Limited 420,000 (2016: Nil) certificates of Rs. 10,000 each Mark-up: 1.1% above six months KIBOR rate with floor and cap of 2.5% and 30% respectively Redemption: 16 equal semi-annual installments Maturity: May 2027 Chairman: Mr. Muhammad Ziad A Syed Annual Report 2017 179
  180. 180 Muhammad Ajmal Mian Irfan Riaz Farhan Jabbar &/Or Lubna Farhan 13 14 15 Muhammad Wajahat Khurshid Akhter House # 247, Riwaz Garden, Lahore. Basharat Rasool House # R-10, Works Co-Oprative Housing Society Near Wchs Public School, Gulistan-e-Johar, Block 4, Karachi. Muhammad Wajahat Khurshid Akhter Basharat Rasool 12 Shabir Ahmed 53-E/1, Kenal Road University Town, Peshawar. 17 Shabir Ahmed 11 Matloob Ashraf Shajar House # 492-A, Street # 9, F-10/2, Islamabad. Shaharyar Ashraf Matloob Ashraf Shajar 10 Syed Babar Ali House # 254/S, Settilit Town, Rawalpindi. Shaharyar Ashraf Syed Babar Ali 9 Santosh Kumar Marton Road, Near Jublie Market, Karachi. 16 Santosh Kumar 8 Sheikh Farooq Iqbal C/O Pakistan Vehicles Engineering, Chongi - 26, Motorway Chowk Peshawar Road, Peshawar. 68-A1, Syed Maratab Ali Road, Fcc Gulberg, Lahore. Sheikh Farooq Iqbal 7 Uzma Mehboob 66-A, Phase-I, Canal View Niaz Baig, Lahore. Farhan Jabbar &/Or Lubna Farhan Uzma Mehboob 6 Shahbaz Ali 34-B, Judicial Colony, Phase # 1, Thokar Niaz Beg, Lahore. F-12/7, Parsa Villas Block-8, Clifton, Karachi. Shahbaz Ali 5 Shah Mohammad Ziauddin C/O Huma’s Lawn, 13 2B Sarai Quarter, I.I Chundrigar Road near Faysal Bank Limited, Karachi. Mian Irfan Riaz Shah Mohammad Ziauddin 4 Raja Tahir Majeed House # 1, Street # 1-A, Near Noorani Masjid, Nizamabad, Ghaziabad, Lahore. House # 302, A Mehran Block, Allama Iqbal Town, Lahore. Raja Tahir Majeed 3 Imran Masih C/O Black Box, M3 Mezzanine Floor, Building 21-C, 24 Commercial Street, Phase II Extension DHA, Karachi. Muhammad Ajmal Imran Masih 2 Asim Salim Adnan Sali 4 Name of Individuals / Partners/Directors S.I.T.E, Super Highway Karachi 3 Address 77-B, Judical Colony Opposite Canal View, Lahore. Friends Exports Private Limited 2 1 1 Name of the borrower S. No. 35200-1428554-1 35202-8242567-9 42301-1318563-5 35202-2820587-3 35202-9746793-1 45504-5684145-1 17301-1589256-9 17301-7279039-9 37405-3713519-3 42301-5233952-3 42101-1889680-9 35200-9080794-7 35202-2516762-1 42101-1387556-3 61101-3128320-5 42201-4348705-1 42201-3879168-3 42201-2886129-3 CNIC Ahmed Khurshid Akhter Muhammad Ashraf Abdul Jabbar Mian Riaz Ahmed Sheikh Muhammad Ashraf Muhammad Shafi Mohammad Abdullah Dar Muhammad Abdul Samad Masood Ul Hassan Nand Lal Iqbal Ahmed Sheikh Rais Ghazi Muhammad Siraj Ali Shah Muhammad Badruddin Raja Majeed Ahmad Naseer Nasih Muhammad Salim 5 Father’s / Husband’s Name 7 8 Others 9 10 11 12 13 Total Other Interest / Principal Financial Mark-up Total written-off Reliefs (10+11+12) written-off (6+7+8) provided 6,112 2,549 5,925 3,068 4,087 4,188 1,990 1,887 1,475 1,234 522 1,538 1,277 461 506 481 183,662 2,001 1,507 1,145 1,041 956 1,398 684 986 836 507 414 268 474 14 - 288 105,747 59 390 554 244 571 259 125 - 129 114 59 315 76 3 - 121 12,450 8,172 4,447 7,625 4,353 5,614 5,845 2,799 2,873 2,440 1,855 995 2,121 1,827 477 506 890 301,859 - - - - - - - - - - - - - 458 492 60 118,662 2,037 1,556 1,118 1,141 803 821 950 1,036 875 525 554 259 481 68 40 321 114,415 63 403 572 251 571 274 133 - 131 121 73 335 81 10 - 127 13,652 2,100 1,959 1,690 1,392 1,374 1,095 1,083 1,036 1,006 647 627 594 562 536 533 508 246,729 ------------------------------------------------- Rupees ‘000 ------------------------------------------------------ 6 Interest / Principal Mark-up Outstanding Liabilities at beginning of year Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December 31, 2017 as referred in note 12.8 to these financial statements. ANNEXURE II TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Annual Report 2017
  181. Annual Report 2017 Zulqarnain Sarfaraz Mohammad Sharif Ansari Malik Manzoor Hussain Rajay Walal , Chak No 296, Rab Dakghna Tehsil, Faislabad. House # C-125, Block A, North Nazimabad, Karachi. House # 1, Street No.14, Fizaia Housing Scheme (Islamabad Highway), Rawalpindi. Muhammad Ilyas Zulqarnain Sarfaraz Mohammad Sharif Ansari 33 34 35 Malik Manzoor Hussain Muhammad Ilyas 39-J III, Gul Berg III, Firdous Market, Lahore. 36 M Fayyaz Abbassi/Sadia Fayyaz Abbassi House # 111, Street 21, Korangi Town, Islamabad. M Fayyaz Abbassi/Sadia Fayyaz Abbassi 32 31 Zulqarnain Sarfaraz Muhammad Zubair Asif 30 Rajay Walal, Chak No 296, Rab Dakghna Tehsil, Faislabad. Naeem Yaqoob 29 Zulqarnain Sarfaraz Azra Saeed 28 Muhammad Zubair Asif Amjad Kamran 27 Naeem Yaqoob Raja Naseer Ahmed 26 Nadeem Jan House # R-320, Sector-14B, North Nazimabad, Karachi. 149 B, Iqbal Avenue Housing Society, near Shaukat Khanam Hospital, Lahore. Nadeem Jan 25 Abdul Wahid Bhatyi House # 7, Street # 30, F-6/1, Islamabad. 23-E, Doctors Colony, Thukar Niaz Baig, Lahore Abdul Wahid Bhatyi 24 Sher Mohammad House # A-179, Sector 11-B, North Karachi. Azra Saeed Sher Mohammad 23 Ali Muhammed Flat # 2, 2nd Floor, 25-C, SunSet Lane Phase II, DHA, Karachi. House # 5, Block B, Gulistan Colony # 2, Faisalabad. Ali Muhammed 22 Shaheen Iqbal House # 15, Main Double Road, F-10 3, Islamabad Amjad Kamran Shaheen Iqbal 21 Haseeb Hashmi P-23-2-1, Block-F, Gulistan Colony #1, Behind Aziz Fatimah Hospital, Faisalabad. Raja Naseer Ahmed Haseeb Hashmi 20 Arshad Mehmood House # 61, Lane # 3, Chaklala Scheme # 1, Rawalpindi. Dara Pur Post Office Khaslahore Arshad Mehmood 19 Zeeshan Ullah Khan Asif 4 Name of Individuals / Partners/Directors E-26, Block-4, Gulshan-e-Iqbal, Karachi. 3 Address House # 9, Street # 1, Air Force Officers Housing Scheme, Falcon Complex, Rawalpindi. Zeeshan Ullah Khan Asif 2 1 18 Name of the borrower S. No. 35302-2017732-5 42401-2408996-5 33100-1435389-1 35202-8949866-5 37405-9574566-5 33100-1435389-1 33100-6287150-3 35202-0776125-7 33100-0888083-6 37405-9409959-7 37405-1993999-5 42101-7337436-3 61101-9631192-1 42101-6905083-3 42000-5970270-7 61101-6069357-3 33100-6847614-7 61101-5121802-7 42201-0343986-5 CNIC Malik Karam Elahi Abdul Hakeem Abid Sarfraz Ch Mohammad Hussain Raja Muhammad Yaseen Abid Sarfraz Mushtaq Ahmed Muhammad Yaqoob Muhammad Saeed Khalid Atta Ullah Qureshi Naseer Ullah Khan Akber Jan Abdul Razzaq Bhatti Bhudan Khan Abdul Karim Mohammad Sharif Arshad Manzoor Suleman Khan Sana Ullah Khan Asif 5 Father’s / Husband’s Name 7 8 Others 9 10 11 12 13 Total Other Interest / Principal Financial Mark-up Total written-off Reliefs (10+11+12) written-off (6+7+8) provided 14,681 17,649 9,816 11,969 7,820 5,884 4,880 4,519 4,656 5,270 4,753 3,328 3,710 3,945 4,468 4,275 2,358 6,832 5,737 15,848 10,552 10,436 9,010 8,491 6,243 6,100 5,531 5,744 4,452 4,234 4,009 3,688 4,637 3,449 3,065 2,767 2,297 1,671 1,145 1,254 686 1,039 606 445 383 366 320 435 351 237 299 355 74 394 148 600 599 31,674 29,455 20,938 22,019 16,917 12,572 11,362 10,416 10,720 10,156 9,338 7,574 7,696 8,936 7,991 7,734 5,273 9,729 8,008 - - - - - - - - - - - - - - - - - - - 16,226 11,315 11,134 9,397 8,752 6,661 6,171 5,829 5,783 4,826 4,294 4,017 3,733 3,384 3,476 3,105 2,922 2,278 1,873 1,168 1,275 735 1,227 614 474 394 447 337 461 373 253 318 362 79 419 157 639 639 17,394 12,591 11,869 10,624 9,366 7,136 6,565 6,277 6,120 5,288 4,668 4,270 4,051 3,746 3,555 3,524 3,079 2,917 2,512 ------------------------------------------------- Rupees ‘000 ------------------------------------------------------ 6 Interest / Principal Mark-up Outstanding Liabilities at beginning of year Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December 31, 2017 as referred in note 12.8 to these financial statements. ANNEXURE II TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 181
  182. 182 Sultan Sikandar Immad Iftikhaar Malik Mohammad Yousuf Akbari Mohammad Akeel Akbari Dilshad Ahmed Faisal Iqbal Khan /Rehana Iqbal Amanullah Abban Kotli Noona, Sambrial Daska Road, District, Sialkot. 35-B, Sharif Colony, Gulberg, Canal Park, Lahore Nalia Wala Building, Green Street, Plaza Quarters, Karachi Rana House, 988 -A , Street 05 Raja Ghulam Rasool Na Rasool Nagar, Faisalabad 37-11, Khayaban-e-Bahria, Phase V DHA near Sultan Masjid, Karachi Showroom 1 And 2, Sabah Palace, P.E.C.H.S Block-6, Shahrah-eFaisal, Karachi. Cadet College Sialkot Oficmobel Sajid Jewellers Muhammad Shakeel Yaqoob & Company 53 54 55 56 Relaxor 50 Aftab Enterprises Faisal Iqbal Khan/Rehana Iqbal 49 Muhammad Nadeem Pakiza International 48 51 Akbari Autos Private Limited 47 52 Immad Iftikhaar Malik 46 45 467-G-3, Johar Town, Lahore Pak Hero Industries Private Limited Arshad Abban Muhammad Shakeel Yaqoob & Company P-8, Gulshan Colony, Faisalabad 162- Hunza Block, Allama Iqbal Town, Lahore Sajid Jewellers House # 7-8, Block-48, S.M.C.H.S, Karachi 31 A, Block 3, Okara Aftab Ahmad Malik Muhammad Nadeem 5 - Mcleod Road, Lahore C-12, Block 16, Gulistan-e-Johar, Karachi. 35202-8633382-5 35202-4294315-1 44 35202-8963776-1 ‘Najam Tufail Javed Iqbal Abdul Hameed Plot No.6, Street No.15, Ghoray Shah Road, Lahore Steel Co. 43 Shakeel Ahmed Mushtaq Packages 42 House # 260, Block-S, North Nazimabad, Karachi 35202-4058970-5 33100-7138297-5 35302-1952448-3 42201-8779326-7 42101-1789300-1 35202-9373554-9 42201-5936836-3 42301-5566887-7 33100-4379742-7 42301-9577510-7 42301-5978403-7 35202-7939481-1 35201-1664367-1 42101-5452464-7 36302-8310973-1 36302-0490448-5 Ashraf Ali Atique Abdul Hameed Diamond Tower, Main Bazar, Chowk Hussain Agahi, Multan. Agro Leads International 41 35201-2361943-7 35201-7029632-9 8-Zafar Ali Road, Lahore Imtiaz Rafi Butt 33100-3962569-1 Yasir Irshad 42101-1870739-3 41306-4620784-7 CNIC Imtiaz Rafi Butt Shazil Imtiaz Rafi 40 House # 47/48, Green View Colony, Faisalabad. Yasir Irshad 39 Mohammad Pervez Khan Faraz Avenue, Flat # 78, Block E, Gulistan-e-Johar, Block 20, near Johar Moor, Karachi Mohammad Pervez Khan 38 Yasir Ali Jatoi 4 House # 21-A, Muslim Housing Society, Qasimabad, Lahore. 3 Name of Individuals / Partners/Directors Yasir Ali Jatoi 2 1 Address 37 Name of the borrower S. No. Malik Feroz Din Sh. Sardar Muhammad Shokat Ali Ammanullah Abban Ghulam Murtaza Muhammad Ashiq Malik Haji Muhammad Abban Iqbal Ahmed Khan Ghulam Muhammad Mohammad Saeed Akbari Mohammad Saeed Akbari Iftikhar Ahmad Malik Chaudhary Sultan Ahmed 1. Ch. Muhammad Sharif Muhammad Tufail Mushtaq Hussain 1. Chaudhry Hakoomat Ali 2. Mian Sardar Ali 1. Muhammad Rafi Butt 2. Imtiaz Rafi Butt Irshad Ahmed Abdul Majeed Khan Dadan Khan Jatoi 5 Father’s / Husband’s Name 7 8 Others 9 10 11 12 13 Total Other Interest / Principal Financial Mark-up Total written-off Reliefs (10+11+12) written-off (6+7+8) provided 8,000 7,000 8,606 11,982 8,663 9,970 12,975 3,000 7,000 9,021 14,996 12,940 10,597 17,965 7,600 5,000 13,011 19,637 19,135 8,005 10,710 10,117 10,136 10,751 10,661 12,074 11,645 12,445 12,048 13,560 15,038 18,408 16,639 19,942 19,738 27,166 63,917 23,655 19,439 7,541 - - - - - - - - - - - - - - - - - 1,484 1,494 13,187 18,710 17,117 18,742 22,733 19,324 22,044 24,620 15,445 19,048 22,581 30,034 31,348 27,236 37,907 27,338 32,166 76,928 44,776 40,068 28,733 - - - - - - - - - - - - - - - - - - - - 8,753 9,263 9,524 9,590 9,756 10,012 10,563 12,497 13,254 13,915 16,404 16,452 17,203 18,776 20,350 27,068 63,823 23,830 20,095 7,982 - - - - - - - - - - - - - - - - - 1,579 1,525 13,251 8,753 9,263 9,524 9,590 9,756 10,012 10,563 12,497 13,254 13,915 16,404 16,452 17,203 18,776 20,350 27,068 63,823 25,408 21,620 21,233 ------------------------------------------------- Rupees ‘000 ------------------------------------------------------ 6 Interest / Principal Mark-up Outstanding Liabilities at beginning of year Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December 31, 2017 as referred in note 12.8 to these financial statements. ANNEXURE II TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Annual Report 2017
  183. Annual Report 2017 House # 8, Hazrat Gul Road, Lahore Sigma Knitting Mills Limited 73 ‘Hussain Sabri 19-Block-J-II, Johar Town, Lahore Munir Sons 72 House #153-B, Street # 48, Sector F-10-4, Islamabad Cash Departmental Store 71 35202-2619201-3 35202-2483651-6 38403-2266601-9 Faisal Jawad Bhatti Rahat Shakeel Muhammad Masood Tahir 187-A, Scotch Corner, Upper Mall, Lahore. Chishtia Sugar Mills Limited 70 37405-9357552-5 ‘Sh. Imran Shahid Plot # 163, Near Bilal Masjid, Mohonpura Road (City Saddar Road), Rawalpindi. Pakistan Iron & Steel Corporation 69 Muhammad Younas Malik Malik Muhamamd Siddique 12, Ground Floor, Muhammadi Plaza, Jinnah Avenue, Blue Area, Islamabad. Air Aid Travels 68 Shafie Mohammad Shah M/S.Shafie International 204, 208-209 , Al-Kabir Plaza, Sohrab Katrak Road, Saddar, Karachi 67 Muhammed Hashim House # 3, Muslim Housing Society, Hyderabad, M.H.Khan Mughal 66 Muhammad Peryal Mehran Cotton Agency 65 Mohammad Ashraf Beria 402 Plot No 7, 71-72 G.K Kharadar Squire Building, Karachi Mohammad Ashraf Beria 64 1 Nono.606, Ali Garden, Garden East Karachi. Pakistan Fateema Poultry Farm 63 35202-8257500-1 35201-7724733-3 35201-9010218-5 35201-4340490-0 Sheikh Nasir Ahmad Faaiz Rahim Khan Zahid Ali Khan Mrs. Nadeem Akbar 61101-4751048-1 34202-0698658-7 34202-0704386-1 42301-2570210-1 41306-9729479-9 42301-0898699-9 42301-0856449-9 42201-0529582-5 42201-0582677-3 42201-7677279-3 Ahmed Arif Rogathiya Zakir Ali Nasser Fazl-E-Ali Deh Pathra-Ii, Sakran Road, Hub, Balochistan 41504-0364207-1 41303-9010699-5 1Flat No.J-201, Zainab Plaza, Gulshan-e-Iqbal, Block-17, Karachi H. A. International 62 Arif Khan Nasir Beverages Agency, Darya Road, Near Suzuki Stand, Kotri District, Jamshoro M/S Nasir Beverage Agency 61 Abdul Sattar Khan Shaheen Enterprises No 5, Block - A, Al-Rahim Shopping Center, Hyderabad 60 Muhammad Raheel Kamran 42201-9285157-1 No 5, Raheel Arcade Opp. Singer Show Room, Tariq Road, Karachi. Planet - T The Toyland 59 41304-2860644-5 Munawar Hussain M/S Al Habib Sanitory Store 58 1No 06 Risala Road, Sundas Center, Hyderabad 37101-5008715-7 37101-7313758-8 37101-0293427-1 37101-0292477-1 CNIC Inam Ul Haq Zill E Humma Omer Usman Taimur Unam 4 Name of Individuals / Partners/Directors House # 10, Street # 08, Sector-B, DHA Phase - I, Islamabad 3 Uppal Construction Company 2 1 Address 57 Name of the borrower S. No. 1. Rahim-Ud-Din Khan 2. Hamid Ali Akbar 3. Zahid Ali Khan Sheikh Noor Ahmad Mohammad Hussain 1. Shakeel Bhatti 2. Shakeel Bhatti 3. Rab Nawaz Sh. Abdul Shahid 1. Muhammad Siddique 2. Malik Abdul Ghanni Ali Asghar Shah Bhooro Khan Gul Muhammad Abdul Sattar Baria Aon Ali Nasir Haider Ali Mohammad Arif Rogath Muhammad Naeem Khan Ibrahim Khan Mian Muhammad Ali Abbas Habib Khan 1. Abdul Rasheed 2. Inam Ul Haq 3. Inam Ul Haq 4. Inam Ul Haq 5 Father’s / Husband’s Name 7 8 Others 9 10 11 12 13 Total Other Interest / Principal Financial Mark-up Total written-off Reliefs (10+11+12) written-off (6+7+8) provided 10,702 563 9,479 21,078 5,276 3,663 400 385 81 3,349 1,198 2,722 3,749 3,000 9,000 725 9,552 13,881 4,710 6,109 10,086 7,123 1,018 569 2,610 912 1,948 1,945 4,118 1,888 3,606 9,427 1,412 4,642 - - - - - 1 - - - - - - - - - - 27 24,584 5,273 15,589 31,163 12,399 4,682 969 2,995 993 5,296 3,143 6,840 5,637 6,606 18,427 2,138 14,221 - - - - - - - - - - - - - - - - - 5,491 4,525 2,876 6,995 5,183 881 621 2,637 767 1,423 2,050 3,781 1,825 3,383 8,205 1,141 2,642 - - - - - 1 - - - - - - - - - - 27 5,491 4,525 2,876 6,995 5,183 882 621 2,637 767 1,423 2,050 3,781 1,825 3,383 8,205 1,141 2,668 ------------------------------------------------- Rupees ‘000 ------------------------------------------------------ 6 Interest / Principal Mark-up Outstanding Liabilities at beginning of year Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December 31, 2017 as referred in note 12.8 to these financial statements. ANNEXURE II TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 183
  184. 184 Malik Brothers Poswal Zari Corporation Abid Thread Works Premier Traders Nick & Sherry International Bashier General Store & Services M.Aslam Steel Re-Rolling Mills Asim Hussain Inter Network Wahgra Farm Services Classic Links Lal Din & Sons 78 79 80 81 82 83 84 85 86 87 88 89 Mohammad Baber Khan Agro Leads Enterprises Majid Traders New Kausar Hardward & Iron Store 93 94 95 96 M.S Corporation Izn-5 Enterprises 77 92 Raja Rani 76 Chand Sawian Amjad Amin Forgings 75 Chaudhry Khalid Bashir Unitas Construction Private Limited 74 90 2 1 91 Name of the borrower S. No. Majid Ali Wajid Ali B-I-3S-31, Block 3A, Municipal Committee, Okara 31 A, Block 3, Okara Mohammad Baber Khan Ashraf Ali Atique Abdul Hameed 930-1-, Block-Z, DHA, Lahore Diamond Tower, Main Bazar, Chowk Hussain Agahi, Multan. Muhammad Munir P-18, Abu Bakar Street, Khayaban Colony, Faisalabad Talib Hussain Chaudhry Khalid Bashir 35- Yasrab Colony, Lahore 50- Ravi Road, Lahore 16-B, Block-G, Johar Town, Lahore 35301-1942293-1 35202-2865376-7 35302-1952450-3 35302-1909598-7 36302-8310973-1 36302-0490448-5 35201-0485423-3 33100-0102969-1 35202-2189432-7 35200-1400727-3 35202-7121001-7 35202-1878165-5 Yar Muhammad Wahgara Dakhana Deepalpur Sham Din, Okara 35202-2440502-1 Naveed Mozahir Ali 111 - Bank Square, Model Town, Lahore 37405-8187780-7 Shah Rukh Hayat Khan Asim Hussain 208, 2nd Floor, Dubai Plaza, 6th Road, Rawalpindi. 35201-7878457-9 35202-7848843-7 35202-3002419-9 35202-2797456-8 35202-3074993-9 35202-2467312-3 36302-8781439-1 36603-3711555-7 34101-1529921-9 35302-6190627-5 35201-6505616-3 35202-2258521-5 35201-4340490-0 CNIC Altaf Hussain Ghulam Hussain Muhammad Fayyaz Warah Star Nai Abadi, Haji Pura, Baghbanpura, Lahore 630- PCSIR-II, Johar Town, Lahore Imran Bashir 55 A-1 P.E.C.H.S, Lahore Abdul Qayyum (Late) Khalid Rasool House # 1547, Block # 10 Chichawatni, District Sahiwal Shahid Mahmood Fozia Shahid Malik Rashid Minhas House # 698, Chak # 9, Gulshan Town, Vehari 7- Zeenat Block, Allama Iqbal Town, Lahore Sajjad Akbar Naqvi House # 38, Allama Iqbal Town, Gujranwala Ali Abid Muhammad Imran Shoes 48, New Lalazar Colony, Okara 11-A, 50-Lawrance Road, Lahore Amjad Amin 28-10, Shahid Park, Nishtar Town, Daroghawala, Lahore 401- Nishtar Block, Allama Iqbal Town, Lahore ‘Nadeem Zar Mrs. Nadeem Akbar 4 Name of Individuals / Partners/Directors House # 59, Ghori Street, Islampura, Lahore 3 Address Shokat Ali Shokat Ali 1. Chaudhry Hakoomat Ali 2. Mian Sardar Ali Mushtaq Ahmed Khan Muhammad Saddiq Ch. Bashir Ahmad Abdul Ghani 1. Haji Lal Din Riffat Hayat Khan Dost Muhammad Adnan Ali Noor Alam Awan Muhammad Aslam Bashir Ahmed 1. Sheikh Abdul Karim 2. Shahid Mahmood Muhammad Yaqoob Akhtar Ali Chaudhary Atta Muhammad Malik Khurshid Ahmed Muhammad Tasaddaq Naqvi Muhammad Shafi Amin Ahmed 1. Barkat Ali Zar 2. Zahid Ali Khan 5 Father’s / Husband’s Name 7 8 Others 9 10 11 12 13 Total Other Interest / Principal Financial Mark-up Total written-off Reliefs (10+11+12) written-off (6+7+8) provided 4,000 5,000 - 4,902 3,376 4,496 3,401 5,997 373 6,500 1,999 2,650 4,160 5,997 - 4,500 2,500 4,702 996 3,969 1,000 4,500 7,469 4,647 5,917 1,006 7,006 1,961 4,384 3,981 3,019 1,639 8,972 2,406 7,149 2,395 6,228 1,799 7,972 4,315 2,298 1,309 7,000 1,140 5,280 4,728 - - - - - - - - - - - - - - - - - - - - - - - 8,647 10,917 1,006 11,908 5,338 8,880 7,382 9,016 2,012 15,472 4,405 9,799 6,555 12,226 1,799 12,472 6,815 7,001 2,305 10,969 2,140 9,780 12,197 - - - - - - - - - - - - - - - - - - - - - - - 4,480 5,851 1,006 6,298 1,703 3,863 3,904 3,007 1,686 8,141 2,582 7,342 2,267 4,775 1,499 7,210 4,501 2,013 1,088 6,214 1,042 4,777 2,764 - - - - - - - - - - - - - - - - - - - - - - - 4,480 5,851 1,006 6,298 1,703 3,863 3,904 3,007 1,686 8,141 2,582 7,342 2,267 4,775 1,499 7,210 4,501 2,013 1,088 6,214 1,042 4,777 2,764 ------------------------------------------------- Rupees ‘000 ------------------------------------------------------ 6 Interest / Principal Mark-up Outstanding Liabilities at beginning of year Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December 31, 2017 as referred in note 12.8 to these financial statements. ANNEXURE II TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Annual Report 2017
  185. Izaz Jaffery Ahmed Hassan Mela Abdul Sattar Muzzafer Ahmed Inam Ullah Khan Naila Arbab Muhammad Shafiq Khadim Ali Bhatti Zulikha Mian Arshad Iqbal Arshad Ali Muhammad Nasrullah Muhammad Rabnawaz Muhammad Iqbal Qari Ghulam Abbas Muhammad Umer Sarwar Lodhi Sikandar Mubariz Khan 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 2 1 97 Name of the borrower S . No. Annual Report 2017 Post Office, Jaranwala Chak 125 Gaaf Bay Tehseel Muhammad Ngar Jaranwala District, Faislabad House # 02, Lodhi Villa, Faisal Street, Chungi # 6, Bosan Road, Multan Mauza Randher & Hussain Pur Randher Tehsildaska District, Sialkot Saboki Post Office Saboki Dandian Tehseel Kamonky Zila, Gujranwala Dera Rehmanwala, Moazamabad, P.O. Khas, Tehsil Bhalwal District Sargodha House No.699, Mohallah Block F2, Wapda Town, Lahore House No.33/61, Mohallah Baghdadi Road Samanabad Block A, Lahore Mauza Zakhira Gashkori, Chak No.48/3-R,Tehsil & District Okara Goth Khokhar Tando, Allah Yar Mauza Harpal Bhatti P.O.Rattali Kalan Noshera Virkan District Gujranwala Muslimabad P.O. Khazana, Tehsil & District Peshawar Near Police Chouki Lalakatay P.O.Turnab Farm Peshawar Lala Kaly Po Turnab Farm Tehsil & District Peshawar Malianwala P.O. Khas Tehsil Daska District, Sialkot Chak No.168 J.B. Po. Chak No.214 J.B. Tehsil And District Jhang 113/3, Stadium Road, Sargodha House # 240, Street # 35, Sector F-10/1, Islamabad 3 Address Sikandar Mubariz Khan Muhammad Umer Sarwar Lodhi Ghulam Abbas Muhammad Iqbal Qari Muhammad Rabnawaz Muhammad Nasrullah Arshad Ali Mian Arshad Iqbal Zulikha Khadim Ali Bhatti Muhammad Shafiq Naila Arbab Inam Ullah Khan Muzzafer Ahmed Abdul Sattar Ahmed Hassan Mela Izaz Jaffery 4 Name of Individuals / Partners/Directors 37203-6535739-5 36302-0663207-5 34601-7708758-9 34102-6677685-5 38401-0339593-3 35301-1987470-1 35202-0583174-3 35302-5989539-1 41307-8234685-4 34103-6732559-5 17301-7962214-1 17301-5001657-4 17301-1489399-5 34601-5990819-9 33201-8651900-9 35201-8888516-9 61101-0617801-1 CNIC Sher Khan Mukhdom Ghulam Sarwar Khan Lodhi Ghulam Haider M Saddique Nazar Muhammad Ghulam Rasool Khan Mian Karim Buksh Khan Muhammad Sher Mehar Din Urf Mehar Muhammad Rafique Arbab Faisal Rehman Faqir Ghulam Muhammad Ahmed Ali Khan Muhammad Nasrullha Khan Meela S W H Jaffery 5 Father’s / Husband’s Name 7 8 Others 9 10 11 12 13 Total Other Interest / Principal Financial Mark-up Total written-off Reliefs (10+11+12) written-off (6+7+8) provided 1,000 2,000 415 2,085 1,300 2,098 - - 3 458 38 500 - - - 3 8,944 1,255 1,763 1,819 1,407 1,999 450 838 746 1,186 1,335 973 1,359 1,191 697 1,230 758 10,044 - - - - - - - - - - - - - - - - - 2,255 3,763 2,234 3,492 3,299 2,548 838 746 1,189 1,793 1,011 1,859 1,191 697 1,230 761 18,987 - - - - - - - - - - - - - - - - - 578 1,220 1,383 964 1,572 575 527 746 1,136 1,166 973 1,174 985 697 970 758 7,365 - - - - - - - - - - - - - - - - - 578 1,220 1,383 964 1,572 575 527 746 1,136 1,166 973 1,174 985 697 970 758 7,365 ------------------------------------------------- Rupees ‘000 ------------------------------------------------------ 6 Interest / Principal Mark-up Outstanding Liabilities at beginning of year Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December 31, 2017 as referred in note 12.8 to these financial statements. ANNEXURE II TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 185
  186. 186 Muhammad Hussain Ch Mahmood Ul Hassan Hamid Ishfaq Bucha Raja Aftab Hussain Raja Zafar Hussain Tulla Control Poultry Shed Syed Tanveer Hussain Shah Mazhar Hussain Muhammad Saleem Liaqat Ali Meraj Muhammad Muhammad Nawazish Ali Pirzada Muhammad Rafique Noor Poultry Products & Farms Rasool Khan & Rozi Khan Shah Zaib Khan Kw Chicks 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 2 1 114 Name of the borrower S. No. House No. 32 Street No.2 Babar Colony Rahim Yar Khan Nawan Thatta Mandi Shah Jewana, Tehsil & District Jhang Nawan Thatha Po Mandi Shah Jewnam Hassam Tehsil & District Jhang House # 107-C, Allama Iqbal Road, Garhi Shahu, Lahore Mouza Kamal Pur Jatyal,District Lodhran 96-Executive Lodge, Lahore Falt No.1, Al-Meraj Centre, I.T. Centre G-11/1 Islamabad Chaindpur P.O. Khas Tehsil & District Nankana Sahib House No. 10 Golf Avenue Canal Bank Mughalpura Lahore Chak No.22 S.B, P.O. Khas Tehsil & District Sargodha Bc-256, Gulistan-E-Sajjad Hyderabad Faqeerian P.O. Same Tehsil Malakwal District M.B. Din Chak No.124 Gb, P.O. Khas, Tehsil Jaranwala, District Faisalabad 23-A Gulgusht Multan Saeedan Wala Chak 116/15 L Po Khas Mian Channu District Khanewal Mauza Modharianwala P.O.Khas Hafizabad,Tehsil & District Hafizabad 3 Address Muhammad Mansha Shah Zaib Khan Rasool Khan Rozi Khan Yasir Zaheer Amir Zaheer Muhammad Rafique Muhammad Nawazish Ali Pirzada Meraj Muhammad Liaqat Ali Muhammad Saleem Mazhar Hussain Syed Tanveer Hussain Shah Gulzar Ahmad Raja Aftab Hussain Raja Zafar Hussain Hamid Ishfaq Bucha Ch Mahmood Ul Hassan Muhammad Hussain 4 Name of Individuals / Partners/Directors 31303-8679052-7 33202-5946304-9 33202-1236111-3 33202-1236107-7 35202-5435559-3 35202-8681732-3 36203-0165754-3 35202-1237390-1 61101-7827750-3 35402-2450449-5 35201-7841942-7 38403-5270076-3 41303-3208113-9 90403-0149960-9 33104-4607128-9 35101-1527343-3 36302-0272182-3 36104-0401956-7 34301-1780124-3 CNIC Muhammad Yousaf Gulab Khan Gulab Khan Zaheer Rehmani Zaheer Rehmani Ahmad Buksh Mian Maqbool Ahmed Ghulam Sarwar Niayamat Ali Meraj Din Malik Muhammad Ishaq Syed Saadullah Shah Sher Muhammad Raja Zafar Hussain Malik Muhammad Ishfa Chaudhary Hakeem Ul Hassan Peer Muhammad 5 Father’s / Husband’s Name 7 8 Others 9 10 11 12 13 Total Other Interest / Principal Financial Mark-up Total written-off Reliefs (10+11+12) written-off (6+7+8) provided 768 799,136 3,794 1,099 722 1,327 1,273 2,097 865 733 1,077 822 1,932 1,896 2,832 2,426 649 890 773,700 800 500 2,300 1,000 1,978 - 1,008 - 453 1,784 4,800 2,572 195 3,000 650 4,562 1,899 1,222 3,627 2,273 4,076 865 1,741 1,077 1,275 3,716 6,696 5,404 2,621 3,650 1,540 41,401 1,614,237 - - - - - - - - - - - - - - - - 119,672 - - - - - - - - - - - - - - - - 763,523 615 750 726 1,405 1,163 1,871 665 613 592 603 2,106 1,237 1,579 1,837 572 674 43,553 - - - - - - - - - - - - - - - - 926,750 615 750 726 1,405 1,163 1,871 665 613 592 603 2,106 1,237 1,579 1,837 572 674 ------------------------------------------------- Rupees ‘000 ------------------------------------------------------ 6 Interest / Principal Mark-up Outstanding Liabilities at beginning of year Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December 31, 2017 as referred in note 12.8 to these financial statements. ANNEXURE II TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 Annual Report 2017
  187. ANNEXURE III TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 The Bank is operating 197 Islamic banking branches (2016: 146) and 1 Islamic sub-branch (2016: 1). The statement of financial position and profit and loss account of these branches for the year ended December 31, 2017 are as follows: (A) Statement of financial position as at December 31, 2017 ASSETS Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Operating fixed assets Deferred tax assets Other assets LIABILITIES Bills payable Due to financial institutions Deposits and other accounts - Current accounts - Saving accounts - Term deposits - Others - Deposits from financial institutions - remunerative - Deposits from financial institutions - non-remunerative Due to head office Deferred tax liabilities Other liabilities Note (A3) (C) NET ASSETS REPRESENTED BY Islamic banking fund Reserves Unappropriated profit Surplus on revaluation of assets - net of tax (A1) Remuneration to Shari’ah Board (A2) Charity fund Opening balance Additions during the year Payments / utilization during the year Closing balance (A2.1) Sources of addition in charity fund Non-shariah compliant income Late payment charges Profit on saving accounts Annual Report 2017 (A2.1) (A2.2) & (A2.3) 2017 2016 7,716,588 113,094 25,399,578 45,601,317 1,685,039 3,573,338 84,088,954 5,601,380 83,370 16,246,917 32,316,678 1,175,046 954,377 56,377,768 1,329,424 4,450,000 896,669 200,000 31,485,430 15,600,698 12,025,841 14,986 11,060,378 41,939 2,263,153 42,307 741,735 79,055,891 5,033,063 18,424,972 12,548,303 7,077,218 34,955 9,618,020 5,500 1,007,797 24,645 2,131,144 51,969,223 4,408,545 2,880,000 1,949,363 4,829,363 203,700 5,033,063 2,880,000 1,357,645 4,237,645 170,900 4,408,545 9,906 9,762 4,844 8,201 (4,800) 8,245 1,034 5,610 (1,800) 4,844 556 7,548 97 8,201 5,564 46 5,610 ----------Rupees ‘000--------- 187
  188. ANNEXURE III TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 2016 2017 -----------Rupees ‘000-----------(A2.2) Sector wise details of charity disbursement Health Education Social work 4,300 200 300 4,800 Note (A2.3) Donee wise details of charity disbursement The Indus Hospital Shaukat Khanum Memorial Trust Sindh Institute of Urology and Transplantation (SIUT) Punjab Institute of Cardiology DEWA Institute of Special and Inclusive Education Alamgir Welfare Trust The Kidney Centre SADA Welfare Foundation Saylani Welfare Trust The Citizens Foundation (A3) Islamic financing and related assets (A3.1) Islamic mode of financing Financing Murabaha Musharaka cum Ijara Diminishing Musharaka Fixed assets Ijarah financing - net Istisna Advance against financing Advance against Murabaha financing Advanced against Diminishing Musharaka Advance against Ijarah Advance against Istisna Gross Islamic financing and related assets Provision against Islamic financing and related assets (A3.2) Murabaha receivable - gross Less: Deferred Murabaha income Add: Profit receivable shown in other assets Murabaha financings Murabaha sale price Murabaha purchase price 188 1,300 200 300 1,800 2016 2017 -----------Rupees ‘000-----------1,500 2,500 100 100 100 100 100 100 100 100 4,800 300 300 300 300 100 100 100 100 100 100 1,800 (A3.1) 45,601,317 32,316,678 (A3.2) 606,921 11,269 37,188,597 17,665 90,873 37,915,325 861,049 11,269 23,602,710 493,559 24,968,587 153,923 3,873,577 3,374,766 574,102 7,976,368 45,891,693 (290,376) 45,601,317 251,821 6,332,472 635,417 400,000 7,619,710 32,588,297 (271,619) 32,316,678 625,570 (8,775) (9,874) 606,921 1,026,101 (52,167) (112,885) 861,049 625,570 (606,921) 18,649 1,026,101 (861,049) 165,052 Annual Report 2017
  189. ANNEXURE III TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 (B) Profit and loss account 2016 2017 ----------Rupees ‘000----------Profit / return earned on financing and investments Profit / return expensed Net spread earned 4,910,831 2,056,236 2,854,595 3,359,915 1,952,029 1,407,886 (4,191) 22,948 18,757 32,103 (5,989) (220) 25,894 2,835,838 1,381,992 266,482 60,994 (712) 6,274 333,038 167,244 8,159 1,552 176,955 3,168,876 1,558,947 2,577,039 119 2,577,158 1,606,552 31,336 18 1,637,906 Extraordinary items / unusual items 591,718 - (78,959) - Profit / (loss) for the year 591,718 (78,959) (Reversal of provision) / provision against non-performing financings - net Provision / (reversal of provision) against consumer financings - general Reversal against provision for diminution in the value of investments Recoveries against written off debts Other income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies - net Loss on sale of securities - net Unrealized gain / (loss) on revaluation of investments classified as held for trading Other income Total other income Other expenses Administrative expenses Other provision / write-offs Other charges Total other expenses (C) Sectors and avenues of deposits and funds The deposits and funds accepted under the pools mentioned in note (D) are provided to diversified sectors and avenues of the economy / businesses. 2016 2017 ----------Rupees ‘000----------Government and other securities Textiles, chemicals, pharmaceuticals, food and allied Production and transmission of energy Transportation Construction / housing Others 25,399,578 4,797,853 9,352,022 3,142,775 4,555,496 24,043,547 71,291,271 16,246,917 4,111,549 7,038,599 5,337,739 4,327,540 11,772,870 48,835,214 Musharaka investments from the SBP under Islamic Export Refinance Scheme (IERS) are channeled towards the export sector of the economy. Annual Report 2017 189
  190. ANNEXURE III TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2016 (D) Pool management The Bank’s Islamic Banking Division (FBL IBD) has maintained the following pools: i. ii. iii. iv. v. ‘General Pool’ for local and foreign currency deposits; ‘Islamic Export Refinance Pool’ ; ‘Treasury Musharaka Pool’ ; ‘Barkat Investment Pools’ ; and ‘Barkat Equity Pool Key features and risk & reward characteristics of all pools - The ‘General Pool’ for both local and foreign currency caters the needs of all FBL IBD depositors and provide profit / loss based on Modaraba and Musharaka; - The IERS Pool caters the ‘Islamic Export Refinance’ requirements based on the guidelines issued by the SBP and is based on Musharaka basis. - The ‘Treasury Musharaka Pool’ is to provide Shari’ah compliant mechanism for Interbank money market deals and manage the liquidity position of FBL IBD balance sheet by creating sub pools against each FBL IBD money market deals; - The Barkat Investment Pools are created to cater the needs of high net worth clients and are based on mudarbah basis; - The Barkat Equity Pool is created to mainly cater the funding requirements of project / long term financing assets during non accrual period; and - The risk characteristics of each pool mainly depends on the asset and liability profile of each pool. (D1) Profit / (loss) distribution to depositor’s pool Parameters used for allocation of profit, charging expenses and provisions etc. along with a brief description of their major components: Gross income generated from relevant assets, calculated at the end of the month is first divided between FBL IBD and investors / depositors in the ratio of FBL IBD’s equity commingled in a pool on pro rata basis, and then amongst FBL IBD and the depositors as per agreed Mudarib fee and weightages declared before start of a month, respectively. All Modaraba and Musharaka based deposits are fully invested in respective pools to produce returns for them. In case where FBL IBD is unable to utilise all funds available for investment, priority is given to the deposit account holders. 190 Annual Report 2017
  191. ANNEXURE III TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2016 All remunerative accounts such as savings accounts, investment certificates and business kamil accounts are opened on the basis of Modaraba or a combination of Modaraba and Musharaka. The return on these deposits is calculated on the basis of Profit and Loss Sharing (PLS). Unless specified, all remunerative local and foreign currency deposits are taken as General Modaraba and Musharaka pool. Profit share is determined using weight assigned to each category of deposit within a pool and profit sharing ratio. These weightages and profit sharing ratio are declared by FBL IBD in compliance with the requirements of the SBP. The allocation (of income and expenses to different pools) is based on pre-defined basis and accounting principles / standards. The Direct expenses are charged to respective pool. The Indirect expenses including the establishment cost are borne by FBL IBD as Mudarib. The Direct expenses charged to the pools include depreciation of Ijara assets, cost of sales of inventories, insurance / Takaful expenses of pool assets, stamp fee, documentation charges, brokerage fee for the purchase of securities / commodities, impairment / losses due to physical damages to specific assets in pools etc. Provisions against any non-performing assets of the pool are not passed on to the pool except on the actual loss / write-off of such non-performing asset and suspension of income against non-performing assets. The profit of the pool is shared between the members of the pool on pre-defined mechanism based on the weightages announced before the profit calculation period. Particulars - Mudarib share amount and percentage of distributable income Amount and percentage of Mudarib share transferred to depositors through Hiba Profit rate earned (annualised) Profit rate distributed (annualised) Annual Report 2017 2017 Rupees ‘000 Percent 2016 Rupees ‘000 Percent 1,382,715 50.15 1,154,324 50.11 478,820 - 34.63 7.14 4.34 674,410 - 58.42 7.62 5.20 191
  192. ANNEXURE IV TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31 , 2017 Details of disposal of fixed assets to executives, and other persons having cost of more than Rs.1 million or net book value of Rs. 250,000 or above are as follows: Description Cost Accumulated depreciation Book value Sale proceeds Gain / (loss) on disposal Mode of disposal Particulars of purchaser / Insurer / addresses (only in case of individuals) ------------------------------- Rupees ‘000 ------------------------------Owned - Vehicles Mercedes Benz 8,000 5,440 2,560 2,880 320 As per Bank Policy Mr. Yousaf Hussain - President & CEO Audi 7,445 3,574 3,871 3,871 - As per Bank Policy Mr. Khurram Gul Agha - Ex-Executive Toyota Fortuner 5,106 1,634 3,472 3,880 Mercedes Benz 4,000 4,000 - 2,300 2,300 Bid Mr. Iftikhar Ahmed - Individual H.No. R-373, Shamsi Villas, Khurram Abad Landi No.2, Sector F-37, Malir Karachi. Toyota Vigo 2,455 2,455 - 1,839 1,839 Bid Mr. Nauman Ahmed Siddiqui - Individual 608, Showroom No.2, Fatima Jinnah Colony, M.A.Jinnah Road, Karachi Toyota Corolla Grande 2,303 737 1,566 1,750 184 As per Bank Policy Mr. Meraj Uddin - Ex-Executive Toyota Corolla GLI 1,690 1,239 451 1,300 849 Honda Civic 1,381 1,105 276 928 652 Bid Mr. M. Tahir Khan - Individual Plot No. 163-D, Flat No. H-1, PECHS Block-3, Karachi. Honda City 1,197 957 240 1,018 778 Bid Mr. Nauman Ahmed Siddiqui - Individual 608, Showroom No.2, Fatima Jinnah Colony, M.A.Jinnah Road, Karachi. 36,047 36,047 - 179 179 Bid M/s. Touch Point Generator 3,296 3,296 - 1,093 1,093 Bid Rajab Ali & Company Generator 1,053 1,053 - 60 60 Bid Haider & Ali 14,569 14,569 - 164 164 Bid Farhan and Company 408 As per Bank Policy Mr. Meraj Uddin - Ex-Executive Insurance Claim EFU Insurance Company Limited Owned - Office furniture, fixtures, equipments, and computers Automated Teller Machines Owned - Leasehold improvements Fixtures including civil works Details of disposal of fixed assets having cost no more than Rs. 1 million or net book value of Rs. 250,000 or above are as follows: - Disposed of - Written off 192 101,968 48,502 99,257 48,379 2,711 123 15,773 - 13,062 (123) 239,012 223,742 15,270 37,035 21,765 Various Written off - Annual Report 2017
  193. CONSUMER GRIEVANCES HANDLING MECHANISM Following is the Bank ’s consumer grievances handling mechanism chart. Customer Complaint Channels Social Media Branch Staff Walk-in Call Centre Letter Fax E mail Regulatory Body Website Complaint Management System Complaint Management Unit Acknowledgement Preliminary Investigation Relevant Business Unit Complaint Management Unit Resolution Customer Consumer Grievances Handling Mechanism • Customer makes a complaint against the Bank via call centre, branch, email, website etc. and the same are lodged in the system. • All customer complaints are acknowledged to the customer. • Initial investigation of the complaint will be conducted by the Complaints Management Unit (CMU) of the Bank, the same will be forwarded to the relevant department for their feedback. • In case a complaint exceeds its stipulated time, the customer will be informed through an interim reply. • Resolution of the complaint will be provided to the customer. • In case where the complaint is declined by the Bank then it will be ensured that the customer will be provided with alternate grievance redressal forums. 01 Annual Report 2017 Annual Report 2017 193
  194. CONSUMER GRIEVANCES HANDLING MECHANISM Listed below are the initiatives taken by Complaint Management Unit Department in the year 2017 : 1. Initiation of a new unit to resolve a complaint on the first call 2. Automation of Complaint Acknowledgement 3. Automation of interim responses Total number of complaints received by the Bank in the year 2017 are 71,693 and the average time taken to resolve them was 4 working days. 194 Annual Report 2017 02 Annual Report 2017
  195. COMBINED PATTERN OF CDC AND PHYSICAL SHAREHOLDING AS ON DECEMBER 31 , 2017 Category No. 1. Categories of Shareholders Category Wise No. of Shareholders Number of Category Wise Shares Held Number of Shares Held Percentage % Associated Companies, Undertakings and Related Parties Ithmaar Bank B.S.C 631,349,927 2,882,876* Faisal Finance (Luxembourg) S.A. 112,382,686 513,163* MFAI (Jersey) Limited 77,351,712 6 DMI (Jersey) Limited 353,205* 951,167,527 72.07 56,191,340 256,582* State Life Insurance Corporation of Pakistan 2 69,886,036 Mutual Funds CDC- Trustee MCB Pakistan Stock Market Fund 11,061,500 CDC- Trustee JS Large CAP. Fund 2,316 CDC-Trustee AKD Index Tracker Fund 85,497 CDC-Trustee NAFA Stock Fund 11,694,182 CDC- Trustee NAFA Multi Asset Fund 652,871 CDC-Trustee NIT-Equity Market Opportunity Fund 434,852 CDC- Trustee NAFA Asset Allocation Fund CDC-Trustee PIML Strategic Multi Asset Fund CDC- Trustee First Capital Mutual Fund CDC- Trustee National Investment (UNIT) Trust CDC- Trustee PIML Value Equity Fund CDC- Trustee UBL Stock Advantage Fund CDC- Trustee UBL Asset Allocation Fund 1,000,373 16 3,000 2.40 410 1,021,588 17,500 3,376,000 1,000 CDC- Trustee UBL Retirement Savings Fund- Equity Sub Fund 673,500 CDC- Trustee Pakistan Capital Market Fund 600,000 CDC- Trustee MCB Pakistan Asset Allocation Fund 31,731,089 1,106,500 * These represent shares in respect of withholding tax on bonus shares issued by the Bank during the periond. These shares have not been released by the Bank to the Government Treasury based on a stay order issued by the Honorable High Court of Sindh. 01 Annual Report 2017 Annual Report 2017 195
  196. COMBINED PATTERN OF CDC AND PHYSICAL SHAREHOLDING AS ON DECEMBER 31 , 2017 Category No. 3 Categories of Shareholders Category Wise No. of Shareholders Number of Category Wise Shares Held Number of Shares Held Directors and their spouse(s) and minor Children Farooq Rahmatullah Khan 1,241 Ahmed Abdulrahim Mohamed Abdulla Bucheery 629 Mian Muhammad Younis 632 Juma Hasan Ali Abul 629 Imtiaz Ahmad Pervez 11 115,952 Abdulelah Ebrahim Mohamed AlQasimi 500 Abdulla Abdulaziz Ali Taleb 500 Fuad Azim Hashimi 122,940 0.01 2,200 Ali Munir 657 Yousaf Hussain - 4 Executives 8 83,745 83,745 0.01 5 Public Sector Companies and Corporations 11 131,131 131,131 0.02 6 Banks, Development Finance Institutions, Non-Banking Finance Companies,Insurance Companies, Takaful, Modarabas and Pension Funds. 23 9,279,354 9,279,354 0.70 7 Foreign Investors 44 59,970,341 59,970,341 4.54 8 General Public 16,936 235,488,843 235,488,843 17.84 9 Others 150 31,761,139 31,761,139 2.41 17,205 1,319,736,109 1,319,736,109 100.00 Total 196 Percentage % Total Paid-up Capital Shares 1,319,736,109 5% of the Paid-up Capital Shares 65,986,805 Annual Report 2017 02 Annual Report 2017
  197. COMBINED PATTERN OF CDC AND PHYSICAL SHAREHOLDING AS ON DECEMBER 31 , 2017 S. No. 1 Shareholders holding 5% or more voting rights in the Listed Company Ithmaar Bank B.S.C Number of Shares Held 631,349,927 2,882,876* 2 Faisal Finance (Luxembourg) S.A. 112,382,686 513,163* 3 MFAI (Jersey) Limited Percentage % 77,351,712 48.06 8.55 5.89 353,205* 4 State Life Insurance Corporation of Pakistan 69,886,036 5.30 * These represent shares in respect of withholding tax on bonus shares issued by the Bank during the periond. These shares have not been released by the Bank to the Government Treasury based on a stay order issued by the Honorable High Court of Sindh. 01 Annual Report 2017 Annual Report 2017 197
  198. Combined Pattern of CDC and Physical Shareholding AS ON DECEMBER 31 , 2017 Category No. Categories of Shareholders 1 Associated Companies, undertakings and Related Parties 2 Number of Shares Held Percentage % 6 951,167,527 72.07 Mutual Funds 16 31,731,089 2.40 3 Directors and their spouse(s) and minor Children 11 122,940 0.01 4 Executives 8 83,745 0.01 5 Public Sector Companies and Corporations 11 131,131 0.02 6 Banks, Development Finance Institutions, Non-Banking Finance Companies, Insurance Companies, Takaful, Modarabas and Pension Funds. 23 9,279,354 0.70 7 Foreign Investors 44 59,970,341 4.54 8 General Public 16,936 235,488,843 17.84 9 Others 150 31,761,139 2.41 17,205 1,319,736,109 100.00 Total 198 Number of Shareholders Annual Report 2017 02 Annual Report 2017
  199. PATTERN OF SHAREHOLDING AS OF DECEMBER 31 , 2017 Number of Shareholders 4617 5957 1219 3602 716 297 149 92 58 43 35 30 25 25 22 18 13 14 15 16 8 5 12 6 10 5 10 4 7 6 2 4 5 2 3 2 2 2 2 1 1 11 3 2 3 2 2 2 01 Shareholdings' Slab 1 101 501 1001 5001 10001 15001 20001 25001 30001 35001 40001 45001 50001 55001 60001 65001 70001 75001 80001 85001 90001 95001 100001 105001 110001 115001 120001 125001 130001 135001 140001 145001 150001 155001 160001 165001 170001 180001 185001 190001 195001 200001 205001 210001 215001 220001 225001 Annual Report 2017 to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to 100 500 1000 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 75000 80000 85000 90000 95000 100000 105000 110000 115000 120000 125000 130000 135000 140000 145000 150000 155000 160000 165000 170000 175000 185000 190000 195000 200000 205000 210000 215000 220000 225000 230000 Total Shares Held 128,488 1,672,368 885,438 8,955,220 5,074,760 3,598,381 2,634,006 2,060,072 1,576,123 1,398,232 1,313,144 1,285,225 1,205,972 1,333,017 1,269,890 1,127,830 863,173 1,018,757 1,164,297 1,321,423 699,810 462,298 1,182,147 607,793 1,092,070 566,007 1,177,063 490,869 888,683 791,859 273,677 570,759 745,711 308,363 477,060 325,274 332,500 346,893 361,185 186,150 195,000 2,194,126 601,689 416,116 638,922 440,000 443,602 457,528 Annual Report 2017 199
  200. PATTERN OF SHAREHOLDING AS OF DECEMBER 31 , 2017 Number of Shareholders 1 2 2 1 2 2 1 3 2 2 2 1 1 1 2 1 1 1 1 1 1 2 1 1 2 2 1 1 2 1 1 3 1 1 1 1 1 2 1 1 1 1 1 2 1 1 1 1 200 Shareholdings' Slab 235001 245001 250001 255001 260001 265001 270001 300001 305001 310001 325001 340001 350001 355001 360001 365001 375001 380001 390001 410001 420001 430001 435001 475001 495001 515001 520001 525001 545001 565001 595001 600001 605001 635001 640001 650001 655001 670001 725001 755001 790001 795001 830001 845001 950001 955001 980001 1000001 Annual Report 2017 to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to 240000 250000 255000 260000 265000 270000 275000 305000 310000 315000 330000 345000 355000 360000 365000 370000 380000 385000 395000 415000 425000 435000 440000 480000 500000 520000 525000 530000 550000 570000 600000 605000 610000 640000 645000 655000 660000 675000 730000 760000 795000 800000 835000 850000 955000 960000 985000 1005000 Total Shares Held 235,675 495,906 503,207 258,711 524,082 534,948 274,070 906,805 618,882 626,691 657,000 341,425 354,935 357,914 726,295 369,847 376,200 383,250 393,000 415,000 423,500 868,142 440,000 477,278 1,000,000 1,033,159 525,000 526,736 1,097,500 570,000 600,000 1,808,678 610,000 640,000 640,954 652,871 656,000 1,347,250 728,561 758,345 792,000 800,000 831,813 1,693,742 952,987 955,890 984,604 1,000,373 02 Annual Report 2017
  201. PATTERN OF SHAREHOLDING AS OF DECEMBER 31 , 2017 Number of Shareholders 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 2 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 17205 01 Shareholdings' Slab 1015001 1020001 1070001 1095001 1105001 1135001 1175001 1200001 1205001 1240001 1295001 1335001 1565001 1650001 1720001 1790001 1810001 2165001 2635001 2800001 3100001 3155001 3195001 3295001 3315001 3375001 3380001 3510001 3555001 4005001 4135001 4390001 4465001 4835001 6200001 7180001 9995001 11060001 11690001 14835001 24085001 28005001 30005001 33750001 43595001 53345001 56190001 69885001 112380001 631345001 Annual Report 2017 to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to 1020000 1025000 1075000 1100000 1110000 1140000 1180000 1205000 1210000 1245000 1300000 1340000 1570000 1655000 1725000 1795000 1815000 2170000 2640000 2805000 3105000 3160000 3200000 3300000 3320000 3380000 3385000 3515000 3560000 4010000 4140000 4395000 4470000 4840000 6205000 7185000 10000000 11065000 11695000 14840000 24090000 28010000 30010000 33755000 43600000 53350000 56195000 69890000 112385000 631350000 Total Shares Held 1,015,732 1,021,588 1,071,669 1,100,000 1,106,500 1,139,050 1,176,664 1,200,500 2,416,500 1,244,983 1,296,835 1,335,992 1,565,600 1,651,902 1,721,395 1,792,787 1,811,126 2,166,577 2,640,000 2,804,849 3,101,375 3,156,093 6,399,000 3,300,000 3,318,500 3,376,000 3,382,416 3,512,130 3,557,200 4,009,199 4,135,168 4,393,140 4,467,731 4,838,000 6,202,756 7,181,900 10,000,000 11,061,500 11,694,182 14,837,000 24,085,123 28,005,500 30,005,500 33,754,986 43,596,726 53,346,550 56,191,340 69,886,036 112,382,686 631,349,927 1,319,736,109 Annual Report 2017 201
  202. 01 202 Annual Report 2017 BRANCH CODE 165 269 330 425 175 196 216 338 441 115 183 S . NO. 1 2 3 4 5 6 7 8 9 10 11 South South South South South South South South South South South REGION Karachi Karachi CITY Fatima Jinnah Road Branch Shahrah-e-Adalat Branch Bukhari Commercial Branch Defence Branch DHA Phase VIII Branch Saba Avenue Branch Phase IV DHA Branch Zamzama Branch Quetta Quetta Karachi Karachi Karachi Karachi Karachi Karachi Abdullah Haroon Road Branch Karachi Clifton Centre Branch Green Belt Residency Branch BRANCH NAME BRANCH NETWORK - CONVENTIONAL 081-2837234, 081-2824973, 081-2836943, 081-2824807 081-2840386-87, 081-2840587, 081-2842028 021-335149595-97 021-35341761, 02135856091, 021-35854038, 021-35854035 021-35246011 021-35245377, 021-35245380 021-35802423 021-35875303, 021-35875323, 021-35822781 021-111-11-22-33 021-35830113-5 021-35877922, 021-35375103 CONTACT Yousuf Centre, Fatima Jinnah Road, Quetta Shahrah-e-Adalat Road, Quetta Ground, Basement and First Floor, 19-C Bukhari Commercial Lane No 5, Phase VI, DHA, Karachi 22/C, Lane-2, Shahbaz Commercial, Phase VI, DHA, Karachi 43-C, Al-Murtaza Commercial Lane No. 4, DHA, Phase VIII, Karachi Shop No. 2 & 3, Ground Floor, Plot No. 36-C, Badar Commercial Street, St. No. 6, Phase V, Karachi 14-C, Sunset Commercial Street No. 2, Phase IV, DHA, Karachi 13-C, 7th Zamzama, Commercial Lane, Clifton, Karachi 16-Abdullah Haroon Road, Karachi Plot No. DC-1, 16-A,16-B, Block 5, Clifton Centre, Kehkashan, Karachi Green Belt Residency, Shop No. 13-16, Plot No. Commercial 7/1, Block 2, KDA Scheme-5, Kehkashan, Clifton, Karachi BRANCH ADDRESS
  203. Annual Report 2017 02 203 118 172 173 209 198 255 281 156 424 123 14 15 16 17 18 19 20 21 22 23 134 170 13 24 453 BRANCH CODE 12 S . NO. South South South South South South South South South South South South South REGION Karachi Karachi Karachi Karachi Karachi Turbat CITY Cloth Market Branch Jodia Bazar I Branch I.I. Chundrigar Road II Branch Korangi Industrial Area Branch Tariq Road Branch Mehmoodabad Branch Karachi Karachi Karachi Karachi Karachi Karachi Khalid Bin Waleed Road Branch Karachi Korangi No.2 Branch Khayaban-e-Tanzeem Branch Stadium Lane, Khayaban-e-Mujahid Branch Quality Height Clifton Branch I. I. Chundrigar Road Branch Turbat Branch BRANCH NAME 11/13, Trade Centre, I.I Chundrigar Road, Karachi Khewat # 32, Khatooni # 32, Al Salam Market, Main Road, Turbat BRANCH ADDRESS Plot No. 89-B, Block-2, PECHS, Karachi Q-14, Ground Floor, Sector 33-A, Korangi No.2, Karachi Plot No. C-4-D-N, Phase V, Khayaban-e-Tanzeem, DHA, Karachi 43-C, Stadium Lane II, Khayaban-e-Mujahid, DHA Phase V, Karachi 021-32439021-22, 021-32438150 021-32471440-3, 021-32443795, 021-32444073 021-32418300-1 021-35114402-3 021-35143538-39 BR-2-1/1, Bander Quarters, New Neham Road, Kharadar, Karachi G-2, Plot No. MR-6/52/1, Ismail Trade Centre, Ram Bharti Street, Karachi Nadir House, I. I. Chundrigar Road, Karachi Plot No. 51/9, Sector 15, Main Korangi Road, Karachi Shop No. 1 & 2, Plot 9-C, Block 2, Main Tariq Road, P.E.CH.S, Karachi 021-34376346-48-49 Plot No. SA-85, Block 7, Karachi Administration Employees Cooperative Housing Society (KAECHS), Karachi 021-34302249-50, 021-34554302 021-35071758-59 021-35877909-10, 021-35824827, 021-35877846 021-35349113, 021-35349111 021-35863772-74-75, 32-A, Ground Floor, Quality Heights, K.D.A 021-35868429, Scheme No. 5, Clifton Block-8, Karachi 021-35868514 021-32638011-13 0852-411074 CONTACT BRANCH NETWORK - CONVENTIONAL
  204. 03 204 Annual Report 2017 BRANCH CODE 145 164 217 227 236 290 422 423 436 437 138 230 S . NO. 25 26 27 28 29 30 31 32 33 34 35 36 South South South South South South South South South South South South REGION Karachi Karachi CITY Sukkur Branch Saddar Branch Denso Hall Branch Metroville Branch Jodia Bazar II Branch Zainab Market - AHR Branch Pak Colony Branch Electronic Market Branch Burns Road Branch Sukkur Hyderabad Karachi Karachi Karachi Karachi Karachi Karachi Karachi APWA Complex Garden Branch Karachi Timber Market Branch New Challi Branch BRANCH NAME BRANCH NETWORK - CONVENTIONAL Shop No. SOA, 5 Ground Floor Apwa Complex, Plot No. 67-AC, Garden Road, Karachi Plot No. 6/2 Old Haji Camp, Siddique Wahab Road Lee Quarters, Karachi Abid Chamber, Plot 3 SR. 6/9, Shahrah-e-Liaqat, Karachi BRANCH ADDRESS 071-5617195-97 022-2728356-59 021-32752306-9 021-36661300, 021-36662034 021-32522225-8 021-35652099, 021-35684525, 021-35683301 021-32556695-96-97 021-32751585-86 City Survey No. D1596 / 1-D, Race Cource Road, Sukha Talab, Sukkur Plot No. 339, Main Bohra Bazar Saddar, Hyderabad Plot No.19, Survey Sheet No. WO-07, Wadhomal Oddharam Quarters, M.A Jinnah Road, Saddar Town, Karachi Street 15, Block 3, Metroville Site, Karachi NP 12/74, Mohammad Shah Street, Karachi State Life Building No. 11, Abdullah Haroon Road, Karachi Plot No. 250, 251 & 252 Modern Colony, Manghopir Road, Karachi Shop No. 3, Hashmi Electronics Centre, Abdullah Haroon Road, Saddar, Karachi 021-32211077-23-43 Shop No. 4 & 5, Ground Floor, Lokhat Mansion, Survey No. 2, Shahrah-e-Liaquat , Burns Road, Karachi 021-32294779-80 021-32734508, 021-32734490 021-32214903-04 CONTACT
  205. Annual Report 2017 04 205 239 258 272 287 291 292 297 301 195 221 222 231 265 38 39 40 41 42 43 44 45 46 47 48 49 BRANCH CODE 37 S . NO. South South South South South South South South South South South South South REGION Federal B. Area II Branch Gulzar-e-Hijri Branch Buffer Zone Branch Power House UP More Branch Nazimabad Branch Kandhkot Branch Shahdadkot Branch Ghotki Branch Qasimabad Branch Larkana Branch Nawabshah Branch Mirpur Khas Branch Latifabad Branch BRANCH NAME Karachi Karachi Karachi Karachi Karachi Kandhkot Shahdadkot Ghotki Hyderabad Larkana Nawabshah Mirpurkhas Hyderabad CITY 021-36340242-5 021-34652159 021-36950081-87 021-36961034-36 021-36707420 072-2572705-7 074-4014227-28 0723-600807 022-2103433-34 074-4056054-56 0244-330895-97 0233- 876472-75 022-3820526-7 CONTACT Plot No. St-4/A-1, Block-20, Scheme-16, Federal B. Area, Adjacent Bank Al Habib, Karachi Plot No. A-747/C, Block 13-A, KDA Scheme 33, Pakistan Employee Cooperating Housing Society, Karachi Plot No. R-2, Sector 15-A / 2, Buffer Zone, North Karachi, Karachi R1, Sector 5C-4, North Karachi, Near Agha Khan Lab, Powerhouse Chowrangi, Karachi Plot No.16, Row No. 1, Sub Block A, Block III (IIIA,1 / 16), Nazimabad, Karachi Plot No.130, Main Bazar Shah Abdul Latif Road, Near Police Station,Kandhkot Plot City Survey No. 520 Ward B, Situated at Shaikh Mohala, Shahdadkot Ground Floor, City Survey No. 890, Ward-B, Situated At Devri Sahab Road, Ghotki Plot No. B-1, R.S.258/2, Bilal Villas Housing Scheme, Deh Sari, Taluka, Qasimabad City Survey No. 2016/4-A Ward C, Faysal Bank Chowk, Larkana City CS No. 555, Ward B, Main Mohni Bazar, Nawabshah City Survey No. 715, 716 and 718, Ward A, Umerkot Road, Taluka and District, Mirpurkhas C - 489, Unit No 8, Latifabad, Hyderabad BRANCH ADDRESS BRANCH NETWORK - CONVENTIONAL
  206. 05 206 Annual Report 2017 BRANCH CODE 342 428 438 139 152 110 119 127 131 143 153 210 333 S . NO. 50 51 52 53 54 55 56 57 58 59 60 61 62 South South South South South South South South South South South South South REGION Shaheed-e-Millat II Branch Gulshan Block-2 Branch Gulshan Chowrangi Branch MACHS Branch Shahrah-e-Faisal Branch Shaheed-e-Millat Branch Gulshan-e-Iqbal Branch Karachi Main Branch North Karachi Industrial Area Branch SITE Branch Federal B. Area Branch Hyderi - North Nazimabad Branch North Nazimabad Branch BRANCH NAME BRANCH NETWORK - CONVENTIONAL Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi CITY 021-111-321-321, 021- 34382595 021-3497 2202, 021-34972998 021-34815319, 021-34833720, 021-34833718 021-34390511, 021-34390516 021-34315634-37 021-34388104-6 021-34994262-3 021-111-747-747, 021-32795200 021-36957155, 021-36954054, 021-36356475 021-32585918-20 021-36800694, 021-36800695 021-36648751 021-36721600-4 CONTACT 72-A/Z, Block 7/8, Al- Riaz, Karachi A-287, Block-2, K.D.A Scheme -24, Gulshan e Iqbal, Karachi Shop No. 1-4, Ground Floor, Sana Arcade, Plot No. ZC-6, Block No. 7, KDA Scheme 24, Karachi Plot No. 2, F Commercial, MACHS, Karachi Business Avenue Centre, Block No. 6, PECHS, Karachi Iqbal Arcade, Plot No. 6, 3/7, DMC Society, Karachi B-35, Block 13-A, Main University Road, Gulshan-e-Iqbal, Karachi Faysal House, St- 02,Main Shahrah-e-Faisal, Karachi SA-2, St 1/1, Sector 12-B, North Karachi Industrial Area, Karachi Plot No. B-17, State Avenue, Karachi C-25, Block 17, Federal B. Area, Karachi Show Room No. 01, Ground Floor, Euro Continental Tower, Plot No D-10, Block-B, KDA Scheme No. 2, North Nazimabad, Karachi. D-4, Block D, North Nazimabad, Karachi BRANCH ADDRESS
  207. Annual Report 2017 06 207 335 442 174 252 112 132 137 179 180 186 197 205 218 64 65 66 67 68 69 70 71 72 73 74 75 BRANCH CODE 63 S . NO. Central I Central I Central I Central I Central I Central I Central I Central I Central I South South South South REGION Nila Gumbud Branch Mughalpura Branch McLeod Road Branch Shahdara Branch Urdu Bazar Branch Shahalam Market Branch Shalimar Garden Branch Circular Road Branch The Mall Branch Branch Safoora Goth Branch Gulistan-e-Jauhar Branch Tipu Sultan Road Branch Gulshan-e-Iqbal II Branch BRANCH NAME Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Karachi Karachi Karachi Karachi CITY GT Road, Shahdara, Lahore S-38, R-205-A, Cattle Street, Circular Road, Urdu Bazar, Lahore 5 A-C, Near Fowara Chowk, Shah Alam Market, Lahore Bilal Market, Chowk Shalimar Bagh, GT Road, Baghbanpura, Lahore Babar Center, 51, Circular Road, Lahore 43, Shahrah-e-Quaid-e-Azam, Lahore Shop No. 1,2,3,4, Plot SV-9, Block VII, Gulistan-e-Jauhar, KDA Scheme No. 36, Karachi Shop No. 28 & 29, Rufi Lake Drive, Block 18, K.D.A Scheme No. 36, Karachi Plot No. 110, Zonal Commercial Area, Karachi SB-25, Block 13/C, Main University Road, Gulshan-e-Iqbal, Karachi BRANCH ADDRESS 042-37360032-34 042-36524863-4 8-The Mall, Bank Square, Lahore 3/15 Jahangir Road, Lal Pul, Near AFC, Mughalpura, Lahore 042-36370024-45-67 Property No. SE-10-R-2, Situated at 3 Nicloson Road, Lahore 042-37902501-4 042-37314617-18 042-376756719 042-36844714-18 042-37673001-6 042-37236014-8 021-34023795, 021-34023791, 021-34023793 021-34026856, 021-34030556-7 021-34301181-3 021-34830110, 021-34830111, 021-34830112, 021-34830108, 021-34830109 CONTACT BRANCH NETWORK - CONVENTIONAL
  208. 07 208 Annual Annual Report 2017 BRANCH CODE 223 253 273 276 467 469 122 128 146 238 245 261 268 279 142 150 S . NO. 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I REGION Model Town Branch Allama Iqbal Town Branch Wazirabad Branch Sheikhupura Road Branch Cantt Sialkot Branch Lalamusa Branch Daska Branch Gujrat Branch Gujranwala Branch Sialkot Main Branch Bilal Gunj Branch Badami Bagh Branch Shadbagh Branch Daroghawala Branch Fruit Market Branch Brandreth Road Branch BRANCH NAME BRANCH NETWORK - CONVENTIONAL Lahore Lahore Wazirabad Gujranwala Sialkot Lalamusa Daska Gujrat Gujranwala Sialkot Lahore Lahore Lahore Lahore Lahore Lahore CITY 042-35884705-7 042-37806022, 042-37806025 055-6609526 055-4240157 052-4261710 053-7519577-6 052-6614623-4 053-3536781 055-3730301-2-3-4 052-4292501-2 042-37214084-8 042-37708160-4 042-37614813-17 042-36533526-30 042-379445043 042-3767224-5 CONTACT 13-C, Faysal Bank, Bank Square Model Town, Lahore 18-Hunza Block, Main Road, Allama Iqbal Town, Lahore Al-Rehmat Plaza, Sialkot Road, Near Chowk Haji Pura, Wazirabad Rehman Market, Sheikhupura Road, Gujranwala 100-A, Aziz Shaheed Road, Cantt, Sialkot Faysal Bank Limited, Shayan Plaza Kaira, GT Road, Lalamusa Plot No. 3, 4 & 5, Muslim Market , Gujranwala, Daska Noble Furniture Plaza, GT Road, Gujrat GT Road, Main Branch, Zia Plaza, Gujranwala Plot No. B1-16S-98B, 17-Paris Road, Opp CC & I, Sialkot 16-Shahjehan Road, Bilal Gunj, Lahore 343-Circular Road, Badami Bagh, Lahore Tajpura Chowk, Near PTCL Exchange, Misri Shah, Shadbagh, Lahore 386-C, More Salamat Pura, Main G.T Road, Daroghawla, Lahore 136, Farooq Centre, Fruit Market Scheme, Ravi Link Road, Lahore 78 Brandreth Road, Old Nishter Road, Lahore BRANCH ADDRESS
  209. Annual Report 2017 08 209 271 274 419 457 125 160 181 189 211 282 334 417 94 95 96 97 98 99 100 101 102 103 104 105 462 187 93 106 158 BRANCH CODE 92 S . NO. Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I REGION DHA Z Block Branch Phase V DHA Branch Cavalry Ground Branch Tufail Road Branch New Airport Road Branch Walton Cantt. Branch Bedian Road Branch Thokar Niaz Baig Branch DHA H-Block Branch Gulberg Industrial Area Branch Faisal Town II Branch Karim Block Branch Main Multan Road Branch Liberty Branch Faisal Town Branch I BRANCH NAME Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore CITY 042-35725903-904 042-37182356-58 042-36655590 042-36604909-14 042-37396852-54 042-36604309-12 042-37165350 042-35457491 042-35897712-7 042-35717142, 042-35717145 042-35203894 042-35295572-4, 042-35295578-79 042-37801904, 042-378019011 042-35752108-9 042-35201991-2 CONTACT 326 Z-Block, Phase III, DHA, Lahore, Pakistan Plot No. 10, Commercial Area, Sector C-C-A, Phase-V, DHA, Lahore 4/5 Haroon Plaza, Cavalry Ground, Lahore Garrison Officers Mess 12, Tufail Road, Lahore Cantt Adjoining Divine Mega-II Plaza, New Airport Road, Cantt, Lahore 36-Jinnah Plaza, Main Boulevard Defence Link Road, Walton Cantt, Lahore Bedian Road, Near DHA Phase VI, Lahore Cantt Jamal Market, Ali Town, Opp. Lahore University, Thokar Niaz Baig, Raiwand Road 136/1, Block-H, Commercial Area, Phase-I, DHA, Lahore Cantt 25-B-2, Gulberg III, Lahore 594-A, Faisal Town, Lahore 2B-2C, Karim Block, Allama Iqbal Town, Lahore 235/1, Badar Block, Allama Iqbal Town, Main Multan Road, Lahore 37-E, III Saeed Alam Tower, Liberty Market, Gulberg III, Lahore 10-C, Main Boulevard, Faisal Town, Lahore BRANCH ADDRESS BRANCH NETWORK - CONVENTIONAL
  210. 09 210 Annual Report 2017 BRANCH CODE 178 188 208 233 331 401 416 468 148 182 212 256 309 S . NO. 107 108 109 110 111 112 113 114 115 116 117 118 119 Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I REGION Ayubia Market Branch EME Society Branch Ghazi Chowk Branch Johar Town Branch Main Boulevard Gulberg Branch Jail Road Branch Gulshan-e-Ravi Branch Egerton Rd Branch Upper Mall Branch CMH Chowk Branch Chouburji Branch Ichra Branch Shadman Branch BRANCH NAME BRANCH NETWORK - CONVENTIONAL Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore CITY 042-35926825-6 042-37511081-4 042-35212250-4 042-35300897, 042-35315735-6 042- 35787839, 042- 35787840, 042- 35787850 042-37420318, 042-37423961 042-37404506, 042-37404512 042-36301629, 042-36363781, 042-36301574 042-111-11-22-33, 042-35751001-6 042-36602327 042-35244832, 042-35244872 042-37569934-5 042-35408506 CONTACT Property No. 18, Block-B, New Muslim Town, Lahore 111-D, Commercial Area, EME Society, DHA Multan Road, Lahore 8-A, Awaisia Cooperative Housing Society, Ghazi Chowk, Link College Road, Township Lahore 435-G-I, Johar Town, Lahore 69-B, Main Boulevard, Gulberg-III, Lahore 9-Main Jail Road, Lahore 2/B, Civic Center, Gulshan-e-Ravi, Lahore Property No. SE-27-R-3, 7 Egerton Road, Lahore 310-Upper Mall, Shahrah-e-Quaid-e-Azam, Lahore 1482/14-15, Day Building, CMH Chowk, Sarwar Road, Lahore Cantt 50, Choburji Chowk, Lahore 172, Ferozepur Road, Ichra, Lahore 11-A, Shadman 1, Jail Road, Lahore BRANCH ADDRESS
  211. Annual Report 2017 08 211 459 461 464 111 121 133 149 154 155 157 163 176 177 200 201 121 122 123 124 125 126 127 128 129 130 131 132 133 134 BRANCH CODE 120 S . NO. Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central I Central I Central I REGION Sadiqabad Branch Burewala Branch Satyana Road Branch GM Abad Branch Jhang Branch Rahim Yar Khan Branch Okara Branch Vehari Branch Bahawalpur Branch 044-2551772, 044-2551773 067-3366401, 067-3366123 062-2730691-3 061-4783391, 061-4783523 061-6214905-9 041-2644481-5 042-35861111, 042-35868010 042-35227087-9 042-35224791-2 CONTACT Sadiqabad Burewala Faisalabad Faisalabad Jhang 068-5702440 067-3773011-3 041-8730405, 041-8730443 041-2691262, 041-2691375 047-7623283-4 Rahim Yar Khan 068-5889411-4 Okara Vehari Bahawalpur Multan Multan Bosan Road Branch Old Bahawalpur Road Branch Faisalabad Lahore Lahore Lahore CITY Civil Line Branch New Garden Town Branch PIA Society Branch Valancia Society Branch BRANCH NAME Property Khata No. 235, Khatooni No.235, situated at Main Water Supply Road, Mouza Mahal 5 C, Multan Road, Burewala, District Vehari Plot No. 721, DGM Block, Batala Colony, Satyana Road, Faisalabad 39-B, Usman Plaza, Sadar Bazar GM Abad, Faisalabad P-10/1/A, Katcheryi Road, Near Session Chowk, Saddar, Jhang 27-Town Hall Opp. City Park, Rahim Yar Khan M.A. Jinnah Road, Okara 47-A, Karkhana Bazar, Vehari 2-Rehman Society, Noor Mahal Road, Bahawalpur 129/1, Old Bahawalpur Road, Multan 1/A-2, Officers Colony, Bosan Road, Multan Bilal Road, Civil Lines Faisalabad Awami Complex, Usman Block No.2, New Garden Town, Lahore Building / Plot 402, Block No. E, PIA Housing Society Road, Near BFC, Lahore 9-A, Commercial Zone Valancia Society, Lahore BRANCH ADDRESS BRANCH NETWORK - CONVENTIONAL
  212. 09 212 Annual Report 2017 BRANCH CODE 202 203 224 225 226 228 229 232 241 242 247 249 254 260 263 264 266 S . NO. 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II REGION Bahawalnagar Branch Chishtian Branch Khanpur Branch Vehari Road Branch Samanabad Branch Rabwah Branch Pakpattan Branch Haroonabad Branch Khanewal Branch Arifwala Branch Mian Channu Branch Toba Tek Singh Branch Depalpur Branch Chichawatni Branch Madina Town Branch Gulshan Market Branch Sahiwal Branch BRANCH NAME BRANCH NETWORK - CONVENTIONAL 044-4540766-68-9 040-5482305-6 041-8723365, 041-8723317 061-6784277-8 040-4224060-4 CONTACT 045-7352307-9 063-225130-2 065-2553610-1 0457-835425-6 065-2664262-3 Bahawalnagar Chishtian Khanpur Multan Faisalabad 063-2279338-9 063-2507809-10 068-5577411-4 061-6241083-4 041-2563671-3 Rabwah, 047-6215530-2 Chenab Nagar Pakpattan Haroonabad Khanewal Arifwala Mian Channu Toba Tek Singh 046-2517801-2 Depalpur Chichawatni Faisalabad Multan Sahiwal CITY 2-B, Ghalla Mandi, Bahawalnagar 143 B-Block, Main Bazar, Chishtian Faysal Bank Ltd, Doabba Road, Khanpur Sheary Commercial Center, Vehari Road, Multan 650 A, Samanabad, Industrial Labor Colony, Faisalabad Plot No. 09, Gol Bazar Darul Saddar, Chenab Nagar, Rabwah College Road, Pakpattan 25/C, Grain Market, Haroonabad Dist., Bahawalnagar Plot No. 75, Block-12, Sir Syed Road, Khanewal 173-D Thana Bazar, Arifwala GT Road near T-Chowk, Mian Channu P-356 A/15-5, ST-6, Chaudhry Park, Farooq Shaheed Road, Toba Tek Singh Shop No. 1& 2, Gillani Heights, Madina Chowk, Depalpur GT Road, Chichawatni Madina Town Branch, Faisalabad 11 Y-block, Gulshan Market, New Multan, Multan Sarwar Shaheed Road, Sahiwal BRANCH ADDRESS
  213. Annual Report 2017 08 213 270 275 280 283 284 285 286 288 293 298 299 341 448 120 135 168 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 BRANCH CODE 152 S . NO. North North North Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II REGION Raja Bazar Branch Satellite Town Branch Haider Road Branch Dera Ghazi Khan Branch Cantt Branch Factory Area Branch Haveli Lakha Branch Pattoki Branch Clock Tower Branch Renala Khurd Branch Liaqauatpur Branch Ahmedpur East Branch Yazman Mandi Branch Gojra Branch Kot Addu Branch Hasilpur Branch BRANCH NAME 046-3512023-5 066-2241093-6 062-2441403-4 CONTACT Rawalpindi Rawalpindi Rawalpindi Dera Ghazi Khan Multan Faisalabad Haveli Lakha Pattoki Faisalabad Renala Khurd Liaqauatpur 051-5530661, 051-5775625, 051-5775623, 051-5775627 051-4424969-7 051-5701018-2 064-2474175-7 061-4588377-9 041-2540186-7 044-4775091-4 049-4421950-3 041-2630971-3 044-2635781-3 068-5792451-2 Ahmedpur East 062-2275214-5 Yazman Mandi 062-2703161-2 Gojra Kot Addu Hasilpur CITY U-I, Iqbal Road, Fawara Chowk, Raja Bazar, Rawalpindi 5th Road, City Shopping Centre, Commercial Market, Satellite Town, Rawalpindi 32, Haider Road, Rawalpindi Cantt, Rawalpindi Block 18, Hospital Chowk, Pakistan Plaza, Dera Ghazi Khan 44/D, Aziz Shaheed Road, Cantt, Multan Factory Area, Tata Market, Faisalabad Head Sulemanki Road, Haveli Lakha, Depalpur, Okara 55-Allama Iqbal Road, Pattoki Plot No. 221/A, Clock Tower, Faisalabad 20-A/2-L, Gulshan Ishaq Colony, Welcome Road, Renala Khurd Shop # 9-10 Abbasia Road, Liaqauatpur 22, Dera Nawab Road, Adjacent Civil Hospital, Ahmedpur East 56/A-DB Bahawalpur Road, Yazman Teshil Office Road Gojra GT Road Kot Addu. 16-D Baldia Road, Hasilpur. BRANCH ADDRESS BRANCH NETWORK - CONVENTIONAL
  214. 09 214 Annual Report 2017 BRANCH CODE 184 214 234 267 278 337 409 166 213 332 204 259 235 190 116 S . NO. 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 North North North North North North North North North North North North North North North REGION Mirpur A.K Branch Dina Branch Chaksawari Branch Dhudial Branch Jhelum Branch F-7/II Branch F-8 Markaz Branch E-11 Branch Ganj Mandi Branch Civil Lines Branch PWD Branch Gulraiz Branch Kalma Chowk Branch Sadiqabad Road Branch Westridge Branch BRANCH NAME BRANCH NETWORK - CONVENTIONAL Mirpur A.K Dina Chaksawari Dhudial Jhelum Islamabad Islamabad Islamabad Rawalpindi Rawalpindi Islamabad Rawalpindi Rawalpindi Rawalpindi Rawalpindi CITY 058-27445100-2 054-4636831 058-27454800 058-27465816 054-4625458 051-111-11-22-33 051-2287412 -3 051-2305109 051-5539115, 051-5535988 051-111321321, 051-5795105 051-5706450-1 051-5596187-9 -102-106 051-5683053-4 051-4257745, 051- 4573741-2 051-5166835-7 CONTACT Opposite Quaid-e-Azam Stadium, Mian Muhammad Road, Mirpur, Azad Kashmir Property No.1880, Al Bilal Plaza, GT Road, Dina Khalid Plaza, Main Bazar, Chaksawari Hussain Shopping Centre, Main Bazaar, Dhudial, AK Koh-e-Noor Bank Square, Old GT Road, Cantt, Jhelum 15, F-7 Markaz, Opposite Fg College For Women, F-7/2, Islamabad NPT Building, F-8, Markaz, Islamabad Royal Plaza, E11/2 Markaz, Islamabad Ganj Mandi, Raja Bazar, Rawalpindi CL / 55-A, Civil Lines, Meo Road, Rawalpindi Atta Arcade, Ground Floor, Main Blwd, Near Police Foundation, PWD, Islamabad Plot No. 27, Gulraiz Scheme II, Rawalpindi Kalma Chowk, Kamalabad, Dhoke Syedan Road, Rawalpindi 72-C, Satellite Town, Sadiqabad Road, Rawalpindi Peshawar Road Westridge, RV Arcade, Rawalpindi BRANCH ADDRESS
  215. Annual Report 2017 08 215 289 162 136 215 405 450 243 294 295 296 300 113 169 194 220 184 185 186 187 188 189 190 191 192 193 194 195 196 197 BRANCH CODE 183 S . NO. North North North North North North North North North North North North North North North REGION G-10 Markaz Branch F-11 Markaz Branch I-10 Markaz Branch Blue Area Branch Dassu Branch Chilas Branch Skardu Branch Gilgit Branch Chakwal Branch Bhalwal Branch Khayyam Chowk Branch Mandi Bahauddin Branch GT Road Branch Kharian Branch Rawat Branch Branch BRANCH NAME Islamabad Islamabad Islamabad Islamabad Dassu Chilas Skardu Gilgit Chakwal Bhalwal Sargodha Mandi Bahauddin Gujar Khan Kharian Rawat Isb CITY 051-2351330, 051-2351353 051-2228142-4 051-4102105-8 051-2275096-9 0998-407301-9 05812-450730-40 05815-456400-10 05811-457380-9 054-3553933 048-6642405 048-483726545 054-6600371 051-3514985, 051-3514996 053-7536067 051-4612114-6 CONTACT 20-A Ground Floor, Sardar Plaza, G-10 Markaz Branch, Islamabad Plot 14, F-11, Markaz, Islamabad 3-G, Monawwar Plaza, C-10, I-10 Markaz, Islamabad 15-West, Jinnah Avenue, Blue Area, Islamabad Shreen Plaza, Dassu, Kohistan Near Madni Masjid, Main Bazar Chilas, District Diamer, Chilas Plot Own Kasra No. 658/25/123, Skamaidan Bazar College Road, Near Old Yadgar Chowk, Skardu ZS Plaza, Shahrah-e-Quaid-e-Azam, Opposite Radio Station Pakistan, Jutial, Gilgit Talagang Road, Opposite Alliance Travels, Chakwal Liaqat Shaheed Road, Bhalwal Khayyam Chowk, Railwar Road, Sargodha Railway Road, Mandi Bahauddin B-III, 215-D, Ward No. 5, GT Road, Gujar Khan Rizwan Plaza, GT Road, Kharian Office No. 1, Riaz Hussain Shah Plaza, Main GT Road, Rawat BRANCH ADDRESS BRANCH NETWORK - CONVENTIONAL
  216. 09 216 Annual Report 2017 BRANCH CODE 262 452 191 192 219 246 248 250 277 411 S . NO. 198 199 200 201 202 203 204 205 206 207 North North North North North North North North North North REGION Fakhr-e-Alam Branch Pipal Mandi Branch Peshawar University Camp Branch Haripur Branch Attock Branch Abbottabad Branch Khyber Bazar Branch University Road Branch Roshan Center, Blue Area II Branch Bara Koh Branch BRANCH NAME BRANCH NETWORK - CONVENTIONAL Peshawar Peshawar Peshawar Haripur Attock Abbottabad Peshawar Peshawar Islamabad Islamabad CITY 091-5285289, 091-5270176-8 091-2592802 091-5610913, 091-5610943 0995-616427-9 057-2602061-2 0992-385919-20, 0992-385925 091-2220471-3 091-5711401-8 051-2275250-2 051-2304041-50 CONTACT 1 Fakhr-e-Alam Road, Cantt, Peshawar Ashraf China Trade Centre, Pipal Mandi, Peshawar Ground Floor, Western Corner, Academic Block - II, University of Peshawar, Peshawar Akbar Arcade, Akbar Khan Plaza, Shahrah-e-Hazara, Haripur Plot No. 169, Shaikh Jaffar Plaza, Saddiqui Road, Attock 841 Farooqabad Main Mansehra Road, Abbottabad 417-D, Outside Bajori Gte, Shoba Chowk, Khyber Bazar, Peshawar 4652-4670, Omer Plaza, Jahangirabad, University Road, Peshawar 78-W, Roshan Center, Jinnah Avenue, Blue Area, Islamabad Shop No. 8,11 Usman Plaza, Main Murree Road, Bara Koh, Islambad BRANCH ADDRESS
  217. 01 Annual Report 2017 Annual Report 2017 217 3134 3121 3135 7 8 9 3052 3123 6 12 3146 5 3042 3107 4 11 3097 3 3144 3018 2 10 3004 BRANCH CODE 1 S . NO. South South South South South South South South South South South South REGION Hyderabad Hyderabad Quetta Gwadar Khuzdar Zhob Quetta Hub Chaman Quetta Quetta Quetta CITY IBB Market Road, Hyderabad IBB Saddar, Hyderabad IBB Quetta Cantt IBB Gwadar IBB Khuzdar, Main Bazar IBB Zhob IBB Hazar Ganji IBB Hub Chowki IBB Chaman, Main Trench Road IBB Shahbaz Town IBB Quetta Qandhari IBB Zarghoon BRANCH NAME 022-613408 022-2730074-7 0316-1180912-3 086-4210448-9 084-8412934-5 082-2412406-7 081-2472927 085-3310104-5 082-6612326 081-28203346 081-2837890, 081-2843005, 081-2820916, 081-2837320 081-2443177, 081-2443265 CONTACT Grand Market, Plot No. C.S. 1284 & 1296, Ward A, Market Road, Hyderabad C.B., 41/474/2, Saddar, Hyderabad Shop No. 12, Jinnah Shopping Complex, Jinnah Road, Quetta Cantt Property bearing Khasra No. 427, Khewat No.191, Khatooni No.191, situated on Airport Road, Gwadar, Balochistan Khasra No. 2142, 2143, 2144 & 2145, Intaqal No. 2053, situated on Rabia Khuzdari Road, Khuzdar, Balochistan Property Bearing No. B/59, Market Road, Zhob, Balochistan Shop No. 8 & 9, Plot No. 8-B & 9-B, New Truck Stand, Commercial Complex, Hazar Ganji, Quetta Plot Bearing Mutation No.1161, Khasra No. 857/2, Khatooni No. 988, Mouza Pathra, Tehsil Hub, District Lasbella Khatooni No. 685, Khasra No. 1283, 1284 & 1285, Main Trench Road, Chaman Plot No. 15-C, Shahbaz Town, Phase II, Quetta Cantt. 1-25/14-15, Qandhari Bazaar, Quetta Near Bukhari Petroleum, New Zarghoon Road, Quetta BRANCH ADDRESS BRANCH NETWORK - ISLAMIC
  218. 218 Annual Report 2017 02 Annual Report 2017 3400 3001 3010 19 20 21 3050 3187 18 24 3172 17 3031 3170 16 23 3171 15 3026 3108 14 22 3083 BRANCH CODE 13 S . NO. South South South South South South South South South South South South REGION IBB Gari Khata IBB Auto Bahn Road BRANCH NAME Karachi Karachi Karachi Karachi Karachi Karachi Jacobabad Hyderabad Dadu IBB Rashid Minhas Road IBB Khy-e-Shahbaz IBB Dhoraji IBB Jodia Bazar IBB Sharfabad IBB Korangi Road, DHA I IBB Jacobabad IBB Cloth Market IBB Dadu Shahdadpur IBB Shahdadpur Hyderabad Hyderabad CITY BRANCH NETWORK - ISLAMIC 021-34832874 021-35342366, 021-35342364 021-34860853-5 021-32463265-7 021-34860997-8 021-35311444 0722-651194-5 0310-1028172 0334-2168591 0332-3355988 022-2720523 022-3821385 CONTACT Plot No. 16, Al Musavvir Crown, Block 10-A, KDA Scheme No. 24, Gulshan-e-Iqbal, Karachi 43-C Khy-e-shabbaz Phase VI DHA Karachi Shop No. G-1 to G-4 Talha Arcade, Plot No. 35/187 Block 7/8, C.P Berar Co. Society karachi Plot No. M.R. 3/18-II-B-143, Market Quarter, Bolton Market, Karachi Shop No. 08, 09, Al Haram Tower 1, Jamaluddin Afghani Road, BMCHS, Sharfabad, Karachi Speedy Towers 129/I & II, Main Korangi Road, Phase I, DHA, Karachi Shop No.1 & 2, Property Bearing C.S. No. 235/22, 235/23,235/24,235/27, all in Ward No. 06 (C) & 670 situated in Ward No.06 (Lar Wah) Town, Jacobabad Plot No.122, Sheet No. 92, C.S. No. 914, Ward-G, Doman Wah Road, near Cloth Market, Hyderabad Plot bearing C.S. No. 615/2, Ward-B, Shahani Mohalla, Dadu Plot Bearing C.S.No. 558, Ward-A, Station Road, Shahdadpur, District Sanghar Plot No. F/810, Ward “F”, Khokhar Mohalla, Station Road, Gari Khata, Hyderabad Plot No.55, Block “BI”, Hyderabad Railway Employee Co-operative Housing Society Ltd, near Mazar Auto Bhan Road, Deh Giddu Bunder, Taluka Latifabad, District Hyderabad BRANCH ADDRESS
  219. 01 Annual Report 2017 Annual Report 2017 219 3060 3080 3115 3189 3087 3043 3078 3103 3098 3099 3188 3046 3063 26 27 28 29 30 31 32 33 34 35 36 37 BRANCH CODE 25 S . NO. South South South South South South South South South South South South South REGION Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi CITY IBB Gulbahar IBB Cattle Colony IBB Gulshan-e-Maymar IBB Malir Cantt, Karachi IBB Model Colony IBB Bahria Town, Karachi IBB Binoria SITE IBB Gulshan Block 6 IBB Landhi No. 6 IBB Clifton Block 9 IBB Moin Steel Market IBB DHA Phase I IBB DHA Phase 2 Ext. BRANCH NAME 021-36729805-8 021-35080121 0317-2697547-9 0316-1180904-5 021-34491623-4 0321-8980742 021-32586605-6 021-34819572-6 021-35030613-6 0310-2840175-6 021-32375643-6 021-35311295 021-35319591 -95-96-97 CONTACT Plot No. 476-478, Ghousia Colony Golimar, Karachi Plot 3-A, Commercial Area, Landhi, Malir, Karachi Plot No.SB-34, Sector-X, Sub Sector-IV, KDA Scheme-45, Gulshan-e-Maymar, Karachi Commercial Plot No. S-20, Bazar Area, Malir Cantonment, Karachi Ground Floor, Plot No. 95, Sheet No. 4, Model Colony, Karachi Bahria Town (Pvt) Ltd, Head Office, Customer Support Center, Super Highway, Karachi Ground Floor, Plot No. LC-2-A/29, Survey Sheet No. 35 P/1-35L/13, Situated at Sindh Industrial Trading Estate Limited, Karachi Plot No. FL-2/4, Block-6, KDA Scheme No. 24, Gulshan-e-Iqbal, Karachi Quarter No. 32/9, Sector/Area No.5-D, Landhi Township, Karachi Showroom No.1, Building No. D-39, Ground Floor, Main Chaudhry Khaliq-u-Zaman Road, Clifton Block- 9, Karachi Shop No.1, Ground Floor, Survery No. 5, Survey Sheet No. R.C.I, Ranchore Quarters, Karachi Plot No.103/C, Commercial Area ‘B’ , Phase-I, DHA, Karachi Ground Floor plot No. 61C 21st Comm Street DHA PH- II ext KHI. BRANCH ADDRESS BRANCH NETWORK - ISLAMIC
  220. 220 Annual Report 2017 02 Annual Report 2017 3064 3066 3068 3137 3136 3186 3086 3096 3131 3151 3190 3059 39 40 41 42 43 44 45 46 47 48 49 BRANCH CODE 38 S . NO. South South South South South South South South South South South South REGION Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi Karachi CITY IBB Nagan Chowrangi IBB Seher Commercial, Karachi IBB Plaza Quarter IBB Zaibunnisa Street IBB Truck Stand IBB West Wharf IBB Orangi Town IBB Al Hilal Society IBB Ishaqabad, Gharibabad IBB Shershah IBB Ayesha Manzil IBB Shah Faisal BRANCH NAME BRANCH NETWORK - ISLAMIC 021-36940461 021-35847244-5 021-32760588-9 021-35140214-5 021-32353525-6 021-32313308-9 021-36660185-6 021-34890354-5 021-36825612-7 021-32580178 021-36360874-5 0333-2267829 CONTACT Plot No. R-410, Sector No.11-C/1, North Karachi Township, North Karachi, Karachi Shop & Hall No. 2, Plot No. 34-C, Commercial Avenue, Seher Lane-4, Phase VII, DHA, Karachi Plot Survay No. 37/20/1 & 2, Survay Sheet, PR No. 1, Sheet E-8, Green Street, Preedy Quarter, Karachi Shop No.02 Survey No.06, Sheet no. SB-7, Main Zaibunnisa street Saddar Bazar Quarters, Karachi. Ground Floor, Plot No.195-C/1, Category A, New Truck Stand, Hawksbay Road, Keamari Town, Karachi Ground Floor, Plot No.21, Warehouse Area, West Wharf, Karachi Shop No.30, Commercial Plot, Sector No.6-E, Orangi Township, Karachi Shop No.4/A, 4/B, UK Appartment, Plot No. Fl-3A Near Al-Hilal Society, Block 14, Gulshan-e- Iqbal, Karachi Plot No. G-1 on Plot No.16-C Survey No. 226 Block C, Situated at Deh Gujro Tapo Sangal Ishaqabad, Liaquatabad, Karachi D-283/21 and D-283/22 SITE, Shershah, Karachi Shop No.1 & 2, Ground Floor, Komal Classic, Plot No. C 10, Block No. 4, Federal B. Area, Near Ayesha Manzil, Karachi Plot No.B-9, Main Electornic Market, Shah Faisal Colony, No.1, Karachi BRANCH ADDRESS
  221. 01 Annual Report 2017 Annual Report 2017 221 3025 3033 3032 3037 56 57 58 59 3051 3008 55 62 3006 54 3040 3421 53 61 3007 52 3038 3081 51 60 3079 BRANCH CODE 50 S . NO. Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I South South South REGION Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Karachi Karachi Karachi CITY IBB Bahria Town IBB Expo Centre IBB Z Block DHA Branch IBB Raiwind Road IBB Township, Lahore IBB Circular Road, Lahore IBB Allama Iqbal Town IBB Azam Cloth Market, Lahore IBB Leads Centre IBB Cavalry Ground IBB Nazimabad IBB Gulberg IBB Sohrab Goth BRANCH NAME 97-Commercial Area, Cavalry Ground, Lahore Ground Floor, Commercial Hall No.2, Arshad Plaza, Plot No. IV-D, 15/1, Nazimabad, Karachi Shop No.05 & 06, Ground Floor, Plot No.BS-1, Block13, Federal B Area, KDA Scheme No.16, Karachi Shop No.05 & 06, Ground Floor, Plot No.1-B/3, Sub Sector 1-B/3, Sector 1-A, KDA Scheme No.33, Karachi BRANCH ADDRESS 042-35452054-8 042-35316023-4 042-35743741-3 042-35320164, 042-35320264, 042-35320360 042-35176051-3 042-37670600-5 042-37811068, 042-37811100, 042-37811074 042-37671351-4 IBB Plot No.5/A, Sector C, Bahria Town, Lahore Plot No.590 Block H-3, Opposite Expo Centre, M.A Johar Town, Lahore 10-Z ,Commercial Phase III, DHA Lahore 131/178, Bohbatein Chowk, Raiwind Road, Lahore Faisal Town 894, D Peco Road, Township, Lahore 33-Circular Road, outside Shah Alam Gate, Lahore 20, Gulshan Block, Allama Iqbal Town, Lahore Faysal Bank, Akbar Block, Rahim Centre, Azam Cloth Market, Lahore 042-35783955-57-9 Leads Centre Branch, Shop No. 4, 4A & 4B, Leads Centre, Main Boulevard, Gulberg-111, Lahore 042-36603412-5 021-36613053-5 0345-3475050 021-36829994-5 CONTACT BRANCH NETWORK - ISLAMIC
  222. 222 Annual Report 2017 02 Annual Report 2017 3132 3130 3127 3139 3160 67 68 69 70 71 3167 3117 66 73 3090 65 3164 3067 64 72 3065 BRANCH CODE 63 S . NO. Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I REGION Sharqpur Sharif Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore Lahore CITY IBB Sharaqpur Sharif IBB Ichra Baba Azam Chowk IBB Shahpur Kanjra IBB Kahna Nau IBB Lake City IBB Bahria Ochard, Lahore IBB Mull Chowk IBB Bund Road IBB Kot Lakhpat IBB Ferozepur Road IBB Azam Cloth Market II BRANCH NAME BRANCH NETWORK - ISLAMIC IBB Kot Lakhpat, LHR (3090) Building No.1, Civic Centre, Quaid-e-Azam Town, Township Scheme, Lahore Mohallah Makhdoom Abad, Chungi Amr Sidhu, Main Ferozepur Road, Lahore Property No. F-1173, Multani Mohalla, Koocha Sodaagran, Chuna Mandi, Lahore BRANCH ADDRESS 056-2590223-9 042-37560029-30 042-37513521-27 042-35274016-7 0317-2015804 0317-2015824-59 042-37860071-76 Building bearing Khasra No.914, Khatooni No.352, Khewat No.152, Main Approach Road, Sharaqpur Shareef, District Sheikhupura Building bearing Khasra No.19846/9044, Khewat No.6753, Khatooni No.12250, Mouza Ichra, Chowk Baba Azam, Lahore Khasra No. 3432, Khewat No. 624, Khatooni No.804 to 836, Opposite to EME Housing Society, Shahpur Kanjra, 17 KM Multan Road, Tehsil and District Lahore Property unit No. S86R-1968, Situated at Mouza Gajumata Tehsil Model Town Lahore Plot No.14, Commercial Block No. 36, Lake City Br.3127. Raiwind Road Lahore Plot No.19, Eastern Block, Bahria Orchards, Main Raiwand Road, Lahore Al Khan Plaza, Near Sunder Industrial Estate Gate, No.1 Mull Chowk, Lahore 042-3714091-95-96 Building No.SWVII-23-C-S-68, Nawan Sanda Main Band Road, Lahore 042-35119959-60 042-35827951-3 042-37656802 CONTACT
  223. 01 Annual Report 2017 Annual Report 2017 223 3180 3194 3088 3166 3110 3173 3054 3056 3073 3089 3116 3149 3030 75 76 77 78 79 80 81 82 83 84 85 86 BRANCH CODE 74 S . NO. Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I REGION IBB Raiwind City BRANCH NAME IBB Kasur IBB Khayaban-e-Jinnah IBB Barki Road IBB DHA Phase IV IBB DHA Phase VI Gujranwala Lahore Phool Nagar Kot Radha Kishan Kasur IBB G.T. Road, Gujranwala IBB DHA Phase III, XX Block IBB Phool Nagar IBB Kot Radha Kishan IBB Allahabad Sheikhupura IBB Sheikhupura Kasur Lahore Lahore Lahore Lahore Talab Saray IBB Abadi Talab Raiwind CITY BIV -9R-220/A, Outside Lahori Gate Railway Road Kasur Building No. 646, Situated at Air Lines Housing Scheme, Main Khayaban-e-Jinnah Road, Lahore Building bearing Khewat No. 41/1, Khatooni No. 245, Khasra No. 512/126/3, Situated at Barki Road, haad bast mouza class mardi, Lahore Pakistan Building No.113, Block CCA, Phase IV-C Commercial, DHA Cantt, Lahore. Plot No. 7, Block - A, Sector CC, Phase VI, DHA Lahore cannt. Property Khewat No. 246/238, Khatoni No. 400, Abadi Sarai Manga, Raiwind Road Talab Sarai, Mouza Manga Uttar, Manga Raiwind Road, Tehsil Raiwind, District Lahore Khewat No.1762, Khatooni No.2162, Situated Mouza Raiwind, District & City Lahore BRANCH ADDRESS Khewat No.230 Khatooni No.399 Salim Khata 81- Canal Nagar, Main Bazar, Phool Nagar Khewat No. 298,Khatooni No. 403 to 418, near Ghala Kot Radha Kishan, District Kasur Main Kasur Road, Allahabad 055-3735531 157- Al Majeed Centre, Street No.14 Mohalla 0317-2015801-803 Plot No.68/A, Block XX, Phase III-C Commercial, Defence Housing Society-DHA, Lahore 049-4510707 049-2380105-107 049-4751288-99 056-3614270-71-73 3-C, College Road Civil Lines, Sheikhupura 049-2760781-3 042-35181779-80 042-36624946 0300-4001737 042-31788513-14 0317-2015827-28 042-35390955-56 CONTACT BRANCH NETWORK - ISLAMIC
  224. 224 Annual Report 2017 02 Annual Report 2017 3104 3133 3143 3142 3175 3179 91 92 93 94 95 96 3176 3129 90 98 3122 89 3178 3119 88 97 3017 BRANCH CODE 87 S . NO. Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I REGION Kotla Arab Ali Khan More Eminabad Rana Town Muridke Gujranwala Gujrat Gujranwala Gujranwala Gujrat Ghakkar Mandi Gujranwala Gujrat CITY IBB Kotla Arab Ali Khan IBB More Eminabad IBB Rana Town IBB Muridke IBB Wapda Town, Gujranwala IBB Rehman Shaheed Road IBB Cantt IBB Peoples Colony IBB Bhimber Road, Gujrat IBB Ghakkar Mandi IBB Satellite Town, Gujranwala IBB Gujrat BRANCH NAME BRANCH NETWORK - ISLAMIC 053-7575425-6 055-3730426 042-37960362 042-37950536 055-486011 053-3510756 055-3861723 055-4244174 053-3600313 055-3880163 055-3261101 053-3535933 CONTACT Khasra No.552, Khewat / Khatooni No. 87/510, Situated Ali Khanat Village, Kotla Arab Ali Khan Khewat No.993, Khatoni No.1151, Khasra No.1862 / 1029 / 1030, GT Road, Main Bank Al-Habib Morr Emnabad Mouza Dhilawali, Tehsil District, Gujranwala Khewat No.690, Khatoni No.767, Salam Khata, Qita 7, Mouza Chak No.39/U.C.C, Tehsil Ferozewala District, Sheikhupura Salam Khata No.15/128, Khewat No.648, Khatooni No.1828, Main G.T Road, Muridke. Plot No.MM-07 Main Market, Block B3, Wapda Town, Gujranwala. Khewat No.213 Khatooni No. 227, Khasra No.63 Rakba Mahal, Aduwal Rehman Shaheed, Gujrat Plot No.10 B, Situated at Super Market Saddar Bazaar Area, Gujranwala Cantt Main Market Peoples Colony, Gujranwala Khewat No. 45, Khatoni No. 58, Khasra No.882, Situated at Ghulab Street, opposite Alena centre Main Bhimber Road Gujrat BV732-B, Main GT Road, Ghakkar Mandi Tehsile Wazirabad Distt Gujranwala. GT Road Moor Eminabad Gujranwala East Circular Road Gujrat BRANCH ADDRESS
  225. 01 Annual Report 2017 Annual Report 2017 225 3105 3138 3158 3159 3016 3162 3181 3072 102 103 104 105 106 107 108 109 Central I 3023 Central I Central I Central I Central I Central I Central I Central I Central I Central I Central I 3023 3109 Central I REGION 3165 BRANCH CODE 101 100 99 S . NO. Lahore Lahore Lahore Lahore Narowal Sialkot Sambrial Sialkot Sialkot Sialkot Daska Lahore CITY IBB Maragzar Housing Society IBB Shahdara Town IBB Manawa, Lahore IBB Zrar Shaheed Road IBB Old Katchery Road, Narowal (RUA) IBB Gohadpur Road, Sialkot IBB Sambrial, Sialkot IBB SIE, Sialkot (Small Industrial Estate) IBB Kashmir Road, Sialkot IBB City Housing , Sialkot (Sub Branch) IBB Daska Road IBB LDA Plaza Johar Town BRANCH NAME 042-35461519 042-3792613132-33-34-35-36 042-36523022, 042-37132736 042-36636801-7 054-2470063-4 052-4296021-2 052-6523964-65 052-3242926 052-4268378 034-56779200 052-3240203-4 042-35447445 CONTACT Main 80, Feet Road, Near Millad Chowk, Maragzar Society, Multan Road, Lahore Property No.N130R-36 / 33 / RH, Near Main Bus Stand, situated at Shahdara Town, Lahore Ship No.2, Plot No.762, G.T Road, Near Al Hafeez Garden, Manawa, Lahore Zarar Shaheed Road , Joray Pull near Ranger Girls High School, Lahore Cantt Khewat No.1443, Khasra No.1057, Khatooni No. 2259, Old Kachary Road, Near Woman Development & Bait-ul-Maal, Narowal Khewat No.52, Khatooni No.141, Khasra No 33, Mouza Gohadpur, Main Gohadpur Road, Sialkot. Property bearing No. B-VII-281, Sialkot Wazirabad Road, Opposite Sabzi Mandi, Sambrial Shop No. B III-8S-222, Ugoki Road, SIE Sialkot Property bearing No.BIII-11S-99/1/A/1RH, Kashmir Road Pacca Garha, Sialkot City Housing Society LTD,shop No.19 , Sialkot Plot No. 651, Daska Road, Pul Aik, Sialkot Building No.452-F, Muhammad Ali Johar Town, Opposite Lahore Development Authority Office, Johar Town, Lahore BRANCH ADDRESS BRANCH NETWORK - ISLAMIC
  226. 226 Annual Report 2017 02 Annual Report 2017 3084 3128 116 117 3183 3047 115 120 3022 114 3161 3157 113 119 3192 112 3145 3156 111 118 3082 BRANCH CODE 110 S . NO. Central II Central II Central II Central II Central II Central II Central II Central II Central I Central I Central I REGION Multan Multan Multan Multan Multan Multan Multan Jaranwala Lahore Lahore Lahore CITY 061-4571768, 061-4570768, 061-4581905-6, 061-4570398, 061-4517408 041-4310724-25 042-35441694-95 042-35961833-66 042-37564024-25 CONTACT IBB Gulghast Colony, Multan IBB Chungi No. 14, Multan IBB Garden Town, Multan IBB Vehari Chowk, Multan IBB Model Town, Multan 061-6511817-18 061-4421170-72 061-6537421-23 061-4480914-15 061-6306156-57 IBB Chowk Shaheedan, Multan 061-4574462-64 IBB Abdali Road, Multan IBB Jaranwala IBB Ferozpur Road II IBB Izmir Town IBB Samanabad BRANCH NAME BRANCH NETWORK - ISLAMIC Property No. 219 Category-C, Town Scheme No. 2, Gulghast Colony, Near Govt. Girls Comprehensive School, Multan. Khewat No. 523/515, Khatooni No. 559, Ghungi No. 14, Mumtazabad Road, Near Ahmedabad, Metro Bus Stop, Mouza Taraf Juma Khalsa, Multan Property No. 7/RH/SH, Main Shershah Road, Garden Town, Multan Shop No. 51 & 52 Madni Commercial Center, Vehari Road, Vehari Chowk, Multan 104 Block-A, Model Town, Multan Property No. 1771/SH, Ward No. VIII-M, Chowk Shaheedan, Multan 80-Abdali Road, Multan Chak No. 127, G.B Khasra No. 4/1/2, Khewat No.3770,Khatooni No, 5358, Jaranwala Property No. S-86-R-405, situated at Ferozpur Road, Naseerabad (Bhabra), Near Samad Rubber Works Factory, Lahore Plot No. 5, Block A, Izmir Town, (Pakistan Expatriates Co-Operative Housing Society Izmir Ltd.) Main Canal Bank Road, Lahore Plot No.381 / N, bearing number SXVI-1-S-32/A/Rh, Main Pounch Road, Samanabad, Lahore BRANCH ADDRESS
  227. 01 Annual Report 2017 Annual Report 2017 227 3085 3118 3120 127 128 129 3141 3061 126 132 3014 125 3140 3021 124 131 3003 123 3150 3199 122 130 3193 BRANCH CODE 121 S . NO. Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II REGION Faisalabad Faisalabad Faisalabad Faisalabad Faisalabad Faisalabad Chiniot Faisalabad Faisalabad Faisalabad Multan Shujaabad CITY IBB Gol Karyana, Faisalabad IBB Peoples Colony, Faisalabad IBB Circular Road, Faisalabad IBB Canal Road, Faisalabad IBB Jhang Road, Faisalabad IBB Millat Chowk, Faisalabad IBB Chiniot IBB Minarwa Road Faisalabad IBB Liaquat Road, Faisalabad IBB Sargodha Road, Faisalabad IBB MDA Chowk, Multan IBB Shujaabad BRANCH NAME 041-2604022-23 041-8717785-86 041-2636341-42 041-8751940-41 041-2651805-06 041-8580824-26 047-6333561-3 041-2416281-85 041-2617403-8, 041-2619025, 041-2627806-7 041-8580381-7 061-4544275-76 061-4425541-42 CONTACT Shop No.72, Gol Karyana Bazar, Near Rail Bazar, Faisalabad Building No.22/A-1 Peoples Colony, Faisalabad Chak No. 212/RB, Shop No.4 & 5, Khasra No. 1038/1, Jinnah Market, Bank square, T.B Hospital, Circular Road Faisalabad Khasra No.16/3/3, Khewat No. 3688-2421, SQNo.83, Chak No.207 RB, Canal Road, Faisalabad P-I, Street Tayran Wali, Partab Nagar, Main Jhang Road, Faisalabad 136 B-II/1 Gulistan Colony, Millat Chowk, Faisalabad Property No.3188/3178, Main Faisalabad Rd, Sagheer Town, Near NADRA Office, Chah Kararri Wala, Chiniot No. 2, Chiniot Shop No.1,2, 46-50, New Grain Market, Minerwa Road, Faisalabad 3-Liaquat Road, Faisalabad Muslim Town, Chak 122/Jb, Main Sargodha Road, Faisalabad Shop No. 1 to 6, Bamazai Arcade, Mouza Taraf Mubarak Awal, MDA Chowk, Multan Khewat No.663/677, Khatoni No. 771, Khasra No. 561/1/2 Situated at Mouza Shujaabad Urban, Jalalpur Road, Shujaabad BRANCH ADDRESS BRANCH NETWORK - ISLAMIC
  228. 228 Annual Report 2017 02 Annual Report 2017 3191 3057 3091 139 140 141 3174 3163 138 144 3092 137 3113 3039 136 143 3200 135 3112 3184 134 142 3182 BRANCH CODE 133 S . NO. Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II Central II REGION Dera Ghazi Khan Jampur Layyah Sahiwal Sahiwal Sadiqabad Lodhran Rahim Yar Khan Bahawalpur Shahkot Samundri Faisalabad CITY IBB Dera Ghazi Khan IBB Jampur IBB Layyah IBB Farid Town, Sahiwal IBB Sahiwal IBB KLP Road, Sadiqabad IBB Lodhran IBB New Ghalla Mandi, RYK IBB Ghallah Mandi Road, Bahawalpur IBB Shahkot IBB Samundri IBB Hajiabad BRANCH NAME BRANCH NETWORK - ISLAMIC 0316-8880959 060-4567316-17 060-6411007-8 040-4270353, 040-4270359 040-4221601-03 068-5700246-47 060-8361654-55 068-5708003, 04 062-2731115-6, 2731118 056-3711935-36 041-3420106-07 041-8580624-25 CONTACT Shops No. 53, 54, Block No.2, Khata No 4312, Khasra No.5514-5515, situated at Katchery Road, Dera Ghazi Khan. Moahamdia Colony near THQ Hospital, Jampur Shama Colony, Opposite BYCO pertol pump, Layyah Khewat No. 6135, Khatoni No. 6209, Khasra No. 1685/390/I, Farid Town, Sahiwal Khata No.923, Khatooni Number 942, Gali Sukh Chain, Mohallah Baloch Ganj, Sahiwal Khata No. 38/38, Khatooni No.41-44, Main KLP Road, Situated at Chak No.10/NP, Sadiqabad Property bearing Khewat No.22-21, Khatooni No. 202-206, situated at Main Multan Bahawalpur Road Near National Bank of Pakistan Near New Ghalla Mandi, Chak No. 72/NP Rahim Yar Khan Plot No.29, Block A, Ghallah Mandi Road, Model Town-B, General Official Colony, Bahawalpur Khewat No.142, Khatoni No.481, Sq. No.36, Kila No.23/1/53/1/1/42, on Main College Road, Near Shahkot Stadium, Shahkot Khewat No.5/5, Khewat No.16/16, situated at Chak No.533 GB, Gojra Road, Tehsil Sumandri, Faisalabad Qita 3, Khewat No.1, Khatoni No.704, situated at Chak No.207 RB, Sheikhupura Road, opposite Millat Square Filling Station, Hajiabad, Faisalabad. BRANCH ADDRESS
  229. 01 Annual Report 2017 Annual Report 2017 229 3126 3153 3197 151 152 153 3053 3034 150 156 3124 149 3011 3019 148 155 3195 147 3009 3185 146 154 3177 BRANCH CODE 145 S . NO. North North North North North North North North North Central II Central II Central II REGION IBB Mirpur AJK IBB Chak No. 51/2-L, Okara IBB Kamalia IBB Okara BRANCH NAME IBB Mansehra Road Abbottabad IBB Mansehra Buner Mardan Mingora Peshawar IBB Buner IBB Bank Road, Mardan IBB Mingora, Swat IBB Dalazak Road, Peshawar Ghourghushti IBB Ghourghushti Mansehra Road Abbottabad Mansehra Muzaffarabad IBB Muzafarabad AJK Mirpur AJK Okara Kamalia Okara CITY Opposite Sethi Masjid Mansehra Road, Abbottabad Rehman Plaza Mansehra , Ground Floor, Tehsil & Distt Mansehra Khasra No.522 Bank Road Muzaffarabad AJK IBB Branch Al Manzar Building, Allama Iqbal Road, Mirpur, AJK Chak No. 51/2-L, Main Depalpur Road, Okara Khewat No.55/55, Khatoni No.62 to 68, Qita 11, Rajan Road, Kamalia. Khasra No. D/2894, Khewat No.2736, Khatoni No.2772, Chak No.1A/4L, D-Block, Near Press Club, Okara. BRANCH ADDRESS 0939-555464-5 0937-870256-258 0946-722011-13 091-2583782 Sawari Bazar, Buner Khatak Plaza, Bank Road, Mardan First & 2nd Floor, Abasindh Tower, Green Chowk, Madyan Road, Mingora, Swat Khasra No. 195, 197, Ground Floor, Malik Plaza, Iqbal Colony, Dalazak Road, Peshawar 0572-542213-14-19 Property No.783-785, Main Bazar, Lakkar Mandi, Ghourghushti. 0992-341780 0997-308303 308304-308305 058-22442391-4 058-27448412 0310-2840156 , 0310-2840168 046-3413805-06 044-2510858-59 CONTACT BRANCH NETWORK - ISLAMIC
  230. 230 Annual Report 2017 02 Annual Report 2017 3055 3058 3069 3071 3125 3154 3070 3024 3044 3048 3077 3147 158 159 160 161 162 163 164 165 166 167 168 BRANCH CODE 157 S . NO. North North North North North North North North North North North North REGION IBB Timergara BRANCH NAME Islamabad Islamabad Islamabad Islamabad Islamabad Gilgit Swabi Mardan Mingora Batkhela IBB D-12, Islamabad IBB DHA Phase II IBB I-8 Markaz IBB Aabpara Market IBB F-10 Markaz IBB Naseem Chowk IBB Amman Chowk Sawabi IBB New Adda Mardan IBB Matta Bazar, Swat IBB Batkhela Mingora Swat IBB Makan Bagh Mingora Timergara CITY BRANCH NETWORK - ISLAMIC 051-2706153 051-5419401 051-4861800-802 051-2870474-76 051-2296962-3, 051-2222873, 051-2809056-8, 051-2222881, 051-2106723 05811-450790 0938-222102,103 0937-870152 0946-790043 0932-411850-2 0946-700801-2 0945-821351-3 CONTACT Plot No.10 Aim Arcade Shop No.1 & 2, D-12 markaz Islamabad PlotNo. 12, Sector E, Jinnah Boulevard, Phase II, DHA,Islamabad Plot No. 33, Aneek Arcade, Sector No. I-8 Markaz, Islamabad Unit No.715, Kamran Restaurant, Aabpara Market, Khayaban-e-Suharwardy, ISB Ground Floor, 7-L, F-10 Markaz, Islamabad PIA Link Road, Airport Road, Main Bazar, Gilgit Khasra No 3356-7, Aman Chowk, Mardan, Swabi Road, Teshil & District Swabi. Khasra No.1564 & 1563, New Adda Branch Mardan Property No.2468, Main Matta Bazar, Tehsil Matta, District Swat, Pakistan Al-Madina Market, Near Khwar,Main bazar, Batkhela Distt: Malakand. Faysal Bank, Saidu Sharif Road, Makan Bagh, Mingora KPK Fakhar Plaza Opposite General Bus Stand Main G.T Timergara Dir Lower BRANCH ADDRESS
  231. 01 Annual Report 2017 Annual Report 2017 231 3106 3111 3148 3169 175 176 177 178 3062 3074 174 181 3075 173 3005 3045 172 180 3196 171 3198 3152 170 179 3102 BRANCH CODE 169 S . NO. North North North North North North North North North North North North North REGION Rawalpindi Rawalpindi Sargodha Malakwal Dinga Sargodha Mianwali Mandi Bahauddin Sargodha Talagang Islamabad Islamabad Islamabad CITY IBB Bahria Town IBB The Mall IBB Faisalabad Road IBB Malakwal IBB DInga IBB Satellite Town, Sargodha IBB Ballo Khel, Mianwali IBB Mandi Bahauddin, Katchehry Road IBB Muslim Bazar IBB Talagang IBB Sector B-17, Main GT Road IBB G-11, Islamabad IBB Kuri Road BRANCH NAME Katchery Road M-B-DIN Ground Floor, Al-Ghafoor Plaza, Muslim Bazar, Sargodha Madina Plaza Chakwal Road Talagang Plot No. 7, lower ground floor, Sea Square, MPCHS, B-17, Main G-T Road, Islamabad Shop No 1& 2, Plot No. 08, Al- Anayat Shopping Plaza, G-11 Markaz, Islamabad Ground Floor, Grandeur Arcade, Khwewat No. 39, Khasra No. 1403/1225/2, Mouza Rehara, Kuri Road, Islamabad BRANCH ADDRESS 051-5412154-55 051-5701054-57 0346-2023024 0546-581208-9-11 0537-401931 048-3213375 Plot No.177, Service Avenue, Intellectual Village, Bahria Town, Phase-7, Rawalpindi Century Towers, 6 The Mall, Rawalpindi Khewat No.167, Khatooni No.195, Ground Floor, Burj Abdul Aziz, Canal View, 47 Pull, Faisalabad Road, Sargodha Khewat No. 455, Khatooni No. 807-815, Badshahpur Road, (Katchery Road), Tehsil Malakwal, Distract Mandi Bahauddin Khewat No.141, Khatooni No.428-462, Khasra 69, Main Bazar, Dhallian Chwok Dinga, Tehsil Kharian, Distt Gujrat 46-A Satellite, Town Sargodha 0459-230675-77-78 Bismillah Plaza Main Bazar ,Ballokhel Road, Mianwali 0546-500947 048-3700850-53 0543-411995 051-5203365, 051-5203366 051-2364106 05402214-15 CONTACT BRANCH NETWORK - ISLAMIC
  232. 232 Annual Report 2017 02 Annual Report 2017 3028 3035 3036 3041 188 189 190 191 3094 3020 187 194 3012 186 3093 3013 185 193 3168 184 3049 3114 183 192 3076 BRANCH CODE 182 S . NO. North North North North North North North North North North North North North REGION Peshawar Peshawar Bannu Peshawar Dera Ismail Khan Kohat Nowshera Charsadda Peshawar Peshawar Rawalpindi Rawalpindi Rawalpindi CITY 091-5200543, 091-5200542 092-8611540-41 091-2593364, 091-2593164 096-6718903-906 092-2522451-52 0923-613400-2 091-6511013/ 091-6511011 091-2590484-7 091-5273093 091-5273182 051-5766108 051-5157540 051-5562448, 051-5562445-47 CONTACT IBB Edgerton Road, Peshawar 091-2593108 IBB Warsak Road, Peshawar IBB Bannu IBB Ashraf Road Branch Peshawar IBB D.I.Khan IBB Kohat IBB Nowshera Cantt IBB Charsadda IBB GT Road Peshawar IBB 6th Saddar Road, Peshawar Cantt IBB Scheme III IBB Adyala Road, Rawalpindi IBB Kashmir Road, Rawalpindi BRANCH NAME BRANCH NETWORK - ISLAMIC Plot No.22-23, Wadud Building, Edgerton Road, (Muhammad Ali Johar Road, Peshawar Property No. 2841,3481, Ground Floor, Noor Plaza, Warsak Road, Peshawar Ex. Gts Chowk, Near Durrani Plaza, Mouza Fatima Khel Bannu Ashraf Road Branch, Peshawar Plot No.19, SurveyNo.79, Near GPO chowk, Circular Road, D.I.Khan Plot No.14 Survey No.253-C, Near Butt Super Store, Katchery Chowk, Hangu Road, Kohat Cantt. Pakistan Amin Tower, Shobra Chowk, G.T Road Nowshera Cantt. Ground Floor Gold Mines Towers Noweshera Rd Charsadda Faysal Bank Ltd Rahim Medical Center Peshawar City Tasnim Plaza, 6th Saddar Road, Peshawar Cantt Ayaz Plaza, Plot No. 77, Chaklala Scheme III, Rawalpindi Khewat No. 521, Khatooni No. 635-637 ,Khasra No. 1428 / 462 / 2 / 2 (3 Qittas),Mouza Dhaman, Adyala Road, Rawalpindi 116 A-C, Kashmir Road, Rawalpindi BRANCH ADDRESS
  233. 01 Annual Report 2017 Annual Report 2017 233 3095 3155 3201 196 197 BRANCH CODE 195 S . NO. North North North REGION Peshawar Khyber Agency Peshawar CITY IBB Canal Road, Peshawar IBB Shahkas Khyber Agency (RUA) IBB PHASE III Chowk, Hayatabad BRANCH NAME 091-5711015, 091-5711225 091-5612043 091-5612043 CONTACT Naseem Plaza, Khasra No. 2464-2451-1102/2, Academy Town, Near Ghandara University, Canal Road, Peshawar Ground Floor, Spinzar Market, Shahkas, Wazeer Dhand,Jamrud Road, Khyber Agency, Peshawar Shop No 5-6, Ground Floor, Waqar Plaza, Gul Abad Colony, Jamrud Road, Phase III Chowk, Hayatabad, Peshawar BRANCH ADDRESS BRANCH NETWORK - ISLAMIC
  234. CODE OF CONDUCT INTRODUCTION Faysal Bank 's reputation is a priceless asset that each of us is responsible for maintaining. Our organisational reputation determines employee loyalty and how we feel about coming to work. The Code of Conduct is designed to guide the personal business ethics to all of us. It applies to every employee of Faysal Bank Limited. In addition, other persons performing services for the Bank may be subject to the Code by Contract or Agreement. You are expected to read this document promptly upon receiving it. Please read and understand the Bank’s policies that relate to sections of this Code. In addition to the guidelines included in the Code, compliance with the requirements of all applicable laws and regulations governing banks must be adhered to. Adherence to the Bank's Code of Conduct is a condition of employment. All employees are required to comply with the Code, and no waivers from its coverage may be granted. IDEOLOGY OF PAKISTAN No employee shall express views detrimental to the ideology or integrity of the Islamic Republic of Pakistan. EMPLOYEES IDENTITY CARD The Bank's employee card gives you a unique identity as a teammate of Faysal Bank Limited. It is compulsory that employees wear the card for identification and security reasons. HEALTH, SAFETY & HYGIENE Faysal Bank is committed to providing a working environment that is both safe and fit for conducting ideal banking business and ensures that health and safety issues are a priority for all banking operations. You shall adhere to applicable health and safety rules and cooperate with the Management to ensure compliance of health and safety legal requirements. Reporting must be made without delay if any potential health / security hazard is seen. Smoking and chewing betel leaf (paan) are strictly prohibited in all the offices of the Bank and at the customer's premises. Customers may politely be informed of this regulation which has been introduced in the interest of public health as well as keeping the work place neat and clean. PROFESSIONAL ATTIRE You are required to follow the dress code that is appropriate for the office and customer interaction, as appended below: Dress Code for Gents Male employees shall wear a suit or dress trousers, dress shirt, suit jacket (obligatory for VP and above, optional for the rest), necktie and dress shoes during all workdays. Shalwar kameez with formal waistcoat or sherwani is also allowed. Employees facing customers in branches open on Saturdays shall also follow this code from Monday through Saturday. Staff with no customer dealing may come on working Saturdays in smart casuals. Jeans, collarless / sleeveless T-shirts, shalwar kameez without waistcoat / sherwani, are strictly not allowed. The above dress code also applies to all internees. 01 234 Annual Report 2017
  235. CODE OF CONDUCT Dress Code for Ladies Female employees should dress elegantly with cultural norms i .e. shalwar kameez, kurta suit, or any modest dressing (loose-fitting dress codes) with shoes or formal flat heels. All the female staff in Islamic Banking Group i.e. Head Office and Islamic Branches (existing and new) are required to wear Hijab (a scarf covering the entire head and hair, and a gown without being ostentatious covering hands up to wrists till toes) while on duty, training and clients' visits, as required by Islamic injunction. Adherence of this dress code is mandatory and shall be communicated in interview sessions with new candidates. The staff is expected to show discretion in their selection of makeup and jewellery. The above dress code also applies to all internees. BUSINESS ETHICS AND COMPLIANCE WITH LAW You are expected to protect and enhance the assets and reputation of Faysal Bank Limited. Our business is based on a strong tradition of trust. It is the reason our customers come to us. Honesty and integrity are cornerstones of ethical behaviour. Trustworthiness and dependability are essential to lasting relationships. Our continued success depends on doing what we promise - promptly, competently and fairly. In our rapidly evolving businesses, each of us is challenged by a complex environment. This often requires fast responses under pressure. No written policy can definitively set forth the appropriate action for all business situations. Accordingly, rather than a set of specific rules, this Code emphasises a standard of ethical conduct that must permeate all of our business dealings and relationships. Individual businesses may issue additional policies that provide more specific guidance about certain practices related to that business. You should speak with your supervisor for more information about any of those policies that pertain to you. You also should pay careful attention to compliance training programs to help you apply the Code in your daily activities. You must discharge your duty in accordance with the Bank's rules and regulations, Islamic Banking practices, internal SOPs, customs and standing instructions, usage and practices pertaining to the Bank's operation, in addition to all applicable laws & regulations imposed by regulatory authorities, along with the Code. Faysal Bank's Threshold and Differentiator Values are governed by Shariah, and the Bank expects its employees to be committed to the cause of Islamic Banking. The Code of Conduct provides guidelines for a variety of business situations. It does not try to anticipate every ethical dilemma you may face. Faysal Bank, therefore, relies on your good judgment. You should consult the Legal Counsel whenever you have a question about the legality of a course of action. You must also exercise the utmost care to ensure that all statements you make, especially those made to the government bodies that regulate our businesses (or with which we do business), are accurate. If you are in doubt about any situation or behaviour, you should speak to your manager, Compliance or your Human Resources representative. Managers, by virtue of their positions of authority, must be ethical role models for all employees. An important part of a manager's responsibility is to exhibit the highest standards of integrity in all dealings with fellow employees, customers, suppliers and the community at large. An equally important responsibility is to obtain employees' commitment and develop their ability to make sound ethical judgments. Managers must communicate the seriousness of the Bank's expectations for ethical conduct and their own personal support of these expectations. Ethical managership includes both fostering a work environment that encourages employees to voice concerns or otherwise seek assistance if faced with potentially compromising situations, and supporting those who speak out. Managers must be alert to any situations and / or actions that may be unethical or potentially damaging to the Company's reputation and to respond appropriately. Managers must Annual Report 2017 02 235
  236. CODE OF CONDUCT avoid giving even implicit approval of such situations and actions . For example, managers must ensure that financial reports and product and service claims are honest and complete. TREATMENT OF TEAM MEMBERS & COLLEAGUES You are expected to treat colleagues, employees and others, with whom you interact, with professionalism, respect and dignity. Treating all employees with respect and dignity is an FBL Value that applies to everyone. Employees working in any department shall speak in such low volume and pitch that the colleague sitting at the adjoining desk should not be disturbed. Talking to colleagues across desks is not encouraged at all, and intercom facility can be utilised for this purpose. This is particularly important for managers who influence the work environment of their areas on a daily basis. Managers must remember that they are role models for their employees and that these employees are likely to treat their colleagues, including employees whom they manage, and others, as they themselves are treated. The Bank expects managers to seek out the ideas of subordinates and to involve them in decisions whenever appropriate. At the same time, once a decision is made, everyone involved is expected to pull together and support it. In addition, you must respect and maintain the confidentiality of information you learn about your employees and colleagues (e.g. salaries, performance reviews, disabilities or leaves of absence). You must not share this information with anyone either inside or outside your department, except as is necessary to perform your job. DEALING & COMMUNICATION WITH REGULATORS All communications with regulators must be handled through the appropriate level / department / function. Where communication with the regulator is part of an employee's job description (e.g. dealing with the regulators for filing regular financial returns which is the responsibility of the respective department sending the regular returns). In these cases, Compliance is only involved if there is a potential breach of regulations. Guidelines of SBP issued in this regard shall be strictly followed. A copy of all non-routine correspondence with the regulators must be provided to the Compliance Function. Meetings with Regulators Any visits to regulators by employees or Senior Management must be notified to and if required may be coordinated by the Compliance Function. Reporting to Regulators Information provided to regulators by FBL must: a) Be accurate; b) Not omit any information that might result in the information provided being misleading; c) Be provided only after all reasonable enquiries are made to ascertain the accuracy and completeness of the information; d) Be reviewed by Head of the Department / Function. Inspection by Regulators Regulators may inspect FBL to enable regulators to inspect its activities. FBL must maintain all records in a form capable of being checked or audited. Employees must ensure that they do not amend, destroy, erase or make further entries to any record or file which is, or may be, relevant to a matter being inspected or investigated by a regulator or to any disciplinary process or appeal process. Employees must cooperate with 01 236 Annual Report 2017
  237. CODE OF CONDUCT any inspection carried out by the regulator to the fullest possible degree . Compliance may coordinate inspections but employees must: a) Make themselves readily available to the inspection team; b) On receipt of a proper request by the regulator, produce to the inspection team any documents, files, and computer data and other material in their possession or control; c) Give the inspection team access, at all times, to FBL's premises and reasonable facilities; to the extent that they are properly requested by the regulator, permit the inspection team to copy any documents or other material in FBL's premises or elsewhere at FBL's expense and to remove copies and hold them elsewhere; d) Answer truthfully and fully all questions put to them by the inspection team. Failure to comply with a request by regulators to produce records and documents, give regulators access to the premises, staff or records of FBL for the purposes of supervision or inspection or to provide information relating to a transaction is an offence for which FBL and Senior Management may be punished by fine or imprisonment. Directors, officers or employees of FBL must comply with any fines, prohibitions, requirements, sanctions, penalties, orders and decisions of any regulator. DEALING & COMMUNICATION WITH CUSTOMERS Employees must ensure that all communications with customers are done in official form and with official contents. In case this is not clear, please contact your supervisor immediately. FBL must manage conflicts of interests appropriately and ensure fair treatment of all clients. Employees must not unfairly or unreasonably place the interests of FBL above those of a client. Employees must ensure they are aware of each client's current financial situation and other relevant facts about the client appropriate to the services provided to or requested by the client. If FBL has control of client assets, it must ensure those assets are properly accounted for and safeguarded in accordance with regulatory, contractual or fiduciary responsibilities. Every employee shall not divulge any information relating to the affairs of its customers except in circumstances in which it is, in accordance with law, practice and customary usage among bankers, necessary or appropriate to divulge such information. EMPLOYEES' DUTY OF NON-DISCLOSURE & TIPPING OFF Anti-Money Laundering (AML) Act of 2010 forbids and makes it a crime, for the Bank or employee to alert a client or potential client (or any party involved in the transaction) to the fact that the Bank is investigating their actions or motives, or to tell them, or any other outside party, that a report of activity identified as suspicious has been prepared and / or filed. The same also applies for the Currency Transaction Reporting (CTR) to Financial Monitoring Unit. Such an act is known as Tipping Off and is a punishable crime under AML Act of 2010 which may lead to fine and / or imprisonment. Such an act may also subject an employee to disciplinary action by the Bank. To protect against a violation of any non-disclosure requirements, employees should adhere to the following guidelines: • Never disclose to the client or any third parties that information has been provided to any department within FBL or a government authority or that any suspicious activity investigation is contemplated or underway. • Never take any action that might otherwise alert the subject that FBL has suspicions that will result in a report or filing a Suspicious Transaction Reporting (STR) and treat the filing of an STR as a confidential matter, even within FBL. Annual Report 2017 02 237
  238. CODE OF CONDUCT CONFIDENTIALITY It is the policy of FBL to honour all applicable laws , including AML, data protection, privacy and Bank confidentiality laws. Copies of STR filings and underlying documentation are maintained as confidential documents. This means they are shared within FBL only on a "need to know" basis. A summary or description of these reports (and supporting materials) may be shared with local regulators as required by applicable law. Generally, regulators are also required to treat as confidential any details that they are provided. In case of any uncertainty as to how to respond to such an inquiry, kindly contact the Compliance Function for guidance. FBL EMPLOYEE REPORTING RESPONSIBILITIES Every employee of FBL is responsible for identifying reportable events and adhering to the CAAML policy with respect to any suspicious activity he / she may observe in his / her job capacity. Consistent with FBL's CAAML policy, employees with client-related duties are responsible for understanding the nature of their clients' transactions, business and source of wealth, and for using currently available FBL resources to monitor their clients' activity for consistency with this understanding. This review activity is a formal means by which Reportable Events may be identified. In addition, employees must be diligent and alert in all aspects of their job functions, including but not limited to the use and review of any available reports and information databases, and must use common sense and experience to guide them in asking questions and spotting irregularities. When a possibly suspicious activity or potential legal or regulatory violation is observed, the employee is responsible for calling the situation to the attention of his / her supervisor, who will notify the Functional Head and the Compliance Function. In extremely sensitive situations or in any instance where an employee is uncomfortable working with their supervisors on such matters, he / she may directly report to the Compliance Function. Failure to follow the STR policy when a Reportable Event occurs is a breach of policy and may subject an employee to disciplinary action. KNOW YOUR CUSTOMER AND ANTI-MONEY LAUNDERING Every client must be owned by a relationship officer of the business line. Such relationship officer will be responsible for the client's KYC, due diligence and ensuring that FBL is safeguarded against criminal activities like money laundering, terrorist financing, drug trafficking, etc in this regard. We must ensure that we have sufficient information about our customers to satisfy ourselves as to their reputation, standing and the nature of their business activities. Money laundering is the process by which banks are used as vehicles to disguise or “launder” the proceeds of criminal activity. Such activities undermine a bank's integrity, damage its reputation, deter honest customers and expose a bank to severe sanctions. Faysal Bank fully supports the international drive against money laundering and is committed to assisting relevant authorities in preventing money laundering. Faysal Bank's success on this front is dependent upon the cooperation of all employees. Everyone must exercise prudence and vigilance when assessing potential new clients, handling client requests and processing client transactions. With everyone's commitment and determination, it is possible to translate the spirit of FBL's Core Values and business principles into daily practice, continue to protect the integrity of the banking system, and maintain the Bank's reputation as a respectable and trustworthy institution. Accordingly, the following precautionary steps are to be adopted in this connection: • The identity of every new customer with whom we deal must be established from reliable identifying documents. • If you suspect that funds stem from illegal activities, this must be reported internally to your Reporting Supervisor or Compliance who will liaise with competent authorities. 01 238 Annual Report 2017
  239. CODE OF CONDUCT • Customers should not be warned when information relating to them is being reported. • Detailed requirements on Bank's due diligence policy and procedures are to be followed as given in the Compliance Manual. INSIDER TRADING Insider trading involves the improper use of unpublished price sensitive information for personal benefit when dealing in securities. Part X of the Securities Act, 2015 prohibits every person to indulge in insider trading. Employees who have privileged price sensitive information and are due to other means, as defined under the said Act, considered to be an insider, should not indulge themselves in insider trading. Those found guilty of contravening the provisions of the Act can be awarded imprisonment up to three years or obliged to pay fine as well as compensation to any person who may have suffered on account of such insider trading. SPECULATIVE DEALING Personal dealing in speculative transactions can entail employees with risks to their financial standing, distract them from the performance of their duties and impact the reputation of the Bank. For these reasons, employees should not engage in speculative transactions for their personal account. Accordingly, no employee shall: • Borrow money from or in any way place himself / herself under pecuniary obligation to a broker or money lender / financier or any firm or persons having dealings with the Bank; • Buy or sell stocks, shares, commodities, foreign exchange or securities of any description without funds to meet the full cost thereof; • Lend / finance money in his private capacity to a constituent of the Bank or have personal dealings with a constituent for the purpose of sale of bill of exchange, Government paper or any other securities. In this connection, employees are advised to note that borrowing money from any source of placing themselves under pecuniary obligations beyond the capacity to repay or honour the commitment will be tantamount to speculative activity. If employees are unclear whether any particular transaction / activity could be considered speculative they should seek guidance from their Executive Officer or Compliance. Please refer to the Compliance Manual Chapter 29 - Personal Account Dealing Policy on the Intranet for details and for adherence. CONFLICT OF INTEREST You must be alert to any situation that could compromise the position of trust you hold as a Faysal Bank employee, and avoid any kind of conflict between your personal interests and those of Faysal Bank. You may engage in outside activities that do not conflict with the interests of the Bank, interfere with the responsibilities of its employees, or damage or misuse the reputation, trademarks, relationships, confidential information or other property of the Bank. The Bank has adopted the following guidelines to protect both the Bank and employees against conflicts of interest, and from situations that create a perception of impropriety. From time to time, situations will arise that are not clear-cut. If you are uncertain about the propriety of your conduct or business relationships, consult your supervisor, Legal or Compliance. You should never use your position with the Bank, or information acquired during your employment, in a manner that may create a conflict - or the appearance of a conflict - between your personal interests and the interests of the Bank Annual Report 2017 239 02
  240. CODE OF CONDUCT or its customers and clients . You should also be aware that actual or potential conflicts of interest can arise not just from dealings with external parties, such as customers or suppliers, but also from relationships or transactions with managers, subordinates or other employees. If a conflict or potential conflict arises, you must report it immediately to your manager or the Compliance Function, who will review it and any such discussion will be held in confidence to the extent possible and in a spirit of cooperation. Employees must ensure that their personal interests do not conflict with the duties which are owed to the Bank or which the Bank owes to its customers. This includes engaging in any of the following activities without the prior written approval of the Management: • Becoming personally involved in any transaction of the Bank / Group. • Negotiating or contracting on behalf of the Bank with an entity in which you or a relative has an interest. • Accepting any employment (whether part time, temporary or other), retainership, consultancy, directorship or partnership outside the Bank except with the approval / allowance of the Bank's concerned authorities as and if required. If you are in doubt about whether a certain circumstance might create a conflict of interest, you may consult the Compliance for guidance before taking action. PERSONAL INVESTMENT POLICY This policy covers Members of Investment Committee and Members of Investment Staff (Back Office) who are required to disclose their personal investments in stocks, shares and other securities. Accordingly, a staff member in the above category is required to obtain prior permission in writing from the Chief Executive for personal investments making sure that there is no case of conflict of interest. A copy should also be forwarded to Compliance. In case prior approval could not be obtained for any reason, investment made should be reported to Compliance as and when investment is made. EXTERNAL FUNCTIONS You may not simultaneously work for any concern that does business with or competes with the Bank without the approval of the Head HR and / or authorities concerned as and if required. You must disclose the following outside positions to the HR, who will determine if a conflict exists: • A member of your immediate family or household works for, and holds a position that can influence decisions at a firm that directly competes with or does business with the Bank. • A member of your immediate family or household holds a position that interacts with positions of authority at a firm that directly competes with or does business with the Bank. • Further, you may not serve as a director, trustee, officer or similar position (paid or otherwise) of any business, other than with the Bank or one of its subsidiaries, without prior approval of the HR and / or authorities concerned as and if required. This rule does not apply to charitable, civic, religious, educational, public or social organisations, or to residential boards whose activities do not conflict with the interests of the Bank and do not impose excessive demand on your time. • An employee must obtain the consent of Corporate Communication and Human Resources before submitting a work for publication, articles, or making a public speech / media presentation / interview in either medium. 01 240 Annual Annual Report 2017
  241. CODE OF CONDUCT BOOKS AND RECORDS ACCURACY AND COMPLETENESS You must ensure that the accounting and financial records of the Bank meet the highest standards of accuracy and completeness . Reporting accurate, complete and understandable information about the Bank's business, earnings and financial condition is an essential responsibility of all employees. It is not the exclusive responsibility of the Bank's accounting personnel to ensure that the Bank's accounting and financial records are accurate and complete. If you have reason to believe that any of the Bank's books and records are not being maintained in an accurate or complete manner, you are expected to report this immediately to your manager, the Chief Financial Officer, Compliance or the HR. Similarly, the Bank relies on you to speak up if you feel that you are being pressured to prepare or destroy documents in violation of Bank policy. You also should speak up if you become aware that any misleading, incomplete or false statement has been made to an accountant, auditor, attorney or government official in connection with any audit, examination or filing with a government agency, such as the State Bank of Pakistan or Securities and Exchange Commission. PROTECTION AND PROPER USE OF BANK'S PROPERTY & INFORMATION As Faysal Bank's employee, you are entrusted with protecting the Bank's property. Acts of dishonesty against the Bank or its customers involving theft, destruction or misappropriation of money, property, office equipment, information, data, devices, supplies or any other items of value are, of course, prohibited. Falsification, alteration or substitution of records for the purpose of concealing or aiding such acts are also prohibited. If you suspect someone has committed such an act or you witness such an act, you should report it immediately to Security. If you prefer, you can speak informally and confidentially with Compliance. You also must protect the use of the Bank's computer equipment, including Faysal Bank's domain email, public email, customers' information or customers' data, and Internet access. The email should only be used for official purpose. All communication and information are the property of the Bank and the Bank reserves the right to retrieve message contents for the purpose of monitoring. You are, therefore, accountable for all activities under your password. You must remember that the Management has zero tolerance on both password sharing (Ref. IT Security Policy Section 10.3.1 present at Bankopedia) and key compromise (esp. vault and ATM keys / combination). You should additionally follow the Bank's policies and procedures in connection with the disposition of personal computers, personal digital assistants, mobile phones or other Bank assets. You should review the Bank's policies present at the Banks Intranet Portal. GIFTS AND ENTERTAINMENT It is the policy of the Bank that gifts are not to be accepted from customers or suppliers and potential donors must be diplomatically informed of this. However, if the employees are offered gifts, other than minor items, they should politely but firmly decline them, referring to the Bank policy, if necessary. Exceptions In cases where refusal of a gift would be regarded as an affront or it would be impractical or impossible to return the gift then in certain cases it can be accepted provided the gift is: • • • Not in the form of cash, Clearly not in return for any consideration or in the anticipation of such, Of nominal value only. Annual Report 2017 02 241
  242. CODE OF CONDUCT Most of the Takaful coverage companies to generate business offer a number of inducements to their clients . The employee dealing with such entities for coverage of the Bank employees, assets, transit items or obtaining policies on behalf of customers for trade finance or consumer products must exercise due care and caution; negotiate the best advantageous coverage at best prices without any consideration for self. This due care and cautiousness must be adhered in case of valuators / contractors and consultants as well. Any departure or proposed departure not included above must be reported through the line to the Compliance Function for a ruling on acceptance: Employees are allowed to accept only minor items such as small number of inexpensive items like calendars, diaries, desk pads, pens, etc. The Department Heads / Line Managers / Compliance should be consulted if any doubts are encountered. If gifts are delivered at their houses or workplace and cannot be easily returned without incurring embarrassment, they must hand over gifts to the Department Head / HRD, which will consider the most appropriate ways of dealing with them. Personal Gifts by Employees Personal friendships developed on the basis of banking relationships can sometimes encourage the exchange of gifts for personal account. Care must be taken in this regard as it must be realised that, unfortunately, what may be offered simply as a token of friendship and goodwill, may be construed, in some circumstances, as not only a breach of ethics but even a criminal action. Presenting Gifts Gifts may be given for promotional purposes or on special occasions where it may be appropriate while remaining within the jurisdiction of FBL management. The context in which such gifts are given is important and care must be exercised to avoid any such event that could be misinterpreted or construed as bribery or corruption. No lavish entertainment offered or extended to any government or private official, agent / supplier or employee. Their entertainment is limited to routine lunches or dinners occurring during the conduct of regular business and that only to the extent that it is not in violation of the policy of the government, private entity involved and has duly been sanctioned by the Bank. Invitations to customers’ / suppliers’ social events, sports or theatre tickets, golf outings, non-business dinners etc should be avoided. It must be ensured that the entertainment against the Islamic injunctions (like music) must be avoided. CONFIDENTIAL INFORMATION AND TRADE SECRETS You must protect confidential information and trade secrets, and prevent such information from being improperly disclosed to others inside or outside the Bank. You may learn, to a greater or lesser degree, facts about the Bank's business plans, operations or “trade secrets” that are not known to the general public or to competitors. Sensitive information such as customer data, the terms or fees offered to particular customers, product manuals, technical secrets, confidential research work, technical processes, operating manuals, marketing or strategic plans, proprietary or products and systems developments are examples of the Bank's confidential information and trade secrets. Similarly, during the course of performing your responsibilities, you may obtain information concerning possible transactions with other companies or receive confidential information about other companies. You may not disclose any confidential information or trade secret of the Bank to others or use any such information for your own or someone else's benefit. Within the Bank, confidential information and trade secrets should be divulged only to other employees who need the information to carry out their business responsibilities. 242 01 Annual Report 2017
  243. CODE OF CONDUCT You also are responsible for maintaining the confidentiality of sensitive employee information , such as salary, bonus or performance appraisal data. These obligations apply both during and subsequent to your employment with the Bank. You must be careful not to discuss such matters with family members, business or social acquaintances, or in places where you can be overheard, such as taxis, elevators, the Bank cafeteria or restaurants. In addition, you should not communicate or transmit confidential or sensitive information through external online communications services, such as the Internet. You are also required to maintain “Clean Desk”, leaving no confidential information on the working place / desk unattended. The confidentiality of non-banking information must also be respected regardless of how an employee comes across it. If an employee receives or holds information which he / she knows or believes is confidential to another person / organisation, he / she should not disclose that information to anyone else. The distinction between this information and the other is not always clear. If in doubt, consult Human Resources. BREACHES & DISCIPLINARY ACTION In the event of an employee committing breach of this Code or any of the provisions of Employment Rules or contravenes instructions / orders issued to him / her in connection with official work or who displays negligence, inefficiency, indolence or criminal (riotous) behaviour or does anything detrimental to the interests of the Bank or is guilty of any other act of fraud, misconduct or insubordination, the Competent Authority, in its sole discretion and without limitation may impose on him / her one or more of the following penalties: • • • • • • Postponement or stoppage of increment or promotion. Recovery from pay of the whole or part of any pecuniary loss caused to Bank by the employee. Demotion to a lower stage of pay in his / her Grade or to a lower Grade. Dismissal from service, which will involve permanent disqualification for future employment in the Bank without notice period. Termination from service. Compulsory retirement from service. Annual Report 2017 02 243
  244. 244 Annual Report 2017
  245. GLOSSARY OF TERMS ACCRUAL BASIS Recognizing the effects of transactions and other events when they occur without waiting for receipt or payment of cash or its equivalent . BONUS ISSUE (SCRIP ISSUE) The issue of new shares to existing shareholders in proportion to their shareholdings. It is a process for converting a company’s reserves (in whole or part) into issued capital and hence does not involve an infusion of cash. CAPITAL ADEQUACY RATIO The relationship between capital and risk weighted assets as defined in the framework developed by the State Bank of Pakistan. CASH EQUIVALENTS Short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. CASH RESERVE RATIO (CRR) Cash Reserve Ratio is the amount of funds that the banks have to keep with SBP. CHARITY Means monetarily helping those in need. Customer is asked to undertake that if he/she fails to pay rent on due date, he/she will pay certain amount to a charity, which will be administered through the Islamic Bank. CONTINGENCIES A condition or situation existing at Balance Sheet date where the outcome will be confirmed only by occurrence of one or more future events. COMMITMENT TO EXTEND CREDIT Credit facilities approved but not yet utilized by the client as at the Balance Sheet date. COST / INCOME RATIO Operating expenses as a percentage of total income. CORPORATE GOVERNANCE The process by which corporate entities are governed. It is concerned with the way in which power is exercised over the management and direction of entity, the supervision of executive actions and accountability to owners and others. DEFERRED TAXATION Sum set aside for tax in the Financial Statements that will become payable in a financial year other than the current financial year. DIMINISHING MUSHARAKAH In Diminishing Musharakah, the financier and the client participate either in joint ownership of a property or equipment whereby the share of the financier is divided into a number of units and the client undertakes to purchase these units one by one periodically until he is the sole owner of the property/equipment. Annual Report 2017 245
  246. GLOSSARY OF TERMS DIVIDEND A sum of money paid by a company to its shareholders out of it profits (or reserves). DIVIDEND PAYOUT RATIO Dividends (cash dividend plus bonus shares) paid per share as a fraction of earnings per share (EPS). DIVIDEND YIELD RATIO Dividend per share divided by the market value of share. DERIVATIVES Derivative is a financial instrument or other contract which has the following characteristics: (a) its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (sometimes called the ‘underlying’); (b) it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; and (c) it is settled at a future date. EARLY TERMINATION CHARGES If the customer wishes to terminate the Ijarah Agreement before the agreed period, the customer has an option to buy the asset on the pre-agreed purchase price. EARNINGS PER SHARE Profit after taxation divided by the weighted average number of ordinary shares in issue. EFFECTIVE TAX RATE Net tax charge divided by the profit before taxation. FINANCE LEASE A contract whereby a lessor conveys to the lessee the right to use an asset for rent over an agreed period of time which is sufficient to amortise the capital outlay of the lessor. The lessor retains ownership of the asset but transfers substantially all the risks and rewards of ownership to the lessee. FORCED SALE VALUE (FSV) Forced Sale Value means the value which fully reflects the possibility of price fluctuations and can currently be obtained by selling the mortgaged / pledged assets in a forced / distressed sale conditions. FORWARD EXCHANGE CONTRACT Agreement between two parties to exchange one currency for another at a future date at a rate agreed upon today. GUARANTEES An agreement involving a promise by a person (the guarantor) to fulfill the obligations of another person owning debt if that person fails to perform. 246 Annual Report 2017
  247. GLOSSARY OF TERMS HIBAH Gift HISTORICAL COST CONVENTION Recording transactions at the actual value received or paid . IAS International Accounting Standards IFRS International Financial Reporting Standards IFRIC International Financial Reporting Interpretation Committee INCOME IN SUSPENSE Income suspended on non-performing financing. INCOME SPREAD Represents the difference between the average rate of income earned and the average rate of cost paid on funds. IJARAH Letting on lease. Technically, sale of a definite usufruct in exchange for a definite reward. Commonly used for wages. It also refers to a mode of financing adopted by Islamic banks. It is an arrangement under which an Islamic bank leases equipment or a building to a client against an agreed rental. ISTISNA Istisna is a type of sale transaction where the buyer places an order with the seller to manufacture certain asset and the sale is completed upon delivery of the asset to the buyer. Istisna is used for providing financing facility for transactions where customer is involved in manufacturing or construction. Under Istisna Financing transaction, the client manufactures goods for the Bank and upon delivery of the goods to the Bank, the client is appointed as Agent of Bank to sell those goods in the market. LIQUID ASSETS Assets that are held in cash or in a form that can be converted to cash readily, such as deposits with other banks, bills of exchange and treasury bills. LOAN LOSSES AND PROVISIONS Amount set aside against possible losses on loans, advances and other credit facilities as a result of their becoming party or wholly uncollectible. MATERIALITY The relative significance of a transaction or an event the omission or misstatement of which could influence the economic decisions of users of financial statements. MUDARIB A working partner; the partner who provides entrepreneurship and management in a Mudarabah agreement. Annual Report 2017 247
  248. GLOSSARY OF TERMS RABB-UL-MAAL A person who invests capital in a Mudarabah . REPURCHASE AGREEMENT Contract to sell and subsequently repurchase securities at a specified date and price. REVERSE REPURCHASE AGREEMENT Transaction involving the purchase of securities by a bank or dealer and resale back to the seller at a future date and specified price. RETURN ON AVERAGE EQUITY Net profit for the year, less preference share dividends if any, expressed as a percentage of average ordinary shareholders’ equity. REVENUE RESERVE Reserves set aside for future distribution and investment. RIBA / INTEREST Riba literally means increase, addition, expansion or growth. It is, however, not every increase, or growth, which has been prohibited by Islam. In the Shariah, Riba technically refers to the premium that must be paid without any consideration in a loan transactions. According to the jurists of Islam this definition covers the two types of Riba, namely Riba Al Fadhl and Riba Al Naseah. NET ASSETS VALUE PER SHARE Shareholders’ funds divided by the number of ordinary shares in issue. NET DIVIDENDS Dividend net of withholding tax. NET INTEREST INCOME The difference between what a bank earns on assets such as loans and securities and what it pays on liabilities such as deposits, refinance funds and inter-bank borrowings. NPLS TO GROSS ADVANCES / LOANS Represents the infected portfolio of the bank and is calculated by dividing the total non-performing loans by gross advances. NON PERFORMING LOAN - OAEM CATEGORY Where markup/interest or principal is overdue by 90 days for agricultural financing. NON PERFORMING LOAN - SUBSTANDARD CATEGORY Where markup/interest or principal is overdue by 90 days or more from the due date. NON PERFORMING LOAN - DOUBTFUL CATEGORY Where markup/interest or principal is overdue by 180 days or more from the due date. 248 Annual Report 2017
  249. GLOSSARY OF TERMS NON PERFORMING LOAN - LOSS CATEGORY Where mark-up /interest or principal is overdue by one year or more from the due date and Trade Bill (Import/ Export or Inland Bills) are not paid/adjusted within 180 days of the due date. OFF BALANCE SHEET TRANSACTIONS Transactions that are not recognized as assets or liabilities in the balance sheet but which give rise to contingencies and commitments. PRICE EARNINGS RATIO (P/E RATIO) Market price of a share divided by earnings per share. PRUDENCE Inclusion of a degree of caution in the exercise of judgment needed in making the estimates required under conditions of uncertainty, such that assets or income are not overstated and liabilities or expenses are not understated. RETURN ON AVERAGE ASSETS Profit after tax divided by the average assets. RISK WEIGHTED ASSETS On Balance Sheet assets and the credit equivalent of off balance sheet assets multiplied by the relevant risk weighting factors. SHAREHOLDERS’ FUNDS Total of Issued and fully paid share capital and revenue reserves. SHARIAH BOARD Shariah Board means a board of members constituted by the Bank pursuant to the regulations of the State Bank of Pakistan to oversee and supervise the Islamic banking operations of the Bank. SHARIAH-COMPLIANT An act or activity that complies with the requirements of the Shariah. STATUTORY RESERVE FUNDS A capital reserve created as per the provisions of the Banking Companies Ordinance, 1962. SUKUK A sukuk is an Islamic financial certificate, that complies with Shariah. Sukuk represents undivided shares in the ownership of tangible assets relating to particular projects or special investment activity. TAKAFUL Islamic Insurance. A scheme of mutual support that provides coverage to individuals against hazards of falling into unexpected and dire need. WEIGHTED AVERAGE COST OF DEPOSITS Percentage of the total cost / interest expensed on average deposits of the Bank for the period. Annual Report 2017 249
  250. JAMA PUNJI 250 Annual Report 2017
  251. FORM OF PROXY I / We, ___________________________________________________________________________________________of _____________________________________________________________________________________________a member(s) of FAYSAL BANK LIMITED and holding ______________________________________ ordinary shares, as per Register Folio No. / Participant’s ID / CDC sub Account No. ____________________________________ hereby, appoint _____________________________________________________________ Folio No. / Participant’s ID / CDC sub Account No_______________________________________________________________________or failing him / her ____________________________________ of ______________________________________________ as my / our proxy to vote and act for me / us on my / our behalf at the Annual General Meeting of the Bank that will be held on March 28, 2018 and at any adjournment thereof. Signed day of , 2018 Witness: 1. 2. Revenue Stamp Rs. 5/Signature of Member(s) Notes: 1. The Share Transfer Books of the Bank shall remain closed from March 22, 2018 to March 28, 2018 (both days inclusive). Transfer received at the Shares Registrar of the Bank, by the close of business on March 21, 2018 will be treated in time for attending Annual General Meeting that will be held on March 28, 2018 in Karachi. 2. A member entitled to attend and vote at the Meeting may appoint another Member as per his / her proxy to attend and vote for him / her provided that a corporation may appoint as its proxy, a person who is not a member, but is duly authorised by the corporation. Proxies must be received at the Registered Office of the Bank not less than 48 hours before the time of the holding of the Meeting. 3. Members are required to timely notify any change in their address to Bank’s Shares Registrar M/s. Central Depository Company of Pakistan Limited, CDC House, 99-B, Block-B, S.M.C.H.S., Main Shahrah-e-Faisal, Karachi. 4. CDC Account Holders will further have to follow the under mentioned guidelines as laid down in Circular 1 dated January 26, 2000 issued by the Securities and Exchange Commission of Pakistan. 01 Annual Report 2017 Annual Report 2017 251
  252. FORM OF PROXY A . For attending the Meeting: i) In case of individuals, the account holder or sub account holder and / or the person whose securities are in group account and their registration detail are uploaded as per the regulations, shall authenticate his / her identity by showing his / her original Computerised National Identity Card (CNIC) or original passport at the time of attending the Meeting. ii) In case of corporate entity, the Board of Directors’ resolution / power of attorney with specimen signature of the nominee shall be produced (unless it has been provided earlier) at the time of Meeting. B. For appointing proxies: i) In case of individuals, the account holder or sub account holder and / or the person whose securities are in group account and their registration details are uploaded as per the regulations, shall submit the proxy form as per the above requirement. ii) The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned on the form. iii) Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form. iv) The proxy shall produce his / her original CNIC or original passport at the time of the Meeting. v) In case of corporate entity, the Board of Directors’ resolution / power of attorney with specimen signature shall be submitted (unless it has been provided earlier) along with proxy form to the Company. 252 Annual Report 2017 02 Annual Report 2017
  253. Annual Report 2017 02 235
  254. 2018 28 2018 2018 01 236 21 2018 28 2018 22 2018 28 Annual Report 2017
  255. ‫‪ .2‬اسالمی بورٹ قول تو میں اضافے کے بٹش یظر‪،‬موجودہ پیموں میں سے افرادی وسانل کو چصوصی طور تر اسالمی عقود کے لنے مخ یص کرنا چا ہنے‪،‬اس کے‬ ‫ساتھ ساتھ پنے مالزمین کی یقرری کے دوران اسالمی ذہن رکھنے والے‪ ،‬اسالمی فاپناتس کے بٹشہ ورانہ نچرنہ اور ترپ یت کے چامل افراد کو ترحبح د پنی چا ہنے۔‬ ‫‪ .3‬جونکہ نحول اور تھنالؤ کے عمل کو مسیعدی سے چاری ر کھنے کے لنے بینک کو اسالمی بی یکاری کی ذہی یت رکھنے والے بٹشہ ورانہ ماہرین کی ضرورت ہے‪،‬‬ ‫اس لنے مالزمین کی ضالحیت اور اہلیت کو تڑھاتے والے پنے تروگراموں کو تسلسل کے ساتھ چاری ر کھنے کی ضرورت ہے۔ تربینی کلینڈر اندرونی طور تر‬ ‫کام کرتے والے مالزمین کی مؤتر ترپ یت تر مسیمل ہونا چا ہنے اور اس کے ساتھ ساتھ اعلی اپ یطامیہ کو تھی نافاعدہ تربینی کلینڈر میں سامل کرنا چا ہنے‪،‬مزند‬ ‫ترآں‪ ،‬ضارفین اور عام لوگوں میں سعور اور آ گاہی پندا کرتے کے لنے تھی اس طرح کی تشستوں کا ایعقاد کرنا چا ہنے۔‬ ‫‪ .4‬ترکت اسالمک بینکنگ کی ترانچز میں مسلسل اضافے کو بٹ ِش یظر رکھنےہوتے‪،‬ترکت اسالمک بینکنگ کی تراڈکٹس کی استہاری مہم میں وسعت التے کی‬ ‫ضرورت ہے۔‬ ‫وہللا سبحانہ ویعالی اعلم‬ ‫‪--------------------------------------‬‬‫مقنی مجمد محب الحق ضدیقی‬ ‫چنٹرمین شریعہ بورڈ‬ ‫‪------------------------‬‬‫ع‬ ‫ڈاکٹر مقنی چلنل اجمد ا ظمی‬ ‫ممٹر شریعہ بورڈ‬ ‫‪-------------------------‬‬‫مقنی جواجہ بور الحشن‬ ‫رتزنڈپٹ شریعہ بورڈ ممٹر‬ ‫نارنخ‪ ۱۶ :‬فروری ‪۲۰۱۸‬ء | ‪ ۲۹‬مادی ّ‬ ‫االول ‪۱۴۳۸‬ھ‬ ‫ج‬ ‫پ‬ ‫‪237‬‬ ‫‪Annual Report 2017‬‬
  256. ‫آقس کے مالزمین اور ان کے معاون سعیہ چات کی اہلیت اور ضالحیت میں اضافہ کرنا تھا۔ بینک کے سعی ِہ ‪ L &D‬تے میبحب مالزمین کے لنے مخنلف نٹرونی اداروں‬ ‫کے بوسط سے تھی تربینی تروگرام م یعقد کنے۔‬ ‫شریعہ یورڈ کی رائے‬ ‫م‬ ‫اگرجہ بورڈ آف ڈاترنکٹرز اور اعلی اپ یطامیہ کمل طور سے اس نات کو یقینی پناتے کے ذمہ دار ہیں کہ ف یضل بینک لمینڈ‪،‬ترکت اسالمک بینکنگ کے ٹمام امور اس طور تر‬ ‫انحام د پنےچابیں کہ وہ ہمہ وفت شرعی اصولوں کے عین مطابق ہوں ناہم‪ ،‬ہم سے انک ربورٹ بٹش کرنا مطلوب ہے جو کہ ف یضل بینک لمینڈ‪،‬ترکت اسالمک بینکنگ‬ ‫کے مجموعی ماجول کے شرعی اصولوں کے مطابق ہوتے کے نارے میں ہو۔‬ ‫اپنی راتے تسکنل د پنے کے لنے‪ ،‬جو کہ اس ربورٹ میں پنان کی گنی ہے‪ ،‬بینک کے شریعہ کمنالپیٹس ڈ پنارٹمیٹ تے ہر قسم کے عقود‪ ،‬م یعلقہ دسناوتزات اور‬ ‫تراسس فلوز کو چانخنے کے لنے ٹمونہ چانی چاتزوں کا اہیمام کنا۔ اس کے ساتھ ساتھ ہم تے اندورنی اور نٹرونی شریعہ آڈٹ کی ربوربوں کا تھی چاتزہ لنا۔‬ ‫مذکورہ ناال یفصنل کی بیناد تر ہماری راتے مندرجہ ذنل ہے‪:‬‬ ‫ت مجموعی‪ ،‬شریعہ بورڈ کی طرف سے چاری کردہ ف یضلے‪ ،‬فناوی چات اور ہدانات کی روسنی‬ ‫‪ .1‬ہماری راتے کے مطابق‪،‬اسالمک بینکنگ ڈوتژن کے امور نحی ی ِ‬ ‫میں شرعیت کے اصول و صوایط کے مطابق انحام د پنے گنے ہیں۔‬ ‫‪ .2‬چاتزہ کے دوران کسی تھی فان ِل اضالح مسنلہ کو بوٹ کنا گنا اور ‪،‬اپ یطامیہ تے ان مسانل کو چل کنا نا مسیقنل میں اسکی درسنگی کی یقین دہانی کروانی۔‬ ‫مندرجہ ناال یفصنل کو بٹش یظر رکھنے ہوتے‪،‬ہماری راتے کے مطابق‪،‬ترکت اسالمک بینکنگ ڈوتژن کے امور‪ ،‬اسی یٹ بینک آف ناکسنان کی طرف سے چاری‬ ‫سدہ‪ ،‬شریعہ کمنالبٹس سے م یعلقہ قواعد و صوایط‪ ،‬اصول اور ہدانات کے مطابق انحام د پنے گنے ہیں۔‬ ‫‪ .3‬بینک‪ ،‬ٹمام معامالت میں شریعہ کمنالبٹس کو یقینی پناتے کے لنے انک چامع یطام رکھنا ہے۔‬ ‫‪ .4‬بینک کے ناس‪ ،‬شریعہ کمنالبٹس اور اندرونی شریعہ آڈٹ کی سکل میں انک واضح یطام موجود ہے‪ ،‬اس نات کو یقینی پناتے کے لنے کہ ٹمام غٹر شرعی‬ ‫ذرا یع سے چاضل ہوتے والی آمدنی چٹرنی اکاؤپٹ میں جمع کرانی چاتے اور اسے سقاف طور تر چٹرانی مقاضد میں جرچ کنا گنا ہے۔‬ ‫ی‬ ‫م‬ ‫‪ .5‬فنڈز کی یعین‪ ،‬یفع و یفضان کی قسیم اور بول بجمی یٹ شرعی قوابین‪ ،‬اصولوں اور اسی یٹ بینک آف ناکسنان کی طرف سے بول کے اپ یطام و ایصرام کے‬ ‫سلسلے میں ملنے والی ہدانات کے مطابق ہے۔‬ ‫‪ .6‬اگرجہ بینک کا سعی ِہ ‪ L& D‬اسالمی فاپناتس کے جوالے سے افرادی ق ّوت کی ترپ یت مخنلف تربینی تروگراموں کے ذر یعے بوری پندہی سے کررہا ہے‪ ،‬لنکن‬ ‫ن‬ ‫اس کے ناوجود بورے سسیم کے نحول کے ح لبج کو سا منے رکھنے ہوتے‪ ،‬مالزمین اور اپ یطامیہ میں شریعہ کمنالبٹس کی اہمیت اور بینک کے تراڈکٹس اور‬ ‫طرقہاتے کار سے م یعلق سعور پندارکرتے کے لنے کوسشوں کو تڑھانا چا ہنے۔‬ ‫م‬ ‫‪ .7‬اپنی ذمہ داربوں سے مؤتر طور تر عہدہ ترآں ہوتے کے لنے شریعہ بورڈ کو کمل اور مناسب وسانل فراہم کنے گنے ہیں۔‬ ‫شریعہ یورڈ کی طرف سے تجاوپز‬ ‫مندرجہ ناال یفصنالت کی بیناد تر ہم نحوتز د پنے ہیں کہ‪:‬‬ ‫م‬ ‫‪ .1‬اپ یطامیہ اور دنگر معاون پیموں کی کارکردگی اگرجہ فانل سناتش ہے‪ ،‬ناہم یطام کے کمل طور تر نحول کے یقاصوں کو مزند مسیعدی کے ساتھ بورا کرتے کی‬ ‫ضرورت ہے۔ اس مفضد کو چاضل کرتے کے لنے ٹمام م یعلقہ سع توں کو‪ ،‬شریعہ کی معاوپت کے ساتھ‪ ،‬زنادہ سے زنادہ مخیت و کاوش کرتے کی ضرورت‬ ‫ہے۔‬ ‫‪Annual Report 2017‬‬ ‫‪238‬‬ ‫‪3‬‬
  257. ‫شریعہ انڈواتزری شروشز‬ ‫دوران سال‪ ،‬بینک تے کنی اسالمی عقود میں شریعہ انڈواتزری شروشز فراہم کیں‪،‬جس میں مخنلف انڈسٹرتز منال ‪،‬شوگر مل‪،‬سیمیٹ انڈسٹری اور ناور سنکٹر سے م یعلق عقود‬ ‫ِ‬ ‫ت‬ ‫ی‬ ‫م‬ ‫م‬ ‫ض‬ ‫ف‬ ‫سامل ہیں۔ ان ٹمام عقود کا مجموعی حجم ‪ ۹،۵۷۲‬لین روتے‪ ،‬حنکہ اس میں ل بینک ترکت اسالمک کی شمولیت ‪ ۳،۵۲۲‬لین روتے کی ھی۔‬ ‫شریعہ ہوم‬ ‫مالزمین کی اسالمی فاپناتس سے م یعلق اہلیت کو تڑھاتے والے مخنلف موافع کی دسینانی کو یقینی پناتے کے لنے ‪SCD‬تے شریعہ ہوم پنانا‪ ،‬جو کہ بینکو پنڈنا (بینک‬ ‫کے انٹراپ یٹ بورنل) تر موجود ہے‪ ،‬جسکو مسلسل پہٹر تھی پنانا چارہا ہے۔ اس بورنل کو شریعہ بورڈ کی سعیہ چانی فراردادوں‪ ،‬بینک کے ماجول کے شریعہ کمنالپ یٹ ہوتے‬ ‫سے م یعلق ‪ RSBM‬کی ربوربوں‪،‬شریعہ کمنالبٹس کی چاتزہ ربوربوں اور شریعہ بورڈ کی ساالنہ ربوربوں کے ذر یعے نافاعدگی کے ساتھ اپ ڈپٹ کنا چاناہے۔اسی طرح مذکورہ‬ ‫بورنل تراسالمی فاپناتس سے م یعلق تربینی مواد اور ترتزبییٹسٹز تھی موجود ہیں۔‬ ‫پراڈکٹ ڈیویلپمنٹ‬ ‫شریعہ بورڈ کی زت ِر نگرانی‪ ،‬تراڈکٹ پیم تےموجودہ تراڈکٹس کو پہٹر کرتے اور پنی تراڈکٹس کو ان کے معاہدات اور دسناوتزات شمیت‪ ،‬پنار کرتے کے لنے کاوش کی۔‬ ‫اس سال کے دوران‪،‬ف یضل بینک ترکت اسالمک تے اپنی انانہ چانی تراڈکٹس کے مجموعے کو‪ ،‬رپنگ مسارکہ ٹمع اس کی اقسام کے‪ ،‬م یعارف کرواتے اور ہوم فاپناتس‬ ‫کی مخنلف اقسام کے اضافے کے ساتھ‪ ،‬مزند پہٹر کنا ہے۔ ا پنے ضارفین کو حج اور عمرہ جٹسی مقدس سہولنات فراہم کرتے کی چاطر‪ ،‬حج اور عمرہ تراڈکٹ کی م یظوری‬ ‫تھی اسی سال دی گنی۔ ‪ Paypak‬کے ساتھ الحاق کرکے ف یضل بینک ترکت اسالمک تے تھی ترکت ‪ Paypak‬ڈپ یِٹ کارڈ کا اجراء کنا ہے‪ ،‬جو مقامی اداپنگی‬ ‫کی انک اسکیم ہے۔ ‪ ۵۵‬سال نا اس سے زاند عمر والے سہربوں کی مالی ضرورنات کو بورا کرتے کے لنےانک چصوصی تراڈکٹ ‪“Life plus Saving‬‬ ‫می‬ ‫می‬ ‫”‪ Account‬کے ترانڈ کے ساتھ م یعارف کرانی گنی ہے۔ تےرول یبجمیٹ کا اپ یطام کرتے کے لنے کٹش یبجمیٹ پیم کے ساتھ مل کر انک اور تراڈکٹ‬ ‫”‪ “Barkat Paycheq plus‬تھی م یعارف کروانی گنی ہے۔اسی طرح ف یضل بینک تے کراچی میں ‪Solitaire Preferred Islamic‬‬ ‫‪ Banking‬کے نام سے ترحبحانی اسالمی بی یکاری مرکز فایم کنا‪،‬جس کا مفضد ا پنےضارفین کو چصوصی سہولنات فراہم کرناہے۔‬ ‫چیریٹی (چیرات)‬ ‫چٹرپنی نڈ کی ا ندانی رقم ‪ 4.844‬ملین روتے تھی اور سال کے دوران ضارفین سے ناچٹر سے اداپنگی کرتے کی وجہ سے ‪7.548‬‬ ‫‪ 7.584‬ملین کی رقم وصول کی گنی۔مزند‬ ‫پ‬ ‫ف‬ ‫ترآں‪،‬شریعہ کمنالبٹس ڈ پنارٹمیٹ کے چاتزوں اور اندورنی شریعہ آڈٹ کے دوران کنی عقود کی طرف شریعہ بورڈ کی بوجہ دالنی گنی‪،‬جن میں م یظور سدہ نالٹسٹز اور طرقہاتے‬ ‫عمل کی رو سے شریعہ ہدانات کی چالف ورزی نانی گنی‪،‬اتسی چالف ورزی کی وجہ سےمزند ‪ 0.556‬ملین روتے چٹرپنی فنڈ میں جمع کراتے گنے۔ اس عرصے کے‬ ‫ی‬ ‫دوران ‪4.800‬ملین روتے شریعہ بورڈ اور بینک اپ یطامیہ کی ہدانات کے مطابق مخنلف چٹرانی اداروں میں قسیم تھی کنے گنے۔ چٹرپنی کی یفصنل بوٹ ٹمٹر‪A-2.2‬تر‬ ‫موجود ہے۔‬ ‫لری پگ ای پڈ ڈولپمنٹ‬ ‫س‬ ‫ترپ یت نافیہ افرادی ق ّوت اسالمی بی یکاری کی انڈسٹری میں کامنانی کی کبجی ہے۔ اس سال کے دوران اعلی طجی اپ یطامیہ کی ترپ یت کے لنے بینک تے ‪NIBAF‬‬ ‫ی‬ ‫کے یعاون سے انک فصنلی تربینی تروگرام کا آعاز کنا۔ عالوہ ازیں اسی یٹ بینک آف ناکسنان کی ہدانات کے مطابق‪ ،‬پنی کھلنے والی ترانچز کے مالزمین کو ‪ ۵‬روزہ اسالمی‬ ‫ی‬ ‫بی یکاری کی تربینی شرپ قنکٹشن تروگرام کے نحت ترپ یت دی گنی۔ اس سال اسالمی بی یکاری کے اعلی کورشز تھی م یعارف کراتے گنے‪،‬جن کا مفضد نالخصوص فرپٹ‬ ‫‪239‬‬ ‫‪Annual Report 2017‬‬ ‫‪2‬‬
  258. ‫شریعہ بورڈ ربورٹ ‪( ۲۰۱۷‬اردو ترجمہ)‬ ‫﷽‬ ‫ربااعلنیمل‪،‬واالصلۃواالسلمیلعاخمتاالایبنءوارملنیلسدمحماٰیفطصملااصلدقاالنیمویلعاٰہلوااحصہبا�‬ ‫ادمحلہلل ّ‬ ‫ہللا سبحانہ ویعالی کے فضل و کرم سے‪ " ،‬ترکت اسالمک بینکنگ" کے ترانڈ سے کام کرتے ہوتے‪"،‬ف یضل بینک لمینڈ" تے اپنی اسالمی بی یکاری کا انک اور کامناب‬ ‫م‬ ‫سال کمل کرلنا ہے۔ ف یضل بینک تسلسل کے ساتھ ا پنے اسالمی ترانچز کے پ یٹ ورک میں وسعت ال رہا ہے اور سال ‪ ۲۰۱۷‬میں‪ ۵۰‬پنی ترانچز کے اضافے کے ساتھ‬ ‫اسالمی ترانچز کا کل پ یٹ ورک ‪ ۱۹۷‬ترانچز نک پہبچ چکا ہے۔‬ ‫دوران سال شریعہ بورڈ تے چار میینگز کا ایعقاد کنا‪ ،‬جس میں مخنلف موجودہ اور پنی تراڈکٹس‪،‬طریقہ ہاتے عمل‪،‬عقود و معامالت اور ان کے شرعی اصولوں کے مطابق‬ ‫ِ‬ ‫ت‬ ‫ہوتے کا چاتزہ لنا گنا۔ شریعہ گوربٹس فریم ورک کی ہداپت کے نحت‪ ،‬دور ِان سال شریعہ بورڈ کی بورڈ آف ڈاترنکٹرز کے ساتھ ھی دو دفعہ میینگز کا ایعقاد ہوا جس میں‬ ‫ی‬ ‫شریعہ کمنالبٹس ماجول کے نارے میں بورڈ کو فصنلی طور تر آ گاہ کنا گنا ۔‬ ‫م‬ ‫شریعہ بورڈ‪ ،‬بینک کے اسالمی بی یکاری کی طرف کمل نحول کے معامالت کے م یعلق بورڈ آف ڈاترنکٹر اور بینک اپ یطامیہ کی یصٹرت کو شراہنا ہے۔‬ ‫سال‪۲۰۱۷‬کے میں بٹش آتے والے امور کا چالصہ درج ذنل ہے‪:‬‬ ‫شریعہ کم پالئنس ڈ ی پارٹمنٹ‬ ‫شریعت کے مطابق عملدرآمد کو یقینی پناتے کے لنے شریعہ کمنالبٹس ڈنارٹمیٹ )‪ (SCD‬تے شریعہ بورڈ کی زت ِرنگرانی مخنلف سعیہ چات سے م یعلق م یظور سدہ تراسس‬ ‫فلوز‪،‬نالٹسٹز اور طریقہ ہاتے عمل کا ٹمونہ چانی بینادوں تر چاتزہ لنا ۔ نہ چاتزے ترنڈ اپنڈ تزتس شروشز‪ ،‬کرنڈٹ انڈمٹسٹرتشن ڈنارٹمیٹ‪ ،‬شروس کوالنی‪ ،‬کال سنٹر‪ ،‬کمنلی یٹ‬ ‫ی‬ ‫سنٹر‪ ،‬اور ترانچز سے م یعلق تھے۔ عالوہ ازیں ‪ SCD‬تے یفع کی قسیم اور ماہانہ بینادوں تر اس کے جساب کناب کے طریقہ کار کا تھی چاتزہ لنا ناکہ اس طریقہ کار‬ ‫کے شریعہ بورڈ کی طرف سے دی گنی رہیمانی کے مطابق ہوتے کی یقین دہانی چاضل کی چاسکے۔‬ ‫مندرجہ ناال سعیہ چات اور ان کے عالوہ دنگر سعیہ چات میں مالزمین کی ضالحیت اور اہلیت کو چانخنے کے لنےچاتزے لنے گنے اور ناہمی پنادلہ حنال کی تشستوں کا‬ ‫ایعقاد کنا گنا۔ مزند ترآں‪،‬شریعہ بورڈ کی ہدانات کے مطابق‪،‬شرتراہ ‪ SCD‬اور ‪ RSBM‬تے الہور‪،‬ملنان اور کراچی میں بینک کےمخنلف مقامی دفاتر اور اسالمی ترانچز‬ ‫کے دورے کنے‪،‬جس میں مالزمین کے ساتھ اسالمی بی یکاری کے جوالے سےسعور اور آ گاہی پندا کرتے والی تشستوں کا ایعقاد کنا گنا۔‬ ‫رواں سال‪ SCD ،‬تے ضارفین کے ساتھ مخصوص ‪ ۸۲‬تراسس فلوز کی م یظوری چاضل کی اور ‪ ۲۱‬سنڈنکیٹ کے عقود میں شرکت کی م یظوری تھی زتر عمل النی‬ ‫ً‬ ‫گنی۔ اس کے عالوہ ‪SCD‬تے چق یقنا زتر عمل طریق ِہ کار کو چانخنے کے لنے عملی معا پنے تھی کنے۔ شریعہ بورڈ کی تسکنل کے ساتھ ہی اسالمی بینک کی نالٹسٹز اور‬ ‫طرقہاتے عمل کو رواپنی بینک سے الگ کرتے کا عمل شروع کر دنا گنا تھا۔ اسی سلسلے میں اس سال‪ SCD‬تے ‪ ۲۸‬موجودہ اور پنی نالٹسٹز ‪/‬طرقہاتے عمل کا چاتزہ‬ ‫لنا اور شریعہ بورڈ سے ان کی م یظوری لی گنی۔‬ ‫‪SCD‬تے مالزمین میں اہلیت اور ضالحیت پندا کرتے میں تھی اہم کردار ادا کنا۔ اس سلسلے میں شریعہ کمنالبٹس پیم تے تربینی مواد میں پہٹری التے اور مخنلف‬ ‫تربینی تشستوں کے ایعقاد کے ذر یعے تھی مذکورہ ہدف چاضل کرتے میں یعاون کنا۔‬ ‫‪Annual Report 2017‬‬ ‫‪1240‬‬
  259. Report 2017 Annual Report 63 241
  260. 64 242 Annual Annual Report 2017
  261. Annual Report 2017 63 243
  262. 64 244 Annual Annual Report 2017 2017
  263. Annual Report 2017 63 245
  264. 246 Annual Report 2017
  265. Annual Report 2017 63 247
  266. 64 248 Annual Annual Report 2017
  267. Annual Report 2017 63 249
  268. 250 Annual Report 2017
  269. Annual Report 2017 251
  270. 252 Annual Report 2017
  271. If undelivered please return to : FAYSAL BANK LIMITED REGISTRAR: M/s. Central Depository Company of Pakistan Limited, CDC House, 99-B, Block-B, S.M.C.H.S., Main Shahrah-e-Faisal, Karachi-74400. PABX: (92-21) 111-111-500 Fax: (92-21) 34326053 www.faysalbank.com

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