Bahrain: Listed Companies BOD Meetings to approve the Financial Results for the Period ended 30/09/2017

Transcription

1. for the six months June 30 , 2017
3. Corporate Information 1 Directors ’ Review 2 Auditor’s Review Report 4 Condensed Interim Statement of Financial Position 5 Condensed Interim Profit and Loss Account 6 Condensed Interim Statement of Comprehensive Income 7 Condensed Interim Statement of Changes in Equity 8 Condensed Interim Cash Flow Statement 9 Notes to the Condensed Interim Financial Information 10
4. CORPORATE INFORMATION Board of Directors Muhammad Azam Khan Shakeel Qadir Khan Maqsood Ismail Ahmad Asad Muhammad Iqbal Javed Akhtar Rashid Ali Khan Chairman Managing Director / CEO Shams-ul-Qayyum Audit Committee Asad Muhammad Iqbal Shakeel Qadir Khan Javed Akhtar Rashid Ali Khan Chairman HR&R Committee Rashid Ali Khan Maqsood Ismail Ahmad Asad Muhammad Iqbal The Managing Director Chairman Risk Management Committee Mr. Maqsood Ismail Ahmad Mr. Rashid Ali Khan The Managing Director Chairman Chief Financial Officer Rahat Gul Company Secretary Zahid Sahibzada Registered Office / Head Office The Bank of Khyber, 24-The Mall, Peshawar Cantt. 1st Floor, State Life Building 34-The Mall, Peshawar Cantt. UAN#00-92-91-111 95 95 95 URL: www.bok.com.pk Auditors Grant Thornton Anjum Rahman Chartered Accountants Legal Advisors Mr. Nisar Ahmed Khan Advocate, Peshawar M/s. Mohsin Tayebaly & Co., Karachi Registrar and Share Registration Office THK Associates (Pvt) Ltd. 1st Floor, 40-C, Block 6 P.E.C.H.S, Karachi – 75530 Pakistan. 13
5. DIRECTORS ’ REVIEW On behalf of the Board of Directors of the Bank of Khyber, I am pleased to present the condensed interim financial information of the Bank along with Auditors' Review Report for the half year ended June 30, 2017. The results are inclusive of Islamic Banking Operations. Financial Highlights The financial results of the Bank of Khyber for the half year ended June 30, 2017 are as under: (Rs. in Million) June 30 December 31 2017 2016 Total Assets 261,874 206,400 Deposits 152,247 157,020 Advances (Gross) 61,774 36,054 Investments (Net) 181,001 141,602 (Rs. in Million) Period Ended June 30 2017 2016 Operating Profit 1,862 2,109 Provision against non-performing advances/Others (210) (365) Reversal against other assets 2 Profit before taxation 1,652 1,746 Taxation (713) (725) Profit after tax 939 1,021 Financial Overview The Bank continues to maintain its performance during the period under review. The Bank posted a pre-tax profit of Rs. 1,652 million against Rs. 1,746 million of the corresponding period of 2016. After tax profit stood at Rs. 939 million. An encouraging growth of 27% has been witnessed in the balance sheet size which reached Rs. 261,874 million from Rs. 206,400 million as at December 31, 2016. Deposits with slight decrease from the year end 2016, stood at Rs. 152,247 million. Advances remarkably increased by 71% and settled at Rs. 61,774 million mainly due to commodity and power sector financing. Investments increased by 28% to Rs. 181,001 million as compared to Rs. 141,602 million at the close of year end 2016. Future Outlook Since start of the year 2017, the economy has shown continued progression in economic activity. Benefitting from the trend, the Bank is making steady progress in all operational areas and have launched different attractive products on the assets and liabilities side. In order to supplement deposit flow, different schemes are being offered with attractive terms and efforts are being made to interact with new customers not only to meet their banking needs but to generate core deposits and reduce its cost. With a network of 155 branches including 79 dedicated Islamic Banking Branches, the Bank provides comprehensive banking services across the country. Continuing with our branch 2 3
6. expansion policy , the Bank will complete the process of opening of 25 new branches by the year end 2017. Credit Rating The JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the medium to long term and short term entity ratings of the Bank at “A” (Single A) and “A-1” (A One) respectively. Outlook on the assigned rating is “Stable”. The Pakistan Credit Rating Agency Limited (PACRA) has maintained the long term and short term entity ratings of the Bank at “A” (Single A) and “A1” (A One) respectively. Rating outlook is “Stable”. These ratings denote low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments. Acknowledgment The Board would like to thank the Provincial Government, State Bank of Pakistan and other regulatory authorities for their support and continued guidance. We are grateful to our valued customers for their trust and support whereas dedicated efforts of the staff is very much appreciated. For and on behalf of the Board of Directors Shams-ul-Qayyum Islamabad: August 18, 2017 Managing Director 3
7. INDEPENDENT AUDITORS ' REPORT TO THE MEMBERS ON REVIEW OF INTERIM FINANCIAL INFORMATION Introduction We have reviewed the accompanying condensed interim financial position of The Bank of Khyber (the bank) as at June 30, 2017 and the related condensed interim profit and loss account, condensed interim statement of comprehensive income, condensed interim cash flow statement and condensed interim statement of changes in equity together with the notes forming part thereof for the six months then ended (here-in-after referred to as the “interim financial information”). Management is responsible for the preparation and presentation of this interim financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on this interim financial information based on our review. The figures of the condensed interim profit and loss account and the condensed statement of comprehensive income for the three months ended June 30, 2017 and 2016 have not been reviewed and we do not express a conclusion on them, as we are required to review only the cumulative figures for the half year ended June 30, 2017. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information as of and for the six months ended June 30, 2017 is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. GRANT THORNTON ANJUM RAHMAN Chartered Accountants Engagement Partner: Nadeem Tirmizi Date: August 18, 2017 Islamabad 4 3
8. CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION (UN-AUDITED) AS AT JUNE 30, 2017 Note (Un-audited) (Audited) June 30, December 31, 2017 2016 Rupees in '000' ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments - net Advances - net Other assets Operating fixed assets Deferred tax asset - net 6 7 8 9 10,148,659 4,356,718 3,025,034 181,000,814 57,144,912 3,933,766 2,264,060 - 8,636,526 9,980,928 8,827,307 141,602,355 31,643,885 3,638,719 2,070,554 - 261,873,963 206,400,274 758,388 89,767,719 152,246,810 3,737,138 35,507 246,545,562 15,328,401 775,938 28,700,825 157,020,365 3,608,857 151,745 190,257,730 16,142,544 10,002,524 2,379,993 1,741,290 10,002,524 2,192,169 2,490,553 14,123,807 1,204,594 14,685,246 1,457,298 15,328,401 16,142,544 LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liability - net 10 11 12 NET ASSETS REPRESENTED BY Share capital Reserves Un-appropriated profit Surplus on revaluation of assets - net of tax 13 CONTINGENCIES AND COMMITMENTS 14 The annexed notes 1 to 20 form an integral part of this condensed interim financial information. Managing Director Director Director 5 Director
9. CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 Three months Six months Three months Six months ended ended ended ended June 30, June 30, June 30, June 30, Note 2017 2017 2016 2016 --------------------------- Rupees in '000' ---------------------------Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / return/ interest income Provision against loans and advances - net (Reversal) / provision for diminution in value of investments - net Bad debts written off directly Net mark-up / return / interest income after provisions 3,664,383 2,467,770 1,196,613 6,731,479 4,504,826 2,226,653 2,792,844 1,637,222 1,155,622 5,587,822 3,348,163 2,239,659 198,131 218,126 338,199 421,891 (8,213) 189,918 1,006,695 (8,378) 209,748 2,016,905 24,078 111 362,388 793,234 (57,169) 111 364,833 1,874,826 101,168 17,304 16,385 915,761 157,301 36,557 35,948 1,156,509 65,471 10,426 21,346 717,558 124,568 86,055 44,626 1,093,657 371 22,650 1,073,639 2,080,334 527 53,019 1,439,861 3,456,766 255 16,451 831,507 1,624,741 40,774 1,389,680 3,264,506 979,111 (87) 1,804,429 (87) 805,233 14,065 20 1,520,812 (2,299) 28 979,024 1,101,310 1,804,342 1,652,424 819,318 805,423 1,518,541 1,745,965 369,263 134,958 16,200 520,421 580,889 558,514 134,958 19,834 713,306 939,118 327,991 90,643 (29,529) (389,105) 416,318 634,904 90,643 595 (724,952) 1,021,013 0.58 0.94 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 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 Provisions/ (reversals) against other assets Other charges Total non mark-up / interest expenses PROFIT BEFORE TAXATION Taxation - Current - Prior - Deferred PROFIT AFTER TAXATION Earnings per share - Basic and Diluted (in Rupees) 15 0.42 1.02 The annexed notes 1 to 20 form an integral part of this condensed interim financial information. Managing Director Director Director 6 Director
10. CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 Three months Six months Three months Six months ended ended ended ended June 30, June 30, June 30, June 30, 2017 2017 2016 2016 ----------------------------- Rupees in '000' ----------------------------Profit after taxation 580,889 Other comprehensive income 939,118 - Total comprehensive income for the period - 580,889 416,318 1,021,013 - 939,118 - 416,318 1,021,013 Components of comprehensive income not reflected in equity Items that will not be reclassified to profit and loss account Change in surplus on revaluation of fixed assets Items that may be reclassified to profit and loss account (Decrease)/increase in surplus on revaluation of available for sale securities Related deferred tax reversal / (charge) - - - - (991,138) 388,776 2,168,616 3,944,513 346,885 (644,253) (136,072) 252,704 (759,016) 1,409,600 (1,380,580) 2,563,933 (644,253) 252,704 1,409,600 2,563,933 Surplus / (deficit) on revaluation of ‘Available for sale’ securities and ‘Fixed assets’ are presented under a separate head below equity as ‘surplus / (deficit) on revaluation of assets’ in accordance with the requirements specified by the State Bank of Pakistan vide its BSD Circular No. 20 dated August 04, 2000 and BSD Circular No. 10 dated July 13, 2004 respectively and Companies Ordinance, 1984. The annexed notes 1 to 20 form an integral part of this condensed interim financial information. Managing Director Director Director 7 Director
11. CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 UnStatutory Total reserve appropriated profit ------------------------ Rupees in '000' ----------------------Share capital Balance as at January 1, 2016 - Audited 10,002,524 1,788,074 2,182,400 13,972,998 Changes in equity during the six months ended June 30, 2016 Transactions with owners recorded directly in equity Final cash dividend for the year ended December 31, 2015 declared at Rs 1.25 per share - - (1,250,464) (1,250,464) Total comprehensive income Profit after taxation for the six months ended June 30, 2016 Other comprehensive income - net of tax Transfer to statutory reserve - - 1,021,013 1,021,013 - - 1,021,013 1,021,013 - Balance as at June 30, 2016 - Unaudited 204,203 10,002,524 1,992,277 (204,203) - 1,748,746 13,743,547 Changes in equity during the six months ended December 31, 2016 Total comprehensive income Profit after taxation for the six months ended December 31, 2016 - - Other comprehensive income - - (57,764) (57,764) - - 941,699 941,699 Transfer to statutory reserve - Balance as at December 31, 2016 - Audited 199,892 10,002,524 2,192,169 999,463 (199,892) 999,463 - 2,490,553 14,685,246 Changes in equity during the six months ended June 30, 2017 Transactions with owners recorded directly in equity Final cash dividend for the year ended December 31, 2016 declared at Rs 1.50 per share - - (1,500,557) (1,500,557) Total comprehensive income Profit after taxation for the six months ended June 30, 2017 Other comprehensive income - net of tax - - 939,118 939,118 - - 939,118 939,118 - Transfer to statutory reserve Balance as at June 30, 2017 - Unaudited 187,824 10,002,524 2,379,993 (187,824) - 1,741,290 14,123,807 The annexed notes 1 to 20 form an integral part of this condensed interim financial information. Managing Director Director Director 8 Director
12. CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 Six months Six months ended ended June 30, June 30, 2017 2016 Rupees in '000' CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Less: Dividend income 1,652,424 36,557 1,745,965 86,055 1,615,867 1,659,910 122,757 16,091 218,126 (8,378) (527) (1,807) 346,262 1,962,129 97,160 9,537 421,891 (57,169) (2,299) (394) 111 468,837 2,128,747 5,802,273 (1,859,557) (25,719,153) (295,047) (22,071,484) (19,370,277) 1,028,528 10,580,582 (572,925) (8,334,092) (17,550) 61,066,894 (4,773,555) 185,222 56,461,011 36,351,656 (763,279) 35,588,377 232,518 (11,181,896) 28,727,783 (115,511) 17,662,894 11,457,549 (773,852) 10,683,697 (35,162,502) (2,756,271) 36,557 (333,173) 2,626 (38,212,763) (9,161,418) 16,690 86,055 (106,599) 2,672 (9,162,600) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid Net cash used in financing activities (1,487,691) (1,487,691) (1,239,659) (1,239,659) (Decrease) / increase in cash and cash equivalents during the period (4,112,077) 281,438 Cash and cash equivalents at beginning of the period 18,617,454 12,060,293 Cash and cash equivalents at end of the period 14,505,377 12,341,731 Adjustments: Depreciation Amortisation Provision against loans and advances - net Reversal of provision for diminution in value of investments-net Reversal of provision against non-banking assets Unrealised gain on revaluation of investments classified as held-for-trading Gain on sale of operating fixed assets Bad debts written off directly (Increase) / decrease in operating assets Lendings to financial institutions Held-for-trading securities Advances Others assets (excluding advance taxation) Increase / (decrease) in operating liabilities Bills payable Borrowings from financial institutions Deposits and other accounts Other liabilities (excluding current taxation) Income taxes paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Net investment in available-for-sale securities Net investment in held-to-maturity securities Dividend income received Investment in operating fixed assets Sale proceeds from disposal of property and equipment Net cash used in investing activities The annexed notes 1 to 20 form an integral part of this condensed interim financial information. Managing Director Director Director 9 Director
13. NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 1 STATUS AND NATURE OF BUSINESS 1.1 The Bank of Khyber ("The Bank") was established under The Bank of Khyber Act, 1991 and is principally engaged in the business of commercial banking and related services. The Bank acquired the status of a scheduled bank in 1994 and is listed on the Karachi Stock Exchange (KSE). The registered office of the Bank is situated at 24 the Mall, Peshawar Cantt, Peshawar and it has been temporarily shifted to 1st Floor, State Life Building, 34 - the Mall, Peshawar Cantt. The Bank operates 155 branches including 79 Islamic Banking Branches as at June 30, 2017 (December 31, 2016: 150 branches including 77 Islamic banking branches). The long term credit rating of the Bank assigned by The Pakistan Credit Rating Agency (PACRA) and JCR-VIS are 'A' and 'A' respectively and the short-term credit ratings assigned are 'A1' (AOne) and 'A-1' (A-One) respectively. 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 SBP has issued various circulars from time to time. Permissible forms of trade-related modes of financing include purchase of goods by the 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 the respective arrangements (except for murabaha financings accounted for under Islamic Financial Accounting Standard - 1 "Murabaha") are not reflected in this condensed interim financial information as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. 2.2 The financial results of the Islamic Banking Group have been consolidated in this financial information for reporting purpose, after eliminating the effects of intra-bank transactions and balances. Key financial figures of the Islamic Banking Group are disclosed in note 17 to this condensed interim financial information. 2.3 This condensed interim financial information has been presented in Pakistani Rupee, which is the Bank's functional and reporting currency. The figures have been rounded off to the nearest thousand rupees, unless otherwise stated. 3 BASIS OF MEASUREMENT This condensed interim financial information has been prepared under the historical cost convention except that certain fixed assets are stated at revalued amounts and certain investments, commitments in respect of employee benefits, forward exchange contracts and derivative financial instruments have been marked to market and are carried at fair value. 4 STATEMENT OF COMPLIANCE 4.1 This condensed interim financial information has been prepared in accordance with the requirements of International Accounting Standards (IAS - 34), Interim Financial Reporting, Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan (ICAP), Companies Ordinance, 1984, Banking Companies Ordinance, 1962 and the directives issued by the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP). In case the requirements differ, the 10
14. NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the said directives have been followed. 4.2 The SBP vide BSD Circular No. 10, dated August 26, 2002 has deferred the applicability of International Accounting Standard (IAS) 39, "Financial Instruments: Recognition and Measurement" and International Accounting Standards (IAS) 40, "Investment Property" for banking companies till further instructions. Further, according to a notification of SECP dated April 28, 2008, IFRS 7 "Financial Instruments: Disclosure" has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of this condensed interim financial information. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP. 4.3 The disclosures made in this condensed interim financial information have been limited based on the format prescribed by the SBP vide BSD Circular Letter No. 2, dated May 12, 2004 and IAS 34 "Interim Financial Reporting" and do not include all the information required for the annual financial statements. Accordingly, this condensed interim financial information should be read in conjunction with the annual financial statements of the Bank for the year ended December 31, 2016. This condensed interim financial information is being submitted to the shareholders in accordance with section 245 of the Companies Ordinance, 1984 and is un-audited but subject to limited scope review by the statutory auditors. 5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGEMENTS AND FINANCIAL RISK MANAGEMENT POLICIES 5.1 The accounting policies, underlying estimates and judgments and methods of computation followed in the preparation of this condensed interim financial information are same as those applied in preparing the most recent annual financial statements of the Bank for the year ended December 31, 2016. 5.2 The financial risk management objectives and policies adopted by the Bank are consistent with those disclosed in the financial statements of the Bank for the year ended December 31, 2016. (Un-audited) (Audited) June 30, December 31, 2017 2016 Rupees in '000' 6 LENDINGS TO FINANCIAL INSTITUTIONS Call money lendings Bai Muajjal receivable from other financial institution Repurchase agreement lendings (Reverse Repo) Placements with other financial institutions 600,000 1,529,106 895,928 238,944 5,475,000 192,307 3,398,944 Provision against lendings to financial institutions 3,263,978 (238,944) 3,025,034 9,066,251 (238,944) 8,827,307 11
15. NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 7 INVESTMENTS June 30, 2017 (Un-audited) December 31, 2016 (Audited) Given as Given as Held by bank Total Held by bank Total Note collateral collateral ----------------------------------------------- Rupees in '000' ----------------------------------------7.1 Investments by types Held-for-trading securities Market Treasury Bills Pakistan Investment Bonds Ordinary shares of listed companies 243,097 1,961,714 15,543 - 243,097 1,961,714 15,543 360,081 - - 360,081 - 2,220,354 - 2,220,354 360,081 - 360,081 89,557,914 69,704,474 6,250,444 1,004,902 30,487 43,620,749 55,822,793 7,250,546 888,612 30,487 Available-for-sale securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan Sukuk Ordinary shares of listed companies Ordinary shares of unlisted companies Ordinary shares of related party Unlisted Preference shares of unlisted company Listed term finance certificates Unlisted term finance certificates Sukuks 49,641,737 39,916,177 23,826,448 45,878,026 6,250,444 1,004,902 30,487 - 14,420,352 9,695,393 - 58,041,101 65,518,186 7,250,546 888,612 30,487 112,500 112,500 112,500 195,000 195,000 195,000 338,345 338,345 138,550 86,881 86,881 168,762 3,454,083 3,454,083 3,228,784 84,940,827 85,794,203 170,735,030 111,456,783 24,115,745 112,500 195,000 138,550 168,762 3,228,784 135,572,528 8,162,414 8,162,414 5,372,809 33,333 33,333 66,667 8,195,747 8,195,747 5,439,476 40,504 40,504 40,504 95,397,432 85,794,203 181,191,635 117,296,844 24,115,745 5,372,809 66,667 5,439,476 40,504 141,412,589 Held-to-maturity securities Pakistan Investment Bonds Sukuks Investment in associate Investments at cost Provision for diminution in value of investments 7.2 Investments - net of provisions Surplus on revaluation of held-for-trading securities - net Surplus on revaluation of available-for-sale securities - net 13 Total investments (853,519) - (853,519) (861,897) - 94,543,913 85,794,203 180,338,116 116,434,947 24,115,745 527 - 527 716 - 662,171 - 662,171 1,050,947 - 95,206,611 85,794,203 181,000,814 117,486,610 24,115,745 12 (861,897) 140,550,692 716 1,050,947 141,602,355
16. NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 Note (Un-audited) (Audited) June 30, December 31, 2017 2016 Rupees in '000' 7.2 Provision for diminution in value of investments Opening balance Charge for the period / year Reversal on disposal Closing balance 8 861,897 958,614 (8,378) 46,820 (143,537) (8,378) (96,717) 853,519 861,897 33,928,409 - 29,845,102 - 33,928,409 29,845,102 26,555,842 5,275,801 727,963 - 581,858 - 727,963 581,858 386,806 174,612 561,418 204,902 146,816 351,718 61,773,632 36,054,479 (4,591,246) (37,474) (4,628,720) 57,144,912 (4,379,722) (30,872) (4,410,594) 31,643,885 ADVANCES Loans, cash credits, running finances, etc. In Pakistan Outside Pakistan Islamic financing and related assets Net investment in Ijarah: In Pakistan Outside Pakistan Bills discounted and purchased (excluding treasury bills) Payable in Pakistan Payable outside Pakistan 8.1 Advances - gross Provision against loan and advances Specific General 8.2 Advances - net of provision 8.1 Advances include Rs. 5,419.490million (December 31, 2016: Rs. 5,456.524million) which have been placed under non-performing status as detailed below: June 30, 2017 (Un-audited) Provision Provision Classified advances required held Category of classification Domestic Overseas Total ------------------------------- Rupees in '000' -----------------------------------------Other Assets Especially Mentioned * Substandard Doubtful Loss 127,517 57,287 117,160 5,117,526 - 127,517 57,287 117,160 5,117,526 86 6,115 3,809 4,581,236 86 6,115 3,809 4,581,236 5,419,490 - 5,419,490 4,591,246 4,591,246 13
17. NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 December 31, 2016 (Audited) Provision Provision Classified Advances required held Domestic Overseas Total ------------------------------- Rupees in '000' ----------------------------------------- Category of classification Other Assets Especially Mentioned * Substandard Doubtful Loss 87,643 288,582 627,585 4,452,714 - 87,643 288,582 627,585 4,452,714 55,851 302,838 4,021,033 55,851 302,838 4,021,033 5,456,524 - 5,456,524 4,379,722 4,379,722 * Other Assets Especially Mentioned category pertains to agricultural finance and small enterprise finance. 8.1.1 State Bank of Pakistan through various circulars has allowed benefit of the forced sales value (FSV) of Plant & Machinery under charge, pledged stock and mortgaged residential, commercial and industrial properties (land and building only) held as collateral against Non-Performing Loans (NPLs) for a maximum of five years from the date of classification. As at June 30, 2017, the Bank has availed cumulative benefit of forced sale values of Rs. 596.831million (December 31, 2016:Rs. 453.778million). Increase in unappropriated profit net of tax amounting to Rs. 387.940million (December 31, 2016:Rs.294.956)is not available for the distribution of cash or stock dividend to the shareholders or bonus to employees. 8.2 Particulars of provision against loans and advances June 30, 2017 (Un-audited) December 31, 2016 (Audited) Specific General Total Specific General Total -------------------------------------- Rupees in '000' --------------------------------------------------Opening balance 4,379,722 30,872 4,410,594 3,655,490 28,046 3,683,536 Charge for the period / year 372,664 Reversals (161,140) 211,524 Amounts written off - 6,602 6,602 - 379,266 (161,140) 218,126 - 1,060,047 (335,815) 724,232 - 2,826 2,826 - 1,062,873 (335,815) 727,058 - 37,474 4,628,720 4,379,722 30,872 4,410,594 Closing balance 9 4,591,246 (Un-audited) (Audited) June 30, December 31, 2017 2016 Rupees in '000' OPERATING FIXED ASSETS Capital work-in-progress Property and equipment Intangible assets 368,771 1,831,488 63,801 2,264,060 430,319 1,597,222 43,013 2,070,554 9.1 Following additions / disposals have been made to / from property and equipment; June 30, 2016 June 30, 2017 (Un-audited) (Un-audited) Additions Disposals Additions Disposals --------------------------- Rs. in '000' ---------------------------------Building on leasehold 11,620 Building 153,001 Furniture and fixtures 29,157 4,425 11,033 3,435 Office equipment 94,023 6,821 53,562 8,556 Vehicles 1,850 3,210 766 1,370 Renovations / Premises 79,826 13,223 34,507 11,072 357,857 27,679 99,868 36,053 9.2 Additions to intangible assets 36,879 17,474 - 14
18. NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 Note 10 BORROWINGS FROM FINANCIAL INSTITUTIONS Secured Borrowings from State Bank of Pakistan under: Export refinance scheme Long term financing for export oriented projects Refinance facility for SME Repurchase agreement borrowings Borrowing from financial institution 10.1 10.2 Unsecured Call borrowings (Un-audited) (Audited) June 30, December 31, 2017 2016 Rupees in '000' 1,824,900 152,524 719 1,978,143 66,112,753 19,681,450 85,794,203 1,698,000 13,805 1,006 1,712,811 14,420,352 9,695,393 24,115,745 1,995,373 2,872,269 89,767,719 28,700,825 10.1 Repurchase agreements with financial institutions carry interest rate of 5.96 % (2016: 5.96%) per annum with maturities up to July 07, 2017. 10.2 Secured borrowing from financial institution carry interest rate ranging from 5.79 % to 5.83% (2016:5.80% to 5.81 %) per annum with maturities up to April 09, 2018. (Un-audited) (Audited) June 30, December 31, 2017 2016 Rupees in '000' 11 DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits 52,676,968 61,494,660 Savings deposits 57,992,967 60,140,991 Current accounts - non-remunerative 35,216,444 28,280,085 Call deposits 3,920,723 5,316,386 Margin and sundry deposits 2,422,603 1,754,950 152,229,705 156,987,072 Financial Institutions Remunerative deposits Non-remunerative deposits 15,928 1,177 17,105 152,246,810 32,224 1,069 33,293 157,020,365 3,510 25,619 87,203 3,448 31,103 3,018 42,352 196,253 3,510 43,027 87,203 3,448 31,103 4,859 42,937 216,087 (231,760) (231,760) (35,507) (367,832) (367,832) (151,745) 12 DEFERRED TAX LIABILITY Deferred tax asset arising in respect of: Provision for balances with other banks Provision against loans and advances Provision for diminution in value of investments Provision for other assets Re-measurement of defined benefit plan Accelerated tax depreciation Islamic Pool Management reserve Deferred tax liability arising in respect of: Surplus on revaluation of investment Deferred tax liability - net 15
19. NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 (Un-audited) (Audited) June 30, December 31, 2017 2016 Rupees in '000' 13 SURPLUS ON REVALUATION OF ASSETS - NET OF TAX Surplus / (deficit) on revaluation of available-for-sale securities Federal government securities: - Market Treasury Bills - Pakistan Investment Bonds - Government of Pakistan Sukuks Fully paid up ordinary shares - listed (25,543) 410,537 113,481 163,696 662,171 Surplus on revaluation of fixed assets Leasehold land Deferred tax liability - net (19,676) 495,268 124,554 450,801 1,050,947 774,183 774,183 1,436,354 (231,760) 1,825,130 (367,832) 1,204,594 1,457,298 556,378 539,084 556,378 539,084 9,201,189 3,853,901 6,935,508 4,211,008 13,055,090 11,146,516 14 CONTINGENCIES AND COMMITMENTS 14.1 Direct credit substitutes Contingent liabilities in respect of guarantees given favouring: Banks Others 14.2 Transaction-related contingent liabilities Contingent liabilities in respect of performance bonds, bid bonds, warranties etc. given favouring: Government Others This includes expired letters of guarantee aggregating to Rs. 3,687.174 million as at June 30, 2017 (December 31, 2016: Rs. 3,496.433 million) for which the formalities relating to return of the original documents are in process. (Un-audited) (Audited) June 30, December 31, 2017 2016 Rupees in '000' 14.3 Trade-related contingent liabilities Letters of credit Sight Usance Acceptances 2,289,536 572,027 1,790,467 360,776 2,861,563 381,057 3,242,620 2,151,243 848,219 2,999,462 1,024,356 1,304,551 3,368,458 3,655,998 14.4 Commitments in respect of forward exchange contracts Purchase Sale 16
20. NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 All forward exchange contracts are backed by trade related transactions to meet the needs of the Bank's clients to generate trading revenues and, as part of its asset and liability management activity, to hedge its own exposure to currency risk. At the period end, all foreign exchange contracts have a remaining maturity of less than one year. (Un-audited) (Audited) June 30, December 31, 2017 2016 Rupees in '000' 14.5 Other commitments Bills for collection Inland bills Foreign bills 79,375 402,432 117,019 659,128 481,807 776,147 14.6 Commitments to extend credit The Bank makes commitments to extend credit in the normal course of its business but these being revocable commitments do not attract any significant penalty if the facility is unilaterally withdrawn. 14.7 Commitment for the acquisition of operating fixed assets Commitments as on reporting date amounts to Rs. 164.577 million (December 31, 2016 : Rs. 256.979 million). 14.8 The income tax assessments of the Bank have been finalized upto tax year 2016. 14.9 During financial year 2011, the tax authorities issued an amended order for the tax year 2009 disallowing certain expenditure on account of lack of evidence for such expenditure resulting in an additional tax demand of Rs. 308.900 million. The Bank filed an appeal as well as rectification application against the said order. Based on rectification application, the order was amended and accordingly the additional demand was reduced to Rs. 256.349 million. During 2012, the Commissioner Inland Revenue (Appeals) [CIR (A)] through an order dated June 01, 2012 has deleted certain additions on account of disallowances except for the additions under certain heads of expenses having tax impact of approximately Rs. 23 million. The Bank had filed an appeal against the order of the Appellate Tribunal Inland Revenue (ATIR) in respect of remaining additions which also decided in favor of the Bank. Subsequently, CIR went in to appeal in Peshawar High Court.The management is confident that matter will be decided in Bank's favor. 14.10 The liquidator of the Indus Bank Limited (IBL), which is under liquidation since January 29, 2001, has lodged a claim of Rs. 11.518 million against the Bank in relation to a reverse repo transaction of Rs. 100 million with a maturity of February 08, 2001 secured against Federal Investment Bonds. The management of the Bank is confident that the above will have no financial impact as IBL is a defaulter of the Bank to the tune of Rs. 10.028 million which is already provided in these financial statements. 17