Bank of Punjab: Annual Report 2021

Transcription

1. GROWTH WITH EMPATHY Nurturing Prosperity , Compassion, Inclusiveness ANNUAL REPORT 2021
2. TABLE OF CONTENTS ABOUT THE BANK 02 The Bank of Punjab 40 Corporate Information 05 Vision Statement 41 Organizational Structure 07 Mission Statement 43 Board of Directors – Composition, Performance and Profile 09Values “E-time” 48 Board Committees Composition and TORs 1 1 Credit Rating 55 Shariah Advisor Board Composition and Profile 12 Products & Services 58 Management and Its Committees CORPORATE GOVERNANCE 60 Policies and Framework 69 Board Remuneration Policy ANALYSIS OF BANK'S PERFORMANCE 94 Analysis of Bank’s Financial Performance STAKEHOLDERS RELATIONSHIP 122 Code of Conduct 125 Operating & Competitive Environment 71 Statement of Compliance with Code of Corporate Governance 126 Strategy & Resource Allocation 127 Fair Treatment of Customers 73 129COVID-19 Recovery Plan Statement by Management 70 Auditors’ Review Report on Code of Corporate Governance Statement of Internal Control 130 Forward Looking Statement 74 ECONOMIC REVIEW 135 Stakeholders Relationship 76 PRESIDENT/CEO's REVIEW 137 Sustainability and Corporate Social Responsibilities 78 DIRECTORS' REPORT 143Notice of AGM 88 REVIEW REPORT BY CHAIRMAN OF AUDIT COMMITTEE 147 Unconsolidated Financial Statements The Bank of Punjab 90 REPORT OF SHARIAH BOARD 261 Consolidated Financial Statements The Bank of Punjab Group 374 List of Branches and Offices 375 Pattern of Shareholding 381 Form of Proxy 1
3. THE BANK OF PUNJAB The Bank of Punjab was established in 1989 under The Bank of Punjab Act , 1989 by the Government of the Punjab. The Bank was granted status of a scheduled Bank in 1994 by SBP and currently carries a vast network of 662 online branches spanned across the Country along with ATM network of 614 offering 24/7 banking services to its diverse clientele. The Bank’s Head Office is located in Lahore whereas Treasury & Capital Market operations are being managed from Karachi. The Bank of Punjab is the second largest public sector bank of the Country. Geographical breakdown of Bank’s branch network as on December 31, 2021 is as under: Province/ Territory No. of Conventional Branches* No. of Islamic Branches* Total Branches* Punjab Sindh Khyber PK Baluchistan 447 30 39 8 76 6 17 6 523 36 56 14 Azad Kashmir Gilgit / Baltistan Federal Capital Total 3 6 15 548 1 2 6 114 4 8 21 662 *Including Sub Branches 662 Branches & 614 ATMs 24/7 BANKING SERVICES The Government of the Punjab (GOPb), being majority shareholder and sponsor of the Bank, holds 57.47% shares of the Bank. As majority shareholder, Chairman of the Board is nominated by the Government of the Punjab from amongst official Directors. Further, in terms of section 10(3) of The Bank of Punjab Act, 1989, the Chairman shall preside over meetings of Board of Directors and shall have a casting vote, but he shall not exercise any executive authority or power. The President/CEO, besides being Executive Director, runs the affairs of the Bank in line with governing rules and regulations. The Bank of Punjab, in order to meet business requirements of its diverse clientele, is offering all permissible products and services in line with modern banking requirements. While having multiple deposits products to cater needs of all type of depositors, the Bank has a strong footprint in the areas of Corporate & Investment, Commercial, SME, Agriculture and Consumer financing products. The Bank launched Islamic Banking operations in the year 2013 and is currently offering a wide range of Shariah compliant products and services to its valued clients through this platform, as well. Through the umbrella of Alternative Delivery Channels (ADCs), the Bank is offering 24/7 services of ATM withdrawals, Branchless Banking, SMS Banking, Mobile Banking, Phone Banking etc. While achieving the objective of financial inclusion through its presence in remote and unbanked areas, the Bank is playing its due role in the economic growth of the Country through its various specially tailored lending products including initiatives of Government of Pakistan and Government of the Punjab such as Kamyab Jawan Scheme of Prime Minister of Pakistan, Low Cost Housing Scheme of Government of Pakistan and Punjab Rozgaar Scheme. The Bank of Punjab has following Subsidiaries: 1. Punjab Modaraba Services Private Limited 2. First Punjab Modaraba 3. Punjab Capital Securities Private Limited 2
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6. VISION STATEMENT "Your banking partner in creating value and improving lives" 5
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8. MISSION STATEMENT "Meet customer needs through innovative technology products/ services to drive business growth while promoting financial inclusion, diversity and prosperity across the nation with a motivated team through culture of excellence and empathy” 7
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10. VALUES "E-time" - Empathy Teamwork Innovation Meritocracy Excellence to ensure best in class customer service 9
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12. CREDIT RATING UPGRADED CREDIT RATING BY PACRA 2021 Long Term AA + Short Term A1+ RATING DEFINITION LONG TERM RATING AA: Very High Credit Quality. AA Ratings denote a very low expectation of credit risk. They indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable for foreseeable events. SHORT TERM RATING A1+: Obligations supported by the highest capacity for timely repayment. 11
13. PRODUCTS & SERVICES Details of some key conventional banking liability products are as under: CURRENT DEPOSITS TIJARAT CURRENT ACCOUNT BOP Tijarat Account is a current account especially designed to cater needs of business Individuals as well as Business entities including but not limited to Proprietorships, Partnerships, Limited / Unlimited Companies, NGOs, NPOs, Trusts , business oriented government / Semi government entity and any legal entity. Salient Features: • • • • • • • • • • • • • • Value added features on maintaining monthly average balance of Rs.25,000 Free IBFT through ATM Free Online Banking ATM/Over the Counter Cash Withdrawal Insurance upto Rs.25,000/- per day (terms, conditions & exclusions of insurance company will apply) Business Assets Insurance upto Rs.1 million (terms, conditions & exclusions of insurance company will apply) Free issuance of Debit Card. For free renewals, monthly average balance criteria to be met. Free unlimited issuance of Cheque Books Free small or medium locker subject to availability & on maintaining monthly average balance of Rs. 1,000,000. However, Key Deposit to be taken irrespective of maintenance of annual average balance of Rs. 1,000,000/- and above. Free issuance of universal cheques Free issuance of CDR Free Collection of OBC upto thrice of last month’s average balance. Free e-banking facility to view statement of account SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. LIFE CURRENT ACCOUNT It is a current account especially designed to cater banking needs of individuals. Salient Features: • • • • • • • • 12 Value added features on maintaining monthly average balance Rs.25,000/Free issuance of Silver Debit card. For free renewals, monthly average balance criteria to be met. Free online banking Free issuance of universal cheques . Free Life Insurance cover equivalent to three times of last three months average balance of account with an upper limit of Rs 2.0 Million (terms, conditions & exclusions of insurance company will apply). Free e-banking facility to view statement of account . SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available.
14. SALARY PLUS ACCOUNT It is a current account designed for salaried individuals working for an organization that is maintaining its salary disbursement account with BOP with a focus on employees of govt /semi govt organizations, their allied corporations, autonomous bodies and private sector entities. Salient Features: • • • • • • • • • Free issuance of Classic Debit card Free online banking Free Collection of Outstation Cheques upto 3 Gross Salaries in a Month. Free Life Insurance of Rs.500,000/- on maintaining Minimum Monthly Balance of Rs.50,000 (terms, conditions & exclusions of insurance company will apply) Consumer Loan Facility on Attractive Terms. Option to avail salary loan (terms and conditions apply) Free e-banking facility to view statement of account SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. YOUTH EDUCATION ACCOUNT It is a current account especially designed for young students of schools, colleges and universities up to 30 years of age with additional feature of Education Insurance. Salient Features: • • • • • • • • • • • • • Students upto age of 30 years will be allowed to open the account in this scheme. If the age of student is below 18 years, minor/guardian account will be opened and new/normal YEA account will be opened upon submission of CNIC of the student, as per existing procedure. Account can only be opened in Minor/Guardian and Student categories. Joint Accounts are not permitted. There is no minimum balance limit hence account maintaining charges will not be applicable. Free PayPak Debit card Free online banking Free issuance of universal cheques favouring any Educational Institution. The Student qualifying for education cover must be an account holder for atleast One Calendar Month. Student will be provided Insurance cover as long as he/she is less than 30 years of age or his/her parent/guardian is in the age band of 18-60 years. Bank will provide free of cost education insurance cover to student amounting Rs.20,000/- per month for 24 months in case of Natural Death and Permanent Total Disability of Parent/Guardian (one person only), whose name has been reported to the bank at the time of account opening. In case of Accidental Death, the insurance cover will be doubled to Rs.40,000/- per month for 24 months. Terms, conditions & exclusions of insurance company will apply. Free e-banking facility to view statement of account SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. 13
15. PRODUCTS & SERVICES CURRENT DEPOSITS FCY SUPREME CURRENT ACCOUNT This is a foreign currency current account available for all customers who are eligible to open Foreign currency account with BOP as per Bank’s criteria. Salient Features: • • • • • • • • • • • Value added attractions on maintaining minimum balance of USD 10,000 or EURO 8,000 or GBP 7,000. Free Debit Card for PKR A/C (issuance and subsequent renewals). Free issuance of one Cheque Book per month. Free Locker Facility (small and medium) with same title, subject to availability and after maintaining average balance for six months. Free OBC Facility (in PKR CD Account, with same title). Free issuance of universal cheques in PKR Free issuance of CDR in PKR Free online facility from PKR account. Free e-banking facility to view account balance and statement of account is available. SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. CURRENT ACCOUNT This is a basic current account to cater day to day banking needs of general public including individuals, partnership, Public / Private Limited Companies, Trust, Not for profit organizations, government and semi government organizations and any type of business entities. Salient Features: • • • • • 14 Free online banking No limit for debit / credit transactions. Free e-banking facility to view statement of account SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available.
16. CURRENT DIRECT PENSION CREDIT ACCOUNT It is a current account opened in the light of Supreme Court ’s SUO MOTO notice (in year 2007) regarding problems being faced by the pensioners and its subsequent order that pension may be disbursed through all branches of all the licensed banks in Pakistan. BOP Current Direct Pension Credit Account can be opened by any individual pensioner. Purpose of account opening will be specifically mentioned on the AOF as “Direct Credit of Pension” only. Salient Features: • • • • • • • Free online banking No fee or service charges for maintaining such account will be charged. Copy of Pension Book mentioning monthly amount of pension and other particulars will also be required alongwith other documents as required in case of individual accounts. Pensioner & Co-indemnifier will indemnifying the bank (on stamp paper) to the extent of six month’s aggregate pension amount or authorize the bank to mark lien on his/her account upto this amount either by depositing cash or by no withdrawal of monthly pension upto six consecutive months. Free e-banking facility to view statement of account SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. BASIC BANKING ACCOUNT It is a current account available especially for customers like students, mustehkeen-ezakat, salary accounts of government and semi government employees, pensioners, widows and children of deceased employees eligible for family pension/benevolent fund grant. Salient Features: • • • • • • • • • The Account can be opened with an initial/minimum deposit of Rs.1,000 Free online banking No account maintaining charges There is no limit for maintaining minimum balance in the account. However; if balance in BBA account remain "NIL" for continuous (06) months period, such accounts will be closed by the bank. Account holder will be allowed a maximum of 2 deposit transactions and 2 chequing withdrawals, free of charge either through cash/through clearing per month otherwise service charges of a regular banking account shall be applicable for that month as per Bank's Schedule of Charges. Unlimited free ATM withdrawals from Bank's own ATMs Free e-banking facility to view statement of account SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. 15
17. PRODUCTS & SERVICES CURRENT DEPOSITS ASAAN CURRENT ACCOUNT Opening a bank account is not an easy task nowadays. A long list of formalities is required to open a bank account. The Bank of Punjab has introduced a simplified account "BOP Asaan Current Account". This is a current account for low risk/low income unbanked/under banked individuals who face difficulties in account opening due to strict requirements/formalities. These segments of society may include but are not limited to self-employed, pensioners, students, farmers, women/housewives, young adult population, work force etc. Salient Features: • • • • • • • • • • • • Account can be opened with minimum of Rs.100 Account can be opened as individual, joint or minor type. Account can be opened with minimum formalities and on one pager account opening form. There is no minimum balance requirement, no account maintaining charges. The account will preferably be Debit Card based. However, cheque book may be issued as per choice of the customer. Free 1st 25 leaf cheque book Free online banking SMS Alerts service is available at subsidized charges of PKR 40 per month Per Month Total Debit Limit and total Credit Balance limit is Rs.500,000 Account can be converted into normal current account after completion of remaining formalities if later on, accountholder requires financial services for higher amounts than the above specified limits. Free e-banking facility to view statement of account Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. KISSAN DOST CURRENT ACCOUNT BOP Kissan Dost Current Account is a current account Agricultural Business Solution to cater to banking needs of agricultural sector. Salient Features: • • • • • • • 16 Initial deposit required for account opening is Rs. 1,000 Monthly Average Deposit Rs. 10,000 to be maintained for value added features Free issuance of PayPak Debit Card Free 1st 25 leaf cheque book Free 2 Universal cheques per month Free online banking Rate break/discount of 1.00% per annum on all Agricultural(ACD) Financing Products
18. ASAAN REMITTANCE CURRENT ACCOUNT Opening of a bank account to receive home remittances from our dear ones is not easy nowadays and involves a long list of formalities . The Bank of Punjab has introduced "BOP Asaan Remittance Current Account" to facilitate opening of bank accounts by low risk/ low income unbanked/under banked customers for receipt of home remittances directly into bank account instead of resorting to traditional over the counter cash transactions. These segments of society may include but are not limited to skilled/unskilled work force, farmers, less educated/ uneducated people, laborers/daily wagers, women/housewives, self-employed individuals, pensioners, young adult population etc. Salient Features: • The account will open in PKR currency as current account only. • This account shall be fed through Home Remittances from abroad only. • Only “Individuals” can open this account in Single or Joint capacity. • There is no requirement of initial deposit and minimum balance. • Free online banking • No account maintaining charges • No commercial remittances shall be deposited in the account. • No local credit shall be allowed in the account. • No outward remittance will be allowed. • Maximum credit balance of upto PKR 2,000,000. • Cash withdrawal upto PKR 50,000 per day. • Fund transfer from Asaan Remittance Current Account to any other account upto PKR 50,000 per day. • Account can be opened with minimum formalities and one pager account opening form. 17
19. PRODUCTS & SERVICES CURRENT DEPOSITS GID BUSINESS CURRENT ACCOUNT In order to provide self-employment opportunities to unemployed youth, Government of Pakistan has launched Prime Minister’s Kamyab Jawan National Youth Development Program (Youth Employment Scheme) across the country. For this purpose, a current deposit account with the name of BOP GID Business Current Account is developed which will be utilized for loan disbursement and business transactions. This will ensure proper MIS keeping and monitoring of the lending program. Those who have been issued Facility Offer Letter (FOL) by BOP will be eligible to open this account. Salient Features: • • • • • • • • Free SMS Alerts Free Mobile Banking subscription Free online banking No account maintaining charges. All other services/product charges and current account charges will apply as per bank’s prevailing Schedule of Charges. Applicant must bring Facility Offer Letter (FOL) to the branch for opening of BOP GID Business Current Account .The account will not be opened without FOL Feeding of FOL number into FOL field in Flexcube will be mandatory for account opening by CPU. BOP GID Business Current Account can be opened in any BOP branch. KHAAS CURRENT ACCOUNT It is a current account for all individual and sole proprietor customers who have relationship balance of PKR 3 million or Clients with monthly salary of PKR 500K or more. These accounts will be allowed to grow in 12 month period to reach minimum threshold of PKR 3million as relationship balance. Salient Features: • • • • • • • • • 18 Account will be opened in PKR Currency only No Initial Deposit requirement to open KHAAS Current Account PKR 50 will be deducted if monthly average balance falls below PKR 10,000 Free Cheque book Free Universal cheques Free KHAAS Platinum Card (Annual Fee Waiver only if customer is marked as “Priority”) Free Platinum KHAAS Supplementary Card--- Free KHAAS Supplementary Card (only if Primary Card is kHAAS Platinum) 50% waiver on Locker Fees (Any Size) Free SMS alerts
20. • • • • • • • • • • • • • Free Mobile Banking Free IBFT (ATM & Mobile Banking) For KHAAS Current account, a shadow(reward) account will also open in Flexcube by CPU simultaneously. The shadow(reward) account is not a regular account .Account opening formalities will not be required for this shadow(reward) account. Shadow(reward) account will only be utilized by customer to earn rewards in the form of profit on deposit balance available in Shadow(reward) account. Funds can only be transferred between KHAAS Current account and shadow(reward) account through Mobile App. Profit will be calculated @3% per annum on monthly average balance of the shadow(reward) account and will be disbursed in Shadow account on a monthly basis. Withholding tax will apply on the rewards(profit) earned on the shadow(reward) account balance. Zakat will also be applicable on the shadow(reward) account and will be deducted from Shadow account. Enhancement in KHAAS Platinum Debit Card limit i.e: Cash Withdrawal: PKR 200,000 POS/E-Commerce: PKR 1,000,000 Fund Transfer/ IBFT: PKR 1,000,000 SAVING DEPOSITS PLS SAVING BANK ACCOUNT It is a saving account available for general public, govt/semi govt organizations, companies, business entities etc who are eligible to open account as per bank’s criteria. Salient Features: • • • • • • • The Account can be opened with an initial/minimum deposit as stipulated by the Bank from time to time unless specifically exempted. Free online banking Calculation of profit is on monthly average balance method at minimum savings rate. Payment of profit is on half yearly basis. Free e-banking facility to view statement of account SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. 19
21. PRODUCTS & SERVICES SAVING DEPOSITS BEHTAREEN MUNAFA ACCOUNT It is a saving account for general public, govt./semi govt. organizations, companies, business entities etc. who are eligible to open account as per bank’s criteria. Salient Features: • • • • • • • Free online banking Calculation of profit on monthly average balance basis. Profit payment is on monthly basis. Free issuance of Classic Debit card. Free e-banking facility to view statement of account SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. CORPORATE PREMIER ACCOUNT This is a saving account especially designed to cater the needs of business entities/corporate entities. Account can be opened singly or jointly. Salient Features: • • • • • • • Calculation of profit is on monthly average basis. Payment of profit is on monthly basis. Free online banking Priority banking and counter services. Free e-banking facility to view account balance and statement of account is available. SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. FCY SAVING ACCOUNT This is a foreign currency saving account available for all customers who are eligible to open foreign currency account with BOP as per Bank’s criteria. Salient Features: • • • 20 Calculation of profit is on monthly average balance Payment of profit is on half yearly basis. Terms and conditions apply
22. FCY SUPREME SAVING ACCOUNT This is a foreign currency current account available for all customers who are eligible to open Foreign currency account with BOP as per Bank ’s criteria. Salient Features: • • • • • • • • • • • Value added attractions on maintaining minimum balance of USD 15,000 or EURO 12,000 or GBP 10,000. Free Debit Card for PKR A/C (issuance and subsequent renewals). Free issuance of one Cheque Book per month. Free Locker Facility (small and medium) with same title, subject to availability and after maintaining average balance for six months. Free OBC Facility (in PKR CD Account, with same title). Free issuance of universal cheques in PKR Free issuance of CDR in PKR Free online facility from PKR account. Free e-banking facility to view account balance and statement of account is available. SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. YOUNG LIONS SAVING ACCOUNT It is a Saving account which provides a disciplined method of savings for children. The account will be opened with Parent/Guardian. Salient Features: • • • • • • • • • • It is available for children under 18 years of age. Account will be opened as Minor account with Child (M)/Parent or Guardian (G). Calculation of profit is on monthly average balance basis. Payment of profit is on monthly basis. Free issuance of first Cheque Book of 25 leaves. Free issuance of PayPak Debit card. Free online banking Free e-banking facility to view statement of account SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. 21
23. PRODUCTS & SERVICES SAVING DEPOSITS PLS DIRECT PENSION CREDIT ACCOUNT It is a saving account opened in the light of Supreme Court’s SUO MOTO notice ( in year 2007) regarding problems being faced by the pensioners and its subsequent order that pension may be disbursed through all branches of all the licensed banks in Pakistan. BOP PLS Direct Pension Credit Account can be opened by any individual pensioner. Purpose of account opening will be specifically mentioned on the AOF as “Direct Credit of Pension” only. Salient Features: • • • • • • • No account maintaining charges Free online banking Copy of Pension Book mentioning monthly amount of pension and other particulars will also be required alongwith other documents as required in case of individual accounts. Pensioner & Co-indemnifier will indemnifying the bank (on stamp paper) to the extent of six month’s aggregate pension amount or authorize the bank to mark lien on his/her account upto this amount either by depositing cash or by no withdrawal of monthly pension upto six consecutive months. Free e-banking facility to view account balance and statement of account is available. SMS Alert facility is available subject to payment of annual charges as per bank’s schedule of charges. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available. ASAAN SAVING ACCOUNT Opening a bank account is not an easy task nowadays. A long list of formalities is required to open a bank account. The Bank of Punjab has introduced a simplified account "BOP Asaan Saving Account". This is a saving account for low risk/low income unbanked/under banked individuals who face difficulties in account opening due to strict requirements/formalities. These segments of society may include but are not limited to self-employed, pensioners, students, farmers, women/housewives, young adult population, work force etc. Salient Features: • • • • • • • • • • 22 Account can be opened with minimum of Rs.100/- as initial amount. Account can be opened as individual, joint or minor type. Account can be opened with minimum formalities and on one pager account opening form. There is no minimum balance requirement, no account maintaining charges The account will preferably be Debit Card based. However; cheque book may be issued as per choice of the customer. Free online banking Per Month Total Debit Limit and total Credit Balance limit is Rs.500,000 Account can be converted into normal saving account after completion of remaining formalities if later on, accountholder requires financial services for higher amounts than the above specified limits. Free e-banking facility to view statement of account Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self service IVR system is available.
24. PLS LG ACCOUNT In order to ensure monitoring of Local Govt . Accounts and to provide them required banking facilities, BOP has introduced a BOP PLS LG Account only for Local Government under Government of Punjab. All Local Government bodies as per Punjab Local Government Act, 2019 will be eligible to open this account including Metropolitan Corporation, Municipal Corporation, Municipal Committees, Town Committees, Tehsil Councils and Village Punchayats & Neighborhood Councils. Salient Features: • • • • • • • • • Free Universal Cheques Free CDRs Free Duplicate Account Statements Free online banking Profit calculation on monthly average deposit at minimum saving rate Profit payment on half yearly basis All facilities and free features allowed to Governments accounts as per prevalent Schedule of Charges will apply. Restriction on Cash payment/withdrawal per transaction from accounts as per limit to be notified under Punjab Local Govt. Accounts Rules 2019. The limit will be communicated in the light of instructions received. However in the meantime no cash payment/withdrawal from LG Accounts is to be made till limit amount is received. KISSAN DOST SAVING ACCOUNT BOP Kissan Dost Saving Account is a saving account Agricultural Business Solution to cater to banking needs of agricultural sector. Salient Features: • • • • • • • • Initial deposit required for account opening is Rs. 1,000 Monthly Average Deposit Rs. 25,000 to be maintained for value added features Free 1st 25 leaf cheque book Free 2 Universal cheques per month Free online banking Rate break/discount of 1.00% per annum on all Agricultural(ACD) Financing Products Profit payment on half yearly basis Profit calculation on monthly average basis 23
25. PRODUCTS & SERVICES SAVING DEPOSITS KHAAS SAVING ACCOUNT It is a saving account for all individual and sole proprietor customers who have relationship balance of PKR 3 million or Clients with monthly salary of PKR 500K or more. These accounts will be allowed to grow in 12 month period to reach minimum threshold of PKR 3million as relationship balance. Salient Features: • • • • • • • • • • • • • • • Account will be opened in PKR Currency only No Initial Deposit requirement to open KHAAS Saving Account No Account maintenance Charges Profit shall be disbursed Semi annually (Normal PLS Saving rate) Free Cheque book-(Any Size) Free Universal cheques Free Platinum KHAAS Card Free Platinum KHAAS Supplementary Card 50% waiver on Locker Fees (Any Size) Free SMS alerts Free Mobile Banking Free IBFT (ATM & Mobile Banking) No shadow account is linked with KHAAS Saving Account Zakat and Withholding Tax will apply Enhancement in Platinum KHAAS Debit Card limit i.e: • Cash Withdrawal: PKR 200,000 • POS/E-Commerce: PKR 1,000,000 • Fund Transfer/ IBFT: PKR 1,000,000 TERM DEPOSITS BONUS MUNAFA TERM DEPOSIT BOP Bonus Munafa Term Deposit (BMTD) a term deposit available for general public i.e. anyone who is eligible to open bank account and invest as per bank’s criteria. The term deposit can be booked singly or jointly. Salient Features: • • • • 24 BOP Bonus Munafa Term Deposit offers monthly profits on your savings Earn a minimum profit rate of 6.10% p.a to 7.25% p.a. depending on the tenor chosen. Earn additional 0.5% p.a to 3% p.a. bonus profit by maintaining only 25% of total BMTD amount as monthly average balance in the linked Current Account Minimum amount of investment is Rs.50,000/- and no maximum limit
26. Salient Features : • • • • • Available in flexible placement periods of 1 Month, 3 Months, 6 Months, 1 Year, 2 Years, 3 Years, 4 Years & 5 Years Customer can open linked current account of any type (current account, BOP Tijarat Account, BOP Life Current Account, BOP Salary Plus Account, BOP Youth Education Account, BOP Current Direct Pension Credit Account, BOP Basic Banking Account, BOP Kissan Dost Current Account, BOP Asaan Current Account, BOP Yes Business Account) If the requirement of 25% monthly average deposit in the linked current account is not met in any month, customer will not qualify for bonus profit Incase of pre-mature encashment, rate corresponding to the highest completed tenure, as available at the time of TD booking for respective Term Deposit Product, shall be applied for the entire outstanding period of TD. However, in case of term deposit of one month, the prevailing normal savings rate shall be applied. The differential of profit already paid will be deducted out of accrued profit payable &/or customer's account Upto 90% Financing Facility available as per bank’s policy in vogue. PLS TERM DEPOSIT It is a Term Deposit account for general public, govt./semi govt. organizations, companies, business entities etc. who are eligible to open account as per bank’s criteria. Salient Features: • • Term Deposit is available in flexible placement periods of 1 Month, 3 Month, 6 Month, 1Year, 2 Year, 3 Year, 4 Year, 5 Year Profit payment on Monthly, Quarterly, semiannually and at Maturity FOREIGN CURRENCY TERM DEPOSIT BOP Foreign Currency Term Deposit is term deposit available for all customers who are eligible to open foreign currency account with BOP as per Bank’s criteria. Salient Features: • • Term Deposit is available in flexible placement periods of 1 Month, 3 Month, 6 Month, 1Year Profit payment at Maturity 25
27. PRODUCTS & SERVICES TERM DEPOSITS ROSHAN DIGITAL ACCOUNT Roshan Digital Account is a major initiative of State Bank of Pakistan which provides banking solutions for millions of Non Resident Pakistanis. BOP offers Roshan Digital Account for Non-Resident and Resident Pakistanis (with declared assets held abroad) to invest in Pakistan with ease. Customer can open either Foreign Currency USD/ GBP/EUR or Pak Rupee denominated account, under Conventional Banking and Islamic Banking, with exciting investment opportunities i.e Naya Pakistan Certificates/ Islamic Naya Pakistan Certificate issued by government and Term deposit products/Riba Free Certificates of the Bank. Salient Features: • Roshan Digital Account is a major initiative of State Bank of Pakistan which provides banking solutions for millions of Non Resident Pakistanis. • BOP offers Roshan Digital Account for Non-Resident and Resident Pakistanis (with declared assets held abroad) to invest in Pakistan with ease. Customer can open either Foreign Currency USD/ GBP/EUR or Pak Rupee denominated account, under Conventional Banking and Islamic Banking, with exciting investment opportunities i.e Naya Pakistan Certificates/ Islamic Naya Pakistan Certificate issued by government and Term deposit products/ Riba Free Certificates of the Bank. • Roshan Digital Account will provide prospective customers an exclusive opportunity to remotely open an account in Pakistan through an entirely digital and online process without visiting any BOP branch in Pakistan. Further, RDA product will provide innovative banking solutions to individuals seeking to undertake banking, payment and investment activities in Pakistan. • To open an account, Non- Resident customers are requested to access a user-friendly and easy-to-use digital portal by visiting website. www.bop.com.pk • For Resident Pakistani, account can only be opened by visiting BOP branches that are authorized to open Foreign Currency accounts. • Resident Pakistani can open account in multiple currencies i.e USD, GBP, EUR. Normal account opening procedure will be followed. • Non-resident Pakistani can open Joint account with Resident/Non-Resident Pakistanis in NRVA and FCVA. • Resident Pakistani can open FCVA account singly as well as jointly with Resident Pakistani only. Eligibility Criteria: • Individual Non Resident Pakistani • Employees or officials of the Federal or Provincial Governments posted abroad in the tax year • Foreign Nationals having Pakistan Origin Card (POC) • Resident Individual Pakistanis who have duly declared assets held abroad as per wealth statement declared in latest tax return with FBR is eligible for opening of Foreign Currency Value account in individual capacity. 26
28. BANCASSURANCE "Bancassurance" "Bancassurance" means distribution of insurance products of insurance companies through bank’s distribution channels. The concept of bancassurance in Pakistan took birth in 2003 but this sector got encouragement during 2008-2009. This product attracted a number of banks in Pakistan, especially those with large branch network and extensive clientele. At present, there are more than twenty banks involved in the business of bancassurance with different companies. This business is managed by Life Insurance Companies and falls under the purview of Securities and Exchange Commission of Pakistan (SECP) who has provided comprehensive guidelines for Bancassurance business which are mandatory to be followed by the banks & insurance companies. The Bank of Punjab is in agency arrangements with two insurance companies i.e. M/s EFU Life Assurance Limited and M/s IGI Life Insurance Limited for Bancassurance plans whereby BOP act as corporate insurance agent for specified insurance products of these companies. It is to be cleared that these plans are underwritten by these insurance companies and the Bank of Punjab is only acting as their corporate distribution agent. These plans are not guaranteed by The Bank of Punjab or its affiliates and are not The Bank of Punjab product. Presently, The Bank of Punjab is offering under-mentioned Bancassurance Plans: • • • • EFU Child Savings Plan EFU Marriage Plan EFU Savings Plan EFU Retirement Plan RETAIL FINANCE CAR LEASE - CARGAR BOP Cargar (Auto Financing) is assisting the small and large businessmen, salaried individuals in fulfilling their desire of having a car of their own, by helping them to purchase local/ imported new or used vehicles at a very minimum documentation and flexible financing options with low down payment. APNA GHAR HOUSE FINANCING Your home is the center of your world, a place where you find peace and comfort. BOP understands your desire to make your house truly your home. BOP House Financing ensures this happens. 27
29. PRODUCTS & SERVICES RETAIL FINANCE APNA GHAR LOW COST HOUSING FINANCE The Bank of Punjab, under guidance of State Bank of Pakistan through Prime Minister’s NAYA Pakistan Housing Program and NAPHDA is contributing towards country’s development and prosperity by fulfilling dreams of millions through financing for affordable (Low Cost) housing. ADVANCE SALARY PERSONAL LOAN A need based unsecured term loan that can help you meet your immediate financial needs, through cash pay back vide equal monthly installments. BOP SOLAR Power your home with solar energy Avail BOP‘s Revolutionary financing offer BOP is the pioneer bank in financing option for customers to purchase solar power on east terms and discounted prices. CARVAAN FLEET FINANCING Carvaan Asan is making efforts to explore new opportunities and expand the horizons by taking your business to new destinations. BOP Carvaan Fleet Financing is offering commercial vehicles on easy and simple financing options by leasing Cars, Vans, Small and Large Trucks etc. with Tracker facility. KISSAN DOST PRODUCTION LOAN To provide short-term facility to the Individual & Corporate farmers for purchase of Farm Inputs (Seeds, Fertilizers, Pesticides, Fungicides etc). 28
30. KISSAN DOST LEASE FINANCE FACILITY The scheme has been designed to provide financial assistance to farmers for purchase of Agri implements /Machinery etc. exclusively for agri related activities. KISSAN DOST COLD STORAGE FINANCE FACILITY The purpose of this loan is to establish compartmentalized cold storage units where perishable Agri commodities can be stored for a longer duration to obtain a year round supply, reducing post-harvest losses. KISSAN DOST LIVESTOCK DEVELOPMENT SCHEME Encourage dairy farmers to establish dairy farm to meet the growing demand of dairy products at reasonable prices. BOP AGRI VEHICLE LEASING All Commercial & Semi Commercials (Light Commercial) vehicles for Agricultural use. SME PRODUCTS Some of the SME loan products are as under: Product & Services Offered • • • • • • BOP Apni Dokan BOP Fori Sahulat BOP Kamyab Karobar BOP Shamsi Tawanai BOP Sonay pe Sohaga BOP Supply Chain Finance SBP Refinance Schemes • • • • • • • • Export Finance Scheme Financing Facility for Storage of Agricultural Produce Long-term Financing Facility for Plant & Machinery Mark-up & Guarantee Facility for Rice Husking Mills in Sindh Refinance Scheme for Modernization of SMEs Refinance Scheme for Special Persons Refinance Scheme for Women Entrepreneurs Refinance Scheme for Working Capital Financing of SEs & low-end MEs 29
31. PRODUCTS & SERVICES GOVERNMENT INITIATIVES Punjab Rozgar Scheme: Small & Medium Enterprises are the back bone of a country’s economy, and their growth is one of the key factors of economic uplift. Despite their importance, these businesses lack access to financing options. In order to give boost to this neglected sector, Government of Punjab has been working on various uplift initiatives which have been merged as a single scheme post-COVID. “Punjab Rozgar Scheme”, launched by Punjab Small Industries Corporation (PSIC) in collaboration with The Bank of Punjab aims to provide subsidized small business loans in the range of Rs. 100,000/- to Rs. 10,000,000/-. Prime Minister’s Kamyab Jawan – Youth Entrepreneurship Scheme (YES): In order to uplift the youth of the country by offering opportunities to utilize their entrepreneurial potential to the fullest, Government of Pakistan has re-opened the applications under Kamyab Jawan - Youth Entrepreneurship Scheme for provision of subsidized business loans. All eligible persons can apply for the loan by visiting Kamyab Jawan Portal at https://www.kamyabjawan.gov.pk/ BankForm/newApplicantForm. No other mode of application submission other than through designated online portal is acceptable. Government’s Mark up Subsidy Scheme for Housing Finance: Lack of affordability is a key factor depriving low-income population from access to institutionalized housing finance to meet their respective needs. In order to facilitate availability of long-term affordable funding for housing to these segments of society, GOP and State Bank of Pakistan (SBP) have decided to introduce a “Government’s Mark up Subsidy Scheme for Housing Finance”. PRODUCTS OFFERED BY CORPORATE BANKING The Bank of Punjab has recently created a new segment of “Corporate Banking” targeted at providing seamless banking services to its Commercial and Corporate clients by sharing maximum value with its relationships and to ensure improved services under one roof. Dedicated teams of Relationship Managers ensure the delivery of our entire range of financial products and services to our clients and provide tailored financial solutions to the customers with respect to their business needs. Some of the Corporate Banking loan products are as under: • • • • • • • 30 Project Finance Debt Syndications and Consortium Financing Corporate Finance Long Term/Demand Finance Working Capital Finance Letter of Credit, Contracts and Export collection services FE Loans, Pre and Post Shipment Export Financing • • • • • • • • Import Financing Bills Discounting Letter of Guarantees Cash Management Services and etc. Housing & Construction Finance Advisory Services Hospital Finance Employee Banking
32. TAQWA ISLAMIC BANKING PRODUCTS BASIC BANKING ACCOUNT Basic Banking Account is based on the Islamic principle of Qard such that the Bank is the ’Borrower’ and the depositor is the ‘Lender’. Main purpose of introducing Basic Banking Account is to facilitate and provide basic banking facilities to the low income people. • • • The salient features of this account are as follows: • • • • The minimum initial deposit will be Rs. 1,000/Account will be opened in PKR. The account will be non remunerative account. • No limit on minimum balance. In cases, where balance in BBA remains 'nil' for a continuous six month period, such accounts will be closed. No fee for maintaining BBA. Free of charge ATM withdrawals from the bank's own ATMs. In case of withdrawal from BBA through the ATM machines of other banks, bank shall recover charges as per schedule of charges. Statement of Account will be issued once in a year free of charge. Other service charges will be applicable as per approved schedule of charges. CURRENT ACCOUNT Current Accounts are based on the Islamic principle of Qard such that the Bank is the ’Borrower’ and the depositor is the ‘Lender’. • • • • The salient features of this account are as follows: • • • • The minimum initial deposit will be Rs. 1,000/ Account will be opened in PKR, USD, GBP & EURO. The Principal amount is guaranteed. The account will be non remunerative account Unlimited deposits and withdrawals are permissible. Zakat deductions are not applicable. Other service charges will be applicable as per approved schedule of charges. Any benefits in money, kind or services over and above the Principal amount is interpreted as Riba unless such benefits are admissible for all account holders without discrimination PROFIT & LOSS SHARING ACCOUNT The relationship between the Bank and customers holding Savings accounts shall be based on the principles of Mudaraba/Musharakah, where the Bank shall be Mudarib and customers shall be Rabbulmal. Further, the relationship is based on unrestricted Mudaraba arrangement. The salient features of this account are as follows: The minimum initial deposit will be Rs. 100/- However, no initial deposit would be required for opening of accounts by (i) Mustahkeen of Zakat, (ii) Students, (iii) Employees of Government or Semi Government institutions for salary and pension purposes (including widows/children of deceased employees eligible for family pension/benevolent fund grant, etc.) and other similar types of accounts. • • Account will be opened in PKR, USD, GBP, EURO. Minimum balance charges are not applicable • • • Funds will be invested in Shariah Compliant Products. Profit will be calculated on average balance of the month basis and distributed on monthly basis Withholding Tax and Zakat deductions are applicable as per rules. • Other service charges will be applicable as per approved schedule of charges. Note: In case a depositor(s) deposits during a month, he shall pay the due proportionate share in profit, based on monthly average balance during the month. If a depositor divests during a month, the “ad hoc profit” for the number of days for which the balance remains invested, during such month, shall be paid at the profit rate for the preceding month. 31
33. PRODUCTS & SERVICES TAQWA ISLAMIC BANKING PRODUCTS TAQWA RAHAT CORPORATE ACCOUNT The relationship between the Bank and customers holding Savings accounts shall be based on the principles of Mudaraba, where the Bank shall be Mudarib and customers shall be Rabbulmal. Further, the relationship is based on unrestricted Mudaraba arrangement. The salient features of this account are as follows: • • • Account will be opened in PKR. Account will be available for business entities only. Minimum initial deposit for opening of account will be • • • • Rs. 100/-. Minimum balance charges are not applicable. Funds will be invested in Shariah Compliant Products. Profit will be calculated on Daily Product (net) Balance in Customer account and distributed on monthly basis. Withholding Tax and Zakat deductions are applicable as per rules. Other service charges will be applicable as per approved schedule of charges. TAQWA RAHAT ACCOUNT The relationship between the Bank and customers holding Savings accounts shall be based on the principles of Mudaraba, where the Bank shall be Mudarib and customers shall be Rabbulmal. Further, the relationship is based on unrestricted Mudaraba arrangement. The salient features of this account are as follows: • • • Account will be opened in PKR. Account will be available for Individuals only. Minimum initial deposit for opening of account will be • • • • • Rs. 100/-. Minimum balance charges are not applicable. Funds will be invested in Shariah Compliant Products. Profit will be calculated on Daily Product (net) Balance in Customer account and distributed on monthly basis. Withholding Tax and Zakat deductions are applicable as per rules. Other service charges will be applicable as per approved schedule of charges. RIBA FREE CERTIFICATES - RFCS The relationship between the Bank and customers holding Riba Free Certificates shall be based on the principles of Mudaraba , where the Bank shall be Mudarib and customers shall be Rabbulmal. Further, the relationship is based on unrestricted Mudaraba arrangement. • • • • The salient features of this account are as follows: • • • 32 Investments can be made for 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 years Account will be opened in PKR. • Minimum investment required is PKR 10,000 Profit payment options are monthly and at maturity. Profit payment is made to the investor’s designated account in BOP as per terms opted by the customer. Profit will be calculated on daily product basis and distribution will be made as per terms customer has opted for. Premature encashment will be made according to premature schedule. Withholding Tax and Zakat deductions are applicable as per rules.
34. TAQWA ASAAN CURRENT ACCOUNT Taqwa Asaan Current Account is based on the Islamic principle of Qard , such that the Bank is the ’Borrower’ and depositor is the ‘Lender’. The salient features of this account are as follows: • • • • • The minimum initial deposit will be Rs. 100/- for account opening Account will be opened in PKR only Transactions limits: Total Debit per month Rs. 500,000/Total Credit Balance Limit Rs. 500,000/- • • • • • • • • Only Individuals can open these accounts as single or joint accounts. The Principal amount is guaranteed. The account will be non-remunerative account No minimum balance requirement Zakat deductions are not applicable Separate account opening form will be used for opening of Asaan Accounts Other service charges (if any) will be applicable as per approved schedule of charges Other terms & conditions as per account opening form TAQWA ASAAN SAVING ACCOUNT The relationship between the Bank and customers holding Taqwa Asaan Savings accounts shall be based on the principles of Mudaraba, where the Bank shall be Mudarib and customers shall be Rabb-ul-maal. Further, the relationship is based on unrestricted Mudaraba arrangement. The salient features of this account are as follows: • • • • • The minimum initial deposit will be Rs. 100/- for account opening Account will be opened in PKR only Transactions limits: Total Debit per month Rs. 500,000/Total Credit Balance Limit Rs. 500,000/- • Profit will be calculated on average monthly balance basis and paid monthly • Deposits are maintained on single tier basis • Only Individuals can open these accounts as single or joint accounts • No minimum balance requirement • WHT and Zakat are applicable as per government rules • Separate weightages shall be announced for this category of account • Separate account opening form will be used for opening of Asaan Account • Other service charges (if any) will be applicable as per approved schedule of charges • Other terms & conditions as per account opening form TAQWA BUSINESS ACCOUNT With TAQWA Business Account customers can now transact their entire banking related activities nationwide through single platform. Additionally, this product is packed with exclusive free of cost services which will facilitate customers on every touch point of their business cycle to ensure business prosperity and growth. This account works in accordance with Shari’ah Principles and following are its salient features: • Mudarabah Based product whereby the profit is distributed between the customer and Bank based on the pre-determined profit sharing ratio and weightages. • • • • • • • • • Free IBFT. Free Online Banking. Free ATM/Debit Card. Free issuance of Cheque Books. Free issuance of universal cheques. Free issuance of CDR. Free Collection of OBC upto thrice of last month’s average balance. Free e-banking facility to view account balance and statement of account. Free of Cost Utility Bills Deposit Facility through BOP ATM Network, BOP Phone Banking and self-service IVR system. 33
35. PRODUCTS & SERVICES TAQWA ISLAMIC BANKING PRODUCTS TAQWA MEHERBAAN CERTIFICATE TAQWA Meherbaan Certificate (TMC) is structured within the realm of Mudarabah principles which offer’s small/medium depositors a medium term low risk and high return avenue with regular stream of profit to cater their house hold and other domestic needs. The salient features of this account are as follows: • Mudarabah based product whereby the profit is distributed between the customer and Bank based on • the pre-determined profit sharing ratio and weightages. Fixed interval profit payment – Monthly. • Booking amount limit: • For single Account holder, Rs 100,000/- to Rs. 7,500,000/-. • For Joint Account Holders, Rs 100,000/- to Rs.15,000,000/-. • Tenure 3 years. • Multiple TMC(s) booking option. TAQWA DIRECT PENSION CREDIT ACCOUNT Taqwa Direct Pension Credit Account is a depository account which aims at providing the necessary tool for pensioners to transact their entire Pension payment related activities through single platform. This account can be opened by any individual/single pensioner. • • • • The salient features of this account are as follows: • Mudarabah based product whereby the profit is distributed between the customer and Bank based on the pre-determined profit sharing ratio and weightages. • Account will be opened in PKR • Account can be fed through Pension payment only • No local or international credit shall be allowed in the account • • • • No commercial remittance shall be deposited in the account The account will be opened by single person (pensioner) only. No requirement for initial deposit. Profit will be calculated on average balance of the month. The bank account shall not be a joint account Withholding Tax and Zakat will be applicable as per prevailing laws and regulations of Government. Other service charges (if any) will be applicable as per approved schedule of charges. Other terms & conditions will be applicable as per account opening form. TAQWA ASAAN REMITTANCE ACCOUNT Taqwa Asaan Remittance Account will facilitate low income/ unbanked customers to receive home remittances through proper account instead of resorting to traditional cash over counter transactions. The salient features of this account are as follows: • • • • • • 34 Qard based product whereby the Bank is the ’Borrower’ and Customer is the ‘Lender’. The account will be non-remunerative account. Account can be fed through home remittance only. Only individuals are eligible to open this account in Single or Joint capacity. Maximum credit balance limit will be Rs. 2,000,000. Cash withdrawal limit will be Rs. 50,000 per day (ATM & • • • • • • • • COC both). Funds transfer limit from Taqwa Asaan Remittance Account to any other account will be Rs. 50,000 per day. No requirement for initial deposit. No local credit shall be allowed in the account. No outward remittance shall be allowed. No commercial remittance shall be deposited in the account. Names of prospective remitter(s) and relationship with beneficiary will be provided by the customer. Other service charges (if any) will be applicable as per approved schedule of charges. Other terms & conditions will be applicable as per account opening form.
36. TAQWA COMMITTEE ACCOUNT TAQWA Committee Account is a unique saving solution which offers regular savers a medium term low risk and high return avenue for savings with flexible options and affordable denominations . The essence of TAQWA Committee Account is the “Multiplier” effect, the Mudarabah partnership increases with time and so does the return. The salient features of this account are as follows: • Mudarabah Based product whereby the profit is • • • • • distributed between the customer and Bank based on the pre-determined profit sharing ratio. Monthly accumulation of profit - payable at maturity. Fixed monthly investment structure. Investment Denominations - Multiple of Rs. 2,000 (i.e., Rs. 2,000/-, Rs. 4,000/-, Rs. 6,000/- and onwards) with a cap of Rs. 20,000/-month. Flexible Term options of 01 and 03 years. Multiple Committee booking options. TAQWA KISSAN DOST SAVING ACCOUNT TAQWA Kissan Dost Saving Account facilitates customers who are engaged directly or indirectly with agri business/ activities. Following segments can open this account: •Individuals • Corporate customers (including Companies) • Small and Medium Enterprises Private Limited Salient Features • Mudarabah Based product whereby the profit is distributed between the customer and bank based on • • • • • • • • • • the pre-determined profit sharing ratio and weightages. Initial deposit required for account opening is Rs. 1,000/Free IBFT Free Online Banking Free Issuance of 1st Pay Pak Debit Card Free Issuance of CDR Free 1st 25 leaves cheque book Free 2 Universal cheques per month Free e-banking facility to view account balance and statement of account Profit payment on monthly basis Profit calculation on monthly average balance basis ASSET SIDE PRODUCTS MURABAHAH FINANCING Murabahah means a sale of goods by a person to another under an arrangement whereby the seller is obliged to disclose to the buyer the cost of goods sold either on cash basis or deferred payment basis and a margin of profit included in the sale price of goods agreed to be sold. Murabahah is transacted in tangible assets only. Murabahah shall not be transacted in respect of any debt instrument including receivables. Being a sale transaction, it is essential that the commodities which are the subject of sale in a Murabahah transaction must exist, owned by the seller and in his physical or constructive possession. Therefore, it is necessary that the seller must have assumed the risks of ownership before selling the commodities to the buyer/customer. It is a fixed price sale and normally is done for short term. The transaction can be used in order to meet the working Capital requirements by way of purchase of goods. It cannot be used to meet overheads payments such as settlement of utility bills or payment of salaries or settlement of amounts owed to others. Murabahah, as a mode of financing, has become synonymous with facility sale of goods by the Banks. As such, almost all kinds of businesses, including those providing services (hotels & hospitals, e.g.) may be the target for Murabahah facilities for their tangible assets or inventory. 35
37. PRODUCTS & SERVICES ASSET SIDE PRODUCTS DIMINISHING MUSHARAKAH FINANCING Diminishing Musharakah (DM) is a form of co-ownership in which two or more people share the ownership of a tangible asset in an agreed proportion and one of the co-owners undertakes to buy in periodic installments the proportionate share of the other co-owner until the title to such tangible asset is completely transferred to the purchasing co-owner. Diminishing Musharakah can be created only in tangible assets. It shall be limited to the specified Asset(s) and not to the whole enterprise or business. Proportionate share of each co-owner must be known and defined in terms of investment. There will be an undertaking by one of the co- owners to the effect to purchase the units of other co-owner at a mutually agreed price until the entire ownership of the asset is transferred to the purchasing co-owner. Additionally, an undertaking shall be given by the other owner to the effect that he will sell the units owned by him to the first co-owner in the event the latter desires to purchase the units earlier than the agreed schedule on such price as may be mutually agreed. Also rental agreement is in place with customer enabling bank to collect the rental on bank’s rented share to customer. IJARAH Ijarah refers to a transaction where the corpus of leased assets remains in the ownership of the Lessor and the Lessee is allowed to benefit from the usefulness of these assets (i.e., their usufruct) for a consideration. Only those assets can be leased which can be used while retaining their original form, e.g., land, building, machinery, tools, crockery & cutlery. During the entire term of the lease, the Lessor must retain title to the assets, and bear all risks and rewards pertaining to ownership. However, if any damage or loss is caused to the leased assets due to the fault or negligence of the Lessee, the consequences thereof shall be borne by the Lessee. The consequences arising from non-customary use of the asset without mutual agreement will also be borne by the Lessee. The Lessee is also responsible for all risks and consequences in relation to third party liability, arising from or incidental to operation or use of the leased assets. The insurance/takaful of the leased asset preferably are in the name of Lessor and the cost of such insurance/takaful borne by him. The amount of rental must be agreed in advance in an unambiguous manner either for the full term of the lease or for a specific period in absolute terms. MUDARABA Mudaraba means an arrangement in which a person participates with his money (called Rabbulmal) and another with his efforts (called Mudarib) for sharing in profit from investment of these funds in an agreed manner. A Mudarib may be a natural person, a group of persons, a legal entity or a corporate body. The profit shall be divided in strict proportion agreed at the time of contract and no party shall be entitled to a predetermined amount of return or remuneration. Financial losses of the Mudaraba shall be borne solely by the Rabbulmal; unless it is proved that the Mudarib has been 36 guilty of fraud, negligence or willful misconduct or has acted in contravention of the mandate. The Mudarib can invest his funds in the business of the Mudaraba with the permission of Rabbulmal. The condition is that in such situation, the Rabbulmal shall not be entitled to a proportion of profit in excess of the ratio that his investment bears to the total investment of the enterprise. The loss, if any, shall be shared in proportion to the Capital of the parties. The amount of Mudaraba investment standing to the facility of Rabbulmal on the culmination or termination of Mudaraba arrangement shall be undertaken to be discharged by the Mudarib.
38. ISTISNA Istisna is a mode of sale , at an agreed price, whereby the buyer places an order to manufacture, assemble or construct, or Cause so to do anything to be delivered at a future date. Price of the goods to be manufactured must be fixed in absolute and unambiguous terms. The agreed price may be paid in lump sum or in installments in the matter mutually agreed by the parties. into a Parallel Istisna contract without any condition or linkage with the original Istisna contract. In one of them, the BOP IBD will be the buyer and in the second the seller. Each of the two contracts shall be independent of the other. They cannot be tied up in a manner that the rights and obligations of one contract are dependent on the rights and obligations of the parallel contract. Unless otherwise mutually agreed, any party may cancel the contract unilaterally if the seller has not incurred any direct or indirect cost in relation thereto. If goods manufactured conform to the specifications agreed between the parties, the purchaser cannot decline to accept them except if there is an obvious defect in such goods. However, the agreement can stipulate that if the delivery is not made within the mutually agreed time period, then the buyer can refuse to accept the goods. The IBOP IBD (buyer in Istisna) can enter Further, Parallel Istisna is allowed with a third party only. In Istisna transactions the buyer shall not, before taking possession (actual or constructive) of the goods sell or transfer ownership in the goods to any other person. If the seller fails to deliver the goods within the stipulated period, the price of the commodity can be reduced by a specified amount per day as per the agreement. Also Murabahah can be done instead of parallel Istisna. RUNNING MUSHARAKAH Running Musharakah is Shariah compliant alternative of Running Finance Facility available in conventional banking system. Running Musharakah is based on the concept of Musharakah. The word Musharakah is derived from the Arabic word Shirkah meaning partnership. Islamic jurists point out that the legality and permissibility of Musharakah is based on the injunctions of the Qur'an, Sunnah, and Ijma (consensus) of the scholars. Purpose of extending Running Musharakah facility is to finance working capital requirements of customer. Unlike Murabaha where finance is allowed for a specific purpose (sale/ purchase of item). In Running Musharakah, customer can utilize the funds for any of its Shariah Compliant working capital requirements. TAQWA TIJARAH FINANCE TAQWA Tijarah Finance is a short term trade based financing facility designed to meet the liquidity requirements of the customers. This is a Sale and Agency based financing facility extended to the customers against Finished Goods. Tijarah Finance product provides flexibility to the Customers who deal with ready-to-sell items and require working capital for inventory holding or receivable financing purposes. TAQWA Tijarah Finance product is available in following variants: • Tijarah Finance – Local • Tijarah Finance – Exports • Islamic Export Refinance Facility under Tijarah Finance 37
39. PRODUCTS & SERVICES OTHER PRODUCTS LETTER OF CREDIT (LC) THROUGH MURABAHAH LC is one of the most widely used modes of settling trade debts on an international level. Also, it is a convenient method for obtaining short-term financial accommodation from banks by the customers. Practice for Documentary Facility (UCP) is a set of rules on the issuance and use of Letters of Facility. It provides all the important aspects and definition of terms used in documentary operations in foreign trade}. The concept of documentary letter of facility is to provide comfort and protection to suppliers / exporters, in respect of payment of the good supplied to the importers, by providing written assurance to pay the specified amount, in the original currency, upon conformity / acceptability of the documents. The documentary letter of facility is deemed to be irrevocable unless specially marked as “Revocable”. “Irrevocable” documentary LCs may not be amended or cancelled without the agreement of all the parties involved. It is pertinent to mention that the payment is guaranteed upon fulfillment of certain terms and conditions and submission of desired documents under Uniform Customs and Practices (UCP) 600 {The Uniform Customs and LCs, in general should not exceed 90 days. In Case of any exception, the facility should be adequately collateralized and/or sources of retirement should be properly identified. Reference to UCP 600 is to be made for details on types of LCs. ALTERNATIVE DELIVERY CHANNELS Following payment segments have been merged under the umbrella of Digital Banking Group: • • • • • Alternate Distribution Channels Payment Card Products Cash Management Department Branchless Banking BOP Contact Center The Bank of Punjab through its Digital Banking Platform is offering commutative services to its clients which broadly include commercial electronic banking activities, remote banking convenience and financial inclusion initiatives. The solutions being offered by the Bank are at par with the global standards and enable quick, accurate and convenient banking services to its valued clients. Under Alternate Delivery Channels (ADC) initiatives, the Bank has successfully introduced following services: • • • • • • 38 BOP Debit MasterCard SMS Banking BOP Mobile Banking Utility Bills Payment System Interbank Funds Transfer BOP Phone Banking & Telesales Unit • • • • • • Customer Relationship Management (CRM) solution Branchless Banking platform Cash Management payments system BOP Tap & Pay for QR based payments Electronic Statements Mastercard 3D Secure The Bank of Punjab is supporting GoPb in the areas of healthcare, child education, direct subsidy disbursement, education and vocational training with an objective to uplift underprivileged segments of the society. In addition, the Bank has led from front in digitizing GoPb collections and payments mechanism across various departments, while maintaining transparency, accuracy and convenience. Some of the key initiatives in this respect are as under: • Khidmat Card Program for poor & marginalized communities • Disbursement of Scholarships under Punjab Education Endowment Fund • Payments under Prime Minister’s Kissan Package •E-Stamping •E-Challans •PESSI
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41. CORPORATE INFORMATION BOARD OF DIRECTORS Mr . Mohammad Jehanzeb Khan.............................................................................................................................................................................................................................Director Dr. Muhammad Amjad Saqib ....................................................................................................................................................................................................................................Director Syed Ghazanfar Abbas Jilani........................................................................................................................................................................................................................................Director Mr. Mohammad Mudassir Amray..........................................................................................................................................................................................................................Director Mr. Asif Reza Sana.....................................................................................................................................................................................................................................................................Director Ms. Nadia Rehman...................................................................................................................................................................................................................................................................Director Mr. Muhammad Naeem Khan...................................................................................................................................................................................................................................Director Mr. Zafar Masud..................................................................................................................................................................................................................................................President & CEO Mr. Kamran Hafeez .......................................................................................................................................................................................................................Secretary to the Board AUDITORS EY Ford Rhodes, Chartered Accountants REGISTERED OFFICE BOP Tower, 10-B, Block-E-II, Main Boulevard, Gulberg-III, Lahore. Telephones: +92 42 35783700–10 Fax No. +92 42 35783975 UAN: 111 200 100 WEBSITE 40 www.bop.com.pk REGISTRAR M/s. Corplink (Pvt) Limited Wings Arcade, 1-K, Commercial, Model Town, Lahore. Telephones: +92 42 35916714, 35916719, 35839182 Fax No. +92 42 35869037
42. ORGANIZATIONAL STRUCTURE 41
43. 42 • Dr. Muhmmad Amjad Saqib • Mr. Muhammad Naeem Khan • Mr. Asif Reza Sana • Syed Ghazanfar Abbas Jilani • Mr. Zafar Masud • Mr. Mohammad Jehanzeb Khan • Mr. Mohammad Mudassir Amray • Ms. Nadia Rehman Standing from Left to Right BOARD OF DIRECTORS
44. BOARD OF DIRECTORS COMPOSITION As of December 31 , 2021, composition of Bank’s Board of Directors is as under: 1 Mr. Zafar Masud President & CEO 2 Mr. Mohammad Jehanzeb Khan Director 3 Dr. Muhammad Amjad Saqib Director 4 Syed Ghazanfar Abbas Jilani Director 5 Mr. Mohammad Mudassir Amray Director 6 Mr. Asif Reza Sana Director 7 Ms. Nadia Rehman Director 8 Mr. Muhammad Naeem Khan (*) Director * Fit and Proper Test (FPT) cleared by SBP on 17-02-2022. ANNUAL PERFORMANCE EVALUATION OF THE BOARD The Board of Directors of the Bank of Punjab are responsible for ensuring compliance with the regulatory regime and devising strategies that enable the Bank in reaching its desired goals and objectives, providing the management with strategic direction and monitor overall performance of the Bank. In order to protect the interests of shareholders in a timely manner, the Board plays a key role to act as a bridge with the management on their behalf. In terms of SBP’s guidelines, Corporate Governance Regulatory Framework and requirements of Listed Companies (CCG) Regulations 2019 on performance evaluation of Board of Directors, a formal and effective mechanism is in place since 2016. As per the requirements of these statutes, the Board decided to opt for in-house approach with qualitative and quantitative techniques and evaluation by an external independent evaluator every three years. Key performance indicators mainly covered in Board’s performance evaluation include: policies encompassing Banks role in areas of emerging scenarios. • The Board, its individual members, Committees and independent members discharge their roles in effective and efficient manner in line with regulatory requirements. • Participation and contribution of all members through effective mechanism of Committees. • Regular and effective check on Internal Controls, Compliance and Audit Function. • Appropriate composition, experience and effectiveness of the Board & Sub-Committees, clear understanding of Bank’s goals, vision & mission statements. Accordingly, as per mechanism approved by the Board, inhouse approach and quantitative technique with scored questionnaire for Board evaluation was conducted in 2021, covering independent directors, full Board, Board Committees and Chief Executive. Areas of improvement during the evaluation will be noted for appropriate action. It is observed that Board of Directors at BOP has efficiently performed its roles and responsibilities and added maximum shareholder value. • Input on Bank’s strategies & policies and focus on alignment in right direction with the development of new 43
45. BRIEF PROFILE OF BOARD MEMBERS Zafar Masud is a seasoned banker and entrepreneur , focus on Development Finance, with 27 years of proven track record of success and delivery. Served at top positions for multinational banks in Pakistan and abroad, including Regional Managing Director & CEO for Southern Africa, Barclays Bank plc. - responsible for three countries and represented on Board of Directors, managing total balance sheet size of US$3Bn and around 10,000 people. Worked at senior levels in Citibank, Dubai Islamic Bank and American Express Bank. Before that until August 2018, worked as Director General, National Savings,Ministry of Finance. Initiated digitization of organization, including online banking and ATM Cards with the support of Gates Foundation, DfID and World Bank. Successfully included Persons with Disabilities and Shuhadah Families in welfare products of National Savings and set in motion launch of Overseas Pakistanis Savings Certificates. Mr. Zafar Masud Most recently, was working as CEO (Interim) for InfraZamin Pakistan - a DfID,UK driven initiative - a first of its kind credit enhancement company for social infrastructure financing in Pakistan. Has extensive experience of working at Board of Directors level for major public and private sector entities including State Bank of Pakistan , Member of Independent Monitory Policy Committee, Oil & Gas Development Company Limited, Port Qasim Authority, Quaid-e-Azam Thermal Power(Private) Limited and Gadoon Textile Mills Limited. Member of IMF motivated Task Force on Framing SOE Law, set-up by the Ministry of Finance. Regular contributor to the local media on the topics of finance, economics and energy. Mudassir is a seasoned banker with well-rounded exposure of over 25 years in senior management roles with proven track record in six geographies (USA, Nigeria, Malaysia, Hong Kong, Singapore, and Pakistan) and multiple roles with local and international banks. Mudassir held various senior positions, including Mr. Mohammad Mudassir Amray 1. Managing Director & Chief Executive Officer of Titan Trust Bank in Nigeria 2. Managing Director & Head of Global Capital Management for LATAM at Citibank New York 3. Managing Director & Group Head of Global Corporate & Investment Banking & Business SCO for Citibank Nigeria and Ghana 4. Head of Wholesale Banking at Al-Rajhi Bank in Malaysia 5. Director, Global Network Capital Management at Citibank in Hong Kong 6. Head of Islamic Banking for Asia Pacific at Citibank in Singapore 7. Country Business Head and Business SCO at Citibank in Pakistan 8. Regional Manager & Country Head Structured Finance for Bank Alfalah in Pakistan 9. Corporate Bank Head at United Bank Limited in Pakistan Mudassir has strong focus on governance and processes and has a balanced approach towards risk and business. He exhibits courage in taking tough decisions and had developed and adopted smart business strategies in different environments. 44
46. Dr . Muhammad Amjad Saqib is a prominent social worker, highly sought consultant, and a distinguished literary figure of our country. He graduated from King Edward Medical College Lahore and joined civil service of Pakistan (DMG) in 1985. While moving towards higher echelons in his dynamic career, he resigned in 2003 with an intent to dedicate himself to become a social entrepreneur and bring about paradigm shift in the society by founding a unique and largest interest free microfinance organization- “Akhuwat” wherein he is Founding chairman/Executive Director. Akhuwat being envisioned with a commitment for a poverty free society had disbursed over $207 million on various initiatives. Besides supporting the Chief Minister Punjab, as Advisor on Poverty Alleviation and Social Development, he renders honorary services for many Civil Society Organizations and NGOs. Dr. Muhammad Amjad Saqib He has been awarded “Life Time Achievement Award, 2014” by Abu Dhabi Islamic Bank (ADIB) and Thomson Reuters on 29th October 2014 at Dubai. The President of Pakistan awarded him “Sitara-a-Imtiaz” in 2010 on account of his contributions made for social development and poverty alleviation. Syed Ghazanfar Abbas Jilani joined Pakistan Audit and Accounts Service in 1984 and retired as Federal Secretary, Economic Affairs Division, Ministry of Finance in 2018. During his long and distinguished career he has held various senior positions in the Government and has diversified professional experience to his credit. He remained posted in Pakistan and USA in various capacities having close interactions with donors like the World Bank, Asian Development Bank, Islamic Development Bank, Asian Infrastructure Investment Bank, United Nations Development Program, European Union and Bilateral Economic Development Partners. Syed Ghazanfar Abbas Jilani He was on the Board of Directors of Pak-Arab Refinery Company, Pakistan International Airlines Company, Sui Southern Gas Company Limited, Government Holding Private Limited, National Highway Authority, National Engineering Services Pakistan, Pakistan Television and Islamabad Electric Supply Company. His international exposure comprises as first Secretary in Pakistan’s Mission to United Nations, delegate to the UN General Assembly and the focal person for Plenary Session to General Assembly. He held various positions as nominee of the Government of Pakistan i.e. i) Alternate Governor of the World Bank, Washington DC, ii) Alternate Governor of Asian Development Bank, Manila, iii) Asian Infrastructure Investment Bank, Beijing, iv) Alternate Governor and Director of Islamic Development Bank and member of Finance Committee, v) Director Pak-China Investment Company Limited and was Chairman of its Finance Committee. He was leader of Pakistan’s delegation to the Annual meeting of the Islamic Development Bank in Tunisia (2018), Asian Development Bank in Manila, Philippines (2018) and Asian Infrastructure Investment Bank at Mumbai, India (2018). Attended World Bank/IMF Spring Meeting in Washington DC and Annual Meetings of the World Bank/IMF in Bali, Indonesia. He holds a Masters degree in Business Administration and Bachelors with Major in Economics from Government College Multan. 45
47. Mr . Mohammad Jehanzeb Khan is serving as Deputy Chairman Planning Commission, Government of Pakistan. He did his MBBS from University of Peshawar and MBA (Public Service) University of Birmingham, UK. He held various positions in Government and has 24 years diversified professional experience. His professional expertise includes Public sector financial management. Mr. Mohammad Jehanzeb Khan Mr. Asif Reza Sana is a banker turned entrepreneur and businessman engaged in multiple governance roles at the corporate level. He is well experienced in restructuring banks and creating financial services brands with a differential. He is also a private equity, banking and finance advisor. His prior career has been with world leader multinationals in the disciplines of finance, general management and marketing. He currently also owns insurance, healthcare and consumer products businesses. Mr. Asif Reza Sana Mr. Sana made his professional career debut in marketing, working for the Irish Dairy Board in 1981; he was then hired by the leading chocolate manufacturing multinational, Mars Inc., in 1982. In 1988, he was headhunted by Philip Morris (PM) then the largest consumer products company in the world. After the collapse of the Soviet Bloc in 1989 he was made a member of the Philip Morris task force, based at the international headquarters in Switzerland. Main assignment of the taskforce was to pioneer establishments of PM businesses in the newly liberated markets of Central and Eastern Europe through mergers and acquisitions, licensing and joint ventures. In 1991 he was appointed to the coveted position of Group head of Philip Morris’ legendary flagship brand, Marlboro. He was promoted to a leadership role of managing a profit centre in 1995, responsible for global pricing strategies, financial management across several countries and currencies with complex tax structures and a multinational workforce based in several countries. On his return to Pakistan, he was appointed advisor to the board of directors of Union Bank in 2000. He conceived, negotiated and closed the acquisition of Emirates Bank in Pakistan and Meshraq Bank in Sri Lanka for Union Bank. He was elected a member of the board of directors of Union Bank and continued to work as the executive director as well as a member of the Management Committee, ALCO, and In-Charge of the monthly business performance review of all country group heads. He assisted the HR and Audit committees. The majority shareholders then gave him the sole mandate to implement an exit strategy. He searched, short listed, negotiated and closed the sale of Union Bank to Standard Chartered Bank at a landmark price of US $ 485 million at the highest multiple in the banking industry of Pakistan at that time. Subsequently, as an advisor to Askari bank he carried out the due diligence to determine the enterprise value of the bank. He steered the recapitalization plan of the bank. On the request of the new shareholders he joined the board of restructured Askari Bank as an independent director and served as the chairman of the audit committee for 6 years. He is currently appointed on the board of governors of Naya Pakistan Housing Authority and also serves on the boards of other public listed companies. He is the founding trustee of a charity that rehabilitated radicalized youth in the main stream society through a boarding school and vocational training programme supported by the Government of Pakistan in Northern Areas. He is also on the Advisory board of Global Sustainability Network (GSN) of UK, a UN associated charity. He is an avid golfer, skier and sportsman. 46
48. Ms . Nadia Rehman is a senior economic policy advisor with demonstrated expertise in international trade, digital government, and tech-enabled innovation. She has a consistent track record of building and leading high-performing and diverse teams in complex projects. She produced technically and potentially high impact economic policy research to create consensus on regional trade and investment agreements. Ms. Nadia Rehman Ms. Rehman is currently working with the Government of Pakistan on the National Industrial Policy. During her career, she has served as Pakistan’s Commercial Counsellor to the Czech Republic, Senior Trade Policy Specialist at the World Bank Group and Advisor on National Economic Corridors at the Asian Development Bank. Nadia has also worked with IBM & Microsoft Corporation, USA on developing real-time conferencing platforms. She holds a Master of Public Administration with major in Development Economics from Harvard University where she was awarded the Benazir Bhutto Fellowship in 2020.She also has a Master in Computer Science from Duke University and a B.Sc. (Honors) degree in Computer Science from LUMS with a major in Artificial Intelligence. Mr. Muhammad Naeem Khan is a senior Director level banking professional with diversified domestic and international Commercial and Investment banking background spanning over a period of 35 years. He started his banking career with United Bank Limited in 1974 and served in various senior level positions at National Bank of Oman, Bank of Credit and Commerce International, American Express Bank, Al Faysal Investment Bank. He also served as Chief Operating Officer of Escorts Investment Bank and Inovative Investment Bank (formerly Crescent Standard Investment Bank). Mr. Muhammad Naeem Khan He represented Government College Lahore and Punjab University and played National Squash Championships in Pakistan representing Punjab. Represented Oman and Luxembourg in Squash in International Championships. Travelled widely in Europe and Asia. He holds a Bachelor degree from Government College Lahore. 47
49. BOARD COMMITTEES COMPOSITION AND TERMS OF REFERENCE BOARD AUDIT COMMITTEE (BAC) Mr. Mohammad Mudassir Amray.................................................Chairman Mr. Mohammad Jehanzeb Khan........................................................Member Syed Ghazanfar Abbas Jilani...................................................................Member that the internal audit function has adequate resources and is appropriately placed within the Bank; • Consideration of major findings of internal investigations of activities characterized by fraud, corruption and abuse of power and management's response thereto; • Review of summary of quarterly report on frauds/ forgeries/ dacoities; • The systemic gaps, if any, that facilitated perpetration of fraud have been filled and actions being taken by the management to curb such incidents in the future; • Identify the reasons for delay in detection and reporting to the senior management of the bank and SBP, if any; • Monitor progress of investigations, court cases and recoveries position of cases of Rs. 0.5 million and above; Review of preliminary announcements of results prior to external communication and publication; • Facilitating the external audit and discussion with external auditors of major observations arising from interim and final audits and any matter that the auditors may wish to highlight (in the absence of management, where necessary); Review the efficacy of remedial actions taken to prevent recurrence of frauds/ forgeries/ dacoities such as strengthening of internal controls, etc; • Supervise the Whistle Blowing Unit; • Ascertaining that the internal control systems including financial and operational controls, accounting systems for timely and appropriate recording and the reporting structure are adequate and effective; • Review of the Bank’s statement on internal control systems prior to endorsement by the Board and internal audit reports; • Instituting special projects, value for money studies or other investigations on any matter specified by the Board, in consultation with the chief executive officer and to consider remittance of any matter to the external auditors or to any other external body; • Determination of compliance with relevant statutory requirements; • Monitoring compliance with Listed Companies (Code of Corporate Governance) Regulations, 2019 and identification of significant violations thereof; Terms of Reference TORs of the Committee include ensuring, inter alia: • • • Review of annual and interim financial statements of the Bank, prior to their approval by the Board, focusing on major judgmental areas, significant adjustments resulting from the audit, going concern assumption, any changes in accounting policies and practices, compliance with applicable accounting standards, compliance with Regulations and other statutory and regulatory requirements; and all related party transactions; • Review of management letter issued by external auditors and management’s response thereto; • Internal audit reports are provided to external auditors for the review and that auditors shall discuss any major findings in relation to the reports with the audit committee, which shall report matters of significance to the Board; • Determination of appropriate measures to safeguard the Bank’s assets; • Coordination between the internal and external auditors of the Bank; • External auditor (or a person involved in the audit of the bank) is not a close relative (i.e. Spouse, parents, dependents and non-dependent children) of the CEO, the CFO, the CIA, Company Secretary or a Director of the Bank; • Facilitating the external audit and discussion with external auditors of major observations arising from interim and final audits and any matter that the auditors may wish to highlight; • Review of Management Letter issued by external auditors and management’s response thereto; • Review of the scope and extent of internal audit, audit plan, reporting framework and procedures and ensuring 48 • Monitoring compliance with relevant applicable regulations and identification of significant violations thereof; • Recommending to the Board the appointment of external auditors, their removal, audit fees and related matters; • Consideration of any other issue or matter as may be assigned by the Board.
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51. RISK MANAGEMENT , COMPLIANCE AND NPL REVIEW COMMITTEE (RMC&NRC) Syed Ghazanfar Abbas Jilani...............................................................Chairman Mr. Mohammad Mudassir Amray.....................................................Member Dr. Muhammad Amjad Saqib.................................................................Member Ms. Nadia Rehman..............................................................................................Member keeping in view the regulatory observations in onsite examinations, regulatory enforcement actions, internal assessments/feedback from Internal Audit Function (IAF), compliance reviews, as well as interactions with the Chief Compliance Officer (CCO). • The Committee shall be responsible to, on advice of CEO, approve the appointment of CCO with sufficient experience, expertise, skills and qualifications to perform CCO’s functions in an effective manner and related matter; • Review the minutes of Compliance Committee of Management meetings to ascertain its effectiveness in managing compliance risk. • Review the progress in implementing remedial actions taken with respect to instances of non-compliance or control weakness as identified by CF through its regular ‘Compliance Reviews’ and /or various other sources. • Review and approve the “Internal Risk Assessment Report” of the Bank; • Receive and review Bank’s standardized report/MIS on the ML/ TF/ PF risks posed to the Bank and the effectiveness of available AML/ CFT controls (preventive measures), on a Quarterly basis; • Make recommendations to the Board of Directors in ascertaining Bank’s risk appetite, formulating strategy and policies for managing risks and establish adequate systems and controls to ensure that overall risk remain within acceptable level and the reward compensate for the risk taken, make recommendations to the Board of Directors for approval of any material exceptions to the Risk Management Policies and tolerances; • Recommend to the Board the Bank’s Credit Risk Strategy and Significant Policies relating to Credit Risk and its management which should be based on the Bank’s overall Business Strategy. • Recommend to the Board the bank’s overall risk tolerance in relation to credit risk. • Bank’s overall credit risk exposure is maintained at prudent levels and consistent with the available capital. • Top management as well as individuals responsible for credit risk management possess sound expertise and knowledge to accomplish the risk management function; Bank implements sound fundamental principles that facilitate the identification, measurement, monitoring and control of credit risk; Terms of Reference TORs of the Committee include ensuring, inter alia: • Monitoring and review of all material controls (financial, operational, compliance and risk management); • Risk mitigation measures are robust and integrity of financial information; • Appropriate extent of disclosure of Bank’s risk framework and internal control system in Directors report; • In addition to oversight and monitoring of ML/TF/ PF risks posed to the entity, also be responsible for ensuring that entity has implemented effective AML/ CFT controls (preventive measures) including Targeted Financial Sanctions (TFS) related to TF & PF, STR/CTR; • • • • • The Board of Directors of the Bank has the ultimate responsibility of guiding and overseeing the design and implementation of enterprise wide Compliance Risk Management Program in the Bank. The CF should assist the Board / Committee in monitoring the Bankwide implementation of Compliance Program and the level of compliance risk that the Bank is faced with at any given point in time. Approve “Compliance Risk Strategy” (as part of Bank’s overall risk strategy) and allied Policies of the Bank and oversee its implementation across the entity in letter and spirit; Establishment of a robust Compliance Function (CF) compatible with Bank’s overall risk management strategy, risk profile and complexity of operations, with required authority, independence, financial resources and quality human resources. Approve an end to end compliance program that promotes and supports compliance risk management across the organization, at every hierarchal level of the Bank; Discuss compliance issues regularly, ensuring that adequate time and priority is provided in the Board agenda to deliberate compliance issues and that such issues are resolved effectively and expeditiously. • • • Evaluate the effectiveness of Bank’s overall management of compliance risk, at least annually; 50 Appropriate plans and procedures for credit risk management are in place.
52. • While the ultimate accountability for Operational Risk Management rests with the Board, and the level of risk that the Bank accepts, together with the basis for managing those risks, is driven from the top down by those charged with overall responsibility for running the business; Adequate resources (technical as well as human) are devoted to market risk management; • The Committee shall be responsible for oversight of the IFRS 9 implementation process; Devise policies and guidelines for identification, measurement, monitoring and control for all major risk categories; • Constitute an IFRS 9 Project Steering Committee to administer the Project; • Review and approve Bank’s transition plan for IFRS 9 implementation; • Review the progress against the transition plan on a Quarterly basis; Smooth implementation of IFRS 9 within the timelines stipulated by State Bank of Pakistan. • Bank’s overall market risk exposure is maintained at prudent levels and consistent with the available capital. • The Bank implements sound fundamental principles that facilitate the identification, measurement, monitoring and control of market risk. • • • The Bank has clear, comprehensive and well documented policies and procedural guidelines relating to risk management and the relevant staff fully understands those policies; • Reviewing and approving market risk limits, including triggers or stop losses for traded and accrual portfolios; • • Robustness of financial models, and the effectiveness of all systems used to calculate market risk, ensure that the Bank has robust Management information system relating to risk reporting; HUMAN RESOURCE, COMPENSATION AND NOMINATION COMMITTEE (HRC&NC) • Review Policy for management of risks particularly in the areas of Credit, Market, Interest Rate, Liquidity, Operational, Technology, Information / Cyber Security, Shariah Compliance, Legal, Country, Financial Institutions, Conduct, Compliance, Money Laundering, Terrorism Financing, Proliferation Financing, and Reputational Risks; • Review and recommend to the Board well defined and transparent write-off policy and review and recommend to the Board any write offs of irrecoverable / bad loans; • There is an effective, integrated Operational Risk Management Framework which should incorporate a clearly defined organizational structure, with defined roles and responsibilities for all aspects of operational risk management/monitoring and appropriate tools that support the identification, assessment, control and reporting of key risks; • Review and propose to the Board the delegation of adequate and appropriate powers down the line to ensure proper management and supervision of writeoffs of bad/irrecoverable loans/advances; • Effective internal control and supervisory mechanism is in place for write offs of bad/irrecoverable loans/ advances; • Review the report of NPLs and write offs and major rescheduling / restructurings on quarterly basis; Mr. Asif Reza Sana............................................................................................Chairman Mr. Mohammad Jehanzeb Khan........................................................Member Dr. Muhammad Amjad Saqib.................................................................Member Syed Ghazanfar Abbas Jilani...................................................................Member Terms of Reference TORs of the Committee include ensuring, inter alia: • A fair, transparent and competitive remuneration mechanism be developed and put in place that encourages the culture of “pay for performance”; • Consideration and approval of policy framework for determining remuneration of directors; • Recommending to the Board, the structure of compensation package of Executive Directors, President & CEO, Key Executives and any other employee or group of employees institution-wide; recommendations will then be approved at appropriate level either by shareholders or by the Board of Directors according to legal and regulatory requirements; • Approving the appointment, compensation package (including retirement benefits), promotion/demotion and renewal of the employment contracts of Key Executives (as defined in HR Policy except Chief Operating Officer or equivalent, Chief Financial Officer, Company Secretary and Head of Internal Audit); • Bank wide remuneration policy should take into account all cadres of employees; 51
53. • Review the Remuneration Policy and remuneration setting mechanism at least once every three years; Key aspects of Remuneration Policy would be to develop separate structures of remuneration for Material Risk Controllers (MRCs) and Material Risk Takers (MRTs); • Review on an annual basis, the Annual Business Plan, Cash flow Projections, Forecasts and Strategic Plan presented by the Management of the Bank and recommend these for the approval of the Board of Directors; • Undertaking, annually, a formal process of evaluation of performance of the Board as a whole and its Committees either directly or by engaging external independent consultant; • Making recommendations to the Board of Directors in introducing the necessary mechanisms and risk management systems to safeguard the interests of Investment Account Holders /Profit and Loss Sharing depositors; • Recommending to the Board the selection, evaluation, development, compensation (including retirement benefits) of Group Chiefs / SEVP- G, Chief Financial Officer and Company Secretary; • • Consideration and approval on recommendations of the President & Chief Executive Officer on such matters for key management positions who report directly to Chief Executive Officer or Group Chiefs / SEVP- G; Appointment of Shariah Board to perform the functions as stipulated in the “Shariah Governance Framework for Islamic Banking Institutions” and to take appropriate measures for introducing and implementing an effective Shariah compliance framework; • Recommending to the Board of Directors the approval of the TORs of the Shariah Board and fix remuneration of the Shariah Board members; • Review the potential and competitive status of Taqwa Islamic Banking and suggest policy measures for its growth in line with its future vision; • Review the quarterly accounts of Taqwa Islamic Banking alongwith comparative analysis of Islamic Banks / Islamic Banking Operations in Pakistan; • Review the existing Islamic Banking lending and deposit products of the industry and suggest enhancement to such products and / or discuss characteristics of new products; • Work for promotion of financial inclusion through Islamic Banking under guidelines of the State Bank of Pakistan; • Oversee Bank’s Performance in financing to ‘Priority Sectors’ i.e. Agriculture, Housing and SME Segments.; • STRATEGY, ISLAMIC AND PRIORITY SECTOR FINANCING COMMITTEE (SI&PSFC) Periodically review, at least on a half yearly basis, the Business Strategies and their outcome and future business plans; • Dr. Muhammad Amjad Saqib.............................................................Chairman Mr. Asif Reza Sana ..............................................................................................Member Ms. Nadia Rehman ............................................................................................Member Periodically review, at least on a half yearly basis, performance of new initiatives, products etc. introduced for business growth; • Periodically review, at least on a half yearly basis, portfolio growth trends, exposure concentrations and geographical distribution; • Periodically review, at least on a half yearly basis, the performance versus internal and regulatory targets; • Periodically review, at least on a half yearly basis, the measures taken for capacity building of staff through in-house and external training; • Considering and making recommendations to the Board in respect of the Board’s Sub-Committees and the Chairmanship of the Board’s Sub-Committees; • Keeping the structure, size and composition of the Board under regular review and for making recommendations to the Board with regard to any changes necessary; • Additional disclosures on Governance and Remuneration in the Annual Financial Statements of the Bank are made as required by “Revised Guidelines on remuneration Practices” issued vide SBP’s BPRD Circular No. 01 of 2017 dated 25.01.2017; • Oversight of various Human Resource functions including but not limited to review of Bank’s organizational structure, training and development, implementation of HR plans, HR MIS, succession planning of key executives etc. Terms of Reference TORs of the Committee include ensuring, inter alia: • 52 Review and recommend to the Board the ‘Corporate Strategy’ of the Bank;
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55. • Periodically review, at least on a half yearly basis, the use of technology to strengthen credit appraisal and monitoring. INFORMATION TECHNOLOGY AND COMMUNICATIONS COMMITTEE (ITCC) Mr. Mohammad Jehanzeb Khan....................................................Chairman Mr. Asif Reza Sana ..............................................................................................Member Ms. Nadia Rehman ............................................................................................Member Mr. Mohammad Mudassir Amray ....................................................Member • Review digital products and trends prevalent in the industry along with comparative analysis with peer banks; • Risk management strategies pertaining to Digital initiatives are designed and implemented to achieve resilience, mitigating risk avenues, and service disruptions. Terms of Reference • Maintenance of an independent and effective Technology Audit Function commensurate with the complexity of Bank’s technology risk profile; make recommendations to the Board in this respect; TORs of the Committee include ensuring, inter alia: • Resource gaps (people, process & technology) identified by the management are adequately and timely fulfilled; make recommendations to the Board to this end; • Skills required for technology governance, service delivery, information security and risk management are sufficient and upto date; make recommendations to the Board in this regard; • To establish a comprehensive enterprise technology governance framework which defines the leadership, organizational structures and processes to ensure that the Bank’s technology sustains and extends the enterprise’s strategies and objectives; to make recommendations to the Board to this end; • Review and approve an IT Governance Framework to ensure that Bank’s IT supports and enables the achievement of corporate Strategies and objectives, the Committee shall be responsible to recommend to the Board the IT Governance Framework; • Approve and receive periodic updates on major technology related projects that may have significant impact on Bank’s operations, earnings or capital, and shall also define the criteria for major projects; make recommendations to the Board in this respect; • Review and approve “IT Strategy” and “Digital Strategy” in line with the business strategy of the Bank and monitor and update the same on regular basis keeping in view potential opportunities and threats; • Risk management strategies are designed and implemented to achieve resilience, such as the ability to effectively respond to wide-scale disruptions, including Cyber Attacks and attacks on multiple critical infrastructure sectors; • Establish an efficient and effective IT organization structure in line with the IT governance framework, the Committee shall be responsible to make recommendations to the Board to this end; • Technology procurements are aligned with the IT strategy and approved by the Board; • Formulate a comprehensive policy on due-diligence and risk management of Cloud Service Provider; make recommendations to the Board for approval of this policy; • Review and recommend to the Board Business Continuity Plan (BCP) based on a comprehensive BIA and risk assessment exercise; • Reporting and advising to the Board on status of Digital initiatives, and programs; • • • 54 Technology risks are integrated with the enterprise risk management function to achieve security, reliability, resiliency, interoperability and recoverability of data/information and information assets; make recommendations to the Board in this regard; Review technology related policies and review the same periodically in light of major technological/ regulatory developments at least after every three (03) years; recommend to the Board the technology related policies. Review relevant policies of Digital and Branchless Banking before approval of the Board;
56. SHARIAH ADVISOR BOARD COMPOSITION AND PROFILE Currently , Bank’s Shariah Board consists of following members: 1. 2. 3. 4. Mufti Muhammad Zahid Dr. Muhammad Mushtaq Ahmed Mufti Rafey Ashraf Usmani Mufti Muhammad Umar Irfan BRIEF PROFILE OF MEMBERS: Mufti Muhammad Zahid (Chairman Shariah Board) Mufti Muhammad Zahid is a renowned personality in the field of Shariah having a long association of 29 years while serving as a teacher in various branches of Islam & Arabic language, Vice President of Jamia Imdadia Faisalabad and member of its Dar-ul-Ifta since 1989. Mufti Muhammad Zahid is working as General Secretary Centre for Islamic Economics, Faisalabad, Member Regional Focus Group on Islamic Banking State Bank of Pakistan, Member Shariah advisory cell International Islamic University Islamabad, Member Executive Committee International League of Islamic Literature Pakistan Chapter, External Examiner for viva-voce of thesis of LLM (M. Phil.), Faculty of Sharia & Law, International Islamic University, Islamabad, Member Board of Studies Faculty of Sharia & Law (Dep. Islamic Law) International Islamic University Islamabad, Member Ulema Board PIPS (Pak Institute for Peace studies), Member consultancy group Centre for Islamic Business Riphah International University, Chairman of the Shariah Supervisory Committee of Bank of Khyber and Chairman Shariah Board of Askari Bank Limited and Shariah Board Member of MCB-Arif Habib Islamic Fund. Mufti Muhammad Zahid has authored various publications including Islamic Banking Foundation (translation from English to Urdu of the work of Mufti Muhammad Taqi Usmani). Mufti Muhammad Zahid holds Shahadh Al-Alamiyyah from Wifaq-ul-Madaris, Al- Arabiyyah Pakistan and Masters Degree in Arabic from International Islamic University, Islamabad. Dr. Muhammad Mushtaq Ahmed Member – Shariah Board Dr. Muhammad Mushtaq Ahmed is a renowned Shariah scholar with proven experience of Islamic Banking and Finance. Dr. Mushtaq has preeminent academic background in Islamic Studies & Islamic Banking and he did his Doctorate (Phd) in Islamic studies/ Shariah with research topic of “Islamic Banking Practices - Shariah Perspective”. He specialized in Fiqh, Iftaa and Shariah from Darul Iftaa Wal Irshaad Karachi Pakistan; he has distinction as Gold Medalist in M.A Islamic Studies (Shariah)/Aalimiyya from Jamia Darul Uloom, Karachi. He is teaching Shariah and Islamic banking courses since 2006. He has delivered lectures in various national and international programs about Islamic Banking, his research papers on Islamic Banking and Finance and social issues have also been published in international research Journals. Mufti Rafey Ashraf Usmani Resident Shariah Board Member Mufti Rafey Ashraf Usmani is an eminent Shariah Scholar. Mr. Rafey has strong academic background in Islamic Studies, Islamic Jurisprudence and Islamic Economics. He completed his religious qualifications including Takhassus-fi-Iftaa & Shahdat-ul-Aalimiyah from Jamia Darul Uloom, Karachi. Mr. Rafey has done his MS Islamic Banking and Finance from University of Management and Technology Lahore (UMT). He is visiting faculty member at different academic institutions including Jamia Ashrafiya Lahore, Jamia Usmania Lahore, Minhaj University Lahore and University of Management and Technology Lahore. He has delivered several lectures at different forums and has written about more than three thousand Fatawas on different Islamic topics including Islamic Finance and family law. Mufti Muhammad Umar Irfan Resident Shariah Board Member Mufti Muhammad Umar Irfan is a prominent Shariah scholar. Mufti Muhammad Umar Irfan has strong academic back ground in Islamic Studies, Islamic jurisprudence and Business & finance. He completed his religious qualification including Takhassus-fi-Iftaa from Jamia Islamia Imdadia Faisalabad & Shahdat-ul-Aalimiyah from Wifaqul Madaris. Mr. Umar has done MBA Islamic Business and Finance from Riphah International University Islamabad. He is teaching Shariah and Islamic banking & Finance courses since 2012. He has delivered lectures in various institutions including Jamia Arbiya Oloom Sharfia, Alburhan, and National Institute of Banking and Finance. He has written about more than Seven Hundred Fatawas on different Islamic topics including Zakat, Hajj and Financial Issues. 55
59. MANAGEMENT AND ITS COMMITTEES MANAGEMENT SR . # NAME DESIGNATION 1 Mr. Zafar Masud President and CEO 2 Mr. Farid Ahmed Khan Group Chief Corporate and Investment Banking 3 Mr. Zahid Mustafa Group Chief Consumer and Digital Banking 4 Mr. Nadeem Amir Chief Financial Officer 5 Mr. Ijaz Ur Rehman Qureshi Group Head Operations 6 Mr. Asif Riaz Group Head Retail and Priority Sector Lending 7 Mr. Khawar Shahid Ansari Group Head Treasury and FI 8 Mr. Faisal Ejaz Khan Chief Information Officer 9 Mr. Arslan Muhammad Iqbal Chief Risk Officer - Additional Charge as Group Head SAMD 10 Ms. Alia Zafar Group Head People and Organizational Excellence 11 Mr. Nofel Daud Chief of Staff and Strategy 12 Mr. Umer Iqbal Sheikh Group Head Islamic Banking 13 Mr. Waqas Mahmood Chief Compliance Officer 14 Mr. Hamza Khalid Randhawa Chief Legal Officer 15 Mr. Asadullah Khan Chief Internal Auditor KEY MANAGEMENT COMMITTEES SR. #COMMITTEE 58 PURPOSE 1 MANCOM A discussion forum, constituting of all Group Heads reporting directly to P&CEO, to review performance of the Bank and all its key functions vis-a-vis business strategy & targets. Further, to discuss issues critical for meeting Bank’s objectives. 2 ALCO (+ Investment Committee) This constitutes of members from Treasury, Risk, Finance and Business to devise comprehensive strategies and guidelines for measurement, monitoring and control of Market, Interest and Liquidity Risks. It also reviews and approve Bank’s investment Strategy. 3 Compliance Management Committee This comprises of all Group Heads reporting to P&CEO, to oversee of implementation of Bank’s Compliance Program. 4 IT Steering Committee Has representation of IT, Business, Strategy, Finance and Operations to set IT direction and strategies for expansion of technology and related requirements in line with business requirements of the Bank. 5 Procurement & Premises Committee To examine, review and approve purchasing, renting, upgradation and shifting etc. of Banks’ premises. It consists of members from Business, ASG, Finance and Operations.
60. SR . #COMMITTEE PURPOSE 6 Non-Banking Asset Management Committee To ensure effective management and/or disposal of Bank’s NBAs. 7 Marketing & Communication Committee To approve annual Media Budget of the Bank along with periodic media and publicity campaigns. The committee has representation from Strategy function and relevant Group Head 8 Fraud Risk Management Committee Oversee implementation of Fraud Risk Management Policy and take decisions on the investigative findings of internal & external frauds. 9 Operational Risk Management committee Comprises of members from Risk, Business, Strategy, Finance, Operations and HR to ensure Implementation of Operational Risk Policy and review status of key risk indicators of the Bank. 10 Credit Risk Management Committee Has representation of Business and Risk to ensure Implementation of credit risk policy/strategy approved by BOD. Further, monitor credit risk on a bank wide basis and ensure compliance with limits approved by BOD. 11 BASEL Implementation Committee Constitutes of members from Business, Risk and Finance to ensure bank wide implementation of Basel framework as per SBP instructions and guidelines issued from time to time. 12 Business Continuity Planning (BCP) Committee The committee consists of members from Treasury, Business, Risk, Operations, Compliance and technology to oversee the effectiveness of Bank’s BCP throughout the organization. 13 Islamic Banking Steering Committee The committee reviews the performance of Taqwa Islamic Banking Group vis a vis its Business Plan & Strategy. 14 Audit Coordination Committee To track rectification of audit observation and bring in more focus on remediation of audit observations. 59
61. POLICIES AND GOVERNANCE In order to ensure effective governance across organization in line with prevalent regulatory regime , the Bank has put in place necessary policies duly approved by Bank’s Board of Directors. Some Key policies along with salient features are as under: a comprehensive Diversity & Inclusion Policy has been framed in year 2020-2021. In line with Bank’s Diversity & Inclusion Policy following initiatives has been taken: 1. Human Resource Framework During the year 2021, the People & Organizational Excellence Group continued to pursue a multi-pronged strategy focusing on the areas of Learning & Development, career progression and build a pay for performance culture across organization. People & Organizational Excellence Group ensures Employee Engagement, Diversity & Inclusion and Team Building. People & Organizational Excellence Group has established a very efficient grievance handling mechanism to timely address the employee’s grievances. • • 60 Diversity & inclusion are an essential pillar of the Bank’s strategy directed to create an inclusive environment which embraces difference and fosters inclusion. The Bank believe that valuing diversity and inclusiveness is a competitive differentiator enabling it to achieve vision of creating unmatched value for customers, colleagues, business partners and shareholders. Diversity & Inclusion is one of the Key Strategic Areas of the Bank, therefore, • • • • • Batch Hiring of Females was conducted to increase females ration. At BOP 16% (as on September 21) are females in comparison to the market average of 15%. Batch Hiring of Persons with Disabilities (PWDs). Hiring of Transgender in the Bank. Affirmation Actions Policy to take special actions for underrepresented groups i.e. Conducted Specials Promotions during the year 2021. Gender Sensitization Sessions throughout the Bank. Diversity and Inclusion is given weightage in annual Balance Scorecard of all senior positions. In line with directives of the SBP, annual % increase in female’s ratio is defined and accordingly presented to the SBP. BOP has already ahead of the targets assigned by SBP. In line with organizational focus to provide growth opportunities to internal talent of the Bank, detailed Succession Policy has been put in place. Succession
62. Planning policy aims to develop a transparent process through which successors are identified , assessed and developed to assume higher responsibilities at Key positions in the Bank. The Succession Planning Policy helps the Bank to achieve following objective: • • • • • • Identifying future leaders of the Bank Ensure continuity of the Business & Resources Minimize disruption & knowledge loss caused by vacant slots Increase effectiveness of leadership development Provide growth opportunities and progression path to employees Developing High Potential Employees to provide basis for long term planning and achieving future goals and improving the performance of the organization. Succession Planning exercise is conducted on yearly basis. Critical positions of the Bank and according succession planning exercise is conducted on yearly basis. People & Organizational Excellence Group shall continue to focus on policies directed towards welfare of all employees which would ultimately make BOP employer of choice in near future. 2. Information Security Policy: The purpose of Information Security (“IS”) is to ensure that the information remains confidential, its integrity is maintained and it is available when needed. The purpose of this document is to define the principles to which all the employees must adhere to when handling or coming across the information, owned by or entrusted to BOP in any form. The policy establishes principles for management of risk originating from threats and vulnerabilities that could impact Information assets or Information Systems environment. The environment includes all Information Systems operated by The Bank of Punjab (BOP) or contracted with a third party by BOP. It covers related documentation, physical and logical controls, hardware, software, and data (together with I.T assets). The policy defines parameters to ensure confidentiality, integrity, availability and appropriate use of information assets that are owned or managed by BOP. Throughout this document, reference to the IT should be taken to include all computing facilities and systems including their underlying infrastructure to support various IT services. State Bank of Pakistan (“SBP”), being the regulator of financial institutes in Pakistan, has laid requirements in various regulations for the security of banks’ information. This document intends to comply with all such requirements laid down by SBP. The guidelines contained in this policy are to be followed by all users, having access to bank’s information, including management, bank’s employees, employees of outsourcing agencies, vendors and third parties etc. 3. Information Security Risk Management Framework: The information created, processed and used by The Bank of Punjab (BOP) is of great value to the organization. Information Technology is one of the primary tools used to render banking services to BOP customers and to help management in decision making. Information requires protection from unauthorized access, unwanted modification and disclosure or destruction. Information assets1 are exposed to inherent risks due to the industry’s typical dynamics. Risks to information could cause harm to information security i.e. it may compromise Confidentiality, Integrity and/or Availability of information. The purpose of this document is to provide BOP staff with direction in how to apply consistent and comprehensive Information Security (“IS”) risk management. 4. IT Policy: a. The main goal of deploying information technology within the Bank is to support the strategic business plan of the Bank, to enhance customer services and provide effective control over the Bank operations through automation and MIS. The IT Policy lays down the principles that are to be followed for achieving the above broad objectives. However, specific implementation plans and procedures to achieve these goals should be developed separately. b. The information technology function in The Bank of Punjab will be responsible for implementation of the Policy and will coordinate with the stakeholders for development of related plans, procedures and/or operational manuals to achieve compliance with the Policy. c. The IT Policy is to be read in conjunction with the Bank’s Information Security Policy which addresses specific areas of information and information technology security. While the IT Policy covers most of the areas pertaining to use of IT within the Bank, the other mentioned policy covers security issues with more detail. The aim of the Bank is to achieve best practices in information security. d. The goals of the IT Policy in different spheres of the Bank’s operations along with relevant policy statements are enumerated hereunder. 5. Internal Audit Policy: Internal controls are crucial for the success of an organization, especially financial institutions that are entrusted with public money. Internal Control refers to policies, plans and processes performed on continuous basis by the senior management and all levels of employees within the bank. These internal controls are used to provide reasonable assurance regarding the 61
63. controls can also ensure the accuracy of the bank ’s financial reporting and related disclosures. However, even the best systems of internal controls cannot provide absolute safeguards against irregularities; intentional and unintentional violations of laws, regulations, policies and procedures may occur, and the bank has a responsibility to investigate and address allegations of suspected fraudulent, wrongful, or improper activities. achievement of organizational objectives in continuous manner. The Bank has adopted the most widely implemented COSO Internal Control Framework for improving the quality of financial reporting through effective internal controls. While there will be an Internal Control Policy (to be approved by the Board separately) to provide standard on which business and support divisions will operate and all divisions will be fully accountable to ensure that this control policy is being adhered to. At the same time, the Board of Directors of Bank of Punjab firmly believes that a clear, transparent and strong internal audit policy is a critical first line of defense for good governance and soundness of the accounting and governance practices and all business and support divisions will be evaluated and measured by the Audit & RAR Group against such Internal Control Framework. 6. Risk Management Policy: The prime objective of Risk Management Policy document is to formalize all the risk assessments, measurements, and management, monitoring, review and mitigation policies for the management to follow. It clearly defines the scope and structure of the Bank, with respect to the roles and responsibilities, and spells out risk management policies in the areas of credit risk, market risk, liquidity risk, operational risk and country risk. Risk management is a discipline at the core of every bank/financial institution and it encompasses all the activities that affect the Bank’s risk profile. It involves the identification, measurement, monitoring, mitigation and controlling of risks to ensure that: a. The individuals who undertake or manage the risks clearly understand them. b. Bank’s risk exposure is within the limits established by the BOD. c. Risk-taking decisions are in line with the BOD’s business strategy and objectives. d. The expected payoffs compensate for the risks taken. e. Risk taking decisions are explicit and clear. f. Sufficient capital, as a buffer, is available to take risk. The WB Program is in addition to the existing systems of complaint and dispute resolution. It is part of a new effort to further improve governance and service quality at The Bank of Punjab. This program sets out the procedures for lodging of complaints and concerns by the WBs, handling of complaints by the bank, reporting requirements, disciplinary actions / rewards / penalties and periodic monitoring of the program. Although the Bank of Punjab has launched Whistle Blowing Program in the year 2010 duly approved by its Board of Directors in 157th meeting held on march 15, 2010 being the best practice yet the same was revisited per defined frequency and in the light of Annexure-1 of SBP BPRD Circular # 03 of 2014 dated February 20, 2014 - Instructions on Fraud Risk Management for Banks/ MFBs/ DFIs & subsequent amendment vide BPRD Circular #06 of 2015 dated March 02, 2015. 8. Compliance Policies: Compliance can be defined as adherence to all applicable laws, acts and regulations such as Banking Companies Ordinance 1962, The State Bank of Pakistan (SBP) Act 1956, Anti-Money Laundering Act 2010 etc., SBP prudential regulations, frameworks & guidelines issued from time to time as well as Bank’s own Policies and Procedures. The Bank of Punjab (“the Bank” or “BOP”) shall comply with all applicable laws, rules and regulations along with best practices and market standards where possible to ensure highest standards of compliance culture, controls efficacy of systems and processes. Compliance risk is the risk of regulatory noncompliance which may lead to sanctions, financial loss, or loss of reputation. Compliance laws, regulations and standards have various sources, including primary legislation, rules, and standards issued by the legislators and supervisors, code of practice promoted by industry associations and internal code of conduct applicable to staff members of the Bank. Accordingly, the compliance of these is likely to go beyond what is legally binding and embrace standards of integrity and ethical conduct. The Compliance Function is organized to assist the Bank in managing the compliance risk effectively. The identification of compliance risk, its assessment, and appropriate risk response are core activities of the Compliance Function. 7. Whistle Blowing (WB) Program: The Bank of Punjab is committed to operating practices with the highest possible standards of service, delivered in an ethical, professional and legal manner. The bank's interactions with customers, suppliers and others requires trust, and all of the bank's directors including the CEO, officers, and employees (herein referred to as "personnel") must maintain strict compliance with all applicable laws and regulations. The bank has adopted a Code of Conduct that establishes specific expectations regarding the behavior of its personnel, and is committed to maintaining an effective internal control environment to detect and to prevent or deter improper activities. Effective internal 62
64. In BOP , Compliance Function is independent and has authority on compliance matters with unrestricted access to any information, function, and personnel’s etc. required to achieve its objectives and to support a healthy compliance culture within the organization. evolving and consequently more vulnerable to frauds. The objective of this document is to effectively optimize the fraud risk management and maintain the risk and reward trade-off to safeguard customers as well as bank from such activities. 9. Fraud Risk Management: As per regulatory requirement stated in PSD Circular No.9 of 2018, BOP has deployed real-time fraud monitoring tools and alert mechanisms under the umbrella of Risk Management Group namely Fraud Risk Management Solution (FRMS). The objective of this unit is to monitor potential fraudulent activities on the Card Systems to safeguard banks and their customers from potential losses due to cyber-crimes and online banking frauds. 10. Business Continuity Plan: The purpose of Business Continuity Plan is to establish procedures whereby critical business processes as identified can be restored timely to operate on interim basis in the case of a disaster. BCP teams and all concerned staff shall use this plan as an action guide in the event of a disruption, for providing a preplanned response to a disaster event. The document is complimented by a Disaster Recovery Plan (“DRP”) to plan for the contingency caused by technology service disruption or information loss or unavailability. There are many possible causes of service disruption which may affect routine operations of the bank causing financial or reputation damage. To cope with this unavoidable scenarios, alternative measures need to be implemented to maintain an acceptable level of business processing. Currently, BOP is utilizing an online fraud monitoring system “FRACTALS” for monitoring of OFFUS issuing portfolio. Fraud Risk Monitoring (FRM) analysts are performing monitoring activities on FRACTALS for post authorized transactions. Transactions are triggered by pre-defined risk rules (Alerts) in FRACTALS and analyst take decisions after analyzing the risk score and isolated risk of each transaction such as risky MCC (Merchant Category Codes), risky country number of transactions etc. FRMS department is the key contact point for Master International/Acquiring Banks to be operational on 24/7 basis. This manual covers in detail all the various known frauds in the card business while also reflecting the importance of preparation of staff to identify dynamic trends of fraudulent activities and ways to proactively tackle such situations. Banks with higher volumes but low ticket size transactions are largely exposed to fraudulent activities on a routine basis. The operating environment is ever- Examples of such incidents may include but not necessarily limited to: • Natural disaster, epidemic, terrorist attack; Fire, flood, extreme weather conditions; Theft of vital records • Loss of facilities (e.g., one or more floors at Head Office) Loss of utilities, including IT and telephone systems; and • Major disruption to staffing; epidemic, transport disruption, industrial action, inability to recruit; mass resignations. These events may not be mutually exclusive, i.e. extreme weather may lead to loss of electricity, disruption of transport, staff inability to get to work and the like. 63
65. RISK MANAGEMENT FRAMEWORK AND RISK & OPPORTUNITIES Robustness of the Bank’s Risk Management Framework is ensured through periodic review of Bank’s Risk Policies and Procedures by establishing that they conform to international as well as local regulatory standards and Best Practices. Risk Management Group of the Bank reviews risk related to Policies and Procedures, ensures induction of new controls, thresholds, early warning indicators and limits along with strengthening of existing ones for Risk: • Identification / assessment. •Mitigation. •Monitoring. •Control. •Reporting. Review of Risk Policies and Procedures at the entity level is conducted across the entire Risk spectrum; encompassing Credit, Market, Interest Rate, Liquidity, Operational, Technology, Information Security, Cross Border, Settlement, Compliance, Legal, Money Laundering (ML), Terrorist Financing, Proliferation Financing and Reputational Risks etc. Current year was challenging in terms of market conditions: the year was characterized by prolonged Covid-19, increased geopolitical tensions, weakening credit performance in certain parts of the market, tightening liquidity and upward pressures on funding costs. However, bank’s balance sheet 64 and P&L continued to demonstrate resilience. Some CY 2021 highlights include: • • • • NPL ratio of 9.74%; lower than last year’s 12.93%. Provision (Specific) coverage is 89.76% for the CY 2021 as compare to 83.58% CY 2020. Capital adequacy ratio of 12.27%, which is robust in line with regulatory requirement of 11.5%. LCR is 137% which is higher in reference to regulatory requirement. With a continued focus on risk management practices alongside enhanced monitoring related to Basel II/III and IFRS-9 framework; bank has managed to improve its’ credit quality whilst also maintaining balance sheet growth. We continue to invest in our risk management capabilities through expanded portfolio-exposure reporting and analytic techniques, standardized stress testing, assessment of ratings migrations, technical trainings, model-development capabilities, and tuning/calibration. We also continue to monitor the impact of macro-economic developments on domestic front and their impacts on bank portfolio to make changes as appropriate to our underwriting capabilities and policies. Through continued focus on automation and information management, Bank is aligning itself with anticipated Basel
66. III requirements which State Bank of Pakistan is in process of implementing in near future . Bank is also upgrading its risk infrastructure through projects such as the digitalization of credit approvals (LOS) and rollout of Enterprise Risk Management Systems including Compliance Risk Management System, Basel Engine, IFRS-9 Engine, Internal Credit Risk Rating Models for Corporate/SME, Facility Risk Rating Models, LGD & PD Model etc. to ensure that our risk management practices remain best-in-class. RMG has also designed Bank-wide Risk Register on consolidated level which gives a holistic view of Risk and Controls. For enhanced return to stakeholders with efficient utilization of funds, bank has embarked on developing / implementing Risk Adjusted Return on Capital (RAROC) model. EMINENT RISKS There always lie a possibility of an event(s) that could lead to significant unexpected / negative outcome(s) which may impede the Bank’s capability in meeting its strategic objective(s). As an on-going practice, the Bank assesses the potential impact of an emerging risk, both from financial and non-financial aspects and takes corrective / remedial measures as necessary. Broadly speaking, eminent risks that could materially affect Pakistan banking system are; macroeconomic conditions, geopolitical risks, regulatory & legal risk and cyber security risks. MACROECONOMIC CONDITIONS OF PAKISTAN Definition and potential impact: Prolonged Covid-19 and widening gap in balance of payment, current levels of high inflation and massive policy rate changes has an impact on the Pakistan economy. Most analyst reports have initial forecast of slowdown in GDP growth and an associated period of lower credit growth and tighter liquidity conditions, however as per recent developments, GDP growth of 5.37% which supports the argument that Pakistan is successfully tackling the Covid -19 pandemic challenges. Mitigation strategy: BOP continuously keeps an eye on all developments and associated economic changes. In this regard BOP prepares various analysis reports/dashboards at Management Committee/ Board levels and comprehensively covers these impacts on Bank’s credit, market, operational and others risk factors. Bank’s ALCO analyzes all on-going Economic developments with respect to Pakistan & international forums and closely monitors the current steepening interest rate levels, it’s impact on Bank’s overall portfolio which includes both credit and market risk. Further, Stress testing and Capital impact analysis are also periodically presented to ALCO for knowledge based decision making. Against investment in Government Securities and Bonds, the Bank has placed duration limits on the basis of which it changes portfolio mix as per interest rate scenarios. Further, investment in equities, lending to diversified groups/ Transaction, Program lending and government initiatives softens the impact of changing macroeconomic conditions. Bank is well-capitalized in terms of capital adequacy and regularly carries out stress tests to ensure sufficient capital coverage at all times. Bank also has a proactive approach toward liquidity risk, which includes daily monitoring of positions, regular stress testing, and maintaining buffers in excess of the Basel/regulatory requirements. GEOPOLITICAL RISK Definition and potential impact: This risk could stem from sources unrelated to the Bank business. Geopolitical tension has been a persistent issue for this region for last few decades. Mitigation strategy: Bank monitors geopolitical situations around the globe on an ongoing basis. In particular, Banks’ Chief Economist centrally assesses the economic impact of changing geopolitical risks and provides key inputs to drive the Banks’ strategy. RMG independently monitors Bank wide Country limits by consolidating all treasury and trade exposures. REGULATORY AND LEGAL RISKS Definition and potential impact: Ever evolving banking sector dynamics within regulatory framework warranting additional requirements, particularly in the areas of capital / liquidity management, credit, operational risk, counterparty exposures and/or business structure. Mitigation strategy: Bank strives to ensure that its’ views are heard at policymakers` / regulators level through its proactive participation either through direct invite or via PBA platform. Internally, we analyze all new draft regulations and/or circulars to measure their qualitative and quantitative impact as well as to ensure its effective implementation. The Bank constantly monitors its capital allocation and liquidity management disciplines to incorporate future increased capital and/or liquidity requirements and to drive appropriate risk management and mitigating actions. CYBER SECURITY RISK Definition and potential impact: A successful cyber-attack could lead to disruption in service, fraudulent activity or loss of customer data, leading to operational loss, financial and reputational consequences. Mitigation strategy: Technology controls in the form of tools, trained IT/IS resources and awareness of users and customers have been a key focus of the Bank. Threats emerging from the cyber space have been an ever-evolving phenomena, especially during the last 3 years, and the Bank has had special emphasis on beefing up its resources, both Human and Technology related, to adequately counter and mitigate such risks. The Bank has made a significant investment on this front, on acquiring best in class tools and systems that ensure that the Bank is safeguarded from any emerging threats. 65
67. PRINCIPAL RISKS AFFECTING BANK AND RISK COVERAGE 1 . CREDIT RISK How we performed during the year - - - - - Credit-risk-weighted assets of 352.12 billion. Non- performing loan ratio dropped to 9.74% (CY` 2021) versus 12.93% in CY`2020) Specific Provision coverage noted @ 89.76% (CY`2021 as compared to 83.58% in CY`2020). Total Specific impairment charges have declined by PKR 1.14 billion which stands at 46.70 billion CY`2021 as compared to 47.85 billion in CY`2020). Top 10 largest funded obligors’ exposure constituted 9.02% of gross loans (10.23% in CY`2020). Credit Risk Management Committee of the Bank has the mandate to appropriately keep credit risk at acceptable levels and within the risk appetite of the Bank. Risk Management Process Measure the amount that could be lost in case of eventuality. Monitor infection ratio, industry concentration, % watch list portfolio, WAORR, RAROC, Expected Credit Loss, RWA analysis, Regulatory ratios and stress testing. Manage portfolio diversification / adherence to credit discipline / underwriting guidelines while ensuring improvement in overall portfolio credit quality. Outcome enabled portfolio credit rating improved as weighted average ORR CY’2021 stands at 3.67 as compare to 4.16 CY’ 2020. 2. MARKET RISK How we performed during the year Market Risk of the Bank is well within defined limits (internal and regulatory) as per SBP Risk management guidelines, Bank’s Investment and Risk management policy. Risk Management Process Measures valuation and risk policies for all Level 1 and Level 2 financial instruments in the trading book using models to measure market risk within a 95% & 99% confidence level through Value at Risk (VaR). Further, other measurement tools like Duration and PVBP are also key tools to measure fixed income risk. Monitoring is done using standard monitoring tools like mark to market, limit monitoring (both internal and regulatory) and advance Risk measurement tools like Value at Risk (VaR), Duration and Price value basis point (PVBP) etc. Manage through daily risk reporting and all material risks highlighted on appropriate forums i.e. ALCO and NPL & Compliance Committee on periodic basis. Risk Appetite and other all exposure limits are approved by BOD. 3. LIQUIDITY AND FUNDING RISK How we performed during the year • • • LCR is 137% as compared to 139.32% CY`2020 NSFR is 124% as compared to 127.19% CY`2020 Gross ADR is 53.26% as compared to 53.02% CY`2020 Risk Management Process Measure using metrics related to Basel III liquidity ratios and internally approved triggers. Liquidity stress tests are carried out using contractual, behavioral and stressed conditions coupled with contingency funding facilities. Monitor ALCO oversee the Bank’s liquidity and funding risk, stress-test management process and corrective actions. Manage Funding from customer deposits (retail & corporate), long-term funding through debt securities & subordinated liabilities. Further, interbank borrowing (both call and secured), FX Swap, borrowing facilities from the State Bank of Pakistan and Liquidity Contingency Funding plan to manage its liquidity risk during normal and liquidity crunch times. 66
68. 4 . CAPITAL RISK How we performed during the year • CAR is 12.27% as compared to 16.23% CY`2020 • Leverage is 3.01% as compared to 3.21% CY`2020 Regulatory requirement is of 11.50% and 3.00% respectively. Risk Management Process Measure using core Tier 1 (CET1) and total capital adequacy ratios following the (Basel III- standardized approach). Leverage is measured through monitoring of Tier 1 capital against average total consolidated assets. Monitor through a process of forecasting capital to ensure our capital position is controlled as per Bank’s internal planning while safeguarding its strategic objective and goals. Further, a long term road map is also in place to monitor target versus achievements with respect to balance sheet growth and Capital planning. Manage employing techniques based on the guidelines developed by the Basel Committee and the State Bank of Pakistan. The Bank also prepares an annual comprehensive ICAAP document, which is a detailed assessment of the Bank’s risk profile, approaches to assessing and measuring various material risks, and capital planning under regular and stress scenarios. 5. OPERATIONAL RISK How we performed during the year • Operational RWA stood at PKR 64.19 billion for year CY’ 2021 as compared to PKR 56.498 billion in CY`2020. Risk Management Process Measurement of Operational risk is done in light of SBP risk management guidelines in supplement with BOD approved policy by using above mentioned measurement tools. Further, Bank is using the Basic Indicator approach prescribed by the State Bank of Pakistan (SBP) to calculate Operational Risk Capital Charge and reports as per SBP’s predefined frequencies. Monitor using key Risk indicators, thresholds, appetite and loss event database. Manage through escalation of issues & events for risk transparency across the organization. All employees are responsible for identifying and assessing risks. Further, ORMC is conducted on monthly basis in which all operational risk updates/analysis are presented based on which all key actions are decided for improvement/ implementation on bank wide basis. 6. INFORMATION SECURITY RISK How we performed during the year No material loss of confidential data or disruption of processes experienced due to information security breach was reported. During the year we have also added several IS control mechanisms. Risk Management Process Monitor through real time integrated logs of systems and network; identifying security events and incidents; assessment of security risks in applications and systems via Vulnerability Assessment and Penetration Testing; maintaining and continually updating information-risk register and reporting to concerned units and management. We have acquired threat intelligence from various providers and receive threat advisories from several sources. This intel is used to identify relevant risk by correlating with BOP technology infrastructure. Manage through risk reporting and treatment; ensuring that custodians of information assets fix the identified vulnerabilities. In addition, we have deployed preventive technology controls for various threat vectors. 67
69. 7 . REPUTATIONAL RISK How we performed during the year No instance occurred which may cause/lead to impact on Banks’ reputation. Risk Management Process Measure through number of complaints/red-flags received/media news/electronic and social media etc. Monitor through ensuring operational alignment with Bank’s mission / strategic objectives and maintenance of stakeholders` confidence. Manage through reduction in overall number of complaints received & resolved within defined timeframe amicably under regulatory guidelines. 8. LEGAL RISK How we performed during the year No instance occurred which places Bank into a Legal battle. Risk Management Process Measure through number of cases filed against BOP and cases filed by BOP. Decision in favor and against BOP is also a tool to measure legal risk. Monitor Bank monitors all filed cases against it on quarterly basis. Further, Bank also allocates Capital Charge as per annual exercise under ICAAP. Manage through a dedicated in-house legal unit, panel of advocates and adequate monitoring of different red-flag/alerts raised. 68
70. BOARD REMUNERATION POLICY KEY HIGHLIGHTS : the Board and Committee(s) meetings. The Board of Directors have approved Board’s Remuneration Policy-2020 of the Bank for attending the Board and its Committee(s) meetings in Compliance of State Bank of Pakistan BPRD Circular 03 of 2019 dated August 17, 2019. 7. The salient features of the policy are as under: 8. Proper disclosure of remuneration and other benefits facilities provided to the Board of Directors shall be made in the Annual Financial Statements of the Bank. 1. The Policy ensures a comprehensive and transparent remuneration structure for the Chairman and other Directors. 2. This Policy has been formulated with clear mandate and charter keeping in view the ownership structure, governance mechanism, risk profile, scope of operations and performance of the bank. 3. The Policy aims to set out the methodology for the determination of scale of the remuneration to be paid to the Directors and Chairman other than President/CEO for attending the Board and its Committee(s) meetings. 4. The Policy is applicable to NonExecutive/Independent Directors, President/Executive Director and the Chairman of the Board. 5. The terms & conditions of the Chairman shall be presented to the shareholders for approval in the Annual General Meeting on pre or post facto basis. 6. The Bank shall facilitate the directors for travelling, board & lodging relating to No consultancy or allied work shall be awarded to a director or to the firm(s), institution(s), or company(ies) etc., in which he individually and/or in concert with other directors of the Bank hold substantial interest. 9.The Board members shall be accountable for their conduct according to the scope of their responsibilities and Annual Performance Evaluation of the Board as a whole and its Committees will be carried out. Based on the evaluation of performance scale of remuneration may be reviewed/adjusted. 10. A Director shall be remunerated for any additional work assigned by the Board of Directors. The remuneration of a Director performing extra services shall not exceed 20% of the remuneration already set for him / her. In any case, remuneration paid to a Director for performing once such extra service / additional work should not exceed Rs.39,000/- (net of applicable taxes). 11. Remuneration for attending Board and its Committee meetings would be Rs.195,000/- per meeting, net of applicable taxes for an Independent/ Non-Executive Director and Chairman of the Board. 69
71. INDEPENDENT AUDITOR 'S REVIEW REPORT To The Members of The Bank Of Punjab Review Report on the Statement of Compliance contained in Listed Companies (Code of Corporate Governance) Regulations, 2019 We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors of The Bank of Punjab (the Bank) for the year ended 31 December 2021 in accordance with the requirements of regulation 36 of the Regulations. The responsibility for compliance with the Regulations is that of the Board of Directors of the bank. Our responsibility is to review whether the Statement of Compliance reflects the status of the Bank’s compliance with the provisions of the Regulations and report if it does not and to highlight any non-compliance with the requirements of the Regulations. 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 Regulations. As a 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 Regulations require 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. 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 procedures to assess and determine the Bank’s process for identification of related parties and that 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 requirements contained in the Regulations as applicable to the Bank for the year ended 31 December 2021. Further, we highlight below instances of non-compliance with the requirements of the Regulations as reflected in the note reference where these are stated in the Statement of Compliance. S. No. Note Reference Description 1 19 The Company is in non-compliance with Regulation 9(2). EY Ford Rhodes Chartered Accountants Lahore: 07 March 2022 UDIN: CR202110079ZyDdIvjEz Member firm of Ernst & Young Global Limited 70
72. STATEMENT OF COMPLIANCE With Listed Companies Code of Corporate Governance Regulations , 2019 THE BANK OF PUNJAB – DECEMBER 31, 2021 The Bank has complied with the requirements of the Regulations in the following manner: 1. The total number of directors are seven (07) as per the following: a. Male: 6 b. Female: 1 2. The composition of board is as follows: a Independent Directors 3 b Non-executive Director 3 c Executive Directors 1 9. The Board has arranged Director’s Training Program for the following: 3. The directors have confirmed that none of them is serving as a director on more than seven listed companies, including this Bank; 4. 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; 10. The Board has approved appointment of Chief Financial Officer, Company Secretary and Head of Internal Audit, including their remuneration and terms & conditions of employment and complied with relevant requirements of the Regulations; 5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Bank. The Board has ensured that complete record of particulars of the significant policies along with their date of approval or updating is maintained by the Bank; 6. All the powers of the Board have been duly exercised and decisions on relevant matters have been taken by the Board/ shareholders as empowered by the relevant provisions of the Act and these Regulations; 7. 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 has complied with the requirements of Act and the Regulations with respect to frequency, recording and circulating minutes of meeting of the Board; 8. The Board have a formal policy and transparent procedures for remuneration of directors in accordance with the Act and these Regulations; a) b) Syed Ghazanfar Abbas Jilani - Director Mr. Kamran Hafeez – Secretary to the Board 11. Chief Financial Officer and Chief Executive Officer duly endorsed the financial statements before approval of the Board; 12.The Board has formed committees comprising of members given below.a) Audit Committee i) Mr. Mohammad Mudassir Amray Chairman ii) Mr. Mohammad Jehanzeb Khan Member iii) Syed Ghazanfar Abbas Jilani Member b)Human Resource, Compensation and Nomination Committee i) Mr. Asif Reza Sana Chairman ii) Mr. Mohammad Jehanzeb Khan Member iii) Dr. Muhammad Amjad Saqib Member iv) Syed Ghazanfar Abbas Jilani Member 71
73. c )Risk Management, Compliance and NPL Review Committee i) Syed Ghazanfar Abbas Jilani Chairman ii) Mr. Mohammad Mudassir Amray Member iii) Dr. Muhammad Amjad Saqib Member iv Ms. Nadia Rehman Member d)Strategy, Islamic and Priority Sectors’ Financing Committee i) Dr. Muhammad Amjad Saqib Chairman ii) Mr. Asif Reza Sana Member iii) Ms. Nadia Rehman Member e) Information Committee Technology and Communications i) Mr. Mohammad Jehanzeb Khan Chairman ii) Mr. Asif Reza Sana Member iii) Ms. Nadia Rehman Member iv Mr. Mohammad Mudassir Amray Member 13. The terms of reference of the aforesaid committees have been formed, documented and advised to the committee for compliance; 14. The frequency of meetings (quarterly/half yearly/ yearly) of the committee were as per following; a) Board Audit Committee Quarterly b) Human Resource, Compensation and Nomination Committee Quarterly c) Risk Management, Compliance and NPL Review Committee Quarterly Reference Clauses from Listed Companies (Code of Corporate Governance) Regulations - 2019 d) Strategy, Islamic and Priority Sectors’ Financing Committee Quarterly e) Information Technology and Communications Committee Quarterly 15.The Board has set up an effective internal audit function and concerned staff is considered suitably qualified and experienced for the purpose and are conversant with the Policies & Procedures of the Bank; 16.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 and registered with Audit Oversight Board of Pakistan, that they and all their partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants of Pakistan and that they and the partners of the firm involved in the audit are not a close relative (spouse, parent, dependent and non-dependent children) of the Chief Executive Officer, Chief Financial Officer, Head of Internal Audit, Company Secretary or director of the Bank; 17. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the Act, these Regulations or any other regulatory requirement and the auditors have confirmed that they have observed IFAC guidelines in this regard; 18. We confirm that all requirements of regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the Regulations have been complied with; and 19.Explanation for non-compliance with requirements, other than regulations 3, 6, 7, 8, 27, 32, 33 and 36 are below: Corresponding Provisions of The Bank of Punjab Act - 1989 Section 10(2) & 10(3) 9 (2) Chairman of the Board The Chairman shall be elected subject to such terms & The Chairman of the Board shall be nominated by the conditions and responsibilities as provided under Section 192 Government from amongst official Directors. of the Act and these Regulations. Further, in terms of Section 10(3), the Chairman shall preside over the meetings of the Board and shall have a casting vote, but he shall not exercise any executive authority or powers. The Chairman has not yet been nominated by Government after expiry of previous term. For & on behalf of the Board Syed Ghazanfar Abbas Jilani Director/Chairman 72
74. STATEMENT OF INTERNAL CONTROLS The Management of The Bank of Punjab (the "Bank") is responsible for establishing Internal Control System for ensuring effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations. concerned functions under oversight of these management committees. Moreover, the Board’s Risk Management, Compliance & NPL Review Committee have an oversight responsibility to monitor all significant and material issues related to internal control system of the bank. Bank’s internal control system is implemented through its policies, procedures, circulars and instructions issued from time to time. Internal Controls are continuously reviewed, refined and improved with the changes in laws & regulations, new risks emanating from bank’s customers, products, geography and channels as well as market disruptions. Accordingly bank has developed required policies and procedural manuals defining adequate controls to manage risks effectively and these are updated regularly. Internal controls also require continuous improvement to align with the changing environment and needs of the business. The Bank continues to place importance on the increasing use of automation to further enhance its evolving control environment. Internal Audit Function (IAF) acts as third line of defense, independent from the line management, is entrusted with the supervisory function with respect to the review of internal controls. IAF evaluates, validates, monitors and contributes to ongoing effectiveness of control systems as part of its scope. It periodically reports significant findings, directly to the Board Audit Committee (BAC). The IAF is also entrusted with the function to assess adequacy and effectiveness of control activities and ensure compliance with all the prescribed policies and procedures. The Bank’s governance structure to implement and monitor internal controls consists of three lines of defense in line with applicable regulations and best practices for financial institutions. First line of defense consists of businesses and Operations functions those are responsible for implementing controls in all activities & transactions handled by the bank. Moreover, they ensure that business risks are properly identified and mitigated, control breaches are identified on a timely basis and corrective actions are efficiently implemented. Their role is to identify design and implementation gaps in processes and ensures that timely remedial actions are undertaken. Second line of defense consist of Compliance, Risk & Control/ Support functions; those are mandated to ensure that policies & procedures are adequately designed and implementation of these is regularly monitored to mitigate risks faced by the bank. For collaborative review of operational risks, management has formulated committees consisting of senior management from all functions i.e., Compliance Committee of Management (CCM), Operational Risk Management Committee (ORMC) & Fraud Risk Management Committee (FRMC), those focus on managing operational, regulatory & financial risks. All significant and material findings identified by the internal/ external auditors and regulators are addressed on priority basis by In compliance with SBP’s directives, the Bank had completed all stages of SBP roadmap on Internal Control over Financial Reporting (ICFR). The SBP had granted exemption to the Bank from the requirement of submission of Long Form Report (LFR) by the External Auditors. Consequent to the grant of exemption by SBP, the annual assessment of bank’s ICFR has been reviewed by the Internal Audit Function and now Bank submits Annual Assessment Report, on efficacy of ICFR duly endorsed by the Board Audit Committee. Internal Controls System evolves continuously and this statement is based on the management's self-assessment towards various aspects of current Internal Controls regime. The Bank’s System of Internal Controls is designed to minimize and manage risks as these cannot totally eliminate the risk of failure to achieve the desired objectives; hence it can only provide reasonable assurance, not absolute assurance, against material misstatement or loss. The system of internal control followed by the Bank is considered to be adequate in design and is being implemented and continuously monitored. ZAFAR MASUD President/CEO 73
75. ECONOMIC REVIEW Pakistan ’s economy rebounded during FY21 after witnessing a COVID-led downturn in FY20, with real GDP growth rising to 5.6 percent, from the COVID induced recession -1.0 percent in FY20. This growth was achieved without the widening of the twin deficits. The current account deficit (CAD) dropped to a 10-year low and contributed to the build-up in the foreign exchange reserves. The fiscal deficit edged down despite the COVID-related spending, allowing for a reduction in the public debt-to-GDP. Some easing was also noted in the headline CPI inflation on the back of stable core inflation, though overall price levels, especially of food items, stayed elevated owing to supply-side challenges. Pakistan also fared well compared to many other countries in terms of real economic activity, exports and public debt accumulation during July 2020-June 2021. This performance was enabled by two major factors: (i) the country’s success in navigating through multiple waves of COVID-19 with targeted mobility restrictions; and (ii) a prompt, well-coordinated and targeted monetary and fiscal response, aimed at countering the impact of COVID on economic growth and livelihoods. Pakistan successfully navigated through two waves of the pandemic during FY21 without imposing wide-scale 74 shutdowns of industry and services. Notably, Pakistan ranked among the best performing countries for its effective handling of COVID-19. Furthermore, the initiation of COVID vaccinations from March 2021 onwards and the gradual pickup in its pace and coverage, together with supportive economic policies, helped sustain the economic momentum. In terms of policy stimulus, the SBP provided aggressive liquidity support via multiple policy tools after the outbreak in March 2020, which stood around 5 percent of GDP by the end of FY21. Refinance schemes were introduced to shore up employment and the healthcare system, and to stimulate long-term investment in the economy. Specifically, the Rozgar Scheme provided payroll support to businesses so they could retain their workers, and was instrumental in getting firms to restart their operations immediately after the reopening of the economy. In the same vein, the loan deferments and restructurings enhanced the liquidity position of firms and consumers, which helped prevent delinquencies. Meanwhile, the Temporary Economic Refinance Facility (TERF) would shore up the long-term productive capacity in the economy. The SBP maintained an accommodative monetary stance, by keeping the policy rate unchanged during FY21, after a sharp 625 bps reduction during Mar-Jun 2020.
76. Importantly , SBP liquidity support sheltered both small and big businesses. Specifically, for the loan deferment and restructuring package and the Rozgar scheme microfinance institutions had about 94 percent and 74 percent share in the total applications approved by SBP, and constituted around one-fifth share in the actual benefits availed by businesses from these schemes. The government provided targeted fiscal support of around 2 percent of GDP through the Economic Stimulus Package (ESP), envisaging a coverage of more than 15 million families through emergency cash transfers. Importantly, Pakistan’s emergency cash intervention was recognized as a global success and was ranked fourth in terms of the number of people covered, and third in terms of the share of population. The ESP also included targeted incentives for agriculture, manufacturing and export sectors during FY21. The agriculture sector gained further from the substantial increase in the minimum support price (MSP) of wheat, as well as from subsidized availability of inputs and machinery. Furthermore, the cost of production for manufacturing firms, especially export-oriented units, was reduced via a rationalization of duties on imported raw materials and elimination of peak-hour power tariff rates. The export sector further benefitted from the fast-tracking of GST refunds. To spur construction activity, the government extended the timelines to avail benefits under the amnesty scheme till June 2021, whereas the SBP implemented mandatory targets for banks to provide construction financing. These policy efforts proved instrumental in driving the sharp recovery in real GDP growth in FY21, exceeding expectations. The growth was broad-based, with major shares from industry, and wholesale and retail trade services. Led by the conducive supply and demand dynamics as well as a low base effect from COVID-led contraction last year, large scale manufacturing (LSM) posted a 11.4 percent increase, with production in some key industries, such as textiles, food, cement, fertilizer and chemicals, exceeding the peaks recorded during the high-growth years of FY17-FY18. However, risks to the recovery have increased in FY22 with international energy, food and metal prices at highest levels since 2011, leading to rise in the import bill and spike in inflation. Growth is expected to moderate around 4 to 5 percent, according to SBP. The key to sustaining the growth momentum will be the reforms targeted under the US$ 6 bn IMF program, including measures to increase tax revenue and turn around the loss making state enterprises. Growth in exports and remittances will be critical in managing the current account deficit and build up SBP reserves. Banks are well capitalized and highly liquid, and in a position to support credit growth to the private sector. 75
77. PRESIDENT / CEO'S REVIEW It is very heartening to note that the Bank has made inspirational progress in all areas of operations in the last year, despite the economic slowdowns caused by the COVID-19 pandemic. As the government initiated massive vaccination drives to combat COVID-19 towards the end of the first quarter of 2021, the Bank, being aware of its corporate social responsibility, ensured that all its employees were vaccinated on top priority basis. Recognizing the importance of vaccination in controlling the spread of COVID-19, and in addition to establishing vaccination facilities at the Bank’s offices for vaccination of staff and their families, the Bank in collaboration with the local administration authorities also established drive-through vaccination centers for the general public in all major cities of the country. This initiative by the Bank was met with wide acclaim, as it provided much needed relief to the public in getting themselves vaccinated without going through the hassle of standing in long queues. It is our firm resolve that the Bank of Punjab would always take the lead in such noble causes. The Bank has also remained on the forefront in supporting various initiates taken by the State Bank of Pakistan, Government of Pakistan and Government of the Punjab for the revival of the economy, following the economic slowdown in the aftermath of COVID-19. Realizing the contribution of Small and Medium Enterprises to the wellbeing and growth of developing economies, and in order to help induce a culture of entrepreneurship among the youth of the country, the Government of Pakistan initiated the Kamyab Jawan Program; and you would appreciate that The Bank of Punjab has been leading this initiative with the highest loan disbursement to the youth and won the trophy of number one bank in terms of disbursements in two consecutive years. Similarly, the Bank is also facilitating Government of the Punjab in it’s recently launched “Punjab Rozgar Program” which is gaining momentum and is expected to be one of the most successful public sector programs in recent times. I strongly believe that the success of such programs would prove to be a real game changer in creating jobs and nurturing a culture of entrepreneurship in the country. The Bank of Punjab has become a market leader in SBP’s concessionary financing schemes and is aggressively involved in government financing schemes pertaining to low-cost housing. In the same vein, LDA City project has been launched successfully, and 76
78. The Bank of Punjab is the lead coordinating Bank among six other financing banks in the massive LDA City Naya Pakistan Apartments Project. In partnership with the Government of the Punjab, the Bank is focused on increasing financial inclusion, especially among the marginalized segments of society. The Khidmat Card scheme is yet another area where the GoPb has partnered with BOP. The beneficiaries of this scheme include senior citizens, disabled persons, and children working at brick kilns across Punjab. The Khidmat Card also provides cash assistance to school-registered girls – this initiative is aimed at encouraging rural and financially insecure parents to educate their daughters. All these programs are exclusively managed by the Bank of Punjab across the province. In addition to the above, numerous digital and cash management solutions are being provided by BOP to several departments and initiatives led by GoPb. BOP was awarded the Agent Bank Mandate by SBP for all government receipts – making it only the second scheduled bank after National Bank of Pakistan (NBP) to be granted this mandate. BOP is also lending its support in the Board of Revenue e-Stamping Project, with the automation of e-stamp papers, the launch of low denomination white paper e-stamping, and collection of its receipts on behalf of the government. The Bank has secured the e-stamping project contract in Baluchistan, as well. The Bank has a well worked-out strategy to become the Bank of Choice for all segments of the society with products and services meant for all types of customers. The Bank of Punjab has expanded rapidly during the last year, especially in the southern region, with the aim of growing its share of private sector business. The Bank is on the verge of setting up a very strong presence in Karachi with its topof-the-line Corporate & Investment Banking Group to meet the business requirements of existing and prospective Corporate sector clients. The Bank has revamped its product suite, and new products & services are being rolled out on a frequent basis to meet the ever-growing business requirements of its clients. The Bank has already launched “BOP Khaas Deposit” scheme for corporate clients. Further, the Bank has introduced “Roshan Digital Account” in keeping with the guidelines of the State Bank of Pakistan, to provide easy access to banking services for the Pakistani community residing abroad. The Bank has also established priority sector banking branches to meet the banking needs of its corporate clients. During the last year, structural changes have been made in the outlook of the branches to evoke an air of consummate professionalism and a revived corporate culture, in-line with today’s (and tomorrow’s) banking needs. In order to further improve the Bank’s corporate image and outreach, the Bank has run unparalleled media campaigns. You must have heard the name of The Bank of Punjab across all forums of print, electronic and social media, doubtless in a very positive tone. The Bank also arranged multiple roadshows in all regions of the country, to showcase its products – thereby expanding its outreach. Now, BOP is closer to being accepted as a household brand name, and its competitive products & services are becoming known to everyone. Taking the Bank to new heights, The Bank of Punjab, for the first time in its history, showcased its products and services at an International forum through Dubai Expo-2020. All participants of the expo thoroughly appreciated the Bank’s presence at the Pakistan Pavilion of Dubai Expo-2020. Owing to aggressive business expansion, prudent management of resources and targeted marketing, the Bank has been able to post very strong financial results throughout the year 2021. All financial indicators remained positive and in-line with the Bank’s strategic business targets. As at close of the year 2021, the Bank achieved another milestone by joining the elite club of banks with deposits of over PKR 1.0 trillion. The upgradation of the Bank’s Long Term Credit Rating from AA to AA+ by PACRA is another laurel achieved during the year prior. Now the Bank, with the highest short term rating of A1+, is standing among the largest banks in the industry, with a vision to attain AAA long term rating; currently recognized as the benchmark of highest premium and secured banking in the country. As business operations continue to expand, it has been ensured that the Bank always remains compliant with governing regulatory regimes. BOP has a very strong Compliance & Control Function and an independent Internal Audit Function to ensure that there is no lapse in compliance with regulatory requirements. At BOP, we take pride in doing business as per the set rules & regulations, and there is no compromise on this score. Our People & Organizational Excellence Group ensures that the Bank has the right blend of experience and youth to meet its operational and business requirements. BOP takes pride in its team of highly professional and skilled staff, and our People & Organizational Excellence Group ensures that our staff is continuously being imparted with quality trainings to keep them abreast of modern banking and regulatory requirements. I am grateful to the Government of Punjab, the Board of Directors, and the State Bank of Pakistan for their continuous support, and assure you that we will make this Bank one of the top financial institutions of the country. I am thankful to all depositors, customers, and shareholders for their confidence in BOP. I also highly appreciate the effort and teamwork of my staff members. ZAFAR MASUD President/CEO 77
79. DIRECTORS ’ REPORT For the year ended December 31, 2021 The Board of Directors is pleased to present the 32nd Annual Report of The Bank of Punjab together with the audited Financial Statements and Auditors’ Report thereon for the year ended December 31, 2021. 78
80. PERFORMANCE AT A GLANCE The Bank successfully weathered the economic slowdown caused by COVID-19 pandemic maintained its growth trajectory by optimum utilization of available resources and creating new business avenues . While ensuring provision of best in the market banking services to its clients in a very tough and competitive operating environment, the Bank continued to expand its outreach in unbanked and earlier ignored areas and now has a network of 662 online branches. As of December 31, 2021, the Deposits of the Bank crossed Rs. 1.0 Trillion mark and stood at Rs. 1,003.0 billion as against Rs. 835.1 billion as of December 31, 2020 showing a growth of 20%. During the year, Bank remained focused on procuring low cost CASA deposits with special emphases on private sector deposits. As on December 31, 2021, the Gross Advances portfolio stood at of Rs. 534.2 billion as against Rs. 442.8 billion as on December 31, 2020 registering a growth of 21%. During the year, significant reduction in NPLs was observed on account of recovery/regularization and the NPLs portfolio reduced to Rs. 52.0 billion as against Rs. 57.3 billion as on December 31, 2020. The Bank stands fully compliant with the provisioning requirement under Prudential Regulations of SBP, while all possible legal measures are being taken to ensure recovery of legacy non-performing portfolio. The Investments & Lending to FIs stood at Rs. 562.7 billion mainly comprising of Government Securities (95%). The Total Assets of the Bank reached the level of Rs. 1,197.0 billion as against Rs. 1,095.4 Billion as of December 31, 2020 thereby registering a growth of 9%. During the year 2021, Net Interest Margin (NIM) improved to Rs. 29.88 billion as against Rs. 23.33 billion during year 2020, registering a rise of 28%. Similarly, Non-Markup/ Interest Income (excluding gains on securities) increased to Rs. 6.12 billion as against Rs. 4.58 billion during year 2020 showing a growth of 34%. Non markup/interest Expenses stood at Rs. 21.01 billion as against Rs. 17.52 billion during year 2020. The rise in expenses was well within the inflationary parameters and growth in Branch Network/Business Volumes. During year 2021, pre-provision profit stood at Rs. 16.77 billion as against Rs. 18.85 billion during last year mainly on account of higher level of Gain on Securities during year 2020. However, in view of risks of shocks in the COVID-19 aftermath, in addition to subjective assessment, the Bank also opted to maintain general provision of Rs. 2.50 billion against loans and advances on prudent basis. During the year 2021, net provision reversal of Rs. (1.64) billion was recorded as against net provision charge of Rs. 6.86 billion during year 2020. Accordingly, the Profit Before Tax was recorded at Rs. 18.41 billion as against Rs. 11.99 billion during year 2020 with a significant rise of 54%. Similarly, the Bank posted After Tax Profit of Rs. 12.44 Billion as against Rs. 6.94 Billion during year 2020 with a hefty rise of 79%. Earnings per Share (EPS) for year 2021 also improved to Rs. 4.71 per share as against Rs. 2.63 per share for year 2020. Keeping in view robust Business Plan envisaging aggressive business growth and CAPEX commitment in the areas of Information Technology & Digitalization, requiring strong capital base, the Board announced and recommended a Stock Dividend of 12.50% for Shareholders for the year 2021 as against 10.0% Cash Dividend announced for the year 2020. 79
81. The Board is pleased to endorse the Statement on Internal Financial Highlights 2021 Controls made by the Management , which is included in the annual report. Rs. In Million Profit before taxation 18,408.013 Bank’s Board of Directors: Taxation-net 5,967.878 Profit after taxation 12,440.135 The Bank’s Board of Directors consists of 08 members with Earnings per share (Rupees) 4.71 04 independent directors. Capital Adequacy and Minimum Capital Requirements As on December 31, 2021, paid-up capital (net of losses) amounted to Rs. 28.39 Billion and the Bank stands compliant with SBP’s minimum capital requirement of Rs. 10.0 billion. Further, the Bank’s Capital Adequacy Ratio (CAR) stood at 12.27% against the regulatory requirement of 11.50%. Had the advance subscription money against future issuance of noncumulative perpetual TFCs been accounted for as eligible capital, the CAR would have been 12.50%. Internal Controls The Board of Directors of The Bank of Punjab has overall responsibility for ensuring existence of an adequate and effective system of internal controls that is designed to manage the Bank’s risks within an acceptable risk profile. 80 Sr. Name of Directors Status 1 Mr. Mohammad Jehanzeb Khan Director 2 Dr. Muhammad Amjad Saqib Director 3 Syed Ghazanfar Abbas Jilani Director 4 Mr. Mohammad Mudassir Amray Director 5 Mr. Asif Reza Sana Director 6 Ms. Nadia Rehman Director 7 Mr. Muhammad Naeem Khan (*) Director 8 Mr. Zafar Masud President & CEO *SBP has granted FPT clearance of one independent Director on 17-02-2022, elected in the EOGM held on October 11, 2021.
82. 09 meetings of Board of Directors were held during 2021 with following attendance : SR.# NAME OF DIRECTORS STATUS 1 Mr. Mohammad Jehanzeb Khan DIRECTOR 9 2 Dr. Muhammad Amjad Saqib DIRECTOR 9 3 Syed Ghazanfar Abbas Jilani DIRECTOR 9 4 Mr. Iftikhar Ali Sahoo (FS Punjab) (*) DIRECTOR 5 5 Mr. Zafar Masud President & CEO 9 6 Mr. M. Abdullah Khan Sumbal (**) DIRECTOR 1 7 Mr. Shaharyar Ahmad (***) DIRECTOR 5 8 Khawaja Farooq Saeed DIRECTOR 9 9 Mr. Saeed Anwar DIRECTOR 9 10 Mr. Farid Ahmed Khan (****) Acting President 2 (*) (**) (***) (****) Total No. of Meetings attended during the period Joined on 22-04-2021 and transferred on 27-12-2021 Transferred on 22-03-2021 Died on 01-09-2021 As Acting President BOD’s Committees: 1- Board Audit Committee: 07 meetings of Board Audit Committee Meeting (BAC) were held during 2021 with following attendance: SR.# NAME OF DIRECTORS/MEMBERS STATUS Total No. of Meetings attended during the year 1 Mr. Saeed Anwar CHAIRMAN 7 2 Mr. Mohammad Jehanzeb Khan MEMBER 7 3 Syed Ghazanfar Abbas Jilani MEMBER 7 4 Mr. Iftikhar Ali Sahoo MEMBER 4 5 Mr. Shaharyar Ahmad MEMBER 3 2- Board Risk Management, Compliance and NPL Review Committee: 06 meetings of Board Risk Management, Compliance and NPL Review Committee Meeting (RMC&NRC) were held during 2021 with following attendance: SR.# NAME OF DIRECTORS/MEMBERS STATUS Total No. of Meetings attended during the period 1 Mr. Shaharyar Ahmad CHAIRMAN 4 2 Khawaja Farooq Saeed MEMBER 6 3 Dr. Muhammad Amjad Saqib MEMBER 6 4 Syed Ghazanfar Abbas Jilani MEMBER 6 5 Mr. Iftikhar Ali Sahoo Special Invitation 1 81
83. 3- Board Human Resource , Compensation and Nomination Committee: 08 meetings of Human Resource, Compensation and Nomination Committee were held during 2021: SR.# NAME OF DIRECTORS/MEMBERS STATUS Total Number of Meetings attended during the period 1 Khawaja Farooq Saeed CHAIRMAN 8 2 Mr. Mohammad Jehanzeb Khan MEMBER 8 3 Dr. Muhammad Amjad Saqib MEMBER 8 4 Mr. Iftikhar Ali Sahoo MEMBER 4 5 Syed Ghazanfar Abbas Jilani MEMBER 8 6 Mr. M. Abdullah Khan Sumbal 7 Mr. Saeed Anwar MEMBER 1 Special Invitation 2 4- Board Strategy, Islamic and Priority Sector Financing Committee: 04 meetings of Strategy, Islamic and Priority Sector Financing Committee were held during the year 2021: SR.# NAME OF DIRECTORS/MEMBERS STATUS Total No. of Meetings attended during the period CHAIRMAN 4 1 Dr. Muhammad Amjad Saqib 2 Mr. Saeed Anwar MEMBER 4 3 Mr. Iftikhar Ali Sahoo MEMBER 2 4 Mr. Shaharyar Ahmad MEMBER 2 5 Mr. Mohammad Jehanzeb Khan Special Invitation 1 6 Syed Ghazanfar Abbas Jilani Special Invitation 2 7 Khawaja Farooq Saeed Special Invitation 2 8 Mr. M. Abdullah Khan Sumbal MEMBER 1 5- Board Information Technology and Communications Committee Meeting (ITCC): 04 meetings of Information Technology and Communications Committee were held during the year 2021: SR.# 82 NAME OF DIRECTORS/MEMBERS STATUS Total No. of Meetings attended during the period CHAIRMAN 4 1 Mr. Mohammad Jehanzeb Khan 2 Mr. Saeed Anwar MEMBER 4 3 Khawaja Farooq Saeed MEMBER 4 4 Mr. Abdullah Khan Sumbal MEMBER 1 5 Mr. Iftikhar Ali Sahoo MEMBER 1 6 Syed Ghazanfar Abbas Jilani Special Invitation 1
84. 6- Monitoring Committee of the Board on Forensic Investigation of Sugar Industry : 05 meetings of Monitoring Committee of the Board on Forensic Investigation of Sugar Industry were held during the year 2021: SR.# NAME OF DIRECTORS/MEMBERS 4 2 Khawaja Farooq Saeed MEMBER 5 3 Mr. Saeed Anwar MEMBER 5 • The financial statements, together with notes thereon have been prepared in conformity with the Banking Companies Ordinance, 1962 and the Companies Act, 2017. These Statements present fair state of affairs, the result of its operations, cash flows and changes in equity and comprehensive income. Proper books of account of the Bank have been maintained. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. • International Accounting and Financial Reporting Standards and Islamic Financial Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departure there-from has been adequately disclosed in the Annual Accounts. The system of internal control is sound in design and has been effectively implemented and monitored. There is no significant doubt upon the Bank’s ability to continue as a going concern. • There has been no material departure from the best practices of corporate governance, as detailed in the listing regulations. • CHAIRMAN Mr Shahayar Ahmad The Directors are pleased to give the following statement in respect of Code of Corporate Governance: • Total No. of Meetings attended during the period 1 Statement of compliance with Corporate and Financial Reporting Framework • STATUS All the statutory liabilities, if any, have been adequately disclosed in the financial statements. • Risk Management Framework has been appropriately disclosed at Page No. 64 of the Annual Report. • Board Remuneration Policy is disclosed at Page No. 69 of Annual Report. • Value of investment of Staff Provident Fund and Gratuity Fund, based on latest audited accounts is Rs.3.24 billion & Rs. 1.34 billion, respectively. • Statement showing pattern of shareholding as on December 31, 2021 is disclosed at page No. 375 of the Annual Report. • Statement showing key operating and financial data for the last six years is disclosed at page No. 103 of the Annual Report. • Statement of compliance with code of corporate governance is presented at page No. 71 of the Annual Report. CREDIT RATING While acknowledging the improved risk profile of the Bank, M/s Pakistan Credit Rating Agency (PACRA) has upgraded the Long-term Entity Rating to “AA+”, while the Short-term Entity Rating has been maintained at “A1+”. As per standard rating scale and definition “AA+” long term rating denotes a very low expectation of credit risk. It indicates a very strong capacity for timely payment of financial commitments, not significantly vulnerable to foreseeable events. Similarly, “A1+” short term rating denotes obligations supported by the highest capacity for timely repayment. 83
85. SUBSIDIARIES The detail of Bank ’s subsidiaries are as follows: Rs. In Million Sr# Name Net Assets as of December 31, 2021 Net Assets as of December 31, 2020 1 Punjab Modaraba Services Private Limited (46.968) (37.840) 2 First Punjab Modaraba 155.433 138.408 3 Punjab Capital Securities Private Limited 82.511 72.521 OUTLOOK FOR THE YEAR 2022 In line with Bank strategic business plan, branch network would be expanded to unbanked areas to ensure improvement in business volume & spread. The Bank shall focus on implementing new technologies to further improve operational oversight and effective monitoring. AUDITORS The retiring external auditors’ M/s EY Ford Rhodes, Chartered Accountants, have completed their mandatory period of 5 years. Accordingly, after completing the due process in line with PPRA requirements, the Board of Directors, on the suggestions of Board Audit Committee, recommended M/s A.F. Ferguson, Chartered Accountants, as statutory auditors of the Bank for year 2022. ACKNOWLEDGEMENT I acknowledge valuable support and guidance of State Bank of Pakistan and Government of the Punjab which helped in achieving desired results. I am also thankful to shareholders and customers for their continued patronage. The Board also highly appreciate the effort of Bank’s management and staff members for achieving good financial results. For and on behalf of the Board Chairman 84
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89. REVIEW REPORT BY CHAIRMAN OF AUDIT COMMITTEE The Audit Committee of the Board consists of 03 members and is being headed by an experience independent Director as Chairman . The members of Audit Committee possess very rich and diverse experience of serving on the Board of various entities besides holding senior management positions in different public and private sector organizations. 88
90. Current composition of Audit Committee is as under : SR.# NAME OF DIRECTORS / MEMBERS STATUS 1 Mr. Mohammad Mudassir Amray Chairman 2 Mr. Mohammad Jehanzeb Khan Member 3 Syed Ghazanfar Abbas Jilani Member During the year 2021, 07 meetings of Audit Committee were held. Major Responsibilities of Board Audit Committee are as under: 1. Supervision of Bank’s Internal Audit Function and ensure its functional independence. 2. Provide necessary guidance to Internal Audit Function. 3. Approve annual audit plan along with allocation of required budget and resources. 4. Ensure effective implementation of Internal Control Regime as per regulatory requirements. 5. Review quarterly and annual financial statement of the Bank and address highlighted significant issues. 6. Review periodical reports of significant issues highlighted by Internal Audit Function and impart necessary guidance of critical issues. 7. Recommend appointment of External Auditor to BOD and ensure their independence. During the year 2021, the Audit Committee has reviewed 3 quarterly and one annual accounts of the Bank and recommended the same to BOD for final approval. The Committee also reviewed periodical report on significant and material issues pointed out by the Internal Audit Function and provided necessary guidance on the same. During the year 2021, Bank’s Internal Audit Function has performed its role in a very satisfactory manner. The Board Audit Committee is fully aware of its responsibilities and shall continue to perform its role in accordance with the regulatory requirements. It shall be ensured that Bank’s Internal Audit Function remains fully independent and perform its function in line with regulatory requirements and best industry practices. For & on Behalf of Audit Committee Chairman 89
91. REPORT OF SHARIAH BOARD Taqwa Islamic Banking The Bank of Punjab (TIB BOP) (For The Financial Year 2021) Alhamdulillah TIB BOP has completed another year of successful banking operations. The Shariah Board (SB) hereby presents its opinion on the affairs of TIB BOP operations. The Board of Directors (BOD) and the management is committed to providing an effective and comprehensive Shariah Governed environment to regulate the overall functions of the bank. During the year Shariah Board convened various SB meetings to discuss different matters referred to the Shariah Board including Internal/ External Shariah Audit Reports, Shariah compliance review reports, policies and procedures, new products/ renewals of existing products, transaction structuring, business and marketing material etc. As a part of the department’s responsibilities SCD also reviewed the process of profit distribution to the depositors on monthly basis. During the course of onsite visit of branches, SCD also guided staff regarding day to day operations while dealing with general banking customers. PRODUCTS AND POLICIES: During the year, SB has reviewed various new products along with the review and renewal of existing products including liability and financing side products. Few of products are already launched by the bank and while remaining shall be launched after system development. SHARIAH COMPLIANCE: 1. TIB BOP is equipped with a team of qualified personal in its Shariah Compliance Department (SCD), working under the supervision and guidance of the Shariah Board. The prime objective of this function is to ensure Shariah Compliance at various levels and take corrective measures. 2. The main modes of financing used for the bank’s financing activities during the year consist of Murabaha, Ijarah, Diminishing Musharakah, Istisna and Running Musharakah. 3. The Shariah Board supervised and analyzed various products, concepts, transactions, processes and their Shariah Compliance as an ongoing process to ensure that the transactions are valid and in conformity with Shariah injunctions. 4. 5. 90 The Internal Shariah Audit unit evaluates the adherence to Shariah guidelines by the Bank. During the year, Shariah Audit of various TIB BOP branches/ departments was conducted that enabled the Bank to improve the Shariah control environment. To strengthen and broaden the functions of Shariah control, the Shariah Compliance Department (SCD) of the bank under the supervision of RSBM, facilitated the customers by formulating customized process flows after assessment of the customers’ business models and determining the most suitable product. Additionally, Shariah Board has also reviewed different policies including Risk Management policy, Facility Policy Manual, Treasury and investment policy etc. SHARIAH OPINION: After review of reports of Shariah Compliance Department, Internal and External Shariah Audit reports we are of the opinion that:   Category of TIB BOP operations is overall satisfactory as per details given below: 1. TIB BOP has by and large complied with Shariah rules and principles in the light of fatawa, rulings and guidelines issued by the Shariah Board. 2. TIB BOP has by and large complied with directives, regulations, instructions and guidelines related to Shariah compliance issued by SBP. 3. TIB BOP has a satisfactory mechanism in place to ensure Shariah compliance in their overall operations. 4. TIB BOP has a proper system in place to ensure that any earnings realized from sources or by means prohibited by Shariah have been credited to charity account and are being properly utilized. Detail of the charity fund is available in the statement of financial position of TIB BOP (annexure I of Annual Report 2021 BOP).
92. 5 . 6. 7. TIB BOP has overall acceptable system of profit / (loss) distribution and pool management. Profit is being properly distributed to all saving account holders on Mudarabah principles. Bank’s BoD and management is cognizant with respect to the importance of Shariah compliance in the products and processes of the bank. In this spirit bank is continuously focusing to enhance the Islamic Banking knowledge & skill set of the staff. Islamic Banking Training Unit and SCD with the coordination of Learning & Development Centre of the Bank has imparted training on Islamic banking products. Shariah Board has been provided with adequate resources enabling it to discharge its duties effectively. Staff Training While appreciating the management’s efforts and focus on HR development, we recommend for management to continue its efforts on capacity building segment with the same zeal with special focus on training to staff to be appointed at Islamic Banking windows, keeping in view SBP increased focus on this area. The Shariah Board of TIB BOP is satisfied with overall performance of Taqwa Islamic Banking - The Bank of Punjab and we expect that the management of the bank will continue adhering to the instructions issued by SBP and the Shariah Board of the bank that will further strengthen Shariah Compliance culture at TIB BOP. In Addition to above: Mufti Muhammad Zahid Chairman Shariah Board RECOMMENDATIONS: There are following significant Shariah related issues which need to be addressed: Mufti Muhammad Umar Irfan Resident Member Shariah Board Staff/Human Resource related Matters It is recommended that Staff Health Insurance of the employees working under Taqwa Islamic banking need to be brought under Takaful arrangements. While encouraging the efforts of ISAU, keeping in view bank’s current business segment growth and overall network expansion plan including opening of Islamic banking Windows, it is recommended that the strength of ISAU should be further increased. Dr. Muhammad Mushtaq Ahmed Member Shariah Board Rafey Ashraf Usmani Member Shariah Board Date: 18-Feb-2022 Awareness Sessions In order to enhance customer awareness of Islamic Banking, the management has arranged awareness sessions on Islamic Banking and Finance. We recommend to arrange similar sessions in the coming years. 91
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95. ANALYSIS OF BANK ’S FINANCIAL PERFORMANCE Six Years' Trend (Rupees in Billion) 94
96. GRAPHICAL PRESENTATION OF Financial Statements (Rupees in Billion) 95
97. ANALYSIS OF BANK ’S FINANCIAL PERFORMANCE Year 2021 Vs Year 2020 (Rupees in Million) MARKUP / INTEREST EARNED 2021 2020 Variance % Mark-up Earned on Advances 35,135 38,860 (3,725) -10% Mark-up Earned on Investments 44,717 45,754 (1,037) -2% Mark-up Earned on lendings 1,763 1,365 398 29% 37 41 (4) -9% 81,651 86,019 (4,368) -5% Mark-up Earned on Balances with Banks Bank's mark up/interest earned decreased by 5% in year 2021 on account of reduction in average pricing linked with SBP and interbank benchmark rates. However, growth in overall business volume & prudent lending decisions supplemented and enabled the Bank to achieve enhanced margins. MARKUP / INTEREST EXPENSED 2021 2020 Variance % 43,955 52,483 (8,528) -16% Mark-up expensed on borrowings 6,168 8,411 (2,242) -27% Mark-up expensed on subordinated debts 604 862 (258) -30% Mark-up expensed on lease liability 1,048 937 110 12% 51,775 62,694 (10,918) -17% Mark-up expensed on deposits Despite increase in Bank's Deposit Portfolio, Bank's mark up/interest expense significantly decreased in year 2021 on account of reduction in average SBP benchmark rates and procurement of low cost fresh deposits. Branch expansion and renewals of leases resulted in increase in markup expense of lease liability. Accordingly, the Bank was able to achieve 28.08% growth in NIM for the year 2021 as compared to negative growth in year 2020. NON MARKUP INCOME 2021 2020 Variance % Fee and commission income 5,103 3,732 1,371 37% Dividend income 377 137 240 175% Foreign exchange income 577 328 249 76% Gain on securities - net 1,786 8,466 (6,681) -79% 61 382 (321) -84% 7,904 13,046 (5,142) -39% Other income - net Bank's strategy to increase business volumes and Fee Based Income thereon yielded positive results and the Fee & Commission Income increased by 37% during year 2021. Rational stipulation of Forex market trends coupled with favorable forward contracts resulted in Increase by 76% of foreign exchange income of the Bank for the year 2021. However, Gain on Securities registered a decrease of 79% on account of realization of higher capital gains during year 2020. Other Income also declined on account of realization of higher gain on disposal of NonBanking Assets in year 2020. Bank's non-markup income excluding capital gains on securities registered a growth of 34% in year 2021 in comparison with year 2020. 96
98. MATURITIES OF ASSETS AND LIABILITIES * (Rupees in Million) Upto 31-Dec-21 03 Months Over 03 Months up to 01 Year Over 01 Year up to 3 Years Over 03 Years Over up to 05 Years 05 Years Assets Cash and balances with treasury banks 71,319 71,319 - - - Balances with other banks 8,718 8,718 - - - Lending to financial institutions 30,980 30,780 200 - - Investments 531,683 46,755 216,524 182,769 14,898 70,738 Advances 484,405 129,028 78,268 65,426 83,765 127,919 Other assets 35,218 28,166 7,051 - - Operating fixed assets 19,832 440 1,047 2,741 3,019 12,584 Intangible assets 1,101 92 275 734 - Deferred tax assets 13,696 - - - 13,696 1,196,952 315,298 303,365 251,670 115,379 211,240 Liabilities Bills payable 10,109 10,109 - - - Borrowings from financial institutions 71,323 24,916 12,697 5,634 6,074 22,002 Deposits and other accounts 1,002,955 348,812 290,846 145,687 88,842 128,768 Sub-ordinated loans 7,789 - 3 5 3,495 4,285 Other liabilities 49,943 27,314 2,558 4,633 6,562 8,875 1,142,119 411,151 306,103 155,960 104,974 163,931 Net assets * Based on expected maturities. 54,833 (95,853) (2,738) 95,710 10,405 47,310 KEY INTEREST BEARING ASSETS & LIABILITIES (Rupees in Million) 20212020 EffectiveEffective Avg. Volume Interest rate % Interest Avg. Volume Interest rate % Interest Interest Earning Assets Lendings to financial institutions 22,874 6.91% 1,580 13,114 10.41% 1,365 Gross advances (excluding NPLs) 410,175 8.57% 35,135 356,802 10.89% 38,860 Gross investments (excluding equity investments) 524,839 8.55% 44,899 466,313 9.81% 45,754 Interest bearing liabilities Deposits (excluding current deposits) 692,410 6.35% 43,946 605,076 8.68% 52,548 Borrowings 72,408 7.19% 5,209 89,394 8.68% 7,761 Subordinated loan 6,796 8.89% 604 7,673 11.24% 862 97
99. ANALYSIS OF BANK ’S FINANCIAL PERFORMANCE Deposits and Advances (Rupees in Million) 98
100. Investments (Rupees in Million) TOP TEN LISTED EQUITY HOLDINGS AS OF 31.12.2021 Name of Company Shares in Numbers Book Value Market Value Fauji Ferterlizer Company Limited 3,727,011 389 374 DG Khan Cement Company Limited 3,080,318 341 255 Pakistan State Oil Company Limited 1,474,258 317 268 358,155 301 243 Nishat Mills Limited 2,894,300 281 230 Pioneer Cement Limited 2,286,700 262 203 Maple Leaf Cement Factory Limited 5,989,136 257 215 Hub Power Company Limited 3,077,916 250 220 AirLimk Communication Limited 3,788,625 248 220 Cherat Cement Company Limited 1,427,600 232 212 Lucky Cement Limited INVESTMENTS IN SUBSIDIARIES Subsidiaries 2021 2020 100.00% 100.00% First Punjab Modaraba 39.16% 39.16% Punjab Capital Securities (Private) Limited 39.16% 39.16% Punjab Modaraba Services (Private) Limited 99
101. ANALYSIS OF BANK ’S FINANCIAL PERFORMANCE Capital Adequacy Ratio (Rupees in Million) Capital Structure 2021 2020 2019 2018 2017 2016 Tier 1 Capital Shareholders Equity/Assigned Capital Share Premium Shares Deposit Money Reserves Unappropriated Profits / (Loss) 26,174 26,174 26,174 26,174 26,174 15,288 2,215 2,215 2,215 2,215 2,215 - - - - - - 7,038 5,814 5,814 4,425 2,776 1,263 1,263 21,999 12,103 8,497 3,296 (2,806) 659 56,202 46,306 41,311 34,460 26,845 24,248 Deductions: Other Deductions 12,208 4,370 3,385 5,529 6,770 2,564 12,208 4,370 3,385 5,529 6,770 2,564 43,994 41,937 37,926 28,931 20,075 21,683 Qualifying Tier 2 Instruments 6,289 6,792 7,194 7,597 3,699 4,100 General Provision subject to 1.25% of Total Risk Weighted Assets 3,054 3,748 413 348 425 391 - 4,831 4,140 1,899 1,682 2,163 9,343 15,371 11,747 9,844 5,806 6,654 4 5 5 5 215 7 Total Tier 1 Capital Tier 2 Capital Revaluation Reserves Deductions: Other deductions Tier 2 un recognized Total Tier 2 Capital Total Regulatory Capital Base - 96 - 108 - - 9,339 15,270 11,742 9,731 5,591 6,647 53,333 57,207 49,669 38,662 25,666 28,330 352,126 289,144 286,448 255,252 230,942 202,710 Risk Weighted Assets Credit Risk Market Risk 18,193 6,871 3,382 2,335 3,151 3,070 Operational Risk 64,191 56,498 45,712 35,908 29,712 24,916 434,510 352,514 335,542 293,495 263,805 230,696 Total RWA Capital Adequacy Ratio 53,333 57,207 49,669 38,662 25,666 28,330 Total Risk Weighted Assets Total Eligible Regulatory Capital Held 434,510 352,514 335,542 293,495 263,805 230,696 Capital Adequacy Ratio 12.27% 16.23% 14.80% 13.17% 9.73% 12.28% 100
102. QUARTERLY PERFORMANCE 2021 & 2020 (Rupees in Million) 2021 2020 4th 3rd 2nd 1st 4th 3rd 2nd 1st Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Profit & Loss Account Mark-up / return / interest earned 21,847 20,938 19,460 19,406 19,515 19,636 22,655 24,212 Mark-up / return / interest expensed 13,883 12,908 12,446 12,538 13,338 14,036 17,007 18,313 Net mark-up / interest income 7,964 8,030 7,014 6,868 6,178 5,600 5,648 5,899 Fee and commission income 1,252 1,359 1,375 1,117 944 976 960 852 Dividend income 165 106 49 56 45 28 23 42 Foreign exchange income 276 160 66 75 91 32 133 73 Gain on securities - net 158 13 353 1,262 166 3,535 3,761 1,004 Other income - net 8 17 11 25 238 99 13 32 Total non-markup / interest income 1,860 1,656 1,854 2,534 1,484 4,670 4,889 2,002 Total income 9,824 9,686 8,868 9,402 7,661 10,270 10,538 7,902 Operating expenses 5,393 5,103 4,742 5,400 4,612 4,110 3,958 4,201 Workers welfare fund 112 84 102 66 66 107 104 58 Other charges 13 0 0 0 0 16 1 288 Total non-markup / interest expenses 5,518 5,186 4,844 5,466 4,678 4,233 4,062 4,546 Profit before provisions 4,307 4,499 4,024 3,936 2,983 6,038 6,476 3,355 Provisions and write offs - net (1,739) (494) (278) 870 1,006 2,366 2,803 687 Profit before taxation 6,046 4,993 4,302 3,067 1,977 3,671 3,672 2,668 Taxation - net 2,323 1,873 537 1,234 862 1,493 1,524 1,168 Profit after taxation 3,723 3,120 3,765 1,833 1,116 2,178 2,149 1,501 Statement of Financial Position Assets Cash and balances with treasury banks 71,319 61,970 78,135 62,180 69,272 61,231 68,703 49,038 Balances with other banks 8,718 7,871 2,306 1,382 2,398 726 8,436 3,504 Lendings to financial institutions 30,980 9,793 11,586 31,243 16,087 6,470 9,089 39,639 Investments - net 531,683 544,085 584,988 504,047 567,789 555,114 497,664 387,887 Advances - net 484,405 443,819 434,413 415,070 391,161 378,722 382,956 371,383 Fixed assets 19,832 15,797 15,868 15,794 14,813 14,137 14,709 14,986 Intangible assets 1,101 961 870 650 689 748 784 792 Deferred tax assets - net 13,696 11,549 10,585 9,394 7,774 7,270 3,491 4,565 Other assets - net 35,218 25,702 28,605 20,083 25,465 26,167 32,615 27,322 1,196,952 1,121,546 1,167,356 1,059,843 1,095,446 1,050,583 1,018,446 899,114 Liabilities Bills payable 10,109 5,342 4,725 5,479 4,169 4,083 3,095 2,927 Borrowings 71,323 127,285 131,549 130,802 154,841 157,185 102,792 78,019 Deposits and other accounts 1,002,955 884,393 925,661 826,946 835,068 791,410 805,717 716,057 Subordinated debts 7,789 6,790 6,790 6,792 6,792 6,793 6,793 8,794 Other liabilities 49,943 44,150 46,159 41,284 42,315 39,812 44,953 43,312 1,142,119 1,067,960 1,114,884 1,011,302 1,043,185 999,283 963,350 849,110 Net Assets 54,833 53,586 52,471 48,541 52,262 51,300 55,095 50,004 Represented by Share capital - net 26,174 26,174 26,174 26,174 26,174 26,174 26,174 26,174 Reserves 10,517 8,029 8,029 8,029 8,029 6,640 6,640 6,640 Surplus on revaluation of assets - net of tax (1,369) 1,126 3,151 3,015 5,955 6,056 12,073 9,149 Unappropriated profit 19,511 18,257 15,118 11,324 12,103 12,430 10,208 8,040 54,833 53,586 52,471 48,541 52,262 51,300 55,095 50,004 101
103. ANALYSIS OF BANK ’S FINANCIAL PERFORMANCE Quarterly Performance 2021 & 2020 (Rupees in Million) Quarter Net Interest Margin Non-Markup Income Operating Expenses Profit Before Tax 1st During the first quarter of year 2021, Bank registered a growth of 16% in comparison to year 2020. The resultant growth in NIM was mainly on account of decrease in markup cost of the bank due to procurement of low cost fresh deposits and decrease in borrowing level of the Bank. During first quarter of year 2021, Bank's Non-Markup Income was recorded at Rs. 2.534 billion as compared to Rs. 2.002 billion in corresponding quarter of year 2020 showing a rise of 27%. This increase was on account of increase in realization of gains on securities and growth of in Fee & Commission Income by 31%. As result of Bank's expansion strategy, increase in staff strength, annual increments and inflation impacts, Bank's operating expense recorded an increase of 29% during the first quarter of year 2021. Bank's Profit Before Tax for 1st quarter of 2021 was recorded at Rs. 3.067 billion as compared to Rs. 2.668 billion during 1st quarter of year 2020 showing a growth of 15%. The said rise was resultant of management's efforts to reduce markup costs and increase in non-markup income. 2nd During the 2nd quarter of year 2021, Bank registered a growth of 24% in comparison to year 2020. The resultant growth in NIM was mainly on account of decrease in markup cost of the bank due to procurement of low cost fresh deposits and decrease in borrowing level of the Bank. Further, Bank also invested in high interest yield portfolio of government securities resulting in increase in markup income. Bank's Non-Markup Income for 2nd quarter of 2021 was recorded at Rs. 1.854 billion as compared to Rs. 4.889 billion during 2nd quarter of year 2020 showing a decrease of 62%. The decrease was due to realization of gain on securities during 2nd quarter 2020. Further, the Fee & Commission Income increase by 43%. Bank's Operating Expenses for 2nd quarter of 2021 were recorded at Rs. 4.742 billion as compared to Rs. 3.958 billion during 2nd quarter of year 2020 showing a rise of 20%. This increase was mainly on account of increase in marketing and advertisement, card issuance, business expansion and inflation impacts. Bank's Profit Before Tax for 2nd quarter of 2021 was recorded at Rs. 4.302 billion as compared to Rs. 3.672 billion during 2nd quarter of year 2020. Despite decrease in capital gains on securities improvement in NIM & reversal of provision against advances during 2nd quarter 2021 resulted in in overall rise of profit in 2nd quarter of 2021 by 17%. 3rd During the 3rd quarter of year 2021, Bank registered a growth of 43% in comparison to year 2020. The resultant growth in NIM was mainly on account of decrease in markup cost of the bank due to procurement of low cost fresh deposits and increase in lending portfolio of the Bank. Bank's Non-Markup Income for 3rd quarter of 2021 was recorded at Rs. 1.656 billion as compared to Rs. 4.670 billion during 3rd quarter of year 2020 showing a decrease of 65%. The decrease was due to realization of gain on securities during 3rd quarter 2020. Further, the Fee & Commission Income increased by 39% while Foreign Exchange Income and Dividend Income also registered a growth of Rs. 129 M & Rs. 79 M, respectively. Bank's Operating Expenses for 3rd quarter of 2021 were recorded at Rs. 5.103 billion as compared to Rs. 4.110 billion during 3rd quarter of year 2020 showing a rise of 24%. This increase was mainly on account of marketing and advertisement, ancillary expense incurred on government schemes, and inflation impacts. Bank's Profit Before Tax for 3rd quarter of 2021 was recorded at Rs. 4.993 billion as compared to Rs. 3.671 billion during 3rd quarter of year 2020 showing a rise of 36%. This increase was on account of net impact of improvement in NIM & reversal of provision against advances during 3rd quarter 2021. 4th During the 4th quarter of year 2021, Bank registered a growth of 29% in comparison to year 2020. The resultant growth in NIM was mainly on account of decrease in markup cost of the bank due to procurement of low cost fresh deposits and decrease in borrowing level of the Bank. Bank's Non-Markup Income for 4th quarter of 2021 was recorded at Rs. 1.860 billion as compared to Rs. 1.484 billion during 4th quarter of year 2020 showing a rise of 25%. Fee & Commission Income increased by Rs. 308 M, while Foreign Exchange Income & Dividend Income increased by Rs. 185 M & Rs. 120 M, respectively. Other Income decreased by Rs. 229 M mainly on account of gain on disposal of Non-Banking Assets during 4th quarter 2020. Bank's Operating Expenses for 4th quarter of 2021 were recorded at Rs. 5.393 billion as compared to Rs. 4.612 billion during 4th quarter of year 2020 showing a rise of 17%. This increase was mainly on account of marketing and advertisement, ancillary expense incurred on government schemes, and inflation impacts. Bank's Profit Before Tax for 4th quarter of 2021 was recorded at Rs. 6.046 billion as compared to Rs. 1.977 billion during 4th quarter of year 2020 showing a significant growth of 206%. This rise was on account of growth in NIM, Non-Markup Income and reversal of provisions against advances. 102
104. SIX YEARS ' FINANCIAL PERFORMANCE Financial Ratios 2016-2021 2021 2020 2019 2018 2017 2016 Profit and loss account Mark-up/ return earned Rs. In Million 81,651 86,019 80,867 46,893 34,668 Mark-up/ return expensed Rs. In Million 51,775 62,694 54,110 26,840 19,095 29,676 17,432 Net interest margin Rs. In Million 29,876 23,325 26,757 20,053 15,574 12,244 Fee, Commission, brokerage & FX income Rs. In Million 5,741 4,442 3,614 3,564 3,184 2,709 Dividend and capital gains Rs. In Million 2,162 8,603 325 109 1,407 2,586 Total income Rs. In Million 37,780 36,371 30,696 23,726 20,165 17,539 Total Non markup expenses Rs. In Million 21,014 17,519 14,876 12,666 10,132 8,380 Operating profit before tax and provision Rs. In Million 16,766 18,852 15,820 11,060 10,033 9,159 WWF Rs. In Million 363 335 285 Admin expenses Rs. In Million 20,637 16,880 14,453 Provisions / write-offs Rs. In Million (1,642) 6,862 1,776 (1,148) 14,731 1,109 Profit before tax Rs. In Million 18,408 11,989 14,044 12,208 (4,698) 8,050 Profit after tax Rs. In Million 12,440 6,944 8,249 7,564 (3,322) 4,858 Cash / stock dividend * Rs. In Million 3,305 2,644 1,983 1,983 - 12,613 - 10,089 - 8,346 - * Includes dividends accounced after year end Statement of Financial Position Authorised capital Rs. In Million 50,000 50,000 50,000 50,000 50,000 50,000 Paid up capital - net Rs. In Million 26,174 26,174 26,174 26,174 26,174 15,288 Reserves Rs. In Million 10,517 8,029 6,640 4,991 3,478 1,301 Unappropriated Profit / (Loss) Rs. In Million 19,511 12,103 8,497 3,296 (2,806) 659 Shareholder's equity Rs. In Million 56,202 46,306 41,311 34,460 26,845 17,248 Surplus on revaluation of assets - net of tax Rs. In Million (1,369) 5,955 5,371 3,260 2,887 3,607 Total Assets Rs. In Million 1,196,952 1,095,446 868,928 714,380 657,737 547,424 Earning Assets Rs. In Million 1,054,108 972,981 747,797 617,234 562,067 453,774 Gross Advances Rs. In Million 534,163 442,760 428,846 425,756 341,735 293,922 Advances - net of provisions Rs. In Million 484,405 391,161 383,313 381,877 295,752 262,068 Non-Performing Loans (NPLs) Rs. In Million 52,032 57,251 51,363 49,385 50,951 54,954 Investments Rs. In Million 531,683 567,789 361,453 210,071 242,506 199,742 Total Liabilities Rs. In Million 1,142,119 1,043,185 822,245 676,659 628,005 519,570 Deposits Rs. In Million 1,002,955 835,068 691,017 595,582 556,281 453,220 Current & Saving Deposits (CASA) Rs. In Million 643,842 545,920 471,581 383,859 368,554 317,286 Borrowings Rs. In Million 71,323 154,841 77,045 41,793 38,949 39,829 Interest bearing Liabilities Rs. In Million 596,619 583,269 426,088 362,367 328,583 371,886 Contingencies and Commitments Rs. In Million 469,024 213,750 195,225 145,808 134,778 76,547 Profitability ratios Profit before tax ratio % 22.54% 13.94% 17.37% 26.03% -13.55% Gross Yield on Average Earning Assets % 8.06% 10.00% 11.85% 7.95% 6.83% 27.13% 7.13% Gross Yield on Avg. Earning Assets (incl. dividend & capital gains) % 8.27% 11.00% 11.90% 7.97% 7.10% 7.75% 41.26% Gross Spread % 36.59% 27.12% 33.09% 42.76% 44.92% Net markup/ interest margin % 2.50% 2.13% 3.08% 2.81% 2.37% 2.24% Non interest income to total income % 8.83% 13.17% 4.65% 7.26% 11.69% 15.14% Return on average equity (ROE) % 24.27% 15.85% 21.77% 24.68% -15.07% 32.78% Return on average assets (ROA) % 1.09% 0.71% 1.04% 1.10% -0.55% 0.95% Return on Capital Employed (ROCE) % 24.27% 15.85% 21.77% 24.68% -15.07% 32.78% 103
105. 2021 2020 2019 2018 2017 2016 Profitability ratios Interest Ratio % 63.41% 72.88% 66.91% 57.24% 55.08% 58.74% Non markup/ interest income to total assets % 0.66% 1.19% 0.45% 0.51% 0.70% 0.97% Net markup/ interest income(after provision)to total assets % 2.63% 1.50% 2.87% 2.97% 0.13% 2.03% 63.41% 72.88% 66.91% 57.24% 55.08% 58.74% 1.04 Markup/interest expense to markup/interest income % Admin expense to profit before tax Times 1.12 1.41 1.03 1.03 (2.15) Operating Expense Ratio Times 1.14 1.46 1.06 1.04 (2.16) 1.04 Gain Ratio % 4.73% 23.28% 0.72% 0.12% 6.53% 14.39% Net investment in Finance Lease to Total Assets % 3.11% 2.87% 3.80% 4.91% 5.35% 7.22% Admin Exp to Profit before Tax % 112.11% 140.79% 102.91% 103.31% -214.75% 103.68% Non-markup/ interest expense to total income % 23.46% 17.68% 17.54% 25.05% 25.81% 23.96% Times 2.61 1.29 3.67 3.43 2.20 1.58 Cost to income ratio % 55.62% 48.17% 48.46% 53.38% 50.25% 47.78% Cost to income ratio (excluding WWF) % 54.66% 47.25% 47.53% 53.38% 50.25% 47.78% Admin expense to non- markup income Investment Ratios Earnings per share (before tax) Rs 6.96 4.54 5.31 4.62 (1.78) 5.18 Earnings per share (after tax) Rs 4.71 2.63 3.12 2.86 (1.26) 3.12 Breakup value per share: - without surplus on revaluation of fixed assets & investments " Rs 21.259 17.516 15.626 13.035 10.154 11.091 - without surplus on revaluation of fixed assets Rs 19.307 19.051 16.934 13.545 10.489 12.033 - without surplus on revaluation of investments Rs 23.179 18.658 16.816 14.272 11.267 12.869 - with surplus on revaluation of fixed assets & investmentsRs 20.741 19.768 17.658 14.268 11.246 13.410 % 12.50% 10.00% 7.50% 7.50% 0.00% 0.00% Rs 1.25 1 0.75 0.75 - 0.00% Cash / stock Dividend Dividend per share Dividend Yield ratio (based on cash dividend) % 14.67% 10.19% 6.89% 6.69% 0.00% Dividend Payout ratio % 26.56% 38.07% 24.04% 26.21% 0.00% 0.00% Price to book value ratio % 40.84% 46.89% 64.16% 83.89% 73.27% 131.62% Price to earning ratio Times 1.81 3.74 3.49 3.92 (9.70) 3.55 Dividend cover ratio Times 3.76 2.63 4.16 3.81 0% 0% Share Information Market value per share - Dec 31 Rs 8.47 9.27 11.33 11.97 8.24 17.65 18.65 High - during the year Rs 10.00 14.33 14.57 13.85 18.65 Low - during the year Rs 7.61 6.52 6.97 8.1 7.3 Market Capitalisation Rs. In Million 22,392 24,507 29,953 31,645 21,784 7.71 27,448 Asset Quality and Liquidity Ratios Gross Advances to deposits ratio % 53.26% 53.02% 62.06% 71.49% 61.43% Gross Advances to deposits & borrowings ratio % 49.72% 44.73% 55.83% 66.80% 57.41% 59.61% Net Advances to deposits ratio % 48.30% 46.84% 55.47% 64.12% 53.17% 57.82% Investments to deposits ratio % 53.01% 67.99% 52.31% 35.27% 43.59% 44.07% Weighted Average Cost of Deposits % 5.12% 7.04% 7.68% 4.17% 3.52% 3.89% CASA to total deposits % 64.19% 65.37% 68.24% 64.45% 66.25% 70.01% Advances net to total assets % 40.47% 35.71% 44.11% 53.46% 44.97% 47.87% NPLs to Gross advances ratio % 9.74% 12.93% 11.98% 11.60% 14.91% 18.70% Provision to Gross advances ratio % 9.32% 11.65% 10.62% 10.31% 13.46% 10.84% NPLs to Shareholders Equity % 92.58% 123.64% 124.33% 143.31% 189.80% 226.64% Coverage Ratio (specific provision/ NPLs) % 89.76% 83.58% 87.84% 88.14% 89.42% 57.25% 104 64.85%
106. 2021 2020 2019 2018 2017 2016 Asset Quality and Liquidity ratio Coverage Ratio (total provision/ NPLs) % 95.63% 90.13% 88.65% 88.85% 90.25% 57.97% Earning assets to total assets ratio % 88.07% 88.82% 86.06% 86.40% 85.45% 82.89% Investment to deposit ratio % 53.01% 67.99% 52.31% 35.27% 43.59% 44.07% Investments to total assets ratio % 44.42% 51.83% 41.60% 29.41% 36.87% 36.49% Cash & Cash Equvilants to Total Assets % 6.69% 6.54% 7.32% 6.88% 8.10% 7.20% Cash to Current Liabilities % 7.70% 7.24% 8.16% 7.66% 8.04% 7.96% Deposits to total assets % 83.79% 76.23% 79.53% 83.37% 84.57% 82.79% NPLSs write off to NPLs provisions % -3.70% 11.76% 3.63% -4.78% 30.73% 2.90% Total liabilities to total assets % 95.42% 95.23% 94.63% 94.72% 95.48% 94.91% Commitments & contingencies to total equity Times 8.35 4.62 4.73 4.23 5.02 3.16 Earning assets to interest bearing Liabilities Times 1.77 1.67 1.76 1.70 1.71 1.22 Deposits to shareholder equity Times 17.85 18.03 16.73 17.28 20.72 18.69 Assets to Equity Times 21.83 20.96 18.61 18.94 22.12 19.65 Current / Quick Ratio Times 1.12 1.08 1.08 1.08 1.06 1.07 Risk Adequacy Tier I Capital Rs. In Million 44 42 38 29 20 22 Total Eligible Capital Rs. In Million 53 57 50 39 26 28 Risk Weighted Assets (RWA) Rs. In Million 435 353 336 293 264 231 Tier I to RWA % 10.12% 11.90% 11.30% 9.86% 7.61% 9.40% RWA to total assets % 0.04% 0.03% 0.04% 0.04% 0.04% 0.04% Capital Adequacy Ratio % 12.27% 16.23% 14.80% 13.17% 9.73% 12.28% Capital ratio (A/C) % 4.70% 4.23% 4.75% 4.82% 4.08% 3.15% Industry Share* Deposits % 4.62% 4.51% 4.33% 4.18% 4.28%3.84% Advances % 4.79% 4.72% 4.65% 4.80%4.54%4.77% Investments % 3.65% 4.76% 4.04% 2.65% 2.78%2.66% Total assets % 3.98% 4.36% 3.95% 3.63% 3.59% 3.46%* based on economic data released by State Bank of Pakistan Per Branch Gross Advances Rs. In Million 807 696 687 739 638 649 Deposits Rs. In Million 1,515 1,313 1,107 1,034 1,038 1,000 CASA Rs. In Million 973 858 756 666 688 700 PBT Rs. In Million 19 11 13 13 (6) 11 DuPont Analysis Net Operating Margin A 32.93% 19.09% 26.87% 31.88% -16.47% Asset Utilization B 3.30% 3.70% 3.88% 3.46% 3.35% 3.43% Return on Assets C=A*B 1.09% 0.71% 1.04% 1.10% -0.55% 0.95% D 21.41 19.85 18.76 20.34 23.82 27.96 C*D 23.23% 14.04% 19.55% 22.43% -13.13% 26.60% Leverage Ratio / Equity Multiplier Return on Equity 27.70% Staff Turn Over Ratios: 2021 8.18% 2020 6.47% 2019 2018 2017 2016 9.18% 11.00% 11.14% 12.48% 105
107. SIX YEARS ' PERFORMANCE REVIEW 106
108. 107
109. SIX YEARS ' - GRAPHICAL SUMMARY OF RATIOS 108
110. SIX YEARS ' - CONCENTRATION OF Advances, NPLs and Off Balance Sheet Items (Rupees in Million) 109
111. SIX YEARS ' - MATURITIES OF ASSETS and Liabilities (Rupees in Million) 110
112. DUPONT ANALYSIS 2021 2020 2019 2018 2017 2016 Net Operating Margin A 32 .93% 19.09% 26.87% 31.88% -16.47% 27.70% Asset Utilization B 3.30% 3.70% 3.88% 3.46% 3.35% 3.43% C=A*B 1.09% 0.71% 1.04% 1.10% -0.55% 0.95% Leverage Ratio / Equity Multiplier D 21.41 19.85 18.76 20.34 23.82 27.96 Return on Equity C*D 23.23% 14.04% 19.55% 22.43% -13.13% 26.60% Return on Assets Following are the main DuPont Analysis Highlights: 1. During year 2017, Net Operating Margin remained in negative zone due to charge of provision amounting to Rs. 14.7 Billion for retirement of LOCs. During year 2020, NOM remained at 19% due to charge of General Provision of Rs. 3.3 Billion & Subjective provisioning of Rs. 1.7 Billion. During year 2021, the NOM siginificanly improved to 33%. 2. Asset Utilization has remained in the range of 3.30% - 3.88%. During year 2021, it remained at 3.30%. 3. Return on Equity during 2016 remained on higher side due to recording of provision against advances on staggered basis under LOCs issued by GOPb. During year 2017, due to charge of provision for retirement of LOCs, ROE remained in negative zone. The ROE for year 2020 remained at 14.04% due to charge of subjective and general provision against advances and it improved to 23.23% during year 2021. 111
113. SUMMARY OF CASH FLOWS (Rupees in Million) 2021 Cash flows from operating activities 2020 2019 (25,055) 197,832 178,738 Cash flows from investing activities 36,552 (184,592) Cash flows from financing activities (3,127) (5,159) Cash and cash equivalents at beginning of the year 71,667 80,036 Cash and cash equivalents at end of the year Restated 2017 2018 Restated 2016 (31,838) 43,965 6,774 (161,062) 23,421 (35,933) (465) (3,270) 4,298 5,831 2,500 63,586 49,181 53,300 39,437 30,628 71,667 63,586 49,181 53,300 39,437 Cash Flow from operating activities mainly represent the core activity of the Bank i.e. mobilization of Deposits. Since 2016, Deposits of the Bank have been growing at a consistent trend with a CAGR of 17%. During year 2021, there was net inflow of Rs. 168 Billion from Deposits, while a net outflow of Rs. 84 Billion in Borrowings was observed. The major deployment under investing activities was on account of investment in AFS Securities. During year 2021, net outflow of Rs.38 Billion was recorded on account of investment in AFS Securities. During year 2021, outflows of Rs. 2.6 Billion was observed against dividend payment while net increase in Advances remained at Rs. 92 Billion. FREE CASH FLOWS (Rupees in Million) 2021 Profit before taxation 2020 2019 Restated 2017 2018 Restated 2016 18,408 11,989 14,044 12,208 (4,698) 8,050 (377) (137) (104) (82) (91) (62) Income tax paid (6,194) (4,851) (3,974) (2,843) (3,006) (1,704) Adjustment for non-cash items (1,022) (1,340) 2,268 904 15,615 110 Operating assets/ liabilities changes (35,870) 192,170 166,503 (42,027) 36,146 380 Net cash generated from operating activities (25,055) 197,832 178,738 (31,838) 43,965 6,774 Capital expenditure (2,461) (1,162) (1,102) (1,566) (1,691) (1,677) Free cash flows (27,517) 196,670 177,635 (33,404) 42,274 5,097 Dividend income 112
114. CASH FLOW STATEMENT Direct Method (Rupees in Million) 20212020 Rupees in million Cash flows from operating activities Mark-up / return / interest and commission receipts 83,270 94,236 Mark-up / return / interest payments (52,277) (62,726) Payments to employees, suppliers and others (18,049) (14,692) 12,943 16,817 Decrease / (increase) in operating assets Lendings to financial institutions (14,894) (12,027) Net investments in 'held for trading' securities (17,626) (20,698) Advances - net (91,523) (13,586) Other assets (3,950) 9,131 (127,993) (37,180) (Decrease) / increase in operating liabilities Bills payable 5,941 748 Borrowings (83,516) 77,934 Deposits and other accounts 167,887 144,050 Other liabilities 5,876 315 96,188 223,046 Income tax paid (6,194) (4,851) Net cash flows from / (used in) operating activities (25,055) 197,832 Cash flows from investing activities Net investments in 'available for sale' securities 38,338 (185,059) Dividends received 377 135 Investment in fixed assets (1,841) (1,068) Investments in intangible assets (621) (93) Proceeds from sale of property and equipment 4 651 Proceeds from sale of non banking assets 293 842 Net cash flows from / (used in) investing activities 36,552 (184,592) Cash flows from financing activities Payments of Subordinated debt (3) (2,003) Dividend paid (2,644) (1,983) Payment of lease liability against right-of-use-assets (1,481) (1,174) Advance subscription money - subordinated perpetual term finance certificates 1,000 - Net cash flows used in financing activities (3,127) (5,159) Increase in cash and cash equivalents 8,369 8,081 Cash and cash equivalents at beginning of the year 71,667 63,586 Cash and cash equivalents at end of the year 80,036 71,667 113
115. MARKUP & NON MARKUP INCOME (Rupees in Million) 2021 2020 2019 2018 2017 2016 Markup earned Mark-up Earned on Advances 35,135 38,860 46,190 28,853 20,506 16,946 44,717 45,754 31,815 15,855 13,243 12,350 1,763 1,365 2,705 2,159 835 329 37 41 157 26 84 49 81,651 86,019 80,867 46,893 34,668 29,674 Mark-up expensed on deposits 43,955 52,483 46,984 23,531 17,075 15,412 Mark-up expensed on borrowings 6,168 8,411 5,237 2,697 1,716 1,887 604 862 1,110 152 125 131 1,048 937 779 459 179 - 51,775 62,694 54,110 26,840 19,095 17,430 Fee and commission income 5,103 3,732 3,530 3,245 2,807 975 Dividend income 377 137 104 82 91 62 Foreign exchange income 577 328 11 227 109 75 1,786 8,466 222 28 1,316 2,524 61 382 73 92 269 1,658 7,904 13,046 3,940 3,673 4,591 5,294 Mark-up Earned on Investments Mark-up Earned on lendings Mark-up Earned on Balances with Banks Markup Expensed Mark-up expensed on subordinated debts Mark-up expensed on lease liability Non Markup income Gain on securities - net Other income - net 114
116. OPERATING EXPENSES (Rupees in Million) 2021 2020 2019 2018 2017 2016 Total compensation expense 10,631 8,734 7,213 6,139 4,936 Property Expense Rent and taxes 22 39 71 970 778 Insurance 17 18 19 14 - Utilities cost 797 664 637 491 391 Depreciation 523 589 528 497 443 Amortization on ROU asset 991 891 876 - - Others 50 45 24 29 14 4,152 1,490 2,400 2,247 2,154 2,000 1,626 739 340 388 23 Information technology expenses Software maintenance 513 473 376 200 93 (16) Hardware maintenance 55 82 107 96 89 65 Depreciation 348 285 230 216 90 126 Amortization 208 198 174 68 26 23 Network Charges 424 355 331 321 236 179 1,547 1,393 1,219 901 534 Other operating expenses Directors' fees and allowances 42 35 9 4 4 Legal & professional charges 227 113 105 107 76 Subscription charges 39 31 16 16 - Outsourced services costs 438 367 236 362 444 Travelling & conveyance 837 561 584 476 354 NIFT clearing charges 68 69 59 50 48 Depreciation owned assets 364 307 291 263 256 Depreciation NBAs 49 59 74 66 87 Depreciation Ijarah assets 119 163 238 360 339 Training & development 67 26 37 16 9 Postage & courier charges 158 221 144 110 103 Stationery & printing 409 265 230 242 144 Marketing, advertisement & publicity 650 356 103 139 118 Donations - 10 1 - - Auditors Remuneration 12 11 12 12 10 Insurance expense 245 144 140 101 89 Deposit protection fee 443 352 337 160 - Repair & Maintenance 294 180 158 138 120 Entertainment 151 112 95 90 81 Fuel charges - Generator 100 86 108 95 90 Commission and Brokerage 274 244 141 120 81 Bank charges 36 42 63 52 53 SMS Banking Charges 41 48 39 34 11 ATM Charges 274 174 140 98 127 Cash remittance & maintenance charges 270 200 181 190 149 Branch License fee 28 17 15 18 25 ECIB and CNIC verification charged 204 71 71 34 34 Others 224 242 240 222 141 6,059 4,506 3,867 3,573 2,994 378 4 64 12 251 303 39 224 106 80 10 68 127 71 10 73 117 73 104 94 51 4 124 134 16 26 143 2,327 Operating expenses excluding compensation 10,006 8,146 7,240 6,474 5,153 4,194 Total operating expenses 20,637 16,880 14,453 12,613 10,089 8,346 115
117. ECONOMIC VALUE ADDED STATEMENT (Rupees in Million) 20212020 Invested Capital Average shareholder's equity 51,254 43,809 Add: Cumulative provision against assets 55,783 57,716 107,037 101,525 Return on invested capital Profit after taxation 12,440 6,944 Add: Provisions and write offs - net (1,002) 4,186 Total return on invested capital Economic cost Opportunity cost of invested capital Economic value added 11,438 11,130 12.38% 13,249 9.71% 9,855 (1,810) 1,275 During the year 2021, Bank’s share was continuously traded below its part value in Pakistan Stock Exchange. Consequently, the average price per share remained little subdued and was recorded as Rs. 8.52 despite continuous improvement in quarterly Earning Per Shares (EPS) with full year EPS improving to Rs. 4.71 per share. Further, dividend announcement for shareholders was increased by 25% during the year through announcement of stock dividend @ 12.50% for the year 2021 as against 10.00% cash dividend paid for last year which resultantly increased the economic cost. Accordingly, Economic value Added (EVA) for year 2021 remained adversely skewed as compared to year 2020. CAPITAL EXPENDITURE Capital expenditure during the year: The total capital expenditure during 2021 was Rs. 2.46 billion mainly on account of business expansion in Karachi & South Region and for the purpose of improvement in IT infrastructure and Digital Banking. Capital expenditures planned for next year: The Bank has budgeted capital expenditure of Rs. 6.43 billion for the year 2022 with major focus on branches expansion, renovation of existing branches & offices, development of IT infrastructure and rolling out new technology based products & services through Digital Banking Channel including launch of credit cards 116
118. NON PERFORMING ASSETS AND RELATED PROVISION (Rupees in Million) Dec 31, 2021 Particulars Non performing assets Dec 31, 2020 Provision Non performing assets Provision Investments Beginning Balance 4,080 4,080 3,696 3,696 Other Adjustments - - - Additions / Charged During the period 322 322 516 516 Reversal (11) (11)(8) (8) Disposal / Write-Offs (280) (280) (125) (125) Ending Balance 4,111 4,111 4,080 4,080 Advances Beginning Balance 57,251 47,851 51,363 45,120 Other Adjustments - - - Additions / Charged During the period 1,351 4,004 8,292 4,818 Reversal (6,570) (5,152)(2,404) (2,087) Write-Offs - (-) - Ending Balance 52,032 46,703 57,251 47,851 Other Assets Beginning Balance 2,041 2,037 1,771 1,767 Other Adjustments - - - Additions / Charged During the period 3 35 270 292 Reversal (131) (148) - (5) Write-Offs - (10) - (17) Ending Balance 1,913 1,914 2,041 2,037 Total Beginning Balance 63,372 53,968 56,830 50,583 Other Adjustments - - - Additions / Charged During the period 1,677 4,362 9,078 5,627 Reversal (6,712) (5,311)(2,411) (2,100) Write-Offs (280) (291)(125) (142) Ending Balance 58,056 52,728 63,372 53,968 117
119. BUSINESS SEGMENT ANALYSIS Balance Sheets & Profit/(Loss) Accounts of following Business Segments have been stated in Note 40 to the Annual Audited Financial Statements: • Corporate & Investment Banking (CIBG) This includes, loans, project finance, real estate finance, export finance, trade finance, investment banking, and other banking activities with corporate and public sector customers. • Consumer & Digital Banking (CDB) It includes deposits and banking services including digital baking services to customers of the Bank. • Retail & Priority Sector Lending (RPSL) It includes loans of individuals, agriculture customers, SME and lending under government initiatives. Products offered to customers include transport finance, house finance, livestock finance, dairy finance etc. •Treasury It includes fixed income, equity, foreign exchanges, commodities, credit, funding, own position securities, lending and repos and brokerage debt. • Islamic Banking (IB) The segment pertains to full scale Islamic Banking operations of the Bank. • Others (including Head Office) This includes head office related activities, and all other activities not tagged to the segments above. 118 Key variances during year 2021 are hereunder: Profit & Loss: • Profit before tax of Corporate and Investment Banking, Islamic Banking Group & Retail and Priority Sector Lending, increased due to reversal of provision during the year 2021 against NPLs. • Further, Landings under Government Subsidized Initiatives also adds a positive impact on net interest margin of Retail and Priority Sector Lending. • Profit before tax of Consumer and Digital Banking increased due to decrease in SBP Policy Rate and corresponding impact on Cost of Deposits and improvement in procurement of loss cost fresh deposits. • Profit before tax of Treasury decreased due to the higher level of Capital Gains realized on Government Securities in year 2020. • Profit before tax of Islamic Banking decreased on account of negative impacts of rise in NPLs on net interest margins & and provision charged during the period. Balance Sheet: • Movement in Assets & Liabilities of different Business Segments was on account of rise in the Level of Deposits and corresponding growth in Assets of the Bank including Advances & Investments.
120. SIX YEARS ' VERTICAL ANALYSIS (Rupees in Million) 2021 Amount % 2020 Amount % 2019 Amount % 2018 Amount % 2017 2016 Amount % Amount % Statement of Financial Position ASSETS Cash and balances with treasury banks 71,319 6% 69,272 6% 53,415 6% 43,589 6% 42,478 6% 35,756 7% Balances with other banks 8,718 1% 2,398 0% 10,311 1% 5,802 1% 6,077 1% 3,766 1% Lendings to financial institutions 30,980 3% 16,087 1% 4,060 0% 27,843 4% 24,571 4% 11,562 2% Investments - net 531,683 44% 567,789 52% 361,453 42% 210,071 29% 242,506 37% 199,742 36% Advances - net 484,405 40% 391,161 36% 383,313 44% 381,877 53% 295,752 45% 262,068 48% Fixed assets 19,832 2% 14,813 1% 15,219 2% 8,788 1% 7,890 1% 7,256 1% Intangible assets 1,101 0% 689 0% 793 0% 891 0% 629 0% 437 0% Deferred tax assets - net 13,696 1% 7,774 1% 6,568 1% 7,965 1% 10,725 2% 6,480 1% Other assets - net 35,218 3% 25,465 2% 33,797 4% 27,552 4% 27,109 4% 20,357 4% 1,196,952 100% 1,095,446 100% 868,928 100% 714,380 100% 657,737 100% 547,424 100% LIABILITIES Bills payable 10,109 1% 4,169 0% 3,421 0% 3,578 1% 3,365 1% 4,183 1% Borrowings 71,323 6% 154,841 14% 77,045 9% 41,793 6% 38,949 6% 39,829 7% Deposits and other accounts 1,002,955 84% 835,068 76% 691,017 80% 595,582 83% 556,281 85% 453,220 83% Subordinated debts 7,789 1% 6,792 1% 8,794 1% 8,797 1% 4,499 1% 4,500 1% Other liabilities 49,943 4% 42,315 4% 41,968 5% 26,909 4% 24,911 4% 17,837 3% 1,142,119 95% 1,043,185 95% 822,245 95% 676,659 95% 628,005 95% 519,570 95% NET ASSETS 54,833 5% 52,262 5% 46,682 5% 37,720 5% 29,732 5% 27,854 5% REPRESENTED BY Share capital - net 26,174 2% 26,174 2% 26,174 3% 26,174 4% 26,174 4% 15,288 3% Share deposit money - 0% - 0% - 0% - 0% - 0% 7,000 1% Reserves 10,517 1% 8,029 1% 6,640 1% 4,991 1% 3,478 1% 1,301 0% Surplus on revaluation of assets - net of tax (1,369) 0% 5,955 1% 5,371 1% 3,260 0% 2,887 0% 3,607 1% Unappropriated profit / (Accumulated Losses) 19,511 2% 12,103 1% 8,497 1% 3,296 0% (2,806) 0% 659 0% 54,833 5% 52,262 5% 46,682 5% 37,720 5% 29,732 5% 27,854 5% Profit & Loss Account Mark-up / return / interest earned 81,651 91% 86,019 87% 80,867 95% 46,893 93% 34,668 88% 29,676 85% Mark-up / return / interest expensed (51,775) -58% (62,694) -63% (54,110) -64% (26,840) -53% (19,095) -49% (17,432) -50% Net mark-up / interest income 29,876 33% 23,325 24% 26,757 32% 20,053 40% 15,574 40% 12,244 35% Non mark-up / interest income 7,904 9% 13,046 13% 3,940 5% 3,673 7% 4,591 12% 5,295 15% Total income 37,780 42% 36,371 37% 30,696 36% 23,726 47% 20,165 51% 17,539 50% Non mark-up / interest expenses (21,014) -23% (17,519) -18% (14,876) -18% (12,666) -25% (10,132) -26% (8,380) -24% Profit before provisions 16,766 19% 18,852 19% 15,820 19% 11,060 22% 10,033 26% 9,159 26% Provisions and write offs - net 1,642 2% (6,862) -7% (1,776) -2% 1,148 2% (14,731) -38% (1,109) -3% Profit before taxation 18,408 21% 11,989 12% 14,044 17% 12,208 24% (4,698) -12% 8,050 23% Taxation - net (5,968) -7% (5,046) -5% (5,795) -7% (4,645) -9% 1,376 4% (3,192) -9% Profit after taxation 12,440 14% 6,944 7% 8,249 10% 7,564 15% (3,322) -8% 4,858 14% Vertical Analysis Commentary: Investments & Advances remained major components of Asset Mix of the Bank. The Bank opted to channelize incremental funds in Risk Free Investments and grow Advances Book in a very careful manner. Accordingly, the mix of Advances-net reduced to 40% in 2021 as against 48% in year 2016 which also includes the impact of provision against NPLs for retirement of LOCs in year 2017. The mix of Investments improved to 44% as against 36% in year 2016. Owing to Branch Expansion and products diversification, the Bank was able to post a steady growth in Deposits with a CAGR of 17%. As of December 31, 2021, the Mix of Deposits and Borrowings stood at 84% & 6%, respectively. Markup Income has shown a steady growth with main contribution from income on Advances and Investments. The contribution of markup income constitutes 91% of the total revenue for year 2021. Markup Expense has also increased due to growth in Deposit base and change in minimum rate of profit on PLS Deposits. Concentration of Non Markup Income for year 2021 remained at 9% as against 13% during year 2020. The concentration of Non Markup Expense remained at 23% & 18% for the years 2021 & 2020, respectively. The rise in Non-Markup Expenses is in line with Branch Expansion, investment in new technologies and inflationary parameters. 119
121. SIX YEARS ' HORIZONTAL ANALYSIS (Rupees in Million) 2021 Rs Mln 21 Vs 20 % 2020 Rs Mln 20 Vs 19 % 2019 19 Vs 18 2018 18 Vs 17 Rs Mln % Rs Mln % 2017 Rs Mln 17 Vs 16 % 2016 16 Vs 15 Rs Mln % Statement of Financial Position ASSETS Cash and balances with treasury banks 71,319 3% 69,272 30% 53,415 23% 43,589 3% 42,478 19% 35,756 37% Balances with other banks 8,718 264% 2,398 -77% 10,311 78% 5,802 -5% 6,077 61% 3,766 -17% Lendings to financial institutions 30,980 93% 16,087 296% 4,060 -85% 27,843 13% 24,571 113% 11,562 89% Investments - net 531,683 -6% 567,789 57% 361,453 72% 210,071 -13% 242,506 21% 199,742 13% Advances - net 484,405 24% 391,161 2% 383,313 0% 381,877 29% 295,752 13% 262,068 19% Fixed assets 19,832 34% 14,813 -3% 15,219 73% 8,788 11% 7,890 9% 7,256 13% Intangible assets 1,101 60% 689 -13% 793 -11% 891 42% 629 44% 437 757% Deferred tax assets - net 13,696 76% 7,774 18% 6,568 -18% 7,965 -26% 10,725 65% 6,480 -18% Other assets - net 35,218 38% 25,465 -25% 33,797 23% 27,552 2% 27,109 33% 20,357 -25% 1,196,952 9% 1,095,446 26% 868,928 22% 714,380 9% 657,737 20% 547,424 16% LIABILITIES Bills payable 10,109 143% 4,169 22% 3,421 -4% 3,578 6% 3,365 -20% 4,183 122% Borrowings 71,323 -54% 154,841 101% 77,045 84% 41,793 7% 38,949 -2% 39,829 -28% Deposits and other accounts 1,002,955 20% 835,068 21% 691,017 16% 595,582 7% 556,281 23% 453,220 21% Subordinated debts 7,789 15% 6,792 -23% 8,794 0% 8,797 96% 4,499 0% 4,500 125% Other liabilities 49,943 18% 42,315 1% 41,968 56% 26,909 8% 24,911 40% 17,837 4% 1,142,119 9% 1,043,185 27% 822,245 22% 676,659 8% 628,005 21% 519,570 15% NET ASSETS 54,833 5% 52,262 12% 46,682 24% 37,720 27% 29,732 7% 27,854 23% REPRESENTED BY Share capital - net 26,174 0% 26,174 0% 26,174 0% 26,174 0% 26,174 71% 15,288 0% Share deposit money - 0% - 0% - 0% - 0% - -100% 7,000 0% Reserves 10,517 31% 8,029 21% 6,640 33% 4,991 43% 3,478 167% 1,301 -44% Surplus on revaluation of assets - net of tax (1,369) -123% 5,955 11% 5,371 65% 3,260 13% 2,887 -20% 3,607 10% Unappropriated profit / (Accumulated Losses) 19,511 61% 12,103 42% 8,497 158% 3,296 -217% (2,806) -526% 659 -113% 54,833 5% 52,262 12% 46,682 24% 37,720 27% 29,732 7% 27,854 23% Profit & Loss Account Mark-up / return / interest earned 81,651 -5% 86,019 6% 80,867 72% 46,893 35% 34,668 17% 29,676 -5% Mark-up / return / interest expensed (51,775) -17% (62,694) 16% (54,110) 102% (26,840) 41% (19,095) 10% (17,432) -14% Net mark-up / interest income 29,876 28% 23,325 -13% 26,757 33% 20,053 29% 15,574 27% 12,244 11% Non mark-up / interest income 7,904 -39% 13,046 231% 3,940 7% 3,673 -20% 4,591 -13% 5,295 -31% Total income 37,780 4% 36,371 18% 30,696 29% 23,726 18% 20,165 15% 17,539 -6% Non mark-up / interest expenses (21,014) 20% (17,519) 18% (14,876) 17% (12,666) 25% (10,132) 21% (8,380) 13% Profit before provisions 16,766 -11% 18,852 19% 15,820 43% 11,060 10% 10,033 10% 9,159 -19% Provisions and write offs - net 1,642 -124% (6,862) 286% (1,776) -255% 1,148 -108% (14,731) 1228% (1,109) -70% Profit before taxation 18,408 54% 11,989 -15% 14,044 15% 12,208 -360% (4,698) -158% 8,050 7% Taxation - net (5,968) 18% (5,046) -13% (5,795) 25% (4,645) -438% 1,376 -143% (3,192) 15% Profit after taxation 12,440 79% 6,944 -16% 8,249 9% 7,564 -328% (3,322) -168% 4,858 2% Horizontal Analysis Bank's Asset Base has registered consistent growth during 2016-2021 and it crossed Rs. 1.0 Trillion mark in 2020. During year 2021, Total Assets registered growth of 9% while CAGR for 2016-21 remained at 17%. Deposits also grew at a steady rate with a CAGR of 17%. Highest growth of 23% was registered in year 2017 while YOY growth for year 2021 remained at 20%. During the period 2016-2021, 209 Branches were opened by the Bank. Owing to consistent growth in profitability, the Equity registered a steady growth. The YOY growth for year 2021 remained at 5%. On profitability side, Markup Income of the Bank registered a CAGR of 22% during 2016-2021. The main components were Markup earned on Advances & Investments. In line with Bank's strategy to grow Advances portfolio cautiously and divert incremental funds towards investment in risk free Government Securities, the major contribution came from Markup Income on Investments. 120
122. Markup Expense also registered a CAGR of 24 % due to above stated growth in Deposits. It also includes impact of change in Minimum Profit Rates on PLS Deposits in line with change in SBP Policy Rate. The Cost of Deposits was effectively managed by the Bank through focus on low cost CASA Deposits. Non Markup Income registered as CAGR of 8% during 2016-2021. The main contribution was made by Capital Gains realized on Securities during different years. The Fee Based Income also registered as steady growth. Non-Markup Expenses registered a CAGR of 20%. The rise is mainly on account of personnel/property expenses in line with expansion in Branch network (209 Branches added), inflation and investment in new technologies. Provision Reversal for year 2021 stood at Rs. 1.6 Billion as against Provision Charge of Rs. 6.9 Billion during year 2020. The Charge of Rs. 6.9 Billion for year 2020 includes General Provision of Rs. 3.3 Billion and Specific Provision of Rs. 1.7 Billion on subjective basis. During year 2017, net Charge of Rs. 14.7 Billion was recorded for retirement of LOCs issued by Government of the Punjab. The Bank is fully compliant with the provisioning requirements under prudential regulations of SBP. As of December 31, 2021, a general provision of Rs. 2.5 Billion has also been maintained by the Bank. 121
123. CODE OF CONDUCT All the Directors of the Bank are expected to read and understand the “Code of conduct” and uphold the standards and policies contained therein by ensuring compliance. iv) v) Duties, Power and responsibilities All the Directors confirm to the best of their knowledge and belief that as Director of the Bank of Punjab, they are fully aware of their duties, powers and responsibilities under the relevant Law(s). Compliance with Rules & Regulations All the Directors shall ensure compliance with the requirements/instructions embodied in all the regulatory enactments, rules & regulations, code of corporate governance and standards. Integrity, Honesty, Confidentiality and Reputation All the Directors shall set up a high standard of integrity and display prudent attitude in dis-charge of their duties. A minimum standard of acceptance would be: i) ii) iii) iv) Business decisions to be based on professional judgment and prudence. Professionally tailored and viable strategies shall be followed in pursuit of achiev-ing the Bank’s overall objectives. A good working atmosphere shall be created in ensuring fair dealings, congenial re-lationship, cooperative and harmony. Customers’ friendly culture shall be promoted by observing the followed norms of business ethics. • Business needs of the customers shall be given top priority. • Business affairs of the customers shall be maintained confidential. • Banker-customer relationship shall not be maintained with those involved in drug trafficking, crimes and terrorist activities. Ethics and disclosure Every Director shall confirm to the best of their knowledge and belief that: i) ii) iii) 122 He is not a Director of more than Five (5) listed companies, including the Bank of Punjab. He is not a Director of any other financial institution. He is a registered tax payer and not in default of payment of any taxes and/or in de-fault of any loan to a banking company, a DFI or an NBFI or, being a member of a Stock Exchange, has been declared as a defaulter by that Stock Exchange. vi) He does not hold any interest in the shares of the Bank other than that disclosed in the pattern of shareholding. He has sufficient means to discharge his financial obligations. He and his spouse are not engaged in the business of stock brokerage (unless specifically exempted by SECP). Conflict of Interest All the Directors shall not engage in any business transactions which might conflict with the interests of the Bank. They shall not accept any gifts, favors or invitation offered by any client, person or Organization with whom the Bank has a business relationship that creates a conflict between the individual’s personal interest and the interest of the Bank. Insider Trading i) Director shall not deal directly or indirectly in the securities of the bank whether on their own account or their relative’s account, if they are in possession of any un-published price sensitive information concerning the Bank. Directors who are in possession of any unpublished price sensitive information shall not communicate directly or indirectly the said information to others who trade on such information. Where any Director or his/her spouse sells, buys or takes any beneficial position, whether directly or indirectly, in the shares of the Bank, he/she shall immediately notify the Company Secretary in writing. Such Director shall also deliver a written record of the price, number of shares, form of share certificates, (i.e. whether physi-cal or electronic within the Central Depository system), and nature of transaction to the Company Secretary within two days of effecting the transaction. Further, no Di-rector shall, directly or indirectly, deal in the shares of the Bank, in any manner, during the period the closed period.(*) (*) Closed period is determined prior to the announcement of interim/final results and any business decision, which may materially affect the market price of shares. ii) Evaluation of the Board. The performance of the overall Board, its Committees and individual Board Members shall be evaluated on annual basis as per mechanism prescribed by the regulator and approved by the Board.
124. CODE OF CONDUCT AND BUSINESS PRACTICES All employees of the Bank of Punjab , hereafter called BOP, are required to follow a Code of Conduct & Business Practices in all areas of professional conduct. They must abide by the following: LAWS/ RULES • All employees shall conform to and abide by the Bank rules and obey all lawful orders and directives which may from time to time, be given by any person or persons under whose jurisdiction, superintendence or control they may, for the time being, be placed. They undertake at all times to comply with and observe all applicable laws, regulations and Bank's policies, wherever they operate. • All employees stand firmly against supporting the activities of any Group or individual that unlawfully threatens public order and safety. They shall not be a member of any political party, take part in, subscribe in aid of, or assist in any way, any political movement in or out side of Pakistan or relating to the affairs of Pakistan. They shall not express views detrimental to the ideology, sovereignty or integrity of Pakistan. • No employee shall canvass or otherwise interfere or use his influence in connection with or take part in any election as a candidate to a legislative / local body or issue an address to the electorate or in any manner announce or allowed to be announced publicly as a candidate or prospective candidate whether in Pakistan or elsewhere. He /She may, however, exercise his/her right to vote. • No employee shall bring or attempt to bring political or other pressure / influence directly or indirectly to bear on the authorities / superior officers or indulge in derogatory pamphleteering, contribute, or write letters to the newspapers, anonymously or in his/her own name with an intent to induce the authority/ superior officers to act in a manner inconsistent with rules, in respect of any matter relating to appointment, promotion, transfer, punishment, retirement or for any other conditions of service of employment. INTEGRITY • All employees shall conduct their self with the highest standards of ethics, professional integrity and dignity in all dealings with the public, clients, investors and fellow bankers and not engage in acts discreditable to the Bank, profession and nation. If he/she becomes aware of any irregularity that might affect the interests of the Bank, he/ she shall inform the senior management immediately. • Employees shall maintain all books, data, information and records with scrupulous integrity, reflecting in an accurate and timely manner all transactions/reports. • Employees shall avoid all such circumstances in which there is personal interest conflict, or may appear to be in conflict, with the interest of the Bank or its customers. • Employee shall not use his/her employment status to seek personal gain from those doing business or seeking to do business with BOP, nor accept such gain if offered, they shall not accept any gift, favor, entertainment or other benefit the size or frequency of which exceeds normal business contacts from a constituent or a subordinate employee of the Bank or from persons likely to have dealings with the Bank and candidates for employment in the Bank. • Employees shall not accept any benefit from the estate of, or a trust created by a customer, or from an estate or trust of which a Bank's Company or business unit is an executor, administrator or trustee. CONFIDENTIALITY • All employees shall maintain the privacy and confidentiality of all the information acquired during the course of professional activities and refrain from disclosing the same unless otherwise required by statutory authorities of law after consultation with approving authorities, if required in case of any ambiguity about disclosure. All such information will remain as a trust and will only be used for the purpose for which it is intended and will not be used for the personal benefit of any individual(s). Inside information about Bank's customers/affairs shall not be used by them for own gain, or for that of others either directly or indirectly. • All employees to ensure meticulous compliance of the IT security policy of the Bank. • No employee shall indulge in “insider trading” as per Securities Act 2015. In case of any staff found involved in violation of the instructions he/she shall be dealt with, in accordance of Bank’s Disciplinary Action Policy. PROFESSIONALISM • Employees shall serve the Bank honestly and faithfully and shall strictly serve the Bank's affairs and the affairs of its constituents. They shall use utmost endeavor to promote the interest and goodwill of the Bank and shall show courtesy and attention in all transactions / correspondence with officers of Government, State Bank of Pakistan, other Banks & Financial Institutions, others Establishments dealing with the Bank, the Bank's constituents and the public. • Employees shall disclose and assign to BOP all interest in any invention, improvement, discovery or work of authorship that he/she may make or conceive and which may arise out of his/her employment with BOP. If his/her employment is terminated, all rights to property and information generated or obtained as part of his/ her employment relationship shall remain the exclusive property of BOP. • Employees shall be truthful in all advertisings and promotional efforts and shall publish only accurate information about the Bank's operations under valid authority. • No employee shall engage in Money Laundering 123
125. and will be extremely vigilant in protecting BOP from being misused by anyone to launder money by strictly complying with "Know your customer" (KYC) policies & procedures. BUSINESS / WORK ETHICS • • • • • • • 124 All employees will respect fellow colleagues and work as a team. They shall at all times be courteous and not let any personal differences affect their work. They will treat every customer of the Bank with respect and courtesy. Employees shall make sure, good attendance and punctuality and demonstrate a consistently good record in this area. For any absence during working hours, he/she will obtain written permission of his/her immediate supervisor. He/she shall not absent himself/ herself from his/her duties, nor leave his/her station overnight, without having first obtained the permission of the Competent Authority. In case of emergency, if it is not possible to obtain prior permission, necessary permission confirmation will be obtained from the Competent Authority within 24 hours. Employees shall maintain a standard of personal hygiene and dress appropriately for attendance at work. Their appearance must inspire confidence and convey a sense of professionalism. All employees shall, as personal responsibility, safeguard both the tangible and intangible assets of BOP and its customer(s) that are under their personal control and shall not use Bank assets for their personal benefits except where permitted by BOP. They shall not use any Bank facilities including a car or telephone to promote trade union activities, or carry weapons into Bank premises unless so authorized by the management, or carry on trade union activities during office hours, or subject Bank officials to physical harassment or abuse. Employees shall not indulge in any kind of harassment or intimidation whether committed by or against any senior/junior, co-worker, customer, vendor or visitor. They shall not use language, written or spoken in intra-office communication(s) or communication (s) with individual(s) outside the office that may contain any statement or material that is offensive to others. They shall never use the Bank's system to transmit or receive electronic images or text containing ethnic slurs, social epithets or anything that might be construed as harassing, offensive or insulting to others. Employees shall not indulge in any sexual advance, request for sexual favors or other verbal or written communication or physical conduct of a sexual nature or sexually demanding attitudes, causing interference with work performance or creating an intimidating, hostile or offensive work environment. Employees to meet their responsibilities to fellow employees, customers and investors they shall help in maintaining a healthy and productive work environment and shall not engage in the selling, manufacturing, distributing, using, any illegal substance or being under the influence of illegal drugs while on the job. Smoking is allowed only in designated areas. • Employees shall ensure strict adherence to all health and safety policies as may be implemented from time to time by the Bank. • Employees shall not give any interview in the print / electronic media or have his/her photograph displayed or act in television / stage plays or in cinema without having permission from the Competent Authority. • Employees shall intimate Human Resources Management of any changes in the personal circumstances relating to their employment or benefits. • Employees must raise concerns & suspicions, in confidence, about any actual or operational illegal activity or misconduct complying with the Whistle Blowing policy and Sexual Harassment policy. Failure to do so will result in employee being deemed a party to the irregularity. • All employees posted at Treasury Functions shall abide by the SBP instructions circulated vide DMMD circular No. 08 of 2014 regarding Code of Conduct for Treasuries of Banks, DFIs & PDs & time to time revisions in instructions by the SBP. All employees shall also not indulge in any of the following activities except with the prior permission of the Competent Authority: • Borrow money from or in any way place them self under pecuniary obligation to broker or moneylender or a subordinate employee of the Bank or any firm or person having dealings with the Bank. Buy or sell stock, shares or securities, of any description without funds to meet the full cost in the case of purchase or scripts for delivery in the case of sale. However, he/she can make a bona-fide investment of his/her own funds in such stocks, shares and securities as he/she may wish to buy. Lend money in his/her private capacity to a constituent of the Bank or have personal dealings with a constituent in the purchase or sale of bills of exchange, Government paper or any other securities. Guarantee in his/her private capacity the pecuniary obligation of another person or agree to indemnify in such capacity another person from loss. Act as agent for an insurance company, otherwise than as agent for or on behalf of the Bank. Be connected with the formation or management of a joint stock company. Engage in any other commercial business or pursuit either on his/her own account as agent for another or others. Accept or seek any outside employment or office whether stipendiary or honorary. Undertake part-time work for a private or public body or private person, or accept fee thereof. Open or maintain a Business Current Account with any Bank or Banker of any description including BOP. • • • • • • • • •
126. OPERATING & COMPETITIVE Environment Owing to various measures taken by Government of Pakistan (GoP) and State Bank of Pakistan (SBP) for mitigating the negative impact of COVID-19, the economy started showing signs of improvement towards the mid of year 2021. Economic recovery was mainly led by construction sector due to initiative taken by GoP. Further, agriculture sector also gained from the substantial increase in the minimum support price of wheat and subsidized availability of inputs and machinery. During the year 2021, subsidized financing schemes introduced by Government of Pakistan and Government of the Punjab for promoting self-employment in the Country created room for credit expansion for the banking industry. Further, Temporary Economic Refinance Facility introduced by the SBP for business concerns and projects under low cost housing schemes of GoP also provided much needed impetus for economic activities. However, investment and lending opportunities in the areas of large scale manufacturing, service sector and other private sectors remained scarce due to lack of activities in these areas till second half of the year. Due to low expansion opportunities in the market, there was tough competition among the banks to enhance their market shares. During the major part of year 2021, the SBP maintained an accommodative monetary stance, by keeping the policy rate unchanged, after a sharp 625 bps reduction during Mar-Jun 2020. This also led to a conservative approach of investing in secured and liquid securities. 125
127. STRATEGY & RESOURCE ALLOCATION The Bank of Punjab would continue to aggressively pursue its strategic plan to become one of the top financial institution of the Country in next few years. Accordingly, resources would be allocated for business expansion, technological advancement and introduction of new products & services in line with market requirements. STRATEGIC AREAS OF FOCUS • Leveraging relationship with Government of the Punjab (GoPb) for best interest of organization. • Support governments initiatives for promoting low cost housing schemes. • Support governments in inculcating culture of entrepreneurship in the Country through self-finance schemes. • Help improve financial inclusion and support GoPb in its poverty alleviation programs. • Aggressive legal measures for recovery of non-performing portfolio. • Improving upon Agri, SME and Consumer portfolio. • Fast track expansion in southern region. • Improvement in trade business. • Introduction of technology based product & services in the areas of Cash Management, Branchless Banking, Alternative Delivery Channels. 126 • Introduction of Credit Card business. • Enhance Taqwa Islamic Banking footprint. • Invest in Bank’s Human Resource and instill culture of merit across the organization. • Aggressive marketing on print, electronic and social media for promoting Bank’s products and services. • Improve upon private sector low cost deposit. • Improve on Bank’s shares in home remittance business. • Continue to work for the welfare of public at large through its Corporate Social Responsivity initiatives.
128. FAIR TREATMENT OF CUSTOMERS FRAMEWORK & CONSUMER GRIEVANCE Good business relationship between bank and the Customers is crucial for the success and growth of the bank. Mutual trust and confidence are imperative factors to lead a bank towards success. To cater this emerging need/issue SBP as a regulator has taken its first step through establishment of its own separate financial consumer protection department. SBP has accentuated on financial consumer protection through issuance of many circular instructions. Broader guiding principles of Bank’s Fair Treatment of Customers Framework are as under: • Instill a culture embedded with Fair Treatment of Customer values across the bank. • Promote good banking practices by setting the service standards in dealing with customers. • Create customer awareness and transparency in financial products and services offered by the bank. Create awareness among customers about their rights to enhance their confidence in Bank of Punjab. Protect customer’s rights by ensuring compliance of SBP regulations and relevant laws. • Consumer Grievances Handling 2021: The Bank has established a dedicated Unit for timely, smooth and seamless handling of consumers’ complaints. The Management of the Bank ensures that all complaints received from customers and general public is duly addressed. Besides handling complaints received from Bank’s internal portal, complaints received through other forums such as Pakistan Citizen Portal etc., are also handled in timely manner. It is ensured that all complaints received by the Unit are resolved within prescribed Turn around Time (TAT) as per guidelines of State Bank of Pakistan. The Complaint Types as per SBP’s Consumer Grievances Handling Mechanism (CGHM) and average TAT is detailed hereunder: Product /service Area Average Time taken to resolve a complaint Personal Loan/overdraft/ Agri loans 3WD Auto Loan 4WD Increase transparency in the provision of banking services so as to enhance the understanding of customers of what they can reasonably expect of the services provided by the bank. House Loan 3WD Account Maintenance 4WD ATM/Debit Card 6 WD Over the counter issues 4WD • Ensure accurate and timely delivery of information to the customer regarding bank’s products and services. Remittance / Clearing (Inland) 5WD e- banking 5WD • Establish a culture that gives freedom to the customers to choose between services or products offered by the bank. Home Remittances 4WD • Prevent collusive business practices that may result in unfavorable outcomes to consumers. • Provide customers with a recourse mechanism that is effective, transparent and impartial, offering prompt resolution of customer grievances. • • 127
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130. C VID-19 RECOVERY PLAN STATEMENT BY MANAGEMENT Since the outbreak of COVID-19 pandemic in early 2020 , the Management of the Bank has remained fully vigilant to the challenge. While invoking Business Continuity Plan to ensure availability of banking services to the customer across the network, the Bank also ensured safety of staff and people visiting the Bank. Safety Measures & Business Continuity: The Bank put in place a comprehensive standard operating procedures (SOPs) which were implemented across organization to ensure safety of staff and public visiting at the branches. A taskforce was constituted to oversee effective implementation of SOPs. All frontline staff members working in the branches were provided necessary precautionary equipment to ensure their safety. For staff members and their families infected by COVID-19, the Bank arranged 100% medical facilities. The Bank ensured that it’s all branches remains functional during COVID-19 pandemic. Vaccination of Staff & their families: Immediately upon commencement of vaccination drive in the Country for COVID-19 from second quarter of year 2021, the Bank made necessary arrangements for vaccination of all its staff members and their families. Special walk in vaccination booth were established at the premises of the Bank in all major cities of the Country to facilitate staff and their families. Use of Technology: in line with instructions with State Bank of Pakistan, the Bank initiate vigorous awareness campaign to encourage use of alternative delivery channels for utilization banking services to discourage queuing up of people in the premises of the Bank. Similarly, all meeting of the Bank were conducted through web based application to control spread of COVID-19. 129
131. FORWARD LOOKING STATEMENT AND ACHIEVEMENTS Despite economic constraints , The Bank of Punjab continued making progress in line with its strategic business plan. Considering the current pace of growth, the future outlook of the Bank seems very bright. While growth remains an inherent part of the journey across all phases, before embarking upon aggressive growth, it was important to put necessary controls and consolidate in order to provide a robust platform as a solid foundation for growth. Most of the key control initiatives commenced last year were successfully completed. The review of COSO framework exercise initiated last year, was divided into two stages: Stage 1 – referred to as the “As-Is” stage; Stage 2 – the “To-Be” stage, and; Stage 3 – Gap Analysis and Implementation stage. The Bank completed the first stage by the third quarter. Stage 3 is under implementation and is targeted for completion by Q2 2022. Segregation of Branch business and Branch operations was also initiated and completed ensuring there is no conflict of interest; business units are now focusing on customer acquisition only, and Ops team is providing necessary support – ensuring adequate controls, reporting directly to the Operations Head. Customer Risk Rating Methodology, which was upgraded to ensure a risk-based approach, was approved and is now in the process of getting implemented in the system. In addition to other benefits, the CRRM will also trigger real time EDD for high-risk customers. Compliance Risk Management System was launched and implemented, which will not only provide regulatory guidance under a single platform, but would also facilitate efficient management and dissemination of Policies and Procedures. The Transfer Pricing mechanism was revamped as the existing methodology is a single-rate mechanism. The new mechanism is a curve-based FTP, offering better idea of individual units’ performances across varying tenors and products. This has been approved and the Bank is in the process of identifying a software and vendor best suited to the newly developed FTP mechanism. The Governance Committee framework which was formed 130 in January 2021, was diligently implemented under an annual calendar. This framework is now being slightly rationalized with the merger of a few committees and the introduction of an additional committee to exercise active oversight on rectification of audit observations. Risk Adjusted Returns methodologies were applied successfully – these policy revisions will help to provide a consistent view of profitability across various business segments, while helping to create, foster, and maintain capital buffers, to leverage the balance sheet in a proficient and prudent manner. Comprehensive and concentrated efforts to materialize the recovery or regularization of the NPL portfolio were carried out during 2020-2021. As a result of this renewed resolve, the targets set in 2021, for NPL regularization/recovery, were met – thereby resulting in a reversal/recovery of PKR 4.1 billion during the period January – September 2021. Thus, the size of the NPL portfolio reduced from PKR 57.2 billion in 2020 to PKR 54.5 billion (as on September 30, 2021). Despite this, however, an addition of PKR 1.3 billion was also made in the NPLs during January – September 2021. In Agriculture Financing, BOP occupies the 4th position among commercial banks; advancing 2 positions up from our previous ranking. The Bank has surpassed SBP’s Mandatory Agriculture Outstanding & Disbursements targets for FY2020-2021 by PKR 7.01 billion and PKR 7.29 billion, respectively. Core Agriculture Credit Division outstanding portfolio (as of 30th November, 2021) was PKR 9.1 billion – an increase of 49% year on year (December 2020 position: PKR 6.1 billion). The Bank surpassed the ACD portfolio target, set at PKR 8.5 billion, by 7.06%. The Bank had a stipulated strategy position to capitalize on opportunities where there is first loss support. At year-end 2020, BOP occupied the pole position in PMKJ-YES/PRS in terms of disbursements. The Bank has remained at the number 1 spot during the current year, 2021, as well; our Agri portfolio under PMKJ surpassed outstanding level of PKR 2.5 billion, which is the highest in the industry. The Bank’s Consumer Banking portfolio grew by 34% from the December 2020 position during the first 11 months. Further, the Retail Finance Division overachieved its annual housing and construction target by 57%. Opening branches in North and South was an integral part of our Retail banking deposit growth strategy. As this is subject to SBP approval, the bank, at most could only open 8 branches in Karachi during the year which were approved
132. based on our earlier submission . However, this will be the key focus as our objective of increasing the contribution of Private deposit is dependent on this. For 2022, the Bank is planning the construction and operationalization of 33 new branches in Karachi, 32 new branches in the North region, and 23 new branches in Punjab Central. By way of restructuring Islamic Banking operations, to make them more impactful to the bottom line, a dedicated Islamic Windows Expansion plan was formulated and executed during the outgoing year (2021). To effectively capitalize on the potential of this high-growth banking sector, a total of 25 new Islamic Banking Windows has been planned for launch, of which 22 are already operational. The Bank explored the possibility of taking over a strategic stake in a Microfinance Bank which is in process. The proposal for the establishment of an Insurance Company has been shared with the Government of Punjab, pending their decision. In addition, the Bank planned an equity injection in Punjab Modaraba, however, our request for in-kind equity injection was not allowed by SBP. During 2021, the Bank has made progress in the domain of Digitalization. It now offers a large suite of digital financial services, catering to the full spectrum of our customers’ online transaction needs. As envisioned in the Strategic Plan, the Bank has operationalized Roshan Digital Account and Digital On-Boarding capabilities, in addition to the introduction of a new Branchless Banking Agent Network. The Bank has also improved its contact centers offering (Queue for Khaas customers, Smart IVR, cheque book activation through Contact Center, among others). In recognition of the outlook of the Bank, as well as strong financial performance and considerable progress made in the areas of risk, compliance, governance, and all other facets of operations, the Pakistan Credit Rating Agency (PACRA) after a lapse of 5 years, has upgraded the long-term entity rating of the Bank of Punjab to “AA+”, with the shortterm highest rating of “A1+”. Our People remain the central focus of our strategy, and the key to our future success. Organizational structures have been re-aligned for efficiency and enhanced productivity, at all levels; an online Performance Management System has been put into place for better tracking and transparency; Workload assessments, self-assessments, and mid-year reviews have been conducted and will continue in the future; Significant efforts have been undertaken on the Diversity & Inclusion arena, where policies have been reviewed/redesigned, not just to improve compliance with SBP’s Diversity directives, but to curate an environment of inclusivity, understanding, and empathy within the ethos of the Bank itself. In addition, numerous learning and development initiatives, tailored to build both hard and soft skills of our people, have been implemented to provide opportunities for growth and progression, while TATs for HR related services have also been significantly reduced via streamlined complaint lodgment and service delivery. Numerous marketing campaigns were launched during the outgoing year to improve the Bank’s corporate image, and to promote its products and initiatives; among them are the launch of Mera Pakistan Mera Ghar, BOP ForeignSe (Cashback Offer), the launch of Roshan Digital Account, Bonus Munafa Term Deposit, financing of RLNG Power Plant, launch of vertical Khaas Debit Card, as well as communication initiatives aimed at raising awareness regarding Covid-19. The Social Welfare initiative “Sadqa-e-Jariah” is live on the RDA Platform as of Q3 2021, in addition to social protection programs in collaboration with PSPA (Punjab Social Protection Authority), tailored towards Health & Nutrition, and the welfare of Transgendered individuals. Upholding the legacy of contributing to national causes as a responsible corporate entity, the Bank of Punjab initiated numerous Corporate Social Responsibility programs, including the introduction of Pakistan’s first Drive-Through Covid-19 Vaccination Centers in Lahore and Islamabad. Additionally, BOP extended support to WWF-Pakistan to maintain clean, pollution-free air, water, and land resources – to help abate environmental degradation, and to preserve the natural world for the benefit of all. In the healthcare sector, the Bank supported Al-Shifa Trust Eye Hospital, with the intention to prevent and control blindness, by providing Al-Shifa with standard and sustainable eye care services. To promote Arts & Culture, the Bank spearheaded a national painting award titled “Arjumand Painting Award”, to encourage emerging painters. The award will help recognize Pakistani artists who exhibit outstanding abilities in the art of painting. The Bank also supported Pink Ribbon Pakistan in carrying out its Zakat Collection Campaign, which included on-ground and online activities, thus supporting the only organization in Pakistan that is dedicated to working on the issue of breast cancer, with a nationwide outreach. In the same vein, the Bank also carried out a month-long Breast Cancer Awareness campaign to help people in identifying the early signs and symptoms of cancer; the drive included awareness activities at different offices of the Bank, webinars, and free mammography facilities for female employees. Additionally, in the interest of uplifting the socially marginalized segments of society, the Bank supported Shade Trust for the provision 131
133. of Ration Bags to 200 underprivileged families in Sialkot . The Bank of Punjab also lent its support to the National Accountability Bureau in its mandate to prevent corruption, and enforce anti-corruption measures. Dividing our SP into three phases was a strategic decision given the Vision of the Bank required aggressive expansion plans. The primary objective behind the first 2 phases was to lay the foundation and build a platform for ensuring sustainable, organic growth so that once the bank enters the third phase which will be predominantly business expansion, its growth will be aggressive yet remain calculated/ prudent. SUMMARY OF KEY ACHIEVEMENTS Corporate & Investment Banking Group: • Growth in Net Advances by 14%. • Expected to cross over PKR 500 Billion in Trade Business by the end of December 2021 • Launch of Corporate Digital Payment Portal under the brand “BOP-Biz” in 2021 • Recovered fee income of PKR 1.50 Bn as of November 30th • Investment Banking: • BOP awarded “The Asian Banking & Finance Corporate & Investment Banking Award 2021” for Project Infrastructure Finance Deal of the Year • Mandated Lead Advisor & Arranger to: • Punjab Thermal Power • Lucky Electric Power Co. • Pakistan Mobile Communications Limited and Ufone (Pak Telecom Mobile Ltd.) • Fauji Cement Company & Attock Cement Company Ltd. • • Transaction Banking: Throughput crossed PKR 100 Bn. Number of transactions nearly 8Mn annually Opened Public Sector Salary Accounts of 21 institutions like PMU, Health Department, with BOP, which yielded more than 10 Billion in additional deposits Consumer & Digital Banking Group: • Implementation of performance-based compensation plans and targets for all units. • Launch of New Branchless Banking Agent network • Operationalization of Roshan Digital Account Capabilities • Launch of Sadqa-e-Jariah Initiative (live on RDA Portal) • Launch of Digital On-Boarding Pilot • Contact Center Initiatives • Developed a policy for PWDs • New PSPA Programs: Health & Nutrition, and 132 • Transgender Launch of BOP Khaas Retail & Priority Sector Lending Group: • BOP remained Top Performing Bank for 2nd year in a row under PMKJ-YES • Launch of Commercial Banking • Launch of LRMIS (Land Revenue Management Information System) at Branch level • Targets set for branches along with support from RBG for all 3 segments (Agri., SME, & Retail Finance) and Trade branches • SME Division registered a 33% growth till Nov ‘21 from Dec ’20 • Collection Mechanism improved; 91% collection ensured in first 30 days of the quarter • Formed alliances for anchor-led financing programs • New products introduced: • Shamsi Tawanai (Solar Power Solutions) • Pilot Warehouse Receipt Financing for Maize and Paddy & Naymat Collateral • Clean lending to small clients under a controlled environment (via PMKJ and PRS) • Targeting farmers and Agri. Businesses by offering financing under PMKJ-YES and Punjab Rozgar Scheme • Expansion into Sindh; Agri resource placement in Hyderabad, Sukkur, Mirpur Khas • Digitization of LCH application submission • BOP is the lead bank under GoPb Peri-Urban Program; leading the consortium for LDA city • Among the Top 3 in SBP Mystery Shopping results pertaining to GMSS scheme • Decentralize Credit Management for SME & Agri. Business through Hub formation Islamic Banking Group: • Opening of branches in FATA, KP and GB Regions as per vision of the management and BOD • Formation of Islamic Banking Windows in conventional branches; plan to close the year with 25 new IBWs • High-Risk account approval TATs reduced • 12%* growth in Private Sector Deposits as on November 30th, 2021 • 39%* growth in Islamic Financing portfolio as on November 2021 • Launch of consumer finance (autos and mortgages) • Launching new products (both assets and liabilities) • BOP is leading LDA City Housing Consortium • BOP-TIB is the lead Shariah structuring agent for Pakistan Telecommunications Co. Ltd, and PHATA. Treasury & Financial Institution Group: • Through the efforts of the Treasury Department, the Bank became one of the first banks to start Debt Market Maker of GOP Securities at Pakistan Stock Exchange.
134. The Bank has successfully started quoting rates of PIBs and T-Bills on PSX 's BATS platform • Successfully launched Kamyab Pakistan Program. BOP aspires to be the biggest and most active player in the program for empowerment, financial inclusion and lowcost housing • Segregation/Establishment of a dedicated Islamic Treasury. Operations Group: • Centralization of Trade Operations • Digitalization of SBP Portals for Foreign Exchange Facilitation Desk through BOP website • Implementation of Systems (C-LINK, FCCM & IHS) for Trade based Money Laundering • Automation of Trade Reporting to mitigate delays and consequent penal action by SBP • Development and Implementation of Pakistan Single Window (PSW) module; BOP among pioneers in the industry • Cost saving of about Rs. 70 (M) in managing CPC, bulk post shipments and Insurance handling • Scanning and digital archiving of over 600K of account opening forms • Supported business in timely launching deposit and lending products through configuration and developments in the system and procedures • Initiation and management of KYC- Remediation Project & ODD units with limited resources • BOP was awarded No. 1 Bank in Year 2021 by J.P. Morgan Bank for achieving highest STP rate • Successful launch of RDA with limited infra support and implementation of Treasury Single Account • Developed and Implemented STP for Remittances product/transactions to reduce human intervention and enhance efficiency • Successfully completed SWIFT Customer Security Control Framework • Automation of PRCs / ePRC/ SPRC Issuance & Verification System. • 99 % recovery of leakage of income detected by Audit in branches • Project for Establishment of CPC at regional level initiated, (in process) • More than 97% complaints were closed within TAT • Development of Digital portal for centralized monitoring of staff and GLs in the branches • Completed takeover of Credit Operations of all lending segments • Successfully configured Islamic Windows Operations in conventional branches Compliance Group: • FCCM was upgraded with addition of new AML/CFT scenarios • Implemented TBML System by customizing Trade related scenarios • C-Link was upgraded • Implemented Price Verification Solution for Trade Transactions • Implemented CRM system to automate Regulatory Repository • Implemented system solution for review of bank’s documents • Automation of Operational Risk tools (RCSA & KRIs, etc.) • Internal Risk Assessment Report – 2021 was developed and approved • Process for handling of cross border transactions/ customer onboarding regarding high-risk jurisdictions was introduced • Development and implementation of Correspondent Risk Rating Model • Standardized the Review Mechanism of bank’s documents by designing standard templates of Policy/ Procedure • Took initiative to perform Compliance Reviews of branches in all geographies as well as NBE • Development of Unscrupulous Borrowers/ fraudsters data for C-Link screening • Conducted multiple training awareness sessions on AML/CFT, Internal Controls, regulatory compliance and fraud prevention • Customer Risk Rating Methodology was upgraded, adopting risk-based approach INFORMATION TECHNOLOGY GROUP: Software Development: • Kamyab Pakistan Information System • Pakistan Single Window • Electronic Proceed Remittance Certificate (ePRC) • RAAST – Micropayment Gateway • Sohni Dharti Remittance Program • Roshan Digital Account (Incl. 8 additional initiatives) • Integration for Digital Platform & Corporate Internet Banking Platform • BOP KHAAS • Image Based Clearing • New Branchless Banking System for Govt. Sector Disbursement • Cheque Book Activation from Call Center • Staff Loan Migration to new CBS Products 133
135. Digital Transformation : • Corporate Internet Banking Platform BOP-Biz • Installation of 58 new ATMs • Upgradation of Compliance Link & Implementation of Trade Based Anti-Money Laundering System] • Upgradation of Oracle FCCM People & Organizational Excellence Group: • Re-aligned organizational structures at top and cascading tiers • Pay-for-Performance, Rewards & Recognition: Created online Conducted Workload Assessments; Introduced Bonus Pool; executives’ remuneration brought in-line with market practices • Introduced Diversity & Inclusion Policy, Prevention from Harassment Policy, Affirmative Action and Deterrent from Retaliation Policy; Revised Disciplinary Action Policy. Special promotions for employees from underrepresented groups • Conducted manpower planning, on-boarded 1700+ employees to support anticipated business growth; Identified individual development plans for N-1 level • Conducted training Needs Assessments; Outcome based specialized trainings; IBP E-learning module; • Improved HRMS was introduced; One Stop Shop was launched for improved complaint resolution; reduced TAT in HR services; Improved Group Life Health Insurance for all employees Staff & Strategy Group: • 14+ marketing campaigns successfully developed and rolled-out • Successfully carried out branding initiatives at 70+ branches • Strengthened the Bank’s brand image via 60+ successful events • 10 CSR related initiatives; including drive-through COVID Vaccination Centers in Lahore & Islamabad • Sponsorships in 25+ high-profile events for brand building • Successfully conducted numerous events at Dubai Expo 2020 to Promote the Bank • Service Quality Policy was developed and approved • Complaints SOP was revamped for efficiency as well as alignment with best practices • Complaint Escalation was automated • Tracked/mentioned bank-wide key initiatives and action items pertaining to all business and support groups on behalf of P&CEO • Developed Strategic Plan 2022-2024 134 • Formulated strategic objectives and coordinated to finalize functional level tactical plans in all areas • Inculcated change by enabling a culture of performance through effective coordination and monitoring of KPI’s • Monitored the execution of the unified bank-wide Strategy Risk Management Group: • Trade Related Risk Profile • Basel Engine implementation • Development of LGD model • Payment Control System • Validation of ICRR and PD models • Web Based Operational RMG System (ORMS) • Application Delivery & Distributed Denial of Service (DDoS) Protection • TBML Risk Appetite • Bank wide Risk Register • RAROC Template • AML Risk and Control Self-Assessment • Security Orchestration, Automation & Response Tool • Zero Trust Network Tool • Phishing/Awareness Automation tool campaigns • Total Principle: PKR 3,429 Million, and Markup: PKR 259 Million, recovery (as on December 20, 2021) by SAM. Further, PKR 370 Million expected by year end Finance Group: • Successful upgradation of Bank’s Credit Rating by PACRA from AA to AA+ • Effective monitoring of financial budget through timely updating to Management & BOD • Successful completion of COSO framework (As-Is, GAP and To-Be stages) through External Consultant and now the Bank is in implementation phase • Successful formation of a team for Data Cleansing of Deposits Accounts in system. So far over 180,000 accounts have been reviewed • Process for acquisition of Fund Transfer Pricing Module completed • Centralization of major CAPEX/OPEX for effective financial control • Bank’s annual Income Tax Return for Tax year 2021 successfully filed with FBR
136. STAKEHOLDERS RELATIONSHIP briefing sessions are also arranged for information of all investors and shareholders . The Bank also arrange an interactive annual general meeting of shareholders and their all questions & queries are duly answered and addressed. The Bank’s interaction process with its major stakeholders is as under: 1. Government of the Punjab: Government of the Punjab (GoPb) being majority shareholder of the Bank has presence on Bank’s Board of Directors through appointment of nominee Directors and also Chairman of the Board as per BOP Act, 1989. The Bank is also providing various banking services to different departments of GoPb. The Finance Department of GOPb is updated on all key issues related to Bank on frequent basis. 5. General Public: The Bank is fully aware of its Corporate Social Responsibilities and all possible efforts are made to ensure welfare of common peoples. The general public is being updated about the affairs of the Bank through all available media platforms. 2. Staff at BOP: 6.Regulators: The Bank has put in place a comprehensive Human Resource Policy and it is being ensured that pay for performance culture is promoted across organization. The management regularly interact with employees through communications vide email, social media platform and direct meetings. An effective grievance handling mechanism and Whistle blowing program has also been put in place to facilitate staff member. Further, during year 2021, People & Organizational Excellence Group also initiative one stop helpline to resolve staff member’s problems in prompt manner. The Bank also maintain close liaison with State Bank of Pakistan and Securities & Exchange Commission of Pakistan as regulators. The Bank ensure effective and timely compliance of all regulatory reporting and information requirements. 3. Account Holders / Customers: The Bank ensure provision of personalized banking services to all its accountholders. The accountholders are being updated on Bank’s product & services and status of their accounts through mobile banking/phone banking services. The Accountholders are provided statement of their accounts on regular basis. The Bank also maintain and update its website and social media platform for information of all accountholders. 4. Investors & Shareholders: The Bank maintain an updated investor information data on its website. Further, periodical corporate 135
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138. SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITIES The Bank of Punjab has always remained steadfast in lending a helping hand to the public , particularly its marginalized and disenfranchised segments. The Bank takes pride in working for the welfare of underprivileged communities, and concerted efforts are being made to achieve the objective of financial inclusion. As the COVID-19 pandemic remained a formidable challenge for the banking industry during the first half of the year 2021, The Bank of Punjab maintained its focus on ensuring the provision of banking services to its clients in a safe and secure environment, while taking all possible measures to uphold the health and wellbeing of its frontline staff. To this end, the Bank ensured the implementation of comprehensive Standard Operating Procedures pertaining to COVID-19 control & prevention. Further, The Bank ensured the provision of necessary health facilities to its employees, and their dependents, throughout the pandemic. Recognizing the importance of vaccination in the fight against COVID-19, the Bank made necessary arrangements for the vaccination of its staff and their family members, on a priority basis, following the commencement of vaccination drives in the country. Arrangements were made in collaboration with the federal and local governments for establishment of walk-in vaccination booths at various premises of The Bank of Punjab for vaccination of staff and their family members. In order to lessen the pressure on vaccination centers established by the government for the general public, The Bank of Punjab established drive-through vaccination centers in all major cities of the country, in coordination with the local administration. This initiative by the Bank was met with high praise as it helped the general public in getting vaccinated without having to stand in long queues. During the year 2021, the Bank participated in the global Pink Ribbon campaign for raising awareness about breast cancer. The Bank arranged media campaigns and special programs to help improve the public’s cognizance regarding this disease. The Bank also lent its support to Pink Ribbon in its Zakat Collection Campaign, which included conducting on-ground and online activities. Pink Ribbon is the only organization in the country that is working on the issue of controlling, and raising awareness about, breast cancer with a nation-wide outreach. In order to promote education in the Country and provide opportunities to students from underprivileged segments of society, the Bank has initiated scholarship programs in collaboration with the top universities of the country. Through these programs, numerous bright, young minds are fulfilling their dream of receiving high quality university education from the nation’s best institutions. The Bank continues to facilitate the Government of Punjab (GoPb) in the disbursement of financial assistance to thousands of underprivileged persons under various initiatives of Punjab Social Protection Authority, through its specially designed Branchless Banking operations and Cash Management Services. The Bank is also facilitating GoPb in 137
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140. improving G2P communication , and various initiatives such as E-Stamping, E-Traffic Challans and online collection of federal taxes. painters. The award is intended to recognize and encourage emerging Pakistani artists who exhibit outstanding abilities and distinguished talent in painting. In terms of extending support to the country’s healthcare sector, the Bank continues to play its part; BOP supported Al-Shifa Eye Trust Hospital, in the interest of enhancing the capacity of this institution in dealing with the control and prevention of blindness and other vision-related ailments, by providing them with standardized, sustainable eye care services. As a testament to the Bank’s commitment to transparency and accountability, BOP supported the National Accountability Bureau in its mandate to deal with corruption, raising awareness, and enforcing anti-corruption measures. As part of its collaboration with NIC, the Bank helped to build an active and well-connected community of change-makers, impact creators, and disruptors. BOP supported NIC’s initiative of creating a FinTech Learning and Development Center. Under this initiative, the Bank provided support to 15-year old Nabeel Jafri, a tech entrepreneur, in launching his messaging application. The Bank continues to sponsor various educational, sports and cultural events across Pakistan. The Bank sponsored various literary festivals with an objective to promote art and literature. The Embassy of Hungary in Pakistan invited The Bank of Punjab to participate in the restoration of a large and historically significant series of paintings, by the Hungarian artist August Schoefft (1809-1888). The paintings depicted an important period of Pakistan’s history, and are considered a precious, surviving testament of the common heritage between Hungary and Pakistan. August Schoefft’s work was not only of artistic, but of historic value, as they depicted details of prominent personalities of the 19th century Sikh Court or Darbar, as well as events of everyday life of the Darbar. A further demonstration of BOP’s dedication to uplifting the marginalized segments of society took the form of providing ration bags to 200 families in Sialkot, in collaboration with Shade Trust. The Bank revitalized its Marketing and Corporate Communications to improve its corporate image, outreach, and to promote its new products, services, and initiatives. As a result of this renewed resolve and enhanced focus on reaching existing and prospective customers through compelling marketing, the Bank’s visibility in media increased manifold. A few of the major campaigns and TVCs produced in 2021 include, but are not limited to: Mera Pakistan Mera Ghar, BOP ForeignSe, the launch of Roshan Digital Account, awareness regarding COVID-19, Bonus Munafa Term Deposit, Financing of RLNG Power Plant, up-gradation of the Bank’s PACRA Ratings, the launch of Vertical Khaas Debit Card, among others. Considering the historical value of August Schoefft’s paintings, the Bank sponsored their restoration, which was successfully carried out in Hungary. After their exhibition in Hungary, the same paintings have now been returned to Lahore and are being exhibited as national heritage. Furthermore, the Bank has also supported a National Painting Award, titled, “Arjumand Painting Award” for emerging artists and 139
141. NOTABLE EVENTS 2021 140
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144. NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the 31st Annual General Meeting of the members of The Bank of Punjab will be held at Avari Hotel , Shahra-e-Quaid-e-Azam, Lahore on Wednesday, 30th March 2022 at 11:30 a.m. to transact the following business. ORDINARY BUSINESS: 1. To confirm the minutes of Extra-ordinary General Meeting held on October 11, 2021. 2. To receive, consider and adopt the Annual Audited Financial Statements of the Bank of Punjab for the year ended December 31, 2021 together with the Director’s and Auditors’ reports thereon. 3. To consider and approve Bonus Shares in the proportion of 12.5 shares for every 100 shares held i.e. 12.5% as recommended by the Board of Directors. 4. To appoint Auditors for the year ending December 31, 2022 and to fix their remuneration. SPECIAL BUSINESS 5. Post-facto approval for all transactions / contracts with Akhuwat for Kamyab Pakistan Program (KPP) be done on arm’s length basis. 6. To approve donation to Akhuwat amounting to Rs.30.00 million (net of taxes) for installation of Solar Solution at Akhuwat College University, Kasur. 7. To approve sale of Bank’s maintained vehicle in use of the retired Chairman-BOP at its book value on post-facto basis. 8. Any other item of business with the permission of the Chair. By order of the Board Lahore March 08, 2022 Kamran Hafeez Secretary to the Board 143
145. NOTES 1 . 2. 3. The Share Transfer Books of the Bank shall remain closed for transfer from 24-03-2022 to 30-03-2022 (both days inclusive). Transfers received at M/s. CORPLINK (Pvt.) Limited, Wings Arcade, 1-K, Commercial, Model Town, Lahore at the close of business on 22nd March 2022 will be treated in time for the purpose of above entitlement to the transferees. All members are entitled to attend the meeting; however, the right of vote is restricted to those who are registered as such for a period of not less than three months prior to the date of the meeting as per Section 17(1) of The Bank of Punjab Act, 1989. Proxies in order to be effective must be deposited at the Corporate Affairs Department of the Bank, BOP Tower, 10-B, Block-E-II, Main Boulevard, Gulberg-III, Lahore not less than 48 hours before the meeting. The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned on the form. In case of corporate entity, the Board of Directors’ resolution/power of attorney with specimen signatures shall be submitted (unless it has been provided earlier) along with proxy form to the Bank. 4. A member is entitled to appoint another member as proxy to attend the meeting. 5. The members should quote their Folio number in all correspondence with the Bank and at the time of attending the Meeting. 6. Members are requested to promptly notify any change in their addresses to our Registrar M/s. CORPLINK (Pvt.) Limited, Wings Arcade, 1-K, Commercial, Model Town, Lahore before book closure so that the above entitlement be dispatched at the correct addresses. 7. CDC Account holders will further have to follow the under mentioned guidelines as laid down in Circular 01 dated January 26, 2000 issued by the Securities & Exchange Commission of Pakistan: A. FOR ATTENDING THE MEETING i) In case of individual, the account holder or subaccount holder 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. 144 ii) In case of corporate entity, the Board of Directors; resolution/power of attorney with specimen signature of the nominee shall have to be produced (unless it has been provided earlier) at the time of the meeting. B. FOR APPOINTING PROXIES i) In case of individual, the account holder or subaccount holder 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 have to be submitted (unless it has been provided earlier) along with proxy form to the Company. 8. Entry of the member or his/her duly authorized person will be on strict identification as per specimen signature on the Bank’s record. 9. Pursuant to SECP Circular No.10 of 2014 dated May 21, 2014, if Bank receives consent form from the members holding aggregate 10% or more shareholding residing at geographical location to participate in the meeting through video conference at least 10 days prior to the date of meeting, the Bank will arrange video conference facility in that city subject to availability of such facility in that city. To avail this facility please provide following information and submit to the Corporate Affairs Department, Lahore. I/We _________________ of __________being a member of The Bank of Punjab, holding __________ordinary shares as per registered Folio/CDC Account No.___________ hereby opt for video conference facility at______________. Signature of Member(s) The Bank will intimate members regarding venue of conference facility at least 5 days before the date of General meeting along with complete information necessary to enable them to access such facility.
146. SPECIAL NOTES TO THE SHAREHOLDERS SUBMISSION OF COPY OF CNIC (MANDATORY): Individuals including all joint holders holding physical share certificates are requested to submit a copy of their valid CNIC to M/s. CORPLINK (Pvt.) Limited, Wings Arcade, 1-K, Commercial, Model Town, Lahore. The shareholders while sending CNIC must quote their respective Folio numbers. It may be noted that in case of non-receipt of the copy of CNIC, the Bank would be constrained to withhold dividend payment. MANDATORY PAYMENT OF CASH DIVIDEND THROUGH ELECTRONIC MODE: The provision of Section 242 of the Companies Act, 2017 requires the listed companies that any dividend payable in cash shall only be paid through electronic mode directly into the bank account designated by the entitled shareholders. The shareholders who have not provided their bank account details so far are advised to provide their below electronic dividend mandate information to Bank’s Share Registrar (in case of physical Share) at the address given above and updates their CDC accounts/Sub-accounts as the case may be, enabling the Bank to credit your future dividend promptly, if any. This statement set out material facts concerning the special business to be transacted at 31st Annual General Meeting. AGENDA ITEM NO.05: POST-FACTO APPROVAL FOR ALL TRANSACTIONS / CONTRACTS WITH AKHUWAT FOR KAMYAB PAKISTAN PROGRAM (KPP) BE DONE ON ARM’S LENGTH BASIS. Dr. Muhammad Amjad Saqib is a Non-Executive Director of the Bank of Punjab and also the Chairman / Executive Director in Akhuwat. He is also on the Advisory Board of Kamyab Pakistan Program (KPP), Government of Pakistan. The Program was launched by the Government in October, 2021. As BOP is participating in Kamyab Pakistan Program which may raise issue of Conflict of Interest since BOP is partnering with Akhuwat for KPP and Akhuwat is a related party, the relationship between BOP and Akhuwat will be absolutely on arm’s length and there would be no preferential treatment, such partnering with Akhuwat bears no reservation on part of the Bank. The shareholders are requested to pass the following resolution: 1. That the Clause 4.3.1 of the Board’s Remuneration Policy - 2020 be amended as: “Resolved that post-facto approval for all transactions / contracts with Akhuwat for Kamyab Pakistan Program (KPP) be done on arm’s length basis be and is hereby approved.” Folio No./Investor Account Number / CDC Sub Account No. Title of Account IBAN Number Bank Name Branch Branch Address Mobile Number CNIC No. (Mandatory) Email Address Signature of Shareholder___________________ UNCLAIMED DIVIDEND / SHARES Shareholders who could not collect their previous dividend/ physical shares are advised to contact our Share Registrar to collect/enquire about their unclaimed dividend or shares, if any. SPECIAL BUSINESS A Statement under Bank’s Bye-Laws # 18-IV(ii) and under Section 134(3) of the Companies Act, 2017 AGENDA ITEM NO.06: TO APPROVE DONATION TO AKHUWAT AMOUNTING TO RS.30.00 MILLION (NET OF TAXES) FOR INSTALLATION OF SOLAR SOLUTION AT AKHUWAT COLLEGE UNIVERSITY, KASUR Dr. Muhammad Amjad Saqib is a Non-Executive Director of the Bank of Punjab. He is also the Chairman / Executive Director in Akhuwat which is a related party of the Bank. Akhuwat is the world largest Islamic Microfinance Organization and has been working for poverty alleviation by empowering socially and economically marginalized segments of the society through its various poverty eluviation projects since 2001. To address the multi-dimensional issues related to poverty, Akhuwat has initiated services in education, healthcare and 145
147. inclusion of the most marginalized segments of the society . Akhuwat College University, Kasur is one of such initiatives by Akhuwat where more than 400 students are given free of cost education and the institution bears all their expenses including food, uniform, stationery, tution and other living expenses. In order to support the institution BOP has decided to provide a grant of Rs.30.00 million to Akhuwat for installation of Solar Power Plant to lower the electricity expenses and earn revenue by selling the surplus electricity produced through net metering system. This will also showcase BOP’s commitment towards initiative like Green Banking (Zero emissions). The Board of Directors, in order to meet the legal & regulatory formalities, decided that the matter be brought for approval of the shareholders in the Annual General Meeting. The shareholders are requested to pass the following resolution: “Resolved that donation to Akhuwat for installation of Solar Solution at Akhuwat College University, Kasur amounting to Rs.30.00 million (Rupees Thirty million only) (net of taxes) be and is hereby approved.” 146 AGENDA ITEM NO.07 RETENTION OF BANK MAINTAINED VEHICLE IN USE OF THE CHAIRMAN (BOP) ON POST-FACTO BASIS. Dr. Pervez Tahir, Chairman Board of Directors, The Bank of Punjab had completed his three years’ service tenure with the Bank. Keeping with the past practice, it was proposed that he be allowed to retain any one vehicle of his choice, in his use, at a price (Book Value), as per Bank’s Policy in such cases. The Board while keeping in view the prudence & professionalism and his enormous contribution in turning around the bank and past precedents allowed the ChairmanBOP to retain a vehicle in his use on payment of its book value. The shareholders are requested to pass the following resolution. “Resolved that in recognition of his services and as per past precedent and tradition, the sale of one vehicle in his use to Dr. Pervez Tahir, Chairman, Board of Directors, at its book value, be and is hereby approved on post facto basis.”
148. UNCONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31 , 2021 147
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150. Building a better working world EY Ford Rhodes Chartered Accountants 96-B-I . 4th Floor, Pace Mall Building M. M. Alam Road, Gulberg-II P.O. Box 104, Lahore-54660 Tel: +9242 3577 8402-11 Fax: +9242 3577 8412-13 ey.lhr@pk.ey.com ey.com/pk INDEPENDENT AUDITOR’S REPORT To the members of The Bank of Punjab Report on the Audit of the Unconsolidated Financial Statements For the year ended 31 December 2021 Opinion We have audited the annexed unconsolidated financial statements of The Bank of Punjab, which comprise the unconsolidated statement of financial position as at 31 December 2021, and the unconsolidated profit and loss account and the unconsolidated statement of comprehensive income, the unconsolidated statement of changes in equity and the unconsolidated cash flow statement for the year then ended, along with unaudited certified returns received from the branches except for 16 branches which have been audited by us and notes to the unconsolidated financial statements, including a summary of significant accounting policies and other explanatory information 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 the audit. In our opinion and to the best of our information and according to the explanations given to us, the unconsolidated statement of financial position, unconsolidated statement of profit and loss and the unconsolidated statement of comprehensive income, unconsolidated statement of changes in equity and unconsolidated cash flow statement together with the notes forming part thereof conform with the accounting and reporting standards as applicable in Pakistan, and give the information required by the Banking Companies Ordinance, 1962 and the Companies Act, 2017(XIX of 2017), in the manner so required and respectively give a true and fair view of the state of the Bank’s affairs as at 31 December 2021 and of the profit and other comprehensive income, the changes in equity and its cash flows for the year then ended. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.   A member Firm of Ernst & Young Global Limited 149
151. Building a better working world Following are the key audit matters : Key audit matters How the matter was addressed in our audit 1. Provision against non-performing advances The Bank’s credit portfolio is spread across various domestic branches and include corporate financing to several public sector entities and large to small size businesses operating in the private sector, as well as consumer financing to individual. We applied a range of audit procedures including the following: We reviewed the Bank’s process for identification and classification of non-performing advances, monitoring of advances with higher risk of default As per the Bank’s accounting policy (refer note 5.4 and migration of these advances to non-performing to the unconsolidated financial statements), the advances category and accurate computation and Bank determines provisions against non-performing recording of provisions. financings exposures in accordance with the requirements of Prudential Regulations (PRs) of State - We performed independent checks on test basis Bank of Pakistan (SBP) and also maintains general for the computations of provisions to assess that provision as required by PRs. The PRs require specific the same is in line with the requirements of the provisioning for loan losses on the basis of an ageapplicable Prudential Regulations.. based criteria which should be supplemented by a subjective evaluation of Bank’s credit portfolio. - In addition, we selected a representative sample The determination of loan loss provision, therefore, of borrowers from the financing portfolios involve use of management judgment, on a case-toincluding individually significant credit facilities case basis, considering factors such as the borrower’s and performed tests and procedures such as economic, financial and business conditions, review of credit documentation, repayment borrowers repayment behaviors and realizability of history and past due status, financial condition as collateral held by the Bank. depicted by the borrowers’ financial statements, nature of collateral held by the Bank and status of The Bank’s advances to the customers represent litigation, if any, with the borrower.. 40.5% of its total assets as at 31 December 2021 and are stated at Rs. 484,405 million which is net of - In respect of the level of general provision provision of Rs. 49,758 million at the year end. maintained by the Bank, we discussed the approach and policy followed by the Bank with In view of the significance of this area in terms of its the management. impact on the unconsolidated financial statements and the level of involvement of management’s We also assessed adequacy of disclosures as judgment, we identified adequacy and completeness included in note 10 to the unconsolidated financial of provision against financings as a significant area statements regarding the non-performing of audit judgment and a key audit matter. financings and provisions made for the same in the unconsolidated financial statements in accordance The accounting policy and disclosures relating to with the requirements of the applicable financial provisioning against non- performing financings reporting framework. are included in note 5.4 and 10 respectively to the unconsolidated financial statements. A member Firm of Ernst & Young Global Limited 150
152. Building a better working world Information Other than the Financial Statements and Auditor ’s Report Thereon Management is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and the Board of Directors for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting and reporting standards as applicable in Pakistan, the requirements of Banking Companies Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so. The Board of directors is responsible for overseeing the Bank’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A member Firm of Ernst & Young Global Limited 151
153. Building a better working world As part of an audit in accordance with ISAs as applicable in Pakistan , we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Bank to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide to the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should A member Firm of Ernst & Young Global Limited 152
154. Building a better working world not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication . Report on Other Legal and Regulatory Requirements 1.          Based on our audit, we further report that in our opinion: a) proper books of account have been kept by the Bank as required by the Companies Act, 2017 (XIX of 2017) and the returns referred above from the branches have been found adequate for the purpose of our audit; b) the statement of financial position, the statement of profit and loss and the statement of comprehensive income, statement of changes in equity and cash flow statement (together with the notes thereon have been drawn up in conformity with the Banking Companies Ordinance, 1962 and the Companies Act, 2017(XIX of 2017) and are in agreement with the books of account and returns; c) d) 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. 2.​ We confirm that for the purpose of our audit we have covered more than sixty per cent of the total loans and advances of the Bank. investments made, expenditure incurred and guarantees extended during the year were in accordance with the objects and powers of the Bank and the transactions of the Bank which have come to our notice have been within the powers of the Bank; and The engagement partner on the audit resulting in this independent auditor’s report is Ahsan Shahzad. E Y Ford Rhodes Chartered Accountants Place: Lahore Date: 07 March 2022 UDIN: AR202110079Zltr5iUfs A member Firm of Ernst & Young Global Limited 153
155. UNCONSOLIDATED STATEMENT OF FINANCIAL POSITION As at December 31 , 2021 20212020 Note Rupees in ‘000’ ASSETS Cash and balances with treasury banks 6 71,318,743 69,271,804 Balances with other banks 7 8,717,632 2,397,707 Lendings to financial institutions 8 30,980,388 16,086,867 Investments - net 9 531,683,056 567,788,623 Advances - net 10 484,405,376 391,160,612 Fixed assets 11 19,831,970 14,812,949 Intangible assets 12 1,101,012 688,508 Deferred tax assets - net 13 13,696,051 7,774,264 Other assets - net 14 35,217,763 25,464,682 1,196,951,991 1,095,446,016 LIABILITIES Bills payable 16 10,109,459 4,168,641 Borrowings 17 71,323,488 154,841,415 Deposits and other accounts 18 1,002,954,667 835,067,592 Liabilities against assets subject to finance lease - Subordinated debts 19 7,788,980 6,791,700 Deferred tax liabilities - Other liabilities 20 49,942,521 42,315,157 1,142,119,115 1,043,184,505 NET ASSETS 54,832,876 52,261,511 REPRESENTED BY Share capital - net 21 26,173,766 26,173,766 Reserves 10,517,051 8,029,024 (Deficit) / surplus on revaluation of assets - net of tax 22 (1,368,710) 5,955,359 Unappropriated profit 19,510,769 12,103,362 54,832,876 52,261,511 CONTINGENCIES AND COMMITMENTS 23 The annexed notes 1 to 47 and annexures I and II form an integral part of these unconsolidated financial statements. Chief Financial Officer 154 President Chairman Director Director
156. UNCONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended December 31 , 2021 20212020 Note Rupees in ‘000’ Mark-up / return / interest earned Mark-up / return / interest expensed 24 25 81,651,255 51,775,404 86,019,127 62,693,706 Net mark-up / interest income 29,875,851 23,325,421 NON MARK-UP / INTEREST INCOME Fee and commission income 26 5,103,495 3,732,141 Dividend income 376,643 136,987 Foreign exchange income 576,914 328,303 Income / (loss) from derivatives - Gain on securities - net 27 1,785,790 8,466,492 Other income - net 28 60,973 381,664 Total non-markup / interest income 7,903,815 13,045,587 Total income 37,779,666 36,371,008 NON MARK-UP / INTEREST EXPENSES Operating expenses 29 20,636,973 16,880,128 Workers welfare fund 363,315 334,882 Other charges 30 13,408 304,279 Total non-markup / interest expenses 21,013,696 17,519,289 Profit before provisions (Reversal) / provisions and write offs - net 31 Extra ordinary / unusual items 16,765,970 (1,642,043) - 18,851,719 6,862,308 - PROFIT BEFORE TAXATION Taxation - net 32 18,408,013 11,989,411 5,967,878 5,045,672 PROFIT AFTER TAXATION 12,440,135 6,943,739 Basic earnings per share 33 4.71 2.63 Diluted earnings per share 34 4.71 2.63 The annexed notes 1 to 47 and annexures I and II form an integral part of these unconsolidated financial statements. Chief Financial Officer President Chairman Director Director 155
157. UNCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended December 31 , 2021 20212020 Note Rupees in ‘000’ Profit after taxation for the year 12,440,135 6,943,739 Other comprehensive income: Items that will not be reclassified to profit and loss account in subsequent periods: Remeasurement loss on defined benefit obligation 37.1.7.2 (747) (87,285) Movement in surplus on revaluation of fixed assets - net of tax 22.1 1,946,307 Movement in surplus on revaluation of non-banking assets - net of tax 22.2 201,167 (6,978) 2,146,727 (94,263) 14,586,862 6,849,476 Items that may be reclassified to profit and loss account in subsequent periods: Movement in surplus on revaluation of investments - net of tax 22 (9,380,427) 707,349 Total comprehensive income 5,206,435 7,556,825 The annexed notes 1 to 47 and annexures I and II form an integral part of these unconsolidated financial statements. Chief Financial Officer 156 President Chairman Director Director
158. 157 - - 26 ,436,924 - - (263,158) - - 26,173,766 - - 2,215,040 - - 4,425,236 - 707,349 2,226,914 - (6,978) 3,144,293 6,943,739 (87,285) 8,497,085 6,943,739 613,086 46,682,334 26,436,924 - (263,158) - 26,173,766 - 2,215,040 - 5,813,984 - 2,934,263 - 3,021,096 - 12,103,362 (1,982,769) 52,261,511 (1,982,769) - - - - - - - (2,643,692) (2,643,692) Chief Financial Officer President Chairman Director Director Balance as on December 31, 2021 26,436,924 (263,158) 26,173,766 2,215,040 8,302,011 (6,446,164) 5,077,454 19,510,769 54,832,876 The annexed notes 1 to 47 and annexures I and II form an integral part of these unconsolidated financial statements. Profit after taxation for the year - - - - - - - 12,440,135 12,440,135 Other comprehensive (loss) / income - - - - - (9,380,427) 2,147,474 (747) (7,233,700) Total comprehensive income / (loss) for the year ended December 31, 2021 - - - - - (9,380,427) 2,147,474 12,439,388 5,206,435 Transfer to statutory reserve - - - - 2,488,027 - - (2,488,027) Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax - - - - - - (59,455) 59,455 Transfer from surplus on revaluation of non banking assets to unappropriated profit - net of tax - - - - - - (9,164) 9,164 Transfer from surplus on revaluation of non banking assets to unappropriated profit on disposal - - - - - - (22,497) 31,119 8,622 Transactions with owners recognized directly in equity : Final cash dividend - December 31, 2020 declared subsequent to year end at 10% - - - - - - - (2,643,692) (2,643,692) Balance as on December 31, 2020 Total comprehensive income / (loss) for the year ended December 31, 2020 - - - - - 707,349 (6,978) 6,856,454 7,556,825 Transfer to statutory reserve - - - - 1,388,748 - - (1,388,748) Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax - - - - - - (66,510) 66,510 Transfer from surplus on revaluation of non banking assets to unappropriated profit - net of tax - - - - - - (9,424) 9,424 Transfer from surplus on revaluation of fixed assets to unappropriated profit on disposal - - - - - - (12,140) 14,963 2,823 Transfer from surplus on revaluation of non banking assets to unappropriated profit on disposal - - - - - - (28,145) 30,443 2,298 Transactions with owners, recognized directly in equity: Final cash dividend - December 31, 2019 declared subsequent to year end at 7.5% - - - - - - - (1,982,769) (1,982,769) Profit after taxation for the year Other comprehensive income / (loss) Balance as on January 01, 2020 Surplus / (Deficit) - net of tax on revaluation of Share Discount on Share Share Statutory Fixed / non Unappropriated capital issue of capital premium reserve Investments banking profit Total shares - net assets R u p e e s i n ‘000’ For the year ended December 31, 2021 UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITY
159. UNCONSOLIDATED CASH FLOW STATEMENT For the year ended December 31 , 2021 20212020 Note Rupees in ‘000’ CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation 18,408,013 11,989,411 Less: Dividend income (376,643) (136,987) 18,031,370 11,852,424 Adjustments: Depreciation on property and equipment 11.3 1,234,819 1,181,106 Depreciation on non banking assets acquired in satisfaction of claims 14.1.1 48,666 58,923 Depreciation on ijarah assets under IFAS - 2 29 118,973 162,883 Depreciation on right-of-use assets 29 990,749 891,145 Amortization on intangible assets 12.1 208,010 197,899 Amortization of discount on debt securities - net (1,483,712) (3,042,435) Markup on lease liability against right-of-use assets 25 1,047,705 937,275 Unrealized gain on revaluation of investments classified as held for trading 9.1 (21,039) (1,630) (Reversal) / provision and write-offs - net 31 (1,642,043) 6,862,308 (Gain) / loss on termination of lease liability against right-of-use assets 28 (3,156) 2,635 Loss / (gain) on sale of property and equipment - net 28 364 (101,461) Gain on sale of non banking assets - net 28 (42,207) (225,129) Realized gain on sale of securities - net 27.1 (1,764,751) (8,464,862) Provision for employees compensated absences 29.1 12,040 13,982 Gratuity expense 29.1 273,147 187,775 (1,022,435) (1,339,586) 17,008,935 10,512,838 (Increase) / Decrease in operating assets: Lendings to financial institutions (14,893,521) (12,027,096) Held for trading securities (14,356,519) (9,188,822) Advances (91,522,647) (13,586,291) Others assets (9,814,261) 4,762,920 (130,586,948) Increase / (Decrease) in operating liabilities: Bills Payable 5,940,818 Borrowings from financial institutions (83,515,791) Deposits and other accounts 167,887,075 Other liabilities 4,672,150 (30,039,289) 747,558 77,933,512 144,050,145 (243,649) 94,984,252 222,487,566 Payment made to gratuity fund (267,524) (278,213) Income tax paid (6,194,183) (4,850,676) (6,461,707) (5,128,889) Net cash (used in) / flow from operating activities (25,055,468) 197,832,226 158
160. UNCONSOLIDATED CASH FLOW STATEMENT For the year ended December 31 , 2021 20212020 Note Rupees in ‘000’ CASH FLOW FROM INVESTING ACTIVITIES Net investment in available for sale securities 38,338,338 (185,058,540) Dividends received 377,380 134,790 Investment in fixed assets (1,840,523) (1,068,488) Investment in intangible assets (620,514) (93,122) Proceeds from sale of property and equipment 3,961 651,459 Proceeds from sale of non banking assets 293,024 842,089 Net cash flow from / (used in) investing activities CASH FLOW FROM FINANCING ACTIVITIES Repayment of subordinated debts Dividend paid Payment of lease liability against right-of-use assets Advance subscription money - subordinated perpetual term finance certificates 19.3 36,551,666 (184,591,812) (2,720) (2,643,692) (1,480,786) (2,002,720) (1,982,769) (1,173,559) 1,000,000 - Net cash used in financing activities (3,127,198) (5,159,048) Increase in cash and cash equivalents Cash and cash equivalents at beginning of the year 8,369,000 71,667,375 8,081,366 63,586,009 Cash and cash equivalents at end of the year 35 80,036,375 71,667,375 The annexed notes 1 to 47 and annexures I and II form an integral part of these unconsolidated financial statements. Chief Financial Officer President Chairman Director Director 159
161. NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31 , 2021 1. 2. 2.1 2.1.1 STATUS AND NATURE OF BUSINESS The Bank of Punjab (the Bank) was constituted pursuant to The Bank of Punjab Act, 1989. It was given the status of a scheduled bank by the State Bank of Pakistan (SBP) on September 19, 1994. It is principally engaged in commercial banking and related services with its registered office at BOP Tower, 10-B, Block E-II, Main Boulevard, Gulberg III, Lahore. The Bank has 662 branches including 16 sub branches and 114 Islamic banking branches (2020: 636 branches including 18 sub branches and 104 Islamic banking branches) in Pakistan and Azad Jammu and Kashmir at the year end. The Bank is listed on Pakistan Stock Exchange. The majority shares of the Bank are held by Government of the Punjab (GoPb). BASIS OF PRESENTATION In accordance with the directives of the Government of Pakistan regarding the conversion 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 marked-up price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these unconsolidated financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. These unconsolidated financial statements are separate financial statements of the Bank in which the investment in subsidiaries are stated at cost less impairment losses (if any) and has not been accounted for on the basis of reported results and net assets of the investee. Consolidated financial statements of the Group are being issued separately. The financial results of Islamic Banking business have been consolidated in these unconsolidated financial statements for reporting purposes, after eliminating inter-branch transactions / balances. Key financial figures of the Islamic Banking business are disclosed in Annexure-II to these unconsolidated financial statements. STATEMENT OF COMPLIANCE These unconsolidated financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards comprise of: - Directives issued by the SBP and the Securities Exchange Commission of Pakistan (SECP). - Requirements of The Bank of Punjab Act, 1989; - Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017; - International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board as are notified under the Companies Act, 2017; and - Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as are notified under the Companies Act, 2017. 160 Wherever the requirements of the directives issued by the SBP and Securities and Exchange Commission of Pakistan (SECP), The Bank of Punjab Act, 1989, the Banking Companies Ordinance, 1962 and the Companies Act, 2017 differ with the requirements of these IFRS or IFAS, the requirements of the said directives, The Bank of Punjab Act, 1989, the Banking Companies Ordinance, 1962 and the Companies Act, 2017 take precedence.
162. 2 .1.2 SBP as per 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 Standard (IAS) 40, “Investment Property” for banking companies till further instructions. Further, according to the notification of SECP dated April 28, 2008, the IFRS – 7 “Financial Instruments: Disclosures” has not been made applicable for banks. Accordingly, the requirements of these Standards have not been considered in the preparation of these unconsolidated financial statements. 2.1.3 The State Bank of Pakistan through BPRD Circular No. 04 of 2015 dated February 25, 2015 has deferred applicability of Islamic Financial Accounting Standard - 3 for Profit & Loss Sharing on Deposits (IFAS 3) issued by the Institute of Chartered Accountants of Pakistan and notified by the SECP, vide their SRO No. 571 of 2013 dated June 12, 2013 for Institutions offering Islamic Financial Services (IIFS). The standard will result in certain new disclosures in these unconsolidated financial statements of the Bank. 2.1.4 New accounting standards / amendments and IFRS interpretations that are effective for the year ended December 31, 2021 During the year, certain amendments to standards, interpretations and improvement to accounting standards became effective; however, the standards, amendments, interpretations and improvements did not have any material effect on these unconsolidated financial statements of the Bank. 2.1.5 New accounting standards and IFRS interpretations that are not yet effective: The following standards, amendments and interpretations are only effective for accounting periods, beginning on or after the date mentioned against each of them. The Bank considers that the following standards and interpretations are either not relevant or will not have any material impact on its unconsolidated financial statements in the period of initial application other than IFRS 9. The SBP vide BPRD Circular No. 04 dated October 23, 2019 has notified the effective date of IFRS 9, ‘Financial Instruments’ as January 01, 2021. However, the initial application date has been extended to January 01, 2022 by SBP vide BPRD Circular Letter No. 24 dated July 05, 2021. IFRS 9, ‘Financial Instruments’ has replaced IAS 39, ‘Financial Instruments: Recognition and Measurement’. The standard addresses recognition, classification, measurement and derecognition of financial assets and financial liabilities. The standard has also introduced a new impairment model for financial assets which requires recognition of impairment charge based on ‘Expected Credit Losses’ (ECL) approach rather than ‘incurred credit losses’ approach. The ECL has impact on all the assets of the Bank which are exposed to credit risk. Presently, in terms of SBP instructions, The Bank calculates impact of adoption of IFRS 9 on the financial statements on parallel run basis based on existing guidelines. Further, final IFRS-9 application instructions has not been issued by the SBP. Standard or Interpretations IFRS 9 IFRS 3 IAS 16 IAS 37 AIP IAS 8 IAS 1 Financial instruments Reference to conceptual framework - Amendments Property, plant and equipment: Proceeds before intended use -Amendments Onerous contracts - costs of fulfilling a contract - Amendments Annual improvements to IFRS Standards 2018 - 2020 Amended Definition of accounting estimates Classification of liabilities as current or non-current -Amendments Effective date (accounting periods beginning on or after) 1 January 2022 1 January 2022 1 January 2022 1 January 2022 1 January 2022 1 January 2023 1 January 2023 161
163. 3 .BASIS OF MEASUREMENT 3.1 These unconsolidated financial statements have been prepared under the historical cost convention, except for revaluation of freehold land and buildings on freehold land, revaluation of non banking assets acquired in satisfaction of claims, valuation of certain investments and commitments in respect of forward exchange contracts at fair value, right-of-use assets, lease liabilities and certain staff retirement benefits at present value. 3.2 These unconsolidated financial statements are presented in Pak Rupees, which is the Bank’s functional and presentation currency. 4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgement in the process of applying the Bank’s accounting policies. Estimates and judgements are continually evaluated and are based on historical experiences, including expectations of future events that are believed to be reasonable under the circumstances. The areas where various assumptions and estimates are significant to the Bank’s unconsolidated financial statements or where judgement was exercised in the application of accounting policies are as follows: 4.1 Classification of investments In classifying investments as “held for trading” the Bank has determined securities which are acquired with the intention to trade by taking advantage of short term market / interest rate movements and are to be sold within 90 days. In classifying investments as “held to maturity” the Bank follows the guidance provided in SBP circulars on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity. In making this judgement, the Bank evaluates its intention and ability to hold such investments to maturity. The investments which are not classified as held for trading or held to maturity are classified as available for sale. 4.2 Provision against non-performing advances and debt securities classified as investments Apart from the provision determined on the basis of time-based criteria given in Prudential Regulations issued by the SBP, the management also applies the subjective criteria of classification and, accordingly, the classification of advances and debt securities is downgraded on the basis of credit worthiness of the borrower, its cash flows, operations in account and adequacy of security in order to ensure accurate measurement of the provision. 4.3 Impairment of available for sale investments The Bank considers that available for sale equity investments are impaired when there has been a significant and prolonged decline in the fair value below its cost. Other factors will also need to be considered before deciding the permanent impairment of investment. This determination of what is significant and prolonged requires judgement. In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance. As of the statement of financial position date, the management has determined an impairment loss on available for sale securities, held to maturity securities and subsidiary companies as disclosed in Note 9.3 to these unconsolidated financial statements. 162
164. 4 .4Depreciation, amortization and revaluation of fixed assets Estimates of useful life of fixed assets are based on management’s best estimate. In making estimates of the depreciation / amortization method, the management uses method which reflects the pattern in which economic benefits are expected to be consumed by the Bank. The method applied is reviewed at each financial year end and if there is a change in the expected pattern of consumption of the future economic benefits embodied in the assets, the method is changed to reflect the change in pattern. Further, the Bank estimates the revalued amount of freehold land and buildings on freehold land on a regular basis. The estimates are based on valuations carried out by an independent valuation expert under the market conditions. 4.5 Income taxes In making estimates for income taxes currently payable by the Bank, the management considers the current income tax laws and the decisions of appellate authorities on certain issues in the past. There are certain matters where the Bank’s view differs with the view taken by the income tax authorities and such amounts are shown as a contingent liability. 4.6 Staff retirement benefits The amount of provision for gratuity and compensated absences is determined using actuarial valuation. The valuation involves making use of assumptions about discount rates, mortality, expected rate of salary increases, retirement rates, and average leave utilization per year. Due to the degree of subjectivity involved and long-term nature of these plans, such estimates are subject to significant uncertainty. 4.7 Non banking assets acquired in satisfaction of claims The Bank estimates the revalued amounts of non banking assets acquired in satisfaction of claims on a regular basis. The estimates are based on expected legal enforceability, ease of realization and valuations carried out by an independent valuation expert under the market conditions. 4.8 Lease liability on right-of-use assets In making estimates, the Bank uses following practical expedients and significant judgements, as permitted by the standard: - Use of a single discount rate for leases with similar characteristics; and - Lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted in the preparation of these unconsolidated financial statements are consistent with those of previous financial year. Significant accounting policies are enumerated as follows: 5.1 Cash and cash equivalents Cash and cash equivalents include cash and balances with treasury banks, balances with other banks and call money lendings less over drawn nostro accounts and other overdrawn bank accounts. 163
165. 5 .2 Lendings / borrowings from financial institutions The Bank enters into transactions of repo and reverse repo at contracted rates for a specified period of time. These are recorded as under: 5.2.1 Sale under repurchase obligations Securities sold subject to a repurchase agreement (repo) are retained in the unconsolidated financial statements as investments and the counter party liability is included in borrowings from financial institutions. The differential in sale and repurchase price is accrued using effective yield method and recorded as interest expense over the term of the related repo agreement. 5.2.2 Purchase under resale obligations Securities purchased under agreement to resell (reverse repo) are not recognized in the unconsolidated financial statements as investments and the amount extended to the counter party is included in lendings to financial institutions. The differential between the contracted price and resale price is amortized over the period of the contract and recorded as interest income. 5.3Investments Investments other than those categorized as held for trading are initially recognized at fair value which includes transaction costs associated with the investments. Investments classified at held for trading are initially recognized at fair value and transaction costs are expensed in the profit and loss account. All regular way purchase / sale of investment are recognized on the trade date, i.e., the date the Bank commits to purchase / sell the investments. Regular way purchase or sale of investment requires delivery of securities within the time frame generally established by regulation or convention in the market place. Investment in subsidiary is stated at cost less provision for impairment (if any). Other investments are classified as follows: Held for trading These are securities which are acquired with the intention to trade by taking advantage of short-term market/interest rate movements. These are carried at market value, with the related surplus / (deficit) on revaluation being taken to profit and loss account. Held to maturity These are securities with fixed or determinable payments and fixed maturity that are held with the intention and ability to hold to maturity. These are carried at amortized cost. Available for sale These are investments, other than those in subsidiaries and associates, which do not fall under the held for trading or held to maturity categories. These are carried at market value with the surplus / (deficit) on revaluation taken to ‘Surplus / (deficit) on revaluation of assets’ shown in equity, except available for sale investments in unquoted shares, debentures, bonds, participation term certificates, term finance certificates, federal, provincial and foreign government securities (except for Treasury Bills and Pakistan Investment Bonds) which are stated at cost less provision for diminution in value of investments, if any. Provision for diminution in the value of investments is made after considering impairment, if any, in their value and charged to profit and loss account. Provision for diminution in value of investments in respect of unquoted shares is calculated with reference to break-up value. Provision for diminution 164
166. in value of investments for unquoted debt securities is calculated with reference to the time-based criteria as per the SBP ’s Prudential Regulations. 5.4 Premium or discount on debt securities classified as available for sale and held to maturity securities are amortized using the effective yield method. On de-recognition or impairment in quoted available for sale securities the cumulative gain or loss previously reported as “Surplus / (Deficit) on revaluation of assets” in equity is included in the profit and loss account for the year. Gain and loss on disposal of investments are dealt with through the profit and loss account in the year in which they arise. Advances including net investment in finance lease Advances and net investments in finance lease are stated net of provision for doubtful debts. Provision for doubtful debts is made in accordance with the Prudential Regulations prescribed by the SBP and charged to profit and loss account. Leases where risks and rewards incidental to ownership are substantially transferred to lessee are classified as finance lease. A receivable is recognized at an amount equal to the present value of the lease payments including any guaranteed residual value. The rentals received / receivable on Ijarahs are recorded as income / revenue. Depreciation on Ijarah assets is charged to profit and loss account by applying the straight line method whereby the depreciable value of Ijarah assets is written off over the Ijarah period. The Bank charges depreciation from the date of the delivery of respective assets to Mustajir upto the date of maturity / termination of Ijarah agreement. 5.5 Fixed assets and depreciation 5.5.1 Property and equipment Property and equipment, other than freehold land which is not depreciated, are stated at cost or revalued amounts less accumulated depreciation and accumulated impairment losses (if any). Freehold land is carried at revalued amount. Depreciation on property and equipment is charged to income using the diminishing balance method so as to write off the historical cost / revalued amount of the asset over its estimated useful life, except motor vehicles, leasehold improvements and computer equipment on which depreciation is charged using the straight line basis. The rates at which the depreciation is charged are given in note 11.3 to these unconsolidated financial statements. Impairment loss or its reversal, if any, is charged to income. When an impairment loss is recognized, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount over its estimated useful life. Depreciation on additions is charged from the month the assets are available for use while no depreciation is charged in the month in which the assets are disposed. Surplus arising on revaluation of freehold land and buildings on freehold land is credited to the “Surplus on Revaluation of Assets” in equity and any deficit arising on revaluation is taken to profit and loss account directly. Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does not differ materially from the fair value. To the extent of the incremental depreciation charged on the revalued assets, the related surplus on revaluation of buildings (net of deferred taxation) is transferred directly to un-appropriated profit / accumulated loss. Gains and losses on sale of fixed assets are included in profit and loss account currently. 165
167. Major renewals and improvements are capitalized and the assets so replaced , if any, are retired. Normal repairs and maintenance are charged to the profit and loss account as and when incurred. Capital work-in-progress is stated at cost less accumulated impairment losses (if any). These are transferred to specific assets as and when assets are available for use. 5.5.2 Right-of-use assets The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred. The right-of-use assets are subsequently depreciated over the lease term using a straight line basis as it closely reflects the expected pattern of consumption of future economic benefits. The right-of-use assets are to be reduced by impairment losses, if any, and adjusted for certain re-measurements of lease liability. Right-of-use assets are recognized using cost model. 5.6 Intangible assets Intangible assets are stated at cost less accumulated amortization and accumulated impairment losses (if any). The cost of intangible assets is amortized over their useful lives, using the straight line method as per the rates given in note 12.1 to these unconsolidated financial statements. Amortization on additions is charged from the month the assets are available for use while no amortization is charged in the month in which the assets are disposed. Intangible-in-progress is stated at cost less accumulated impairment losses (if any). These are transferred to specific assets as and when assets are available for use. 5.7 Borrowings / deposits Borrowings / deposits are recorded at the proceeds received. The cost of borrowings / deposits is recognized as an expense in the period in which this is incurred. 5.8 Subordinated debts Subordinated loans are initially recorded at the amount of proceeds received. Mark-up accrued on subordinated loans is recognized separately as part of other liabilities and is charged to the profit and loss account over the period on an accrual basis. 5.9 Employee retirement and other benefits Defined contribution plan – Provident fund 166 The Bank operates an approved provident fund scheme, covering all permanent employees. Contributions are made monthly by the Bank and the employees at the rate of 8.33% of basic salary. Contributions by the Bank are charged to profit and loss account. Defined benefit plan - Gratuity scheme The Bank operates an approved funded gratuity scheme for all its permanent employees. Contributions are made to cover the obligations under the scheme on the basis of actuarial valuation and are charged to income. Actuarial gains and losses are charged or credited to other comprehensive income in the year in which they occur. Defined benefit plan - Employees’ compensated absences The Bank makes annual provision in the financial statements for its liabilities towards vested compensated absences accumulated by its employees on the basis of actuarial valuation. Actuarial gains and losses are charged to income in the year in which they occur.
168. 5 .10 5.11 5.12 Assets acquired in satisfaction of claims Non-banking assets acquired in satisfaction of claims are carried at revalued amounts less accumulated depreciation except land which is carried at revalued amount. Revaluation by independent professionally qualified valuers, is carried out with sufficient regularity to ensure that their net carrying value does not differ materially from their fair value. Surplus arising on revaluation of non banking assets is credited to the ‘surplus on revaluation of assets’ account and any deficit arising on revaluation is taken to profit and loss account directly. Legal fees, transfer costs and direct costs of acquiring title to property is charged to profit and loss account and not capitalized. Foreign currencies Transactions in foreign currency are translated to Rupees at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities and commitments for letters of credit and acceptances in foreign currencies are translated at the exchange rates prevailing at the statement of financial position date except assets and liabilities for which there are forward contracts which are translated at the contracted rates. Forward exchange contracts and foreign bills purchased are valued at forward rates applicable to their respective maturities. All exchange differences are charged to profit and loss account. Revenue recognition Revenue is recognized to the extent that the economic benefits will flow to the Bank and the revenue can be reliably measured. The following recognition criteria must be met before revenue is recognized. Mark-up / return / interest income Mark-up / return / interest on advances and return on investments are recognized in profit and loss account on an accrual basis, except mark-up on non-performing advances which is recognized when received. Dividend income Dividend income is recognized when the Bank’s right to receive the dividend is established. Financing method is used in accounting for income from lease financing. Under this method, the unearned lease income (excess of the sum of total lease rentals and estimated residual value over the cost of leased assets) is deferred and taken to income over the term of the lease periods so as to produce a constant periodic rate of return on the outstanding net investment in lease. Unrealized lease income is suspended, where necessary, in accordance with the requirements of the SBP. Gain/ loss on termination of lease contracts, documentation charges and other lease income are recognized as income when these are realized. Lease finance income Fees and commission income Fee commission is recognized at amount that reflects consideration to which the Bank expects to be entitled in exchange for providing the services. The Bank recognizes fees earned on transaction based arrangements at point in time, when the Bank has provided the services to customer. where the contract requires services to be provided over time, income is recognized on systematic basis over the period of arrangement. 167
169. 5 .13 Lease liabilities against right-of-use assets The lease liability is initially measured at present value of lease payments to be made over lease term, discounted using bank’s incremental weighted average borrowing rate. The lease liability shall be subsequently measured at amortized cost using the effective interest rate method i.e. increase by interest cost on lease liability and decrease by lease payments made. 5.13.1 Short-term leases and leases of low-value asset The bank applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are low value. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term. 5.14Taxation Current Provision for current taxation is based on taxable income for the year determined in accordance with the prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year if enacted. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made in previous years arising from assessments framed during the year for such years. Prior years The taxation charge for prior years represents adjustments to the tax charge relating to prior years, arising from assessments / changes in laws and changes in estimates made during the current year. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that the taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized. Deferred tax is calculated at 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 by the statement of financial position date. Deferred tax is charged or credited in income statement, except in the case of items credited or charged to equity in which case it is included in equity. The Bank also recognizes deferred tax asset / liability on deficit / surplus on revaluation of operating fixed assets and available for sale securities which is adjusted against the related deficit / surplus in accordance with the requirements of International Accounting Standard (IAS)12, ‘Income Taxes’. 5.15Impairment The carrying amounts of assets (other than deferred tax assets) are reviewed for impairment at each statement of financial position date whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. If such indication exists, and where the 168
170. 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 the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of that asset. 5.16Provisions Provisions are recorded when the Bank has a present obligation as a result of a past event when it is probable that it will result in an outflow of economic benefits and a reliable estimate can be made of the amount of the obligation. 5.17 Provision for off balance sheet obligations Provision for guarantees, claims and other off balance sheet obligations are made when the Bank has legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of amount can be made. Charge to profit and loss account is stated net of expected recoveries. 5.18 Share capital Ordinary shares are classified as equity and recognized at their face value. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the equity. 5.19Acceptances Acceptances comprise undertaking by the Bank to pay bills of exchange drawn on customer. The Bank expects most acceptances to be simultaneously settled with the reimbursement from the customers. Acceptances are accounted for as on balance sheet transactions. 5.20 Financial instruments 5.20.1 Financial assets and liabilities Financial instruments carried on the statement of financial position include cash and bank balances, lending to financial institutions, investments, advances, certain receivables, borrowing from financial institutions, deposits and other payables. The particular recognition criteria adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with them. 5.20.2Off setting Financial assets and financial liabilities are set off and the net amount is reported in the unconsolidated financial statements when there is a legally enforceable right to set off and the Bank intends either to settle on a net basis, or to realize the assets and settle the liabilities, simultaneously. 5.21 Segment reporting A segment is a distinguishable component of the Bank that is engaged either in providing product or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. 169
171. 5 .21.1 Business segments Corporate and investment banking This includes, loans, project finance, real estate finance, export finance, trade finance, investment banking, and other banking activities with corporate and public sector customers. Consumer and digital banking It includes deposits and banking services including digital baking services to customers of the Bank. It includes loans of individuals, agriculture customers, SME and lending under government initiatives. Products offered to customers include transport finance, house finance, livestock finance, dairy finance etc. Treasury It includes fixed income, equity, foreign exchanges, commodities, credit, funding, own position securities, lending and repos and brokerage debt. Retail and priority sector lending Islamic The segment pertains to full scale Islamic Banking operations of the Bank. 5.21.2 5.22 This includes head office related activities, and all other activities not tagged to the segments above. Others Geographical segments The Bank operates only in Pakistan. Dividend distribution and appropriations Dividend distributions and appropriation to reserves are recognized as a liability in the unconsolidated financial statements in the period in which these are approved. Transfer to statutory reserve and any of the mandatory appropriations as may be required by law are recognized in the period to which they relate. 5.23 Earnings per share The Bank presents earnings per share (EPS) for its ordinary shares which is calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank by weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effect of all dilutive potential ordinary shares (if any). 170
172. 20212020 Note Rupees in ‘000’ 6. CASH AND BALANCES WITH TREASURY BANKS In hand: Local currency 13,800,458 17,921,687 Foreign currencies 4,359,944 4,182,816 18,160,402 With SBP in: Local currency current account 6.1 40,886,803 Foreign currency current account 6.2 900,219 Foreign currency deposit account 6.3 2,109,501 22,104,503 33,648,507 484,298 956,624 43,896,523 35,089,429 With National Bank of Pakistan in: Local currency current account 9,174,433 11,200,818 Prize bonds 87,385 877,054 71,318,743 69,271,804 6.1 This represents current account maintained with the SBP under the requirements of section 22 “Cash Reserve Requirement” of the Banking Companies Ordinance, 1962. 6.2 This represents mandatory reserves maintained in respect of foreign currency deposits under FE-25 scheme, as prescribed by the SBP. 6.3 This carries mark-up at the rate of Nil (2020: 0.00% to 0.76% per annum) as announced by SBP on monthly basis. 20212020 Note Rupees in ‘000’ 7. BALANCES WITH OTHER BANKS In Pakistan: Current accounts 261,003 404,719 Deposit accounts 7.1 5,534,036 887 5,795,039 Outside Pakistan: Current accounts 1,339,397 Deposit accounts 7.2 1,583,196 405,606 229,657 1,762,444 2,922,593 1,992,101 8,717,632 2,397,707 7.1 These carry mark-up at rates ranging from 2.56% to 11.30% per annum (2020: 2.84% to 6.02% per annum). 7.2 These carry mark-up at rates ranging from 0.00% to 0.01% per annum (2020: 0.03% to 1.34% per annum). 171
173. 20212020 Note Rupees in ‘000’ 8. LENDINGS TO FINANCIAL INSTITUTIONS Call money lendings 100,000 Repurchase agreement lendings (Reverse Repo) 8.2 26,380,388 7,454,867 Placements 8.3 4,500,000 8,632,000 30,980,388 16,086,867 8.1 Particulars of lending In local currency 30,980,388 16,086,867 In foreign currencies - 30,980,388 16,086,867 8.2 Securities held as collateral against lendings to financial institutions 2021 2020 Held by Further Total Held by Further bank given as bank given as collateralcollateral Total Rupees in ‘000’ Market treasury bills Pakistan investment bonds 21,088,298 5,292,090 - - 21,088,298 4,154,867 5,292,090 3,300,000 - - 4,154,867 3,300,000 Total 26,380,388 - 26,380,388 - 7,454,867 7,454,867 Market value of securities held as collateral as at December 31, 2021 amounted to Rs. 26,391,416 thousand (2020: Rs. 6,651,750 thousand). These carry mark-up at rate ranging from 10.50% to 10.75% per annum (2020: 6.00% to 7.30% per annum) with maturities upto January 07, 2022. 8.3 These carry profit at rate ranging from 7.25% to 10.90% per annum (2020: 6.40% to 7.00% per annum) with maturities upto April 01, 2022. 9. INVESTMENTS - NET 2021 2020 Cost / Provision Surplus Carrying Cost / Provision Amortised for / (Deficit) value Amortised for costdiminution costdiminution Note Rupees in ‘000’ Surplus / (Deficit) Carrying value 9.1 Investments by type: Held for trading securities Federal government securities 33,472,511 - 26,429 33,498,940 Ordinary shares 34,331 - (5,390) 28,941 33,506,842 - 21,039 33,527,881 9.1.1 19,146,767 - 19,146,767 - - - 1,630 - 1,630 19,148,397 19,148,397 Available for sale securities Federal government securities Shares 9.1.1 & 9.2.1 9,091,450 (1,420,029) (840,977) 6,830,444 4,815,673 (1,378,194) 199,777 3,637,256 Non government debt securities 17,084,566 (2,525,563) 39,662 14,598,665 17,516,016 (2,536,232) (139,247) 14,840,537 Foreign securities 425,181,105 11,957 - (9,766,167) - - 415,414,938 465,221,303 11,957 451,369,078 (3,945,592) (10,567,482) 436,856,004 4,019 - 4,453,720 469,675,023 - - 4,019 487,557,011 (3,914,426) 4,514,250 488,156,835 Held to maturity securities Federal government securities WAPDA bonds 9.1.1 & 9.6.1 61,299,171 400 - (400) - - 61,299,171 - 60,483,391 400 - (400) - 60,483,391 - - 61,299,571 (400) - 61,299,171 60,483,791 (400) - 60,483,391 Subsidiaries Total investments 172 9.1.3 164,945 546,340,436 (164,945) - - 164,945 (164,945) - - (4,110,937) (10,546,443) 531,683,056 567,352,514 (4,079,771) 4,515,880 567,788,623
174. 9 .1.1 Market treasury bills and Pakistan investment bonds are eligible for re-discounting with SBP. 9.1.2 Certain approved / Government securities are kept with the SBP to meet statutory liquidity requirements calculated on the basis of domestic demand and time liabilities. 9.1.3 The Bank has three subsidiary companies i.e. Punjab Modaraba Services (Private) Limited (PMSL), First Punjab Modaraba (FPM) and Punjab Capital Securities (Private) Limited (PCS). The wholly owned subsidiary company of the Group, PMSL exercises control over FPM, as its management company and also has a direct economic interest in it. Further, PCS is a wholly owned subsidiary of FPM. Key financial results of subsidiary companies are as follows. PMSL FPM PCS 20212020 2021202020212020 Rupees in ‘000’ Total assets 55,210 37,689 2,164,694 2,042,576 105,456 108,539 Total liabilities 102,178 75,529 2,009,261 1,904,168 22,945 36,019 Equity (46,968) (37,840) 155,433 138,408 82,511 72,520 Revenue - - 265,783 260,959 31,604 13,807 (Loss) / profit after tax (10,061) (12,739) 17,024 (55,875) 9,062 1,967 Total comprehensive (loss) / income (9,129) (16,335) 17,024 (55,875) 9,991 2,417 2021 2020 Cost / Provision Surplus Carrying Cost / Provision Amortised for / (Deficit) value Amortised for costdiminution costdiminution Note Rupees in ‘000’ Surplus / (Deficit) Carrying value 9.2 Investments by segments: Federal government securities: Market treasury bills 9.2.1 125,305,799 - (107,427) 125,198,372 329,361,613 - 149,632 329,511,245 Pakistan investment bonds 9.2.1 389,308,027 - (9,631,157) 379,676,870 210,484,580 - 4,304,640 214,789,220 Ijarah sukuks 4,502,908 - (1,154) 4,501,754 2,249,072 - 1,078 2,250,150 Naya Pakistan Certificates 836,053 - - 836,053 - - - Sukuk - bai muajjal with Government of Pakistan - - - - 2,756,196 - - 2,756,196 WAPDA bonds 400 (400) - - 400 (400) - - 519,953,187 (400) (9,739,738) 510,213,049 544,851,861 (400) 4,455,350 549,306,811 Shares: Listed companies 9,019,423 (1,332,637) (846,367) 6,840,419 4,709,315 (1,287,418) 199,777 3,621,674 Unlisted companies 106,358 (87,392) - 18,966 106,358 (90,776) - 15,582 9,125,781 (1,420,029) (846,367) 6,859,385 4,815,673 (1,378,194) 199,777 3,637,256 Non government debt securities: Listed 10,082,285 (15,321) 39,662 10,106,626 10,294,933 (15,850) (139,247) 10,139,836 Unlisted 7,002,281 (2,510,242) - 4,492,039 7,221,083 (2,520,382) - 4,700,701 17,084,566 (2,525,563) 39,662 14,598,665 17,516,016 (2,536,232) (139,247) 14,840,537 Foreign securities: Equity securities 9.5 11,957 - - 11,957 4,019 - - 4,019 Subsidiaries: Punjab modaraba services (private) limited 164,945 (164,945) - - 164,945 (164,945) - Total investments 546,340,436 (4,110,937) (10,546,443) 531,683,056 567,352,514 (4,079,771) 4,515,880 567,788,623 20212020 Rupees in ‘000’ 9.2.1 Investments given as collateral - at cost / amortized cost Market treasury bills Pakistan investment bonds - 1,768,381 66,472,184 35,514,708 1,768,381 101,986,892 173
175. 20212020 Note Rupees in ‘000’ 9.3 Provision for diminution in value of investments 9.3.1 Opening balance 4,079,771 3,696,054 Charge / reversals : Charge for the year 322,188 516,324 Reversals for the year (10,669) (7,500) 31 Reversal on disposals 311,519 (280,353) 508,824 (125,107) Closing balance 4,110,937 4,079,771 9.3.2 Particulars of provision against debt securities 2021 2020 Category of classification NPI ProvisionNPI Provision Rupees in ‘000’ Domestic Other assets especially mentioned - - - Substandard - - - Doubtful - - - Loss 2,525,963 2,525,963 2,536,632 2,536,632 Total 2,525,963 2,525,963 2,536,632 2,536,632 9.4 Quality of available for sale securities Details regarding quality of Available for Sale (AFS) securities are as follows: 20212020 Cost / Amortized cost Rupees in ‘000’ Federal government securities - government guaranteed Market treasury bills Pakistan investment bonds Naya Pakistan Certificates Ijarah sukuks Sukuk bai-muajjal with Government of Pakistan 93,138,541 326,703,603 836,053 4,502,908 - 310,457,363 149,758,672 2,249,072 2,756,196 425,181,105 465,221,303 174
176. 20212020 Cost / Amortized cost Rupees in ‘000’ Shares Cement Fertilizer Power generation & distribution Textile composite Oil & gas marketing companies Technology & telecommunication Oil & gas exploration companies Chemicals Pharmaceuticals Automobile Engineering Cable & electrical goods Glass & ceramics Food & personal care products Sugar & allied industries Paper & board Insurance Commercial banks Leasing companies Textile spinning Others 1,542,575 1,332,054 1,035,804 678,328 751,764 560,225 414,920 445,179 423,489 355,231 323,895 301,051 284,031 218,049 84,629 62,780 37,761 25,000 17,936 2,067 194,682 197,516 1,040,336 622,608 264,381 285,265 211,367 164,466 384,453 73,660 29,952 81,113 317,908 43 93,724 89,448 85 27,081 882,759 15,566 2,067 31,875 9,091,450 4,815,673 2021 2020 Unlisted Companies Cost BreakupCost Breakup value value Rupees in ‘000’ Al - Baraka Bank Pakistan Limited Al - Arabia Sugar Mills Limited 25,000 81,358 18,966 - 25,000 81,358 15,582 - 106,358 18,966 106,358 15,582 20212020 Cost Rupees in ‘000’ Non government debt securities Listed - AAA 104,167 145,833 - AA+, AA, AA- 1,500,000 1,606,575 - CCC and below 4,985 - Unrated 8,473,133 8,542,525 10,082,285 10,294,933 Unlisted - AAA 2,750,000 2,792,857 - A+, A, A- 1,492,240 1,565,258 - BBB+, BBB, BBB- 249,800 249,850 - Unrated 2,510,241 2,613,118 7,002,281 7,221,083 9.5 Foreign equity securities SWIFT shares 11,957 4,019 175
177. This represents 13 shares (2020: 06 shares) of SWIFT purchased by the Bank as per mandatory requirement of the SWIFT by-laws requiring its members to purchase shares allocated on the basis of financial contributions payable to SWIFT. 9.6 Particulars relating to held to maturity securities are as follows: 20212020 Cost / Amortized cost Rupees in ‘000’ Federal government securities - government guaranteed Pakistan investment bonds WAPDA bonds 61,299,171 400 60,483,391 400 61,299,571 60,483,791 9.6.1 Market value of held to maturity investments amounted to Rs. 63,715,206 thousand (2020: Rs. 69,082,534 thousand). 10. ADVANCES - NET Performing Non Performing Total 20212020 2021202020212020 Note Rupees in ‘000’ Loans, cash credits, running finances, etc. Net book value of assets in ijarah under 10.1 418,699,627 340,882,450 48,738,919 54,343,717 467,438,546 395,226,167 1,988,841 IFAS 2 - In Pakistan 1,860,758 1,773,841 215,000 215,000 2,075,758 Islamic financing and related assets 45,336,297 29,209,198 3,050,869 2,661,933 48,387,166 31,871,131 Bills discounted and purchased 16,234,159 13,643,227 27,521 30,521 16,261,680 13,673,748 Advances - gross 482,130,841 385,508,716 52,032,309 57,251,171 534,163,150 442,759,887 Provision against advances: - Specific - - (46,702,829) (47,850,782) (46,702,829) (47,850,782) - General (3,054,945) (3,748,493) - - (3,054,945) (3,748,493) (3,054,945) 479,075,896 (3,748,493) (46,702,829) (47,850,782) (49,757,774) (51,599,275) 381,760,223 5,329,480 9,400,389 484,405,376 391,160,612 Advances - net of provision 10.1 Includes net investment in finance lease as disclosed below: Not later than one year 2021 Later than one and less than five years 2020 Over Not later five than one Total years year Rupees in ‘000’ Later than Over one and five Total less than years five years Lease rentals receivable Residual value 1,967,194 1,426,904 25,440,343 1,887,543 29,295,080 10,046,320 518,653 11,991,877 2,398,732 4,506,914 20,012,262 7,414,848 459,238 22,870,232 104,100 12,025,862 Minimum lease payments Financial charges for future periods 3,394,098 545,180 35,486,663 2,406,196 41,286,957 6,905,646 3,483,391 51,390 4,079,961 556,073 27,427,110 2,839,503 563,338 34,896,094 17,170 3,412,746 Present value of minimum lease payments 2,848,918 32,003,272 2,354,806 37,206,996 24,587,607 546,168 31,483,348 6,349,573 10.2 Particulars of advances (gross) 20212020 Rupees in ‘000’ In local currency In foreign currencies 534,073,566 89,584 442,580,174 179,713 534,163,150 442,759,887 176
178. 10 .3 Advances include Rs. 52,032,309 thousand (2020: Rs. 57,251,171 thousand) which have been placed under non-performing status as detailed below: 2021 2020 NonNon Category of classification performingProvisionperforming Provision loans loans Rupees in ‘000’ Domestic Other assets especially mentioned 156,255 3,946 190,528 3,495 Substandard 3,173,639 517,367 6,286,206 1,234,491 Doubtful 6,432,920 5,571,388 8,086,336 6,149,532 Loss 42,269,495 40,610,128 42,688,101 40,463,264 Total 52,032,309 46,702,829 57,251,171 47,850,782 10.4 Particulars of provision against advances 20212020 SpecificGeneral Total SpecificGeneral Total Note Rupees in ‘000’ Opening balance 47,850,782 3,748,493 51,599,275 45,119,933 412,641 45,532,574 Charge for the year 4,004,162 - 4,004,162 4,818,333 3,335,852 8,154,185 Reversals for the year (5,152,004) (693,548) (5,845,552) (2,087,484) - (2,087,484) Amounts written off 31 10.5.1 Closing balance (1,147,842) (111) (693,548) (1,841,390) - (111) 46,702,829 3,054,945 49,757,774 2,730,849 3,335,852 - - 47,850,782 3,748,493 6,066,701 51,599,275 10.4.1 Particulars of provision against advances with respect to currencies In local currency 46,702,829 3,054,945 49,757,774 47,785,981 3,748,493 51,534,474 In foreign currencies - - - 64,801 - 64,801 46,702,829 3,054,945 49,757,774 47,850,782 3,748,493 51,599,275 10.4.2 General provision includes a provision against consumer financing portfolio as required by Prudential Regulations issued by the SBP and recognized / reversed during the year as explained in note 44.1 of these unconsolidated financial statements and provision . 10.4.3 The Bank has availed the benefit of Forced Sale Value (FSV) of collateral against non-performing advances as allowed vide BSD Circular No.1 dated October 21, 2011. This has resulted in decrease in provision against non-performing advances by Rs. 1,975,509 thousand (2020: Rs. 2,996,620 thousand). The FSV benefit availed is not available for cash or stock dividend. 20212020 Note Rupees in ‘000’ 10.5 Particulars of write offs: 10.5.1 Against provisions 10.4 111 Directly charged to profit and loss account 31 300 411 - 177
179. 20212020 Note Rupees in ‘000’ 10.5.2Domestic Write offs of Rs. 500,000 and above 10.6 - Write offs of below Rs. 500,000 411 - 411 10.6 Details of loan write off 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 Rupees five hundred thousand or above allowed to a person(s) during the year ended December 31, 2021 is given in Annexure-I. 20212020 Note Rupees in ‘000’ 11. FIXED ASSETS Capital work-in-progress 11.1 191,433 98,500 Right-of-use assets 11.2 7,891,934 6,265,106 Property and equipment 11.3 11,748,603 8,449,343 19,831,970 14,812,949 11.1 Capital work-in-progress Civil works 191,433 98,500 11.2 Right-of-use assets At January 1: Cost 7,987,437 7,191,638 Accumulated depreciation (1,722,331) (849,471) Net book value 6,265,106 6,342,167 Opening net book value 6,265,106 6,342,167 For the year ended December 31: Additions 2,781,817 900,920 Terminations - at cost Depreciation on terminations (218,638) 54,398 (105,121) 18,285 Terminations - at book value Depreciation charge 11.2.1 (164,240) (990,749) (86,836) (891,145) Closing net book value 7,891,934 6,265,106 At December 31: Cost 10,550,616 7,987,437 Accumulated depreciation (2,658,682) (1,722,331) Net book value 7,891,934 6,265,106 11.2.1 Right-of-use assets are depreciated over their respective lease term. 178
180. 179 2021 169 ,700 (52,172) 27,832 - - 899 (899) - (1,146) (47,594) (5,006) 3,860 - (75) 75 - - (321,269) - - - 685 (685) - (3,002) (214,796) (46,001) 42,999 - (1,502) 1,502 - (177) (347,779) (6,946) 6,769 - 410 (410) - - (101,576) (1,732) 1,732 145,360 197,949 (52,589) 449,690 (4,325) (1,234,819) (59,685) 55,360 Net book value Rate of depreciation (percentage) - 2,619,024 5% 6,145,459 445,140 849,353 252,799 20% 20%33.33% 959,430 10%33.33% 477,398 11,748,603 Closing net book value 2,619,024 6,145,459 477,398 445,140 959,430 849,353 252,799 11,748,603 At December 31, 2021: Cost / Revalued amount 2,619,024 6,145,459 872,894 3,429,026 2,295,378 2,348,043 655,330 18,365,154 Accumulated depreciation - - (395,496) (2,983,886) (1,335,948) (1,498,690) (402,531) (6,616,551) 117,528 449,690 - 27,832 - (201,805) - - Disposals - at book value Depreciation charge Depreciation adjustment on revaluation surplus Transfers / adjustments - at cost / revalued amount Depreciation on transfers / adjustments - - - - Disposals - at cost Depreciation on disposal Net book value 1,538,879 3,958,886 435,302 499,758 893,429 963,908 159,181 8,449,343 Opening net book value 1,538,879 3,958,886 435,302 499,758 893,429 963,908 159,181 8,449,343 For the year ended December 31, 2021: Additions - 677,709 90,836 266,651 283,799 233,401 195,194 1,747,590 Revaluation surplus 1,052,313 1,143,451 - - - - - 2,195,764 Freehold Building on Furniture Lease Electrical Computer land freehold and hold and office equipments Vehicles Total land fixtures improvementsequipments Rupees in ‘000’ 11.3 Property and equipment At January 1, 2021: Cost / Revalued amount 1,538,879 4,154,599 786,165 3,162,450 2,056,895 2,123,090 461,458 14,283,536 Accumulated depreciation - (195,713) (350,863) (2,662,692) (1,163,466) (1,159,182) (302,277) (5,834,193)
181. 180 2020 13 ,477,202 (4,792,746) Total Disposals - at book value Depreciation charge Depreciation adjustment on revaluation surplus Transfers / adjustments - at cost / revalued amount Depreciation on transfers / adjustments 16,084 19,278 (3,194) 317,649 - 317,649 - (93,860) (209,994) - (440,860) - (57) (3,084) 3,027 - (6,122) (46,606) - - - - - (379,070) 53 (576) 629 - (6,140) (191,237) 4 3,660 (3,656) - (1,453) (285,116) - - - - (1,563) (69,083) 333,733 336,927 (3,194) - (549,998) (1,181,106) Net book value Rate of depreciation (percentage) - 1,538,879 5% 3,958,886 10% 435,302 33.33% 499,758 20% 893,429 20% 963,908 33.33% 159,181 8,449,343 Closing net book value 1,538,879 3,958,886 435,302 499,758 893,429 963,908 159,181 8,449,343 At December 31, 2020: Cost / Revalued amount 1,538,879 4,154,599 786,165 3,162,450 2,056,895 2,123,090 461,458 14,283,536 Accumulated depreciation - (195,713) (350,863) (2,662,692) (1,163,466) (1,159,182) (302,277) (5,834,193) Net book value 1,660,054 4,246,656 443,270 532,400 882,116 826,158 93,802 8,684,456 Opening net book value 1,660,054 4,246,656 443,270 532,400 882,116 826,158 93,802 8,684,456 For the year ended December 31, 2020: Additions 2,036 - 44,817 346,428 208,637 424,315 136,025 1,162,258 Revaluation surplus - - - - - - - Disposals - at cost / revalued amount (440,860) (111,335) (17,517) - (43,785) (33,545) (45,809) (692,851) Depreciation on disposal - 17,475 11,395 - 37,645 32,092 44,246 142,853 Freehold Building on Furniture Lease Electrical Computer land freehold and hold and office equipments Vehicles land fixtures improvementsequipments Rupees in ‘000’ At January 1, 2020 Cost / Revalued amount 1,660,054 4,246,656 761,949 2,816,022 1,892,619 1,728,660 371,242 Accumulated depreciation - - (318,679) (2,283,622) (1,010,503) (902,502) (277,440)
182. 11 .3.1 Freehold land and buildings on freehold land were revalued on December 31, 2021 by PBA approved independent valuer, on the basis of fair market value. The valuation resulted in surplus of Rs. 1,052,313 thousand and Rs. 1,593,141 thousand in respect of freehold land and buildings on freehold land respectively. Detailed particulars as on December 31, 2021 are as follows: Revalued amount Rupees in ‘000’ Freehold land 2,619,024 Buildings on freehold land 6,145,459 11.3.2 Had the freehold land and buildings on freehold land not been revalued, their carrying amounts would have been as follows: 20212020 Rupees in ‘000’ Freehold land 934,308 906,842 Buildings on freehold land 2,692,785 2,013,342 11.3.3 The gross carrying amount (cost) of fully depreciated assets that are still in use is Rs. 836,325 thousand (2020: Rs. 769,453 thousand). 11.3.4 During the year, no fixed assets were sold to related parties. 20212020 Note Rupees in ‘000’ 12. INTANGIBLE ASSETS Intangible in progress 523,686 67,644 Softwares 12.1 577,326 620,864 1,101,012 688,508 12.1Softwares At January 01 Cost 1,130,853 978,954 Accumulated amortization (509,989) (312,090) Net book value 620,864 666,864 Year ended December 31 Opening net book value 620,864 666,864 Capitalized during the year 164,472 151,899 Amortization charge 29 (208,010) (197,899) Closing net book value 577,326 620,864 At December 31 Cost 1,295,325 1,130,853 Accumulated amortization (717,999) (509,989) Net book value 577,326 620,864 Rate of amortization (percentage) 10-33.33% 10-33.33% 181
183. 12 .1.1 The gross carrying amount (cost) of fully amortized intangible assets that are still in use is Rs. 428,845 thousand (2020: Rs. 113,502 thousand). 13. DEFERRED TAX ASSETS - NET 2021 AtRecognized RecognizedAt January 01 in P&L in OCI December 31 Deductible temporary differences on: - Deficit on revaluation of investments - Right-of-use assets - Provision against advances Rupees in ‘000’ - - 361,644 257,590 10,051,802 647,820 10,413,446 905,410 4,121,318 - 4,121,318 619,234 - 10,699,622 4,121,318 15,440,174 Taxable temporary differences on: - Surplus on revaluation of fixed assets (680,942) - Surplus on revaluation of investments (1,579,987) - Accelerated tax depreciation (266,486) 36,230 - Surplus on revaluation of non banking assets (111,767) 5,860 (61,415) (167,322) (2,639,182) 80,100 814,959 (1,744,123) 7,774,264 985,510 4,936,277 13,696,051 38,010 - (703,613) (1,346,545) 1,579,987 - - (230,256) 2020 AtRecognized RecognizedAt January 01 in P&L in OCI December 31 Rupees in ‘000’ Deductible temporary differences on: - Deficit on revaluation of investments - Right-of-use assets 129,797 231,847 - Provision against advances 8,763,726 1,288,076 8,893,523 1,519,923 - - - - - 361,644 - 10,051,802 - 10,413,446 Taxable temporary differences on: - Surplus on revaluation of fixed assets (717,498) - Surplus on evaluation of investments (1,199,107) - Accelerated tax depreciation (306,240) 39,754 - Surplus on revaluation of non banking assets (102,895) 5,075 (13,947) (111,767) (2,325,740) 80,642 (394,084) (2,639,182) 6,567,783 1,600,565 (394,084) 7,774,264 182 35,813 743 (680,942) - (380,880) (1,579,987) - (266,486)
184. 20212020 Note Rupees in ‘000’ 14. OTHER ASSETS - NET Income / mark-up accrued in local currency 18,791,445 15,302,821 Income / mark-up accrued in foreign currencies 1,013 4,526 Profit paid in advance on pehlay munafa scheme - 539 Advances, deposits, advance rent and other prepayments 828,612 432,004 Advance taxation (payments less provisions) - 3,740 Non-banking assets acquired in satisfaction of claims 14.1 5,479,598 5,866,478 Acceptances 8,337,508 2,821,232 Branch adjustment account - 8,751 Mark to market gain on forward foreign exchange contracts 150,612 20,250 Stock of stationery 90,478 129,902 Suspense account 11,807 7,413 Zakat recoverable from National Investment Trust Limited (NITL) 14.2 36,790 36,790 Unrealized gain on revaluation of foreign bills and trade loans 41,665 41,129 Receivable against fraud and forgeries 445,033 462,656 Unearned income on sale of sukuk on bai-muajjal basis - 336,351 Auto Teller Machine and point of sale receivable 740,953 245,955 Others 722,792 545,141 Less: Provision held against other assets 14.3 35,678,306 (1,914,474) 26,265,678 (2,037,220) 33,763,832 24,228,458 1,453,931 1,236,224 Other assets (net of provision) Surplus on revaluation of non-banking assets acquired in satisfaction of claims 22.2 Other assets - total 35,217,763 25,464,682 14.1 Market value of non-banking assets acquired in satisfaction of claims - net of provision 5,848,593 5,904,147 The carrying and revalued amounts have been determined based on prudence, expected legal enforceability, ease of realization and current market conditions etc. These include assets which are in the process of sale and are stated at their respective sale prices. Latest full scope valuations are carried out by PBA approved independent valuer as on December 31, 2021. 20212020 Note Rupees in ‘000’ 14.1.1 Non-banking assets acquired in satisfaction of claims Opening balance Surplus on revaluation during the year Disposals during the year - net book value 14.1.2 Transfer to fixed assets - net book value Reversal on account of restoration of loan Depreciation charged during the year 29 Impairment reversed during the year Closing balance 5,904,147 275,670 (250,817) (145,360) - (48,666) 113,619 5,848,593 7,392,801 45,122 (616,960) (333,733) (524,160) (58,923) 5,904,147 183
185. 20212020 Rupees in ‘000’ 14.1.2 Gain on disposal of non-banking assets acquired in satisfaction of claims Disposal proceeds 293,024 842,089 Less: - Cost / revalued amount 286,955 636,019 - Depreciation (36,138) (19,059) 250,817 616,960  Gain on sale recognized during the year 42,207 225,129 14.2 This represents zakat deducted on dividends by NITL. The Bank has filed suit against NITL for recovery of the amount. The case was decided in favour of the Bank in 1993 and intra court appeal was filed by the Zakat and Ushr Department against the decision which is still pending. As a matter of prudence, though without prejudice to the Bank’s claim against NITL at the court of law, the claim amount has been fully provided for. 20212020 Note Rupees in ‘000’ 14.3 Provision held against other assets Advances, deposits, advance rent & other prepayments Non banking assets acquired in satisfaction of claims Zakat recoverable from NITL Fraud and forgeries 14.3.2 Others 35,723 1,084,936 36,790 446,760 310,265 35,723 1,198,555 36,790 459,093 307,059 1,914,474 2,037,220 14.3.1 Movement in provision held against other assets Opening balance 2,037,220 1,767,448 Charge for the year Reversals during the year 31 Amount written off 35,367 (147,839) 292,072 (5,308) (112,472) (10,274) 286,764 (16,992) Closing balance 1,914,474 2,037,220 14.3.2 This includes provision amounted to Rs. 3,118 thousand (2020: Nil) maintained against certain closed cases as per approval of the management. 20212020 Rupees in ‘000’ 15. CONTINGENT ASSETS Contingent assets Nil Nil 184
186. 20212020 Note Rupees in ‘000’ 16. BILLS PAYABLE In Pakistan 10,109,459 4,168,641 Outside Pakistan - 10,109,459 4,168,641 17.BORROWINGS Secured Borrowings from SBP under: Export refinance scheme (ERF) 17.1 28,221,440 Long term financing facility (LTFF) 17.2 13,499,088 Finance facility for storage of agricultural produce (FFSAP) 17.3 185,799 Finance facility for renewable energy performance platform (REPP) 17.4 5,347,359 Refinancing facility for payment of salaries and wages 17.5 9,132,079 Combating COVID-19 17.6 1,089,182 Refinancing facility for modernization of small and medium enterprises 17.7 155,628 Finance facility for working capital of small and medium enterprises 17.8 3,000 Finance facility for temporary relief refinance scheme (TERF) 17.9 11,881,311 Finance Facility for women entrepreneurs 17.10 3,589 Repurchase agreement borrowings 17.11 Call borrowings 17.12 Borrowings from Pakistan Mortgage Refinance Company Limited 17.13 69,518,475 - - 1,805,013 22,609,115 11,250,709 69,523 1,859,306 16,242,813 123,005 119,299 52,273,770 37,430,967 64,672,133 462,409 Total secured 71,323,488 154,839,279 Unsecured Overdrawn nostro accounts - 2,136 71,323,488 154,841,415 17.1 These are secured against the Bank’s cash and security balances held with the SBP. Mark-up on these borrowings is payable quarterly at rates ranging from 1.00% to 2.00% per annum (2020: 1.00% to 2.00% per annum) with maturities upto June 27, 2022. 17.2 This amount has been obtained for providing long term finance to customers. The Bank has granted the SBP right to recover outstanding amount from the Bank at date of maturity of finance by directly debiting current account maintained by the Bank with the SBP. Mark-up on these borrowings is payable quarterly at rates ranging from 1.00% to 6.00% per annum (2020: 1.00% to 6.00% per annum) with maturities upto December 13, 2031. 17.3 These represent borrowings under scheme of financing facility for storage of agricultural produce. Mark-up on these borrowings is payable quarterly at rates ranging from 2.00% to 3.50% per annum (2020: 2.00% to 3.50% per annum) with maturities upto June 29, 2028. 185
187. 17 .4 17.5 17.6 17.7 17.8 17.9 These represent borrowings under scheme of financing facility for renewable energy performance platform. Mark-up on these borrowings is payable quarterly at rate of 1.00% to 3.00% per annum (2020: 2.00% to 3.00% per annum) with maturities upto November 02, 2033. These represent borrowings under scheme of financing facility for payment of salaries and wages. Mark-up on these borrowings is payable quarterly at rate of Nil (2020: Nil) with maturities upto April 01, 2023. These represent borrowings under scheme of financing facility for combating COVID-19. Mark-up on these borrowings is payable quarterly at rate of Nil (2020: Nil) with maturities upto November 17, 2026. These represent borrowings under scheme of financing facility for modernization of small and medium enterprises (SMES). Mark-up on these borrowings is payable quarterly at rate of 2.00% per annum (2020: 2.00% per annum) with maturities upto November 11, 2030. These represent borrowings under scheme of financing facility for working capital financing of small and medium enterprises. Mark-up on these borrowings is payable quarterly at rate of 2.00% per annum (2020: Nil) with maturities upto January 06, 2022. These represent borrowings under scheme of temporary relief refinance facility (TERF). Mark-up on these borrowings is payable quarterly at rate of 1.00% to 3.00% per annum (2020: Nil) with maturities upto December 13, 2031. 17.10 These represent borrowings under scheme of financing women entrepreneurs. Mark-up on these borrowings is payable quarterly at rate of Nil (2020: Nil) with maturities upto January 01, 2026. 17.11 These are secured against market treasury bills, carrying mark-up at rate of Nil (2020: 6.25% to 7.05% per annum). The carrying value of market treasury bills given as collateral against these borrowings is Nil (2020: Rs. 37,448,377 thousand). 17.12 These are secured against Pakistan investment bonds (PIBs) and Market treasury bills (MTBs), carrying markup at rate of Nil (2020: 6.25% to 7.15% per annum). The carrying value of PIBs and MTBs given as collateral against these borrowings is Nil (2020: PIBs and MTBs Rs. 35,233,653 thousand and Rs.29,023,807 thousand respectively). 17.13 These are secured against Pakistan investment bonds (PIBs) and hypothecation charge over mortgage loan portfolio, carrying markup at rates ranging from 6.50% to 8.03% per annum (2020: 7.00% to 7.85% per annum) maturing on June 30, 2031. The carrying value of PIBs given as collateral against these borrowings is Rs. 1,768,381 thousand (2020: Rs. 281,055 thousand). 20212020 Rupees in ‘000’ 17.14 Particulars of borrowings with respect to currencies In local currency 71,323,488 154,839,279 In foreign currencies - 2,136 186 71,323,488 154,841,415
188. 18 . DEPOSITS AND OTHER ACCOUNTS 2021 2020 In local In foreign Total In local In foreign Total currency currencies currencycurrencies Rupees in ‘000’ Customers: Current deposits 169,522,753 3,649,150 173,171,903 144,971,825 3,099,131 148,070,956 Savings deposits 459,784,249 3,340,461 463,124,710 388,946,529 2,635,237 391,581,766 Term deposits 320,956,024 7,419,447 328,375,471 265,567,945 3,594,396 269,162,341 Others 16,921,902 - 16,921,902 19,012,007 - 19,012,007 967,184,928 14,409,058 981,593,986 818,498,306 9,328,764 827,827,070 Financial institutions: Current deposits 1,797,032 874,512 2,671,544 2,690,764 821,999 3,512,763 Savings deposits 4,870,165 3,585 4,873,750 2,746,932 7,427 2,754,359 Term deposits 10,841,125 2,446,653 13,287,778 889,875 - 889,875 Others 527,609 - 527,609 83,525 - 83,525 18,035,931 3,324,750 21,360,681 6,411,096 829,426 7,240,522 985,220,859 17,733,808 1,002,954,667 824,909,402 10,158,190 835,067,592 20212020 Rupees in ‘000’ 18.1 Composition of deposits: - Individuals 153,435,431 157,876,351 - Private sector 227,188,625 168,476,448 - Government (federal and provincial) 496,982,326 409,081,183 - Public sector entities 103,987,604 92,393,088 - Banking companies 2,897,620 3,121,762 - Non-banking financial institutions 18,463,061 4,118,760 1,002,954,667 835,067,592 18.2 Deposits eligible to be covered under insurance arrangements of Deposit Protection Corporation amounted to Rs. 318,300,730 thousand (2020: Rs. 276,891,867 thousand). 20212020 Note Rupees in ‘000’ 19. SUBORDINATED DEBTS Privately placed term finance certificates - I 19.1 2,495,000 2,496,000 Privately placed term finance certificates - II 19.2 4,293,980 4,295,700 Advance subscription money - subordinated perpetual term finance certificates 19.3 1,000,000 7,788,980 6,791,700 187
189. 19 .1 Privately placed term finance certificates - I The Bank has issued rated, unsecured and subordinated term finance certificates under section 120 of the Companies Ordinance, 1984, in a set of twenty (20) scrips, corresponding to the redemption dates of the TFC and representing the TFC Holders entitlement to the redemption amount on the each such redemption date; and registered book entry securities in accordance with the CDC regulations, as outlined by SBP under BPRD Circular No. 06 dated August 15, 2013; with each TFC having a face value of PKR 100,000 or multiples thereof. Issue amount: Rupees 2,500,000 thousand Issue date: December 23, 2016 Maturity date: December 22, 2026 Rating: AA- Tenor: 10 Years. Security: Unsecured and subordinated to all other indebtedness of the Bank including deposits. Profit payment & frequency: Profit payable on half yearly basis in arrears on the outstanding principal amount. Profit rate: Floating rate of return at base rate plus 100 bps p.a. (Base rate will be the average rate ‘Ask side of the six month Karachi Inter Bank Offered Rate set at 1 (one business) day prior to the redemption date for the redemption amount payable on the immediately following redemption date). Repayment: The TFC has been structured to redeem 0.02% of the issue amount semi-annually in the first 09 years after the issue and the remaining issue amount in two equal semi-annual installments of 49.82% each, in the 10th year. Call / Put option: Callable after a period of 05 years. However no put option is available to the investors. Lock in clause: Neither profit nor principal may be paid (even at maturity) if such payments would result in a shortfall in the Bank’s Minimum Capital Requirement (MCR) or Capital Adequacy Ratio (CAR) or increase any existing shortfall in MCR or CAR. Loss absorbency clause: May be converted into ordinary shares or written off immediately (either partially or in full) at the discretion of the SBP, upon the occurrence of a point of non-viability (“PONV”) event as defined in the Basel III guidelines, at the market value of the shares on the date of trigger of PONV as declared by the SBP. 19.2 Privately placed term finance certificates - II The Bank has issued rated, unsecured and subordinated term finance certificates under section 66 of the Companies Act, 2017, in a set of twenty (20) scrips, corresponding to the redemption dates of the TFC and representing the TFC Holders entitlement to the redemption amount on the each such redemption date and registered book entry securities in accordance with the CDC regulations, as outlined by SBP under BPRD Circular No. 06 dated August 15, 2013 with each TFC having a face value of PKR 100,000 or multiples thereof. 188
190. Issue amount : Rupees 4,300,000 thousand Issue date: April 23, 2018 Maturity date: April 23, 2028 Rating: AA- Tenor: 10 Years. Security: Unsecured and subordinated to all other indebtedness of the Bank including deposits. Profit payment & frequency: Profit payable on half yearly basis in arrears on the outstanding principal amount. Profit rate: Floating rate of return at base rate plus 125 bps p.a. (Base rate will be the average rate ‘Ask side of the six month Karachi Inter Bank Offered Rate set at 1 (one business) day prior to the redemption date for the redemption amount payable on the immediately following redemption date). Repayment: The TFC has been structured to redeem 0.02% of the issue amount semi-annually in the first 09 years after the issue and the remaining issue amount in two equal semi-annual installments of 49.82% each, in the 10th year. Call / Put option: Callable after a period of 05 years. However no put option is available to the investors. Lock in clause: Neither profit nor principal may be paid (even at maturity) if such payments would result in a shortfall in the Bank’s Minimum Capital Requirement (MCR) or Capital Adequacy Ratio (CAR) or increase any existing shortfall in MCR or CAR. Loss absorbency clause: May be converted into ordinary shares or written off immediately (either partially or in full) at the discretion of the SBP, upon the occurrence of a point of non-viability (“PONV”) event as defined in the Basel III guidelines, at the market value of the shares on the date of trigger of PONV as declared by the SBP. 19.3 Advance subscription money - subordinated perpetual term finance certificates Prior to close of year ended December 31, 2021, the Bank received Rs. 1,000,000 thousand under formal investor agreement from potential investors as advance subscription money against unsecured, subordinated, perpetual and non cumulative term finance certificates in the nature of Additional Tier -I capital. Subordinated to all other debts of the Bank including deposits but superior to equity. The Bank has applied to SBP for grant of formal approval for issue of Additional Tier - I capital for Capital Adequacy requirement as per guidelines set by SBP. The advance subscription money carries mark-up at rate of 6 month KIBOR plus spread of 200 bps per annum. 189
191. 20212020 Note Rupees in ‘000’ 20. OTHER LIABILITIES Mark-up / return / interest payable in local currency 14,222,369 15,775,068 Mark-up / return / interest payable in foreign currency 52,107 63,615 Lease key money 11,991,877 12,025,862 Provision for taxation (provisions less payments) 755,465 Sundry creditors and accrued expenses 1,242,506 1,492,807 Acceptances 8,337,508 2,821,232 Mark-up payable on subordinated debts 90,505 75,781 Unclaimed dividends 2,586 2,588 Branch adjustment account 290,150 Payable to gratuity fund 37.1.3 268,144 261,774 Gratuity payable to key management personnel 5,750 Payable to charity fund 8 Provision against off-balance sheet obligations 20.1 62,183 62,183 Provision for employees compensated absences 37.2.3 133,629 123,506 Taxes / zakat / import fee payable 684,132 526,978 Deferred income on sale of sukuk on bai - muajjal basis - 336,351 Lease liability against right-of-use assets 20.2 9,479,713 7,298,374 Workers welfare fund 983,158 619,843 Inter bank fund transfer payable 544,489 298,024 Others 796,242 531,171 49,942,521 42,315,157 20.1 The above provision has been made against letters of guarantee issued by the Bank. 20.2 Lease liability against right-of-use assets Not later than one year 107,808 58,981 Later than one year and less than five years 1,077,877 1,215,564 Over five years 8,294,028 6,023,829 9,479,713 7,298,374 21. SHARE CAPITAL - NET 21.1 Authorized Capital 2021 2020 20212020 Number of shares Rupees in ‘000’ 5,000,000,0005,000,000,000 Ordinary / Preference shares of Rs. 10 each 50,000,000 50,000,000 The authorized capital of the Bank is fifty thousand million rupees divided into five thousand million ordinary or preference shares of ten rupees each. 21.2 Issued, subscribed and paid up capital 2021 2020 Number of shares 1,607,912,555 1,607,912,555 Ordinary shares of Rs. 10 each paid in cash 526,315,789 526,315,789 Ordinary shares of Rs. 10 each issued at discount 509,464,036 509,464,036 Issued as bonus shares 20212020 Rupees in ‘000’ 16,079,125 16,079,125 5,263,158 5,094,641 5,263,158 5,094,641 2,643,692,380 2,643,692,380 26,436,924 - - Less: Discount on issue of shares (263,158) 2,643,692,380 2,643,692,380 26,173,766 GoPb held 57.47% shares in the Bank as at December 31, 2021 (December 31, 2020: 57.47%). 26,436,924 (263,158) 26,173,766 190
192. 20212020 Note Rupees in ‘000’ 22. (DEFICIT) / SURPLUS ON REVALUATION OF ASSETS - NET OF TAX (Deficit) / surplus on revaluation of: - Available for sale securities 9.1 (10,567,482) 4,514,250 - Property and equipment 22.1 5,137,390 2,577,581 - Non-banking assets acquired in satisfaction of claims 22.2 1,453,931 1,236,224 (3,976,161) Deferred tax on deficit / (surplus) on revaluation of: - Available for sale securities 4,121,318 - Property and equipment 22.1 (1,346,545) - Non-banking assets acquired in satisfaction of claims 22.2 (167,322) 8,328,055 (1,579,987) (680,942) (111,767) 2,607,451 (2,372,696) (1,368,710) 5,955,359 22.1 Surplus on revaluation of property and equipment - net of tax At January 01 2,577,581 2,630,999 Surplus recognized during the year 2,645,454 Surplus on land and building transferred from non banking assets during the year 11,820 63,868 Surplus realized on disposal during the year - (14,963) Transferred to unappropriated profit in respect of incremental depreciation charged during the year - net of deferred tax (59,455) (66,510) Related deferred tax liability on incremental depreciation charged during the year (38,010) (35,813) At December 31 5,137,390 2,577,581 Less: related deferred tax liability on: - revaluation as at January 01 (680,942) (717,498) - revaluation recognized during the year (621,325) - effect of change in deferred tax due to rate change (77,822) - surplus transferred from non banking asset during the year (4,466) (2,080) - surplus realized on disposal during the year - 2,823 - incremental depreciation charged during the year 38,010 35,813 13 (1,346,545) (680,942) 3,790,845 1,896,639 191
193. 20212020 Note Rupees in ‘000’ 22.2 Surplus on revaluation of non-banking assets acquired in satisfaction of claims - net of tax At January 01 1,236,224 1,333,687 Surplus recognized during the year 275,670 45,122 Surplus realized on disposal during the year (31,119) (30,443) Surplus reversed on account of restoration of loan - (33,775) Surplus on land and building transferred to fixed assets during the year (11,820) (63,868) Transferred to unappropriated profit in respect of incremental depreciation charged during the year - net of deferred tax (9,164) (9,424) Related deferred tax liability on incremental depreciation charged during the year (5,860) (5,075) At December 31 1,453,931 1,236,224 Less: related deferred tax liability on: - revaluation as at January 01 (111,767) (102,895) - revaluation recognized during the year (61,729) (18,325) - effect of change in deferred tax due to rate change (12,774) - surplus transferred to fixed assets during the year 4,466 2,080 - surplus realized on disposal during the year 8,622 2,298 - incremental depreciation charged during the year 5,860 5,075 13 (167,322) (111,767) 1,286,609 23. CONTINGENCIES AND COMMITMENTS Guarantees Commitments Other contingent liabilities 23.1 23.2 23.3 80,791,490 388,223,744 8,975 1,124,457 64,847,674 148,893,256 8,975 469,024,209 213,749,905 23.1Guarantees: Financial guarantees Performance guarantees Other guarantees 18,341,471 18,710,766 43,739,253 18,515,042 18,139,861 28,192,771 80,791,490 64,847,674 23.2Commitments: Documentary credits and short-term trade-related transactions - letters of credit 136,560,464 Commitments in respect of: - forward foreign exchange contracts 23.2.1 205,641,893 - forward lending 23.2.2 45,923,548 Commitments for acquisition of: - fixed assets 13,052 - intangible assets 84,787 192 388,223,744 78,976,971 48,807,235 20,393,865 689,875 25,310 148,893,256
194. 20212020 Note Rupees in ‘000’ 23.2.1 Commitments in respect of forward foreign exchange contracts Purchase 105,824,202 24,708,677 Sale 99,817,691 24,098,558 205,641,893 48,807,235 23.2.2 Commitments in respect of forward lending Undrawn formal standby facilities, credit lines and other commitments to lend 23.2.2.1 45,923,548 20,393,865 23.2.2.1 These represent commitments that are irrevocable because they cannot be withdrawn at the discretion of the Bank without the risk of incurring significant penalty or expense. In addition, the Bank makes revocable commitments that do not attract any significant penalty or expense if the facility is unilaterally withdrawn. 20212020 Rupees in ‘000’ 23.3 Other contingent liabilities 8,975 8,975 For the tax year 2007, the Income Tax Department concluded proceedings under section 161/205 and created a default of Rs. 8,975 thousand. The Bank filed appeal before CIR (A), however the same was not allowed. Now, the Bank has filed appeal against the said order of CIR (A) with ATIR. The expected tax liability for the said year amounts to Rs. 8,975 thousand. However, the management of the Bank, as per opinion of its tax consultant, is confident that the decision for the aforementioned tax year will be decided in Bank’s favor. 20212020 Note Rupees in ‘000’ 23.4 Claims against the Bank not acknowledged as debts 23.4.1 54,809,134 54,743,496 23.4.1 The amounts involved in the claims filed against the Bank are yet to be adjudicated by the concerned Courts as the same have been filed as outburst to our recovery suits. Uptill now, in no case, any claim has been adjudicated, determined or decreed by the Courts against the Bank. Moreover, there is no likelihood of decreeing the suits against the Bank because, the claims are frivolous. 20212020 Rupees in ‘000’ 24. MARK-UP / RETURN / INTEREST EARNED a) On loans and advances 35,134,711 38,859,849 b) On investments: Available for sale securities 35,872,000 37,345,707 Held for trading securities 1,367,238 1,018,716 Held to maturity securities 7,477,551 7,389,212 c) On lendings to financial institutions: Securities purchased under resale agreements 993,245 1,065,581 Call lending 182,285 94 Letters of placement 587,000 298,978 d) On balances with banks 37,225 40,990 81,651,255 86,019,127 193
195. 20212020 Note Rupees in ‘000’ 25. MARK-UP / RETURN / INTEREST EXPENSED Deposits 43,955,154 52,483,499 Borrowings: Securities sold under repurchase agreements 744,020 2,651,455 Call borrowings 4,465,203 5,109,314 SBP borrowings 875,124 640,537 Borrowing from Pakistan Mortgage Refinance Company Limited 83,887 9,262 Subordinated debts: Mark-up on subordinated loan from GoPb - 106,644 Mark-up on advance subscription money - subordinated perpetual term finance certificate 738 Mark-up on privately placed term finance certificates 603,573 755,720 Markup on lease liability against right-of-use assets 1,047,705 937,275 51,775,404 62,693,706 26. FEE AND COMMISSION INCOME Branch banking customer fees 572,496 487,905 Consumer finance related fees 359,111 256,197 Card related fees 811,107 618,720 Credit related fees 802,328 642,252 Branchless banking fees 124,342 100,857 Commission on trade 751,623 571,400 Commission on guarantees 421,062 264,015 Commission on cash management 156,165 144,141 Commission on remittances including home remittances 437,494 363,128 Commission on bancassurance 110,158 38,452 Commission on wheat financing 214,120 SMS banking income 343,489 245,074 5,103,495 3,732,141 27. GAIN ON SECURITIES - NET Realized gain on sale of securities - net 27.1 1,764,751 8,464,862 Unrealized gain - held for trading 9.1 21,039 1,630 1,785,790 8,466,492 27.1 Realized gain on sale of securities - net: Federal government 1,213,864 8,069,228 Shares / units 550,887 394,634 Term finance certificates - 1,000 1,764,751 8,464,862 28. OTHER INCOME - NET Rent on property - 43,529 Gain / (loss) on termination of lease liability against right-of-use assets 3,156 (2,635) (Loss) / gain on sale of property and equipment - net (364) 101,461 Gain on sale of non banking assets - net 14.1.2 42,207 225,129 Notice pay on resignations 15,974 14,180 194 60,973 381,664
196. 20212020 Note Rupees in ‘000’ 29. OPERATING EXPENSES Total compensation expense 29.1 10,631,065 8,734,391 Property expense: Rent and taxes 22,210 39,010 Insurance 16,979 18,359 Utilities cost 796,784 663,931 Security 1,148 1,483 Repair and maintenance including janitorial charges 49,021 43,431 Depreciation 523,074 589,064 Depreciation on right-of-use assets 11.2 990,749 891,145 Others - 397 2,399,965 Information technology expenses: Software maintenance 512,905 Hardware maintenance 54,879 Depreciation 347,779 Amortization 12.1 208,010 Network charges 423,700 2,246,820 1,547,273 Other operating expenses: Directors’ fees and allowances 38.2 41,685 Fees and allowances to shariah board 38.3 5,925 Legal and professional charges 221,304 Subscription charges 38,962 Outsourced staff services costs 36.1 437,730 Travelling and conveyance 836,652 NIFT clearing charges 67,957 Depreciation 363,966 Depreciation on non banking assets 14.1.1 48,666 Depreciation on ijarah assets 118,973 Training and development 66,608 Postage and courier charges 158,377 Stationery and printing 408,857 Marketing, advertisement and publicity 649,687 Donations 29.2 - Auditors remuneration 29.3 11,513 Insurance 244,711 Deposit protection fee 443,027 Repair and maintenance 293,584 Entertainment expenses 150,834 Fuel for generator 100,036 Commission and brokerage 274,174 Bank charges 36,362 SMS banking charges 40,608 ATM charges including ATM maintenance charges 273,571 Cash remittance charges 269,805 Branch license fee 27,701 CNIC verification / ECIB charges 203,713 COVID - 19 related expenses 38,493 Miscellaneous expenses 185,189 1,393,010 6,058,670 473,022 82,092 285,116 197,899 354,881 35,200 3,660 109,638 31,080 367,095 560,890 69,078 306,926 58,923 162,883 26,047 220,858 264,909 356,021 10,000 11,068 144,477 351,964 179,597 111,596 85,646 244,136 41,931 48,491 174,061 200,336 16,507 71,311 45,725 195,853 4,505,907 20,636,973 16,880,128 195
197. Total cost for the year included in other operating expenses relating to outsourced activities is Rs . 1,187,522 thousand (2020: Rs. 558,412 thousand). This expense represents payments made to companies incorporated in Pakistan. 20212020 Note Rupees in ‘000’ 29.1 Total compensation expense Managerial remuneration: Fixed 8,760,186 Variable cash bonus / awards etc. 925,553 Provision for gratuity 37.1.7.1 267,397 Provision for compensated absences 37.2.4 12,040 Gratuity expense of key management personnel 42.4 5,750 Contribution to defined contribution plans 299,283 Utilities 343 Medical 271,411 Conveyance 47,844 Liveries 33,090 Scholarship 8,168 7,564,256 465,342 174,489 13,982 13,286 246,497 106 206,795 25,937 17,641 6,060 Grand Total 10,631,065 8,734,391 29.2 This represents donation paid during the year (2020: Akhuwat Corona Imdad Fund Rs. 10,000 thousand). 20212020 Note Rupees in ‘000’ 29.3 Auditors remuneration Audit fee 3,850 3,350 Fee for half year review and other statutory certifications 5,172 5,178 Special certifications 1,391 1,540 Out of pocket expenses 1,100 1,000 11,513 11,068 30. OTHER CHARGES Penalties imposed by SBP 13,408 304,279 31. PROVISIONS AND WRITE OFFS - NET Provision for diminution in value of investments 9.3.1 311,519 508,824 (Reversal) / provision against advances - net 10.4 (1,841,390) 6,066,701 (Reversal) / provision against other assets - net 14.3.1 (112,472) 286,764 Bad debts written off directly 10.5.1 300 Other assets written off directly - 19 (1,642,043) 6,862,308 196
198. 20212020 Note Rupees in ‘000’ 32. TAXATION Current 32.1 7,061,542 6,633,772 Prior years (108,154) 12,463 Deferred (985,510) (1,600,563) 5,967,878 5,045,672 32.1 This includes provision for super tax for the year in accordance with Income Tax Ordinance, 2001. The Government vide Finance Act 2022, has changed the effective tax rate for banking industry from 35% to 39% by enacting super tax at the rate of 4% for indefinite period of time. Accordingly, the effect of change in tax rate has been recognized in these unconsolidated financial statements. 20212020 Rupees in ‘000’ 32.2 Relationship between tax expense and accounting profit Accounting profit before tax for the year 18,408,013 11,989,411 Tax on income @ 35% (2020: 35%) Super tax @ 4% (2020: 4%) 6,442,805 726,630 4,196,294 669,764 Effective tax rate @ 39% (2020: 39%) Tax effect of permanent differences Tax effect of prior year Cumulative tax effect of change in tax rate Others 7,169,435 4,693 (108,154) (1,120,866) 22,770 4,866,058 106,498 12,463 60,653 Tax charge for the year 5,967,878 5,045,672 20212020 33. BASIC EARNINGS PER SHARE Profit after tax for the year (Rs in ‘000’) 12,440,135 6,943,739 Weighted average number of ordinary shares (No.) 2,643,692,380 2,643,692,380 Basic earnings per share (Rs) 4.71 2.63 34. DILUTED EARNINGS PER SHARE There is no dilution effect on basic earnings per share. 20212020 Rupees in ‘000’ 35. CASH AND CASH EQUIVALENTS Cash and balances with treasury banks 6 71,318,743 69,271,804 Balance with other banks 7 8,717,632 2,397,707 Overdrawn nostro accounts 17 - (2,136) 80,036,375 71,667,375 197
199. 198 Subordinated debts Other liabilities Liabilities Equity Unappropriated profit 2021 Reconciliation of movement of liabilities to cash flows arising from financing activities Subordinated debts Rupees in '000' Total Other liabilities Liabilities Total Unappropriated profit 2020 Total Balance as at December 31 Total equity related other changes 7,788,980 - 49,942,521 - 19,510,769 10,051,099 77,242,270 10,051,099 6,791,700 - 42,315,157 - 12,103,362 5,589,046 61,210,219 5,589,046 Balance as at January 01, 6,791,700 42,315,157 12,103,362 61,210,219 8,794,420 41,967,541 8,497,085 59,259,046 Changes from financing cash flows Redemption of Subordinated debts (2,720) - - (2,720) (2,002,720) - - (2,002,720) Advance subscription money - subordinated perpetual term finance certificates 1,000,000 - - 1,000,000 - - - Payment of lease liability against right-of-use-assets - (1,480,786) - (1,480,786) - (1,173,559) - (1,173,559) Dividend paid - - (2,643,692) (2,643,692) - - (1,982,769) (1,982,769) Total changes from financing cash flows 997,280 (1,480,786) (2,643,692) (3,127,198) (2,002,720) (1,173,559) (1,982,769) (5,159,048) Liability related Changes in Other liabilities Cash based - 4,404,626 - 4,404,626 - (334,087) - (334,087) Non cash based - 4,703,524 - 4,703,524 - 1,855,262 - 1,855,262 Total liability related other changes - 9,108,150 - 9,108,150 - 1,521,175 - 1,521,175 35.1
200. 20212020 Number 36 . STAFF STRENGTH Permanent On Bank contract 9,358 1,899 Bank’s own staff strength at the end of the year 11,257 7,930 2,037 9,967 36.1 In addition to the above, 1,155 (2020: 1033) employees of outsourcing services companies were assigned to the Bank as at the end of the year to perform services other than guarding and janitorial services. 37. EMPLOYEE BENEFITS 37.1 Defined benefit plan - gratuity The Bank operates a funded gratuity scheme for all its permanent employees. The benefits under the scheme are payable on retirement / resignation which is equal to one month’s last drawn basic salary for each year of eligible service or part thereof, with effect from January 01, 2008, subject to minimum of five years of service. The Bank makes annual provision in these unconsolidated financial statements for its liabilities on the basis of actuarial valuation. 37.1.1 Number of employees under the scheme The number of employees covered under the following defined benefit scheme are: 20212020 Number - Eligible employees under gratuity scheme 9,358 7,930 37.1.2 Principal actuarial assumptions The most recent valuation was carried out at December 31, 2021 using the “Projected Unit Credit Method”. The mortality rates used for active employees are based on SLIC (2001-05) Mortality Table. The principal assumptions used in the valuation were as follows: 20212020 Per annum Discount rate 11.75% 9.75% Expected rate of return on plan assets 11.75% 9.75% Expected rate of salary increase 10.75% 8.75% Average expected remaining working life (years) 8 8 20212020 Note Rupees in ‘000’ 37.1.3 Reconciliation of payable to defined benefit plan Present value of obligations 37.1.4 1,918,269 1,590,008 Fair value of plan assets 37.1.5 (1,669,712) (1,343,925) Benefits payable 19,587 15,691 Payable to defined benefit plan 268,144 261,774 199
201. 20212020 Note Rupees in ‘000’ 37.1.4 Movement in present value of defined benefit obligations Obligations at the beginning of the year 1,590,008 1,284,100 Current service cost 256,355 164,580 Interest cost 152,231 138,435 Benefits paid during the year (57,339) (51,196) Re-measurement (gain) / loss (22,986) 54,089 Obligations at the end of the year 1,918,269 1,590,008 37.1.5 Movement in fair value of plan assets Fair value at the beginning of the year 1,343,925 1,088,236 Interest income on plan assets 141,189 128,526 Contribution by the Bank during the year 261,774 211,783 Benefits paid during the year (53,443) (51,424) Return on plan assets excluding interest income (23,733) (33,196) Fair value at the end of the year 1,669,712 1,343,925 37.1.6 Movement in payable under defined benefit scheme Opening balance 261,774 211,783 Charge for the year 37.1.7.1 267,397 174,489 Contribution by the Bank during the year (261,774) (211,783) Re-measurement loss recognized in other comprehensive income during the year 37.1.7.2 747 87,285 Closing balance 268,144 261,774 37.1.7 Charge for defined benefit plans 37.1.7.1 Cost recognized in profit and loss Current service cost 256,355 164,580 Net interest on defined benefit plan 11,042 9,909 267,397 174,489 37.1.7.2 Re-measurements recognized in other comprehensive income during the year (Gain) / loss on obligation experience adjustment (22,986) 54,089 Return on plan assets over interest income 23,733 33,196 Total re-measurement loss recognized in other comprehensive income 747 87,285 37.1.8 Components of plan assets Cash and cash equivalents - net 133,509 1,036,625 Government Securities 1,209,200 Shares / units 327,003 307,300 200 1,669,712 1,343,925
202. These assets are mostly contained in the form of cash and cash equivalents so there is no significant risk associated with it . However, investments in shares/ units may be adversely affected by movement in equity and interest rate markets. 37.1.9 Sensitivity analysis Sensitivity analysis has been performed by varying one assumption keeping all other assumptions constant and calculating the impact on the present value of the defined benefit obligations. The increase / (decrease) in the present value of defined benefit obligations as a result of change in discount rate and salary growth is summarized below: 20212020 Rupees in ‘000’ 1% increase in discount rate 1,789,226 1,472,296 1% decrease in discount rate 2,056,664 1,724,426 1 % increase in expected rate of salary increase 2,056,619 1,724,426 1 % decrease in expected rate of salary increase 1,789,204 1,470,252 37.1.10 Expected contributions to be paid to the fund in the next financial year 268,144 261,774 37.1.11 Expected charge for the next financial year 340,032 37.1.12 Maturity profile The weighted average duration of the obligation (in years) 7 206,947 7 37.1.13 Funding policy There is no statutory minimum funding requirements. However, contributions to the scheme are made on the basis of actuarial valuations carried in each year. The Bank’s gratuity scheme is mainly subject to following risks: Asset volatility The majority of the gratuity fund assets are invested in cash or cashequivalent. Therefore, there is insignificant investment risk to the scheme due to fluctuation in interest rate environment or changes in bond yields. Also, there is no liquidity investment risk to the scheme. However, investments in shares/ units may be adversely affected by movement in equity and interest rate markets. Inflation risk Higher than expected growth in inflation may result in higher than assumed salary increases which will lead to increase in liability. However, assets of the scheme may not be at significant risk due to changes in inflation rate. Life expectancy / Withdrawal rate Actuarial valuation assumes heavy withdrawals for younger ages but moderate withdrawal rates are used for older ages. Significant withdrawals of employees having reasonable years of service would cause large benefit payments. Consequently, deficit position of the scheme would deteriorate further. However, availability of cash for benefit payments will not be an issue due to the liquid nature of assets of the Gratuity Fund. 201
203. 37 .2 Defined benefit plan - compensated absences The Bank makes annual provision in these unconsolidated financial statements for its liabilities towards vested compensated absences accumulated by its employees on the basis of actuarial valuation. The employees of the Bank are entitled to take leave as Leave Preparatory to Retirement (LPR) immediately before retirement. These leaves are subject to retirees’ un-utilized privilege leave balance with an upper limit of 180 days. Alternatively, the retiree may receive a lump-sum cash amount equal to 180 days basic salary at the time of retirement in lieu of LPR of 180 days. Privilege leave accrues at the rate of 30 days per year. Moreover, any unutilized privilege leaves over 180 days are ignored. 37.2.1 Principal actuarial assumptions The most recent valuation was carried out at December 31, 2021. The principal assumptions used in the valuation were as follows: 20212020 Per annum Discount rate (%) 11.75% 9.75% Expected rate of eligible salary increase in future years (%) 10.75% 8.75% Average number of leaves accumulated per annum by the employees (days) 18 18 20212020 Rupees in ‘000’ 37.2.2 Present value of defined benefit obligation 133,629 123,506 37.2.3 Movement in payable to defined benefit plan: Opening balance 123,506 111,612 Charge for the year 12,040 13,982 Benefit paid (1,917) (2,088) Closing balance 133,629 123,506 37.2.4 Charge for defined benefit plan: Current service cost 4,116 3,888 Interest cost 11,948 12,162 Actuarial gain recognized (4,024) (2,068) 12,040 13,982 37.2.5 Sensitivity analysis: Sensitivity analysis has been performed by varying one assumption keeping all other assumptions constant and calculating the impact on the present value of the defined benefit plan. The increase / (decrease) in the present value of defined benefit plan as a result of change in discount rate and salary growth is summarized below: 20212020 Rupees in ‘000’ Increase in discount rate by 1% 122,180 111,827 Decrease in discount rate by 1% 146,146 137,205 Increase in expected future increment in salary by 1% 146,149 137,205 Decrease in expected future increment in salary by 1% 122,182 111,626 202
204. 37 .2.6 Reconciliation of net liability recognized for compensated absences for the five years is as follows: 2021 202020192018 2017 Rupees in ‘000’ Opening net liability 123,506 111,612 102,294 93,523 91,181 Net charge for the year 10,123 11,894 9,318 8,771 2,342 133,629 123,506 111,612 102,294 93,523 Actuarial gain / (loss) on obligation 4,024 2,068 (1,175) 886 1,617 37.3 Defined contribution plan 38. COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL 38.1 Total compensation expense The Bank operates and approved provident fund scheme for all its permanent employees. Equal monthly contributions are made by the Bank and employees at the rate of 8.33% of basic salary. 2021 Chairman Members shariah board President / CEO Key management personnel Note Other material risk takers / controllers Rupees in '000' Fees and allowances etc. 38.3 - 5,925 - - Managerial remuneration Fixed - 1,502 92,575 236,419 Variable cash bonus / awards - 116 35,000 32,504 Charge for defined benefit plan - - 5,750 6,629 Contribution to defined contribution plan - - - 8,385 Servant salary - - 720 2,874 Club membership - - 265 1,271 Fuel - 389 - 10,622 Others - - 116 210 Total - 7,932 134,426 298,914 Number of persons - 6 1 15 227,908 36,875 8,959 7,874 3,529 2,089 14,999 432 302,665 32 203
205. 2020 Chairman Members shariah board President / CEO Key management personnel Other material risk takers / controllers Rupees in '000' Fees and allowances etc. 87 3,660 - - Managerial remuneration Fixed - 983 76,323 180,033 Variable cash bonus / awards - 44 19,325 11,199 Charge for defined benefit plan - - 13,286 3,642 Contribution to defined contribution plan - - 79 4,171 Servant salary - - 510 1,924 Furnishing allowance - - 750 1,500 Club membership - - 46 3,650 Fuel - 307 - 6,231 Others - - 21 1,103 Total 87 4,994 110,340 213,453 Number of persons 0 3 3 180,710 16,842 6,529 7,402 1,940 565 10,303 224,291 23 30 38.1.1 In terms of section 10 (2) of the Bank of Punjab Act, 1989, the Chairman of the Board shall be nominated by the GoPb amongst the Directors. However, the GoPb has not concluded nomination of the Chairman of the Board of Directors during the year ended December 31, 2021 and the same is in process. 38.1.2 In terms of service agreement of President / CEO, certain benefits including provision of Bank maintained cars, medical insurance cover etc. are also available to him. Further, certain executives are also entitled for Bank maintained car along with driver and mobile phone as per Bank’s policy. 38.1.3 Total compensation paid during the year ended December 31, 2020 to President / CEO includes amount paid to Acting Presidents amounting to Rs. 49,143 thousand from January 01, 2020 to April 15, 2020. 38.1.4 Deferred cash bonus for key management personnel and other material risk takers / controllers stood at December 31, 2021 is Rs. 22,182 thousand (2020: Nil) 38.2 Remuneration paid to directors for participation in board and committee meetings 2021 Rupees in ‘000’ For Board Committees Board Meetings Name of Director Strategy, Islamic & Priority Sector Finance Committee Dr. Muhammad Amjad Saqib Khawaja Farooq Saeed Iftikhar Ali Sahoo Mohammad Jehanzeb Khan Muhammad Abdullah Khan Sumbal Saeed Anwar Shaharyar Ahmad Syed Ghazanfar Abbas Jilani 2,044 2,044 994 2,043 375 2,044 1,125 2,044 806 431 375 188 188 806 375 431 Total 12,713 3,600 Board Audit Committee - - 805 1,613 - 1,613 750 1,613 6,394 Human Resource, Compensation & Nomination Committee Information Technology & Communications Committee 1,744 2,104 750 1,744 374 431 - 1,744 8,891 - 806 188 806 188 806 - 187 2,981 Risk Management, Compliance & NPL Review Committee 1,181 1,181 188 - - - 750 1,181 4,481 Monitoring Committee of the Board on Forensic Investigation of Sugar Industry NPLs - 938 - - - 937 750 - 2,625 204 Total amount paid 5,775 7,504 3,300 6,394 1,125 6,637 3,750 7,200 41,685
206. 2020 Rupees in ‘000’ For Board Committees Board Meetings Name of Director Strategy, Islamic & Priority Sector Finance Committee Board Audit Committee Human Resource, Compensation & Nomination Committee Information Technology & Communications Committee Risk Management, Compliance & NPL Review Committee Monitoring Committee of the Board on Forensic Investigation of Sugar Industry NPLs Total amount paid Dr. Pervaiz Tahir - ex chairman 87 - - - - - - 87 Mohammad Jehanzeb Khan 2,600 - 375 1,725 750 513 - 5,963 Abdullah Khan Sumbal 2,600 375 375 1,125 188 513 - 5,176 Syed Ghazanfar Abbas Jilani 1,125 - 375 563 - 375 - 2,438 Khawaja Farooq Saeed 2,600 187 837 1,725 562 375 - 6,286 Saeed Anwar 2,600 375 1,212 - 750 513 - 5,450 Dr. Muhammad Amjad Saqib 2,600 563 - 1,725 375 700 - 5,963 Shaharyar Ahmad 2,337 375 563 - - 562 - 3,837 Total 16,549 1,875 3,737 6,863 2,625 3,551 - 35,200 38.3 Remuneration paid to Shariah board members 2021 2020 Resident Non- Total ResidentNon- Total Chairman member resident amount Chairmanmember resident amount memberpaid memberpaiod Rupees in ‘000’ Meeting fee and allowances 2,540 - 3,385 5,925 1,890 - 1,770 3,660 Salary & festival bonus paid to resident member through Bank’s payroll - 2,007 - 2,007 - 1,334 - 1,334 Total amount 2,540 2,007 3,385 7,932 1,890 1,334 1,770 4,994 Number of persons 1 2 3 1 1 1 39. 39.1 FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of the assets and liabilities 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. The Bank categorizes fair value measurements within the following fair value hierarchy. The fair value of quoted securities other than those classified as held to maturity, is based on quoted market price. Quoted securities classified as held to maturity are carried at cost. The fair value of unquoted equity securities, other than investments in subsidiaries, is determined on the basis of the break-up value of these investments as per their latest available audited unconsolidated financial statements. The fair value of unquoted debt securities, fixed term loans, other assets, other liabilities, fixed term deposits and borrowings cannot be calculated with sufficient reliability due to the absence of a current and active market for these assets and liabilities and reliable data regarding market rates for similar instruments. In the opinion of the management, the fair value of the remaining financial assets and liabilities are not significantly different from their carrying values since these are either short-term in nature or, in the case of customer loans and deposits, are frequently reprised. The Bank measures fair vale using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: 205
207. Level 1 : Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Fair value measurement using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly. (i.e. derived from prices). Level 3: Fair value measurements using input for the asset or liability that are not based on observable market data (i.e. unobservable inputs). The table below analyses financial instruments measured at the end of the reporting period by the level in the fair value hierarchy into which the fair value measurement is categorised: 2021 Carrying Fair value value Level 1 Level 2 Level 3 Total Rupees in ‘000’ On balance sheet financial instruments Financial assets measured at fair value : Government securities 448,913,878 - 448,913,878 - 448,913,878 Shares 6,859,385 6,840,419 - 18,966 6,859,385 Non-Government debt securities 10,106,626 - 10,106,626 - 10,106,626 Foreign securities 11,957 - - 11,957 11,957 Subsidiary company - - - - Financial assets disclosed but not measured at fair value : Government securities 61,299,171 - 63,715,206 - 63,715,206 Non Financial assets measured at fair value : Property and equipment (land & building) 8,764,483 - 8,764,483 - 8,764,483 Non banking assets acquired in satisfaction of claims 5,848,593 - 5,848,593 - 5,848,593 Financial liabilities measured at fair value: Payable to gratuity fund 268,144 - 268,144 - 268,144 Provision for employees compensated absences 133,629 - 133,629 - 133,629 Off balance sheet financial instruments: Forward purchase of foreign exchange contracts 107,277,276 - 107,277,276 - 107,277,276 Forward sale of foreign exchange contracts 101,120,153 - 101,120,153 - 101,120,153 2020 Carrying Fair value value Level 1 Level 2 Level 3 Total Rupees in ‘000’ On balance sheet financial instruments Financial assets measured at fair value : Government securities 488,823,420 - 488,823,420 - 488,823,420 Shares 3,637,256 3,621,674 - 15,582 3,637,256 Non-Government debt securities 10,139,836 - 10,139,836 - 10,139,836 Foreign securities 4,019 - - 4,019 4,019 Subsidiary company - - - - Financial assets disclosed but not measured at fair value : Government securities 60,483,391 - 69,082,534 - 69,082,534 Non Financial assets measured at fair value : Operating fixed assets (land & building) 5,497,765 - 5,497,765 - 5,497,765 Non banking assets acquired in satisfaction of claims 5,904,147 - 5,904,147 - 5,904,147 Financial liabilities measured at fair value: Payable to gratuity fund 261,774 - 261,774 - 261,774 Provision for employees compensated absences 123,506 - 123,506 - 123,506 Off balance sheet financial instruments: Forward purchase of foreign exchange contracts 24,343,173 - 24,343,173 - 24,343,173 Forward sale of foreign exchange contracts 23,712,804 - 23,712,804 - 23,712,804 206
208. 207 Segment details with respect to busine ss activities 40 .1 1,865,043 (747,074) 8,673,233 311,519 609,312 770,058 (12,818,035) (125,742) Total liabilities 356,138,661 952,809,584 87,512,609 590,048,455 83,062,176 16,149,576 2,085,721,061 Contingencies & commitments 255,411,391 - 416,094 205,641,893 7,448,017 106,814 469,024,209 Total equity & liabilities 2,140,553,937 Equity 54,832,876 Total assets 356,138,661 952,809,584 87,512,609 590,048,455 87,614,794 66,429,834 2,140,553,937 Borrowings 68,607,066 - 1,805,013 - 911,409 - 71,323,488 Subordinated debts - - - - - 7,788,980 7,788,980 Deposits & other accounts - 923,748,571 - - 79,206,096 - 1,002,954,667 Net inter segment borrowing 279,443,786 - 74,282,001 589,876,159 - - 943,601,946 Others 8,087,809 29,061,013 11,425,595 172,296 2,944,671 8,360,596 60,051,980 Profit / (loss) before tax 7,910,552 12,376,669 2,612,117 8,361,714 (160,746) (12,692,293) 18,408,013 Balance sheet Cash & bank balances - 24,886,324 - 41,562,509 13,587,542 - 80,036,375 Investments - net 4,244,704 - - 510,848,259 16,590,093 - 531,683,056 Net inter segment lending - 923,007,639 - - 442,430 20,151,877 943,601,946 Lendings to financial institutions - - - 26,480,388 4,500,000 - 30,980,388 Advances - performing 335,615,453 - 86,053,619 - 47,197,055 10,209,769 479,075,896 - non-performing - net 2,675,142 - 818,292 - 1,835,989 57 5,329,480 Others 13,603,362 4,915,621 640,698 11,157,299 3,461,685 36,068,131 69,846,796 12,380,246 3,577 16,765,970 (1,642,043) 6,056,171 (1,854,381) Profit before provisions Provisions 72,789,100 89,555,070 81,651,255 7,903,815 Total income 7,441,857 64,013,924 3,500,452 14,221,086 4,733,138 (4,355,387) Segment total expenses 1,385,686 51,633,678 1,635,409 5,547,853 4,123,826 8,462,648 Rupees in ‘000’ Profit & loss Net mark-up / return / profit 24,904,888 - 7,235,506 44,448,997 4,621,515 440,349 Inter segment revenue - net (19,147,791) 61,725,743 (4,367,170) (33,250,325) (65,951) (4,894,506) Non mark-up / return / interest income 1,684,760 2,288,181 632,116 3,022,414 177,574 98,770 2021 Corporate Consumer Retail and Treasury Islamic Others Total and investment and digital priority including banking banking sector lending Head Office SEGMENT INFORMATION 40.
209. 208 1 ,729,146 247,252 12,105,965 508,825 970,578 414,325 (9,340,104) 8,776 Total liabilities 307,581,660 793,557,870 54,994,918 585,404,077 65,007,164 14,059,228 1,820,604,917 - 639,748 48,807,235 3,269,939 724,160 213,749,905 Contingencies & commitments 160,308,823 Total equity & liabilities 1,872,866,428 Equity 52,261,511 Total assets 307,581,660 793,557,870 54,994,918 585,404,077 69,121,612 62,206,291 1,872,866,428 Borrowings 51,665,928 - 462,409 102,105,236 607,842 - 154,841,415 Subordinated debts - - - - - 6,791,700 6,791,700 Deposits & other accounts - 773,528,003 - - 61,539,589 - 835,067,592 Net inter segment borrowing 253,101,917 - 42,481,624 481,836,871 - - 777,420,412 Others 2,813,815 20,029,867 12,050,885 1,461,970 2,859,733 7,267,528 46,483,798 Profit / (loss) before tax 441,945 7,261,059 1,481,894 11,597,140 556,253 (9,348,880) 11,989,411 Balance sheet Cash & bank balances - 43,841,350 - 22,168,221 5,659,940 - 71,669,511 Investments - net 2,320,445 - - 548,471,575 16,996,603 - 567,788,623 Net inter segment lending - 743,701,158 - - 951,270 32,767,984 777,420,412 Lendings to financial institutions - - - 7,454,867 8,632,000 - 16,086,867 Advances - performing 290,749,427 - 53,317,428 - 30,983,039 6,710,329 381,760,223 - non-performing - net 6,229,401 - 930,497 - 2,218,148 22,343 9,400,389 Others 8,282,387 6,015,362 746,993 7,309,414 3,680,612 22,705,635 48,740,403 7,545,661 284,602 18,851,719 6,862,308 5,840,473 5,398,528 80,212,995 Profit before provisions Provisions 99,064,714 86,019,127 13,045,587 Total income 6,812,262 66,126,197 2,626,966 20,210,742 5,116,293 (1,827,746) Segment total expenses 971,789 58,580,536 897,820 8,104,777 4,145,715 7,512,358 Rupees in ‘000’ Profit & loss Net mark-up / return / profit 29,145,073 - 6,346,075 45,088,416 5,057,562 382,001 Inter segment revenue - net (22,931,710) 64,402,623 (3,982,350) (34,842,275) (59,260) (2,587,028) Non mark-up / return / interest income 598,899 1,723,574 263,241 9,964,601 117,991 377,281 2020 Corporate Consumer Retail and Treasury Islamic Others Total and investment and digital priority including banking banking sector lending Head Office
210. 209 Rupees in ‘000 Other liabilities - markup payable - - 20 - 11,087 - - - - - Lendings to financial institutions: Opening balance - - 1,000,000 - - - - 400,000 - Addition during the year - - 4,600,000 - - - - 4,000,000 - Repaid during the year - - 4,000,000 - - - - 3,400,000 - Closing balance - - 1,600,000 - - - - 1,000,000 - Investments (gross) - - 164,945 - - - - 164,945 - Provision for diminution in value of investments - - 164,945 - - - - 164,945 - Advances: Opening balance - 161,708 686,633 - 595,721 - 311,603 1,258,526 - Addition during the year - 153,404 4,211,653 - 2,963,637 - 51,412 3,904,573 - 5,541,638 Repaid during the year - 46,096 4,765,855 - 2,241,339 - 201,307 4,476,466 - 4,945,917 Closing balance - 269,016 132,431 - 1,318,019 - 161,708 686,633 - 595,721 Provision held against advances - - - - - - - 59,757 - Contingencies (non fund exposure) - - 2,000 - 112,072 - - 7,000 - 419,488 Other assets - advance deposits and prepayments - 17,547 100,000 - - - - - - Other assets - markup receivable - 13,821 21,649 - 14,151 - 11,049 36,846 - 14,491 Right-of-use assets - - - - 62,202 - - - - 66,055 Lease liability against right-of-use assets - - - - 22,900 - - - - 20,030 Deposits and other accounts: Opening balance 598 24,363 11,287 3,071,616 33,878 61 13,746 1,588 2,564,910 876 Received during the year 16,522 532,244 4,627,102 4,247,275 61,507,975 4,353 457,854 4,158,702 1,152,506 122,199 Withdrawn during the year 16,218 529,812 4,602,002 6,944,119 59,982,854 3,816 447,237 4,149,003 645,800 89,197 Closing balance 902 26,795 36,387 374,772 1,558,999 598 24,363 11,287 3,071,616 33,878 2021 2020 Subsidiary Employee Other Key Subsidiary Employee Other company funds related Directors management company funds related and parties personneland parties managed modarabamanaged Rupees in ‘000 Key management personnel modaraba Related parties comprise subsidiary, key management personnel and entities in which key management personnel are office holders / members. The Bank in the normal course of business carries out transactions with various related parties on arm’s length basis. Amounts due from and due to related parties are shown under receivables and payables. Remuneration of key management personnel, shariah board and fixed assets sold to related parties are disclosed in Note 38.1, 38.2 & Note 11.3.4 respectively. In addition key management personnel are paid terminal and short-term terminal benefits. RELATED PARTY TRANSACTIONS The Bank is not engaged in any significant trust activities. However, the Bank arranges and maintain government securities on behalf of its customers. TRUST ACTIVITIES Directors 41. 42.
211. 2021 2020 Key Subsidiary Employee Other Key Subsidiary Employee Other Directors management company funds related Directors management company funds related personnel and managed parties personnel and managed parties modaraba modaraba Rupees in ‘000 Income: Mark-up / return / interest earned - 10,317 115,184 - 34,743 - 13,880 162,543 - 24,297 Non markup income - - - - 8,367 - - - - 580 Expense: Mark-up / return / interest paid 24 555 225 88,308 51,689 26 1,314 - 245,354 314 Mark-up on lease liability against right-of-use assets - - - - 2,870 - - - - 4,240 Depreciation on right-of-use assets - - - - 3,853 - - - - 4,614 Non markup expense - - 5,218 - - - - 1,543 - Provisions: (Reversal) / charge of provision - advances - - (59,757) - - - - 3,456 - 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 year are not reflected as part of the closing balance. The same are accounted for through movement presented above. 42.2 The GoPb holds controlling interest (57.47% shareholding) in the Bank and therefore entities which are owned and / or controlled by the GoPb, or where the GoPb may exercise significant influence, are related parties of the Bank. The Bank in the ordinary course of business enters into transaction with Government- related entities. Such transactions include lending to, deposits from and provision of other banking services to Government-related entities. As at Statement of Financial Position date the loans and advances, deposits, acceptances and contingencies relating to GoPb and its related entities amounted to Rs. 57,299,296 thousand (December 31, 2020: Rs. 37,126,458 thousand), Rs. 484,197,126 thousand (December 31, 2020: Rs. 421,019,222 thousand) Rs. 71,929 thousand (December 31, 2020: Rs. 71,929 thousand) and Rs. 26,097,691 thousand (December 31, 2020: Rs. 27,070,415 thousand) respectively. Markup / interest earned and markup receivable from these loans & advances amounted to Rs.4,142,460 thousand and 1,078,401 thousand respectively. Markup / interest expensed and markup payable on these deposits amounted to Rs.27,220,372 thousand and Rs.9,079,554 thousand respectively. Income on contingencies is Rs.101,798 thousand. 42.3 The Bank made contribution of Rs. 299,283 thousand (2020: Rs. 246,497 thousand) to defined contribution plan during the year. 42.4 During the year, the Bank has recorded Rs. 5,750 thousand as gratuity expense to president (2020: Rs 13,286 thousand to ex-Acting President / DCEO). 42.5 First Punjab Modaraba and Punjab Modaraba Services (Pvt) Limited are using The Bank of Punjab premises free of cost. 42.6 Advances to employees as at December 31, 2021, other than key management personnel, amounted to Rs. 11,219,294 thousand (2020: Rs. 7,375,234 thousand) with markup receivable of Rs. 678,455 thousand (2020: Rs. 519,593 thousand) and markup income of Rs.419,855 thousand (2020: Rs. 351,368 thousand). 210
212. 20212020 Note Rupees in ‘000’ 43. CAPITAL ADEQUACY, LEVERAGE RATIO & LIQUIDITY REQUIREMENTS Minimum Capital Requirement (MCR): Paid-up capital (net of losses) 28,388,806 28,388,806 Capital Adequacy Ratio (CAR): Eligible Common Equity Tier 1 (CET 1) Capital 43,993,744 41,936,560 Advance subscription money - Additional Tier 1 (ADT 1) Capital 19.3 - Total Eligible Tier 1 Capital Eligible Tier 2 Capital 43,993,744 9,338,940 41,936,560 15,270,354 Total Eligible Capital (Tier 1 + Tier 2) 53,332,684 57,206,914 Risk Weighted Assets (RWAs): Credit Risk 352,126,107 289,144,564 Market Risk 18,193,098 6,871,393 Operational Risk 64,190,824 56,498,084 Total 434,510,029 352,514,041 Common Equity Tier 1 Capital Adequacy ratio 10.12% 11.90% Tier 1 CAR (%) 10.12% 11.90% Total CAR (%) 12.27% 16.23% As explained in note 19.3, had the advance subscription money against future issuance of non-cumulative perpetual term finance certificates been accounted for as eligible capital, the capital adequacy, leverage and net stable funding ratio would have been 12.50%, 3.08% and 124.00%, respectively. 43.1 Capital adequacy framework The Basel Framework for a capital adequacy is applicable to the Bank both at the consolidated level (including the subsidiary) and on a stand alone basis. The Bank’s policy is to maintain strong capital base so as to maintain, investor, creditor and market confidence and to sustain future business developments. The adequacy of the Bank’s capital is monitored using, among other measures, the rules and ratios established by the SBP. The ratio compares the amount of eligible capital with the total of risk-weighted assets. The Bank monitors and reports its capital ratios under SBP rules, which ultimately determine the regulatory capital required to be maintained by Banks and DFIs. In addition, the SBP requires that the paid up capital of locally incorporated banks should be raised to Rs. 10 billion by December 31, 2013 in a phased manner. The paid-up capital requirement (net of losses) as at December 31, 2021 is Rs.10.0 billion. The SBP requires that banks doing business in Pakistan should maintain regulatory capital for credit, market, and operational risks, the amount of which should at least be equal to 10% plus capital conservation buffer of 2.50% of the risk weighted assets of the Bank. However, in order to dampen the effects of COVID - 19, SBP vide Circular No 12 of 2020 dated March 26, 2020, provided relaxation to maintain CCB of 1.5% from March, 2020 till further instructions. Accordingly, capital adequacy ratio requirement stood at 11.50% and the Banks’s total capital adequacy ratio as at December 31, 2021 under Basel III stood at 12.27% The SBP’s regulatory capital as managed by the Bank is analyzed into following tiers: Tier I capital (CET1), which comprises of highest quality capital element and include fully paid up capital, share premium, reserve for bonus shares, general reserves and accumulated losses. 211
213. Additional Tier I capital (ADT-I), which includes instrument meeting the prescribed SBP criteria e.g. perpetual non-cumulative preference shares and its premium after all regulatory adjustments applicable on ADT-I. The deductions from Tier 1 capital include mainly: i) Book value of goodwill / intangibles; ii) Shortfall in provision iii) Deficit on revaluation of available for sale investments - AFS & fixed assets; iv) Defined benefit pension fund asset v) Investment in own shares vi) Reciprocal cross holdings in equity capital instruments of other banks, financial institutions and insurance companies; vii) Investment in mutual funds above a prescribed ceiling viii)Threshold deductions applicable from 2014 on deferred tax assets and certain investments; ix) 10% of investments in majority capital instruments or other financial subsidiaries not consolidated in the statement of financial position during transition phase Tier II capital, which includes subordinated debt / instruments and its premium, general reserve for loan losses (up to a maximum of 1.25% of CRWA), net of tax revaluation reserves, exchange translation reserves after all regulatory adjustments applicable on Tier-II. The deductions from Tier 2 include mainly i) Reciprocal cross holdings in other capital instruments of other banks, financial institution and insurance companies; ii) 10% of investments in majority capital instruments or other financial subsidiaries not consolidated in the statement of financial position, during transition phase. The Bank calculates capital requirement as per regulatory framework, using the following approaches: Credit risk Standardized Approach Market risk Standardized Approach Operational risk Basic Indicator Approach Basel-III Framework enables a more risk-sensitive regulatory capital calculation to promote long term viability of the Bank. 20212020 Rupees in ‘000’ 43.2 Leverage Ratio (LR): Eligible Tier-1 Capital 43,993,744 41,936,560 Total Exposures 1,462,811,386 1,307,635,296 LR (%) 3.01% 3.21% 43.3 Liquidity Coverage Ratio (LCR): Total High Quality Liquid Assets 566,498,287 538,917,589 Total Net Cash Outflow 413,944,607 386,811,819 LCR (%) 136.85% 139.32% Net Stable Funding Ratio (NSFR): Total Available Stable Funding 667,827,072 600,034,473 Total Required Stable Funding 539,376,598 471,758,220 NSFR (%) 123.81% 212 127.19%
214. 43 .4 The full disclosures on the capital adequacy, leverage ratio and liquidity requirements as per SBP instructions issued from time to time are available at http://bop.com.pk. 44. 44.1 RISK MANAGEMENT The Bank has established market, credit, liquidity and operational risk appetite under the supervision of Board of Directors, where the Bank has already implemented new core business system and web based obligor risk rating system. The Bank has implemented a system of reporting risks and exceptions on various frequencies to business groups, Asset and Liabilities Committee, Investment Committee, Board Risk Management Committee and Board of Directors. Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge its obligations and cause the other party to incur a financial loss. The Bank manages its exposure to credit risk by pursuing credit policy approved by the Board of Directors and undertaking all lending activities in accordance with standard practices and procedures as laid down in the Credit Policy Manual. The Bank’s credit process currently entails assessment of credit worthiness of potential customers, pre-sanction evaluation of credit proposal, adequacy and quality checks over collateral and examination of charge documents before disbursements. The Bank will also continue to keep its focus on expansion through diversified exposure. Further, to strengthen the portfolio and as a matter of prudence, adequate provisions against non-performing advances are accounted for in accordance with the requirements of the Prudential Regulations issued by the SBP. The Bank’s risk management involves the identification, measurement, monitoring, mitigation and controlling of risks to ensure that following primary objectives are adhered: a. Individuals who take or manage risks clearly understand it in the entire credit value chain. b. The Bank’s risk exposure is within the risk appetite limits duly defined by the regulator or established by Board of Directors. c. Risk taking decisions are in line with business strategy and objectives set by the management. d. Business decisions optimize the risk-reward trade-off. e. Risk taking decisions are explicit and clear. f. Sufficient capital as a buffer is available to take risk. The risk management function of the Bank is regularly conducting assessments of Bank’s credit portfolio to identify borrowers most likely to get affected due to changes in the business and economic environment. During the year 2020, the Bank further strengthened its credit review procedures in light of COVID-19 pandemic situation and a buffer was created against unforeseen loan losses in form of general provision to mitigate credit risk. During the year 2021 following post COVID-19 economic recovery and objective classification of certain accounts, the management now considers it appropriate to maintain general provision to an extent of Rs. 2,500,000 thousand to mitigate any further adverse impact on equity, performance and regulatory compliance. Accordingly, a net reversal from general provision of Rs. 781,355 thousand has been recognized in these unconsolidated financial statements. Further, assessment of following obligor risk rating factors are in place for effective risk management: Adjusted net worth, current ratio, net profit margin, adjusted leverage, relationship with the Bank, quality of financial reporting, ownership structure, account behavior, internal quality and buyer / supplier concentration. 213
215. 44 .1.1 Lendings to financial institutions Credit risk by public / private sector Gross lendings Non-performing lendings Provision held 20212020 2021202020212020 Rupees in ‘000’ Public / Government Private 1,200,000 29,780,388 2,500,000 13,586,867 - - - - - - - 30,980,388 16,086,867 - - - - Gross investments Non-performing investments Provision held 20212020 2021202020212020 Rupees in ‘000’ 44.1.2 Investment in debt securities Oil & gas Textile Cement Sugar Electronics and electrical appliances Construction Power (electricity), gas, water, sanitary Transport, storage and communication Financial Services Chemical and pharmaceuticals Fertilizer 104,167 145,833 571,632 582,301 20,000 20,000 308,606 308,606 27,862 520,599 47,387 47,387 10,708,212 11,314,946 5,488 5,488 521,359,479 545,408,204 867,240 890,258 1,500,000 1,500,000 1,517,680 1,624,255 - 571,632 20,000 308,606 27,862 47,387 400 5,488 26,908 - - 1,517,680 - 582,301 20,000 308,606 27,862 47,387 400 5,488 26,908 - - 1,517,680 - 571,632 20,000 308,606 27,862 47,387 400 5,488 26,908 - - 1,517,680 582,301 20,000 308,606 27,862 47,387 400 5,488 26,908 1,517,680 537,037,753 562,367,877 2,525,963 2,536,632 2,525,963 2,536,632 Credit risk by public / private sector Public/ Government 519,953,187 553,416,407 400 400 400 400 Private 17,084,566 8,951,470 2,525,563 2,536,232 2,525,563 2,536,232 537,037,753 562,367,877 2,525,963 2,536,632 2,525,963 2,536,632 Gross advances Non-performing advances Provision held 20212020 2021202020212020 Rupees in ‘000’ 44.1.3Advances Agriculture, forestry, hunting and fishing Oil & gas Textile Chemical and pharmaceuticals Cement Sugar Footwear and leather garments Automobile and transportation equipment Electronics and electrical appliances Cable, electrical & engineering Production & transmission of energy Construction Trading & commerce Food & allied Transport, storage and communication Financial Fertilizer Services Individuals Others 23,387,696 2,253,449 91,036,952 12,036,528 18,835,441 13,717,499 2,253,507 2,327,717 5,573,162 7,285,762 82,342,597 10,407,103 30,338,244 54,773,093 68,958,485 4,801,922 9,159,211 15,199,339 57,526,712 21,948,731 16,240,841 1,432,213 81,325,326 10,724,142 16,450,985 16,276,840 1,729,427 2,289,286 3,107,790 6,871,970 74,470,207 6,455,130 31,895,731 34,252,509 50,370,204 3,116,218 11,342,978 13,897,447 43,087,668 17,422,975 1,594,354 99,564 22,594,938 41,988 - 1,716,172 517,610 1,985,237 111,634 2,180,272 3,119,104 1,678,035 8,226,611 2,853,135 163,825 959,030 62,266 1,132,540 835,004 2,160,990 1,719,776 108,181 25,196,074 108,105 93,246 2,021,095 517,610 2,114,743 31,513 2,184,081 3,272,610 1,727,683 9,213,670 3,082,326 176,319 606,009 66,879 1,383,421 898,549 2,729,281 1,275,176 80,797 21,176,270 41,988 - 1,508,642 516,066 1,981,736 67,634 2,123,552 1,905,914 1,425,839 7,615,485 2,802,584 163,825 959,030 62,266 1,007,791 683,058 1,305,176 1,301,745 83,138 23,397,721 87,022 93,246 1,759,210 516,066 2,011,725 31,513 2,103,054 2,076,873 1,422,215 6,708,841 2,929,458 176,319 606,009 66,879 1,229,461 671,745 578,542 534,163,150 442,759,887 52,032,309 57,251,171 46,702,829 47,850,782 Credit risk by public / private sector Public/ Government 153,977,196 115,264,859 - - - Private 380,185,954 327,495,028 52,032,309 57,251,171 46,702,829 47,850,782 534,163,150 442,759,887 52,032,309 57,251,171 46,702,829 47,850,782 214
216. 20212020 Rupees in ‘000’ 44.1.4 Contingencies and commitments Textile and ginning 32,510,604 Cement 17,696,783 Sugar 1,035,352 Financial 241,832,171 Construction and real estate 17,707,258 Oil and gas 3,537,699 Auto and allied 1,810,272 Food and allied 4,139,694 Chemical and pharmaceuticals 2,710,686 Fertilizers 2,773,187 Cable, electrical and engineering 4,103,574 Production and transmission of energy 42,816,673 Transport, storage and communication 8,485,191 Trading and commerce 3,311,218 Services 4,956,551 Others 79,597,296 14,184,990 2,203,095 1,971,414 67,237,907 12,100,439 6,874,235 1,556,366 3,772,706 2,726,604 2,998,697 3,273,404 42,075,870 6,519,333 2,927,534 781,120 42,546,191 469,024,209 213,749,905 Credit risk by public / private sector Public/ Government 92,790,919 61,831,913 Private 376,233,290 151,917,992 469,024,209 213,749,905 44.1.5 Concentration of advances The Bank’s top 10 exposures on the basis of total (funded and non-funded exposures) aggregated to Rs. 231,949,089 thousand (2020: Rs. 179,556,038 thousand). 20212020 Rupees in ‘000’ Funded Non funded 144,289,362 87,659,727 121,923,500 57,632,538 Total exposure 231,949,089 179,556,038 The sanctioned limits against these top 10 exposures aggregated to Rs. 382,338,498 thousand (2020: Rs. 259,445,323 thousand). 215
217. Total funded classified therein 2021 2020 Amount ProvisionAmount Provision held held Rupees in ‘000’ OAEM Substandard Doubtful Loss - Total - - - - 6,071,699 5,695,850 - - - 6,071,699 5,695,850 For the purpose of this note, exposure means outstanding funded facilities and utilized non-funded facilities as at the reporting date. 44.1.6 Advances - province / region-wise disbursement and utilization 2021 Disbursements Utilization AJK Punjab Sindh KPK BaluchistanIslamabad including Province / Region including Gilgit FATA Baltistan Rupees in ‘000’ Punjab Sindh KPK including FATA Baluchistan Islamabad AJK including Gilgit-Baltistan Total 275,933,046 259,064,239 101,536,041 1,692,248 - 32,050,513 14,535 11,210,780 2,743,663 587,847 2,265,216 61,301 4,925,298 94,752,945 565,509 162,289 1,130,000 - 406 - 949,604 - - - 1,691,842 - - 2,346,490 - 411,226,383 264,939,547 105,963,725 - 7,347,504 - - - - - - 750,136 28,754,119 - 32,149,335 300 14,535 76,136 2020 Disbursements Utilization AJK Punjab Sindh KPK BaluchistanIslamabad including Province / Region including Gilgit FATA Baltistan Rupees in ‘000’ Punjab Sindh KPK including FATA Baluchistan Islamabad AJK including Gilgit-Baltistan Total 222,079,696 213,964,993 83,087,045 817,217 - 5,082,660 336,305 503,459 2,414,776 79,063,437 1,528,123 80,709 275 - - - 22,268,326 - - 4,500 - 328,256,784 216,380,044 - 84,146,097 816,942 - 3,910,769 - 6,592,139 2,187,443 4,836 - - - - - - - - - 18,315,802 41,755 - 4,500 - 584,168 20,503,245 51,091 44.1.7 Credit risk - general disclosures The Bank follows the standardized approach for its credit risk exposures, which sets out fixed risk weights corresponding to external credit rating or type of exposure, whichever is applicable. Under standardized approach, the capital requirement is based on the credit rating assigned to the counterparties by the External Credit Assessment Institutions (ECAIs) duly recognized by SBP for capital adequacy purposes. Bank utilizes, wherever available, the credit ratings assigned by the SBP recognized ECAIs, viz. PACRA (Pakistan Credit Rating Agency), JCR-VIS (Japan Credit Rating Company – Vital Information Systems), Fitch Moody’s and Standard & Poors . Credit rating data for advances is obtained from recognized ECAIs and then mapped to SBP’s rating grades. 216
218. Type of exposures & ECAIs used Exposures JCR-VIS PACRA S&P Moody’s Fitch Corporate √ √ Banks √ √ Sovereigns √ PSEs √ √ √ √ √ SMEs √ √ Mapping to SBP rating grades For all credit exposures, the selected ratings are translated to the standard rating grades given by the SBP. The mapping tables used for converting ECAI ratings to SBP rating grades are given below: Long term ratings grades mapping SBP rating grade Fitch Moody’s S & P PACRA JCR-VIS ECA Scores 1 AAA Aaa AAAAAAAAA 0 AA+ Aa1 AA+AA+AA+ 1 AA Aa2AAAAAA AA- Aa3AA-AA-AA- A+ 2 A1 A+A+A+ A A2AAA A- A3A-A-A- 3 BBB+ Baa1 BBB+BBB+BBB+ BBB Baa2BBBBBBBBB BBB- Baa3BBB-BBB-BBB- BB+ 4 Ba1 BB+BB+BB+ BB Ba2BBBBBB BB- Ba3BB-BB-BB- B+ 3 4 B1 B+B+B+ 5 B B2BBB 6 B- B3B-B-B- 5 2 6 CCC+ Caa1 CCC+ CCC+ CCC+ 7 and below and below and below and below and below Short term rating grades mapping SBP rating grade Fitch Moody’s S & P PACRA JCR-VIS S1 F1 P-1 A-1+A-1+A-1+ S1 F1 P-1 A-1A-1A-1 S2 F2 P-2 A-2A-2A-2 S3 F3 P-3 A-3A-3A-3 S4 Others Others OthersOthersOthers 217
219. Credit exposures subject to standardized approach 20212020 Net AmountDeduction Net ExposuresRating AmountDeduction outstandingCRM amountoutstanding CRM amount Rupees in ‘000 Corporate 1 46,944,674 (14,316,014) 32,628,660 39,718,795 (5,783,299) 33,935,496 2 125,736,486 (2,068,418) 123,668,068 86,847,146 (1,462,186) 85,384,960 3,4 9,442,480 (174,751) 9,267,729 14,853,075 (206,106) 14,646,969 5,6 - - - - - Unrated-125% 33,878,185 (2,319,837) 31,558,348 25,657,917 (660,089) 24,997,828 Unrated-100% 58,042,503 (4,675,337) 53,367,166 49,795,777 (730,216) 49,065,561 Bank 1 38,468,068 (17,671,981) 20,796,087 26,570,344 (5,334,907) 21,235,437 2,3 2,466,667 - 2,466,667 15,048 - 15,048 4,5 179,640 - 179,640 - - 6 - - - - - Unrated - - - - - Public sector enterprises 1 27,781,681 (6,595,379) 21,186,302 24,377,640 (5,556,688) 18,820,952 in Pakistan 2,3 - - - - - 4,5 - - - - - 6 - - - - - Unrated 78,618,621 (78,618,621) - 74,755,104 (74,062,609) 692,495 Sovereigns and on Government 0 583,709,633 (36,601,415) 547,108,218 614,195,065 (23,344,678) 590,850,387 of Pakistan or Provisional 1 - - - - - Government or SBP or Cash 2 - - - - - 3 - - - - - 4,5 30,389 - 30,389 16,448 - 16,448 6 - - - - - Unrated - - - - - Listed equity investments 100% 874,797 - 874,797 249,846 - 249,846 Un-listed equity investments 150% 18,966 - 18,966 15,582 - 15,582 Non performing loans 150% 3,081,057 - 3,081,057 4,772,618 - 4,772,618 100% 1,708,607 - 1,708,607 3,877,256 - 3,877,256 50% 539,817 - 539,817 750,515 - 750,515 Mortgage 35% 10,780,812 - 10,780,812 6,290,344 - 6,290,344 Low Cost Housing 25% 1,845,429 - 1,845,429 - - Retail 75% 65,925,321 (13,117,366) 52,807,955 55,186,506 (12,934,665) 42,251,841 Fixed assets 100% 19,831,970 - 19,831,970 14,812,949 - 14,812,949 Deferred tax assets 100% - - - - - Deferred tax assets 250% 5,244,527 - 5,244,527 4,519,166 - 4,519,166 Significant investments 250% - - - - - Others 100% 35,217,769 (5,300,590) 29,917,179 25,464,245 (994,789) 24,469,456 1,150,368,099 (181,459,709) 968,908,390 1,072,741,386 (131,070,232) 941,671,154 Total 44.1.8 Credit risk: Disclosures with respect to credit risk mitigation for standardized approach The Bank has adopted comprehensive approach of credit risk mitigation for banking book. Under this approach cash, lien on deposits, government securities, and eligible securities etc. are consolidated as eligible collateral. Where the Bank’s exposure to an obligor is secured by eligible collaterals, the Bank reduces its exposure for the calculation of the capital requirement by the realizable amount of the collateral, adjusted for any applicable haircuts. 44.1.8.1 Credit risk: Disclosures for portfolio subject to the standardized approach No credit risk mitigation benefit is taken in the trading book. For each asset class, the risk weights as specified by the SBP or corresponding to the SBP rating grades are applied to the net amount for the calculation of risk weighted assets. 218
220. 44 .1.8.2 Equity position risk in the banking book The Bank takes proprietary equity positions for both short term and long term trading purposes. As of December 31, 2021 the composition of equity investments, is as follows: Held for Available Total trading for sale Rs. In ‘000’ Operators / Directors are representing Sialkot Chamber of Commerce Ordinary shares (listed) - net of impairment held 28,941 6,541,478 6,570,419 Ordinary shares (un-listed) - net of impairment held - 30,923 30,923 Preference shares - net of impairment held - 270,000 270,000 Total 28,941 6,842,401 6,871,342 The Bank classify its equity investment portfolio in accordance with the directives of the SBP as follows: ·         Investments - Held for trading ·         Investments – Available for Sale ·         Investments in subsidiaries 44.2 Market risk Market risk is the risk that the value of ‘on’ or ‘off’ balance sheet positions will be adversely affected by movements in equity and interest rate markets, foreign exchange rates and equity position risk. Interest rate risk is risk to the earnings or market value of a portfolio due to uncertain future interest rates. Interest rate risks can be categorized in different ways, and there is usually some overlap between categories. Interest rate risk can be categorized into the following components: a. Repricing or maturity mismatch risk or yield curve risk b. Basis risk c. Options risk d. Price risk Equity price risk is the risk that the value of a security or portfolio of securities will decline in the future. It is risk to earnings or capital that results from adverse changes in the value of equity related portfolios of a financial institution. Foreign exchange risk is the exposure of an institution to the potential impact of movements in foreign exchange rates. The risk is that adverse fluctuations in exchange rates may result in a loss to the institution. Foreign exchange risk arises from two factors: currency mismatches in an institution’s assets and liabilities (both on- and off-balance sheet) that are not subject to a fixed exchange rate, and currency cash flow mismatches. Such risk continues until the foreign exchange position is covered. The Bank’s market risk management structure consists of NPL & Risk Management Committee (NPL & RMC). , Assets and Liabilities Committee and independent Enterprise Risk & Governance department (ER&G). Market risk is an independent risk management function that works in close partnership with the business segments to identify and monitor market risks throughout the Bank and to define market risk policies and procedures. ER&G unit seeks to facilitate efficient risk/return decisions, reduce volatility in operating performance and provide transparency in reporting the Bank’s market risk profile to the senior management, the Board of Directors and the SBP. 219
221. The Bank is using following techniques for mitigation of market risk : -Hedging the open positions i.e. taking offsetting positions -Portfolio diversification -Limits setting, monitoring and reporting The Bank is using following techniques for measurement of market risk and all the reports along with suggestive strategies which are escalated to senior management for their review and corrective actions: • Daily mark to market revaluation of equity, foreign exchange and bonds portfolio • Estimated value at risk on equity and foreign exchange exposures. • Interest rate gap analysis • Duration analysis • Stress testing of market risk exposures. • Scenarios based analysis 44.2.1 Balance sheet split by trading and banking books 20212020 BankingTrading Total BankingTrading Total book bookbookbook Rupees in ‘000’ Cash and balances with treasury banks 71,318,743 - 71,318,743 69,271,804 - 69,271,804 Balances with other banks 8,717,632 - 8,717,632 2,397,707 - 2,397,707 Lendings to financial institutions 30,980,388 - 30,980,388 16,086,867 - 16,086,867 Investments - net 491,601,740 40,081,316 531,683,056 545,710,522 22,078,101 567,788,623 Advances - net 484,405,376 - 484,405,376 391,160,612 - 391,160,612 Fixed assets 19,831,970 - 19,831,970 14,812,949 - 14,812,949 Intangible assets 1,101,012 - 1,101,012 688,508 - 688,508 Deferred tax assets - net 13,696,051 - 13,696,051 7,774,264 - 7,774,264 Other assets 35,217,763 - 35,217,763 25,464,682 - 25,464,682 1,156,870,675 40,081,316 1,196,951,991 1,073,367,915 22,078,101 1,095,446,016 44.2.2 Foreign exchange risk The Bank’s foreign exchange exposure comprises of forward contracts, purchases of foreign bills, foreign currency cash in hand, balances with banks abroad, foreign currency placements with foreign commercial banks and foreign currency deposits. The Bank manages its foreign exchange exposure by matching foreign currency assets and liabilities. Foreign exchange exposure and nostro balances are managed within the statutory limits, as fixed by SBP. Counter parties limits are also fixed to limit risk concentration. Market risk charge calculates on FEEL and forward contracts (interest rate) and credit risk charge manage by Bank on all forward contracts. 2021 2020 Foreign Foreign Off-balance Net Foreign Foreign Off-balance Net currency currency sheet foreign currency currency sheet foreign assets liabilities itemscurrency assets liabilities itemscurrency exposure exposure Rupees in ‘000 United States Dollar 5,233,234 12,332,382 6,044,660 (1,054,488) 3,949,430 5,427,835 (147,258) (1,625,664) Great Britain Pound Sterling 1,698,989 Euro 2,534,033 Japanese Yen Other currencies 220 74,475 853,067 10,393,798 4,034,680 2,234,694 (100,997) 1,365,305 (1,520,922) 1,441 (352,194) 1,163,850 3,418,473 2,246,898 (7,725) 2,578,326 1,310,425 (1,447,381) (179,479) (66,939) 6,095 295 2,253 4,663 2,705 - (684,984) 168,083 107,670 1,340 (46,803) 59,526 17,733,808 6,006,509 (1,333,501) 7,799,571 10,160,326 610,119 (1,750,637)
222. 2021 2020 Banking TradingBanking Trading book book book book Rupees in ‘000’ Impact of 1% change in foreign exchange rates on - Profit and loss account - (12,413) - - Other comprehensive income - - - (2,487) - 44.2.3 Equity position risk The risk arising from taking long or short positions, in the trading book, in the equities and all instruments that exhibit market behavior similar to equities. The Bank’s strategy is to invest in equity securities for increase in dividend income and capital gains through market volatility. 2021 2020 Banking TradingBanking Trading book book book book Rupees in ‘000’ Impact of 5% change in equity prices on - Profit and loss account - (344,356) - - Other comprehensive income - - - (167,584) - 44.2.4 Yield / Interest Rate Risk in the Banking Book (IRRBB)-Basel II specific Interest rate risk is the potential that the value of the on-balance sheet and the off-balance sheet positions of the bank would be negatively affected with the change in the market interest rates. The vulnerability of the Bank towards the adverse movements of the interest rate can be gauged by using duration GAP analysis. Interest rate risk in the banking book is the risk to interest income arising from a mismatch between the duration of assets and liabilities that arises in the normal course of business activities. The banking book activities that give rise to interest rate risk include lending activities, balance sheet funding and capital management. Interest rate risk in banking book can be measured by both, changes in net interest income and changes in market value of interest bearing AFS investments. This also refers to the non-trading market risk. To adjust the effective rate sensitivity, the Bank is using following strategies after proper analysis of the Bank’s gaps and prevailing interest rate: • Reduced asset sensitivity • Increased asset sensitivity • Reduced liability sensitivity • Increased liability sensitivity The Bank’s interest rate risk management policy includes following techniques to mitigate potential risks: a) Monitoring and management of interest rate volatility in terms of percentage change in net income through interest sensitive gaps. b) Key consideration in investing in interest rate driven financial instruments. c) Managing volatility in the trading on category / instrument wise basis. 2021 2020 Banking TradingBanking Trading book book book book Rupees in ‘000’ Impact of 1% change in interest rates on - Profit and loss account (4,812,111) (344,989) (4,847,855) - Other comprehensive income - - - (191,484) - 221
223. 222 2021 1 ,141,766,782 40,780,528 614,523,617 75,044,756 99,735,941 5,023,307 3,878,948 28,970,428 21,834,555 8,461,810 243,512,892 Cumulative yield / interest risk sensitivity gap 48,154,870 (75,880,870) (133,517,919) (24,117,035) 113,017,384 147,052,721 119,352,393 159,697,798 151,235,988 283,156,538 Off-balance sheet gap 269,379,852 - - - - - - - - - 269,379,852 Total yield / interest risk sensitivity gap 48,154,870 (124,035,740) (57,637,049) 109,400,884 137,134,419 34,035,337 (27,700,328) 40,345,405 (8,461,810) 131,920,550 On-balance sheet gap 13,776,686 48,154,870 (124,035,740) (57,637,049) 109,400,884 137,134,419 34,035,337 (27,700,328) 40,345,405 (8,461,810) (137,459,302) Off-balance sheet financial instruments Documentary credits and guarantees 217,351,954 - - - - - - - - - 217,351,954 Commitments in respect of: - forward foreign exchange contracts - net 6,006,511 - - - - - - - - - 6,006,511 - forward lending 45,923,548 - - - - - - - - - 45,923,548 Other commitments 97,839 - - - - - - - - - 97,839 1,155,543,468 88,935,398 490,487,877 17,407,707 209,136,825 142,157,726 37,914,285 1,270,100 62,179,960 - 106,053,590 Liabilities Bills payable 10,109,459 - - - - - - - - - 10,109,459 Borrowings 7.17% 71,323,488 2,318,198 24,402,473 7,705,699 4,991,766 4,467,197 1,166,837 4,268,981 19,716,582 2,285,755 Deposits and other accounts 5.12% 1,002,954,667 38,424,427 590,119,600 59,539,129 94,686,762 434,421 2,465,934 23,991,436 - - 193,292,958 Subordinated debts 8.89% 7,788,980 - - 7,788,980 - - - - - - Other liabilities 49,590,188 37,903 1,544 10,948 57,413 121,689 246,177 710,011 2,117,973 6,176,055 40,110,475 On-balance sheet financial instruments Assets Cash and balances with treasury banks 71,318,743 2,109,501 - - - - - - - - 69,209,242 Balances with other banks 7.25% 8,717,632 7,117,232 - - - - - - - - 1,600,400 Lending to financial institutions 7.71% 30,980,388 28,780,388 2,000,000 200,000 - - - - - - Investments - net 8.52% 531,683,056 1,328,729 53,886,382 17,207,707 209,136,825 142,157,726 37,914,285 1,270,100 62,179,960 - 6,601,342 Advances - net 7.36% 484,405,376 49,599,548 434,601,495 - - - - - - - 204,333 Other assets 28,438,273 - - - - - - - - - 28,438,273 Effective Over 6 Over 1 Over 2 Over 3 Over 5 Non-interest Over 1 Above yield / Upto 1 Over 3 months tototo to bearing Total to 3 10 interest month to 6to 23510 financial years months rate months 1 year years years years years instruments Rupees in ‘000 Exposed to Yield / Interest risk 44.2.5 Mismatch of interest rate sensitive assets and liabilities
224. 223 2020 1 ,043,122,322 107,523,471 505,790,228 51,164,172 131,314,489 9,598,590 6,434,536 7,963,951 8,823,651 4,704,606 209,804,628 Cumulative yield / interest risk sensitivity gap (24,870,875) (96,015,274) 15,237,645 (31,225,288) (6,156,904) 30,414,974 65,530,957 145,762,524 141,057,918 188,109,570 Off-balance sheet gap 165,543,814 - - - - - - - - - 165,543,814 Total yield / interest risk sensitivity gap (24,870,875) (71,144,399) 111,252,919 (46,462,933) 25,068,384 36,571,878 35,115,983 80,231,567 (4,704,606) 47,051,652 On-balance sheet gap 22,565,756 (24,870,875) (71,144,399) 111,252,919 (46,462,933) 25,068,384 36,571,878 35,115,983 80,231,567 (4,704,606) (118,492,162) Off-balance sheet financial instruments Documentary credits and guarantees 143,824,645 - - - - - - - - - 143,824,645 Commitments in respect of: - forward foreign exchange contracts 610,119 - - - - - - - - - 610,119 - forward lending 20,393,865 - - - - - - - - - 20,393,865 Other commitments 715,185 - - - - - - - - - 715,185 1,065,688,078 82,652,596 434,645,829 162,417,091 84,851,556 34,666,974 43,006,414 43,079,934 89,055,218 - 91,312,466 Liabilities Bills payable 4,168,641 - - - - - - - - - 4,168,641 Borrowings 8.68% 154,841,415 62,672,147 29,419,076 5,703,591 36,353,005 4,274,982 5,906,562 3,005,488 6,840,746 663,682 2,136 Deposits and other accounts 7.04% 835,067,592 44,844,606 476,370,663 38,663,540 94,915,051 5,175,166 332,451 4,086,864 - - 170,679,251 Subordinated debts 11.23% 6,791,700 - - 6,791,700 - - - - - - Other liabilities 42,252,974 6,718 489 5,341 46,433 148,442 195,523 871,599 1,982,905 4,040,924 34,954,600 On-balance sheet financial instruments Assets Cash and balances with treasury banks 69,271,804 956,624 - - - - - - - - 68,315,180 Balances with other banks 5.50% 2,397,707 1,763,331 - - - - - - - - 634,376 Lending to financial institutions 10.41% 16,086,867 14,286,867 1,800,000 - - - - - - - Investments - net 9.81% 567,788,623 27,580,589 79,759,572 162,417,091 84,851,556 34,666,974 43,006,414 43,079,934 89,055,218 - 3,371,275 Advances - net 9.12% 391,160,612 38,065,185 353,086,257 - - - - - - - 9,170 Other assets 18,982,465 - - - - - - - - - 18,982,465 Effective Over 6 Over 1 Over 2 Over 3 Over 5 Non-interest Over 1 Above yield / Upto 1 Over 3 months tototo to bearing Total to 3 10 interest month to 6 to 2 3 5 10 financial years months rate months 1 year years years years years instruments Rupees in ‘000 Exposed to Yield / Interest risk
225. Reconciliation of financial assets and liabilities with total assets and liabilities : 20212020 Rupees in ‘000’ Financial assets 1,155,543,468 1,065,688,078 Non financial assets: Fixed assets 19,831,970 14,812,949 Intangibles 1,101,012 688,508 Operators/ Directors are representing Sialkot Chamber of Commerce 13,696,051 7,774,264 Other assets 6,779,490 6,482,217 41,408,523 29,757,938 Total assets as per statement of financial position 1,196,951,991 1,095,446,016 Financial liabilities 1,141,766,782 1,043,122,322 Non financial liabilities: Other liabilities 352,333 62,183 Total liabilities as per statement of financial position 1,142,119,115 1,043,184,505 44.3 Operational risk Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and system or from external events. The Bank cannot expect to eliminate all operational risks, but through a control framework and by monitoring and responding to potential risks, the Bank is able to manage operational risk. Controls include effective segregation of duties, access, authorization and reconciliation procedures, staff education and appraisal procedures, including the use of internal audit. The Bank has established a comprehensive business continuity plan to deal with the risk of financial loss and damage to reputation arising from operational risk factors. The Bank uses Risk Control Self Assessment and monitoring of Key Risk Indicators to mitigate operational losses. The Bank’s operational risk management framework, as laid down in the operational risk policy, duly approved by Board of Directors, is flexible enough to implement in stages and permits the overall risk management approach to evolve in the light of organizational learning and the future needs of the Bank. Operational loss events are reviewed and appropriate corrective actions taken on an ongoing basis, including measures to improve control procedures with respect to design and operative effectiveness. In accordance with the operational risk policy and framework, a database covering losses, control breaches and near misses is being maintained. Major risk events are analyzed from the control breach perspective and mitigating controls are assessed on design and operating effectiveness. quarterly updates on operational risk events are presented to senior management and the Board Risk Management Committee (BRMC). 224
226. 44 .3.1 Operational risk disclosures Basel-II specific Currently, the Bank is reporting operational risk capital charge under Basic Indicator Approach (BIA). However, the Bank took a number of initiatives with respect to operational risk management. The Bank will initiate further steps for improvement in operational risk management to adopt next approach of capital charge i.e. Alternative Standardized Approach (ASA). 44.4 Liquidity risk Liquidity risk is the potential for loss to an institution arising from either its inability to meet its obligations or to fund increase in assets as they fall due without incurring unacceptable cost or losses. The Bank’s ALCO is primarily responsible to ensure adequate maintenance and monitoring of liquidity and minimization of liquidity risk. The Bank manages its liquidity risk by continuous monitoring of the maturity profiles of its assets and liabilities, strengthening of its credit recovery procedures by focusing on retail and medium-sized customers and managing open positions through effective treasury operations. Allocation of funds towards various business prepositions and pricing of assets and liabilities of the Bank are given significant importance. The Bank is using following strategies for mitigation of liquidity risk: • Contingency funding plan • Monitoring of advances to deposits ratio. • Diversification of portfolio • Maintaining desirable level of currency wise liquidity • Identify situations or events that may trigger a crisis situation in terms of liquidity • Invest key liquid deposit providers in liquid investment. 225
227. 226 Total Upto 1 Day 7 days Over 1 to 14 days Over 7 to to 1 Month Over 14 days Over 1 to 2 Months Over 2 to 3 Months Over 3 to 6 Months to 1 year 2 years Over 6 to Over 9 months Over 1 to 9 Months Over 2 to 3 years 484 ,405,376 Advances - net 119,151,843 8,936,259 - 987 6,410 30,172,966 (1,154) - 8,717,632 71,318,743 30,446,768 800,866 - 5,922 38,460 1,921,132 - 27,680,388 - - 4,657,859 1,135,939 - 6,909 44,870 3,470,141 - - - - 26,482,752 11,160,879 - 16,766 109,303 14,035,309 60,495 1,100,000 - - 45,761,165 3,877,590 - 30,584 118,993 25,274,109 15,159,889 1,300,000 - - 6,150,632 200,000 - - 88,797,390 2,254,845 - 30,584 121,561 40,995,134 838,147 - 91,752 349,257 54,154,402 33,365,346 31,535,998 700,000 - - - - - - - - 6,024,865 - 91,752 343,738 32,917,785 97,983,984 164,385,948 188,373 - 91,752 354,320 11,984,443 - - 366,996 1,416,240 27,879,365 39,898,243 - - - 182,109,172 69,560,844 - - 367,008 1,325,245 37,546,641 85,365,096 125,007,808 142,870,278 - - - - - - 115,378,653 - 13,696,051 - 3,019,471 83,765,134 14,897,997 5 Years Over 3 to Over 19,510,769 54,832,876 161,547,247 62,931,362 74,788,964 176,077,972 35,162,507 8,874,790 97,397,538 6,629,482 40,589,689 6,562,474 Unappropriated profit 59,239,693 20,561,925 2,457,903 4,285,380 (1,368,710) 15,026,909 (30,607,253) 38,744,291 66,988,410 2,175,341 3,495,440 (Deficit) / surplus on revaluation of assets - net of tax (8,927,178) 71,602,387 1,408,086 2,720 - 22,002,337 10,517,051 2,834,637 73,770,481 302,771 2,720 24,457,781 6,073,994 - Reserves (7,937,376) 54,688,343 846,816 1,360 3,002,022 1,166,837 - 26,173,766 24,028,622 23,648,115 2,216,204 - 13,916,667 4,467,197 - Share capital - net (571,568,261) 12,595,235 3,860,036 1,360 4,840,334 - 38,290,088 60,738,630 151,432 - 54,832,876 6,418,146 1,031,870 - 63,048,512 7,705,699 - Net assets 690,720,104 1,111,749 - 61,334,603 10,219,674 - 1,142,119,115 842,347 - 38,450,521 12,377,786 - 18,252,134 - 21,786,900 829,345 - 49,942,521 - 10,485,748 997,738 - Other liabilities - 5,196,537 379,262 - 7,788,980 662,246,658 111,853 10,109,459 - 211,240,479 - - - 12,584,102 127,918,603 Subordinated debts 1,002,954,667 71,323,488 Borrowings Deposits and other accounts 10,109,459 Bills payable - - - 70,737,774 5 Years Liabilities 1,196,951,991 35,217,763 Other assets - net 13,696,051 1,101,012 Deferred tax assets - net Intangible assets 19,831,970 531,683,056 Investments - net Fixed assets 30,980,388 8,717,632 Balances with other banks Lendings to financial institutions 71,318,743 Cash and balances with treasury banks Assets Rupees in ‘000 2021 44.4.1 Maturities of assets and liabilities - based on contractual maturity of the assets and liabilities of the Bank
228. 227 7 days Over 1 to 14 days Over 7 to to 1 Month Over 14 days Over 1 to 2 Months Over 2 to 3 Months Over 3 to 6 Months to 1 year 2 years Over 6 to Over 9 months Over 1 to 9 Months Over 2 to 3 years 1 ,095,446,016 25,464,682 97,029,550 7,686,363 - 617 3,904 17,664,170 4,985 - 2,397,707 69,271,804 10,389,781 77,465 - 3,702 23,422 2,398,325 - 7,886,867 - - 19,854,473 301,791 - 4,319 33,608 3,596,090 14,908,665 1,010,000 - - 40,107,429 7,942,133 - 10,487 66,420 14,406,600 12,291,789 5,390,000 - - 62,225,773 692,734 - 19,125 80,210 20,391,101 39,242,603 1,800,000 - - 152,176,817 - - - 74,187,923 276,399 - 19,125 80,261 181,423,124 497,174 - 57,375 236,119 38,949,039 28,455,639 34,863,099 - - - - - - - - - 7,044,356 - 57,375 248,492 25,571,550 63,121,401 65,942,032 946,267 - 57,375 235,076 9,634,978 62,271,930 - - 229,500 986,358 25,633,812 52,247,705 33,020,259 35,422,260 - - - - 7,774,264 - 2,431,287 78,910,285 51,191,717 - - - Over 677,790 1,360 40,310,611 5,703,591 - - 159,872,114 20,410,194 6,127,666 6,778,100 - 7,504,428 52,261,511 127,817,012 12,490,541 4,978,875 5,440 4,500,738 3,005,488 - 89,482,911 8,819,828 2,319,759 2,720 590,787 5,906,562 - 12,103,362 51,164,677 11,107,253 1,455,284 2,720 5,374,267 4,274,982 - Unappropriated profit (9,016,392) 74,958,424 1,244,108 1,360 47,213,979 26,498,977 - 5,955,359 1,747,706 61,373,695 1,379,893 - 50,139,774 9,854,028 - (Deficit) / surplus on revaluation of assets - net of tax 10,678,316 134,729,772 63,509,607 46,693,352 549,745 - 52,745,363 10,214,499 - 8,029,024 17,290,316 44,935,457 1,398,788 - 24,332,092 19,204,577 - Reserves 14,925,507 25,181,922 748,486 - 16,838,799 7,594,637 - 26,173,766 (6,568,021) 26,422,494 547,564 - 16,210,203 9,664,727 - Share capital - net (41,015,857) 51,405,638 691,496 - 7,725,313 42,988,829 - 52,261,511 (498,846,550) 595,876,100 20,195,703 - 569,085,666 2,426,090 4,168,641 - - - 9,370,214 72,074,834 Net assets 1,043,184,505 42,315,157 Other liabilities 6,791,700 Subordinated debts 835,067,592 154,841,415 Borrowings Deposits and other accounts 4,168,641 Bills payable - - - 98,837,260 5 Years 98,302,739 140,307,553 180,282,308 - - 229,508 1,017,578 53,474,189 43,581,464 - - - 5 Years Over 3 to Liabilities Other assets - net 7,774,264 14,812,949 Fixed assets Deferred tax assets - net 391,160,612 Advances - net 688,508 567,788,623 Investments - net Intangible assets 16,086,867 2,397,707 69,271,804 Lendings to financial institutions Balances with other banks Cash and balances with treasury banks Assets Rupees in ‘000 1 Day Upto 2020 Total
229. 228 Rupees in ‘000 35,217,763 22,033,943 - 30,584 199,043 6,132,435 - 61,168 240,554 79,428,511 46,695,887 2,000,000 - - - - - - - - 6,213,238 - 183,504 698,058 44,902,228 40,995,134 262,369,932 838,147 - 91,752 349,257 33,365,346 - 3,019,471 83,765,134 14,897,997 - - - - 115,378,653 - - 13,696,051 366,996 1,416,240 27,879,365 39,898,243 - - - 182,109,172 69,560,844 - - 367,008 1,325,245 37,546,641 6,150,632 210,372,904 142,870,278 200,000 - - - - - 5,343,840 19,915,046 - - - - 185,981,593 25,258,886 - - - 7,240,262 108,003,557 70,737,774 - - - 71,323,488 1,142,119,115 54,832,876 Other liabilities Net assets 7,705,699 - 6,057,600 - 846,816 1,360 196,361,410 127,432,704 22,597,460 - (5,395,392) (90,457,915) (94,991,445) 186,134,614 225,016,470 135,986,579 21,256,740 - 152,450,217 2,318,198 10,109,459 4,467,197 - 92,253,039 170,116,893 1,710,857 1,360 97,163,055 84,946,117 2,175,341 2,720 163,412,910 78,300,859 4,991,766 - 6,562,474 3,495,440 88,841,973 6,073,994 - (1,452,830) 10,404,772 71,013,674 104,973,881 2,457,903 2,720 67,386,214 1,166,837 - 6,176,055 - 64,384,188 2,285,755 - 94,896,704 (47,587,112) 91,084,889 72,845,998 2,698,735 4,285,380 64,384,192 19,716,582 - 19,510,769 54,832,876 Unappropriated profit Deposit account without contractual maturities have been classified by taking into account historical trend of their withdrawal pattern, which shows that 15% of such deposits mature in each of the first two categories mentioned above and 10% mature in each of the remaining seven categories. 10,517,051 (1,368,710) (Deficit) / surplus on revaluation of assets - net of tax 26,173,766 Reserves Share capital - net 7,788,980 49,942,521 Subordinated debts 1,002,954,667 Borrowings Deposits and other accounts 10,109,459 Bills payable Liabilities 1,196,951,991 180,739,222 134,558,555 Other assets - net 13,696,051 1,101,012 Deferred tax assets - net Intangible assets 19,831,970 484,405,376 49,599,548 Fixed assets Advances - net 59,341 531,683,056 Investments - net 8,717,632 71,318,743 30,980,388 28,780,388 8,717,632 Balances with other banks Lendings to financial institutions 71,318,743 Cash and balances with treasury banks Assets 2021 Over Over 1 Over 3 Over 1 Over 2 Over 3 Over 5Above 6 months TotalUpto to 3 top 6 to to 2 to 3 to 5 to 10 1 month 10 years monthsmonths yearsyears years years 1 year 44.4.2 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Bank
230. 229 Rupees in ‘000 127,354 14,812,949 7,774,264 1,095,446,016 167,381,233 16,007,752 - 19,125 - 136,413,696 969,133 - 38,250 160,471 59,340,140 74,105,702 1,800,000 - - 181,423,124 497,174 - 57,375 236,119 28,455,639 152,176,817 - - - 129,063,433 7,990,623 - 114,750 483,568 35,206,528 85,267,964 - - - 62,271,930 - - 229,500 986,358 25,633,812 35,422,260 - - - 98,302,739 - - 229,508 1,017,578 53,474,189 43,581,464 - - - 140,307,553 - 7,774,264 - 2,431,287 78,910,285 51,191,717 - - - 167,292,700 - - - 5,640,245 62,815,195 98,837,260 - - - 12,989,608 - - - 3,729,969 9,259,639 - - - 4,168,641 52,261,511 (67,473,048) 234,854,281 22,183,249 - 145,828,108 62,674,283 - (53,919,345) 190,333,041 1,948,533 - 158,965,432 29,419,076 - 80,137,787 101,285,337 677,790 1,360 94,902,596 5,703,591 - (61,860,671) 190,924,104 2,624,001 1,360 151,945,738 36,353,005 - (3,427,308) 65,699,238 1,455,284 2,720 59,966,252 4,274,982 - 34,890,926 63,411,813 2,319,759 2,720 55,182,772 5,906,562 - 73,225,027 67,082,526 4,978,875 5,440 59,092,723 3,005,488 - 59,296,592 4,040,924 - 54,591,986 663,682 96,995,127 (46,306,984) 70,297,573 2,086,742 6,778,100 54,591,985 26,173,766 5,955,359 12,103,362 52,261,511 (Deficit) / surplus on revaluation of assets - net of tax Unappropriated profit Reserves 8,029,024 Share capital - net - 6,840,746 Net assets 1,043,184,505 42,315,157 6,791,700 Other liabilities 835,067,592 Subordinated debts Deposits and other accounts 4,168,641 154,841,415 Bills payable Borrowings Liabilities 25,464,682 Deferred tax assets - net Other assets - net 688,508 Intangible assets Fixed assets 38,065,185 391,160,612 Advances - net 27,205,439 567,788,623 Investments - net 14,286,867 2,397,707 69,271,804 16,086,867 2,397,707 69,271,804 Lendings to financial institutions Balances with other banks Cash and balances with treasury banks Assets 2020 Over Over 1 Over 3 Over 1 Over 2 Over 3 Over 5Above 6 months TotalUpto to 3 top 6 to 2 to 3 to 5 to 10 1 month to 10 years monthsmonths yearsyears years years 1 year
231. 45 . 46. NON ADJUSTING EVENTS AFTER THE BALANCE SHEET DATE The Board of Directors of the Bank in its meeting held on February 18, 2022 has proposed a stock dividend of 12.50% (2020: 10% cash dividend). These appropriations will be approved in the forthcoming Annual General Meeting. These unconsolidated financial statements for the year ended December 31, 2021 do not include the effect of these appropriations which will be accounted for in the unconsolidated financial statements for the year ending December 31, 2022. DATE OF AUTHORIZATION FOR ISSUE These unconsolidated financial statements were authorized for issue on February 18, 2022 by the Board of Directors of the Bank. 47.GENERAL 47.1 Figures have been rounded off to the nearest thousand rupees. 47.2 Corresponding figures have been re-arranged and re-classified wherever necessary, for the purpose of comparison. However, no significant reclassification has been made. Chief Financial Officer 230 President Chairman Director Director
232. 231 Muzaffar Ali Asif Ali Nadeem Babar Sani (Kot Afzal Abad Rossa Tibba Chak # 1 Tehsil Chunian Kasur Pattoki) Zulfiqar Ali Mehdi (Ghous Pour Qureshian Tulamba Mian Channu) Nazim Ud Din (Bakar Key Mahar P.O. Basirpur) Nazim Ud Din (Bakar Key Mahar P.O. Basirpur) Rajco Poultry Farm (Panwana P.O Pasrur) Shehzad Ahmed (Chack 3/SP Gayiana P/O Havililakha Depalpur) Ali Muhammad Mughal (Tehsil Depalpur Khalil Abad Colony Depalpur District Okara) Ahsan Raza (House # 136, Shamsabad Colony Eid Gah Road Multan) Zulfiqar Ali (Atari Virk Sham Kot P.O. Chunian) Ayyaz Qamar (House No. 257, Street No. 03 Rasoolabad Colony Hasilpur) Zafar Hussain (P.O.Injrateh Jand District Attock) 2 3 4 5 6 7 8 9 10 11 2 1 1 Name and address of the borrower S. No. Zafar Hussain (37104-6942265-5) Ayyaz Qamar (31203-3613876-1) Zulfiqar Ali (35101-2456123-9) Ahsan Raza (32203-6971287-9) Ali Muhammad Mughal (35301-8220837-5) Shehzad Ahmed (35301-1922970-7) Muhammad Fayyaz (34602-3977816-9) Anwar Ahmed (34602-9918193-7) Imitaz Ahmed (34602-5022888-3) Nazim Ud Din (35301-5047787-3) Nazim Ud Din (35301-5047787-3) Zulfiqar Ali Mehdi (36302-0455616-5) Muzaffar Ali (35101-2509930-1) Asif Ali (35101-2509928-5) Nadeem Babar Sani (35101-2509932-1) 3 Name of individuals / partners / directors (with CNIC No.) Noor Hussain Rana Qamar Hussain Qamar Ali Mushtaq Ahmad Hashmi Haji Muhammad Zafar Khan Muhammad Rafique Bhatti M.Fiaz Imtiaz Ahmed Anwar Ahmed Abdul Shakoor Abdul Shakoor Peer Mehdi Hussain Muhammad Din 4 Father’s / Husband’s name 5 - - - - - - - - - - 427 Principal 1,541 596 893 528 1,387 2,091 2,185 918 1,635 691 1,610 6 Interest / Mark-up 7 - - - - - - - - - - - Other than Interest / Mark-up 893 528 1,387 2,091 2,185 918 1,635 691 1,610 1,541 1,023 8 Total Outstanding Liabilities at beginning of year DURING THE YEAR ENDED DECEMBER 31, 2021 10 - - - - - - - - - - - - - - - - - - - - - - Interest / Mark-up written-off Rupees in ‘000 9 Principal written-off 1,541 596 893 528 1,381 2,077 2,164 916 1,603 691 1,592 11 Interest/ Mark-up waived 12 Other financial relief provided STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF OF RUPEES FIVE HUNDRED THOUSAND OR ABOVE PROVIDED - - - - - - - - - - - 893 528 1,381 2,077 2,164 916 1,603 691 1,592 1,541 596 13 Total (9+10+11+12) Annexure I
233. 232 Name and address of the borrower 2 Haroon Javed (Qila Jawind Singh Tehsil Depalpur District Okara) Muhammad Nawaz (Dilo Kala P/O Thathi Asaish Tehsil Pindi Bhattian District Hafizabad) Muhammad Nawaz (Dilo Kala P/O Thathi Asaish Tehsil Pindi Bhattian District Hafizabad) Ch Liaqat Ali (Chauhdary House Shah Jamal Road Khan Muzaffargarh) Sardar Agri Farms Prop Rizwan Ullah Khan (House No 13 Gali No 1 Mohallah Gujranwala X Peoples Colony Block Gujran) Sardar Agri Farms Prop Rizwan Ullah Khan (House No 13 Gali No 1 Mohallah Gujranwala X Peoples Colony Block Gujran) Altaf Ahmad Gondal (House #300-A Satellite Town Sargodha) Syed Nusrat Abbas Kirmani (Chak Nawab Shah Chak # 21/1 A.L P/O Akhtarabad Okara) Shabiran Bibi (Chak # 25/2 Okara) Rafaqat Ali (Mohallah Misken Abad Ghazi Kohli P.O. Losar Sharfo Taxila Rawalpindi) Syed Ali Nawaz (Bhaikey Lal Chand P.O. Same Hujra Shah Muqeem) Iftikhar Ahmad (Chak.93/ District Yazman Bahawalpur) Abdul Waheed Shad (Chak# 38 / P.O.39 / Tehsil & District Pakpattan) Rub Nawaz (127 Khan Colony Faisalabad Road Okara) S. No. 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Rub Nawaz (35202-7343737-5) Abdul Waheed Shad (36402-8796094-3) Iftikhar Ahmad (31205-1664128-7) Syed Ali Nawaz (35301-1950894-3) Rafaqat Ali (37406-8523431-9) Shabiran Bibi (35302-8038299-2) Syed Nusrat Abbas Kirmani (42301-0715066-7) Altaf Ahmad Gondal (38403-4498350-3) Rizwan Ullah Khan (34101-3576703-3) Rizwan Ullah Khan (34101-3576703-3) Mian Farzand Ali Haji Muhammad Ali Muhammad Siddique Syed Shahnawaz Malik Mian Khan Muhammad Ameer Sayed Imam Ali Shah S/O Allah Buksh Sardar Nusrat Ullah Sardar Nusrat Ullah Chauhdary Mehmood-Ul-Hassan Shaer Mohammad Muhammad Nawaz (34302-1213577-1) Ch Liaqat Ali (32304-6527518-5) Shaer Mohammad Javed Aslam 4 Father’s / Husband’s name Muhammad Nawaz (34302-1213577-1) Haroon Javed (35202-0396186-5) 3 Name of individuals / partners / directors (with CNIC No.) - - - - - 392 500 - 3,113 2,287 536 2,399 535 2,275 5 Principal 748 2,136 1,000 1,107 1,151 5,557 2,073 835 1,327 898 1,724 803 637 2,380 6 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - - - - - - - 748 2,136 1,392 1,607 1,151 8,670 4,360 1,371 3,726 1,433 3,999 803 637 2,380 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - - - - 2,073 835 1,327 909 1,700 803 637 2,356 748 2,122 1,024 1,144 861 5,640 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - - - - - - - - 1,024 1,144 861 5,640 2,073 835 1,327 909 1,700 803 637 2,356 748 2,122 13 Total (9+10+11+12) Annexure I
234. 233 Shoukat Ali (Kot Adna Abad Elha Abad P/O Khas Theng Ghatan Tehsil Chunian.) Lal Khan (Chack # 31/4- L Tehsil & District Okara) Muhammad Hashim (Labana Chak # 37 P/O Pattoki Tehsil Pattoki District Kasur Pattoki) Malik Riaz Hussain (9/66, Akbar Street Islampura Lahore.) Muhammad Irshad (Chak # 543/E District Vehari) Didar Ali (Chak Makhdoom Wala P.O. Jhanbiwahin Tehsil Kahror Pacca Lodhran) Pakistan Milk And Breeders (Suit # 3, Plot # 8C Sunset 2 Phase II Extension DHA Karachi) Muhammad Asghar Ramzan (Kot Sorro P/O Karam Pur Tehsil Mailsi Vehari) Ali Sajid (H. No. 1953, Mohallah Islamabad Tehsil Chunian District Kasur) Asmat Batool (Nothain P.O. Adoketeh. Pindi Bhattian District Hafizabad) Asmat Batool (Nothain P.O. Adoketeh. Pindi Bhattian District Hafizabad) Asmat Batool (Nothain P.O. Adoketeh. Pindi Bhattian District Hafizabad) Niamat Ali & Karamat Ali (Chak # 1, Rosa Tibba Tehsil Chunian Kasur) 27 28 29 30 31 32 33 34 35 36 37 38 2 1 26 Name and address of the borrower S. No. Niamat Ali (35101-2518690-9) Karamat Ali (35101-2861425-9) Asmat Batool (34302-4892657-8) Asmat Batool (34302-4892657-8) Asmat Batool (34302-4892657-8) Ali Sajid (35101-0795667-3) Muhammad Asghar Ramzan (36602-9592955-5) Hassan Ahmed Farooqui (42201-2362383-7) Didar Ali (36202-4254139-3) Muhammad Irshad (36603-7824573-7) Rehmat Ali W/O Syed Hussain Ali Shah W/O Syed Hussain Ali Shah W/O Syed Hussain Ali Shah Riaz Hussain Mohammad Ramzan Ghulam Rabbani Sallay Khan Muhammad Khan Malik Sardar Ali Hurmat Khan Muhammad Hashim (35103-5080494-7) Malik Riaz Hussain (35103-8603189-9) Karam Khan Muhammad Ashiq 4 Father’s / Husband’s name Lal Khan (35302-6155508-3) Shoukat Ali (35101-5835094-7) 3 Name of individuals / partners / directors (with CNIC No.) 1,167 370 1,740 2,980 412 2,016 4,796 374 739 - 412 513 1,860 5 Principal 6 2,246 547 2,563 5,694 494 894 5,761 1,090 964 510 690 915 213 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - - - - - - - 1,464 1,703 510 1,102 1,428 2,073 3,413 917 4,303 8,674 906 2,910 10,557 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - - - 547 2,563 5,883 513 1,040 5,761 1,107 1,020 510 682 915 287 2,304 11 Interest/ Mark-up waived 12 - - - - - - - - - - - - 269 Other financial relief provided 510 682 915 556 2,304 547 2,563 5,883 513 1,040 5,761 1,107 1,020 13 Total (9+10+11+12) Annexure I
235. 234 Azeem Cold Storage (Churasta Mian Khanchurasta Mian Khan Depalpur) Abdul Majeed (Chah Utradi Wala Mohalla Multani Wala Kahror Pacca. District Lodhran) Muhammad Nawaz (Village Shamair P.O. Kamoki Tehsil Kamoki Lahore) Kaneez Fatima (Chak #3/1-R.A Tehsil Renala Khurd District Okara) Conimpex Hatchery & Breeding Farm (1683-Quaid-E-Azam Market Multan Cant Multan) Conimpex Hatchery & Breeding Farm (1683-Quaid-E-Azam Market Multan Cant Multan) Muhammad Yasin (Mouza Lala Wala P/O Hujra Shahmuqeem Tehsil Depalpur) Jam Muhammad Iqbal (Basti Walana P.O. Sanjarpur Sadiqabad) Malik Mukhtar Ahmad (Kalia P.O. Aanba Sheikhupura) Nadeem Asghar (Mohallah Naukhar Qadeem Farooqabad P.O. Same Tehsil & District Sheikhupura) Anees Hussain (Hoewky P.O. Same Tehsil & District Sheikhupura) Ajmal Khan (Chak No 104-RB Tehsil Jaranwala Faisalabad) Muhammad Hassan (Dera Ali Sarhana Jattri Kohna P/O Same Tehsil & District Sheikhupura) 40 41 42 43 44 45 46 47 48 49 50 51 2 1 39 Name and address of the borrower S. No. Muhammad Hassan (35404-2565653-7) Ajmal Khan (33104-2143529-1) Anees Hussain (35404-8892905-1) Nadeem Asghar (35404-5254893-7) Malik Mukhtar Ahmad (35404-2933083-3) Jam Muhammad Iqbal (31304-8370982-7) Muhammad Yasin (35301-1972057-3) Mir Tahir Shua Zaidi (36302-4974012-5) Syed Farjad Zaidi (36302-8835247-9) Mir Tahir Shua Zaidi (36302-4974012-5) Syed Farjad Zaidi (36302-8835247-9) Kaneez Fatima (35202-9678520-0) Muhammad Nawaz (34102-9303135-1) Abdul Majeed (36202-2263321-7) Muhammad Naseem (35202-5447863-1) 3 Name of individuals / partners / directors (with CNIC No.) Peeran Ditta. Muhammad Sher Muhammad Nawaz Chaudhary Asghar Ali Malik Noor Muhammad Jam Allah Wasaya Muhammad Hassan Syed Ahmad Shuaa Zaidi Syed Ahmad Shuaa Zaidi Syed Israr Hussain Muhammad Nawaz Karim Bux Prop.Mohammad Naseem 4 Father’s / Husband’s name 307 267 366 317 502 20 - 15,000 15,000 539 - 578 4,859 5 Principal 6 512 498 637 754 840 2,687 574 500 500 588 2,861 1,437 1,192 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - - - - - - - 1,127 2,861 2,015 6,051 819 765 1,003 1,071 1,342 2,707 574 15,500 15,500 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - - - 1,498 1,641 512 525 637 721 840 2,149 574 2,661 2,293 608 2,846 11 Interest/ Mark-up waived 12 - - - - - - - - - - - 1,124 1,008 Other financial relief provided 512 525 637 721 840 2,149 574 3,785 3,301 608 2,846 1,498 1,641 13 Total (9+10+11+12) Annexure I
236. 235 Malik Sajid Mehmood (Kachi Muhammad Khan P.O. Taranda Muhammad Pannah Tehsil Liaquatpur) Raja Hassan Nawaz Khan (544-H-3 Johar Town Lahore.) Tahir Abbas (Village Wahgray Tehsil Ferozewala District Sheikhupura) Safdar Ali (Chak # 12/1 R Okara) Hassan Saeed (Dahroor Muslim P.O. Siri Rampura Tehsil Ferozwala) Mehar Din (Mouza Manga Hathar, P.O. Sundar Tehsil & District Lahore) Rana Sana Ullah & Rana Aman Ullah (137-B/2R Mohallah Eid Gah Haveli Lakkah) Muhammad Ismail (Jamsher Chak # 24 Pattoki) Muhammad Ismail (Jamsher Chak # 24 Pattoki) Ali Raza (Mir Pur Bhattian P.O Kot Hussain Tehsil Nankana Sahib) Muhammad Azam Nawaz (Near Ghala Godam House No. 44 Mohalla Willayatabad No. 02 Multan) Muhammad Mansoor Sadiq (H. No. 525 Block A Lateef Chowk GM Abad) Nemat Ullah (Ward No.10 Hassan Shah Colony Jampur District Rajanpur) Muhammad Adil Khan (H # 130 G-3 Wapda Town Lahore) 53 54 55 56 57 58 59 60 61 62 63 64 65 2 1 52 Name and address of the borrower S. No. Muhammad Adil Khan (35404-6952483-3) Nemat Ullah (32402-1449847-9) Muhammad Mansoor Sadiq (33100-4505165-1) Muhammad Azam Nawaz (36302-5418877-5) Ali Raza (35402-7780936-3) Muhammad Ismail (35103-6556067-9) Muhammad Ismail (35103-6556067-9) Rana Sana Ullah & Rana Aman Ullah (35301-1910732-9) (35301-1910734-3) Fazal Ur Rehman Khan Mohammad Ramzan Sheikh Abdul Sadiq Haji Malik Rizwan Rai Ghazanfar Ali Khan Nawaz Khan Nawaz Khan Rana Mohammad Hanif Muhammad Anwer Liaqat Ali Hassan Saeed (35401-9369028-9) Mehar Din (35202-5409958-9) Yar Muhammad Muhammad Hanif Tahir Abbas (35401-6049777-1) Safdar Ali (35302-1820559-7) Raja Rab Nawaz Khan Malik Jind Wadda 4 Father’s / Husband’s name Raja Hassan Nawaz Khan (38201-0984198-3) Malik Sajid Mehmood (31302-2152625-1) 3 Name of individuals / partners / directors (with CNIC No.) 5 2,227 1,445 1,797 1,525 - 358 499 2,146 394 438 585 410 1,823 2,722 Principal 6 313 721 336 341 567 560 851 3,813 662 815 1,098 622 1,818 5,160 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - - - - - - - - 2,166 2,133 1,866 567 918 1,350 5,959 1,056 1,253 1,683 1,032 3,641 7,882 2,540 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - - - - 661 815 1,157 622 1,128 5,268 393 1,600 313 280 567 560 902 4,099 11 Interest/ Mark-up waived 12 - - - - - - - - - - 329 - 312 390 Other financial relief provided 722 1,600 625 670 567 560 902 4,099 661 815 1,157 622 1,128 5,268 13 Total (9+10+11+12) Annexure I
237. 236 Muhammad Afzal Ch (Shop No. 2 Nayyar Plaza Gulraz Rawalpindi) Musawar Hussain (P.O. Phalia Rugh Tehsil Phalia District Mandi Bahauddin) Muhammad Hasnain (Chah Talib Wala P/O Khas Gogran Tehsil And District Lodhran) Riaz Ahmad (P.O. Khas Pahrianwali Tehsil Phalia District Mandi Bahauddin) Ali Raza (P.O. Khas Pahrianwali Tehsil Phalia District Mandi Bahauddin) Haq Carriage Contractor (Mohallah Saeed Abad Ahmad Pur Sial) Abdul Waheed Wajid (12-13-A Willayat Abad # 2 Vehari Road P.O. Timber Market Multan) Bashir Ahmad Chishti (Basti Peer Muhammad Yar P/O Chak Nadar Shah Khaibodla Tehsil Bahawalnagar) Shah Zaib Khan (House # P-526 Mohallah Saidpur Angat Pura Rawalpindi) Imran Khan (Manchar Road Gali No.3 Mohalla Islamabad Ali Pur Chattha District Gujranwala) Hoorain Goods Transport Company (Street No. 08 Mohalla Tipu Sultan Shaheed Sadiqabad District Rahim Yar Khan) Muhammad Aslam (Head Rcad, Khanewal Road Multan) Rukhsana Imdad (House No.62-J, Canal Burg Multan Road Lahore) 67 68 69 70 71 72 73 74 75 76 77 78 2 1 66 Name and address of the borrower S. No. Rukhsana Imdad (35202-7417349-8) Muhammad Aslam (36302-8595119-5) Rana Mohsin Jameel (31304-8265853-3) Imran Khan (34104-2013298-7) Shah Zaib Khan (37405-5821289-3) Bashir Ahmad Chishti (31101-7757984-7) Abdul Waheed Wajid (36302-0464372-1) Muhammad Farooq Nawaz (33204-0405399-1) Ali Raza (34403-6684947-7) D/O Imdad Ali Ameer Ud Din Muhammad Jameel Zafar Ullah Khan Chattha Shah Nawaz Khan Nazir Ahmad Chishti Ch Abdul Majeed Rahi Zulafiqar Ali Muhammad Mansha Noor Muahmmad Muhammad Rafeeq Muhammad Hasnain (36203-3374128-1) Riaz Ahmad (34403-8439667-3) Munawar Hussain Chaudhary Muhammad Ali 4 Father’s / Husband’s name Musawar Hussain (34403-2742416-5) Muhammad Afzal Ch (35303-2111594-1) 3 Name of individuals / partners / directors (with CNIC No.) 1,346 2,196 - 2,228 3,777 4,907 1,656 1,588 2,528 2,653 5,447 1,540 2,026 5 Principal 6 397 1,788 816 188 282 425 1,559 759 231 470 201 417 421 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - - - - - - - 1,771 2,496 1,547 2,613 421 2,625 5,565 5,723 1,844 1,870 2,953 4,212 6,206 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - - - 11 433 2,024 1,226 227 285 423 1,106 1,014 328 554 281 344 421 Interest/ Mark-up waived 12 781 - 1,246 560 251 311 - 1,422 391 586 238 451 389 Other financial relief provided 519 795 810 1,214 2,024 2,472 787 536 734 1,106 2,436 719 1,140 13 Total (9+10+11+12) Annexure I
238. 237 Babar Ameer (Thakkar Key Banda P/O Jamal Ko Depalpur Okara Haveli Lakha) Deewan Goods Transport Co (Circular Road Near Akbar Masjid Rahim Yar Khan District Rahim Yar Khan) Ali Ijaz (Sharif Pura P.O. Awan Muslim Tehsil Muridkey District Shiekhupura) Al-Riaz Traders (Jowana Bangla Chak # 4/4 R P/O Rang Pur Tehsil & District Muzaffargarh) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) 80 81 82 83 84 85 86 87 88 89 90 2 1 79 Name and address of the borrower S. No. Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Riaz Hussain (32304-1563123-9) Ali Ijaz (35405-0558679-5) Usama Raiz (31303-3674461-3) Babar Ameer (35301-4728408-5) 3 Name of individuals / partners / directors (with CNIC No.) Ghulam Ali Ghulam Ali Ghulam Ali Ghulam Ali Ghulam Ali Ghulam Ali Ghulam Ali Ghulam Ali Abdul Rehman Abbas Ali Muhammad Riaz Muhammad Ameer 4 Father’s / Husband’s name 1,117 5,268 5,268 5,268 5,268 5,346 5,268 5,268 5,268 5,405 2,506 4,642 5 Principal 6 1,219 1,219 1,219 1,219 1,234 1,219 1,219 1,219 856 147 852 146 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - - - - - - 6,487 6,487 6,487 6,261 2,653 5,494 1,263 6,487 6,487 6,487 6,487 6,580 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - - 11 868 868 868 871 883 868 868 868 769 416 1,216 259 Interest/ Mark-up waived 12 1,545 1,550 1,547 1,551 1,653 1,550 1,540 1,545 788 490 1,747 262 Other financial relief provided 521 2,413 2,418 2,415 2,422 2,536 2,418 2,408 2,413 1,557 906 2,963 13 Total (9+10+11+12) Annexure I
239. 238 Akhtar Hussain (BOP Main Branch Rawalpindi (Staff). Global Infrastructure (Private) Limited (10-Q, Gulberg II, Lahore) KNK Infrastructure (Pvt) Ltd. (11-A-III, Gulberg- III, Lahore) Wood Master International (Pvt) Ltd. (Office # G 1, Craze Plaza, Near DHA, Main Boulevard, Lahore) Zafar Developers And Builders (Jamal Town Opp.Sufi Soap, 12-Km Lhr/Skp. Road Kot Abdul Malik, Lahore) Dr.Pervaiz Imtiaz Khan (681 Shadman Colony Lahore) Bashir Cotton Mills (Pvt) Ltd. (97-B, Gulberg-II, Lahore) 92 93 94 95 96 97 2 1 91 Name and address of the borrower S. No. Tariq Rafi (42301-0838522-7) Arif Rafi (35202-1504108-3) Anjum Rafl (35202-2434949-9) Abdullah Rafl (3520014165767) Dr. Pervaiz Imtiaz Khan (35202-1182931-9) Muhammad Anjum Ch. (35202-2203235-3) Muhammad Younas (34101-8746080-1) Muhammad Afzal (33100-0771376-1) Imran Hassan (34101-9984652-7) Kamal Nasir Khan (56503-5034439-7) Abaid Ullah Khan (54400-8534874-7) Shuja Ul Mulk Khan (35202-2926820-5) Abbas Khan (56503-1843659-3) Asad Nawaz Khan (61101-6412215-1) Mehmood Amir Saeed (35202-1368012-5) Asad Nawaz Khan (61101-6412215-1) Mehmood Amir Saeed (35202-1368012-5) Kamal Nasir Khan (56503-5034439-7) Akhtar Hussain (37201-1563861-5) 3 Name of individuals / partners / directors (with CNIC No.) Muhammad Rafi Imtiaz Ali Khan. Ch. Faqir Muhammad. Hassan Din Amir Muhammad Hassan Din Abaidullah Khan Sheikh Merak Khan Abaidullah Khan Abaidullah Khan Ch. Muhammad Nazwaz Khan Mian Muhammad Saeed Ch. Muhammad Nazwaz Khan Mian Muhammad Saeed Abaidullah Khan Haji Safdar Hussain 4 Father’s / Husband’s name 1,254 165,469 - - 188 - 12,500 5 Principal 270 204,691 13,154 6,036 72,272 130,655 146,094 6 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - 1,524 370,160 13,154 6,036 72,460 130,655 158,594 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - 338 196,412 4,675 5,603 45,952 46,163 39,391 11 Interest/ Mark-up waived 12 - - - - 2,136 1,048 411 Other financial relief provided 749 196,412 4,675 5,603 45,952 48,299 40,439 13 Total (9+10+11+12) Annexure I
240. 239 Gulistan Power Generation Ltd . (2nd Floor Finlay House, I.I Chundrigarh Road, Karachi) Crescent Jute Products Ltd. (1st Floor, 65-XX, Khayaban-e-Iqbal Road, Sector XX DHA Phase 3, Lahore) Maqbool Engineering Associates (Pvt) Ltd. (255, Panorama Center, Fatima Jinnah Road Saddar Karachi) Zemindar Flour Mills (Pvt) Ltd. (33-KM G.T Road, Khorey Muridke) Yaqoob & Sons (Makkah Rice Mill Pindi Bhattian Road. Jalalpur Bhattian District Hafizabad) 99 100 101 102 2 1 98 Name and address of the borrower S. No. Mumtaz Ahmed (34301-1729295-3) Mian Fazal-e-Haque (35201-7529542-1) Mian Fazal-Ur-Rehman (35201-1396058-1). Muhammad Yaqoob Muhammad Yousaf Syed Maqbool Hussain Syed Mahmood Hussain Syed Mehmood Hussain Mazhar Karim Mazhar Karim Humayun Mazhar Humayun Mazhar Khurram Mazhar Karim Khurram Mazhar Karim Humayun Mazhar (35201-2124933-9) Khurram Mazhar Karim (35201-1471781-3) Shehryar Mazhar (35201-0706577-7) Shameel Mazhar (35201-8645147-9) Shahjahan Mazhar Karim (35201-3671625-7) Rijah Khurram Mazhar (35201-0464730-6) Syed Mahmood Hussain (42301-0883262-5) Nafisa Mahmood (42301-0827600-4) Syed Nabeel Hussain Shah (42301-1080033-3) Jamal Din Abdul Shakoor Abdul Shakoor Maqsood Ilahi Karam Dad Khan Zulfiqar Ali 4 Father’s / Husband’s name Abdul Shakoor (42201-0350226-5) Tanveer Ahmed (42201-0350138-5) Naseer Ahmed (42201-0632509-5) Sohail Maqsood (35201-4740143-5) Muhammad Akhtar Mirza (3520196760423) Iftikhar Ali (35401-2034238-7) 3 Name of individuals / partners / directors (with CNIC No.) 49,538 53,714 103,428 93,541 6,980 95,590 112,992 1,589 30,614 6 51,132 5 Principal Interest / Mark-up 7 Other than Interest / Mark-up - - - - - 152,966 147,255 8,569 208,582 81,746 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - Rupees in ‘000 9 Principal written-off - - - - - 47,784 53,946 6,488 108,357 31,206 11 Interest/ Mark-up waived - - - - 5,055 12 Other financial relief provided 47,784 53,946 6,488 113,412 31,206 13 Total (9+10+11+12) Annexure I
241. 240 Haseeb Waqas Sugar Mills Ltd . (6-F Model Town, Lahore) Oriental Fruits (Pvt) Ltd. (6-F Model Town, Lahore) Sialkot Transport Co. Pvt. Limited (Near General Bus Stand, Opposite Noor LPG Center Sialkot) 104 105 2 1 103 Name and address of the borrower S. No. Operators / Directors are representing Sialkot Chamber of Commerce Ilyas Mehraj (35202-7301494-9) Mian Waqas Riaz (35202-2562237-9) Mian Haseeb Ilyas (35202-7459668-5) Mian Ijaz Mehraj (35202-7102873-1) Mrs. Yasmin Riaz (35202-9509247-2) Mian Haseeb Illyas (35202-7459668-5) Shahzadi Ilyas (35202-2476849-8) Zainab Waqas (35202-4366644-4) Mian Waqas Riaz (35202-2562237-9) Mian Illyas Mehraj (35202-7301494-9) Mian Ijaz Mehraj (35202-7102873-1) Mrs. Yasmin Riaz (35202-9509247-2) Zakia Ilyas (35202-4771354-0) Muhammad Akram Khan (35201-6808852-3) Raza Mustafa (33100-7254107-1) Hafiz Muhammad Irfan Hussain (35301-9994693-9) 3 Name of individuals / partners / directors (with CNIC No.) - Mian Mehraj Din Mian Riaz Mehraj Mian Illyas Mehraj Mian Mehraj Din Mian Riaz Mehraj Mian Illyas Mehraj Mian M. Illyas Mian Waqas Riaz Mian Riaz Mehraj Mian Mehraj Din Mian Mehraj Din Mian Riaz Mehraj Mian Illyas Mehraj Ch. Niaz Ahmed Shoukat Ali Haji M. Ali Butt 4 Father’s / Husband’s name 17,743 109,187 288,487 5 Principal 7,045 66,057 90,316 6 Interest / Mark-up 7 Other than Interest / Mark-up - - - 24,788 175,244 378,803 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - Rupees in ‘000 9 Principal written-off - - - 4,183 41,612 98,413 11 Interest/ Mark-up waived 12 - - 6,422 Other financial relief provided 10,605 41,612 98,413 13 Total (9+10+11+12) Annexure I
242. 241 Dar es Salaam Textile Mills Ltd . (176-N, Scotch Corner, Upper Mall, Lahore) Hygiene Industries (Plot # 21-A, Industrial Estate, Multan) Pak Pansy (Pvt) Ltd. (Plot # 04, Ahmed Town, Survey # 212, Block # 02, Azizabad, Commercial Area Karachi) Universal Corporation (Plot # 4, 2nd Floor, Ahmed Town, Survey No. F.B. Area, Block-2, Karachi) 107 108 109 2 1 106 Name and address of the borrower S. No. Mr. Muhammad Athar (42101-4593499-1) Mst. Nuzhat Athar (42101-8646171-8) Mr. Muhammad Athar (42101-4593499-1) Mst. Nuzhat Athar (42101-8646171-8) Mr. Muhammad Athar (42101-4593499-1) Mst. Nuzhat Athar (42101-8646171-8) Faisal Mukhtar (35200-1561125-1) Abida Mukhtar (35202-1492705-4) Nilofar Mukhtar (61101-1836202-0) Mahwesh Faisal Mukhtar (35201-1523109-0) Sheikh Parvez Ashraf (35202-6738230-7) Zulfiqar Ahmed (35202-4941853-1) M. Ejaz Akbar Khan (35202-2732679-9) Ch Ahmed Mukhtar (34201-0402286-7) (Deceased) Irfan Nasr (35201-5531354-9) 3 Name of individuals / partners / directors (with CNIC No.) 38,892 32,356 Sharif Ahmad. Muhammad Athar. Sharif Ahmad. Muhammad Athar. 37,791 12,862 5 Principal 38,833 32,786 44,541 10,520 6 Interest / Mark-up 7 Other than Interest / Mark-up - - - - 77,725 65,142 82,332 23,382 8 Total Outstanding Liabilities at beginning of year Sharif Ahmad. Muhammad Athar. Ch. Ahmed Mukhtar Ch. Ahmed Mukhtar Ch. Ahmed Mukhtar Faisal Mukhtar Sheikh Muhammad Ashraf Nazar Mohammad Muhammad Akber Khan Ch. Mohammad Husain Raja Nasrullah Khan 4 Father’s / Husband’s name 10 Interest / Mark-up written-off - - - - Rupees in ‘000 9 Principal written-off - - - - 24,489 20,756 24,149 6,269 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - 24,489 20,756 24,149 6,269 13 Total (9+10+11+12) Annexure I
243. 242 Paramount Spinning Mills Ltd . (2nd Floor Finlay House, I.I Chundrigarh Road, Karachi) Khurshid Traders (R/O Bismillah Colony Jatoi Muzaffargarh) Rana Khalid Hussain (House 281-B/5 Babawala Chowk Sahiwal) Ghulam Yasin (Kotla Band Ali P/O Jhuggi Wala Tehsil Jatoi, District. Muzaffargarh) Shabbir Trading Company (Pakpattan Road Depalpur, District.Okara) Khawaja Fareed Telecom (College Road, Layyah Tehsil & District Layyah) New Modern Cotton Ginner Grain Mark (Shop # 45 A Grain Market Hasilpur) 111 112 113 114 115 116 2 1 110 Name and address of the borrower S. No. Ghulam Haider (31203-1716367-5) Ghulam Hussain (31203-1716323-5) Asif Iqbal (32203-1000221-9) Ch. Shabbir Ahmed (35301-7661077-3) Ghulam Yasin (32302-9083889-1) Rana Khalid Hussain (36502-8420142-3) Khursheed Ahmed Rao (32302-1702838-1) Abdul Shakoor (42201-0350226-5) Tanveer Ahmed (42201-0350138-5) Naseer Ahmed (42201-0632509-5) Sohail Maqsood (35201-4740143-5) Muhammad Asif Akram (35404-2976207-1) Muhammad Akhtar Mirza (3520196760423) Abid Sattar (35202-2306906-3) Muhammad Arif (35201-1641317-5) Muhammad Ashraf Khan (35201-1346603-5) Muhammad Junaid (35202-6261910-0) 3 Name of individuals / partners / directors (with CNIC No.) Ghulam Ali Khuda Bakhsh Sher Muhammad Sher Muhammad Khadim Hussain Muhammad Yousaf Jamal Din Abdul Shakoor Abdul Shakoor Maqsood Ilahi Muhammad Akram Karam Dad Khan Abdul Sattar Zahid Abdul Hameed Anwar Muhammad Dilshad Khan Abdul Rasheed 4 Father’s / Husband’s name 2,805 - - - - - 619,184 5 Principal 6,811 3,292 41,967 1,598 776 12,181 1,132,669 6 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - 9,616 3,292 41,967 1,598 776 12,181 1,751,853 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - 4,253 1,120 23,588 745 529 4,837 361,263 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - 4,253 1,120 23,588 745 529 4,837 361,263 13 Total (9+10+11+12) Annexure I
244. 243 Azeem Exports (Pvt.) Ltd (Chak - 202 R.B. Ghona Road Ghatti, Faisalabad) Ali Rizwan Bhatti (Chah Pucca P.O. Kot Hussain Khan Nankana Sahib) Fiaz Rice Corporation (Mananwala Narang Manddi Road Narang Mandi) Azam Majid / Co. (Tatley Road Kamoke) Khawaja Naseer Ud Din Mehmood (Rajanpur Kalan Rahim Yar Khan) Hamid Associates (H. No.7 Sultan Ahmad Road Lahore) Liaqat Ali Khan (Raupur Road Joti P.O. Jatoi District M. Gahr Ali Pur) 118 119 120 121 122 123 2 1 117 Name and address of the borrower S. No. Liaqat Ali Khan (32302-1736439-1) Hamid Almas (35202-7635686-7) Haji Abdul Sattar (31303-23400569-9) Muhammad Hanif (358-89-056551) Muhammad Yaqoob (358-78-764496) Shahid Hanif (358-80-792560) Rana Anwar Ali Khan (34102-0452452-5) Rana Muhammad Azam Khan (34102-0452451-5) Muhammad Majid Khan (34102-0451127-9) Atta Ullah khan Muhammad Saeed Abdul Aziz Amir Ud Din Muhammad Hanif Ghulam Mahiudin Khan Ghulam Muhammad Ghulam Muhammad Abdul Aziz Muhammad Sakhi Bhatti Ali Rizwan Bhatti (35202-1933765-7) Iqbal Ahmad (35401-2559531-3) Muhammad Fayyaz (35201-2256395-3) Muhammad Akram Sh. 4 Father’s / Husband’s name Abrar Ahmed (33100-0310806-9) Ijaz Ahmed (33100-2102921-7) Yasmeen Ibrar (33100-0336460-2) Suraya Bano (33100-6007043-8) Naeem Akhter (33100-9148895-4) 3 Name of individuals / partners / directors (with CNIC No.) 5,086 174 2,944 17,052 1,762 7,542 3,463 97 21,652 45,358 11,341 - 7,652 6 2,898 5 Principal Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - 22,138 1,936 10,486 3,560 14,239 21,652 53,010 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - 17,961 5,501 553 5,084 1,510 6,366 10,502 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - 5,501 553 5,084 1,510 6,366 10,502 17,961 13 Total (9+10+11+12) Annexure I
245. 244 Chaudary Brothers Farming Servi (2-Kilometer By Pass Khanqah Sharif Ganwar Shah Road Baahwalpur) Malik Zari Service Prop: Bashir (Chah Wakeel Wala Khakhi Gharbi P.O. Khas DG Khan) Sheheryar Bilal Ice/Cold Storage (Tehsil Chowk Chiniot) Woodsy Furniture Chiniot (6-Malik Centre Tehsil Chowk Chiniot) Hero Center (Tehkal Payan University Road Peshawar) Sagro Seed Corporation (Old Grain Market Khan Pur) Al Madina Filling Station (Opposite Children Hospital Abdali Road Multan) Azeem Tyres (LMQ Road Nawan Shehr Multan) Alpha Industrial Establishment (19-Birdwood Road, Lahore) K.M.Furniture (Mohalla. Karam Abad Chiniot) Ausaf Rice Factory (17-Kassi Basti Masoom Shah Vehari Road Multan) Zaynoon Traders (A-8,School Road, Nishtarabad Peshawar) 125 126 127 128 129 130 131 132 133 134 135 2 1 124 Name and address of the borrower S. No. Mohd. Nadeem Gul (17301-1301410-5) Zia Rustam (13101-4102829-3) Syed Muhammad Hussain Zaidi (36302-2248004-9) Saddat Yar (33201-7802200-1) Rana Zaheer Ahmad (35202-2760066-3) Dr. Muhammad Rafi (35201-2783986-9) Muhammad Azeem (36101-2904883-5) Rao Ahmad Ali Qamar (32302-1690084-3) Saeed Ahmad (31301-2207099-5) Imran Khan Khatak (17301-5827250-5) Muhammad Bilal (33201-3032058-5) Muhammad Bilal Ahmed (33201-3032058-5) Bashir Ahmad (32102-7360864-7) Nasir Mehmood (37405-4371036-9) Khalid Mehmood (35202-3725540-9) Muhammad Adeel (35202-7290958-3) 3 Name of individuals / partners / directors (with CNIC No.) Toor Gull Rustam Khan Syed Waqar Hussain Khushi Muhammad Rana Muhammad Tufail Chaudhry Muhammad Shafi Zafar Chirag Din Liaqat Ali Allah Ditta Nasud Khan Khushi Muhammad Khushi Muhammad Khushi Muhammad Abdul Karim 4 Father’s / Husband’s name 4,093 - - 3,398 6,148 2,126 1,042 4,564 3,775 16,163 4,566 20,707 5 Principal 1,770 2,658 2,690 1,035 7,627 2,669 1,921 21,843 10,809 4,900 5,696 32,595 6 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - - - - - - 14,584 21,063 10,262 53,302 5,863 2,658 2,690 4,433 13,775 4,795 2,963 26,407 8 Total Outstanding Liabilities at beginning of year 10 - - - - - - - - - - - - - - - - - - - - - - - 1,131 Interest / Mark-up written-off Rupees in ‘000 9 Principal written-off 11 5,094 2,513 2,920 6,584 706 1,192 1,216 - 3,368 1,064 1,071 11,151 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - - - - - - 1,071 11,151 5,094 2,513 2,920 6,584 706 1,192 1,216 1,131 3,368 1,064 13 Total (9+10+11+12) Annexure I
246. 245 Ahmad Ashraf Cotton Industries (Cotton Lundi Pitafi Road Jatoi District Muzaffargarh) Gopang Oil Mills Prop:Khalid Mehmood (Khan Oil Mills Wong Tehsil & District Rajan Pur Kot Mithan) Giltwood Interiors (Malik Centre Tehsil Chowk Chiniot) Bismillah Paper Traders (22 Madina Market, Ganpat Road Lahore) Jholay Lal Petrolium Service (Chak-14/1L G.T. Road Renala Khurd Okara) Noshahi Enterprises (Sabzi Mandi Kamoke, Kamoke) Appolo Builders Associates (301, Windsong Place, 7-8, K.U. C.H.S. Shaheed-EMillat Road, Karachi) Al-Ghazi Alamgir Flour Mill (Dau Wala Guddu Road Mureed Shakh Ghotki) Noor ud Din (Bhong Tehsil Sadiq Abad) Rias Muneer Ahmed (House No. 3 Street No. 29 Sector F61 Islamabad) 137 138 139 140 141 142 143 144 145 2 1 136 Name and address of the borrower S. No. Raees Munir Ahmed (42301-6386978-5) Noor ud Din (31304-2026365-5) Abdul Manan (33100-0549069-5) Akhtar Ali (61101-4703724-3) Muhammad Amin (42201-4010470-3) Mrs. Nargis Amin (42000-7104159-0) M. Ashique Hussain (34102-8105347-5) M. Saddique (34102-5659931-1) Hafiz Amir Shahzad (34102-8200347-5) Muhammaed Asif (34102-8985522-7) Muhammad Amin Shah (Deceased) (35303-4337954-5) Shahid Abbas (35303-6412064-5) Tanveer Akram Khan (35202-8211669-1) Saddat Yar (33201-7802200-1) Khalid Mehmood (32403-1633928-9) Rao Ahmad Ali Qamar (32302-1690084-3) Muhammad Ashraf (32302-8203286-5) Muhammad Nasir (36302-0339562-1) 3 Name of individuals / partners / directors (with CNIC No.) 8,279 Rais Shabbir Ahmed Faqeer Buksh Abdul Rehman Sabir Ali Ch Jamal Din Ch Shamsul Haq 9,917 3,955 8,017 6,479 37,018 9,942 30,249 14,392 6,669 6,821 Muhammad Latif Urf Bhola Pehlwan Muhammad Ashiq Hussain Muhammad Latif 4,993 202 Mukhtar Ali Ghulam Abbas 1,834 8,162 6,698 6 Interest / Mark-up 861 6,671 3,005 2,676 5 Principal 7 Other than Interest / Mark-up - - - - - - - - - - 46,935 13,897 38,266 20,871 13,490 5,195 2,695 14,833 9,703 10,955 8 Total Outstanding Liabilities at beginning of year Muhammad Akram Khan Khushi Muhammad Pir Buksh Khan Liaqat Ali, Muhammad Jammil Muhammad Rafique 4 Father’s / Husband’s name 10 Interest / Mark-up written-off - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - 2,535 2,799 13,021 3,248 10,643 4,253 3,124 2,409 712 2,920 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - - - - 13,021 3,248 10,643 4,253 3,124 2,409 712 2,920 2,535 2,799 13 Total (9+10+11+12) Annexure I
247. 246 Uzma Zeeshan / Muhammad Mouzzam Razi (House # 39/B New Muslim Town Lahore) Asim Niazi And Co (Ali Pur Road Piracha Petrol Pump Muzaffer Garh) Hafsa Embroidery (House # 2549 Samanabad Faisalabad) Al-Wahab Filling Station (H. No.50-C Johar Town Lahore) Adnan Mustafa Tractor Showroom (Chah Wakeel Wala Khaki Gharbi D.G Khan) Ahmed Nasir Corporation (5-Umer Road Model Town A Bahawalpur) Al Meezan Metal Industries Pvt Ltd (Suit # 409 4TH Floor Anum Trade Centre Ghani Chowrangi Site Karachi) Four Star Garments (197-B Gulgasht Colony Multan) Azam Spray Center (Ghosia Chock Abdul Hakim Tehsil Kabirwala District Khanewal) Ali Doubling (Haji Ali Muhammad Wali Street Road Kot Kasur) Lasani Poultary Farm (College Road Pattoki Tehsil Pattoki District Okara) Malik Traders (Faisalabad Road Opposite Govt. Islamia College Chiniot) 147 148 149 150 151 152 153 154 155 156 157 2 1 146 Name and address of the borrower S. No. Sheheryar Hassan (33201-1833497-9) Javid Iqbal (35101-2465787-1) Mehboob Ahmed (35102-1364036-9) Rauf Ahmed (35102-1804161-9) Allah Ditta (36101-1911871-9) Zahid Akhter Kanwar (36302-5910466-5) Shah Zaki ur Rehman (42301-1381245-3) Munawar Ahmed (42301-6880736-9) Muhammad Bukash (-) Khalid Pervaiz (-) Ghulam Mustafa (32102-1117540-3) Syed Ashfaq Hussain Shah (36401-6178476-7) Shahid Iqbal (33102-7560678-5) Muhammad Asgher Khan (32304-1587455-5) Muhammad Asim Khan (32304-1587456-5) Shugufta Yasmeen (32102-2743069-4) Munawar Sultana (32604-1534186-4) Uzma Zeshan (31303-0194929-6) Mohd. Moazam Razi (35202-8128599-3) 3 Name of individuals / partners / directors (with CNIC No.) Khushi Muhammad Muhammad Ashique Ali Muhammad Muhammad Azam Kanwar Akhtar Ali Shah Aziz Ur Rehman Muhammad Shamsul Tauheed Muhammad Ramzan Ch Sanaullah Sher Muhammad Syed Safdar Hussain Shah Muhammad Ashraf Muhammad Khan Niazi W/O Muhammad Ayub Niazi W/O Muhammad Asghar Khan Fasih 4 Father’s / Husband’s name 5 2,083 411 2,845 720 4,574 42,414 3,704 1,301 4,322 2,575 1,133 4,789 629 6,381 8,952 11,565 2,475 4,001 1,102 1,867 769 2,068 9,807 6 Interest / Mark-up 3,961 Principal 7 Other than Interest / Mark-up - - - - - - - - - - - - 8 4,658 1,544 7,634 1,349 10,955 51,366 15,269 3,776 8,323 3,170 2,636 13,768 Total Outstanding Liabilities at beginning of year 10 - - - - - - - - - - - - - - - - - - 124 - - - 250 4,582 Interest / Mark-up written-off Rupees in ‘000 9 Principal written-off 11 1,198 546 2,316 616 2,574 2,784 5,028 1,291 2,134 608 604 2,991 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - - - - - - 13 1,322 546 2,316 616 2,824 7,366 5,028 1,291 2,134 608 604 2,991 Total (9+10+11+12) Annexure I
248. 247 Kentax Sirgroh (Pvt) Ltd (Industrial Area Katar Band Road Thokar Niaz Baig Multan Road Lahore) Vicky Trading Company (40 Deewan Street Nishtar Road Lahore) Ahmad Carporation (Railway Road Pakpattan) Al-Madina Furniture (Malik Center Tehsil Chiniot) Excel Distributors (02, White House Lane-02 Sunderdas Road Lahore) Haji Manzoor Qadir (Sandhu Furniture House, Kutchery Road, Gujrat) Punjab Group Of Colleges Jehanian (H # 453 Near Masjid Quados Mohallah Jinnah Colony-B Jahanian) Ahmed Rice Mills (Ahmed Nagar, Tehsil Wazirabad District Gujranwala) Badar Majeed (164-Aurangzeb Block, Garden Town Lahore) Saanco Enterprises (25 Street # 43/S Pak Colony Near Timber Market Ravi Road Lahore) 159 160 161 162 163 164 165 166 167 2 1 158 Name and address of the borrower S. No. Malik Muhammad Amin (35102-6153918-1 ) Badar Majeed (35202-4970220-7) Ghulam Nabi Butt (34104-0865481-7) M. Jehangir Chatha (34104-2261706-5) Allah Rakha (34104-2239145-9) Ghulam Rasool (34104-2221302-9) Zonaira Maryam (34101-6114870-6) Tawakkal Hussain (36101-2904883-5 ) Manzoor Qadir (34201-8976433-7) Syed Hassan Ilyas (35201-3778403-3) Sheheryar Hassan (33201-1833497-9) Mukhtar Ahmad (36402-9121053-1) Tariq Majeed (35201-1850928-3) Hammad Khalid (35202-9980349-9 ) Haseeb Khalid (35202-7237512-3) Amna Khalid (35202-0107764-2 ) 3 Name of individuals / partners / directors (with CNIC No.) Malik Ghulam Muhammad Sheikh Abdul Majeed Muhammad Ismail Ch.Maqsood Ali Chattha Muhammad Ibrahim Allah Ditta W/O Abdul Rashid Malik Sikandar Khan Muhammad Ismail Syed Ilyas Ali Khushi Muhammad Haji Muhammad Sheikh Abdul Majeed Khalid Sharif Hammad Khalid 4 Father’s / Husband’s name 8,471 552 13,648 14,000 161 2,225 5,161 89 13,861 12,285 5 Principal 10,175 911 20,182 6,748 3,135 3,601 6,504 1,137 18,276 16,942 6 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - - - - 18,646 1,463 33,830 20,748 3,296 5,826 11,665 1,226 32,137 29,227 8 Total Outstanding Liabilities at beginning of year 10 - - - - - - - - - - - - 103 - 1,625 - - - - 348 Interest / Mark-up written-off Rupees in ‘000 9 Principal written-off 1,600 5,104 700 16,413 2,485 1,197 1,570 2,926 714 18,970 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - - - - 5,104 803 16,413 4,110 1,197 1,570 2,926 714 19,318 1,600 13 Total (9+10+11+12) Annexure I
249. 248 Name and address of the borrower 2 Ittefaq Bricks Company (2-KM, Bucheki Road, Near Haseeb Waqas Sugar Mills, Nankana Sahib, Bucheki Road Nankana Sahib) Champion Traders (Abaseen Complex, Ground Floor, 8-Davis Road, Lahore) S. No. 1 168 169 Ghulam Sarwar (35202-6541229-7) Rai Saleem-ur-Rehman Bhatti (35202-5365019-7 ) 3 Name of individuals / partners / directors (with CNIC No.) Ahmad Din Ahmad Din 4 Father’s / Husband’s name 2,981,735 2,056,361 1,648 1,853 1,065 6 2,200 5 Principal Interest / Mark-up 7 Other than Interest / Mark-up - - - 4,053 2,713 5,038,096 8 Total Outstanding Liabilities at beginning of year 10 - - - - - 8,163 Interest / Mark-up written-off Rupees in ‘000 9 Principal written-off 851 860 1,522,072 11 Interest/ Mark-up waived - - 40,898 12 Other financial relief provided 851 860 1,571,133 13 Total (9+10+11+12) Annexure I
250. Annexure II ISLAMIC BANKING BUSINESS The Bank has started Islamic banking operations in the year 2013 . As at close of the December 31, 2021, the Bank is operating 114 Islamic banking branches (2020: 102 Islamic banking branches and 02 sub Islamic banking branches) and 25 Islamic banking windows (2020: Nil). STATEMENT OF FINANCIAL POSITION As at December 31, 2021 20212020 Note Rupees in ‘000’ ASSETS Cash and balances with treasury banks 7,527,608 5,351,954 Balances with other banks 6,059,934 307,986 Due from financial institutions 1 4,500,000 8,632,000 Investments - net 2 16,590,093 16,996,603 Islamic financing and related assets - net 3 49,033,044 33,201,187 Fixed assets 2,052,740 1,670,801 Intangible assets 9,439 6,626 Due from head office 442,430 951,270 Other assets 1,399,506 2,003,185 Total assets 87,614,794 69,121,612 LIABILITIES Bills payable 388,599 212,448 Due to financial institutions 911,409 607,842 Deposits and other accounts 4 79,206,096 61,539,589 Due to head office - Subordinated debt - Other liabilities 2,556,072 2,647,285 83,062,176 65,007,164 NET ASSETS 4,552,618 4,114,448 REPRESENTED BY Islamic banking fund 2,000,000 1,500,000 Reserves 5,505 735 Deficit on revaluation of assets (3,019) (97,165) Unappropriated profit 5 2,550,132 2,710,878 4,552,618 4,114,448 CONTINGENCIES AND COMMITMENTS6 249
251. Annexure II ISLAMIC BANKING BUSINESS PROFIT AND LOSS ACCOUNT For the year ended December 31 , 2021 20212020 Note Rupees in ‘000’ Profit / return earned Profit / return expensed 7 8 4,621,515 2,208,303 5,057,562 2,558,654 Net profit / return 2,413,212 2,498,908 Fee and commission income 179,284 108,798 Dividend income - Foreign exchange (loss) / income (5,175) 4,915 Income / (loss) from derivatives - Gain on securities 2,194 Other income 1,271 4,278 177,574 117,991 Total income 2,590,786 2,616,899 Other expenses Operating expenses 1,981,180 1,646,171 Workers welfare fund - Other charges 294 150 1,981,474 1,646,321 Profit before provisions Provisions and write offs - net 609,312 770,058 970,578 414,325 (Loss) / profit before taxation Taxation 9 (160,746) - 556,253 - (Loss) / profit after taxation (160,746) 556,253 250
252. Annexure II ISLAMIC BANKING BUSINESS CASH FLOWS STATEMENT For the year ended December 31 , 2021 20212020 Rupees in ‘000’ CASH FLOWS FROM OPERATING ACTIVITIES (Loss) / profit before taxation (160,746) 556,253 Less: dividend income - (160,746) Adjustments for: Depreciation on fixed assets 127,910 Amortization on intangible assets 1,446 Depreciation on ijarah assets under IFAS - 2 118,973 Depreciation right-of-use assets 177,486 Markup on lease liability against right-of-use assets 195,434 Amortization of premium on debt securities - net 63,923 Gain on termination of lease liability against right-of-use assets 679 Gain on sale of property and equipment - net (34) Provision and write-offs - net 770,058 556,253 126,823 1,353 162,883 158,935 181,732 43,739 17 (2,135) 414,325 1,455,875 1,087,672 1,295,129 (Increase) / decrease in operating assets: Lendings to financial institutions 4,132,000 Advances (16,721,924) Others assets 1,113,555 1,643,925 (11,476,369) Increase / (decrease) in operating liabilities: Bills payable 176,151 Due to financial institutions 303,567 Deposits and other accounts 17,666,507 Other liabilities (504,559) 17,641,666 (5,237,000) (6,507,423) 1,847,493 (9,896,930) (37,765) 607,842 15,450,580 (582,550) 15,438,107 Net cash flow from operating activities 7,460,426 7,185,102 CASH FLOWS FROM INVESTING ACTIVITIES Net investments in available for sale securities 436,733 (8,269,009) Investments in fixed assets (192,119) (120,718) Investment in intangible assets (2,813) (2,198) Net cash flow from / (used in) investing activities 241,801 (8,391,925) CASH FLOWS FROM FINANCING ACTIVITIES Increase in Islamic banking fund 500,000 Payment of lease liability against right-of-use assets (274,625) (231,034) Net cash flow from / (used in) financing activities 225,375 (231,034) Net increase / (decrease) in cash and cash equivalents 7,927,602 (1,437,857) Cash and cash equivalents at beginning of the year 5,659,940 7,097,797 Cash and cash equivalents at end of the year 13,587,542 5,659,940 251
253. Annexure II 1 . DUE FROM FINANCIAL INSTITUTIONS 20212020 In local In foreign Total In local In foreign Total currency currencies currencycurrencies Rupees in ‘000’ Unsecured 4,500,000 - 4,500,000 8,632,000 - 8,632,000 2. INVESTMENTS BY SEGMENTS 2021 2020 Cost / Provision Surplus Carrying Cost / Provision Surplus Amortized for / (Deficit) value Amortized for / (Deficit) costdiminution costdiminution Rupees in ‘000’ Carrying value Federal government securities: - Ijarah sukuks 4,502,908 - (1,154) 4,501,754 2,249,072 - 1,078 2,250,150 - Naya Pakistan Certificates 88,600 - - 88,600 - - - - Sukuk - bai muajjal with Government of Pakistan - - - - 2,756,196 - - 2,756,196 4,591,508 - (1,154) 4,590,354 5,005,268 - 1,078 5,006,346 Non government debt securities - Listed -Unlisted Total investments 8,457,812 3,617,239 - (75,312) 8,382,500 - - 3,617,239 16,666,559 - (76,466) 16,590,093 8,521,689 (171,690) 8,349,999 3,640,258 - - 3,640,258 17,167,215 - (170,612) 16,996,603 20212020 Note Rupees in ‘000’ 3. ISLAMIC FINANCING AND RELATED ASSETS Ijarah 3.1 2,075,758 1,988,841 Murabaha 3.2 2,115,237 220,091 Musharaka 21,482,411 9,347,782 Diminishing musharaka 20,579,778 18,353,796 Istisna 4,154,436 3,894,158 Payment against documents 55,304 55,304 Gross islamic financing and related assets 50,462,924 33,859,972 Less: provision against islamic financings - Specific 1,429,880 658,785 - General - Islamic financing and related assets - net of provision 3.1Ijarah As at Jan Additions 01, 2021 658,785 49,033,044 33,201,187 2021 Cost 1,429,880 Depreciation Book value Deletion / As at Dec As at Jan Deletion / Charge for As at Dec as at Dec adjustment 31, 2021 01, 2021 adjustment the year 31, 2021 31, 2021 Rupees in ‘000’ Plant and machinery Vehicles Equipment Service Ijarah 96,262 537,678 196,223 1,624,407 - 241,247 - - Total 2,454,570 241,247 252 (49,442) 46,820 (38,061) 740,864 (73,139) 123,084 - 1,624,407 (160,642) 2,535,175 38,170 278,634 148,925 - (36,339) (16,304) (72,642) - 12,930 14,761 32,059 78,935 341,265 399,599 27,108 103,391 19,693 - - 1,624,407 465,729 (125,285) 118,973 459,417 2,075,758
254. Annexure II 2020 Cost Depreciation Book value As at Jan Additions Deletion / As at Dec As at Jan Deletion / Charge for As at Dec as at Dec 01, 2020 adjustment 31, 2020 01, 2020 adjustment the year 31, 2020 31, 2020 Rupees in ‘000’ Plant and machinery Vehicles Equipment Service Ijarah 125,415 521,933 214,523 1,235,518 - 31,188 - 388,889 (29,153) 96,262 (15,443) 537,678 (18,300) 196,223 - 1,624,407 48,493 212,044 99,424 - (31,144) (11,434) (14,537) - Total 2,097,389 420,077 (62,896) 359,961 (57,115) 3.1.1 Future ijarah payments receivable Not later than 1 year Ijarah rental receivables 460,402 2,454,570 20,821 38,170 58,092 78,024 278,634 259,044 64,038 148,925 47,298 - - 1,624,407 162,883 465,729 1,988,841 20212020 Later than Later than Over Not later Over 1& one & five five than 1 Total Total less than less than years year years 5 years 5 years Rupees in ‘000’ Rupees in ‘000’ 1,197,537 417,819 2,075,758 425,493 1,145,529 417,819 1,988,841 20212020 Note Rupees in ‘000’ 3.2Murabaha Murabaha financing 3.2.1 2,056,987 197,566 Advances for murabaha 58,250 22,525 2,115,237 3.2.1 Murabaha receivable - gross 3.2.2 2,137,662 Less: deferred murabaha income 3.2.4 43,890 Profit receivable shown in other assets 36,785 220,091 242,516 344 44,606 Murabaha financings 2,056,987 197,566 3.2.2 The movement in murabaha financing during the year is as follows: Opening balance 242,516 1,046,741 Sales during the year 3,122,725 859,021 Adjusted during the year 1,227,579 1,663,246 Closing balance 2,137,662 3.2.3 Murabaha sale price 2,187,623 Murabaha purchase price 2,056,987 242,516 203,970 6,404 130,636 197,566 3.2.4 Deferred murabaha income Opening balance 344 Arised during the year 89,814 Less: recognized during the year 46,268 29,784 32,506 61,946 Closing balance 3.3 Islamic financing and related assets include Rs. 3,265,869 thousand (2020: Rs. 2,876,933 thousand) which have been placed under non-performing status. 43,890 344 253
255. Annexure II 4 . DEPOSITS AND OTHER ACCOUNTS 20212020 In local In foreign Total In local In foreign Total currency currencies currencycurrencies Rupees in ‘000’ Customers Current deposits 14,637,500 413,124 15,050,624 11,129,196 361,767 11,490,963 Savings deposits 44,910,744 223,869 45,134,613 46,122,394 65,342 46,187,736 Term deposits 7,693,035 - 7,693,035 1,967,176 - 1,967,176 Others 1,545,903 - 1,545,903 1,581,404 - 1,581,404 68,787,182 636,993 69,424,175 60,800,170 427,109 61,227,279 Financial institutions Current deposits 221,033 41,503 262,536 216,155 - 216,155 Savings deposits 69,119 185 69,304 90,864 5,291 96,155 Term deposits 9,450,000 - 9,450,000 - - Others 81 - 81 - - 9,740,233 41,688 9,781,921 307,019 5,291 312,310 78,527,415 678,681 79,206,096 61,107,189 432,400 61,539,589 20212020 Rupees in ‘000’ 4.1 Composition of deposits - Individuals 15,034,600 13,391,543 - Government 22,981,647 24,840,912 - Public sector entities 1,244,608 430,596 - Banking companies 259,390 269,062 - Non-banking financial institutions 9,522,531 43,248 - Private sector 30,163,320 22,564,228 79,206,096 61,539,589 4.2 This includes deposits eligible to be covered under insurance arrangements of Deposit Protection Corporation amounted to Rs. 39,930,973 thousand (2020: Rs 30,735,192 thousand). 20212020 Rupees in ‘000’ 5. ISLAMIC BANKING BUSINESS UNAPPROPRIATED PROFIT Opening balance Add: Islamic banking (loss) / profit for the year 2,710,878 (160,746) 2,154,625 556,253 Closing balance 2,550,132 2,710,878 6. CONTINGENCIES AND COMMITMENTS - Guarantees 1,662,941 1,683,665 - Commitments 5,785,076 1,586,274 7,448,017 3,269,939 254
256. Annexure II 20212020 Rupees in ‘000’ 6.1Guarantees: Financial guarantees 68,200 78,900 Performance guarantees 851,135 765,088 Other guarantees 743,606 839,677 1,662,941 1,683,665 6.2Commitments: Documentary credits and short-term trade-related transactions - letters of credit 4,684,070 1,078,068 Commitments in respect of: - forward lending 1,101,006 508,206 5,785,076 1,586,274 6.2.2 Commitments in respect of forward lending Undrawn formal standby facilities, credit lines and other commitments to lend 1,101,006 508,206 6.2.2.1 These represent commitments that are irrevocable because they cannot be withdrawn at the discretion of the Bank without the risk of incurring significant penalty or expense. In addition, the Bank makes revocable commitments that do not attract any significant penalty or expense if the facility is unilaterally withdrawn. 20212020 Rupees in ‘000’ Claims against the Bank not acknowledged as debts 65,639 The amounts involved in the claims filed against the Bank are yet to be adjudicated by the concerned Courts as the same have been filed as outburst to our recovery suits. Uptill now, in no case, any claim has been adjudicated, determined or decreed by the Courts against the Bank. Moreover, there is no likelihood of decreeing the suits against the Bank because, the claims are frivolous. 20212020 Rupees in ‘000’ 7. PROFIT / RETURN EARNED OF FINANCING, INVESTMENTS AND PLACEMENT Profit earned on: Financing 2,705,740 3,209,835 Investments 1,530,172 1,543,985 Placements 351,056 291,047 Deposits with financial institutions 34,547 12,695 4,621,515 5,057,562 255
257. Annexure II 20212020 Rupees in ‘000’ 8. PROFIT ON DEPOSITS AND OTHER DUES EXPENSED Deposits and other accounts Markup on lease liability against right-of-use assets Markup on borrowings from SBP Profit on deposits from conventional HO 1,944,056 195,434 2,860 65,953 2,317,614 181,732 49 59,259 2,208,303 2,558,654 9. The Bank calculates and files a single corporate tax return as per the requirements of Income Tax Ordinance, 2001. Segmental calculation is not required for filing. However, considering the format requirement of the financial statements to disclose Islamic Banking segment’s tax charge separately, a notional net tax credit for Islamic Banking is expected to be Rs. 52,114 thousand (2020: notional net tax charge of Rs. 234,071 thousand). 20212020 Rupees in ‘000’ 10. CHARITY FUND Opening balance 4,162 40,263 Additions during the year : Received from customers on account of delayed payment 833 11,259 Profit on charity saving account 131 982 964 Payments / utilization during the year : Health 5,126 12,241 48,342 Closing balance - 4,162 11. POOL MANAGEMENT 11.1 BOP TAQWA islamic banking division is maintaining following pools for profit declaration and distribution. i) General pool ii) Special pool-I (Equity) iii) Special pool-II iv) Special pool-IV v) Special pool-VII (PER) vi) Special pool-IX vii) Special pool-XIII viii) Special pool-XIV ix) Special pool-XV x) Special pool-XVI xi) Special pool-XVII xii) Special pool-XVIII xiii) Special pool-XIX xiv) Special pool-XX xv) Special pool-XXI xvi) Special pool-XXII 256
258. Annexure II 11 .2 xvii) Special pool-XXIII xviii) Special pool-XXIV xix) Special pool-XXV xx) Special pool-XXVI xxi) Special pool-XXVII (IERS Pool) xxii) Special pool-XXVIII xxiii) Special pool-XXIX xxiv) Special pool-XXX xxv) Special pool-XXXI xxvi) Taqwa Foreign Currency USD Pool xxvii) Taqwa Foreign Currency GBP Pool xxviii) Taqwa Foreign Currency EURO Pool xxix) USD special pool-I General pool The general pool comprises of depositors’ funds, Bank’s equity inclusive of current deposits and mudaraba placements from BOP head office. The Bank acts as fund manager (Mudarib) and invests the funds in shariah compliant modes of financings, investments and placements (remunerative assets). The profit of the pool is calculated on all the remunerative assets booked by the Bank and is shared amongst the members of the pool on pre-defined mechanism based on weightages announced before the commencement of period concerned. The distributable profit of the pool is finalized after deduction of direct expenses only while indirect expenses including administrative and general expenses are borne by BOP-IBD as Mudarib. a) Weightages for distribution of profit in general pool Profit is calculated on the basis of daily product balance in Mudaraba based depositors’ accounts and paid as per pre defined weightages. While considering weightages emphasis is given to the quantum, type and the period of risk assessed by following factors: • Contracted period, nature and type of deposit/ fund • Payment cycle of profit on such deposit/ fund, i.e. monthly, quarterly or on maturity • Magnitude of risk b) Identification and allocation of pool related income & expenses The distributable profit of the pool is finalized by including direct income earned by income generating / remunerative assets and after deducting direct expenses of the period concerned, while indirect expenses including administrative and general expenses are borne by BOP-IBD as Mudarib. c) Parameters associated with risk and rewards Following are the consideration attached with risk & reward of general pool: • Period, return, safety, security and liquidity of investment • Financing proposals under process at various stages and likely to be extended in the near future. • Expected withdrawals of deposits according to the maturities affecting the deposit base. • Maturities of funds obtained from principal office, Islamic Banking Institutions and Shariah compliant organizations as regulated in Pakistan. • Element of risk attached to various types of investments. • SBP rules & shariah clearance. 257
259. Annexure II 11 .3 Special pools The special pools comprise of depositors’ funds, Bank’s equity inclusive of current deposits and mudaraba placements from BOP head office. The Bank acts as Fund Manager (Mudarib) and invests the funds in shariah compliant modes of financings, investments and placements (remunerative assets). The profit of the pools is calculated on all the remunerative assets booked by the Bank and is shared amongst the members of the pool on pre-defined mechanism based on weightages announced before the commencement of concerned period. The distributable profit of the pool is finalized after deduction of direct expenses only while indirect expenses including administrative and general expenses are borne by BOP-TAQWA as Mudarib. a) Weightages for distribution of profit in special pools Profit is calculated on daily product basis and paid as per pre defined weightages. While considering weightages emphasis is given to the quantum, type and the period of risk assessed by following factors: • Contracted period, nature and type of deposit/ fund. • Payment cycle of profit on such deposit/ fund, i.e. monthly, quarterly or on maturity • Magnitude of risk b) Identification and allocation of pool related income & expenses The distributable profit of the pool is finalized by including direct income earned by income generating / remunerative assets and after deducting direct expenses of the period concerned, while indirect expenses including administrative and general expenses are borne by BOP-IBD as Mudarib. c) Parameters associated with risk and rewards Following are the consideration attached with risk & reward of general pool: • Period, return, safety, security and liquidity of investment • Financing proposals under process at various stages and likely to be extended in the near future. • Expected withdrawals of deposits according to the maturities affecting the deposit base. • Maturities of funds obtained from principal office, islamic banking institutions and shariah compliant organizations as regulated in Pakistan. • Element of risk attached to various types of investments. • SBP rules & shariah clearance. 258
260. Annexure II 11 .4 Avenues / sectors of economy / business where mudaraba based deposits have been deployed: 20212020 Rupees in ‘000’ Federal and provincial governments 20,567,121 9,602,269 Due from GOP - bai muajjal - 2,756,196 Placement with Financial Institutions 4,500,000 8,632,000 Ijara sukuk 4,502,908 2,249,071 Transport, storage, logistics and communication 157,013 186,055 Manufacturing and trading of food items 1,092,893 842,840 Manufacture of pesticides and other agro-chemical product - 68,137 Power generation 18,464,149 18,131,692 Manufacture of paper, paperboard and products thereof 507,914 614,086 Consumer car Ijarah 184,559 16,225 Consumer Housing / LCH 269,977 Textile composite / other 3,198,893 4,328,821 Cement & allied 3,920,171 3,138,939 Iron & steel industry 1,439,874 856,890 Rubber / plastic products etc. 1,340,342 198,648 Others 17,017,696 8,054,170 77,163,510 59,676,039 11.5 Charging expenses The direct expenses are being charged to the pool, while indirect expenses including the establishment cost is being borne by BOP IBD as Mudarib. The direct expenses to be charged to the pool may include cost of sales of inventories, insurance / takaful expenses of pool assets, stamp fee or documentation charges, brokerage fee for purchase of securities/commodities etc. 20212020 Rupees in ‘000’ Provisions Murabaha Istisna Ijarah Diminishing Musharika 79,995 10,000 195,320 1,144,565 50,009 10,000 186,380 412,396 1,429,880 658,785 11.6 Mudarib share (in amount and percentage of distributable income): 2021 2020 Rupees in Percentage Rupees in Percentage ‘000’ % ‘000’% Rupees in ‘000’ Rabbul mal Mudarib 2,058,478 1,482,331 58.14% 41.86% 2,250,493 1,715,683 56.74% 43.26% Distributable income 3,540,809 100.00% 3,966,176 100.00% 259
261. Annexure II 11 .7 Amount & percentage of mudarib share transferred to depositors through Hiba: 20212020 Rupees in ‘000’ Mudarib share 1,482,331 Hiba 82,175 Hiba percentage of mudarib share 5.54% 1,715,683 173,347 10.10% This is not a special hiba as such. This hiba has been distributed across the board to all the investment account holders. Profit rate earned vs. profit rate distributed to the depositors during the year: Profit rate earned 7.49% 9.53% Profit rates distributed to depositors 3.57% 4.83% 260
262. CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2021 (The Bank of Punjab and Its Subsidiaries) 261
263. Building a better working world EY Ford Rhodes Chartered Accountants 96-B-I . 4th Floor, Pace Mall Building M. M. Alam Road, Gulberg-II P.O. Box 104, Lahore-54660 Tel: +9242 3577 8402-11 Fax: +9242 3577 8412-13 ey.lhr@pk.ey.com ey.com/pk INDEPENDENT AUDITOR’S REPORT To the members of The Bank of Punjab Report on the Audit of the Consolidated Financial Statements For the year ended 31 December 2021 Opinion We have audited the annexed consolidated financial statements of The Bank of Punjab and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2021, and the consolidated statement of profit and loss account and the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated cash flow statement for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information. In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2021, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with the accounting and reporting standards as applicable in Pakistan. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.   A member Firm of Ernst & Young Global Limited 262 & Its Subsidiaries
264. Building a better working world Following are the key audit matters : Key audit matters How the matter was addressed in our audit 1. Provision against non-performing advances The Group’s credit portfolios include advances, We applied a range of audit procedures including the debt securities and non-funded credit facilities. The following: portfolio is spread across various domestic branches and include corporate financing to several public - We reviewed the Group’s process for identification and classification of non-performing financings. sector entities and large to small size businesses As part of such review we performed an analysis operating in the private sector, as well as consumer of the changes within the different categories financing to individuals. of classified non-performing accounts from last year to the current reporting date. This analysis As per the Group’s accounting policy (refer note 5.4 was used to gather audit evidence regarding to the consolidated financial statements), the Group downgrading of impaired financings and declassification of accounts from non-performing determines provisions against non-performing to regular and vice versa, as the case may be. financings exposures in accordance with the requirements of Prudential Regulations of State Bank of Pakistan (SBP) and also maintains general - We performed independent checks on test basis for the computations of provisions to assess that provision as required by PRs. The PRs require specific the same is in line with the requirements of the provisioning for loan losses on the basis of an ageapplicable Prudential Regulations. based criteria which should be supplemented by a subjective evaluation of Group’s credit portfolio. - In addition, we selected a representative sample The determination of loan loss provision, therefore, of borrowers from the financings portfolios involve use of management judgment, on a case-toincluding individually significant credit facilities and performed tests and procedures such as case basis, considering factors such as the borrower’s review of credit documentation, repayment economic, financial, and business conditions, history and past due status, financial condition as borrowers repayment behaviors and realizability of depicted by the borrowers’ financial statements, collateral held by the Group. nature of collateral held by the Group and status of litigation, if any, with the borrower; The Group’s advances to the customers represent 40.5% of its total assets as at 31 December 2021 - In respect of the level of general provision and are stated at Rs. 485,576 million which is net of maintained by the Group, we discussed the provision of Rs. 50,014 million at the year end. approach and policy followed by the Group with the management. In view of the significance of this area in terms of its impact on the consolidated financial statements and We also assessed adequacy of disclosures as the level of involvement of management’s judgment, included in note 10 to the consolidated financial regarding the non-performing we identified adequacy and completeness of statements provision against financings as a significant area of financings and provisions made for the same in the consolidated financial statements in accordance audit judgment and a key audit matter. with the requirements of the applicable financial reporting framework. The accounting policy and disclosures relating to provisioning against non- performing financings are included in note 5.4 and 10 respectively to the consolidated financial statements. A member Firm of Ernst & Young Global Limited 263
265. Building a better working world Information Other than the Financial Statements and Auditor ’s Report Thereon Management is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the financial statements and our auditors’ report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and Board of Directors for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the accounting and reporting standards as applicable in Pakistan, the requirements of Banking Companies Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017) and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The Board of directors is responsible for overseeing the Group’s financial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: · Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. ·  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. A member Firm of Ernst & Young Global Limited 264 & Its Subsidiaries
266. Building a better working world · Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. · Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. · Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. · Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide to the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor’s report is Ahsan Shahzad. E Y Ford Rhodes Chartered Accountants Place: Lahore Date: 07 March 2022 UDIN: AR202110079jMTdbLPpB A member Firm of Ernst & Young Global Limited 265
267. CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at December 31 , 2021 20212020 Note Rupees in ‘000’ ASSETS Cash and balances with treasury banks 6 71,319,238 69,272,177 Balances with other banks 7 8,858,356 2,507,010 Lendings to financial institutions 8 29,580,388 15,086,867 Investments - net 9 531,697,948 567,803,516 Advances - net 10 485,576,503 391,889,808 Fixed assets 11 19,836,430 14,817,059 Intangible assets 12 1,108,152 695,648 Deferred tax assets - net 13 13,760,437 7,838,663 Other assets - net 14 35,534,757 25,937,481 1,197,272,209 1,095,848,229 LIABILITIES Bills payable 16 10,109,459 4,168,641 Borrowings 17 71,323,488 154,841,415 Deposits and other accounts 18 1,002,918,281 835,070,362 Liabilities against assets subject to finance lease - Subordinated debts 19 7,788,980 6,791,700 Deferred tax liabilities - Other liabilities 20 50,221,597 42,593,336 1,142,361,805 1,043,465,454 NET ASSETS 54,910,404 52,382,775 REPRESENTED BY Share capital - net 21 26,173,766 26,173,766 Reserves 10,602,583 8,113,976 Non Controlling Interest 587,579 506,993 (Deficit) / surplus on revaluation of assets - net of tax 22 (1,368,710) 5,955,359 Unappropriated profit 18,915,186 11,632,681 54,910,404 52,382,775 CONTINGENCIES AND COMMITMENTS 23 The annexed notes 1 to 47 and annexures I and II form an integral part of these consolidated financial statements. Chief Financial Officer 266 President & Its Subsidiaries Chairman Director Director
268. CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended December 31 , 2021 20212020 Note Rupees in ‘000’ Mark-up / return / interest earned Mark-up / return / interest expensed 24 25 81,804,413 51,776,184 86,120,415 62,696,412 Net mark-up / interest income 30,028,229 23,424,003 NON MARK-UP / INTEREST INCOME Fee and commission income 26 5,143,597 3,757,167 Dividend income 377,403 136,987 Foreign exchange income 576,914 328,303 Income / (loss) from derivatives - Gain on securities - net 27 1,785,790 8,466,492 Other income - net 28 60,357 387,191 Total non-markup / interest income 7,944,061 13,076,140 Total income 37,972,290 36,500,143 NON MARK-UP / INTEREST EXPENSES Operating expenses 29 20,835,578 17,064,740 Workers welfare fund 363,315 334,882 Other charges 30 13,408 304,279 Total non-markup / interest expenses 21,212,301 17,703,901 Profit before provisions (Reversal) / provisions and write offs - net 31 Extra ordinary / unusual items 16,759,989 (1,611,018) - 18,796,242 6,869,929 - PROFIT BEFORE TAXATION Taxation - net 32 18,371,007 11,926,313 5,974,608 5,045,784 PROFIT AFTER TAXATION 12,396,399 6,880,529 PROFIT ATTRIBUTABLE TO: Equity holders of the parent 12,315,813 6,818,867 Non Controlling Interest 80,586 61,662 12,396,399 6,880,529 Basic earnings per share 33 4.66 2.58 Diluted earnings per share 34 4.66 2.58 The annexed notes 1 to 47 and annexures I and II form an integral part of these consolidated financial statements. Chief Financial Officer President Chairman Director Director 267
269. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended December 31 , 2021 20212020 Note Rupees in ‘000’ Profit after taxation for the year 12,396,399 6,880,529 Other comprehensive income: Items that will not be reclassified to profit and loss account in subsequent periods: Remeasurement loss on defined benefit obligation Movement in surplus on revaluation of fixed assets - net of tax Movement in surplus on revaluation of non-banking assets - net of tax 37.1.7.2 (747) (87,285) 22.1 1,946,307 - 22.2 201,167 (6,978) 2,146,727 (94,263) 14,543,126 6,786,266 Items that may be reclassified to profit and loss account in subsequent periods: Movement in surplus on revaluation of investments - net of tax 22 (9,380,427) 707,349 Total comprehensive income 5,162,699 7,493,615 Total comprehensive income attributable to: Equity holders of the parent 5,082,113 7,431,953 Non Controlling Interest 80,586 61,662 5,162,699 7,493,615 The annexed notes 1 to 47 and annexures I and II form an integral part of these consolidated financial statements. Chief Financial Officer 268 President & Its Subsidiaries Chairman Director Director
270. 269 - - 26 ,436,924 - - (263,158) - - 26,173,766 - - 2,215,040 - - 4,510,188 - 707,349 2,226,914 - (6,978) 3,144,293 6,818,867 (87,285) 8,151,276 61,662 - 445,331 6,880,529 613,086 46,866,808 Total - - Total comprehensive income / (loss) for the year ended December 31, 2021 - - - - (263,158) - - - - 26,173,766 - - - - 2,215,040 - - - - 5,898,936 - (9,380,427) - (9,380,427) 2,934,263 - 2,147,474 - 2,147,474 3,021,096 12,315,066 12,315,813 (747) 11,632,681 (1,982,769) - (1,982,769) 52,382,775 80,586 5,162,699 80,586 12,396,399 - (7,233,700) 506,993 - - - - - - - (2,643,692) - (2,643,692) Chief Financial Officer President Chairman Director Director Balance as on December 31, 2021 26,436,924 (263,158) 26,173,766 2,215,040 8,387,543 (6,446,164) 5,077,454 18,915,186 587,579 54,910,404 The annexed notes 1 to 47 and annexures I and II form an integral part of these consolidated financial statements. Transfer to statutory reserve - - - - 2,488,607 - - (2,488,607) - Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax - - - - - - (59,455) 59,455 - Transfer from surplus on revaluation of non banking assets to unappropriated profit - net of tax - - - - - - (9,164) 9,164 - Transfer from surplus on revaluation of non banking assets to unappropriated profit on disposal - - - - - - (22,497) 31,119 - 8,622 Transactions with owners recognized directly in equity : Final cash dividend - December 31, 2020 declared subsequent to year end at 10% - - - - - - - (2,643,692) - (2,643,692) - - 26,436,924 Profit after taxation for the year Other comprehensive (loss) / income Balance as on December 31, 2020 Total comprehensive income / (loss) for the year ended December 31, 2020 - - - - - 707,349 (6,978) 6,731,582 61,662 7,493,615 Transfer to statutory reserve - - - - 1,388,748 - - (1,388,748) - Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax - - - - - - (66,510) 66,510 - Transfer from surplus on revaluation of non banking assets to unappropriated profit - net of tax - - - - - - (9,424) 9,424 - Transfer from surplus on revaluation of fixed assets to unappropriated profit on disposal- net of tax - - - - - - (12,140) 14,963 - 2,823 Transfer from surplus on revaluation of non banking assets to unappropriated profit on disposal - - - - - - (28,145) 30,443 - 2,298 Transactions with owners, recognized directly in equity: Final cash dividend - December 31, 2019 declared subsequent to year end at 7.5% - - - - - - - (1,982,769) - (1,982,769) Profit after taxation for the year Other comprehensive income / (loss) Balance as on January 01, 2020 Surplus / (Deficit) - net of tax on revaluation of Share Discount on Share Share Statutory Fixed / Unappropriated Non capital issue of capital premium reserve Investments non profit Controlling shares - net banking Interest assets R u p e e s i n ‘000’ For the year ended December 31, 2021 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
271. CONSOLIDATED CASH FLOW STATEMENT For the year ended December 31 , 2021 20212020 Note Rupees in ‘000’ CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation 18,371,007 11,926,313 Less: Dividend income (377,403) (136,987) 17,993,604 11,789,326 Adjustments: Depreciation on property and equipment 11.3 1,236,473 1,181,997 Depreciation on non banking assets acquired in satisfaction of claims 14.1.1 48,666 58,923 Depreciation on ijarah assets under IFAS - 2 29 240,683 287,075 Depreciation on right-of-use assets 29 990,749 891,145 Amortization on intangible assets 12.1 208,010 197,899 Amortization of discount on debt securities - net (1,483,712) (3,042,435) Markup on lease liability against right-of-use assets 25 1,047,705 937,275 Unrealized gain on revaluation of investments classified as held for trading 9.1 (21,039) (1,630) (Reversal) / provision and write-offs - net 31 (1,611,018) 6,869,929 (Gain) / loss on termination of lease liability against right-of-use assets 28 (3,156) 2,635 Loss / (gain) on sale of property and equipment - net 28 980 (101,461) Gain on sale of non banking assets - net 28 (42,207) (225,129) Realized gain on sale of securities - net 27.1 (1,764,751) (8,464,862) Provision for employees compensated absences 29.1 12,040 13,982 Gratuity expense 29.1 273,147 187,775 (867,430) (1,206,882) 17,126,174 10,582,444 (Increase) / Decrease in operating assets: Lendings to financial institutions (14,493,521) (11,127,096) Held for trading securities (14,356,519) (9,188,822) Advances (92,117,313) (14,114,064) Others assets (9,662,535) 4,660,063 (130,629,888) (29,769,919) Increase / (Decrease) in operating liabilities: Bills Payable 5,940,818 747,558 Borrowings from financial institutions (83,515,791) 77,619,855 Deposits and other accounts 167,847,919 144,054,503 Other liabilities 4,673,047 (222,984) 94,945,993 222,198,932 Payment made to gratuity fund (267,524) (278,213) Income tax paid (6,196,821) (4,854,867) (6,464,345) (5,133,080) Net cash (used in) / flow from operating activities (25,022,066) 197,878,377 270 & Its Subsidiaries
272. CONSOLIDATED CASH FLOW STATEMENT For the year ended December 31 , 2021 20212020 Note Rupees in ‘000’ CASH FLOW FROM INVESTING ACTIVITIES Net investment in available for sale securities 38,338,339 (185,058,541) Dividends received 378,140 134,790 Investment in fixed assets (1,842,527) (1,069,119) Investment in intangible assets (620,514) (93,122) Proceeds from sale of property and equipment 3,345 651,797 Proceeds from sale of non banking assets 293,024 842,089 Net cash flow from / (used in) investing activities 36,549,807 (184,592,106) CASH FLOW FROM FINANCING ACTIVITIES Repayment of subordinated debts (2,720) (2,002,720) Dividend paid (2,643,692) (1,982,769) Payment of lease liability against right-of-use assets (1,480,786) (1,173,559) Advance subscription money - subordinated perpetual term finance certificates 19.3 1,000,000 Net cash used in financing activities (3,127,198) (5,159,048) Effects of exchange rate changes on cash and cash equivalents - Increase in cash and cash equivalents Cash and cash equivalents at beginning of the year 8,400,543 71,777,051 8,127,223 63,649,828 Cash and cash equivalents at end of the year 35 80,177,594 71,777,051 The annexed notes 1 to 47 and annexures I and II form an integral part of these consolidated financial statements. Chief Financial Officer President Chairman Director Director 271
273. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31 , 2021 1.STATUS AND NATURE OF BUSINESS 1.1 The Bank of Punjab Group (“the Group”) comprises of The Bank of Punjab (“the Bank”) (“BOP”) (“the Parent”), Punjab Modaraba Service (Private) Limited (“PMSL”) (the Management Company), First Punjab Modaraba (“FPM”) (“the Modaraba”), Punjab Capital Securities (Private) Limited (“PCSL”) (100% owned by First Punjab Modaraba). For the purpose of these financial statements, The Bank of Punjab and consolidated subsidiaries are referred to as the Group. The Group consists of: Parent The Bank of Punjab % age of % age of holdingholding 20212020 Rupees in ‘000’ Subsidiaries Punjab Modaraba Service (Private) Limited 100.00% 100.00% First Punjab Modaraba 39.16% 39.16% Punjab Capital Securities (Private) Limited 39.16% 39.16% The subsidiary company of the Group, Punjab Modaraba Service (Private) Limited exercises control over First Punjab Modaraba, as its management company and also has a direct economic interest in it. Further, Punjab Capital Securities (Private) Limited is a 100% subsidiary of FPM. The Group has consolidated the financial statements of the modaraba and PCSL as the ultimate parent. The Group is principally engaged in commercial banking, modaraba management, leasing, brokerage, etc. Brief profile of the Bank and subsidiaries is as follows: The Bank of Punjab (the Bank) was constituted pursuant to The Bank of Punjab Act, 1989. It was given the status of a scheduled bank by the State Bank of Pakistan (SBP) on September 19, 1994. It is principally engaged in commercial banking and related services with its registered office at BOP Tower, 10-B, Block E-II, Main Boulevard, Gulberg III, Lahore. The Bank has 662 branches including 16 sub branches and 114 Islamic banking branches (2020: 636 branches including 18 sub branches and 104 Islamic banking branches) in Pakistan and Azad Jammu and Kashmir at the year end. The Bank is listed on Pakistan Stock Exchange. The majority shares of the Bank are held by Government of the Punjab (GoPb). Punjab Modaraba Service (Private) Limited Punjab Modaraba Services (Private) Limited was incorporated in Pakistan on October 19, 1991 under the Companies Ordinance, 1984 as a private limited company. It is wholly owned by The Bank of Punjab and is primarily engaged in the business of floating and managing Modarabas. It has accumulated losses as at December 31, 2021. Further, the Company’s current liabilities exceeded its current assets. These losses are mainly due to drying up of revenue streams. The management fee and dividend from First Punjab Modaraba (the Managed Modaraba) are the main sources of revenue of the Company. The financial statements of PMSL, however, have been prepared under the going concern assumption due to the reason that with continued support of the Bank of Punjab (the Holding Company), the Modaraba is expected to show better performance going forward yielding returns for the Bank. 272 & Its Subsidiaries
274. 1 .2 First Punjab Modaraba First Punjab Modaraba was formed under the Modaraba Companies and Modaraba (Flotation and Control) Ordinance, 1980 and rules framed there under and is managed by Punjab Modaraba Services (Private) Limited (wholly owned subsidiary of The Bank of Punjab).The registered office of the Modaraba is situated at Office No 100, 3rd floor, National Tower 28-Edgerton Road, Lahore. The Modaraba commenced its operations on 23 December 1992. The Modaraba is listed on Pakistan Stock Exchange. During the period ended 31 December 2021, the Modaraba has made operating profit, however the accumulated losses of First Punjab Modaraba, net of capital reserve, as at 31 December 2021 exceeds more than fifty percent of the total amount subscribed by the holders of the Modaraba Certificates. Further the current liabilities of the Modaraba exceed its current liabilities as at December 31, 2021. The losses attributed mainly to the increased finance costs in the recent financial years. In order to address going concern issue in terms of section 23 of the Modaraba Companies and Modarabas (Flotation and Control) Ordinance, 1980 (the Modaraba Ordinance), The Bank of Punjab (BOP) being the parent company of the Modaraba’s Management Company’ is providing enduring support and it shall continue to provide financial support to the Modaraba in order to mitigate liquidity risk. The Modaraba has obtained approval from the Securities & Exchange Commission of Pakistan dated 13 January 2021 to undertake Building, Construction and Real Estate activities. Accordingly, financial benefits shall be accrued in books of Modaraba in due course of time. Further, the Modaraba has made significant progress in term of recovery from certain classified borrower resulting in improvement of net equity in term of compliance of section 23 of the Modaraba Ordinance. On the basis of support and the arrangements as outlined above and the business plan prepared by the management of the Modaraba, the management of the Bank is of the view that no material uncertainty exists related to events or conditions that, individually or collectively, may cast significant doubt on the entity’s ability to continue as a going concern and the Modaraba shall be able to operate on going concern basis in the foreseeable future. Consequently, these condensed interim financial statements have been prepared reflecting these assumptions Punjab Capital Securities (Private) Limited Punjab Capital Securities (Private) Limited is registered under the Companies Ordinance, 1984 as company limited by shares from the 29th day of November 2016. PCSL is mainly engaged in business of brokerage services, portfolio management and consultancy services. The registered office of the company is situated at Room No 319, 3rd Floor, LSE Building, Lahore. The Company is wholly-owned subsidiary of First Punjab Modaraba. Basis of Consolidation Subsidiaries are all entities over which the bank has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Parent controls another entity. The Bank also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control. De-facto control may arise in circumstances where the size of the Bank’s voting rights relative to the size and dispersion of holdings of other shareholders give the Bank the power to govern the financial and operating policies, etc. The Group financial statements include the financial statements of the Bank and its subsidiaries. Subsidiaries are fully consolidated from the date on which control is transferred to the Bank. They are deconsolidated from the date that control ceases. The financial statements of subsidiaries have been consolidated on line by line basis. All significant inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognized in assets are also eliminated. 273
275. 2 . The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquiree on an acquisition- by-acquisition basis, at the non-controlling interest’s proportionate share of the recognized amounts of acquiree’s identifiable net assets. The Financial Statements of the Bank and its subsidiaries are prepared upto the same reporting date using consistent accounting policies. Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through income statement. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity. Goodwill, if any, is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in income statement. After initial recognition, is measured at carrying value i.e. cost at the date of acquisition less any accumulated impairment. Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Bank had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss. BASIS OF PRESENTATION These financial statements are the consolidated financial statements of the Group in which investments in subsidiaries is accounted for on the basis of acquisitions method. Standalone financial statements of the Bank and its subsidiaries are prepared separately. In accordance with the directives of the Government of Pakistan regarding the conversion 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 marked-up price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these consolidated financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. 274 & Its Subsidiaries
276. The financial results of Islamic Banking business have been consolidated in these consolidated financial statements for reporting purposes , after eliminating inter-branch transactions / balances. Key financial figures of the Islamic Banking business are disclosed in Annexure-II to these consolidated financial statements. 2.1 2.1.1 Statement of Compliance These consolidated financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards comprise of: - Directives issued by the SBP and the Securities Exchange Commission of Pakistan (SECP). - Requirements of The Bank of Punjab Act, 1989; - Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017; - International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board as are notified under the Companies Act, 2017; and - Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as are notified under the Companies Act, 2017. Wherever the requirements of the directives issued by the SBP and Securities and Exchange Commission of Pakistan (SECP), The Bank of Punjab Act, 1989, the Banking Companies Ordinance, 1962 and the Companies Act, 2017 differ with the requirements of these IFRS or IFAS, the requirements of the said directives, The Bank of Punjab Act, 1989, the Banking Companies Ordinance, 1962 and the Companies Act, 2017 take precedence. 2.1.2 SBP as per 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 Standard (IAS) 40, “Investment Property” for banking companies till further instructions. Further, according to the notification of SECP dated April 28, 2008, the IFRS – 7 “Financial Instruments: Disclosures” has not been made applicable for banks. Accordingly, the requirements of these Standards have not been considered in the preparation of these consolidated financial statements. 2.1.3 The State Bank of Pakistan through BPRD Circular No. 04 of 2015 dated February 25, 2015 has deferred applicability of Islamic Financial Accounting Standard - 3 for Profit & Loss Sharing on Deposits (IFAS 3) issued by the Institute of Chartered Accountants of Pakistan and notified by the SECP, vide their SRO No. 571 of 2013 dated December 12, 2013 for Institutions offering Islamic Financial Services (IIFS). The standard will result in certain new disclosures in these consolidated financial statements of the Bank. 2.1.4 New accounting standards / amendments and IFRS interpretations that are effective for the year ended December 31, 2021 During the year, certain amendments to standards, interpretations and improvement to accounting standards became effective; however, the standards, amendments, interpretations and improvements did not have any material effect on these consolidated financial statements of the Group. New accounting standards and IFRS interpretations that are not yet effective: The following standards, amendments and interpretations are only effective for accounting periods, beginning on or after the date mentioned against each of them. The Group considers that the 275
277. following standards and interpretations are either not relevant or will not have any material impact on its consolidated financial statements in the period of initial application other than IFRS 9 . The SBP vide BPRD Circular No. 04 dated October 23, 2019 has notified the effective date of IFRS 9, ‘Financial Instruments’ as January 01, 2021. However, the initial application date has been extended to January 01, 2022 by SBP vide BPRD Circular Letter No. 24 dated July 05, 2021. IFRS 9, ‘Financial Instruments’ has replaced IAS 39, ‘Financial Instruments: Recognition and Measurement’. The standard addresses recognition, classification, measurement and derecognition of financial assets and financial liabilities. The standard has also introduced a new impairment model for financial assets which requires recognition of impairment charge based on ‘Expected Credit Losses’ (ECL) approach rather than ‘incurred credit losses’ approach. The ECL has impact on all the assets of the Bank which are exposed to credit risk. Presently, in terms of SBP instructions, The Bank calculates impact of adoption of IFRS 9 on the financial statements on parallel run basis based on existing guidelines. Further, final IFRS-9 application instructions has not been issued by the SBP. Standard or Interpretations IFRS 9 IFRS 3 IAS 16 IAS 37 AIP IAS 8 IAS 1 3. 3.1 3.2 4. 4.1 Financial instruments Reference to conceptual framework - Amendments Property, plant and equipment: Proceeds before intended use -Amendments Onerous contracts - costs of fulfilling a contract - Amendments Annual improvements to IFRS Standards 2018 - 2020 Amended Definition of accounting estimates Classification of liabilities as current or non-current - Amendments 1 January 2022 1 January 2022 1 January 2022 1 January 2022 1 January 2022 1 January 2023 1 January 2023 BASIS OF MEASUREMENT These consolidated financial statements have been prepared under the historical cost convention, except for revaluation of freehold land and buildings on freehold land, revaluation of non banking assets acquired in satisfaction of claims, valuation of certain investments and commitments in respect of forward exchange contracts at fair value, right-of-use assets, lease liabilities and certain staff retirement benefits at present value. These consolidated financial statements are presented in Pak Rupees, which is the Group’s functional and presentation currency. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgement in the process of applying the Group’s accounting policies. Estimates and judgements are continually evaluated and are based on historical experiences, including expectations of future events that are believed to be reasonable under the circumstances. The areas where various assumptions and estimates are significant to the Group’s consolidated financial statements or where judgment was exercised in the application of accounting policies are as follows: Classification of investments In classifying investments as “held for trading” the Group has determined securities which are acquired with the intention to trade by taking advantage of short term market / interest rate movements and are to be sold within 90 days. 276 Effective date (accounting periods beginning on or after) & Its Subsidiaries
278. 4 .2 4.3 4.4 4.5 4.6 In classifying investments as “held to maturity” the Group follows the guidance provided in SBP circulars on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity. In making this judgment, the Group evaluates its intention and ability to hold such investments to maturity. The investments which are not classified as held for trading or held to maturity are classified as available for sale. Provision against non-performing advances and debt securities classified as investments Apart from the provision determined on the basis of time-based criteria given in Prudential Regulations issued by the SBP, the management also applies the subjective criteria of classification and, accordingly, the classification of advances and debt securities is downgraded on the basis of credit worthiness of the borrower, its cash flows, operations in account and adequacy of security in order to ensure accurate measurement of the provision. Impairment of available for sale investments The Group considers that available for sale equity investments are impaired when there has been a significant and prolonged decline in the fair value below its cost. Other factors will also need to be considered before deciding the permanent impairment of investment. This determination of what is significant and prolonged requires judgment. In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance. As of the statement of financial position date, the management has determined an impairment loss on available for sale securities, held to maturity securities and subsidiary companies as disclosed in Note 9.3 to these consolidated financial statements. Depreciation, amortization and revaluation of fixed assets Estimates of useful life of fixed assets are based on management’s best estimate. In making estimates of the depreciation / amortization method, the management uses method which reflects the pattern in which economic benefits are expected to be consumed by the Group. The method applied is reviewed at each financial year end and if there is a change in the expected pattern of consumption of the future economic benefits embodied in the assets, the method is changed to reflect the change in pattern. Further, the Group estimates the revalued amount of freehold land and buildings on freehold land on a regular basis. The estimates are based on valuations carried out by an independent valuation expert under the market conditions. Income taxes In making estimates for income taxes currently payable by the Group, the management considers the current income tax laws and the decisions of appellate authorities on certain issues in the past. There are certain matters where the Group’s view differs with the view taken by the income tax authorities and such amounts are shown as a contingent liability. Staff retirement benefits The amount of provision for gratuity and compensated absences is determined using actuarial valuation. The valuation involves making use of assumptions about discount rates, mortality, expected rate of salary increases, retirement rates, and average leave utilization per year. Due to the degree of subjectivity involved and long-term nature of these plans, such estimates are subject to significant uncertainty. 277
279. 4 .7 4.8 Non banking assets acquired in satisfaction of claims The Group estimates the revalued amounts of non banking assets acquired in satisfaction of claims on a regular basis. The estimates are based on expected legal enforceability, ease of realization and valuations carried out by an independent valuation expert under the market conditions. Lease liability on right-of-use assets In making estimates, the Group uses following practical expedients and significant judgments, as permitted by the standard: - Use of a single discount rate for leases with similar characteristics; and Lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted in the preparation of these consolidated financial statements are consistent with those of previous financial year. Significant accounting policies are enumerated as follows: 5.1 Cash and cash equivalents Cash and cash equivalents include cash and balances with treasury banks, balances with other banks and call money lendings less over drawn nostro accounts and other overdrawn Group accounts. 5.2 Lendings / borrowings from financial institutions The Group enters into transactions of repo and reverse repo at contracted rates for a specified period of time. These are recorded as under: 5.2.1 Sale under repurchase obligations Securities sold subject to a repurchase agreement (repo) are retained in the consolidated financial statements as investments and the counter party liability is included in borrowings from financial institutions. The differential in sale and repurchase price is accrued using effective yield method and recorded as interest expense over the term of the related repo agreement. 5.2.2 Purchase under resale obligations Securities purchased under agreement to resell (reverse repo) are not recognized in the consolidated financial statements as investments and the amount extended to the counter party is included in lendings to financial institutions. The differential between the contracted price and resale price is amortized over the period of the contract and recorded as interest income. 5.3Investments Investments other than those categorized as held for trading are initially recognized at fair value which includes transaction costs associated with the investments. Investments classified at held for trading are initially recognized at fair value and transaction costs are expensed in the profit and loss account. All regular way purchase / sale of investment are recognized on the trade date, i.e., the date the Group commits to purchase / sell the investments. Regular way purchase or sale of investment requires delivery of securities within the time frame generally established by regulation or convention in the market place. 278 - & Its Subsidiaries
280. Investment in subsidiary is stated at cost less provision for impairment (if any). Other investments are classified as follows: Held for trading These are securities which are acquired with the intention to trade by taking advantage of short-term market/interest rate movements. These are carried at market value, with the related surplus / (deficit) on revaluation being taken to profit and loss account. Held to maturity These are securities with fixed or determinable payments and fixed maturity that are held with the intention and ability to hold to maturity. These are carried at amortized cost. Available for sale These are investments, other than those in subsidiaries and associates, which do not fall under the held for trading or held to maturity categories. These are carried at market value with the surplus / (deficit) on revaluation taken to ‘Surplus / (deficit) on revaluation of assets’ shown in equity, except available for sale investments in unquoted shares, debentures, bonds, participation term certificates, term finance certificates, federal, provincial and foreign government securities (except for Treasury Bills and Pakistan Investment Bonds) which are stated at cost less provision for diminution in value of investments, if any. Provision for diminution in the value of investments is made after considering impairment, if any, in their value and charged to profit and loss account. Provision for diminution in value of investments in respect of unquoted shares is calculated with reference to break-up value. Provision for diminution in value of investments for unquoted debt securities is calculated with reference to the time-based criteria as per the SBP’s Prudential Regulations. Premium or discount on debt securities classified as available for sale and held to maturity securities are amortized using the effective yield method. On de-recognition or impairment in quoted available for sale securities the cumulative gain or loss previously reported as “Surplus / (Deficit) on revaluation of assets” in equity is included in the profit and loss account for the year. Gain and loss on disposal of investments are dealt with through the profit and loss account in the year in which they arise. 5.4 Advances including net investment in finance lease Advances and net investments in finance lease are stated net of provision for doubtful debts. Provision for doubtful debts is made in accordance with the Prudential Regulations prescribed by the SBP and charged to profit and loss account. Leases where risks and rewards incidental to ownership are substantially transferred to lessee are classified as finance lease. A receivable is recognized at an amount equal to the present value of the lease payments including any guaranteed residual value. The rentals received / receivable on Ijarahs are recorded as income / revenue. Depreciation on Ijarah assets is charged to profit and loss account by applying the straight line method whereby the depreciable value of Ijarah assets is written off over the Ijarah period. The Group charges depreciation from the date of the delivery of respective assets to Mustajir upto the date of maturity / termination of Ijarah agreement. 279
281. 5 .5 Fixed assets and depreciation 5.5.1 Property and equipment Property and equipment, other than freehold land which is not depreciated, are stated at cost or revalued amounts less accumulated depreciation and accumulated impairment losses (if any). Freehold land is carried at revalued amount. Depreciation on property and equipment is charged to income using the diminishing balance method so as to write off the historical cost / revalued amount of the asset over its estimated useful life, except motor vehicles, leasehold improvements and computer equipment on which depreciation is charged using the straight line basis. The rates at which the depreciation is charged are given in note 11.3 to these consolidated financial statements. Impairment loss or its reversal, if any, is charged to income. When an impairment loss is recognized, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount over its estimated useful life. Depreciation on additions is charged from the month the assets are available for use while no depreciation is charged in the month in which the assets are disposed. Surplus arising on revaluation of freehold land and buildings on freehold land is credited to the “Surplus on Revaluation of Assets” in equity and any deficit arising on revaluation is taken to profit and loss account directly. Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does not differ materially from the fair value. To the extent of the incremental depreciation charged on the revalued assets, the related surplus on revaluation of buildings (net of deferred taxation) is transferred directly to un-appropriated profit / accumulated loss. Gains and losses on sale of fixed assets are included in profit and loss account currently. Major renewals and improvements are capitalized and the assets so replaced, if any, are retired. Normal repairs and maintenance are charged to the profit and loss account as and when incurred. Capital work-in-progress is stated at cost less accumulated impairment losses (if any). These are transferred to specific assets as and when assets are available for use. 5.5.2 Right-of-use assets The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred. The right-of-use assets are subsequently depreciated over the lease term using a straight line basis as it closely reflects the expected pattern of consumption of future economic benefits. The right-of-use assets are to be reduced by impairment losses, if any, and adjusted for certain re-measurements of lease liability. Right-of-use assets are recognized using cost model. 5.6 Intangible assets Intangible assets are stated at cost less accumulated amortization and accumulated impairment losses (if any). The cost of intangible assets is amortized over their useful lives, using the straight line method as per the rates given in note 12.1 to these consolidated financial statements. Amortization on additions is charged from the month the assets are available for use while no amortization is charged in the month in which the assets are disposed. Intangible-in-progress is stated at cost less accumulated impairment losses (if any). These are transferred to specific assets as and when assets are available for use. 280 & Its Subsidiaries
282. 5 .7 5.8 5.9 5.10 5.11 5.12 Borrowings / deposits Borrowings / deposits are recorded at the proceeds received. The cost of borrowings / deposits is recognized as an expense in the period in which this is incurred. Subordinated debts Subordinated loans are initially recorded at the amount of proceeds received. Mark-up accrued on subordinated loans is recognized separately as part of other liabilities and is charged to the profit and loss account over the period on an accrual basis. Employee retirement and other benefits Defined contribution plan – Provident fund The Group operates an approved provident fund scheme, covering all permanent employees. Contributions are made monthly by the Group and the employees at the rate of 8.33% of basic salary. Contributions by the Group are charged to profit and loss account. Defined benefit plan - Gratuity scheme The Group operates an approved funded gratuity scheme for all its permanent employees. Contributions are made to cover the obligations under the scheme on the basis of actuarial valuation and are charged to income. Actuarial gains and losses are charged or credited to other comprehensive income in the year in which they occur. Defined benefit plan - Employees’ compensated absences The Group makes annual provision in the financial statements for its liabilities towards vested compensated absences accumulated by its employees on the basis of actuarial valuation. Actuarial gains and losses are charged to income in the year in which they occur. Assets acquired in satisfaction of claims Non-banking assets acquired in satisfaction of claims are carried at revalued amounts less accumulated depreciation except land which is carried at revalued amount. Revaluation by independent professionally qualified valuers, is carried out with sufficient regularity to ensure that their net carrying value does not differ materially from their fair value. Surplus arising on revaluation of non banking assets is credited to the ‘surplus on revaluation of assets’ account and any deficit arising on revaluation is taken to profit and loss account directly. Legal fees, transfer costs and direct costs of acquiring title to property is charged to profit and loss account and not capitalized. Foreign currencies Transactions in foreign currency are translated to Rupees at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities and commitments for letters of credit and acceptances in foreign currencies are translated at the exchange rates prevailing at the statement of financial position date except assets and liabilities for which there are forward contracts which are translated at the contracted rates. Forward exchange contracts and foreign bills purchased are valued at forward rates applicable to their respective maturities. All exchange differences are charged to profit and loss account. Revenue recognition Revenue is recognized to the extent that the economic benefits will flow to the Group and the revenue can be reliably measured. The following recognition criteria must be met before revenue is recognized: 281
283. 5 .13 Mark-up / return / interest income Mark-up / return / interest on advances and return on investments are recognized in profit and loss account on an accrual basis, except mark-up on non-performing advances which is recognized when received. Dividend income Dividend income is recognized when the Group’s right to receive the dividend is established. Lease finance income Financing method is used in accounting for income from lease financing. Under this method, the unearned lease income (excess of the sum of total lease rentals and estimated residual value over the cost of leased assets) is deferred and taken to income over the term of the lease periods so as to produce a constant periodic rate of return on the outstanding net investment in lease. Unrealized lease income is suspended, where necessary, in accordance with the requirements of the SBP. Gain/ loss on termination of lease contracts, documentation charges and other lease income are recognized as income when these are realized. Fees and commission income Fee commission is recognized at amount that reflects consideration to which the Group expects to be entitled in exchange for providing the services. The Group recognizes fees earned on transaction based arrangements at point in time, when the Group has provided the services to customer. where the contract requires services to be provided over time, income is recognized on systematic basis over the period of arrangement. Lease liabilities against right-of-use assets The lease liability is initially measured at present value of lease payments to be made over lease term, discounted using Bank’s incremental weighted average borrowing rate. The lease liability shall be subsequently measured at amortized cost using the effective interest rate method i.e. increase by interest cost on lease liability and decrease by lease payments made. 5.13.1 Short-term leases and leases of low-value asset The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are low value. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term. 5.14Taxation Current Provision for current taxation is based on taxable income for the year determined in accordance with the prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year if enacted. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made in previous years arising from assessments framed during the year for such years. Prior years The taxation charge for prior years represents adjustments to the tax charge relating to prior years, arising from assessments / changes in laws and changes in estimates made during the current year. 282 & Its Subsidiaries
284. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit . Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that the taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized. Deferred tax is calculated at 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 by the statement of financial position date. Deferred tax is charged or credited in income statement, except in the case of items credited or charged to equity in which case it is included in equity. The Group also recognizes deferred tax asset / liability on deficit / surplus on revaluation of operating fixed assets and available for sale securities which is adjusted against the related deficit / surplus in accordance with the requirements of International Accounting Standard (IAS)12, ‘Income Taxes’. 5.15Impairment The carrying amounts of assets (other than deferred tax assets) are reviewed for impairment at each statement of financial position date whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. If 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 the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of that asset. 5.16Provisions Provisions are recorded when the Group has a present obligation as a result of a past event when it is probable that it will result in an outflow of economic benefits and a reliable estimate can be made of the amount of the obligation. 5.17 Provision for off balance sheet obligations Provision for guarantees, claims and other off balance sheet obligations are made when the Group has legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of amount can be made. Charge to profit and loss account is stated net of expected recoveries. 5.18 Share capital Ordinary shares are classified as equity and recognized at their face value. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the equity. 5.19Acceptances Acceptances comprise undertaking by the Group to pay bills of exchange drawn on customer. The Group expects most acceptances to be simultaneously settled with the reimbursement from the customers. Acceptances are accounted for as on balance sheet transactions. 5.20 Financial instruments 5.20.1 Financial assets and liabilities Financial instruments carried on the statement of financial position include cash and bank balances, lending to financial institutions, investments, advances, certain receivables, borrowing from financial 283
285. institutions , deposits and other payables. The particular recognition criteria adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with them. 5.20.2Off setting Financial assets and financial liabilities are set off and the net amount is reported in the consolidated financial statements when there is a legally enforceable right to set off and the Group intends either to settle on a net basis, or to realize the assets and settle the liabilities, simultaneously. 5.21 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing product or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. 5.21.1 Business segments Corporate and investment banking This includes, loans, project finance, real estate finance, export finance, trade finance, investment banking, and other banking activities with corporate and public sector customers. Consumer and digital banking It includes deposits and banking services including digital baking services to customers of the Group. Retail and priority sector lending It includes loans of individuals, agriculture customers, SME and lending under government initiatives. Products offered to customers include transport finance, house finance, livestock finance, dairy finance etc. 5.21.2 5.22 Treasury It includes fixed income, equity, foreign exchanges, commodities, credit, funding, own position securities, lending and repos and brokerage debt. Islamic The segment pertains to full scale Islamic banking operations of the Group. Others This includes head office related activities, and all other activities not tagged to the segments above. Geographical segments The Group operates only in Pakistan. Dividend distribution and appropriations Dividend distributions and appropriation to reserves are recognized as a liability in the consolidated financial statements in the period in which these are approved. Transfer to statutory reserve and any of the mandatory appropriations as may be required by law are recognized in the period to which they relate. 5.23 Earnings per share The Group presents earnings per share (EPS) for its ordinary shares which is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effect of all dilutive potential ordinary shares (if any). 284 & Its Subsidiaries
286. 20212020 Note Rupees in ‘000’ 6. CASH AND BALANCES WITH TREASURY BANKS In hand: Local currency 13,800,719 17,921,945 Foreign currencies 4,359,944 4,182,816 18,160,663 With SBP in: Local currency current account 6.1 40,887,037 Foreign currency current account 6.2 900,219 Foreign currency deposit account 6.3 2,109,501 22,104,761 33,648,622 484,298 956,624 43,896,757 35,089,544 With National Bank of Pakistan in: Local currency current account 9,174,433 11,200,818 Prize bonds 87,385 877,054 71,319,238 69,272,177 6.1 This represents current account maintained with the SBP under the requirements of section 22 “Cash Reserve Requirement” of the Banking Companies Ordinance, 1962. 6.2 This represents mandatory reserves maintained in respect of foreign currency deposits under FE-25 scheme, as prescribed by the SBP. 6.3 This carries mark-up at the rate of Nil (2020: 0.00% to 0.76% per annum) as announced by SBP on monthly basis. 20212020 Note Rupees in ‘000’ 7. BALANCES WITH OTHER BANKS In Pakistan: Current accounts 296,993 504,317 Deposit accounts 7.1 5,638,770 10,592 5,935,763 Outside Pakistan: Current accounts 1,339,397 Deposit accounts 7.2 1,583,196 514,909 229,657 1,762,444 2,922,593 1,992,101 8,858,356 2,507,010 7.1 These carry mark-up at rates ranging from 2.56% to 11.30% per annum (2020: 2.84% to 6.02% per annum). 7.2 These carry mark-up at rates ranging from 0.00% to 0.01% per annum (2020: 0.03% to 1.34% per annum). 285
287. 20212020 Note Rupees in ‘000’ 8. LENDINGS TO FINANCIAL INSTITUTIONS Call money lendings 100,000 Repurchase agreement lendings (Reverse Repo) 8.2 26,380,388 7,454,867 Placements 8.3 3,100,000 7,632,000 29,580,388 15,086,867 8.1 Particulars of lending In local currency 29,580,388 15,086,867 In foreign currencies - 29,580,388 15,086,867 8.2 Securities held as collateral against lendings to financial institutions 2021 2020 Held by Further Total Held by Further bank given as bank given as collateralcollateral Total Rupees in ‘000’ Market treasury bills Pakistan investment bonds 21,088,298 5,292,090 - - 21,088,298 4,154,867 5,292,090 3,300,000 - - 4,154,867 3,300,000 Total 26,380,388 - 26,380,388 - 7,454,867 7,454,867 Market value of securities held as collateral as at December 31, 2021 amounted to Rs. 26,391,416 thousand (2020: Rs. 6,651,750 thousand). These carry mark-up at rate ranging from 10.50% to 10.75% per annum (2020: 6.00% to 7.30% per annum) with maturities upto January 07, 2022. 8.3 These carry profit at rate ranging from 7.25% to 10.90% per annum (2020: 6.40% to 7.00% per annum) with maturities upto April 01, 2022. 9. INVESTMENTS - NET 2021 2020 Cost / Provision Surplus Carrying Cost / Provision Amortised for / (Deficit) value Amortised for costdiminution costdiminution Note Rupees in ‘000’ Surplus / (Deficit) Carrying value 9.1 Investments by type: Held for trading securities Federal government securities Ordinary shares 9.1.1 33,472,511 - 26,429 33,498,940 34,331 - (5,390) 28,941 19,146,767 - - - 1,630 - 19,148,397 - 33,506,842 - 21,039 33,527,881 19,146,767 - 1,630 19,148,397 Available for sale securities Federal government securities 9.1.1 & 9.2.1 425,181,105 - (9,766,167) 415,414,938 465,221,303 - 4,453,720 469,675,023 Shares 9,106,342 (1,420,029) (840,977) 6,845,336 4,830,566 (1,378,194) 199,777 3,652,149 Non government debt securities 17,084,566 (2,525,563) 39,662 14,598,665 17,516,016 (2,536,232) (139,247) 14,840,537 Foreign securities 11,957 - - 11,957 4,019 - - 4,019 451,383,970 (3,945,592) (10,567,482) 436,870,896 487,571,904 (3,914,426) 4,514,250 488,171,728 Held to maturity securities Federal government securities 9.1.1 & 9.6.1 61,299,171 - - 61,299,171 60,483,391 - - 60,483,391 WAPDA bonds 400 (400) - - 400 (400) - - 61,299,571 (400) - 61,299,171 60,483,791 (400) - 60,483,391 Total investments 546,190,383 (3,945,992) (10,546,443) 531,697,948 567,202,462 (3,914,826) 4,515,880 567,803,516 286 & Its Subsidiaries
288. 9 .1.1 Market treasury bills and Pakistan investment bonds are eligible for re-discounting with SBP. 9.1.2 Certain approved / Government securities are kept with the SBP to meet statutory liquidity requirements calculated on the basis of domestic demand and time liabilities. 2021 2020 Cost / Provision Surplus Carrying Cost / Provision Amortised for / (Deficit) value Amortised for costdiminution costdiminution Note Rupees in ‘000’ Surplus / (Deficit) Carrying value 9.2 Investments by segments: Federal government securities: Market treasury bills 9.2.1 Pakistan investment bonds 9.2.1 Ijarah sukuks Naya Pakistan Certificates Sukuk - bai muajjal with Government of Pakistan WAPDA bonds 125,305,799 389,308,027 4,502,908 836,053 - 400 - (107,427) 125,198,372 329,361,613 (9,631,157) 379,676,870 210,484,580 (1,154) 4,501,754 2,249,072 - 836,053 - - (400) - - - - 2,756,196 400 - 149,632 329,511,245 4,304,640 214,789,220 1,078 2,250,150 - - - (400) - 2,756,196 - - 519,953,187 (400) (9,739,738) 510,213,049 544,851,861 (400) 4,455,350 549,306,811 Shares: Listed companies 9,019,423 (1,332,637) (846,367) 6,840,419 4,709,316 (1,287,418) 199,777 3,621,675 Unlisted companies 121,250 (87,392) - 33,858 121,250 (90,776) - 30,474 9,140,673 (1,420,029) (846,367) 6,874,277 4,830,566 (1,378,194) 199,777 3,652,149 Non government debt securities: Listed 10,082,285 (15,321) 39,662 10,106,626 10,294,933 (15,850) (139,247) 10,139,836 Unlisted 7,002,281 (2,510,242) - 4,492,039 7,221,083 (2,520,382) - 4,700,701 17,084,566 (2,525,563) 39,662 14,598,665 17,516,016 (2,536,232) (139,247) 14,840,537 Foreign securities: Equity securities 9.5 11,957 - - 11,957 4,019 - - 4,019 Total investments 546,190,383 (3,945,992) (10,546,443) 531,697,948 567,202,462 (3,914,826) 4,515,880 567,803,516 20212020 Rupees in ‘000’ 9.2.1 Investments given as collateral - at cost / amortized cost Market treasury bills Pakistan investment bonds - 1,768,381 66,472,184 35,514,708 1,768,381 101,986,892 9.3 Provision for diminution in value of investments 9.3.1 Opening balance 3,914,826 3,531,109 Charge / reversals : Charge for the year 322,188 516,324 Reversals for the year (10,669) (7,500) 31 Reversal on disposals 311,519 (280,353) 508,824 (125,107) Closing balance 3,945,992 3,914,826 287
289. 9 .3.2 Particulars of provision against debt securities 2021 2020 Category of classification NPI ProvisionNPI Provision Rupees in ‘000’ Domestic Other assets especially mentioned - - - Substandard - - - Doubtful - - - Loss 2,525,963 2,525,963 2,536,632 2,536,632 Total 2,525,963 2,525,963 2,536,632 2,536,632 The Group has availed the benefit of Forced Sale Value (FSV) of collateral against non-performing investments as allowed vide BSD Circular No.1 dated October 21, 2011. This has resulted in decrease in provision against non-performing investments by Rs. Nil (2020: Nil). The FSV benefit availed is not available for cash or stock dividend. 9.4 Quality of available for sale securities Details regarding quality of Available for Sale (AFS) securities are as follows: 20212020 Cost / Amortized cost Rupees in ‘000’ Federal government securities - government guaranteed Market treasury bills Pakistan investment bonds Naya Pakistan Certificates Ijarah sukuks Sukuk bai-muajjal with Government of Pakistan 93,138,541 326,703,603 836,053 4,502,908 - 310,457,363 149,758,672 2,249,072 2,756,196 425,181,105 465,221,303 Shares Cement 1,542,575 197,516 Fertilizer 1,332,054 1,040,336 Power generation & distribution 1,035,804 622,608 Textile composite 678,328 264,381 Oil & gas marketing companies 751,764 285,265 Technology & telecommunication 560,225 211,367 Oil & gas exploration companies 414,920 164,466 Chemicals 445,179 384,453 Pharmaceuticals 423,489 73,660 Automobile 355,231 29,952 Engineering 323,895 81,113 Cable & electrical goods 301,051 317,908 Glass & ceramics 284,031 43 Food & personal care products 218,049 93,724 Sugar & allied industries 84,629 89,448 Paper & board 62,780 85 Insurance 37,761 27,081 Commercial banks 25,000 882,759 Leasing companies 17,936 15,566 Textile spinning 2,067 2,067 Others 209,574 46,768 288 & Its Subsidiaries 9,106,342 4,830,566
290. 2021 2020 Unlisted Companies Cost BreakupCost Breakup value value Rupees in ‘000’ Al - Baraka Bank Pakistan Limited Al - Arabia Sugar Mills Limited LSE Financial Services Limited 25,000 81,358 14,892 18,966 - 20,534 25,000 81,358 14,892 15,582 19,606 121,250 39,500 121,250 35,188 20212020 Cost Rupees in ‘000’ Non government debt securities Listed - AAA 104,167 145,833 - AA+, AA, AA- 1,500,000 1,606,575 - CCC and below 4,985 - Unrated 8,473,133 8,542,525 10,082,285 10,294,933 Unlisted - AAA 2,750,000 2,792,857 - A+, A, A- 1,492,240 1,565,258 - BBB+, BBB, BBB- 249,800 249,850 - Unrated 2,510,241 2,613,118 7,002,281 7,221,083 9.5 Foreign equity securities SWIFT shares 11,957 4,019 This represents 13 shares (2020: 06 shares) of SWIFT purchased by the Group as per mandatory requirement of the SWIFT by-laws requiring its members to purchase shares allocated on the basis of financial contributions payable to SWIFT. 9.6 Particulars relating to held to maturity securities are as follows: 20212020 Cost / Amortized cost Rupees in ‘000’ Federal government securities - government guaranteed Pakistan investment bonds WAPDA bonds 61,299,171 400 60,483,391 400 61,299,571 60,483,791 9.6.1 Market value of held to maturity investments amounted to Rs. 63,715,206 thousand (2020: Rs. 69,082,534 thousand). 289
291. 10 . ADVANCES - NET Performing Non Performing Total 20212020 2021202020212020 Note Rupees in ‘000’ Loans, cash credits, running finances, etc. Net book value of assets in ijarah under 10.1 419,870,754 341,611,646 48,995,887 54,569,660 468,866,641 396,181,306 1,988,841 IFAS 2 - In Pakistan 1,860,758 1,773,841 215,000 215,000 2,075,758 Islamic financing and related assets 45,336,297 29,209,198 3,050,869 2,661,933 48,387,166 31,871,131 Bills discounted and purchased 16,234,159 13,643,227 27,521 30,521 16,261,680 13,673,748 Advances - gross 483,301,968 386,237,912 52,289,277 57,477,114 535,591,245 443,715,026 Provision against advances: - Specific - General (3,054,945) - (3,748,493) - (46,959,797) (3,054,945) (3,748,493) (46,959,797) 480,247,023 382,489,419 5,329,480 Advances - net of provision 10.1 Includes net investment in finance lease as disclosed below: Not later than one year 25,440,343 1,426,904 10,046,320 518,653 Minimum lease payments 3,394,098 35,486,663 2,406,196 545,180 3,483,391 51,390 Financial charges for future periods Present value of minimum lease payments 2,848,918 (50,014,742) (51,825,218) 9,400,389 485,576,503 391,889,808 2020 1,887,543 29,295,080 1,967,194 Residual value (3,748,493) (48,076,725) Over Not later five than one Total years year Rupees in ‘000’ Lease rentals receivable 11,991,877 (48,076,725) (3,054,945) Later than one and less than five years (46,959,797) - 2021 (48,076,725) - Later than Over one and five Total less than years five years 2,398,732 20,012,262 459,238 22,870,232 4,506,914 7,414,848 104,100 12,025,862 41,286,957 6,905,646 27,427,110 563,338 34,896,094 4,079,961 32,003,272 2,354,806 37,206,996 556,073 2,839,503 17,170 3,412,746 6,349,573 24,587,607 546,168 31,483,348 10.2 Particulars of advances (gross) 20212020 Rupees in ‘000’ In local currency In foreign currencies 535,501,661 89,584 443,535,313 179,713 535,591,245 443,715,026 10.3 Advances include Rs. 52,289,277 thousand (2020: Rs. 57,477,114 thousand) which have been placed under non-performing status as detailed below: 2021 2020 NonNon Category of classification performingProvisionperforming Provision loans loans Rupees in ‘000’ Domestic Other assets especially mentioned 156,255 3,946 190,528 3,495 Substandard 3,173,639 517,367 6,286,206 1,234,491 Doubtful 6,432,920 5,571,388 8,086,336 6,149,532 Loss 42,526,463 40,867,096 42,914,044 40,689,207 Total 290 52,289,277 & Its Subsidiaries 46,959,797 57,477,114 48,076,725
292. 10 .4 Particulars of provision against advances 20212020 SpecificGeneral Total SpecificGeneral Total Note Rupees in ‘000’ Opening balance 48,076,725 3,748,493 51,825,218 45,338,255 412,641 45,750,896 Charge for the year 4,004,162 - 4,004,162 4,825,954 3,335,852 8,161,806 Reversals for the year (5,120,979) (693,548) (5,814,527) (2,087,484) - (2,087,484) Amounts written off 31 10.5.1 Closing balance (1,116,817) (111) (693,548) (1,810,365) - (111) 46,959,797 3,054,945 50,014,742 2,738,470 3,335,852 - - 48,076,725 3,748,493 6,074,322 51,825,218 10.4.1 Particulars of provision against advances with respect to currencies In local currency 46,959,797 3,054,945 50,014,742 48,011,924 3,748,493 51,760,417 In foreign currencies - - - 64,801 - 64,801 46,959,797 3,054,945 50,014,742 48,076,725 3,748,493 51,825,218 10.4.2 General provision includes a provision against consumer financing portfolio as required by Prudential Regulations issued by the SBP and recognized / reversed during the year as explained in note 44.1 of these consolidated financial statements and provision. 10.4.3 The Group has availed the benefit of Forced Sale Value (FSV) of collateral against non-performing advances as allowed vide BSD Circular No.1 dated October 21, 2011. This has resulted in decrease in provision against non-performing advances by Rs. 1,975,509 thousand (2020: Rs. 2,996,620 thousand). The FSV benefit availed is not available for cash or stock dividend. 20212020 Note Rupees in ‘000’ 10.5 Particulars of write offs: 10.5.1 Against provisions 10.4 111 Directly charged to profit and loss account 31 300 411 10.5.2Domestic Write offs of Rs. 500,000 and above 10.6 - Write offs of below Rs. 500,000 411 - - 411 10.6 Details of loan write off 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 Rupees five hundred thousand or above allowed to a person(s) during the year ended December 31, 2021 is given in Annexure-I. 20212020 Note Rupees in ‘000’ 11. FIXED ASSETS Capital work-in-progress 11.1 191,433 98,500 Right-of-use assets 11.2 7,891,934 6,265,106 Property and equipment 11.3 11,753,063 8,453,453 19,836,430 14,817,059 291
293. 20212020 Note Rupees in ‘000’ 11.1 Capital work-in-progress Civil works 191,433 98,500 11.2 Right-of-use assets At January 1: Cost 7,987,437 7,191,638 Impact of IFRS-16 - Accumulated depreciation (1,722,331) (849,471) Net book value 6,265,106 6,342,167 Opening net book value 6,265,106 6,342,167 For the year ended December 31: Additions 2,781,817 900,920 Terminations - at cost Depreciation on terminations (218,638) 54,398 (105,121) 18,285 Terminations - at book value Depreciation charge 11.2.1 (164,240) (990,749) (86,836) (891,145) Closing net book value 7,891,934 6,265,106 At December 31: Cost 10,550,616 7,987,437 Accumulated depreciation (2,658,682) (1,722,331) Net book value 7,891,934 6,265,106 11.2.1 Right-of-use assets are depreciated over their respective lease term. 292 & Its Subsidiaries
294. 293 2021 Disposals - at book value Depreciation charge Depreciation adjustment on revaluation surplus Transfers / adjustments - at cost / revalued amount Depreciation on transfers / adjustments 27,832 - - - - - - 169,700 (52,172) - (201,805) 449,690 - - 899 (899) (1,146) (47,897) - (5,200) 4,054 (75) 75 - (321,269) - - - 685 (685) (3,002) (215,070) - (46,128) 43,126 (1,502) 1,502 (177) (347,872) - (6,946) 6,769 410 (410) - (102,560) - (1,732) 1,732 197,949 (52,589) (4,325) (1,236,473) 449,690 (60,006) 55,681 Rate of depreciation (percentage) - 5% 10% 33.33% 20% 20% 33.33% 27,832 117,528 - - - - - 145,360 Closing net book value 2,619,024 6,145,459 478,409 445,140 961,700 849,599 253,732 11,753,063 At December 31, 2021: Cost / Revalued amount 2,619,024 6,145,459 875,842 3,429,026 2,300,419 2,349,285 657,782 18,376,837 Accumulated depreciation - - (397,433) (2,983,886) (1,338,719) (1,499,686) (404,050) (6,623,774) Net book value 2,619,024 6,145,459 478,409 445,140 961,700 849,599 253,732 11,753,063 Disposals - at cost Depreciation on disposal Freehold Building on Furniture Lease Electrical Computer land freehold and hold and office equipments Vehicles Total land fixtures improvementsequipments Rupees in ‘000’ 11.3 Property and equipment At January 1, 2021: Cost / Revalued amount 1,538,879 4,154,599 789,278 3,162,450 2,060,308 2,124,304 463,718 14,293,536 Accumulated depreciation - (195,713) (352,691) (2,662,692) (1,166,090) (1,160,085) (302,812) (5,840,083) Net book value 1,538,879 3,958,886 436,587 499,758 894,218 964,219 160,906 8,453,453 Opening net book value 1,538,879 3,958,886 436,587 499,758 894,218 964,219 160,906 8,453,453 For the year ended December 31, 2021: Additions - 677,709 90,865 266,651 285,554 233,429 195,386 1,749,594 Revaluation surplus 1,052,313 1,143,451 - - - - - 2,195,764 Impairment loss recognized in the profit and loss account - net -
295. 294 & Its Subsidiaries 2020 Disposals - at book value Depreciation charge Depreciation adjustment on revaluation surplus Transfers / adjustments - at cost / revalued amount Depreciation on transfers / adjustments 317,649 - (440,860) - - (440,860) - 19,278 (3,194) (93,860) (209,994) - (111,335) 17,475 (3,084) 3,027 (6,122) (46,924) - (17,517) 11,395 - - - (379,070) - - - (576) 629 (6,356) (191,574) - (44,023) 37,667 3,660 (3,656) (1,453) (285,248) - (33,545) 32,092 - - (1,685) (69,187) - (45,974) 44,289 336,927 (3,194) (550,336) (1,181,997) - (693,254) 142,918 Rate of depreciation (percentage) - 5% 10% 33.33% 20% 20% 33.33% Freehold land Buildings on freehold land 2,619,024 6,145,459 Freehold land and buildings on freehold land were revalued on December 31, 2021 by PBA approved independent valuer, on the basis of fair market value. The valuation resulted in surplus of Rs. 1,052,313 thousand and Rs. 1,593,141 thousand in respect of freehold land and buildings on freehold land respectively. Detailed particulars as on December 31, 2021 are as follows: Revalued amount Rupees in ‘000’ 11.3.1 317,649 16,084 (57) - 53 4 - 333,733 Closing net book value 1,538,879 3,958,886 436,587 499,758 894,218 964,219 160,906 8,453,453 At December 31, 2020: Cost / Revalued amount 1,538,879 4,154,599 789,278 3,162,450 2,060,308 2,124,304 463,718 14,293,536 Accumulated depreciation - (195,713) (352,691) (2,662,692) (1,166,090) (1,160,085) (302,812) (5,840,083) Net book value 1,538,879 3,958,886 436,587 499,758 894,218 964,219 160,906 8,453,453 Disposals - at cost / revalued amount Depreciation on disposal Freehold Building on Furniture Lease Electrical Computer land freehold and hold and office equipments Vehicles Total land fixtures improvementsequipments Rupees in ‘000’ At January 1, 2020: Cost / Revalued amount 1,660,054 4,246,656 765,026 2,816,022 1,895,925 1,729,874 373,417 13,486,974 Accumulated depreciation - - (320,189) (2,283,622) (1,012,812) (903,273) (277,914) (4,797,810) Net book value 1,660,054 4,246,656 444,837 532,400 883,113 826,601 95,503 8,689,164 Opening net book value 1,660,054 4,246,656 444,837 532,400 883,113 826,601 95,503 8,689,164 For the year ended December 31, 2020: Additions 2,036 - 44,853 346,428 208,982 424,315 136,275 1,162,889 Revaluation surplus - - - - - - - -
296. 11 .3.2 Had the freehold land and buildings on freehold land not been revalued, their carrying amounts would have been as follows: 20212020 Rupees in ‘000’ Freehold land 934,308 906,842 Buildings on freehold land 2,692,785 2,013,342 11.3.3 The gross carrying amount (cost) of fully depreciated assets that are still in use is Rs. 1,470,521 thousand (2020: Rs. 1,403,061 thousand). 11.3.4 During the year, no fixed assets were sold to related parties. 20212020 Note Rupees in ‘000’ 12. INTANGIBLE ASSETS Intangible in progress 523,686 67,644 Softwares 12.1 584,466 628,004 1,108,152 695,648 12.1Softwares At January 01 Cost 1,167,177 1,015,278 Accumulated amortization (539,173) (341,274) Net book value 628,004 674,004 Year ended December 31 Opening net book value 628,004 674,004 Capitalized during the year 164,472 151,899 Amortization charge 29 (208,010) (197,899) Closing net book value 584,466 628,004 At December 31 Cost 1,331,649 1,167,177 Accumulated amortization (747,183) (539,173) Net book value 584,466 628,004 Rate of amortization (percentage) 10-33.33% 10-33.33% 12.1.1 The gross carrying amount (cost) of fully amortized intangible assets that are still in use is Rs. 428,845 thousand (2020: Rs. 113,502 thousand). 295
297. 13 . DEFERRED TAX ASSETS - NET 2021 AtRecognized RecognizedAt January 01 in P&L in OCI December 31 Rupees in ‘000’ Deductible temporary differences on: - Deficit on revaluation of investments - Right-of-use assets - Provision against advances - Business losses in subsidiary - 361,644 10,051,802 64,399 - 257,590 647,820 - 4,121,318 4,121,318 - 619,234 - 10,699,622 - 64,399 10,477,845 905,410 4,121,318 Taxable temporary differences on: - Surplus on revaluation of fixed assets - Surplus on revaluation of investments - Accelerated tax depreciation - Surplus on revaluation of non banking assets 15,504,573 (680,942) (1,579,987) (266,486) (111,767) 38,010 - 36,217 5,860 (703,613) (1,346,545) 1,579,987 - (230,269) (61,415) (167,322) (2,639,182) 80,087 814,959 (1,744,136) 7,838,663 985,497 4,936,277 13,760,437 2020 AtRecognized RecognizedAt January 01 in P&L in OCI December 31 Rupees in ‘000’ Deductible temporary differences on: - Deficit on revaluation of investments - Right-of-use assets - Provision against advances - Business losses in subsidiary - - 129,797 231,847 8,763,726 1,288,076 64,399 - - 361,644 10,051,802 64,399 8,957,922 1,519,923 - 10,477,845 Taxable temporary differences on: - Surplus on revaluation of fixed assets - Surplus on revaluation of investments - Accelerated tax depreciation - Surplus on revaluation of non banking assets (717,498) (1,199,107) (306,240) (102,895) 296 & Its Subsidiaries 35,813 743 (680,942) - (380,880) (1,579,987) 39,754 - (266,486) 5,075 (13,947) (111,767) (2,325,740) 80,642 (394,084) (2,639,182) 6,632,182 1,600,565 (394,084) 7,838,663
298. 20212020 Note Rupees in ‘000’ 14. OTHER ASSETS - NET Income / mark-up accrued in local currency 18,969,201 15,558,654 Income / mark-up accrued in foreign currencies 1,013 4,526 Profit paid in advance on pehlay munafa scheme - 539 Advances, deposits, advance rent and other prepayments 1,016,018 637,991 Advance taxation (payments less provisions) - 7,819 Non-banking assets acquired in satisfaction of claims 14.1 5,479,598 5,866,478 Acceptances 8,337,508 2,821,232 Branch adjustment account - 8,751 Mark to market gain on forward foreign exchange contracts 150,612 20,250 Stock of stationery 90,478 129,902 Suspense account 11,807 7,413 Zakat recoverable from National Investment Trust Limited (NITL) 14.2 36,790 36,790 Unrealized gain on revaluation of foreign bills and trade loans 41,665 41,129 Receivable against fraud and forgeries 445,033 462,656 Unearned income on sale of sukuk on bai-muajjal basis - 336,351 Auto Teller Machine and point of sale receivable 740,953 Others 674,624 797,996 Less: Provision held against other assets 14.3 35,995,300 (1,914,474) 26,738,477 (2,037,220) 34,080,826 24,701,257 1,453,931 1,236,224 Other assets (net of provision) Surplus on revaluation of non-banking assets acquired in satisfaction of claims 22.2 Other assets - total 35,534,757 25,937,481 14.1 Market value of non-banking assets acquired in satisfaction of claims - net of provision 5,848,593 5,904,147 The carrying and revalued amounts have been determined based on prudence, expected legal enforceability, ease of realization and current market conditions etc. These include assets which are in the process of sale and are stated at their respective sale prices. Latest full scope valuations are carried out by PBA approved independent valuer as on December 31, 2021. 20212020 Note Rupees in ‘000’ 14.1.1 Non-banking assets acquired in satisfaction of claims Opening balance Surplus on revaluation during the year Disposals during the year - net book value 14.1.2 Transfer to fixed assets - net book value Reversal on account of restoration of loan Depreciation charged during the year 29 Impairment reversed during the year Closing balance 5,904,147 275,670 (250,817) (145,360) - (48,666) 113,619 5,848,593 7,392,801 45,122 (616,960) (333,733) (524,160) (58,923) 5,904,147 297
299. 20212020 Note Rupees in ‘000’ 14.1.2 Gain on disposal of non-banking assets acquired in satisfaction of claims Disposal proceeds 293,024 842,089 Less: - Cost / revalued amount 286,955 636,019 - Depreciation (36,138) (19,059) 250,817 616,960  Gain on sale recognized during the year 42,207 225,129 14.2 This represents zakat deducted on dividends by NITL. The Group has filed suit against NITL for recovery of the amount. The case was decided in favour of the Group in 1993 and intra court appeal was filed by the Zakat and Ushr Department against the decision which is still pending. As a matter of prudence, though without prejudice to the Group’s claim against NITL at the court of law, the claim amount has been fully provided for. 20212020 Note Rupees in ‘000’ 14.3 Provision held against other assets Advances, deposits, advance rent & other prepayments Non banking assets acquired in satisfaction of claims Zakat recoverable from NITL Fraud and forgeries 14.3.2 Others 35,723 1,084,936 36,790 446,760 310,265 35,723 1,198,555 36,790 459,093 307,059 1,914,474 2,037,220 14.3.1 Movement in provision held against other assets Opening balance 2,037,220 1,767,448 Charge for the year Reversals during the year 31 Amount written off 35,367 (147,839) 292,072 (5,308) (112,472) (10,274) 286,764 (16,992) Closing balance 1,914,474 2,037,220 14.3.2 This includes provision amounted to Rs. 3,118 thousand (2020: Nil) maintained against certain closed cases as per approval of the management. 20212020 Rupees in ‘000’ 15. CONTINGENT ASSETS Contingent assets Nil Nil 16. BILLS PAYABLE In Pakistan 10,109,459 4,168,641 Outside Pakistan - 298 & Its Subsidiaries 10,109,459 4,168,641
300. 20212020 Rupees in ‘000’ 17.BORROWINGS Secured Borrowings from SBP under: Export refinance scheme (ERF) 17.1 28,221,440 Long term financing facility (LTFF) 17.2 13,499,088 Finance facility for storage of agricultural produce (FFSAP) 17.3 185,799 Finance facility for renewable energy performance platform (REPP) 17.4 5,347,359 Refinancing facility for payment of salaries and wages 17.5 9,132,079 Combating COVID-19 17.6 1,089,182 Refinancing facility for modernization of small and medium enterprises 17.7 155,628 Finance facility for working capital of small and medium enterprises 17.8 3,000 Finance facility for temporary relief refinance scheme (TERF) 17.9 11,881,311 Finance Facility for women entrepreneurs 17.10 3,589 Repurchase agreement borrowings 17.11 Call borrowings 17.12 Borrowings from Pakistan Mortgage Refinance Company Limited 17.13 69,518,475 - - 1,805,013 22,609,115 11,250,709 69,523 1,859,306 16,242,813 123,005 119,299 52,273,770 37,430,967 64,672,133 462,409 Total secured 71,323,488 154,839,279 Unsecured Overdrawn nostro accounts - 2,136 71,323,488 154,841,415 17.1 These are secured against the Group’s cash and security balances held with the SBP. Mark-up on these borrowings is payable quarterly at rates ranging from 1.00% to 2.00% per annum (2020: 1.00% to 2.00% per annum) with maturities upto June 27, 2022. 17.2 This amount has been obtained for providing long term finance to customers. The Group has granted the SBP right to recover outstanding amount from the group at date of maturity of finance by directly debiting current account maintained by the Group with the SBP. Mark-up on these borrowings is payable quarterly at rates ranging from 1.00% to 6.00% per annum (2020: 1.00% to 6.00% per annum) with maturities upto December 13, 2031. 17.3 These represent borrowings under scheme of financing facility for storage of agricultural produce. Mark-up on these borrowings is payable quarterly at rates ranging from 2.00% to 3.50% per annum (2020: 2.00% to 3.50% per annum) with maturities upto June 29, 2028. 17.4 These represent borrowings under scheme of financing facility for renewable energy performance platform. Mark-up on these borrowings is payable quarterly at rate of 1.00% to 3.00% per annum (2020: 2.00% to 3.00% per annum) with maturities upto November 02, 2033. 17.5 These represent borrowings under scheme of financing facility for payment of salaries and wages. Mark-up on these borrowings is payable quarterly at rate of Nil (2020: Nil) with maturities upto April 01, 2023. 17.6 These represent borrowings under scheme of financing facility for combating COVID-19. Mark-up on these borrowings is payable quarterly at rate of Nil (2020: Nil) with maturities upto November 17, 2026. 299
301. 17 .7 17.8 17.9 These represent borrowings under scheme of financing facility for modernization of small and medium enterprises (SMES). Mark-up on these borrowings is payable quarterly at rate of 2.00% per annum (2020: 2.00% per annum) with maturities upto November 11, 2030. These represent borrowings under scheme of financing facility for working capital financing of small and medium enterprises. Mark-up on these borrowings is payable quarterly at rate of 2.00% per annum (2020: Nil) with maturities upto January 06, 2022. These represent borrowings under scheme of temporary relief refinance facility (TERF). Mark-up on these borrowings is payable quarterly at rate of 1.00% to 3.00% per annum (2020: Nil) with maturities upto December 13, 2031. 17.10 These represent borrowings under scheme of financing women entrepreneurs. Mark-up on these borrowings is payable quarterly at rate of Nil (2020: Nil) with maturities upto January 01, 2026. 17.11 These are secured against market treasury bills, carrying mark-up at rate of Nil (2020: 6.25% to 7.05% per annum). The carrying value of market treasury bills given as collateral against these borrowings is Nil (2020: Rs. 37,448,377 thousand). 17.12 These are secured against Pakistan investment bonds (PIBs) and Market treasury bills (MTBs), carrying markup at rate of Nil (2020: 6.25% to 7.15% per annum). The carrying value of PIBs and MTBs given as collateral against these borrowings is Nil (2020: PIBs and MTBs Rs. 35,233,653 thousand and Rs.29,023,807 thousand respectively). 17.13 These are secured against Pakistan investment bonds (PIBs) and hypothecation charge over mortgage loan portfolio, carrying markup at rates ranging from 6.50% to 8.03% per annum (2020: 7.00% to 7.85% per annum) maturing on June 30, 2031. The carrying value of PIBs given as collateral against these borrowings is Rs. 1,768,381 thousand (2020: Rs. 281,055 thousand). 20212020 Rupees in ‘000’ 17.14 Particulars of borrowings with respect to currencies In local currency 71,323,488 154,839,279 In foreign currencies - 2,136 18. 71,323,488 154,841,415 DEPOSITS AND OTHER ACCOUNTS 20212020 In local In foreign Total In local In foreign Total currency currencies currencycurrencies Rupees in ‘000’ Customers: Current deposits 169,522,753 3,649,150 173,171,903 144,971,825 3,099,131 148,070,956 Savings deposits 459,784,249 3,340,461 463,124,710 388,946,529 2,635,237 391,581,766 Term deposits 320,956,024 7,419,447 328,375,471 265,567,945 3,594,396 269,162,341 Others 16,885,516 - 16,885,516 19,012,007 - 19,012,007 967,148,542 14,409,058 981,557,600 818,498,306 9,328,764 827,827,070 Financial institutions: Current deposits 1,797,032 874,512 2,671,544 2,679,477 821,999 3,501,476 Savings deposits 4,870,165 3,585 4,873,750 2,746,932 7,427 2,754,359 Term deposits 10,841,125 2,446,653 13,287,778 889,875 - 889,875 Others 527,609 - 527,609 97,582 - 97,582 18,035,931 3,324,750 21,360,681 6,413,866 829,426 7,243,292 985,184,473 17,733,808 1,002,918,281 824,912,172 10,158,190 835,070,362 300 & Its Subsidiaries
302. 20212020 Rupees in ‘000’ 18.1 Composition of deposits: - Individuals 153,435,431 157,876,351 - Private sector 227,188,625 168,479,218 - Government (federal and provincial) 496,982,326 409,081,183 - Public sector entities 103,951,218 92,393,088 - Banking companies 2,897,620 3,121,762 - Non-banking financial institutions 18,463,061 4,118,760 1,002,918,281 835,070,362 18.2 Deposits eligible to be covered under insurance arrangements of Deposit Protection Corporation amounted to Rs. 318,300,730 thousand (2020: Rs. 276,891,867 thousand). 20212020 Note Rupees in ‘000’ 19. SUBORDINATED DEBTS Privately placed term finance certificates - I 19.1 2,495,000 2,496,000 Privately placed term finance certificates - II 19.2 4,293,980 4,295,700 Advance subscription money - subordinated perpetual term finance certificates 19.3 1,000,000 7,788,980 6,791,700 19.1 Privately placed term finance certificates - I The Bank has issued rated, unsecured and subordinated term finance certificates under section 120 of the Companies Ordinance, 1984, in a set of twenty (20) scrips, corresponding to the redemption dates of the TFC and representing the TFC Holders entitlement to the redemption amount on the each such redemption date; and registered book entry securities in accordance with the CDC regulations, as outlined by SBP under BPRD Circular No. 06 dated August 15, 2013; with each TFC having a face value of PKR 100,000 or multiples thereof. Issue amount: Rupees 2,500,000 thousand Issue date: December 23, 2016 Maturity date: December 22, 2026 Rating: AA- Tenor: 10 Years. Security: Unsecured and subordinated to all other indebtedness of the Bank including deposits. Profit payment & frequency: Profit payable on half yearly basis in arrears on the outstanding principal amount. Profit rate: Floating rate of return at base rate plus 100 bps p.a. (Base rate will be the average rate ‘Ask side of the six month Karachi Inter Bank Offered Rate set at 1 (one business) day prior to the redemption date for the redemption amount payable on the immediately following redemption date). Repayment: The TFC has been structured to redeem 0.02% of the issue amount semi-annually in the first 09 years after the issue and the remaining 301
303. issue amount in two equal semi-annual installments of 49 .82% each, in the 10th year. Call / Put option: Callable after a period of 05 years. However no put option is available to the investors. Lock in clause: Neither profit nor principal may be paid (even at maturity) if such payments would result in a shortfall in the Bank’s Minimum Capital Requirement (MCR) or Capital Adequacy Ratio (CAR) or increase any existing shortfall in MCR or CAR. Loss absorbency clause: May be converted into ordinary shares or written off immediately (either partially or in full) at the discretion of the SBP, upon the occurrence of a point of non-viability (“PONV”) event as defined in the Basel III guidelines, at the market value of the shares on the date of trigger of PONV as declared by the SBP. 19.2 Privately placed term finance certificates - II The Bank has issued rated, unsecured and subordinated term finance certificates under section 66 of the Companies Act, 2017, in a set of twenty (20) scrips, corresponding to the redemption dates of the TFC and representing the TFC Holders entitlement to the redemption amount on the each such redemption date and registered book entry securities in accordance with the CDC regulations, as outlined by SBP under BPRD Circular No. 06 dated August 15, 2013 with each TFC having a face value of PKR 100,000 or multiples thereof. Issue amount: Rupees 4,300,000 thousand Issue date: April 23, 2018 Maturity date: April 23, 2028 Rating: AA- Tenor: 10 Years. Security: Unsecured and subordinated to all other indebtedness of the Bank including deposits. Profit payment & frequency: Profit payable on half yearly basis in arrears on the outstanding principal amount. Profit rate: Floating rate of return at base rate plus 125 bps p.a. (Base rate will be the average rate ‘Ask side of the six month Karachi Inter Bank Offered Rate set at 1 (one business) day prior to the redemption date for the redemption amount payable on the immediately following redemption date). Repayment: The TFC has been structured to redeem 0.02% of the issue amount semi-annually in the first 09 years after the issue and the remaining issue amount in two equal semi-annual installments of 49.82% each, in the 10th year. Call / Put option: Callable after a period of 05 years. However no put option is available to the investors. Lock in clause: Neither profit nor principal may be paid (even at maturity) if such payments would result in a shortfall in the Bank’s Minimum Capital Requirement (MCR) or Capital Adequacy Ratio (CAR) or increase any existing shortfall in MCR or CAR. Loss absorbency clause: May be converted into ordinary shares or written off immediately (either partially or in full) at the discretion of the SBP, upon the occurrence of a point of non-viability (“PONV”) event as defined in the Basel III guidelines, at the market value of the shares on the date of trigger of PONV as declared by the SBP. 302 & Its Subsidiaries
304. 19 .3 Advance subscription money - subordinated perpetual term finance certificates Prior to close of year ended December 31, 2021, the Group received Rs. 1,000,000 thousand under formal investor agreement from potential investors as advance subscription money against unsecured, subordinated, perpetual and non cumulative term finance certificates in the nature of Additional Tier -I capital. Subordinated to all other debts of the Group including deposits but superior to equity. The Group has applied to SBP for grant of formal approval for issue of Additional Tier - I capital for Capital Adequacy requirement as per guidelines set by SBP. The advance subscription money carries mark-up at rate of 6 month KIBOR plus spread of 200 bps per annum. 20212020 Note Rupees in ‘000’ 20. OTHER LIABILITIES Mark-up / return / interest payable in local currency 14,306,594 15,775,450 Mark-up / return / interest payable in foreign currency 52,107 63,615 Lease key money 11,991,877 12,025,862 Provision for taxation (provisions less payments) 755,465 Sundry creditors and accrued expenses 1,410,802 1,680,865 Acceptances 8,337,508 2,821,232 Mark-up payable on subordinated debts 90,505 75,781 Unclaimed dividends 2,586 2,588 Branch adjustment account 290,150 Payable to gratuity fund 37.1.3 268,144 261,774 Gratuity payable to key management personnel 5,750 Payable to charity fund 8 Provision against off-balance sheet obligations 20.1 62,183 62,183 Provision for employees compensated absences 37.2.3 133,629 123,506 Taxes / zakat / import fee payable 689,636 526,978 Deferred income on sale of sukuk on bai - muajjal basis - 336,351 Lease liability against right-of-use assets 20.2 9,479,713 7,298,374 Workers welfare fund 983,158 619,843 Inter bank fund transfer payable 544,489 298,024 Others 817,293 620,910 50,221,597 42,593,336 20.1 The above provision has been made against letters of guarantee issued by the Bank. 20.2 Lease liability against right-of-use assets Not later than one year 107,808 47,926 Later than one year and less than five years 1,077,877 1,215,565 Over five years 8,294,028 6,034,883 9,479,713 7,298,374 21. SHARE CAPITAL - NET 21.1 Authorized Capital 2021 2020 20212020 Number of shares Rupees in ‘000’ 5,000,000,0005,000,000,000 Ordinary / Preference shares of Rs. 10 each 50,000,000 50,000,000 The authorized capital of the Bank is fifty thousand million rupees divided into five thousand million ordinary or preference shares of ten rupees each. 303
305. 21 .2 Issued, subscribed and paid up capital 2021 2020 Number of shares 1,607,912,555 1,607,912,555 Ordinary shares of Rs. 10 each paid in cash 526,315,789 526,315,789 Ordinary shares of Rs. 10 each issued at discount 509,464,036 509,464,036 Issued as bonus shares 20212020 Rupees in ‘000’ 16,079,125 16,079,125 5,263,158 5,094,641 5,263,158 5,094,641 2,643,692,380 2,643,692,380 26,436,924 - - Less: Discount on issue of shares (263,158) 2,643,692,380 2,643,692,380 26,173,766 GoPb held 57.47% shares in the Bank as at December 31, 2021 (December 31, 2020: 57.47%). 26,436,924 (263,158) 26,173,766 20212020 Note Rupees in ‘000’ 22. (DEFICIT) / SURPLUS ON REVALUATION OF ASSETS - NET OF TAX (Deficit) / surplus on revaluation of: - Available for sale securities 9.1 (10,567,482) 4,514,250 - Property and equipment 22.1 5,137,390 2,577,581 - Non-banking assets acquired in satisfaction of claims 22.2 1,453,931 1,236,224 (3,976,161) Deferred tax on deficit / (surplus) on revaluation of: - Available for sale securities 4,121,318 - Property and equipment 22.1 (1,346,545) - Non-banking assets acquired in satisfaction of claims 22.2 (167,322) 8,328,055 (1,579,987) (680,942) (111,767) 2,607,451 (2,372,696) (1,368,710) 5,955,359 22.1 Surplus on revaluation of property and equipment - net of tax At January 01 2,577,581 2,630,999 Surplus recognized during the year 2,645,454 Surplus on land and building transferred from non banking assets during the year 11,820 63,868 Surplus realized on disposal during the year - (14,963) Transferred to unappropriated profit in respect of incremental depreciation charged during the year - net of deferred tax (59,455) (66,510) Related deferred tax liability on incremental depreciation charged during the year (38,010) (35,813) At December 31 5,137,390 Less: related deferred tax liability on: - revaluation as at January 01 (680,942) - revaluation recognized during the year (621,325) - effect of change in deferred tax due to rate change (77,822) - surplus transferred from non banking asset during the year (4,466) - surplus realized on disposal during the year - - incremental depreciation charged during the year 38,010 13 (1,346,545) 2,577,581 (717,498) (2,080) 2,823 35,813 (680,942) 3,790,845 1,896,639 304 & Its Subsidiaries
306. 20212020 Note Rupees in ‘000’ 22.2 Surplus on revaluation of non-banking assets acquired in satisfaction of claims - net of tax At January 01 1,236,224 1,333,687 Surplus recognized during the year 275,670 45,122 Surplus realized on disposal during the year (31,119) (30,443) Surplus reversed on account of restoration of loan - (33,775) Surplus on land and building transferred to fixed assets during the year (11,820) (63,868) Transferred to unappropriated profit in respect of incremental depreciation charged during the year - net of deferred tax (9,164) (9,424) Related deferred tax liability on incremental depreciation charged during the year (5,860) (5,075) At December 31 1,453,931 1,236,224 Less: related deferred tax liability on: - revaluation as at January 01 (111,767) (102,895) - revaluation recognized during the year (61,729) (18,325) - effect of change in deferred tax due to rate change (12,774) - surplus transferred to fixed assets during the year 4,466 2,080 - surplus realized on disposal during the year 8,622 2,298 - incremental depreciation charged during the year 5,860 5,075 13 (167,322) (111,767) 1,286,609 23. CONTINGENCIES AND COMMITMENTS Guarantees Commitments Other contingent liabilities 23.1 23.2 23.3 80,791,490 388,223,744 8,975 1,124,457 64,847,674 148,893,256 8,975 469,024,209 213,749,905 23.1Guarantees: Financial guarantees Performance guarantees Other guarantees 18,341,471 18,710,766 43,739,253 18,515,042 18,139,861 28,192,771 80,791,490 64,847,674 23.2Commitments: Documentary credits and short-term trade-related transactions - letters of credit 136,560,464 Commitments in respect of: - forward foreign exchange contracts 23.2.1 205,641,893 - forward lending 23.2.2 45,923,548 Commitments for acquisition of: - fixed assets 13,052 - intangible assets 84,787 388,223,744 78,976,971 48,807,235 20,393,865 689,875 25,310 148,893,256 305
307. 20212020 Note Rupees in ‘000’ 23.2.1 Commitments in respect of forward foreign exchange contracts Purchase 105,824,202 24,708,677 Sale 99,817,691 24,098,558 205,641,893 48,807,235 23.2.2 Commitments in respect of forward lending Undrawn formal standby facilities, credit lines and other commitments to lend 23.2.2.1 45,923,548 20,393,865 23.2.2.1 These represent commitments that are irrevocable because they cannot be withdrawn at the discretion of the Bank without the risk of incurring significant penalty or expense. In addition, the Bank makes revocable commitments that do not attract any significant penalty or expense if the facility is unilaterally withdrawn. 20212020 Rupees in ‘000’ 23.3 Other contingent liabilities 8,975 8,975 For the tax year 2007, the Income Tax Department concluded proceedings under section 161/205 and created a default of Rs. 8,975 thousand. The Bank filed appeal before CIR (A), however the same was not allowed. Now, the Bank has filed appeal against the said order of CIR (A) with ATIR. The expected tax liability for the said year amounts to Rs. 8,975 thousand. However, the management of the Bank, as per opinion of its tax consultant, is confident that the decision for the aforementioned tax year will be decided in Bank’s favor. 20212020 Note Rupees in ‘000’ 23.4 Claims against the Bank not acknowledged as debts 23.4.1 54,809,134 54,765,641 23.4.1 The amounts involved in the claims filed against the Bank are yet to be adjudicated by the concerned Courts as the same have been filed as outburst to our recovery suits. Uptill now, in no case, any claim has been adjudicated, determined or decreed by the Courts against the Bank. Moreover, there is no likelihood of decreeing the suits against the Bank because, the claims are frivolous. 20212020 Rupees in ‘000’ 24. MARK-UP / RETURN / INTEREST EARNED a) On loans and advances 35,287,869 38,959,973 b) On investments: Available for sale securities 35,872,000 37,345,707 Held for trading securities 1,367,238 1,018,716 Held to maturity securities 7,477,551 7,389,212 c) On lendings to financial institutions: Securities purchased under resale agreements 993,245 1,065,581 Call lending 182,285 94 Letters of placement 587,000 298,978 d) On balances with banks 37,225 42,154 306 & Its Subsidiaries 81,804,413 86,120,415
308. 20212020 Note Rupees in ‘000’ 25. MARK-UP / RETURN / INTEREST EXPENSED Deposits 43,955,934 52,483,499 Borrowings: Securities sold under repurchase agreements 744,020 2,654,161 Call borrowings 4,465,203 5,109,314 SBP borrowings 875,124 640,537 Borrowing from Pakistan Mortgage Refinance Company Limited 83,887 9,262 Mark-up on subordinated loan from GoPb - 106,644 Mark-up on advance subscription money - subordinated perpetual term finance certificate 738 Mark-up on privately placed term finance certificates 603,573 755,720 Markup on lease liability against right-of-use assets 1,047,705 937,275 51,776,184 62,696,412 26. FEE AND COMMISSION INCOME Branch banking customer fees 585,810 487,905 Consumer finance related fees 359,111 268,034 Card related fees 811,107 618,720 Credit related fees 802,328 642,252 Branchless banking fees 124,342 100,857 Commission on trade 778,411 584,589 Commission on guarantees 421,062 264,015 Commission on cash management 156,165 144,141 Commission on remittances including home remittances 437,494 363,128 Commission on bancassurance 110,158 38,452 Commission on wheat financing 214,120 SMS banking income 343,489 245,074 5,143,597 3,757,167 27. GAIN ON SECURITIES - NET Realized gain on sale of securities - net 27.1 1,764,751 8,464,862 Unrealized gain - held for trading 9.1 21,039 1,630 1,785,790 8,466,492 27.1 Realized gain on sale of securities - net: Federal government 1,213,864 8,069,228 Shares / units 550,887 394,634 Term finance certificates - 1,000 1,764,751 8,464,862 28. OTHER INCOME - NET Rent on property - 43,529 Gain / (loss) on termination of lease liability against right-of-use assets 3,156 (2,635) (Loss) / gain on sale of property and equipment - net (980) 101,461 Gain on sale of non banking assets - net 14.1.2 42,207 225,129 Notice pay on resignations 15,974 19,707 60,357 387,191 307
309. 20212020 Note Rupees in ‘000’ 29. OPERATING EXPENSES Total compensation expense 29.1 10,687,383 8,782,278 Property expense: Rent and taxes 22,635 39,039 Insurance 16,979 18,359 Utilities cost 798,543 664,833 Security 1,148 1,483 Repair and maintenance including janitorial charges 49,021 43,592 Depreciation 523,074 589,064 Depreciation on right-of-use assets 11.2 990,749 891,145 Others - 397 2,402,149 Information technology expenses: Software maintenance 512,905 Hardware maintenance 54,879 Depreciation 347,872 Amortization 12.1 208,010 Network charges 424,900 2,247,912 473,022 82,092 285,960 197,899 354,881 1,548,566 1,393,854 Other operating expenses: Directors’ fees and allowances 38.2 41,685 35,200 Fees and allowances to shariah board 38.3 5,925 3,660 Legal and professional charges 223,230 114,445 Subscription charges 38,366 32,258 Outsourced staff services costs 36.1 437,730 367,095 Travelling and conveyance 836,936 560,890 NIFT clearing charges 67,957 69,078 Depreciation 365,527 306,973 Depreciation on non banking assets 14.1.1 48,666 58,923 Depreciation on ijarah assets 240,683 287,075 Training and development 66,608 26,047 Postage and courier charges 159,300 221,169 Stationery and printing 409,987 265,579 Marketing, advertisement and publicity 651,895 356,682 Donations 29.2 - 10,000 Auditors remuneration 29.3 12,358 11,068 Insurance 248,352 145,328 Deposit protection fee 443,027 351,964 Repair and maintenance 296,572 180,907 Entertainment expenses 151,659 112,151 Fuel for generator 100,036 85,646 Commission and brokerage 274,174 242,593 Bank charges 36,362 41,931 SMS banking charges 40,608 48,491 ATM charges including ATM maintenance charges 273,571 174,061 Cash remittance charges 269,805 200,336 Branch license fee 27,701 16,507 CNIC verification / ECIB charges 203,713 71,311 COVID - 19 related expenses 38,493 45,725 Miscellaneous expenses 186,554 197,603 6,197,480 4,640,696 20,835,578 17,064,740 308 & Its Subsidiaries
310. Total cost for the year included in other operating expenses relating to outsourced activities is Rs . 1,187,522 thousand (2020: Rs. 558,412 thousand). This expense represents payments made to companies incorporated in Pakistan. 20212020 Note Rupees in ‘000’ 29.1 Total compensation expense Managerial remuneration: Fixed 8,760,186 Variable cash bonus / awards etc. 981,871 Provision for gratuity 37.1.7.1 267,397 Provision for compensated absences 37.2.4 12,040 Gratuity expense of key management personnel 42.4 5,750 Contribution to defined contribution plans 299,283 Rent & house maintenance - Utilities 343 Medical 271,411 Conveyance 47,844 Liveries 33,090 Scholarship 8,168 7,611,938 465,342 174,489 13,982 13,286 246,497 106 206,795 26,142 17,641 6,060 Grand Total 10,687,383 8,782,278 29.2 This represents donation paid during the year (2020: Akhuwat Corona Imdad Fund Rs. 10,000 thousand). 20212020 Note Rupees in ‘000’ 29.3 Auditors remuneration Audit fee 4,435 3,350 Fee for half year review and other statutory certifications 5,172 5,178 Special certifications 1,391 1,540 Out of pocket expenses 1,100 1,000 12,098 11,068 30. OTHER CHARGES Penalties imposed by SBP 13,408 304,279 31. PROVISIONS AND WRITE OFFS - NET Provision for diminution in value of investments 9.3.1 311,519 508,824 (Reversal) / provision against advances - net 10.4 (1,810,365) 6,074,322 (Reversal) / provision against other assets - net 14.3.1 (112,472) 286,764 Bad debts written off directly 10.5.1 300 Other assets written off directly - 19 (1,611,018) 6,869,929 309
311. 20212020 Note Rupees in ‘000’ 32. TAXATION Current 32.1 7,068,259 6,633,884 Prior years (108,154) 12,463 Deferred (985,497) (1,600,563) 5,974,608 5,045,784 32.1 This includes provision for super tax of Bank for the year in accordance with Income Tax Ordinance, 2001. The Government vide Finance Act 2022, has changed the effective tax rate for banking industry from 35% to 39% by enacting super tax at the rate of 4% for indefinite period of time. Accordingly, the effect of change in tax rate has been recognized in these consolidated financial statements. 20212020 Rupees in ‘000’ 32.2 Relationship between tax expense and accounting profit Accounting profit before tax for the year 18,371,007 11,926,313 Tax on income @ 35% (2020: 35%) Super tax @ 4% (2020: 4%) 6,429,852 726,630 4,174,210 669,764 Effective tax rate @ 39% (2020: 39%) Tax effect of permanent differences Tax effect of prior year Cumulative tax effect of change in tax rate Others 7,156,482 4,693 (108,154) (1,120,866) 42,453 4,843,974 106,498 95,312 Tax charge for the year 5,974,608 5,045,784 20212020 33. BASIC EARNINGS PER SHARE Profit after tax for the year (Rs in ‘000’) 12,315,813 6,818,867 Weighted average number of ordinary shares (No.) 2,643,692,380 2,643,692,380 Basic earnings per share (Rs) 4.66 2.58 34. DILUTED EARNINGS PER SHARE There is no dilution effect on basic earnings per share. 20212020 Rupees in ‘000’ 35. CASH AND CASH EQUIVALENTS Cash and balances with treasury banks Balance with other banks Overdrawn nostro accounts 6 7 17 71,319,238 8,858,356 - 80,177,594 310 & Its Subsidiaries 69,272,177 2,507,010 (2,136) 71,777,051
312. 311 Other liabilities Unappropriated profit Equity Subordinated debts Rupees in '000' Total Other liabilities Liabilities Equity Unappropriated profit 2020 Total Balance as at December 31 7,788,980 50,221,597 18,915,186 76,925,763 6,791,700 42,593,336 11,632,681 61,017,717 Balance as at January 01, 6,791,700 42,593,336 11,632,681 61,017,717 8,794,420 42,225,055 8,151,276 59,170,751 Changes from financing cash flows Redemption of Subordinated debts (2,720) - - (2,720) (2,002,720) - - (2,002,720) Advance subscription money - subordinated perpetual term finance certificates 1,000,000 - - 1,000,000 - - - Payment of lease liability against right-of-use-assets - (1,480,786) - (1,480,786) - (1,173,559) - (1,173,559) Dividend paid - - (2,643,692) (2,643,692) - - (1,982,769) (1,982,769) Total changes from financing cash flows 997,280 (1,480,786) (2,643,692) (3,127,198) (2,002,720) (1,173,559) (1,982,769) (5,159,048) Liability related Changes in Other liabilities Cash based - 4,405,523 - 4,405,523 - (313,422) - (313,422) Non cash based - 4,703,524 - 4,703,524 - 1,855,262 - 1,855,262 Total liability related other changes - 9,109,047 - 9,109,047 - 1,541,840 - 1,541,840 Total equity related other changes - - 9,926,197 9,926,197 - - 5,464,174 5,464,174 Subordinated debts 2021 is includes provision for super tax for the year in accordance with Income Tax Ordinance, 2001. Liabilities Reconciliation of movement of liabilities to cash flows arising from financing activities 35.1
313. 20212020 Number 36 . STAFF STRENGTH Permanent On Bank contract 9,358 1,899 Bank’s own staff strength at the end of the year 11,257 7,975 2,037 10,012 36.1 In addition to the above, 1,155 (2020: 1033) employees of outsourcing services companies were assigned to the Bank as at the end of the year to perform services other than guarding and janitorial services. 37. EMPLOYEE BENEFITS 37.1 Defined benefit plan - gratuity The Bank operates a funded gratuity scheme for all its permanent employees. The benefits under the scheme are payable on retirement / resignation which is equal to one month’s last drawn basic salary for each year of eligible service or part thereof, with effect from January 01, 2008, subject to minimum of five years of service. The Bank makes annual provision in these consolidated financial statements for its liabilities on the basis of actuarial valuation. 37.1.1 Number of employees under the scheme The number of employees covered under the following defined benefit scheme are: 20212020 Number - Eligible employees under gratuity scheme 9,358 7,930 37.1.2 Principal actuarial assumptions The most recent valuation was carried out at December 31, 2021 using the “Projected Unit Credit Method”. The mortality rates used for active employees are based on SLIC (2001-05) Mortality Table. The principal assumptions used in the valuation were as follows: 20212020 Per annum Discount rate 11.75% 9.75% Expected rate of return on plan assets 11.75% 9.75% Expected rate of salary increase 10.75% 8.75% Average expected remaining working life (years) 8 8 20212020 Note Rupees in ‘000’ 37.1.3 Reconciliation of payable to defined benefit plan Present value of obligations 37.1.4 1,918,269 1,590,008 Fair value of plan assets 37.1.5 (1,669,712) (1,343,925) Benefits payable 19,587 15,691 312 Payable to defined benefit plan & Its Subsidiaries 268,144 261,774
314. 20212020 Note Rupees in ‘000’ 37.1.4 Movement in present value of defined benefit obligations Obligations at the beginning of the year 1,590,008 1,284,100 Current service cost 256,355 164,580 Interest cost 152,231 138,435 Benefits paid during the year (57,339) (51,196) Re-measurement (gain) / loss (22,986) 54,089 Obligations at the end of the year 1,918,269 1,590,008 37.1.5 Movement in fair value of plan assets Fair value at the beginning of the year 1,343,925 1,088,236 Interest income on plan assets 141,189 128,526 Contribution by the Bank during the year 261,774 211,783 Benefits paid during the year (53,443) (51,424) Return on plan assets excluding interest income (23,733) (33,196) Fair value at the end of the year 1,669,712 1,343,925 37.1.6 Movement in payable under defined benefit scheme Opening balance 261,774 211,783 Charge for the year 37.1.7.1 267,397 174,489 Contribution by the Bank during the year (261,774) (211,783) Re-measurement loss recognized in other comprehensive income during the year 37.1.7.2 747 87,285 Closing balance 268,144 261,774 37.1.7 Charge for defined benefit plans 37.1.7.1 Cost recognized in profit and loss Current service cost 256,355 164,580 Net interest on defined benefit plan 11,042 9,909 267,397 174,489 37.1.7.2Re-measurements recognized in other comprehensive income during the year (Gain) / loss on obligation experience adjustment (22,986) 54,089 Return on plan assets over interest income 23,733 33,196 Total re-measurement loss recognized in other comprehensive income 747 87,285 37.1.8 Components of plan assets Cash and cash equivalents - net 133,509 1,036,625 Government Securities 1,209,200 Shares / units 327,003 307,300 1,669,712 1,343,925 313
315. These assets are mostly contained in the form of cash and cash equivalents so there is no significant risk associated with it . However, investments in shares/ units may be adversely affected by movement in equity and interest rate markets. 37.1.9 Sensitivity analysis Sensitivity analysis has been performed by varying one assumption keeping all other assumptions constant and calculating the impact on the present value of the defined benefit obligations. The increase / (decrease) in the present value of defined benefit obligations as a result of change in discount rate and salary growth is summarized below: 20212020 Rupees in ‘000’ 1% increase in discount rate 1,789,226 1,472,296 1% decrease in discount rate 2,056,664 1,724,426 1 % increase in expected rate of salary increase 2,056,619 1,724,426 1 % decrease in expected rate of salary increase 1,789,204 1,470,252 37.1.10 Expected contributions to be paid to the fund in the next financial year 268,144 261,774 37.1.11 Expected charge for the next financial year 340,032 37.1.12 Maturity profile The weighted average duration of the obligation (in years) 7 206,947 7 37.1.13 Funding policy There is no statutory minimum funding requirements. However, contributions to the scheme are made on the basis of actuarial valuations carried in each year. The Bank’s gratuity scheme is mainly subject to following risks: Asset volatility The majority of the gratuity fund assets are invested in cash or cashequivalent. Therefore, there is insignificant investment risk to the scheme due to fluctuation in interest rate environment or changes in bond yields. Also, there is no liquidity investment risk to the scheme. However, investments in shares/ units may be adversely affected by movement in equity and interest rate markets. Inflation risk Higher than expected growth in inflation may result in higher than assumed salary increases which will lead to increase in liability. However, assets of the scheme may not be at significant risk due to changes in inflation rate. Life expectancy / Withdrawal rate Actuarial valuation assumes heavy withdrawals for younger ages but moderate withdrawal rates are used for older ages. Significant withdrawals of employees having reasonable years of service would cause large benefit payments. Consequently, deficit position of the scheme would deteriorate further. However, availability of cash for benefit payments will not be an issue due to the liquid nature of assets of the Gratuity Fund. 314 & Its Subsidiaries
316. 37 .2 Defined benefit plan - compensated absences The Bank makes annual provision in these consolidated financial statements for its liabilities towards vested compensated absences accumulated by its employees on the basis of actuarial valuation. The employees of the Bank are entitled to take leave as Leave Preparatory to Retirement (LPR) immediately before retirement. These leaves are subject to retirees’ un-utilized privilege leave balance with an upper limit of 180 days. Alternatively, the retiree may receive a lump-sum cash amount equal to 180 days basic salary at the time of retirement in lieu of LPR of 180 days. Privilege leave accrues at the rate of 30 days per year. Moreover, any unutilized privilege leaves over 180 days are ignored. 37.2.1 Principal actuarial assumptions The most recent valuation was carried out at December 31, 2021. The principal assumptions used in the valuation were as follows: 20212020 Per annum Discount rate (%) 11.75% 9.75% Expected rate of eligible salary increase in future years (%) 10.75% 8.75% Average number of leaves accumulated per annum by the employees (days) 18 18 20212020 Rupees in ‘000’ 37.2.2 Present value of defined benefit obligation 133,629 123,506 37.2.3 Movement in payable to defined benefit plan: Opening balance 123,506 111,612 Charge for the year 12,040 13,982 Benefit paid (1,917) (2,088) Closing balance 133,629 123,506 37.2.4 Charge for defined benefit plan: Current service cost 4,116 3,888 Interest cost 11,948 12,162 Actuarial gain recognized (4,024) (2,068) 12,040 13,982 37.2.5 Sensitivity analysis: Sensitivity analysis has been performed by varying one assumption keeping all other assumptions constant and calculating the impact on the present value of the defined benefit plan. The increase / (decrease) in the present value of defined benefit plan as a result of change in discount rate and salary growth is summarized below: 20212020 Rupees in ‘000’ Increase in discount rate by 1% 122,180 111,827 Decrease in discount rate by 1% 146,146 137,205 Increase in expected future increment in salary by 1% 146,149 137,205 Decrease in expected future increment in salary by 1% 122,182 111,626 315
317. 37 .2.6 Reconciliation of net liability recognized for compensated absences for the five years is as follows: 2021 2020 20192018 2017 Rupees in ‘000’ Opening net liability Net charge for the year 123,506 10,123 111,612 11,894 102,294 9,318 93,523 8,771 91,181 2,342 133,629 123,506 111,612 102,294 93,523 Actuarial gain / (loss) on obligation 4,024 2,068 (1,175) 886 1,617 37.3 Defined contribution plan 38. COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL 38.1 Total compensation expense The Bank operates and approved provident fund scheme for all its permanent employees. Equal monthly contributions are made by the Bank and employees at the rate of 8.33% of basic salary. 2021 Chairman Members shariah board President / CEO Key management personnel Note Other material risk takers / controllers Rupees in '000' Fees and allowances etc. 38.3 - 5,925 - - Managerial remuneration Fixed - 1,502 92,575 246,477 Variable cash bonus / awards - 116 35,000 32,504 Charge for defined benefit plan - - 5,750 7,027 Contribution to defined contribution plan - - - 8,821 Servant salary - - 720 2,874 Club membership - - 265 1,271 Fuel - 389 - 11,791 Others - - 116 210 Total - 7,932 134,426 310,975 Number of persons - 6 1 17 227,908 36,875 8,959 7,874 3,529 2,089 14,999 432 302,665 32 316 & Its Subsidiaries
318. 2020 Chairman Members shariah board President / CEO Key management personnel Other material risk takers / controllers Rupees in '000' Fees and allowances etc. 87 3,660 - - Managerial remuneration Fixed - 983 76,323 187,840 Variable cash bonus / awards - 44 19,325 11,956 Charge for defined benefit plan - - 13,286 3,950 Contribution to defined contribution plan - - 79 4,311 Servant salary - - 510 1,924 Furnishing allowance - - 750 1,500 Club membership - - 46 3,650 Fuel - 307 - 6,231 Others - - 21 2,077 180,710 16,842 6,529 7,402 1,940 565 10,303 - Total 87 4,994 110,340 223,926 Number of persons 0 3 3 224,291 25 30 38.1.1 In terms of section 10 (2) of the Bank of Punjab Act, 1989, the Chairman of the Board shall be nominated by the GoPb amongst the Directors. However, the GoPb has not concluded nomination of the Chairman of the Board of Directors during the year ended December 31, 2021 and the same is in process. 38.1.2 In terms of service agreement of President / CEO, certain benefits including provision of Bank maintained cars, medical insurance cover etc. are also available to him. Further, certain executives are also entitled for Bank maintained car along with driver and mobile phone as per Bank’s policy. 38.1.3 Total compensation paid during the year ended December 31, 2020 to President / CEO includes amount paid to Acting Presidents amounting to Rs. 49,143 thousand from January 01, 2020 to April 15, 2020. 38.1.4 Deferred cash bonus for key management personnel and other material risk takers / controllers stood at December 31, 2021 is Rs. 22,182 thousand (2020: Nil). 38.2 Remuneration paid to directors for participation in board and committee meetings 2021 Rupees in ‘000’ For Board Committees Name of Director Board Meetings Strategy, Islamic & Priority Sector Finance Committee Information Technology & Communications Committee Human Resource, Compensation & Nomination Committee Board Audit Committee Dr. Muhammad Amjad Saqib 2,044 806 - 1,744 Khawaja Farooq Saeed 2,044 431 - 2,104 Iftikhar Ali Sahoo Mohammad Jehanzeb Khan Muhammad Abdullah Khan Sumbal Saeed Anwar Shaharyar Ahmad Monitoring Committee of the Board on Forensic Investigation of Sugar Industry NPLs Risk Management, Compliance & NPL Review Committee - 1,181 806 1,181 188 - 938 Total amount paid 5,775 7,504 994 375 805 750 188 - 3,300 2,043 188 1,613 1,744 806 - - 6,394 375 188 374 188 - - 2,044 806 1,613 431 806 - 1,125 375 750 - - - 750 1,125 937 6,637 750 3,750 Syed Ghazanfar Abbas Jilani 2,044 431 1,613 1,744 187 1,181 - 7,200 Total 12,713 3,600 6,394 8,891 2,981 4,481 2,625 41,685 317
319. 2020 Rupees in ‘000’ For Board Committees Name of Director Board Meetings Strategy, Islamic & Priority Sector Finance Committee Board Audit Committee Human Resource, Compensation & Nomination Committee Information Technology & Communications Committee Risk Management, Compliance & NPL Review Committee Monitoring Committee of the Board on Forensic Investigation of Sugar Industry NPLs Total amount paid Dr. Pervaiz Tahir - ex chairman 87 - - - - - - 87 Mohammad Jehanzeb Khan 2,600 - 375 1,725 750 513 - 5,963 Abdullah Khan Sumbal 2,600 375 375 1,125 188 513 - 5,176 Syed Ghazanfar Abbas Jilani 1,125 - 375 563 - 375 - 2,438 Khawaja Farooq Saeed 2,600 187 837 1,725 562 375 - 6,286 Saeed Anwar 2,600 375 1,212 - 750 513 - 5,450 Dr. Muhammad Amjad Saqib 2,600 563 - 1,725 375 700 - 5,963 Shaharyar Ahmad 2,337 375 563 - - 562 - 3,837 Total 16,549 1,875 3,737 6,863 2,625 3,551 - 35,200 38.3 Remuneration paid to Shariah board members 2021 2020 Resident Non- Total ResidentNon- Total Chairman member resident amount Chairmanmember resident amount memberpaid memberpaiod Rupees in ‘000’ Meeting fee and allowances 2,540 - 3,385 5,925 1,890 - 1,770 3,660 Salary & festival bonus paid to resident member through Bank’s payroll - 2,007 - 2,007 - 1,334 - 1,334 Total amount 2,540 2,007 3,385 7,932 1,890 1,334 1,770 4,994 Number of persons 1 2 3 1 1 1 39. 39.1 FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of the assets and liabilities 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. The Bank categorizes fair value measurements within the following fair value hierarchy. The fair value of quoted securities other than those classified as held to maturity, is based on quoted market price. Quoted securities classified as held to maturity are carried at cost. The fair value of unquoted equity securities, other than investments in subsidiaries, is determined on the basis of the break-up value of these investments as per their latest available audited consolidated financial statements. The fair value of unquoted debt securities, fixed term loans, other assets, other liabilities, fixed term deposits and borrowings cannot be calculated with sufficient reliability due to the absence of a current and active market for these assets and liabilities and reliable data regarding market rates for similar instruments. In the opinion of the management, the fair value of the remaining financial assets and liabilities are not significantly different from their carrying values since these are either short-term in nature or, in the case of customer loans and deposits, are frequently reprised. The Bank measures fair vale using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Fair value measurement using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly. (i.e. derived from prices). 318 & Its Subsidiaries
320. Level 3 : Fair value measurements using input for the asset or liability that are not based on observable market data (i.e. unobservable inputs). The table below analyses financial instruments measured at the end of the reporting period by the level in the fair value hierarchy into which the fair value measurement is categorised: 2021 Carrying Fair value value Level 1 Level 2 Level 3 Total Rupees in ‘000’ On balance sheet financial instruments Financial assets measured at fair value : Government securities 448,913,878 - 448,913,878 - 448,913,878 Shares 6,874,277 6,834,777 - 39,500 6,874,277 Non-Government debt securities 10,106,626 - 10,106,626 - 10,106,626 Foreign securities 11,957 - - 11,957 11,957 Financial assets disclosed but not measured at fair value : Government securities 61,299,171 - 63,715,206 - 63,715,206 Non Financial assets measured at fair value : Property and equipment (land & building) 8,764,483 - 8,764,483 - 8,764,483 Non banking assets acquired in satisfaction of claims 5,848,593 - 5,848,593 - 5,848,593 Financial liabilities measured at fair value : Payable to gratuity fund 268,144 - 268,144 - 268,144 Provision for employees compensated absences 133,629 - 133,629 - 133,629 Off balance sheet financial instruments : Forward purchase of foreign exchange contracts 107,277,276 - 107,277,276 - 107,277,276 Forward sale of foreign exchange contracts 101,120,153 - 101,120,153 - 101,120,153 2020 Carrying Fair value value Level 1 Level 2 Level 3 Total Rupees in ‘000’ On balance sheet financial instruments Financial assets measured at fair value : Government securities 488,823,420 - 488,823,420 - 488,823,420 Shares 3,652,149 3,616,961 - 35,188 3,652,149 Non-Government debt securities 10,139,836 - 10,139,836 - 10,139,836 Foreign securities 4,019 - - 4,019 4,019 Financial assets disclosed but not measured at fair value : Government securities 60,483,391 - 69,082,534 - 69,082,534 Non Financial assets measured at fair value : Operating fixed assets (land & building) 5,497,765 - 5,497,765 - 5,497,765 Non banking assets acquired in satisfaction of claims 5,904,147 - 5,904,147 - 5,904,147 Financial liabilities measured at fair value: Payable to gratuity fund 261,774 - 261,774 - 261,774 Provision for employees compensated absences 123,506 - 123,506 - 123,506 Off balance sheet financial instruments: Forward purchase of foreign exchange contracts 24,343,173 - 24,343,173 - 24,343,173 Forward sale of foreign exchange contracts 23,712,804 - 23,712,804 - 23,712,804 319
321. 320 & Its Subsidiaries Segment details with respect to business activities 40.1 1,865,043 (747,074) 8,673,233 311,519 609,312 770,058 (12,818,035) (125,742) Total liabilities 357,717,660 952,773,198 87,512,609 588,648,455 83,062,176 16,149,576 2,085,863,674 2,140,774,078 469,024,209 Total equity & liabilities Contingencies & commitments 255,411,391 - 416,094 205,641,893 7,448,017 106,814 Equity 54,910,404 Total assets 357,717,660 952,773,198 87,512,609 588,648,455 87,614,794 66,507,362 2,140,774,078 Borrowings 68,607,066 - 1,805,013 - 911,409 - 71,323,488 Subordinated debts - - - - - 7,788,980 7,788,980 Deposits & other accounts - 923,712,185 - - 79,206,096 - 1,002,918,281 Net inter segment borrowing 280,743,709 - 74,282,001 588,476,159 - - 943,501,869 Others 8,366,885 29,061,013 11,425,595 172,296 2,944,671 8,360,596 60,331,056 Profit / (loss) before tax 7,873,546 12,376,669 2,612,117 8,361,714 (160,746) (12,692,293) 18,371,007 Balance sheet Cash & bank balances - 25,027,543 - 41,562,509 13,587,542 - 80,177,594 Investments - net 4,259,596 - - 510,848,259 16,590,093 - 531,697,948 Net inter segment lending - 922,830,034 - - 442,430 20,229,405 943,501,869 Lendings to financial institutions - - - 25,080,388 4,500,000 - 29,580,388 Advances - performing 336,786,580 - 86,053,619 - 47,197,055 10,209,769 480,247,023 Advances - non-performing - net 2,675,142 - 818,292 - 1,835,989 57 5,329,480 Others 13,996,342 4,915,621 640,698 11,157,299 3,461,685 36,068,131 70,239,776 12,380,246 3,577 16,759,989 (1,611,018) 6,050,190 (1,823,356) 72,988,485 Profit before provisions Provisions 89,748,474 81,804,413 7,944,061 Total income 7,635,261 64,013,924 3,500,452 14,221,086 4,733,138 (4,355,387) Segment total expenses 1,585,071 51,633,678 1,635,409 5,547,853 4,123,826 8,462,648 Rupees in ‘000’ Profit & loss Net mark-up / return / profit 25,058,046 - 7,235,506 44,448,997 4,621,515 440,349 Inter segment revenue - net (19,147,791) 61,725,743 (4,367,170) (33,250,325) (65,951) (4,894,506) Non mark-up / return / interest income 1,725,006 2,288,181 632,116 3,022,414 177,574 98,770 2021 Corporate Consumer Retail and Treasury Islamic Others Total and investment and digital priority including banking banking sector lending Head Office SEGMENT INFORMATION 40.
322. 321 1 ,729,146 247,252 12,105,965 508,825 970,578 414,325 (9,340,104) 8,776 Total liabilities 308,859,304 793,560,640 54,994,918 584,418,970 65,007,164 14,059,228 1,820,900,224 Total equity & liabilities Contingencies & commitments 160,308,823 - 639,748 48,807,235 3,269,939 724,160 213,749,905 1,873,282,999 Equity 52,382,775 Total assets 308,859,304 793,560,640 54,994,918 584,418,970 69,121,612 62,327,555 1,873,282,999 Borrowings 51,659,260 - 462,409 102,105,236 607,842 - 154,834,747 Subordinated debts - - - - - 6,791,700 6,791,700 Deposits & other accounts - 773,530,773 - - 61,539,589 - 835,070,362 Net inter segment borrowing 254,087,325 - 42,481,624 480,851,764 - - 777,420,713 Others 3,112,719 20,029,867 12,050,885 1,461,970 2,859,733 7,267,528 46,782,702 Profit / (loss) before tax 378,847 7,261,059 1,481,894 11,597,140 556,253 (9,348,880) 11,926,313 Balance sheet Cash & bank balances - 43,951,026 - 22,168,221 5,659,940 - 71,779,187 Investments - net 2,320,445 - - 548,486,468 16,996,603 - 567,803,516 Net inter segment lending - 743,594,252 - - 951,270 32,889,248 777,434,770 Lendings to financial institutions - - - 6,454,867 8,632,000 - 15,086,867 Advances - performing 291,478,623 - 53,317,428 - 30,983,039 6,710,329 382,489,419 - non-performing - net 6,229,401 - 930,497 - 2,218,148 22,343 9,400,389 Others 8,830,835 6,015,362 746,993 7,309,414 3,680,612 22,705,635 49,288,851 7,545,661 284,602 18,796,242 6,869,929 5,784,996 5,406,149 Profit before provisions Provisions 80,400,313 99,196,555 86,120,415 13,076,140 Total income 6,944,103 66,126,197 2,626,966 20,210,742 5,116,293 (1,827,746) Segment total expenses 1,159,107 58,580,536 897,820 8,104,777 4,145,715 7,512,358 Rupees in ‘000’ Profit & loss Net mark-up / return / profit 29,246,361 - 6,346,075 45,088,416 5,057,562 382,001 Inter segment revenue - net (22,931,710) 64,402,623 (3,982,350) (34,842,275) (59,260) (2,587,028) Non mark-up / return / interest income 629,452 1,723,574 263,241 9,964,601 117,991 377,281 2020 Corporate Consumer Retail and Treasury Islamic Others Total and investment and digital priority including banking banking sector lending Head Office
323. 41 . TRUST ACTIVITIES 42. RELATED PARTY TRANSACTIONS Related parties comprise subsidiary, key management personnel and entities in which key management personnel are office holders / members. The Bank in the normal course of business carries out transactions with various related parties on arm’s length basis. Amounts due from and due to related parties are shown under receivables and payables. Remuneration of key management personnel, shariah board and fixed assets sold to related parties are disclosed in Note 38.1, 38.2 & Note 11.3.4 respectively. In addition key management personnel are paid terminal and short-term terminal benefits. The Bank is not engaged in any significant trust activities. However, the Bank arranges and maintain government securities on behalf of its customers. 2021 Key Employee Directors management funds personnel Other related Directors parties 2020 Key Employee Other management funds related personnel parties Rupees in ‘000 Advances: Opening balance - 171,147 - 595,721 - 322,244 - Addition during the year - 156,784 - 2,963,637 - 51,412 - 5,541,638 Repaid during the year - 51,332 - 2,241,339 - 202,509 - 4,945,917 Closing balance - 276,599 - 1,318,019 - 171,147 - 595,721 Contingencies (non fund exposure) - - - 112,072 - - - 419,488 Other assets - advance deposits and prepayments - 17,547 - - - - - Other assets - markup receivable - 14,709 - 14,151 - 12,316 - 14,491 Right-of-use assets - - - 62,202 - - - 66,055 Lease liability against right-of use assets - - - 22,900 - - - 20,030 Deposits and other accounts: Opening balance 598 26,253 3,071,616 33,878 61 13,961 2,564,910 876 Received during the year 16,522 545,013 4,247,275 61,507,975 4,353 473,997 1,152,506 122,199 Withdrawn during the year 16,218 542,876 6,944,119 59,982,854 3,816 461,705 645,800 89,197 Closing balance 902 28,390 374,772 1,558,999 598 26,253 3,071,616 33,878 Other liabilities - markup payable - - - 11,087 - - - Income: Mark-up / return / interest earned - 10,826 - 34,743 - 15,096 - 24,297 Non markup income - - - 8,367 - - - 580 Expense: Mark-up / return / interest paid 24 585 88,308 51,689 26 1,333 245,354 314 Mark-up on lease liability against right-of-use assets - - - 2,870 - - - 4,240 Depreciation on right-of-use assets - - - 3,853 - - - 4,614 Non markup expense - - - - - - - 42.1 42.2 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 year are not reflected as part of the closing balance. The same are accounted for through movement presented above. The GoPb holds controlling interest (57.47% shareholding) in the Bank and therefore entities which are owned and / or controlled by the GoPb, or where the GoPb may exercise significant influence, are related parties of the Bank. The Bank in the ordinary course of business enters into transaction with Government- related entities. Such transactions include lending to, deposits from and provision of other banking services to Government-related entities. 322 & Its Subsidiaries
324. 42 .3 42.4 As at Statement of Financial Position date the loans and advances, deposits, acceptances and contingencies relating to GoPb and its related entities amounted to Rs. 57,299,296 thousand (December 31, 2020: Rs. 37,126,458 thousand), Rs. 484,197,126 thousand (December 31, 2020: Rs. 421,019,222 thousand) Rs. 71,929 thousand (December 31, 2020: Rs. 71,929 thousand) and Rs. 26,097,691 thousand (December 31, 2020: Rs. 27,070,415 thousand) respectively. Markup / interest earned and markup receivable from these loans & advances amounted to Rs.4,142,460 thousand and 1,078,401 thousand respectively. Markup / interest expensed and markup payable on these deposits amounted to Rs.27,220,372 thousand and Rs.9,079,554 thousand respectively. Income on contingencies is Rs.101,798 thousand. The Bank made contribution of Rs. 299,283 thousand (2020: Rs. 246,497 thousand) to defined contribution plan during the year. During the year, the Bank has recorded Rs. 5,750 thousand as gratuity expense to president (2020: Rs 13,286 thousand to ex-Acting President / DCEO). 42.5 Advances to employees as at December 31, 2021, other than key management personnel, amounted to Rs. 11,219,294 thousand (2020: Rs. 7,375,234 thousand) with markup receivable of Rs. 678,455 thousand (2020: Rs. 519,593 thousand) and markup income of Rs.419,855 thousand (2020: Rs. 351,368 thousand). 20212020 Note Rupees in ‘000’ 43. CAPITAL ADEQUACY, LEVERAGE RATIO & LIQUIDITY REQUIREMENTS Minimum Capital Requirement (MCR): Paid-up capital (net of losses) 28,388,806 28,388,806 Capital Adequacy Ratio (CAR): Eligible Common Equity Tier 1 (CET 1) Capital 43,965,111 41,439,997 Advance subscription money - Additional Tier 1 (ADT 1) Capital 19.3 - Total Eligible Tier 1 Capital Eligible Tier 2 Capital 43,965,111 9,338,940 41,439,997 15,059,584 Total Eligible Capital (Tier 1 + Tier 2) 53,304,051 56,499,581 Risk Weighted Assets (RWAs): Credit Risk 353,676,099 289,587,746 Market Risk 18,222,882 6,838,846 Operational Risk 64,463,283 56,706,471 Total 436,362,264 353,133,063 Common Equity Tier 1 Capital Adequacy ratio 10.08% 11.73% Tier 1 CAR (%) 10.08% 11.73% Total CAR (%) 12.22% 16.00% As explained in note 19.3, had the advance subscription money against future issuance of non-cumulative perpetual term finance certificates been accounted for as eligible capital, the capital adequacy, leverage and net stable funding ratio would have been 12.44%, 3.08% and 124.00%, respectively. 323
325. 43 .1 Capital adequacy framework The Basel Framework for a capital adequacy is applicable to the Bank both at the consolidated level (including the subsidiary) and on a stand alone basis. The Bank’s policy is to maintain strong capital base so as to maintain, investor, creditor and market confidence and to sustain future business developments. The adequacy of the Bank’s capital is monitored using, among other measures, the rules and ratios established by the SBP. The ratio compares the amount of eligible capital with the total of risk-weighted assets. The Bank monitors and reports its capital ratios under SBP rules, which ultimately determine the regulatory capital required to be maintained by Banks and DFIs. In addition, the SBP requires that the paid up capital of locally incorporated banks should be raised to Rs. 10 billion by December 31, 2013 in a phased manner. The paid-up capital requirement (net of losses) as at December 31, 2021 is Rs.10.0 billion. The SBP requires that banks doing business in Pakistan should maintain regulatory capital for credit, market, and operational risks, the amount of which should at least be equal to 10% plus capital conservation buffer of 2.50% of the risk weighted assets of the Bank. However, in order to dampen the effects of COVID - 19, SBP vide Circular No 12 of 2020 dated March 26, 2020, provided relaxation to maintain CCB of 1.5% from March, 2020 till further instructions. Accordingly, capital adequacy ratio requirement stood at 11.50% and the Banks’s total capital adequacy ratio as at December 31, 2021 under Basel III stood at 12.22 The SBP’s regulatory capital as managed by the Bank is analyzed into following tiers: Tier I capital (CET1), which comprises of highest quality capital element and include fully paid up capital, share premium, reserve for bonus shares, general reserves and accumulated losses. Additional Tier I capital (ADT-I), which includes instrument meeting the prescribed SBP criteria e.g. perpetual non-cumulative preference shares and its premium after all regulatory adjustments applicable on ADT-I. The deductions from Tier 1 capital include mainly: i) Book value of goodwill / intangibles; ii) Shortfall in provision iii) Deficit on revaluation of available for sale investments - AFS & fixed assets; iv) Defined benefit pension fund asset v) Investment in own shares vi) Reciprocal cross holdings in equity capital instruments of other banks, financial institutions and insurance companies; vii) Investment in mutual funds above a prescribed ceiling viii)Threshold deductions applicable from 2014 on deferred tax assets and certain investments; ix) 10% of investments in majority capital instruments or other financial subsidiaries not consolidated in the statement of financial position during transition phase Tier II capital, which includes subordinated debt / instruments and its premium, general reserve for loan losses (up to a maximum of 1.25% of CRWA), net of tax revaluation reserves, exchange translation reserves after all regulatory adjustments applicable on Tier-II. The deductions from Tier 2 include mainly i) Reciprocal cross holdings in other capital instruments of other banks, financial institution and insurance companies; ii) 10% of investments in majority capital instruments or other financial subsidiaries not consolidated in the statement of financial position, during transition phase. 324 & Its Subsidiaries
326. The Bank calculates capital requirement as per regulatory framework , using the following approaches: Credit risk Standardized Approach Market risk Standardized Approach Operational risk Basic Indicator Approach Basel-III Framework enables a more risk-sensitive regulatory capital calculation to promote long term viability of the Bank. 20212020 Rupees in ‘000’ 43.2 Leverage Ratio (LR): Eligible Tier-1 Capital 43,965,111 41,439,997 Total Exposures 1,463,063,318 1,307,692,667 LR (%) 3.01% 3.17% 43.3 Liquidity Coverage Ratio (LCR): Total High Quality Liquid Assets 566,498,287 538,917,589 Total Net Cash Outflow 413,944,607 386,811,819 LCR (%) 136.85% 139.32% Net Stable Funding Ratio (NSFR): Total Available Stable Funding 667,827,072 600,034,473 Total Required Stable Funding 539,376,598 471,758,220 NSFR (%) 123.81% 127.19% 43.4 The full disclosures on the capital adequacy, leverage ratio and liquidity requirements as per SBP instructions issued from time to time are available at http://bop.com.pk. 44. 44.1 RISK MANAGEMENT The Bank has established market, credit, liquidity and operational risk appetite under the supervision of Board of Directors, where the Bank has already implemented new core business system and web based obligor risk rating system. The Bank has implemented a system of reporting risks and exceptions on various frequencies to business groups, Asset and Liabilities Committee, Investment Committee, Board Risk Management Committee and Board of Directors. Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge its obligations and cause the other party to incur a financial loss. The Bank manages its exposure to credit risk by pursuing credit policy approved by the Board of Directors and undertaking all lending activities in accordance with standard practices and procedures as laid down in the Credit Policy Manual. The Bank’s credit process currently entails assessment of credit worthiness of potential customers, pre-sanction evaluation of credit proposal, adequacy and quality checks over collateral and examination of charge documents before disbursements. The Bank will also continue to keep its focus on expansion through diversified exposure. Further, to strengthen the portfolio and as a matter of prudence, adequate provisions against non-performing advances are accounted for in accordance with the requirements of the Prudential Regulations issued by the SBP. 325
327. The Bank ’s risk management involves the identification, measurement, monitoring, mitigation and controlling of risks to ensure that following primary objectives are adhered: a. Individuals who take or manage risks clearly understand it in the entire credit value chain. b. The Bank’s risk exposure is within the risk appetite limits duly defined by the regulator or established by Board of Directors. c. Risk taking decisions are in line with business strategy and objectives set by the management. d. Business decisions optimize the risk-reward trade-off. e. Risk taking decisions are explicit and clear. f. Sufficient capital as a buffer is available to take risk. The risk management function of the Bank is regularly conducting assessments of Bank’s credit portfolio to identify borrowers most likely to get affected due to changes in the business and economic environment. During the year 2020, the Bank further strengthened its credit review procedures in light of COVID-19 pandemic situation and a buffer was created against unforeseen loan losses in form of general provision to mitigate credit risk. During the year 2021 following post COVID-19 economic recovery and objective classification of certain accounts, the management now considers it appropriate to maintain general provision to an extent of Rs. 2,500,000 thousand to mitigate any further adverse impact on equity, performance and regulatory compliance. Accordingly, a net reversal from general provision of Rs. 781,355 thousand has been recognized in these consolidated financial statements. Further, assessment of following obligor risk rating factors are in place for effective risk management: Adjusted net worth, current ratio, net profit margin, adjusted leverage, relationship with the Bank, quality of financial reporting, ownership structure, account behavior, internal quality and buyer / supplier concentration. 326 & Its Subsidiaries
328. 44 .1.1 Lendings to financial institutions Credit risk by public / private sector Gross lendings Non-performing lendings Provision held 20212020 2021202020212020 Rupees in ‘000’ Public / Government Private 1,200,000 28,380,388 1,500,000 13,586,867 - - - - - - - 29,580,388 15,086,867 - - - - Gross investments Non-performing investments Provision held 20212020 2021202020212020 Rupees in ‘000’ 44.1.2 Investment in debt securities Oil & gas Textile Cement Sugar Electronics and electrical appliances Construction Power (electricity), gas, water, sanitary Transport, storage and communication Financial Services Chemical and pharmaceuticals Fertilizer 104,167 145,833 571,632 582,301 20,000 20,000 308,606 308,606 27,862 520,599 47,387 47,387 10,708,212 11,314,946 5,488 5,488 521,359,479 545,408,204 867,240 890,258 1,500,000 1,500,000 1,517,680 1,624,255 - 571,632 20,000 308,606 27,862 47,387 400 5,488 26,908 - - 1,517,680 - 582,301 20,000 308,606 27,862 47,387 400 5,488 26,908 - - 1,517,680 - 571,632 20,000 308,606 27,862 47,387 400 5,488 26,908 - - 1,517,680 582,301 20,000 308,606 27,862 47,387 400 5,488 26,908 1,517,680 537,037,753 562,367,877 2,525,963 2,536,632 2,525,963 2,536,632 Credit risk by public / private sector Public/ Government 519,953,187 553,416,407 400 400 400 400 Private 17,084,566 8,951,470 2,525,563 2,536,232 2,525,563 2,536,232 537,037,753 562,367,877 2,525,963 2,536,632 2,525,963 2,536,632 Gross advances Non-performing advances Provision held 20212020 2021202020212020 Rupees in ‘000’ 44.1.3Advances Agriculture, forestry, hunting and fishing Oil & gas Textile Chemical and pharmaceuticals Cement Sugar Footwear and leather garments Automobile and transportation equipment Electronics and electrical appliances Cable, electrical & engineering Production & transmission of energy Construction Trading & commerce Food & allied Transport, storage and communication Financial Fertilizer Services Individuals Others 23,387,696 2,285,094 91,248,417 12,051,879 18,836,377 13,749,499 2,253,507 2,327,717 5,586,285 7,285,762 82,342,597 10,532,372 30,338,244 54,807,493 69,570,957 4,663,499 9,159,211 15,199,339 57,839,658 22,125,642 16,240,841 1,465,651 81,536,150 10,767,746 16,455,668 16,308,840 1,729,427 2,289,286 3,204,546 6,871,970 74,470,207 6,580,362 31,895,731 34,274,979 50,472,137 3,116,218 11,342,978 13,897,447 43,371,867 17,422,975 1,594,354 118,520 22,709,709 41,988 - 1,721,982 517,610 1,985,237 117,642 2,180,272 3,119,104 1,678,636 8,226,611 2,879,677 185,952 959,030 62,266 1,132,540 866,504 2,191,643 1,719,776 176,838 25,302,956 144,509 93,246 2,035,095 517,610 2,114,743 31,513 2,184,081 3,272,610 1,727,683 9,213,670 3,082,326 176,319 606,009 66,879 1,383,421 898,549 2,729,281 1,275,176 1,301,745 99,753 151,795 21,291,041 23,504,603 41,988 123,426 - 93,246 1,514,452 1,773,210 516,066 516,066 1,981,736 2,011,725 73,642 31,513 2,123,552 2,103,054 1,905,914 2,076,873 1,426,440 1,422,215 7,615,485 6,708,841 2,829,126 2,929,458 185,952 176,319 959,030 606,009 62,266 66,879 1,007,791 1,229,461 714,558 671,745 1,335,829 578,542 535,591,245 443,715,026 52,289,277 57,477,114 46,959,797 48,076,725 Credit risk by public / private sector Public/ Government 153,977,196 115,264,859 - - - Private 381,614,049 328,450,167 52,289,277 57,477,114 46,959,797 48,076,725 535,591,245 443,715,026 52,289,277 57,477,114 46,959,797 48,076,725 327
329. 20212020 Rupees in ‘000’ 44.1.4 Contingencies and commitments Textile and ginning 32,510,604 Cement 17,696,783 Sugar 1,035,352 Financial 241,832,171 Construction and real estate 17,707,258 Oil and gas 3,537,699 Auto and allied 1,810,272 Food and allied 4,139,694 Chemical and pharmaceuticals 2,710,686 Fertilizers 2,773,187 Cable, electrical and engineering 4,103,574 Production and transmission of energy 42,816,673 Transport, storage and communication 8,485,191 Trading and commerce 3,311,218 Services 4,956,551 Others 79,597,296 14,184,990 2,203,095 1,971,414 67,237,907 12,100,439 6,874,235 1,556,366 3,772,706 2,726,604 2,998,697 3,273,404 42,075,870 6,519,333 2,927,534 781,120 42,546,191 469,024,209 213,749,905 Credit risk by public / private sector Public/ Government 92,790,919 61,831,913 Private 376,233,290 151,917,992 469,024,209 213,749,905 44.1.5 Concentration of advances The Bank’s top 10 exposures on the basis of total (funded and non-funded exposures) aggregated to Rs. 231,949,089 thousand (2020: Rs. 179,556,038 thousand). 20212020 Rupees in ‘000’ Funded Non funded 144,289,362 87,659,727 121,923,500 57,632,538 Total exposure 231,949,089 179,556,038 The sanctioned limits against these top 10 exposures aggregated to Rs. 382,338,498 thousand (2020: Rs. 259,445,323 thousand). 328 & Its Subsidiaries
330. Total funded classified therein 2021 2020 Amount ProvisionAmount Provision held held Rupees in ‘000’ OAEM Substandard Doubtful Loss - Total - - - - 6,071,699 5,695,850 - - - 6,071,699 5,695,850 For the purpose of this note, exposure means outstanding funded facilities and utilized non-funded facilities as at the reporting date. 44.1.6 Advances - province / region-wise disbursement and utilization 2021 Disbursements Utilization AJK Punjab Sindh KPK BaluchistanIslamabad including Province / Region including Gilgit FATA Baltistan Rupees in ‘000’ Punjab Sindh KPK including FATA Baluchistan Islamabad AJK including Gilgit-Baltistan Total 276,349,050 259,480,243 11,210,780 2,743,663 101,536,041 4,925,298 94,752,945 565,509 1,692,248 406 - 1,691,842 - - - - 32,050,513 949,604 - 2,346,490 14,535 - - - 411,642,387 265,355,551 105,963,725 7,347,504 587,847 162,289 - - - - 2,265,216 1,130,000 - - 28,754,119 - 61,301 300 14,535 750,136 32,149,335 76,136 2020 Disbursements Utilization AJK Punjab Sindh KPK BaluchistanIslamabad including Province / Region including Gilgit FATA Baltistan Rupees in ‘000’ Punjab Sindh KPK including FATA Baluchistan Islamabad AJK including Gilgit-Baltistan 222,408,496 214,276,763 5,082,660 83,087,045 2,414,776 79,063,437 817,217 275 - - - - 22,268,326 - - 4,500 - - 336,405 1,528,123 816,942 - 3,910,769 - 503,459 2,204,243 80,709 - - - - - - 18,315,802 - - 4,966 41,755 4,500 Total 328,585,584 6,592,239 584,168 20,520,045 51,221 216,691,814 84,146,097 44.1.7 Credit risk - general disclosures The Bank follows the standardized approach for its credit risk exposures, which sets out fixed risk weights corresponding to external credit rating or type of exposure, whichever is applicable. Under standardized approach, the capital requirement is based on the credit rating assigned to the counterparties by the External Credit Assessment Institutions (ECAIs) duly recognized by SBP for capital adequacy purposes. Bank utilizes, wherever available, the credit ratings assigned by the SBP recognized ECAIs, viz. PACRA (Pakistan Credit Rating Agency), JCR-VIS (Japan Credit Rating Company – Vital Information Systems), Fitch Moody’s and Standard & Poors . Credit rating data for advances is obtained from recognized ECAIs and then mapped to SBP’s rating grades. 329
331. Type of exposures & ECAIs used Exposures JCR-VIS PACRA S&P Moody’s Fitch Corporate √ √ Banks √ √ Sovereigns √ PSEs √ √ √ √ √ SMEs √ √ Mapping to SBP rating grades For all credit exposures, the selected ratings are translated to the standard rating grades given by the SBP. The mapping tables used for converting ECAI ratings to SBP rating grades are given below: Long term ratings grades mapping SBP rating grade Fitch Moody’s S & P PACRA JCR-VIS ECA Scores 1 AAA Aaa AAAAAAAAA 0 AA+ Aa1 AA+AA+AA+ 1 AA Aa2AAAAAA AA- Aa3AA-AA-AA- A+ 2 A1 A+A+A+ A A2AAA A- A3A-A-A- 3 BBB+ Baa1 BBB+BBB+BBB+ BBB Baa2BBBBBBBBB BBB- Baa3BBB-BBB-BBB- BB+ 4 Ba1 BB+BB+BB+ BB Ba2BBBBBB BB- Ba3BB-BB-BB- B+ 3 4 B1 B+B+B+ 5 B B2BBB 6 B- B3B-B-B- 5 2 6 CCC+ Caa1 CCC+ CCC+ CCC+ 7 and below and below and below and below and below Short term rating grades mapping SBP rating grade Fitch Moody’s S & P PACRA JCR-VIS S1 F1 P-1 A-1+A-1+A-1+ S1 F1 P-1 A-1A-1A-1 S2 F2 P-2 A-2A-2A-2 S3 F3 P-3 A-3A-3A-3 S4 330 Others Others OthersOthersOthers & Its Subsidiaries
332. Credit exposures subject to standardized approach 20212020 Net AmountDeduction Net ExposuresRating AmountDeduction outstandingCRM amountoutstanding CRM amount Rupees in ‘000 Corporate 1 46,944,674 (14,316,014) 32,628,660 39,718,795 (5,783,299) 33,935,496 2 125,600,698 (2,068,418) 123,532,280 86,220,270 (1,462,186) 84,758,084 3,4 9,442,480 (174,751) 9,267,729 14,853,075 (206,106) 14,646,969 5,6 - - - - - Unrated-125% 33,878,185 (2,319,837) 31,558,348 25,657,917 (660,089) 24,997,828 Unrated-100% 57,949,417 (3,322,078) 54,627,339 50,151,850 (730,216) 49,421,634 Bank 1 38,608,792 (17,671,981) 20,936,811 26,679,647 (5,334,908) 21,344,739 2,3 2,646,307 - 2,646,307 15,048 - 15,048 4,5 - - - - - 6 - - - - - Unrated - - - - - Public sector enterprises 1 27,781,681 (6,595,379) 21,186,302 24,377,640 (5,556,688) 18,820,952 in Pakistan 2,3 - - - - - 4,5 - - - - - 6 - - - - - Unrated 78,618,621 (78,618,621) - 74,755,104 (74,062,609) 692,495 Sovereigns and on Government 0 583,710,128 (36,601,415) 547,108,713 614,195,438 (23,344,677) 590,850,761 of Pakistan or Provisional 1 - - - - - Government or SBP or Cash 2 - - - - - 3 - - - - - 4,5 30,389 - 30,389 16,448 - 16,448 6 - - - - - Unrated - - - - - Listed equity investments 100% 874,796 874,796 249,846 - 249,846 Un-listed equity investments 150% 18,966 - 18,966 15,582 - 15,582 Non performing loans 150% 3,081,057 - 3,081,057 4,772,618 - 4,772,618 100% 1,708,608 - 1,708,608 3,877,256 - 3,877,256 50% 539,818 - 539,818 750,514 - 750,514 Mortgage 35% 10,780,812 - 10,780,812 6,290,344 - 6,290,344 Low Cost Housing 25% 1,845,429 - 1,845,429 - - Retail 75% 65,925,320 (13,117,365) 52,807,955 55,186,506 (12,934,665) 42,251,841 Fixed assets 100% 19,836,431 - 19,836,431 14,817,057 - 14,817,057 Deferred tax assets 100% - - - - - Deferred tax assets 250% 5,247,777 - 5,247,777 4,479,878 - 4,479,878 Significant investments 250% - - - - - Others 100% 35,534,759 (5,300,590) 30,234,169 25,937,481 (994,789) 24,942,692 1,150,605,145 (180,106,449) 970,498,696 1,073,018,314 (131,070,232) 941,948,082 Total 44.1.8 Credit risk: Disclosures with respect to credit risk mitigation for standardized approach The Bank has adopted comprehensive approach of credit risk mitigation for banking book. Under this approach cash, lien on deposits, government securities, and eligible securities etc. are consolidated as eligible collateral. Where the Bank’s exposure to an obligor is secured by eligible collaterals, the Bank reduces its exposure for the calculation of the capital requirement by the realizable amount of the collateral, adjusted for any applicable haircuts. 44.1.8.1 Credit risk: Disclosures for portfolio subject to the standardized approach No credit risk mitigation benefit is taken in the trading book. For each asset class, the risk weights as specified by the SBP or corresponding to the SBP rating grades are applied to the net amount for the calculation of risk weighted assets. 331
333. 44 .1.8.2 Equity position risk in the banking book The Bank takes proprietary equity positions for both short term and long term trading purposes. As of December 31, 2021 the composition of equity investments, is as follows: Held for Available Total trading for sale Rupees in ‘000’ Ordinary shares (listed) - net of impairment held 28,941 6,541,478 6,570,419 Ordinary shares (un-listed) - net of impairment held - 45,815 45,815 Preference shares - net of impairment held - 270,000 270,000 Total 28,941 6,857,293 6,886,234 The Bank classify its equity investment portfolio in accordance with the directives of the SBP as follows: ·         Investments - Held for trading ·         Investments - Available for Sale ·         Investments in Subsidiaries 44.2 Market risk Market risk is the risk that the value of ‘on’ or ‘off’ balance sheet positions will be adversely affected by movements in equity and interest rate markets, foreign exchange rates and equity position risk. Interest rate risk is risk to the earnings or market value of a portfolio due to uncertain future interest rates. Interest rate risks can be categorized in different ways, and there is usually some overlap between categories. Interest rate risk can be categorized into the following components: a. Repricing or maturity mismatch risk or yield curve risk b. Basis risk c. Options risk d. Price risk Equity price risk is the risk that the value of a security or portfolio of securities will decline in the future. It is risk to earnings or capital that results from adverse changes in the value of equity related portfolios of a financial institution. Foreign exchange risk is the exposure of an institution to the potential impact of movements in foreign exchange rates. The risk is that adverse fluctuations in exchange rates may result in a loss to the institution. Foreign exchange risk arises from two factors: currency mismatches in an institution’s assets and liabilities (both on- and off-balance sheet) that are not subject to a fixed exchange rate, and currency cash flow mismatches. Such risk continues until the foreign exchange position is covered. The Bank’s market risk management structure consists of NPL & Risk Management Committee (NPL & RMC). , Assets and Liabilities Committee and independent Enterprise Risk & Governance department (ER&G). Market risk is an independent risk management function that works in close partnership with the business segments to identify and monitor market risks throughout the Bank and to define market risk policies and procedures. ER&G unit seeks to facilitate efficient risk/return decisions, reduce volatility in operating performance and provide transparency in reporting the Bank’s market risk profile to the senior management, the Board of Directors and the SBP. 332 & Its Subsidiaries
334. The Bank is using following techniques for mitigation of market risk : -Hedging the open positions i.e. taking offsetting positions -Portfolio diversification -Limits setting, monitoring and reporting The Bank is using following techniques for measurement of market risk and all the reports along with suggestive strategies which are escalated to senior management for their review and corrective actions: • Daily mark to market revaluation of equity, foreign exchange and bonds portfolio • Estimated value at risk on equity and foreign exchange exposures. • Interest rate gap analysis • Duration analysis • Stress testing of market risk exposures. • Scenarios based analysis 44.2.1 Balance sheet split by trading and banking books 20212020 BankingTrading Total BankingTrading Total book bookbookbook Rupees in ‘000’ Cash and balances with treasury banks 71,319,238 - 71,319,238 69,272,177 - 69,272,177 Balances with other banks 8,858,356 - 8,858,356 2,507,010 - 2,507,010 Lendings to financial institutions 29,580,388 - 29,580,388 15,086,867 - 15,086,867 Investments - net 491,616,632 40,081,316 531,697,948 545,710,520 22,092,996 567,803,516 Advances - net 485,576,503 - 485,576,503 391,889,808 - 391,889,808 Fixed assets 19,836,430 - 19,836,430 14,817,059 - 14,817,059 Intangible assets 1,108,152 - 1,108,152 695,648 - 695,648 Deferred tax assets - net 13,760,437 - 13,760,437 7,838,663 - 7,838,663 Other assets 35,534,757 - 35,534,757 25,937,481 - 25,937,481 1,157,190,893 40,081,316 1,197,272,209 1,073,755,233 22,092,996 1,095,848,229 44.2.2 Foreign exchange risk The Bank’s foreign exchange exposure comprises of forward contracts, purchases of foreign bills, foreign currency cash in hand, balances with banks abroad, foreign currency placements with foreign commercial banks and foreign currency deposits. The Bank manages its foreign exchange exposure by matching foreign currency assets and liabilities. Foreign exchange exposure and nostro balances are managed within the statutory limits, as fixed by SBP. Counter parties limits are also fixed to limit risk concentration. Market risk charge calculates on FEEL and forward contracts (interest rate) and credit risk charge manage by Bank on all forward contracts. 2021 2020 Foreign Foreign Off-balance Net Foreign Foreign Off-balance Net currency currency sheet foreign currency currency sheet foreign assets liabilities itemscurrency assets liabilities itemscurrency exposure exposure Rupees in ‘000 United States Dollar 5,233,234 12,332,382 6,044,660 (1,054,488) 3,949,430 5,427,835 (147,258) (1,625,664) Great Britain Pound Sterling 1,698,989 4,034,680 2,234,694 (100,997) 1,163,850 3,418,473 2,246,898 (7,725) Euro 2,534,033 1,365,305 (1,520,922) (352,194) 2,578,326 1,310,425 (1,447,381) (179,479) Japanese Yen 74,475 1,441 (66,939) 6,095 295 2,253 4,663 2,705 Other currencies 853,067 - (684,984) 168,083 107,670 1,340 (46,803) 59,526 10,393,798 17,733,808 6,006,509 (1,333,501) 7,799,571 10,160,326 610,119 (1,750,637) 333
335. 2021 2020 Banking TradingBanking Trading book book book book Rupees in ‘000’ Impact of 1% change in foreign exchange rates on - Profit and loss account - (12,413) - - Other comprehensive income - - - (2,487) - 44.2.3 Equity position risk The risk arising from taking long or short positions, in the trading book, in the equities and all instruments that exhibit market behavior similar to equities. The Bank’s strategy is to invest in equity securities for increase in dividend income and capital gains through market volatility. 2021 2020 Banking TradingBanking Trading book book book book Rupees in ‘000’ Impact of 5% change in equity prices on - Profit and loss account - (344,356) - - Other comprehensive income - - - (167,584) - 44.2.4 Yield / Interest Rate Risk in the Banking Book (IRRBB)-Basel II specific Interest rate risk is the potential that the value of the on-balance sheet and the off-balance sheet positions of the bank would be negatively affected with the change in the market interest rates. The vulnerability of the Bank towards the adverse movements of the interest rate can be gauged by using duration GAP analysis. Interest rate risk in the banking book is the risk to interest income arising from a mismatch between the duration of assets and liabilities that arises in the normal course of business activities. The banking book activities that give rise to interest rate risk include lending activities, balance sheet funding and capital management. Interest rate risk in banking book can be measured by both, changes in net interest income and changes in market value of interest bearing AFS investments. This also refers to the non-trading market risk. To adjust the effective rate sensitivity, the Bank is using following strategies after proper analysis of the Bank’s gaps and prevailing interest rate: • Reduced asset sensitivity • Increased asset sensitivity • Reduced liability sensitivity • Increased liability sensitivity The Bank’s interest rate risk management policy includes following techniques to mitigate potential risks: a) Monitoring and management of interest rate volatility in terms of percentage change in net income through interest sensitive gaps. b) Key consideration in investing in interest rate driven financial instruments. c) Managing volatility in the trading on category / instrument wise basis. 2021 2020 Banking TradingBanking Trading book book book book Rupees in ‘000’ 334 Impact of 1% change in interest rates on - Profit and loss account (4,812,111) (344,989) (4,847,855) - Other comprehensive income - - - & Its Subsidiaries (191,484) -
336. 335 2021 1 ,142,009,472 40,780,528 614,523,617 75,044,756 99,735,941 5,023,307 3,878,948 28,970,428 21,834,555 8,461,810 243,755,582 6,006,511 45,923,548 97,839 Cumulative yield / interest risk sensitivity gap 47,759,604 (75,790,117) (133,627,166) (24,226,282) 112,908,137 146,943,474 119,243,146 159,588,551 151,126,741 282,970,674 Off-balance sheet gap 269,379,852 - - - - - - - - - 269,379,852 Total yield / interest risk sensitivity gap 47,759,604 (123,549,721) (57,837,049) 109,400,884 137,134,419 34,035,337 (27,700,328) 40,345,405 (8,461,810) 131,843,933 Commitments in respect of: - forward foreign exchange contracts - net 6,006,511 - - - - - - - - - - forward lending 45,923,548 - - - - - - - - - Other commitments 97,839 - - - - - - - - - On-balance sheet gap 13,590,822 47,759,604 (123,549,721) (57,837,049) 109,400,884 137,134,419 34,035,337 (27,700,328) 40,345,405 (8,461,810) (137,535,919) Off-balance sheet financial instruments Documentary credits and guarantees 217,351,954 - - - - - - - - - 217,351,954 1,155,600,294 88,540,132 490,973,896 17,207,707 209,136,825 142,157,726 37,914,285 1,270,100 62,179,960 - 106,219,663 Liabilities Bills payable 10,109,459 - - - - - - - - - 10,109,459 Borrowings 7.17% 71,323,488 2,318,198 24,402,473 7,705,699 4,991,766 4,467,197 1,166,837 4,268,981 19,716,582 2,285,755 Deposits and other accounts 5.12% 1,002,918,281 38,424,427 590,119,600 59,539,129 94,686,762 434,421 2,465,934 23,991,436 - - 193,256,572 Subordinated debts 8.89% 7,788,980 - - 7,788,980 - - - - - - Other liabilities 49,869,264 37,903 1,544 10,948 57,413 121,689 246,177 710,011 2,117,973 6,176,055 40,389,551 On-balance sheet financial instruments Assets Cash and balances with treasury banks 71,319,238 2,109,501 - - - - - - - - 69,209,737 Balances with other banks 7.25% 8,858,356 7,221,966 - - - - - - - - 1,636,390 Lending to financial institutions 7.71% 29,580,388 28,280,388 1,300,000 - - - - - - - Investments - net 8.52% 531,697,948 1,328,729 53,901,274 17,207,707 209,136,825 142,157,726 37,914,285 1,270,100 62,179,960 - 6,601,342 Advances - net 7.36% 485,576,503 49,599,548 435,772,622 - - - - - - - 204,333 Other assets 28,567,861 - - - - - - - - - 28,567,861 Effective Over 6 Over 1 Over 2 Over 3 Over 5 Non-interest Over 1 Above yield / Upto 1 Over 3 months tototo to bearing Total to 3 10 interest month to 6to 23510 financial years months rate months 1 year years years years years instruments Rupees in ‘000 Exposed to Yield / Interest risk 44.2.5 Mismatch of interest rate sensitive assets and liabilities
337. 336 & Its Subsidiaries 2020 1,041,920,099 107,523,471 505,790,228 51,164,172 131,314,489 9,598,590 6,434,536 7,963,951 8,823,651 4,704,606 208,602,405 Cumulative yield / interest risk sensitivity gap (24,831,974) (96,276,373) 14,976,546 (31,486,387) (6,418,003) 30,153,875 65,269,858 145,501,425 140,796,819 189,889,536 Off-balance sheet gap 165,543,814 - - - - - - - - - 165,543,814 Total yield / interest risk sensitivity gap (24,831,974) (71,444,399) 111,252,919 (46,462,933) 25,068,384 36,571,878 35,115,983 80,231,567 (4,704,606) 49,092,717 On-balance sheet gap 24,345,722 (24,831,974) (71,444,399) 111,252,919 (46,462,933) 25,068,384 36,571,878 35,115,983 80,231,567 (4,704,606) (116,451,097) Off-balance sheet financial instruments Documentary credits and guarantees 143,824,645 - - - - - - - - - 143,824,645 Commitments in respect of: - forward foreign exchange contracts - net 610,119 - - - - - - - - - 610,119 - forward lending 20,393,865 - - - - - - - - - 20,393,865 Other commitments 715,185 - - - - - - - - - 715,185 1,066,265,821 82,691,497 434,345,829 162,417,091 84,851,556 34,666,974 43,006,414 43,079,934 89,055,218 - 92,151,308 Liabilities Bills payable 4,168,641 - - - - - - - - - 4,168,641 Borrowings 8.68% 154,841,415 62,672,147 29,419,076 5,703,591 36,353,005 4,274,982 5,906,562 3,005,488 6,840,746 663,682 2,136 Deposits and other accounts 7.04% 835,070,362 44,844,606 476,370,663 38,663,540 94,915,051 5,175,166 332,451 4,086,864 - - 170,682,021 Subordinated debts 11.23% 6,791,700 - - 6,791,700 - - - - - - Other liabilities 41,047,981 6,718 489 5,341 46,433 148,442 195,523 871,599 1,982,905 4,040,924 33,749,607 On-balance sheet financial instruments Assets Cash and balances with treasury banks 69,272,177 956,624 - - - - - - - - 68,315,553 Balances with other banks 5.50% 2,507,010 1,773,036 - - - - - - - - 733,974 Lending to financial institutions 10.41% 15,086,867 13,586,867 1,500,000 - - - - - - - Investments - net 9.81% 567,803,516 27,580,589 79,759,572 162,417,091 84,851,556 34,666,974 43,006,414 43,079,934 89,055,218 - 3,386,168 Advances - net 9.12% 391,889,808 38,794,381 353,086,257 - - - - - - - 9,170 Other assets 19,706,443 - - - - - - - - - 19,706,443 Effective Over 6 Over 1 Over 2 Over 3 Over 5 Non-interest Over 1 Above yield / Upto 1 Over 3 months tototo to bearing Total to 3 10 interest month to 6 to 2 3 5 10 financial years months rate months 1 year years years years years instruments Rupees in ‘000 Exposed to Yield / Interest risk
338. Reconciliation of financial assets and liabilities with total assets and liabilities : 20212020 Rupees in ‘000’ Financial assets 1,155,543,468 1,065,688,078 Non financial assets: Fixed assets 19,836,430 14,817,059 Intangibles 1,108,152 695,648 Deferred tax assets - net 13,760,437 7,838,663 Other assets 6,966,896 6,231,038 41,671,915 29,582,408 Total assets as per statement of financial position 1,197,272,209 1,095,848,229 Financial liabilities 1,142,009,472 1,041,920,099 Non financial liabilities: Other liabilities 352,333 1,545,355 Total liabilities as per statement of financial position 1,142,361,805 1,043,465,454 44.3 Operational risk Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and system or from external events. The Bank cannot expect to eliminate all operational risks, but through a control framework and by monitoring and responding to potential risks, the Bank is able to manage operational risk. Controls include effective segregation of duties, access, authorization and reconciliation procedures, staff education and appraisal procedures, including the use of internal audit. The Bank has established a comprehensive business continuity plan to deal with the risk of financial loss and damage to reputation arising from operational risk factors. The Bank uses Risk Control Self Assessment and monitoring of Key Risk Indicators to mitigate operational losses. The Bank’s operational risk management framework, as laid down in the operational risk policy, duly approved by Board of Directors, is flexible enough to implement in stages and permits the overall risk management approach to evolve in the light of organizational learning and the future needs of the Bank. Operational loss events are reviewed and appropriate corrective actions taken on an ongoing basis, including measures to improve control procedures with respect to design and operative effectiveness. In accordance with the operational risk policy and framework, a database covering losses, control breaches and near misses is being maintained. Major risk events are analyzed from the control breach perspective and mitigating controls are assessed on design and operating effectiveness. quarterly updates on operational risk events are presented to senior management and the Board Risk Management Committee (BRMC). 337
339. 44 .3.1 Operational risk disclosures Basel-II specific Currently, the Bank is reporting operational risk capital charge under Basic Indicator Approach (BIA). However, the Bank took a number of initiatives with respect to operational risk management. The Bank will initiate further steps for improvement in operational risk management to adopt next approach of capital charge i.e. Alternative Standardized Approach (ASA). 44.4 Liquidity risk Liquidity risk is the potential for loss to an institution arising from either its inability to meet its obligations or to fund increase in assets as they fall due without incurring unacceptable cost or losses. The Bank’s ALCO is primarily responsible to ensure adequate maintenance and monitoring of liquidity and minimization of liquidity risk. The Bank manages its liquidity risk by continuous monitoring of the maturity profiles of its assets and liabilities, strengthening of its credit recovery procedures by focusing on retail and medium-sized customers and managing open positions through effective treasury operations. Allocation of funds towards various business prepositions and pricing of assets and liabilities of the Bank are given significant importance. The Bank is using following strategies for mitigation of liquidity risk: • Contingency funding plan • Monitoring of advances to deposits ratio. • Diversification of portfolio • Maintaining desirable level of currency wise liquidity • Identify situations or events that may trigger a crisis situation in terms of liquidity 338 • Invest key liquid deposit providers in liquid investment. & Its Subsidiaries
340. 339 Total Upto 1 Day 7 days Over 1 to 14 days Over 7 to to 1 Month Over 14 days Over 1 to 2 Months Over 2 to 3 Months Over 3 to 6 Months to 1 year 2 years Over 6 to Over 9 months Over 1 to 9 Months Over 2 to 3 years 485 ,576,503 Advances - net 119,892,378 9,136,880 - 994 6,410 30,571,654 (1,154) - 8,858,356 71,319,238 29,854,930 800,866 - 5,964 38,460 1,929,252 - 27,080,388 - - 4,669,508 1,135,939 - 6,958 44,870 3,481,741 - - - - 26,406,071 11,160,879 - 16,885 109,303 14,058,509 60,495 1,000,000 - - 45,807,760 3,877,590 - 30,780 118,993 25,320,508 15,159,889 1,300,000 - - 6,150,632 200,000 - - 908,115 - 92,389 349,257 88,234,933 41,209,936 2,325,172 - 30,801 121,561 54,221,401 33,509,543 31,535,998 - - - - - - - - - 6,000,943 - 92,396 343,738 33,128,281 98,161,125 164,573,166 188,373 - 92,396 354,320 12,160,940 182,160,153 - - 369,563 1,325,245 37,595,067 85,365,096 125,007,808 142,870,278 - - - 69,562,874 - - 369,026 1,416,240 27,879,365 39,898,243 - - - - - - 115,443,039 - 13,760,437 - 3,019,471 83,765,134 14,897,997 5 Years Over 3 to Over 4,840,334 - 62,933,392 74,853,350 54,910,404 18,915,186 97,584,756 161,598,228 Unappropriated profit 59,403,432 587,579 14,385,070 (30,427,410) Non Controlling Interest (8,880,583) 176,001,699 35,294,637 9,006,920 4,285,380 - 22,002,337 (1,368,710) 6,562,474 3,495,440 24,457,781 6,073,994 - 6,629,482 40,589,689 2,457,903 2,720 3,002,022 1,166,837 - (Deficit) / surplus on revaluation of assets 2,757,956 20,561,925 2,175,341 2,720 13,916,667 4,467,197 - 10,602,583 1,408,086 1,360 38,757,693 66,988,410 316,173 - 38,290,088 60,738,630 151,432 - Reserves (7,925,727) 71,637,346 881,775 1,360 63,048,512 7,705,699 - 23,434,784 73,849,863 2,295,586 - 61,334,603 10,219,674 - 26,173,766 54,688,343 3,860,036 - 38,450,521 12,377,786 - 54,910,404 (570,808,543) 23,648,115 1,031,870 - 21,786,900 829,345 - Net assets 12,595,235 1,111,749 - 10,485,748 997,738 - Share capital - net 844,347 - 5,196,537 379,262 - 6,420,146 18,269,337 - 662,210,272 111,853 10,109,459 - 211,296,336 - - - 12,588,562 127,955,108 690,700,921 1,142,361,805 50,221,597 Other liabilities 7,788,980 Subordinated debts 1,002,918,281 71,323,488 Borrowings Deposits and other accounts 10,109,459 Bills payable - - - 70,752,666 5 Years Liabilities 1,197,272,209 35,534,757 Other assets - net 13,760,437 1,108,152 Deferred tax assets - net Intangible assets 19,836,430 531,697,948 Investments - net Fixed assets 29,580,388 8,858,356 Balances with other banks Lendings to financial institutions 71,319,238 Cash and balances with treasury banks Assets Rupees in ‘000 2021 44.4.1 Maturities of assets and liabilities - based on contractual maturity of the assets and liabilities of the Bank
341. 340 & Its Subsidiaries 7 days Over 1 to 14 days Over 7 to to 1 Month Over 14 days Over 1 to 2 Months Over 2 to 3 Months Over 3 to 6 Months to 1 year 2 years Over 6 to Over 9 months Over 1 to 9 Months Over 2 to 3 years 7,962,923 97,415,792 25,937,481 Other assets - net 1,095,848,229 9,989,817 77,465 - 3,738 23,422 2,398,325 - 7,486,867 - - 19,654,744 302,020 - 4,361 33,608 3,596,090 14,908,665 810,000 - - 40,743,784 7,949,177 - 10,602 66,420 15,135,796 12,291,789 5,290,000 - - 61,938,728 705,490 - 19,324 80,210 20,391,101 39,242,603 1,500,000 - - 152,176,817 - - - 543,038 - 57,972 236,119 74,203,410 181,469,585 291,687 - 19,324 80,261 38,949,039 28,455,639 34,863,099 - - - - - - - - - 63,167,862 992,131 - 57,972 235,076 9,634,978 66,011,823 7,113,550 - 57,972 248,492 25,571,550 62,274,318 - - 231,888 986,358 25,633,812 52,247,705 33,020,259 35,422,260 - - - - 7,838,663 - 2,431,287 78,910,285 51,206,610 - - - 98,305,103 140,386,845 - - 231,872 1,017,578 53,474,189 43,581,464 - - - 5 Years Over 3 to Over 154,841,415 6,791,700 52,382,775 1,043,465,454 42,593,336 (498,741,257) 596,157,049 20,473,882 - 569,088,436 2,426,090 4,168,641 (41,415,821) 51,405,638 691,496 - 7,725,313 42,988,829 - (6,767,750) 26,422,494 547,564 - 16,210,203 9,664,727 - 15,561,862 25,181,922 748,486 - 16,838,799 7,594,637 - 17,003,271 44,935,457 1,398,788 - 24,332,092 19,204,577 - 677,790 1,360 40,310,611 5,703,591 - 10,693,803 134,776,233 63,509,607 46,693,352 549,745 - 52,745,363 10,214,499 - 1,794,167 61,373,695 1,379,893 - 50,139,774 9,854,028 - (8,946,601) 74,958,424 1,244,108 1,360 47,213,979 26,498,977 - 51,167,065 11,107,253 1,455,284 2,720 5,374,267 4,274,982 - 12,490,541 4,978,875 5,440 4,500,738 3,005,488 - 89,485,275 127,896,304 8,819,828 2,319,759 2,720 590,787 5,906,562 - 159,876,224 20,410,194 6,127,666 6,778,100 Unappropriated profit 52,382,775 506,993 11,632,681 Non Controlling Interest 8,113,976 5,955,359 (Deficit) / surplus on revaluation of assets 26,173,766 Reserves Share capital - net - 7,504,428 - 180,286,418 - - - 9,374,324 72,074,834 Net assets Other liabilities Subordinated debts 835,070,362 Borrowings Deposits and other accounts 4,168,641 Bills payable - - - 98,837,260 5 Years Liabilities - 623 695,648 7,838,663 Deferred tax assets - net 3,904 17,664,170 4,985 - 2,507,010 69,272,177 Intangible assets 14,817,059 Advances - net Fixed assets 567,803,516 391,889,808 Investments - net 2,507,010 15,086,867 Balances with other Banks Lendings to financial institutions 69,272,177 Cash and balances with treasury Banks Assets Rupees in ‘000 1 Day Upto 2020 Total
342. 341 Rupees in ‘000 22,234,564 - 30,801 199,043 50,041,156 6,202,762 - 61,581 240,554 79,541,909 46,695,887 1,300,000 - - - - - - - - 6,189,316 - 184,792 698,058 45,289,221 41,209,936 262,734,291 908,115 - 92,389 349,257 33,509,543 182,160,153 - - 369,563 1,325,245 37,595,067 6,150,632 210,372,904 142,870,278 200,000 - - - 3,019,471 - - - - 7,240,262 69,562,874 115,443,039 186,032,990 - 70,752,666 - - - 83,765,134 108,040,062 14,897,997 - - - - 13,760,437 369,026 1,416,240 27,879,365 39,898,243 - - - 25,263,346 - - - 5,348,300 19,915,046 - - - - 21,257,303 - 152,413,831 2,318,198 10,109,459 - - 7,705,699 881,775 1,360 225,114,492 136,021,538 6,155,622 - 196,361,410 127,432,704 22,597,460 - - 4,467,197 170,130,295 1,724,259 1,360 84,946,117 2,175,341 2,720 163,412,910 78,300,859 4,991,766 - - 6,562,474 3,495,440 88,841,973 6,073,994 71,013,674 104,973,881 2,457,903 2,720 67,386,214 1,166,837 - 91,084,889 2,698,735 4,285,380 64,384,192 19,716,582 - 72,978,128 6,308,185 - 64,384,188 2,285,755 Deposit account without contractual maturities have been classified by taking into account historical trend of their withdrawal pattern, which shows that 15% of such deposits mature in each of the first two categories mentioned above and 10% mature in each of the remaining seven categories. 54,910,404 18,915,186 Unappropriated profit (Deficit) / surplus on revaluation of assets 587,579 (1,368,710) Reserves Non Controlling Interest 26,173,766 10,602,583 Share capital - net Net assets 54,910,404 (5,275,904) (91,071,799) (94,811,602) 92,603,996 97,214,036 (1,450,800) 10,469,158 94,948,101 (47,714,782) 1,142,361,805 186,098,791 50,221,597 Other liabilities 7,788,980 Subordinated debts 1,002,918,281 Borrowings Deposits and other accounts 10,109,459 71,323,488 Bills payable Liabilities 1,197,272,209 180,822,887 134,042,693 35,534,757 Other assets - net 13,760,437 1,108,152 19,836,430 Deferred tax assets - net Intangible assets Fixed assets 485,576,503 Advances - net 59,341 531,697,948 8,858,356 Investments - net 8,858,356 29,580,388 28,080,388 Balances with other banks 71,319,238 Lendings to financial institutions 71,319,238 Cash and balances with treasury banks Assets 2021 Over Over 1 Over 3 Over 1 Over 2 Over 3 Over 5Above 6 months TotalUpto to 3 top 6 to to 2 to 3 to 5 to 10 1 month 10 years monthsmonths yearsyears years years 1 year 44.4.2 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Bank
343. 342 & Its Subsidiaries Rupees in ‘000 127,354 567,803,516 391,889,808 14,817,059 Investments - net Advances - net 16,291,585 - 19,234 27,205,439 13,586,867 543,038 - 57,972 236,119 28,455,639 152,176,817 - - - 136,142,138 181,469,585 997,177 - 38,648 160,471 59,340,140 74,105,702 1,500,000 - - 129,179,685 8,105,681 - 115,944 483,568 35,206,528 85,267,964 - - - 62,274,318 - - 231,888 986,358 25,633,812 35,422,260 - - - - 7,838,663 - 2,431,287 78,910,285 51,206,610 - - - 98,305,193 140,386,845 - - 231,962 1,017,578 53,474,189 43,581,464 - - - 167,292,700 - - - 5,640,245 62,815,195 98,837,260 - - - 12,993,718 - - - 3,734,079 9,259,639 - - - - 22,461,428 - 145,840,474 - 1,948,533 - 158,963,739 29,419,076 - 677,790 1,360 94,902,596 5,703,591 - 2,624,001 1,360 151,945,738 36,353,005 - 1,455,284 2,720 59,966,252 4,274,982 52,382,775 (67,340,779) (54,189,210) 80,184,248 (61,744,419) (3,424,920) 1,043,465,454 235,144,826 190,331,348 101,285,337 190,924,104 65,699,238 42,593,336 6,791,700 835,070,362 4,168,641 62,674,283 - 34,893,380 63,411,813 2,319,759 2,720 55,182,772 5,906,562 - 73,304,319 67,082,526 4,978,875 5,440 59,092,723 3,005,488 26,173,766 Unappropriated profit 52,382,775 506,993 11,632,681 Non Controlling Interest 5,955,359 (Deficit) / surplus on revaluation of assets - 59,296,592 4,040,924 - 54,591,986 663,682 97,003,030 (46,302,874) 70,289,670 2,086,742 6,778,100 54,584,082 Reserves 8,113,976 Share capital - net - 6,840,746 Net assets Other liabilities Subordinated debts Deposits and other accounts 4,168,641 154,841,415 Bills payable Borrowings Liabilities 1,095,848,229 167,804,047 7,838,663 25,937,481 Deferred tax assets - net Other assets - net 695,648 Intangible assets Fixed assets 38,794,381 15,086,867 Lendings to financial institutions 2,507,010 2,507,010 Balances with other banks 69,272,177 69,272,177 Cash and balances with treasury banks Assets 2020 Over Over 1 Over 3 Over 1 Over 2 Over 3 Over 5Above 6 months TotalUpto to 3 top 6 to to 2 to 3 to 5 to 10 1 month 10 years monthsmonths yearsyears years years 1 year
344. 45 . 46. NON ADJUSTING EVENTS AFTER THE BALANCE SHEET DATE The Board of Directors of the Bank in its meeting held on February 18, 2022 has proposed a stock dividend of 12.50% (2020: 10% cash dividend). These appropriations will be approved in the forthcoming Annual General Meeting. These consolidated financial statements for the year ended December 31, 2021 do not include the effect of these appropriations which will be accounted for in the consolidated financial statements for the year ending December 31, 2022. DATE OF AUTHORIZATION FOR ISSUE These consolidated financial statements were authorized for issue on February 18, 2022 by the Board of Directors of the Bank. 47GENERAL 47.1 Figures have been rounded off to the nearest thousand rupees. 47.2 Corresponding figures have been re-arranged and re-classified wherever necessary, for the purpose of comparison. However, no significant reclassification has been made. Chief Financial Officer President Chairman Director Director 343
345. 344 & Its Subsidiaries Muzaffar Ali Asif Ali Nadeem Babar Sani (Kot Afzal Abad Rossa Tibba Chak # 1 Tehsil Chunian Kasur Pattoki) Zulfiqar Ali Mehdi (Ghous Pour Qureshian Tulamba Mian Channu) Nazim Ud Din (Bakar Key Mahar P.O. Basirpur) Nazim Ud Din (Bakar Key Mahar P.O. Basirpur) Rajco Poultry Farm (Panwana P.O Pasrur) Shehzad Ahmed (Chack 3/SP Gayiana P/O Havililakha Depalpur) Ali Muhammad Mughal (Tehsil Depalpur Khalil Abad Colony Depalpur District Okara) Ahsan Raza (House # 136, Shamsabad Colony Eid Gah Road Multan) Zulfiqar Ali (Atari Virk Sham Kot P.O. Chunian) Ayyaz Qamar (House No. 257, Street No. 03 Rasoolabad Colony Hasilpur) Zafar Hussain (P.O.Injrateh Jand District Attock) 2 3 4 5 6 7 8 9 10 11 2 Name and address of the borrower 1 1 S. No. Zafar Hussain (37104-6942265-5) Ayyaz Qamar (31203-3613876-1) Zulfiqar Ali (35101-2456123-9) Ahsan Raza (32203-6971287-9) Ali Muhammad Mughal (35301-8220837-5) Shehzad Ahmed (35301-1922970-7) Muhammad Fayyaz (34602-3977816-9) Anwar Ahmed (34602-9918193-7) Imitaz Ahmed (34602-5022888-3) Nazim Ud Din (35301-5047787-3) Nazim Ud Din (35301-5047787-3) Zulfiqar Ali Mehdi (36302-0455616-5) Muzaffar Ali (35101-2509930-1) Asif Ali (35101-2509928-5) Nadeem Babar Sani (35101-2509932-1) 3 Name of individuals / partners / directors (with CNIC No.) Noor Hussain Rana Qamar Hussain Qamar Ali Mushtaq Ahmad Hashmi Haji Muhammad Zafar Khan Muhammad Rafique Bhatti - - - - - - - M.Fiaz Imtiaz Ahmed Anwar Ahmed - - 427 - 5 Principal 2,185 918 1,635 691 1,610 1,541 596 893 528 1,387 2,091 6 Interest / Mark-up 7 - - - - - - - - - - - Other than Interest / Mark-up 893 528 1,387 2,091 2,185 918 1,635 691 1,610 1,541 1,023 8 Total Outstanding Liabilities at beginning of year Abdul Shakoor Abdul Shakoor Peer Mehdi Hussain Muhammad Din 4 Father’s / Husband’s name DURING THE YEAR ENDED DECEMBER 31, 2021 10 Interest / Mark-up written-off - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - 691 1,592 1,541 596 893 528 1,381 2,077 2,164 916 1,603 11 Interest/ Mark-up waived 12 Other financial relief provided STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF OF RUPEES FIVE HUNDRED THOUSAND OR ABOVE PROVIDED - - - - - - - - - - - 691 1,592 1,541 596 893 528 1,381 2,077 2,164 916 1,603 13 Total (9+10+11+12) Annexure I
346. 345 Name and address of the borrower 2 Haroon Javed (Qila Jawind Singh Tehsil Depalpur District Okara) Muhammad Nawaz (Dilo Kala P/O Thathi Asaish Tehsil Pindi Bhattian District Hafizabad) Muhammad Nawaz (Dilo Kala P/O Thathi Asaish Tehsil Pindi Bhattian District Hafizabad) Ch Liaqat Ali (Chauhdary House Shah Jamal Road Khan Muzaffargarh) Sardar Agri Farms Prop Rizwan Ullah Khan (House No 13 Gali No 1 Mohallah Gujranwala X Peoples Colony Block Gujran) Sardar Agri Farms Prop Rizwan Ullah Khan (House No 13 Gali No 1 Mohallah Gujranwala X Peoples Colony Block Gujran) Altaf Ahmad Gondal (House #300-A Satellite Town Sargodha) Syed Nusrat Abbas Kirmani (Chak Nawab Shah Chak # 21/1 A.L P/O Akhtarabad Okara) Shabiran Bibi (Chak # 25/2 Okara) Rafaqat Ali (Mohallah Misken Abad Ghazi Kohli P.O. Losar Sharfo Taxila Rawalpindi) Syed Ali Nawaz (Bhaikey Lal Chand P.O. Same Hujra Shah Muqeem) Iftikhar Ahmad (Chak.93/ District Yazman Bahawalpur) Abdul Waheed Shad (Chak# 38 / P.O.39 / Tehsil & District Pakpattan) Rub Nawaz (127 Khan Colony Faisalabad Road Okara) S. No. 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Rub Nawaz (35202-7343737-5) Abdul Waheed Shad (36402-8796094-3) Iftikhar Ahmad (31205-1664128-7) Syed Ali Nawaz (35301-1950894-3) Rafaqat Ali (37406-8523431-9) Shabiran Bibi (35302-8038299-2) Syed Nusrat Abbas Kirmani (42301-0715066-7) Altaf Ahmad Gondal (38403-4498350-3) Rizwan Ullah Khan (34101-3576703-3) Mian Farzand Ali Haji Muhammad Ali Muhammad Siddique Syed Shahnawaz Malik Mian Khan Muhammad Ameer Sayed Imam Ali Shah S/O Allah Buksh Sardar Nusrat Ullah Sardar Nusrat Ullah Chauhdary Mehmood-UlHassan Ch Liaqat Ali (32304-6527518-5) Rizwan Ullah Khan (34101-3576703-3) Shaer Mohammad Shaer Mohammad Javed Aslam 4 Father’s / Husband’s name Muhammad Nawaz (34302-1213577-1) Muhammad Nawaz (34302-1213577-1) Haroon Javed (35202-0396186-5) 3 Name of individuals / partners / directors (with CNIC No.) 392 500 - 3,113 2,287 536 2,399 535 1,000 1,107 1,151 5,557 2,073 835 1,327 898 1,724 803 637 - - 2,380 748 2,136 6 - - - 2,275 5 Principal Interest / Mark-up 7 - - - - - - - - - - - - - - Other than Interest / Mark-up 748 2,136 1,392 1,607 1,151 8,670 4,360 1,371 3,726 1,433 3,999 803 637 2,380 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - - - 748 2,122 1,024 1,144 861 5,640 2,073 835 1,327 909 1,700 803 637 2,356 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - - - - - - - - 748 2,122 1,024 1,144 861 5,640 2,073 835 1,327 909 1,700 803 637 2,356 13 Total (9+10+11+12) Annexure I
347. 346 & Its Subsidiaries Shoukat Ali (Kot Adna Abad Elha Abad P/O Khas Theng Ghatan Tehsil Chunian.) Lal Khan (Chack # 31/4- L Tehsil & District Okara) Muhammad Hashim (Labana Chak # 37 P/O Pattoki Tehsil Pattoki District Kasur Pattoki) Malik Riaz Hussain (9/66, Akbar Street Islampura Lahore.) Muhammad Irshad (Chak # 543/E District Vehari) Didar Ali (Chak Makhdoom Wala P.O. Jhanbiwahin Tehsil Kahror Pacca Lodhran) Pakistan Milk And Breeders (Suit # 3, Plot # 8C Sunset 2 Phase II Extension DHA Karachi) Muhammad Asghar Ramzan (Kot Sorro P/O Karam Pur Tehsil Mailsi Vehari) Ali Sajid (H. No. 1953, Mohallah Islamabad Tehsil Chunian District Kasur) Asmat Batool (Nothain P.O. Adoketeh. Pindi Bhattian District Hafizabad) Asmat Batool (Nothain P.O. Adoketeh. Pindi Bhattian District Hafizabad) Asmat Batool (Nothain P.O. Adoketeh. Pindi Bhattian District Hafizabad) Niamat Ali & Karamat Ali (Chak # 1, Rosa Tibba Tehsil Chunian Kasur) 27 28 29 30 31 32 33 34 35 36 37 38 2 1 26 Name and address of the borrower S. No. Niamat Ali (35101-2518690-9) Karamat Ali (35101-2861425-9) Asmat Batool (34302-4892657-8) Asmat Batool (34302-4892657-8) Asmat Batool (34302-4892657-8) Ali Sajid (35101-0795667-3) Muhammad Asghar Ramzan (36602-9592955-5) Hassan Ahmed Farooqui (42201-2362383-7) Didar Ali (36202-4254139-3) Muhammad Irshad (36603-7824573-7) Malik Riaz Hussain (35103-8603189-9) Muhammad Hashim (35103-5080494-7) Lal Khan (35302-6155508-3) Shoukat Ali (35101-5835094-7) 3 Name of individuals / partners / directors (with CNIC No.) Rehmat Ali W/O Syed Hussain Ali Shah W/O Syed Hussain Ali Shah W/O Syed Hussain Ali Shah Riaz Hussain Mohammad Ramzan Ghulam Rabbani Sallay Khan Muhammad Khan Malik Sardar Ali Hurmat Khan Karam Khan Muhammad Ashiq 4 Father’s / Husband’s name 1,167 370 1,740 2,980 412 2,016 4,796 374 739 - 412 513 1,860 5 Principal 964 510 690 915 213 2,246 547 2,563 5,694 494 894 5,761 1,090 6 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - - - - - - - 3,413 917 4,303 8,674 906 2,910 10,557 1,464 1,703 510 1,102 1,428 2,073 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - - - 510 682 915 287 2,304 547 2,563 5,883 513 1,040 5,761 1,107 1,020 11 Interest/ Mark-up waived 12 - - - - - - - - - - - - 269 Other financial relief provided 510 682 915 556 2,304 547 2,563 5,883 513 1,040 5,761 1,107 1,020 13 Total (9+10+11+12) Annexure I
348. 347 Azeem Cold Storage (Churasta Mian Khanchurasta Mian Khan Depalpur) Abdul Majeed (Chah Utradi Wala Mohalla Multani Wala Kahror Pacca. District Lodhran) Muhammad Nawaz (Village Shamair P.O. Kamoki Tehsil Kamoki Lahore) Kaneez Fatima (Chak #3/1-R.A Tehsil Renala Khurd District Okara) Conimpex Hatchery & Breeding Farm (1683-Quaid-E-Azam Market Multan Cant Multan) Conimpex Hatchery & Breeding Farm (1683-Quaid-E-Azam Market Multan Cant Multan) Muhammad Yasin (Mouza Lala Wala P/O Hujra Shahmuqeem Tehsil Depalpur) Jam Muhammad Iqbal (Basti Walana P.O. Sanjarpur Sadiqabad) Malik Mukhtar Ahmad (Kalia P.O. Aanba Sheikhupura) Nadeem Asghar (Mohallah Naukhar Qadeem Farooqabad P.O. Same Tehsil & District Sheikhupura) Anees Hussain (Hoewky P.O. Same Tehsil & District Sheikhupura) Ajmal Khan (Chak No 104-RB Tehsil Jaranwala Faisalabad) Muhammad Hassan (Dera Ali Sarhana Jattri Kohna P/O Same Tehsil & District Sheikhupura) 40 41 42 43 44 45 46 47 48 49 50 51 2 1 39 Name and address of the borrower S. No. Muhammad Hassan (35404-2565653-7) Ajmal Khan (33104-2143529-1) Anees Hussain (35404-8892905-1) Nadeem Asghar (35404-5254893-7) Malik Mukhtar Ahmad (35404-2933083-3) Jam Muhammad Iqbal (31304-8370982-7) Muhammad Yasin (35301-1972057-3) Mir Tahir Shua Zaidi (36302-4974012-5) Syed Farjad Zaidi (36302-8835247-9) Mir Tahir Shua Zaidi (36302-4974012-5) Syed Farjad Zaidi (36302-8835247-9) Kaneez Fatima (35202-9678520-0) Muhammad Nawaz (34102-9303135-1) Abdul Majeed (36202-2263321-7) Muhammad Naseem (35202-5447863-1) 3 Name of individuals / partners / directors (with CNIC No.) Peeran Ditta. Muhammad Sher Muhammad Nawaz Chaudhary Asghar Ali Malik Noor Muhammad Jam Allah Wasaya Muhammad Hassan Syed Ahmad Shuaa Zaidi Syed Ahmad Shuaa Zaidi Syed Israr Hussain Muhammad Nawaz Karim Bux Prop.Mohammad Naseem 4 Father’s / Husband’s name 307 267 366 317 502 20 - 15,000 15,000 539 - 578 4,859 5 Principal 1,437 1,192 512 498 637 754 840 2,687 574 500 500 588 2,861 6 Interest / Mark-up 7 - - - - - - - - - - - - - Other than Interest / Mark-up 819 765 1,003 1,071 1,342 2,707 574 15,500 15,500 1,127 2,861 2,015 6,051 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - - - 1,641 512 525 637 721 840 2,149 574 2,661 2,293 608 2,846 1,498 11 Interest/ Mark-up waived - - - - - - - - - - - 1,124 1,008 12 Other financial relief provided 1,641 512 525 637 721 840 2,149 574 3,785 3,301 608 2,846 1,498 13 Total (9+10+11+12) Annexure I
349. 348 & Its Subsidiaries Malik Sajid Mehmood (Kachi Muhammad Khan P.O. Taranda Muhammad Pannah Tehsil Liaquatpur) Raja Hassan Nawaz Khan (544-H-3 Johar Town Lahore.) Tahir Abbas (Village Wahgray Tehsil Ferozewala District Sheikhupura) Safdar Ali (Chak # 12/1 R Okara) Hassan Saeed (Dahroor Muslim P.O. Siri Rampura Tehsil Ferozwala) Mehar Din (Mouza Manga Hathar, P.O. Sundar Tehsil & District Lahore) Rana Sana Ullah & Rana Aman Ullah (137-B/2R Mohallah Eid Gah Haveli Lakkah) Muhammad Ismail (Jamsher Chak # 24 Pattoki) Muhammad Ismail (Jamsher Chak # 24 Pattoki) Ali Raza (Mir Pur Bhattian P.O Kot Hussain Tehsil Nankana Sahib) Muhammad Azam Nawaz (Near Ghala Godam House No. 44 Mohalla Willayatabad No. 02 Multan) Muhammad Mansoor Sadiq (H. No. 525 Block A Lateef Chowk GM Abad) Nemat Ullah (Ward No.10 Hassan Shah Colony Jampur District Rajanpur) Muhammad Adil Khan (H # 130 G-3 Wapda Town Lahore) 53 54 55 56 57 58 59 60 61 62 63 64 65 2 1 52 Name and address of the borrower S. No. Muhammad Adil Khan (35404-6952483-3) Nemat Ullah (32402-1449847-9) Muhammad Mansoor Sadiq (33100-4505165-1) Muhammad Azam Nawaz (36302-5418877-5) Ali Raza (35402-7780936-3) Muhammad Ismail (35103-6556067-9) Muhammad Ismail (35103-6556067-9) Rana Sana Ullah & Rana Aman Ullah (35301-1910732-9) (35301-1910734-3) Mehar Din (35202-5409958-9) Hassan Saeed (35401-9369028-9) Safdar Ali (35302-1820559-7) Tahir Abbas (35401-6049777-1) Raja Hassan Nawaz Khan (38201-0984198-3) Malik Sajid Mehmood (31302-2152625-1) 3 Name of individuals / partners / directors (with CNIC No.) Fazal Ur Rehman Khan Mohammad Ramzan Sheikh Abdul Sadiq Haji Malik Rizwan Rai Ghazanfar Ali Khan Nawaz Khan 2,227 1,445 1,797 1,525 - 358 499 2,146 Rana Mohammad Hanif Nawaz Khan 394 438 585 410 1,823 2,722 5 Principal 313 721 336 341 567 560 851 3,813 662 815 1,098 622 1,818 5,160 6 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - - - - - - - - 2,540 2,166 2,133 1,866 567 918 1,350 5,959 1,056 1,253 1,683 1,032 3,641 7,882 8 Total Outstanding Liabilities at beginning of year Muhammad Anwer Liaqat Ali Yar Muhammad Muhammad Hanif Raja Rab Nawaz Khan Malik Jind Wadda 4 Father’s / Husband’s name 10 Interest / Mark-up written-off - - - - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - - - - 393 1,600 313 280 567 560 902 4,099 661 815 1,157 622 1,128 5,268 11 Interest/ Mark-up waived 12 - - - - - - - - - - 329 - 312 390 Other financial relief provided 722 1,600 625 670 567 560 902 4,099 661 815 1,157 622 1,128 5,268 13 Total (9+10+11+12) Annexure I
350. 349 Muhammad Afzal Ch (Shop No. 2 Nayyar Plaza Gulraz Rawalpindi) Musawar Hussain (P.O. Phalia Rugh Tehsil Phalia District Mandi Bahauddin) Muhammad Hasnain (Chah Talib Wala P/O Khas Gogran Tehsil And District Lodhran) Riaz Ahmad (P.O. Khas Pahrianwali Tehsil Phalia District Mandi Bahauddin) Ali Raza (P.O. Khas Pahrianwali Tehsil Phalia District Mandi Bahauddin) Haq Carriage Contractor (Mohallah Saeed Abad Ahmad Pur Sial) Abdul Waheed Wajid (12-13-A Willayat Abad # 2 Vehari Road P.O. Timber Market Multan) Bashir Ahmad Chishti (Basti Peer Muhammad Yar P/O Chak Nadar Shah Khaibodla Tehsil Bahawalnagar) Shah Zaib Khan (House # P-526 Mohallah Saidpur Angat Pura Rawalpindi) Imran Khan (Manchar Road Gali No.3 Mohalla Islamabad Ali Pur Chattha District Gujranwala) Hoorain Goods Transport Company (Street No. 08 Mohalla Tipu Sultan Shaheed Sadiqabad District Rahim Yar Khan) Muhammad Aslam (Head Rcad, Khanewal Road Multan) Rukhsana Imdad (House No.62-J, Canal Burg Multan Road Lahore) 67 68 69 70 71 72 73 74 75 76 77 78 2 1 66 Name and address of the borrower S. No. Rukhsana Imdad (35202-7417349-8) Muhammad Aslam (36302-8595119-5) Rana Mohsin Jameel (31304-8265853-3) Imran Khan (34104-2013298-7) Shah Zaib Khan (37405-5821289-3) Bashir Ahmad Chishti (31101-7757984-7) Abdul Waheed Wajid (36302-0464372-1) Muhammad Farooq Nawaz (33204-0405399-1) D/O Imdad Ali Ameer Ud Din Muhammad Jameel Zafar Ullah Khan Chattha Shah Nawaz Khan Nazir Ahmad Chishti Ch Abdul Majeed Rahi Zulafiqar Ali Muhammad Mansha Noor Muahmmad Riaz Ahmad (34403-8439667-3) Ali Raza (34403-6684947-7) Muhammad Rafeeq Munawar Hussain Chaudhary Muhammad Ali 4 Father’s / Husband’s name Muhammad Hasnain (36203-3374128-1) Musawar Hussain (34403-2742416-5) Muhammad Afzal Ch (35303-2111594-1) 3 Name of individuals / partners / directors (with CNIC No.) 1,346 2,196 - 2,228 3,777 4,907 1,656 1,588 2,528 2,653 5,447 1,540 2,026 5 Principal 6 397 1,788 816 188 282 425 1,559 759 231 470 201 417 421 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - - - - - - - 1,771 2,496 1,547 2,613 421 2,625 5,565 5,723 1,844 1,870 2,953 4,212 6,206 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - - - 11 433 2,024 1,226 227 285 423 1,106 1,014 328 554 281 344 421 Interest/ Mark-up waived 12 781 - 1,246 560 251 311 - 1,422 391 586 238 451 389 Other financial relief provided 13 1,214 2,024 2,472 787 536 734 1,106 2,436 719 1,140 519 795 810 Total (9+10+11+12) Annexure I
351. 350 & Its Subsidiaries Babar Ameer (Thakkar Key Banda P/O Jamal Ko Depalpur Okara Haveli Lakha) Deewan Goods Transport Co (Circular Road Near Akbar Masjid Rahim Yar Khan District Rahim Yar Khan) Ali Ijaz (Sharif Pura P.O. Awan Muslim Tehsil Muridkey District Shiekhupura) Al-Riaz Traders (Jowana Bangla Chak # 4/4 R P/O Rang Pur Tehsil & District Muzaffargarh) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) The Melsi Karachi Goods Transport (408-A Gate # 2 Street # 2 New Truck Sand Hawksbay Road Karachi) 80 81 82 83 84 85 86 87 88 89 90 2 1 79 Name and address of the borrower S. No. Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Shahzad Ali (42401-0474834-7) Ghulam Ali Ghulam Ali Ghulam Ali Ghulam Ali Ghulam Ali Ghulam Ali Ghulam Ali Ghulam Ali Abdul Rehman Riaz Hussain (32304-1563123-9) Shahzad Ali (42401-0474834-7) Abbas Ali Muhammad Riaz Muhammad Ameer 4 Father’s / Husband’s name Ali Ijaz (35405-0558679-5) Usama Raiz (31303-3674461-3) Babar Ameer (35301-4728408-5) 3 Name of individuals / partners / directors (with CNIC No.) 1,117 5,268 5,268 5,268 5,268 5,346 5,268 5,268 5,268 5,405 2,506 4,642 5 Principal 1,219 1,219 1,219 856 147 852 146 1,219 1,219 1,219 1,219 1,234 6 Interest / Mark-up 7 - - - - - - - - - - - - Other than Interest / Mark-up 6,487 6,487 6,487 6,487 6,580 6,487 6,487 6,487 6,261 2,653 5,494 1,263 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - - - 11 868 868 868 871 883 868 868 868 769 416 1,216 259 Interest/ Mark-up waived 788 490 1,747 262 1,545 1,550 1,547 1,551 1,653 1,550 1,540 1,545 12 Other financial relief provided 521 2,413 2,418 2,415 2,422 2,536 2,418 2,408 2,413 1,557 906 2,963 13 Total (9+10+11+12) Annexure I
352. 351 Akhtar Hussain (BOP Main Branch Rawalpindi (Staff). Global Infrastructure (Private) Limited (10-Q, Gulberg II, Lahore) KNK Infrastructure (Pvt) Ltd. (11-A-III, Gulberg- III, Lahore) Wood Master International (Pvt) Ltd. (Office # G 1, Craze Plaza, Near DHA, Main Boulevard, Lahore) Zafar Developers And Builders (Jamal Town Opp.Sufi Soap, 12-Km Lhr/Skp. Road Kot Abdul Malik, Lahore) Dr.Pervaiz Imtiaz Khan (681 Shadman Colony Lahore) 92 93 94 95 96 2 1 91 Name and address of the borrower S. No. Dr. Pervaiz Imtiaz Khan (35202-1182931-9) Muhammad Anjum Ch. (35202-2203235-3) Muhammad Younas (34101-8746080-1) Muhammad Afzal (33100-0771376-1) Imran Hassan (34101-9984652-7) Kamal Nasir Khan (56503-5034439-7) Abaid Ullah Khan (54400-8534874-7) Shuja Ul Mulk Khan (35202-2926820-5) Abbas Khan (56503-1843659-3) Asad Nawaz Khan (61101-6412215-1) Mehmood Amir Saeed (35202-1368012-5) Asad Nawaz Khan (61101-6412215-1) Mehmood Amir Saeed (35202-1368012-5) Kamal Nasir Khan (56503-5034439-7) Akhtar Hussain (37201-1563861-5) 3 Name of individuals / partners / directors (with CNIC No.) Imtiaz Ali Khan. Ch. Faqir Muhammad. Hassan Din Amir Muhammad Hassan Din Abaidullah Khan Sheikh Merak Khan Abaidullah Khan Abaidullah Khan Ch. Muhammad Nazwaz Khan Mian Muhammad Saeed Ch. Muhammad Nazwaz Khan Mian Muhammad Saeed Abaidullah Khan Haji Safdar Hussain 4 Father’s / Husband’s name - - 188 13,154 6,036 72,272 130,655 - 270 146,094 6 12,500 1,254 5 Principal Interest / Mark-up 7 - - - - - - Other than Interest / Mark-up 1,524 13,154 6,036 72,460 130,655 158,594 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - 338 4,675 5,603 45,952 46,163 39,391 11 Interest/ Mark-up waived 411 - - - 2,136 1,048 12 Other financial relief provided 749 4,675 5,603 45,952 48,299 40,439 13 Total (9+10+11+12) Annexure I
353. 352 & Its Subsidiaries Gulistan Power Generation Ltd. (2nd Floor Finlay House, I.I Chundrigarh Road, Karachi) Crescent Jute Products Ltd. (1st Floor, 65-XX, Khayaban-e-Iqbal Road, Sector XX DHA Phase 3, Lahore) Maqbool Engineering Associates (Pvt) Ltd. (255, Panorama Center, Fatima Jinnah Road Saddar Karachi) Zemindar Flour Mills (Pvt) Ltd. (33-KM G.T Road, Khorey Muridke) 98 99 100 101 Bashir Cotton Mills (Pvt) Ltd. (97-B, Gulberg-II, Lahore) 2 1 97 Name and address of the borrower S. No. Mian Fazal-e-Haque (35201-7529542-1) Mian Fazal-Ur-Rehman (35201-1396058-1). Syed Mahmood Hussain (42301-0883262-5) Nafisa Mahmood (42301-0827600-4) Syed Nabeel Hussain Shah (42301-1080033-3) Humayun Mazhar (35201-2124933-9) Khurram Mazhar Karim (35201-1471781-3) Shehryar Mazhar (35201-0706577-7) Shameel Mazhar (35201-8645147-9) Shahjahan Mazhar Karim (35201-3671625-7) Rijah Khurram Mazhar (35201-0464730-6) Abdul Shakoor (42201-0350226-5) Tanveer Ahmed (42201-0350138-5) Naseer Ahmed (42201-0632509-5) Sohail Maqsood (35201-4740143-5) Muhammad Akhtar Mirza (3520196760423) Iftikhar Ali (35401-2034238-7) Tariq Rafi (42301-0838522-7) Arif Rafi (35202-1504108-3) Anjum Rafl (35202-2434949-9) Abdullah Rafl (3520014165767) 3 Name of individuals / partners / directors (with CNIC No.) Muhammad Yousaf Syed Maqbool Hussain Syed Mahmood Hussain Syed Mehmood Hussain Mazhar Karim Mazhar Karim Humayun Mazhar Humayun Mazhar Khurram Mazhar Karim Khurram Mazhar Karim Jamal Din Abdul Shakoor Abdul Shakoor Maqsood Ilahi Karam Dad Khan Zulfiqar Ali Muhammad Rafi 4 Father’s / Husband’s name 53,714 1,589 112,992 51,132 165,469 5 Principal 93,541 6,980 95,590 30,614 204,691 6 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - 147,255 8,569 208,582 81,746 370,160 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - Rupees in ‘000 9 Principal written-off - - - - - 53,946 6,488 108,357 31,206 196,412 11 Interest/ Mark-up waived - - - - 5,055 12 Other financial relief provided 53,946 6,488 113,412 31,206 196,412 13 Total (9+10+11+12) Annexure I
354. 353 Yaqoob & Sons (Makkah Rice Mill Pindi Bhattian Road. Jalalpur Bhattian District Hafizabad) Haseeb Waqas Sugar Mills Ltd. (6-F Model Town, Lahore) Oriental Fruits (Pvt) Ltd. (6-F Model Town, Lahore) 103 104 2 1 102 Name and address of the borrower S. No. Ilyas Mehraj (35202-7301494-9) Mian Waqas Riaz (35202-2562237-9) Mian Haseeb Ilyas (35202-7459668-5) Mian Ijaz Mehraj (35202-7102873-1) Mrs. Yasmin Riaz (35202-9509247-2) Mian Haseeb Illyas (35202-7459668-5) Shahzadi Ilyas (35202-2476849-8) Zainab Waqas (35202-4366644-4) Mian Waqas Riaz (35202-2562237-9) Mian Illyas Mehraj (35202-7301494-9) Mian Ijaz Mehraj (35202-7102873-1) Mrs. Yasmin Riaz (35202-9509247-2) Zakia Ilyas (35202-4771354-0) Muhammad Akram Khan (35201-6808852-3) Raza Mustafa (33100-7254107-1) Hafiz Muhammad Irfan Hussain (35301-9994693-9) Mumtaz Ahmed (34301-1729295-3) 3 Name of individuals / partners / directors (with CNIC No.) Mian Mehraj Din Mian Riaz Mehraj Mian Illyas Mehraj Mian Mehraj Din Mian Riaz Mehraj Mian Illyas Mehraj Mian M. Illyas Mian Waqas Riaz Mian Riaz Mehraj Mian Mehraj Din Mian Mehraj Din Mian Riaz Mehraj Mian Illyas Mehraj Ch. Niaz Ahmed Shoukat Ali Haji M. Ali Butt Muhammad Yaqoob 4 Father’s / Husband’s name 66,057 90,316 288,487 109,187 103,428 6 49,538 5 Principal Interest / Mark-up 7 - - - Other than Interest / Mark-up 175,244 378,803 152,966 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - Rupees in ‘000 9 Principal written-off - - - 41,612 98,413 47,784 11 Interest/ Mark-up waived 12 Other financial relief provided - - - 41,612 98,413 47,784 13 Total (9+10+11+12) Annexure I
355. 354 & Its Subsidiaries Sialkot Transport Co. Pvt. Limited (Near General Bus Stand, Opposite Noor LPG Center Sialkot) Dar es Salaam Textile Mills Ltd. (176-N, Scotch Corner, Upper Mall, Lahore) Hygiene Industries (Plot # 21-A, Industrial Estate, Multan) Pak Pansy (Pvt) Ltd. (Plot # 04, Ahmed Town, Survey # 212, Block # 02, Azizabad, Commercial Area Karachi) Universal Corporation (Plot # 4, 2nd Floor, Ahmed Town, Survey No. F.B. Area, Block-2, Karachi) 106 107 108 109 2 1 105 Name and address of the borrower S. No. Mr. Muhammad Athar (42101-4593499-1) Mst. Nuzhat Athar (42101-8646171-8) Mr. Muhammad Athar (42101-4593499-1) Mst. Nuzhat Athar (42101-8646171-8) Mr. Muhammad Athar (42101-4593499-1) Mst. Nuzhat Athar (42101-8646171-8) Faisal Mukhtar (35200-1561125-1) Abida Mukhtar (35202-1492705-4) Nilofar Mukhtar (61101-1836202-0) Mahwesh Faisal Mukhtar (35201-1523109-0) Sheikh Parvez Ashraf (35202-6738230-7) Zulfiqar Ahmed (35202-4941853-1) M. Ejaz Akbar Khan (35202-2732679-9) Ch Ahmed Mukhtar (34201-0402286-7) (Deceased) Irfan Nasr (35201-5531354-9) Operators / Directors are representing Sialkot Chamber of Commerce 3 Name of individuals / partners / directors (with CNIC No.) Sharif Ahmad. Muhammad Athar. Sharif Ahmad. Muhammad Athar. 38,892 32,356 37,791 38,833 32,786 44,541 10,520 12,862 Ch. Ahmed Mukhtar Ch. Ahmed Mukhtar Ch. Ahmed Mukhtar Faisal Mukhtar Sheikh Muhammad Ashraf Nazar Mohammad Muhammad Akber Khan Ch. Mohammad Husain Raja Nasrullah Khan Sharif Ahmad. Muhammad Athar. 7,045 6 Interest / Mark-up 17,743 5 Principal 7 Other than Interest / Mark-up - - - - - 77,725 65,142 82,332 23,382 24,788 8 Total Outstanding Liabilities at beginning of year - 4 Father’s / Husband’s name 10 Interest / Mark-up written-off - - - - - Rupees in ‘000 9 Principal written-off - - - - - 4,183 24,489 20,756 24,149 6,269 11 Interest/ Mark-up waived - - - - 6,422 12 Other financial relief provided 24,489 20,756 24,149 6,269 10,605 13 Total (9+10+11+12) Annexure I
356. 355 Paramount Spinning Mills Ltd . (2nd Floor Finlay House, I.I Chundrigarh Road, Karachi) Khurshid Traders (R/O Bismillah Colony Jatoi Muzaffargarh) Rana Khalid Hussain (House 281-B/5 Babawala Chowk Sahiwal) Ghulam Yasin (Kotla Band Ali P/O Jhuggi Wala Tehsil Jatoi, District. Muzaffargarh) Shabbir Trading Company (Pakpattan Road Depalpur, District.Okara) Khawaja Fareed Telecom (College Road, Layyah Tehsil & District Layyah) New Modern Cotton Ginner Grain Mark (Shop # 45 A Grain Market Hasilpur) 111 112 113 114 115 116 2 1 110 Name and address of the borrower S. No. Ghulam Haider (31203-1716367-5) Ghulam Hussain (31203-1716323-5) Asif Iqbal (32203-1000221-9) Ch. Shabbir Ahmed (35301-7661077-3) Ghulam Yasin (32302-9083889-1) Rana Khalid Hussain (36502-8420142-3) Khursheed Ahmed Rao (32302-1702838-1) Abdul Shakoor (42201-0350226-5) Tanveer Ahmed (42201-0350138-5) Naseer Ahmed (42201-0632509-5) Sohail Maqsood (35201-4740143-5) Muhammad Asif Akram (35404-2976207-1) Muhammad Akhtar Mirza (3520196760423) Abid Sattar (35202-2306906-3) Muhammad Arif (35201-1641317-5) Muhammad Ashraf Khan (35201-1346603-5) Muhammad Junaid (35202-6261910-0) 3 Name of individuals / partners / directors (with CNIC No.) Ghulam Ali Khuda Bakhsh Sher Muhammad Sher Muhammad Khadim Hussain Muhammad Yousaf Jamal Din Abdul Shakoor Abdul Shakoor Maqsood Ilahi Muhammad Akram Karam Dad Khan Abdul Sattar Zahid Abdul Hameed Anwar Muhammad Dilshad Khan Abdul Rasheed 4 Father’s / Husband’s name 2,805 - - - - - 619,184 5 Principal 6,811 3,292 41,967 1,598 776 12,181 1,132,669 6 Interest / Mark-up 7 - - - - - - - Other than Interest / Mark-up 9,616 3,292 41,967 1,598 776 12,181 1,751,853 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - 4,253 1,120 23,588 745 529 4,837 361,263 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - 4,253 1,120 23,588 745 529 4,837 361,263 13 Total (9+10+11+12) Annexure I
357. 356 & Its Subsidiaries Fiaz Rice Corporation (Mananwala Narang Manddi Road Narang Mandi) Azam Majid / Co. (Tatley Road Kamoke) Khawaja Naseer Ud Din Mehmood (Rajanpur Kalan Rahim Yar Khan) Hamid Associates (H. No.7 Sultan Ahmad Road Lahore) Liaqat Ali Khan (Raupur Road Joti P.O. Jatoi District M. Gahr Ali Pur) 119 120 121 122 123 Azeem Exports (Pvt.) Ltd (Chak - 202 R.B. Ghona Road Ghatti, Faisalabad) 117 Ali Rizwan Bhatti (Chah Pucca P.O. Kot Hussain Khan Nankana Sahib) 2 1 118 Name and address of the borrower S. No. Liaqat Ali Khan (32302-1736439-1) Hamid Almas (35202-7635686-7) Haji Abdul Sattar (31303-23400569-9) Muhammad Hanif (358-89-056551) Muhammad Yaqoob (358-78-764496) Shahid Hanif (358-80-792560) Rana Anwar Ali Khan (34102-0452452-5) Rana Muhammad Azam Khan (34102-0452451-5) Muhammad Majid Khan (34102-0451127-9) Iqbal Ahmad (35401-2559531-3) Muhammad Fayyaz (35201-2256395-3) Ali Rizwan Bhatti (35202-1933765-7) Abrar Ahmed (33100-0310806-9) Ijaz Ahmed (33100-2102921-7) Yasmeen Ibrar (33100-0336460-2) Suraya Bano (33100-6007043-8) Naeem Akhter (33100-9148895-4) 3 Name of individuals / partners / directors (with CNIC No.) Atta Ullah khan Muhammad Saeed Abdul Aziz Amir Ud Din Muhammad Hanif Ghulam Mahiudin Khan Ghulam Muhammad Ghulam Muhammad Abdul Aziz Muhammad Sakhi Bhatti Muhammad Akram Sh. 4 Father’s / Husband’s name 5,086 174 2,944 97 2,898 - 7,652 5 Principal 17,052 1,762 7,542 3,463 11,341 21,652 45,358 6 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - 22,138 1,936 10,486 3,560 14,239 21,652 53,010 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - 5,501 553 5,084 1,510 6,366 10,502 17,961 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - 5,501 553 5,084 1,510 6,366 10,502 17,961 13 Total (9+10+11+12) Annexure I
358. 357 Chaudary Brothers Farming Servi (2-Kilometer By Pass Khanqah Sharif Ganwar Shah Road Baahwalpur) Malik Zari Service Prop: Bashir (Chah Wakeel Wala Khakhi Gharbi P.O. Khas DG Khan) Sheheryar Bilal Ice/Cold Storage (Tehsil Chowk Chiniot) Woodsy Furniture Chiniot (6-Malik Centre Tehsil Chowk Chiniot) Hero Center (Tehkal Payan University Road Peshawar) Sagro Seed Corporation (Old Grain Market Khan Pur) Al Madina Filling Station (Opposite Children Hospital Abdali Road Multan) Azeem Tyres (LMQ Road Nawan Shehr Multan) Alpha Industrial Establishment (19-Birdwood Road, Lahore) K.M.Furniture (Mohalla. Karam Abad Chiniot) Ausaf Rice Factory (17-Kassi Basti Masoom Shah Vehari Road Multan) Zaynoon Traders (A-8,School Road, Nishtarabad Peshawar) 125 126 127 128 129 130 131 132 133 134 135 2 1 124 Name and address of the borrower S. No. Mohd. Nadeem Gul (17301-1301410-5) Zia Rustam (13101-4102829-3) Syed Muhammad Hussain Zaidi (36302-2248004-9) Saddat Yar (33201-7802200-1) Rana Zaheer Ahmad (35202-2760066-3) Dr. Muhammad Rafi (35201-2783986-9) Muhammad Azeem (36101-2904883-5) Rao Ahmad Ali Qamar (32302-1690084-3) Saeed Ahmad (31301-2207099-5) Imran Khan Khatak (17301-5827250-5) Muhammad Bilal (33201-3032058-5) Muhammad Bilal Ahmed (33201-3032058-5) Bashir Ahmad (32102-7360864-7) Nasir Mehmood (37405-4371036-9) Khalid Mehmood (35202-3725540-9) Muhammad Adeel (35202-7290958-3) 3 Name of individuals / partners / directors (with CNIC No.) Toor Gull Rustam Khan Syed Waqar Hussain Khushi Muhammad Rana Muhammad Tufail Chaudhry Muhammad Shafi Zafar Chirag Din Liaqat Ali Allah Ditta Nasud Khan Khushi Muhammad Khushi Muhammad Khushi Muhammad Abdul Karim 4 Father’s / Husband’s name 3,775 16,163 4,566 20,707 4,093 - - 3,398 6,148 2,126 1,042 4,564 5 Principal 10,809 4,900 5,696 32,595 1,770 2,658 2,690 1,035 7,627 2,669 1,921 21,843 6 Interest / Mark-up 7 - - - - - - - - - - - - Other than Interest / Mark-up 14,584 21,063 10,262 53,302 5,863 2,658 2,690 4,433 13,775 4,795 2,963 26,407 8 Total Outstanding Liabilities at beginning of year 10 - - - - - - - - - - - - - - - - - - - - - - - 1,131 Interest / Mark-up written-off Rupees in ‘000 9 Principal written-off 1,071 11,151 5,094 2,513 2,920 6,584 706 1,192 1,216 - 3,368 1,064 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - - - - - - 1,071 11,151 5,094 2,513 2,920 6,584 706 1,192 1,216 1,131 3,368 1,064 13 Total (9+10+11+12) Annexure I
359. 358 & Its Subsidiaries Ahmad Ashraf Cotton Industries (Cotton Lundi Pitafi Road Jatoi District Muzaffargarh) Gopang Oil Mills Prop:Khalid Mehmood (Khan Oil Mills Wong Tehsil & District Rajan Pur Kot Mithan) Giltwood Interiors (Malik Centre Tehsil Chowk Chiniot) Bismillah Paper Traders (22 Madina Market, Ganpat Road Lahore) Jholay Lal Petrolium Service (Chak-14/1L G.T. Road Renala Khurd Okara) Noshahi Enterprises (Sabzi Mandi Kamoke, Kamoke) Appolo Builders Associates (301, Windsong Place, 7-8, K.U. C.H.S. Shaheed-EMillat Road, Karachi) Al-Ghazi Alamgir Flour Mill (Dau Wala Guddu Road Mureed Shakh Ghotki) Noor ud Din (Bhong Tehsil Sadiq Abad) Rias Muneer Ahmed (House No. 3 Street No. 29 Sector F61 Islamabad) 137 138 139 140 141 142 143 144 145 2 1 136 Name and address of the borrower S. No. Raees Munir Ahmed (42301-6386978-5) Noor ud Din (31304-2026365-5) Abdul Manan (33100-0549069-5) Akhtar Ali (61101-4703724-3) Muhammad Amin (42201-4010470-3) Mrs. Nargis Amin (42000-7104159-0) M. Ashique Hussain (34102-8105347-5) M. Saddique (34102-5659931-1) Hafiz Amir Shahzad (34102-8200347-5) Muhammaed Asif (34102-8985522-7) Muhammad Amin Shah (Deceased) (35303-4337954-5) Shahid Abbas (35303-6412064-5) Tanveer Akram Khan (35202-8211669-1) Saddat Yar (33201-7802200-1) Khalid Mehmood (32403-1633928-9) Rao Ahmad Ali Qamar (32302-1690084-3) Muhammad Ashraf (32302-8203286-5) Muhammad Nasir (36302-0339562-1) 3 Name of individuals / partners / directors (with CNIC No.) Rais Shabbir Ahmed Faqeer Buksh Abdul Rehman Sabir Ali Ch Jamal Din Ch Shamsul Haq Muhammad Latif Urf Bhola Pehlwan Muhammad Ashiq Hussain Muhammad Latif Mukhtar Ali Ghulam Abbas Muhammad Akram Khan Khushi Muhammad Pir Buksh Khan Liaqat Ali, Muhammad Jammil Muhammad Rafique 4 Father’s / Husband’s name 9,917 3,955 8,017 37,018 9,942 30,249 14,392 6,669 6,821 6,479 4,993 1,834 8,162 6,698 8,279 6 202 861 6,671 3,005 2,676 5 Principal Interest / Mark-up 7 - - - - - - - - - - Other than Interest / Mark-up 46,935 13,897 38,266 20,871 13,490 5,195 2,695 14,833 9,703 10,955 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - - - - - - Rupees in ‘000 9 Principal written-off - - - - - - - - - - 13,021 3,248 10,643 4,253 3,124 2,409 712 2,920 2,535 2,799 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - - - - 13,021 3,248 10,643 4,253 3,124 2,409 712 2,920 2,535 2,799 13 Total (9+10+11+12) Annexure I
360. 359 Uzma Zeeshan / Muhammad Mouzzam Razi (House # 39/B New Muslim Town Lahore) Asim Niazi And Co (Ali Pur Road Piracha Petrol Pump Muzaffer Garh) Hafsa Embroidery (House # 2549 Samanabad Faisalabad) Al-Wahab Filling Station (H. No.50-C Johar Town Lahore) Adnan Mustafa Tractor Showroom (Chah Wakeel Wala Khaki Gharbi D.G Khan) Ahmed Nasir Corporation (5-Umer Road Model Town A Bahawalpur) Al Meezan Metal Industries Pvt Ltd (Suit # 409 4TH Floor Anum Trade Centre Ghani Chowrangi Site Karachi) Four Star Garments (197-B Gulgasht Colony Multan) Azam Spray Center (Ghosia Chock Abdul Hakim Tehsil Kabirwala District Khanewal) Ali Doubling (Haji Ali Muhammad Wali Street Road Kot Kasur) Lasani Poultary Farm (College Road Pattoki Tehsil Pattoki District Okara) Malik Traders (Faisalabad Road Opposite Govt. Islamia College Chiniot) 147 148 149 150 151 152 153 154 155 156 157 2 1 146 Name and address of the borrower S. No. Sheheryar Hassan (33201-1833497-9) Javid Iqbal (35101-2465787-1) Mehboob Ahmed (35102-1364036-9) Rauf Ahmed (35102-1804161-9) Allah Ditta (36101-1911871-9) Zahid Akhter Kanwar (36302-5910466-5) Shah Zaki ur Rehman (42301-1381245-3) Munawar Ahmed (42301-6880736-9) Muhammad Bukash (-) Khalid Pervaiz (-) Ghulam Mustafa (32102-1117540-3) Syed Ashfaq Hussain Shah (36401-6178476-7) Shahid Iqbal (33102-7560678-5) Muhammad Asgher Khan (32304-1587455-5) Muhammad Asim Khan (32304-1587456-5) Shugufta Yasmeen (32102-2743069-4) Munawar Sultana (32604-1534186-4) Uzma Zeshan (31303-0194929-6) Mohd. Moazam Razi (35202-8128599-3) 3 Name of individuals / partners / directors (with CNIC No.) Khushi Muhammad Muhammad Ashique Ali Muhammad Muhammad Azam Kanwar Akhtar Ali Shah Aziz Ur Rehman Muhammad Shamsul Tauheed Muhammad Ramzan Ch Sanaullah Sher Muhammad Syed Safdar Hussain Shah 2,083 411 2,845 720 4,574 42,414 3,704 1,301 4,322 2,068 769 Muhammad Khan Niazi W/O Muhammad Ayub Niazi W/O Muhammad Asghar Khan Muhammad Ashraf 3,961 5 Principal 2,575 1,133 4,789 629 6,381 8,952 11,565 2,475 4,001 1,102 1,867 9,807 6 Interest / Mark-up 7 - - - - - - - - - - - - Other than Interest / Mark-up 4,658 1,544 7,634 1,349 10,955 51,366 15,269 3,776 8,323 3,170 2,636 13,768 8 Total Outstanding Liabilities at beginning of year Fasih 4 Father’s / Husband’s name 10 Interest / Mark-up written-off - - - - - - - - - - - - - - - - - - 124 - - - 250 4,582 Rupees in ‘000 9 Principal written-off 1,198 546 2,316 616 2,574 2,784 5,028 1,291 2,134 608 604 2,991 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - - - - - - 1,322 546 2,316 616 2,824 7,366 5,028 1,291 2,134 608 604 2,991 13 Total (9+10+11+12) Annexure I
361. 360 & Its Subsidiaries Kentax Sirgroh (Pvt) Ltd (Industrial Area Katar Band Road Thokar Niaz Baig Multan Road Lahore) Vicky Trading Company (40 Deewan Street Nishtar Road Lahore) Ahmad Carporation (Railway Road Pakpattan) Al-Madina Furniture (Malik Center Tehsil Chiniot) Excel Distributors (02, White House Lane-02 Sunderdas Road Lahore) Haji Manzoor Qadir (Sandhu Furniture House, Kutchery Road, Gujrat) Punjab Group Of Colleges Jehanian (H # 453 Near Masjid Quados Mohallah Jinnah Colony-B Jahanian) Ahmed Rice Mills (Ahmed Nagar, Tehsil Wazirabad District Gujranwala) Badar Majeed (164-Aurangzeb Block, Garden Town Lahore) Saanco Enterprises (25 Street # 43/S Pak Colony Near Timber Market Ravi Road Lahore) 159 160 161 162 163 164 165 166 167 2 1 158 Name and address of the borrower S. No. Malik Muhammad Amin (35102-6153918-1 ) Badar Majeed (35202-4970220-7) Ghulam Nabi Butt (34104-0865481-7) M. Jehangir Chatha (34104-2261706-5) Allah Rakha (34104-2239145-9) Ghulam Rasool (34104-2221302-9) Zonaira Maryam (34101-6114870-6) Tawakkal Hussain (36101-2904883-5 ) Manzoor Qadir (34201-8976433-7) Syed Hassan Ilyas (35201-3778403-3) Sheheryar Hassan (33201-1833497-9) Mukhtar Ahmad (36402-9121053-1) Tariq Majeed (35201-1850928-3) Hammad Khalid (35202-9980349-9 ) Haseeb Khalid (35202-7237512-3) Amna Khalid (35202-0107764-2 ) 3 Name of individuals / partners / directors (with CNIC No.) Malik Ghulam Muhammad Sheikh Abdul Majeed Muhammad Ismail Ch.Maqsood Ali Chattha Muhammad Ibrahim Allah Ditta W/O Abdul Rashid Malik Sikandar Khan Muhammad Ismail Syed Ilyas Ali Khushi Muhammad Haji Muhammad Sheikh Abdul Majeed Khalid Sharif Hammad Khalid 4 Father’s / Husband’s name 8,471 552 13,648 14,000 161 2,225 5,161 89 13,861 12,285 5 Principal 10,175 911 20,182 6,748 3,135 3,601 6,504 1,137 18,276 16,942 6 Interest / Mark-up 7 Other than Interest / Mark-up - - - - - - - - - - 18,646 1,463 33,830 20,748 3,296 5,826 11,665 1,226 32,137 29,227 8 Total Outstanding Liabilities at beginning of year 10 - - - - - - - - - - - - 103 - 1,625 - - - - 348 Interest / Mark-up written-off Rupees in ‘000 9 Principal written-off 5,104 700 16,413 2,485 1,197 1,570 2,926 714 18,970 1,600 11 Interest/ Mark-up waived 12 Other financial relief provided - - - - - - - - - - 5,104 803 16,413 4,110 1,197 1,570 2,926 714 19,318 1,600 13 Total (9+10+11+12) Annexure I
362. 361 Name and address of the borrower 2 Ittefaq Bricks Company (2-KM, Bucheki Road, Near Haseeb Waqas Sugar Mills, Nankana Sahib, Bucheki Road Nankana Sahib) Champion Traders (Abaseen Complex, Ground Floor, 8-Davis Road, Lahore) S. No. 1 168 169 Ghulam Sarwar (35202-6541229-7) Rai Saleem-ur-Rehman Bhatti (35202-5365019-7 ) 3 Name of individuals / partners / directors (with CNIC No.) Ahmad Din Ahmad Din 4 Father’s / Husband’s name 1,853 2,981,735 2,056,361 1,648 6 2,200 1,065 5 Principal Interest / Mark-up 7 - - - Other than Interest / Mark-up 2,713 5,038,096 4,053 8 Total Outstanding Liabilities at beginning of year 10 Interest / Mark-up written-off - - - - - 8,163 Rupees in ‘000 9 Principal written-off 851 860 1,522,072 11 Interest/ Mark-up waived - - 40,898 12 Other financial relief provided 851 860 1,571,133 13 Total (9+10+11+12) Annexure I
363. Annexure II ISLAMIC BANKING BUSINESS The Bank has started Islamic banking operations in the year 2013 . As at close of the December 31, 2021, the Bank is operating 114 Islamic banking branches (2020: 102 Islamic banking branches and 02 sub Islamic banking branches) and 25 Islamic banking windows (2020: Nil). STATEMENT OF FINANCIAL POSITION As at December 31, 2021 20212020 Note Rupees in ‘000’ ASSETS Cash and balances with treasury banks 7,527,608 5,351,954 Balances with other banks 6,059,934 307,986 Due from financial institutions 1 4,500,000 8,632,000 Investments - net 2 16,590,093 16,996,603 Islamic financing and related assets - net 3 49,033,044 33,201,187 Fixed assets 2,052,740 1,670,801 Intangible assets 9,439 6,626 Due from head office 442,430 951,270 Other assets 1,399,506 2,003,185 Total assets 87,614,794 69,121,612 LIABILITIES Bills payable 388,599 212,448 Due to financial institutions 911,409 607,842 Deposits and other accounts 4 79,206,096 61,539,589 Due to head office - Subordinated debt - Other liabilities 2,556,072 2,647,285 83,062,176 65,007,164 NET ASSETS 4,552,618 4,114,448 REPRESENTED BY Islamic banking fund 2,000,000 1,500,000 Reserves 5,505 735 Deficit on revaluation of assets (3,019) (97,165) Unappropriated profit 5 2,550,132 2,710,878 4,552,618 4,114,448 CONTINGENCIES AND COMMITMENTS6 362 & Its Subsidiaries
364. Annexure II ISLAMIC BANKING BUSINESS PROFIT AND LOSS ACCOUNT For the year ended December 31 , 2021 20212020 Note Rupees in ‘000’ Profit / return earned Profit / return expensed 7 8 4,621,515 2,208,303 5,057,562 2,558,654 Net profit / return 2,413,212 2,498,908 Fee and commission income 179,284 108,798 Dividend income - Foreign exchange (loss) / income (5,175) 4,915 Income / (loss) from derivatives - Gain on securities 2,194 Other income 1,271 4,278 177,574 117,991 Total income 2,590,786 2,616,899 Other expenses Operating expenses 1,981,180 1,646,171 Workers welfare fund - Other charges 294 150 1,981,474 1,646,321 Profit before provisions Provisions and write offs - net 609,312 770,058 970,578 414,325 (Loss) / profit before taxation Taxation 9 (160,746) - 556,253 - (Loss) / profit after taxation (160,746) 556,253 363
365. Annexure II ISLAMIC BANKING BUSINESS CASH FLOW STATEMENT For the year ended December 31 , 2021 20212020 Rupees in ‘000’ CASH FLOWS FROM OPERATING ACTIVITIES (Loss) / profit before taxation (160,746) 556,253 Less: dividend income - (160,746) Adjustments for: Depreciation on fixed assets 127,910 Amortization on intangible assets 1,446 Depreciation on ijarah assets under IFAS - 2 118,973 Depreciation right-of-use assets 177,486 Markup on lease liability against right-of-use assets 195,434 Amortization of premium on debt securities - net 63,923 Gain on termination of lease liability against right-of-use assets 679 Gain on sale of property and equipment - net (34) Provision and write-offs - net 770,058 556,253 126,823 1,353 162,883 158,935 181,732 43,739 17 (2,135) 414,325 1,455,875 1,087,672 1,295,129 (Increase) / decrease in operating assets: Lendings to financial institutions 4,132,000 Advances (16,721,924) Others assets 1,113,555 1,643,925 (11,476,369) Increase / (decrease) in operating liabilities: Bills payable 176,151 Due to financial institutions 303,567 Deposits and other accounts 17,666,507 Other liabilities (504,559) 17,641,666 (5,237,000) (6,507,423) 1,847,493 (9,896,930) (37,765) 607,842 15,450,580 (582,550) 15,438,107 Net cash flow from operating activities 7,460,426 7,185,102 CASH FLOWS FROM INVESTING ACTIVITIES Net investments in available for sale securities 436,733 (8,269,009) Investments in fixed assets (192,119) (120,718) Investment in intangible assets (2,813) (2,198) Net cash flow from / (used in) investing activities 241,801 (8,391,925) CASH FLOWS FROM FINANCING ACTIVITIES Increase in Islamic banking fund 500,000 Payment of lease liability against right-of-use assets (274,625) (231,034) Net cash flow from / (used in) financing activities 225,375 (231,034) Net increase / (decrease) in cash and cash equivalents 7,927,602 (1,437,857) Cash and cash equivalents at beginning of the year 5,659,940 7,097,797 Cash and cash equivalents at end of the year 364 & Its Subsidiaries 13,587,542 5,659,940
366. Annexure II 1 . DUE FROM FINANCIAL INSTITUTIONS 20212020 In local In foreign Total In local In foreign Total currency currencies currencycurrencies Rupees in ‘000’ Unsecured 4,500,000 - 4,500,000 8,632,000 - 8,632,000 2. INVESTMENTS BY SEGMENTS 2021 2020 Cost / Provision Surplus Carrying Cost / Provision Surplus Amortized for / (Deficit) value Amortized for / (Deficit) costdiminution costdiminution Rupees in ‘000’ Carrying value Federal government securities: - Ijarah sukuks 4,502,908 - (1,154) 4,501,754 2,249,072 - 1,078 2,250,150 - Naya Pakistan Certificates 88,600 - - 88,600 - - - - Sukuk - bai muajjal with Government of Pakistan - - - - 2,756,196 - - 2,756,196 4,591,508 - (1,154) 4,590,354 5,005,268 - 1,078 5,006,346 Non government debt securities - Listed -Unlisted Total investments 8,457,812 3,617,239 - (75,312) 8,382,500 - - 3,617,239 16,666,559 - (76,466) 16,590,093 8,521,689 (171,690) 8,349,999 3,640,258 - - 3,640,258 17,167,215 - (170,612) 16,996,603 20212020 Note Rupees in ‘000’ 3. ISLAMIC FINANCING AND RELATED ASSETS Ijarah 3.1 2,075,758 1,988,841 Murabaha 3.2 2,115,237 220,091 Musharaka 21,482,411 9,347,782 Diminishing musharaka 20,579,778 18,353,796 Istisna 4,154,436 3,894,158 Payment against documents 55,304 55,304 Gross islamic financing and related assets 50,462,924 33,859,972 Less: provision against islamic financings - Specific 1,429,880 658,785 - General - Islamic financing and related assets - net of provision 3.1Ijarah As at Jan Additions 01, 2021 658,785 49,033,044 33,201,187 2021 Cost 1,429,880 Depreciation Book value Deletion / As at Dec As at Jan Deletion / Charge for As at Dec as at Dec adjustment 31, 2021 01, 2021 adjustment the year 31, 2021 31, 2021 Rupees in ‘000’ Plant and machinery Vehicles Equipment Service Ijarah 96,262 537,678 196,223 1,624,407 - 241,247 - - Total 2,454,570 241,247 (49,442) 46,820 (38,061) 740,864 (73,139) 123,084 - 1,624,407 (160,642) 2,535,175 38,170 278,634 148,925 - (36,339) (16,304) (72,642) - 12,930 14,761 32,059 78,935 341,265 399,599 27,108 103,391 19,693 - - 1,624,407 465,729 (125,285) 118,973 459,417 2,075,758 365
367. Annexure II 2020 Cost Depreciation Book value As at Jan Additions Deletion / As at Dec As at Jan Deletion / Charge for As at Dec as at Dec 01, 2020 adjustment 31, 2020 01, 2020 adjustment the year 31, 2020 31, 2020 Rupees in ‘000’ Plant and machinery Vehicles Equipment Service Ijarah 125,415 521,933 214,523 1,235,518 - 31,188 - 388,889 (29,153) 96,262 (15,443) 537,678 (18,300) 196,223 - 1,624,407 48,493 212,044 99,424 - (31,144) (11,434) (14,537) - Total 2,097,389 420,077 (62,896) 359,961 (57,115) 3.1.1 Future ijarah payments receivable Not later than 1 year Ijarah rental receivables 460,402 2,454,570 20,821 38,170 58,092 78,024 278,634 259,044 64,038 148,925 47,298 - - 1,624,407 162,883 465,729 1,988,841 20212020 Later than Later than Over Not later Over 1& one & five five than 1 Total Total less than less than years year years 5 years 5 years Rupees in ‘000’ Rupees in ‘000’ 1,197,537 417,819 2,075,758 425,493 1,145,529 417,819 1,988,841 20212020 Note Rupees in ‘000’ 3.2Murabaha Murabaha financing 3.2.1 2,056,987 197,566 Advances for murabaha 58,250 22,525 2,115,237 3.2.1 Murabaha receivable - gross 3.2.2 2,137,662 Less: deferred murabaha income 3.2.4 43,890 Profit receivable shown in other assets 36,785 220,091 242,516 344 44,606 Murabaha financings 2,056,987 197,566 3.2.2 The movement in murabaha financing during the year is as follows: Opening balance 242,516 1,046,741 Sales during the year 3,122,725 859,021 Adjusted during the year 1,227,579 1,663,246 Closing balance 2,137,662 3.2.3 Murabaha sale price 2,187,623 Murabaha purchase price 2,056,987 242,516 203,970 6,404 130,636 197,566 3.2.4 Deferred murabaha income Opening balance 344 Arised during the year 89,814 Less: recognized during the year 46,268 29,784 32,506 61,946 Closing balance 3.3 Islamic financing and related assets include Rs. 3,265,869 thousand (2020: Rs. 2,876,933 thousand) which have been placed under non-performing status. 366 & Its Subsidiaries 43,890 344
368. Annexure II 4 . DEPOSITS AND OTHER ACCOUNTS 20212020 In local In foreign Total In local In foreign Total currency currencies currencycurrencies Rupees in ‘000’ Customers Current deposits 14,637,500 413,124 15,050,624 11,129,196 361,767 11,490,963 Savings deposits 44,910,744 223,869 45,134,613 46,122,394 65,342 46,187,736 Term deposits 7,693,035 - 7,693,035 1,967,176 - 1,967,176 Others 1,545,903 - 1,545,903 1,581,404 - 1,581,404 68,787,182 636,993 69,424,175 60,800,170 427,109 61,227,279 Financial institutions Current deposits 221,033 41,503 262,536 216,155 - 216,155 Savings deposits 69,119 185 69,304 90,864 5,291 96,155 Term deposits 9,450,000 - 9,450,000 - - Others 81 - 81 - - 9,740,233 41,688 9,781,921 307,019 5,291 312,310 78,527,415 678,681 79,206,096 61,107,189 432,400 61,539,589 20212020 Rupees in ‘000’ 4.1 Composition of deposits - Individuals 15,034,600 13,391,543 - Government 22,981,647 24,840,912 - Public sector entities 1,244,608 430,596 - Banking companies 259,390 269,062 - Non-banking financial institutions 9,522,531 43,248 - Private sector 30,163,320 22,564,228 79,206,096 61,539,589 4.2 This includes deposits eligible to be covered under insurance arrangements of Deposit Protection Corporation amounted to Rs. 39,930,973 thousand (2020: Rs 30,735,192 thousand). 20212020 Rupees in ‘000’ 5. ISLAMIC BANKING BUSINESS UNAPPROPRIATED PROFIT Opening balance Add: Islamic banking (loss) / profit for the year 2,710,878 (160,746) 2,154,625 556,253 Closing balance 2,550,132 2,710,878 6. CONTINGENCIES AND COMMITMENTS - Guarantees 1,662,941 1,683,665 - Commitments 5,785,076 1,586,274 7,448,017 3,269,939 367
369. Annexure II 20212020 Rupees in ‘000’ 6.1Guarantees: Financial guarantees 68,200 78,900 Performance guarantees 851,135 765,088 Other guarantees 743,606 839,677 1,662,941 1,683,665 6.2Commitments: Documentary credits and short-term trade-related transactions - letters of credit 4,684,070 1,078,068 Commitments in respect of: - forward lending 1,101,006 508,206 5,785,076 1,586,274 6.2.2 Commitments in respect of forward lending Undrawn formal standby facilities, credit lines and other commitments to lend 1,101,006 508,206 6.2.2.1 These represent commitments that are irrevocable because they cannot be withdrawn at the discretion of the Bank without the risk of incurring significant penalty or expense. In addition, the Bank makes revocable commitments that do not attract any significant penalty or expense if the facility is unilaterally withdrawn. 20212020 Rupees in ‘000’ Claims against the Bank not acknowledged as debts 65,639 The amounts involved in the claims filed against the Bank are yet to be adjudicated by the concerned Courts as the same have been filed as outburst to our recovery suits. Uptill now, in no case, any claim has been adjudicated, determined or decreed by the Courts against the Bank. Moreover, there is no likelihood of decreeing the suits against the Bank because, the claims are frivolous. 20212020 Rupees in ‘000’ 7. PROFIT / RETURN EARNED OF FINANCING, INVESTMENTS AND PLACEMENT Profit earned on: Financing 2,705,740 3,209,835 Investments 1,530,172 1,543,985 Placements 351,056 291,047 Deposits with financial institutions 34,547 12,695 368 & Its Subsidiaries 4,621,515 5,057,562
370. Annexure II 20212020 Rupees in ‘000’ 8. PROFIT ON DEPOSITS AND OTHER DUES EXPENSED Deposits and other accounts Markup on lease liability against right-of-use assets Markup on borrowings from SBP Profit on deposits from conventional HO 1,944,056 195,434 2,860 65,953 2,317,614 181,732 49 59,259 2,208,303 2,558,654 9. The Bank calculates and files a single corporate tax return as per the requirements of Income Tax Ordinance, 2001. Segmental calculation is not required for filing. However, considering the format requirement of the financial statements to disclose Islamic Banking segment’s tax charge separately, a notional net tax credit for Islamic Banking is expected to be Rs. 52,114 thousand (2020: notional net tax charge of Rs. 234,071 thousand). 20212020 Rupees in ‘000’ 10. CHARITY FUND Opening balance 4,162 40,263 Additions during the year : Received from customers on account of delayed payment 833 11,259 Profit on charity saving account 131 982 964 Payments / utilization during the year : Health 5,126 12,241 48,342 Closing balance - 4,162 11. POOL MANAGEMENT 11.1 BOP TAQWA islamic banking division is maintaining following pools for profit declaration and distribution. i) General pool ii) Special pool-I (Equity) iii) Special pool-II iv) Special pool-IV v) Special pool-VII (PER) vi) Special pool-IX vii) Special pool-XIII viii) Special pool-XIV ix) Special pool-XV x) Special pool-XVI xi) Special pool-XVII xii) Special pool-XVIII xiii) Special pool-XIX xiv) Special pool-XX xv) Special pool-XXI xvi) Special pool-XXII 369
371. Annexure II 11 .2 370 xvii) Special pool-XXIII xviii) Special pool-XXIV xix) Special pool-XXV xx) Special pool-XXVI xxi) Special pool-XXVII (IERS Pool) xxii) Special pool-XXVIII xxiii) Special pool-XXIX xxiv) Special pool-XXX xxv) Special pool-XXXI xxvi) Taqwa Foreign Currency USD Pool xxvii) Taqwa Foreign Currency GBP Pool xxviii) Taqwa Foreign Currency EURO Pool xxix) USD special pool-I General pool The general pool comprises of depositors’ funds, Bank’s equity inclusive of current deposits and mudaraba placements from BOP head office. The Bank acts as fund manager (Mudarib) and invests the funds in shariah compliant modes of financings, investments and placements (remunerative assets). The profit of the pool is calculated on all the remunerative assets booked by the Bank and is shared amongst the members of the pool on pre-defined mechanism based on weightages announced before the commencement of period concerned. The distributable profit of the pool is finalized after deduction of direct expenses only while indirect expenses including administrative and general expenses are borne by BOP-IBD as Mudarib. a) Weightages for distribution of profit in general pool Profit is calculated on the basis of daily product balance in Mudaraba based depositors’ accounts and paid as per pre defined weightages. While considering weightages emphasis is given to the quantum, type and the period of risk assessed by following factors: • Contracted period, nature and type of deposit/ fund • Payment cycle of profit on such deposit/ fund, i.e. monthly, quarterly or on maturity • Magnitude of risk b) Identification and allocation of pool related income & expenses The distributable profit of the pool is finalized by including direct income earned by income generating / remunerative assets and after deducting direct expenses of the period concerned, while indirect expenses including administrative and general expenses are borne by BOP-IBD as Mudarib. c) Parameters associated with risk and rewards Following are the consideration attached with risk & reward of general pool: • Period, return, safety, security and liquidity of investment • Financing proposals under process at various stages and likely to be extended in the near future. • Expected withdrawals of deposits according to the maturities affecting the deposit base. • Maturities of funds obtained from principal office, Islamic Banking Institutions and Shariah compliant organizations as regulated in Pakistan. • Element of risk attached to various types of investments. • SBP rules & shariah clearance. & Its Subsidiaries
372. Annexure II 11 .3 Special pools The special pools comprise of depositors’ funds, Bank’s equity inclusive of current deposits and mudaraba placements from BOP head office. The Bank acts as Fund Manager (Mudarib) and invests the funds in shariah compliant modes of financings, investments and placements (remunerative assets). The profit of the pools is calculated on all the remunerative assets booked by the Bank and is shared amongst the members of the pool on pre-defined mechanism based on weightages announced before the commencement of concerned period. The distributable profit of the pool is finalized after deduction of direct expenses only while indirect expenses including administrative and general expenses are borne by BOP-TAQWA as Mudarib. a) Weightages for distribution of profit in special pools Profit is calculated on daily product basis and paid as per pre defined weightages. While considering weightages emphasis is given to the quantum, type and the period of risk assessed by following factors: • Contracted period, nature and type of deposit/ fund. • Payment cycle of profit on such deposit/ fund, i.e. monthly, quarterly or on maturity • Magnitude of risk b) Identification and allocation of pool related income & expenses The distributable profit of the pool is finalized by including direct income earned by income generating / remunerative assets and after deducting direct expenses of the period concerned, while indirect expenses including administrative and general expenses are borne by BOP-IBD as Mudarib. c) Parameters associated with risk and rewards Following are the consideration attached with risk & reward of general pool: • Period, return, safety, security and liquidity of investment • Financing proposals under process at various stages and likely to be extended in the near future. • Expected withdrawals of deposits according to the maturities affecting the deposit base. • Maturities of funds obtained from principal office, islamic banking institutions and shariah compliant organizations as regulated in Pakistan. • Element of risk attached to various types of investments. • SBP rules & shariah clearance. 371
373. Annexure II 11 .4 Avenues / sectors of economy / business where mudaraba based deposits have been deployed: 20212020 Rupees in ‘000’ Federal and provincial governments 20,567,121 9,602,269 Due from GOP - bai muajjal - 2,756,196 Placement with Financial Institutions 4,500,000 8,632,000 Ijara sukuk 4,502,908 2,249,071 Transport, storage, logistics and communication 157,013 186,055 Manufacturing and trading of food items 1,092,893 842,840 Manufacture of pesticides and other agro-chemical product - 68,137 Power generation 18,464,149 18,131,692 Manufacture of paper, paperboard and products thereof 507,914 614,086 Consumer car Ijarah 184,559 16,225 Consumer Housing / LCH 269,977 Textile composite / other 3,198,893 4,328,821 Cement & allied 3,920,171 3,138,939 Iron & steel industry 1,439,874 856,890 Rubber / plastic products etc. 1,340,342 198,648 Others 17,017,696 8,054,170 77,163,510 59,676,039 11.5 Charging expenses The direct expenses are being charged to the pool, while indirect expenses including the establishment cost is being borne by BOP IBD as Mudarib. The direct expenses to be charged to the pool may include cost of sales of inventories, insurance / takaful expenses of pool assets, stamp fee or documentation charges, brokerage fee for purchase of securities/commodities etc. 20212020 Rupees in ‘000’ Provisions Murabaha Istisna Ijarah Diminishing Musharika 79,995 10,000 195,320 1,144,565 50,009 10,000 186,380 412,396 1,429,880 658,785 11.6 Mudarib share (in amount and percentage of distributable income): 2021 2020 Rupees in Percentage Rupees in Percentage ‘000’ % ‘000’% Rupees in ‘000’ Rabbul mal Mudarib 2,058,478 1,482,331 58.14% 41.86% 2,250,493 1,715,683 56.74% 43.26% Distributable income 3,540,809 100.00% 3,966,176 100.00% 372 & Its Subsidiaries
374. Annexure II 11 .7 Amount & percentage of mudarib share transferred to depositors through Hiba: 20212020 Rupees in ‘000’ Mudarib share 1,482,331 Hiba 82,175 Hiba percentage of mudarib share 5.54% 1,715,683 173,347 10.10% This is not a special hiba as such. This hiba has been distributed across the board to all the investment account holders. Profit rate earned vs. profit rate distributed to the depositors during the year: Profit rate earned 7.49% 9.53% Profit rates distributed to depositors 3.57% 4.83% 373
375. BRANCH NETWORK Banking Sector No . of Branches No. of Sub-Branches Conventional 102 2 D.G. KHAN 53 - FSD 48 1 GUJ- R 51 1 GUJ- U 45 1 ISD 51 2 KHI 38 1 LHR- A 41 4 LHR- B 34 3 MUL 47 1 PSDD 8 - PSH 44 1 SGH 42 - SWL 46 1 Islamic 114 - Central I 13 - Central II 13 - Central III 8 - KHI & Balochistan 11 - North I 13 - North II 8 - North III 15 - South I 11 - South II 10 - South III 12 - 662 16 Grand Total 374 & Its Subsidiaries
376. PATTERN OF SHAREHOLDING OF SHARES As on December 31 , 2021 No. of Shareholders------Shareholding------ Physical CDC 1055 1517 624 937 143 47 32 17 46 7 5 2 2 2 1 1 1 1 1 1 1 1 1128 1832 1652 3581 1410 602 451 335 218 133 170 86 204 93 72 46 58 65 41 25 36 22 128 30 25 19 22 24 13 9 8 11 44 12 13 10 8 14 9 4 8 6 50 8 6 3 8 8 10 6 3 8 21 Total 2183 3349 2276 4518 1553 649 483 352 264 140 175 88 206 95 73 47 59 65 42 25 37 23 128 30 25 20 22 24 13 9 8 11 44 12 13 10 8 14 9 4 9 6 50 8 6 3 8 8 10 6 3 8 21 FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM From 1 101 501 1001 5001 10001 15001 20001 25001 30001 35001 40001 45001 50001 55001 60001 65001 70001 75001 80001 85001 90001 95001 100001 105001 110001 115001 120001 125001 130001 135001 140001 145001 150001 155001 160001 165001 170001 175001 180001 185001 190001 195001 200001 205001 210001 215001 220001 225001 230001 235001 240001 245001 TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO To Total Shares Held Physical 100 38,344 500 397,354 1000 462,437 5000 1,982,420 10000 973,701 15000 568,297 20000 565,974 25000 372,516 30000 1,205,519 35000 223,398 40000 189,771 45000 84,016 50000 97,708 55000 103,068 60000 57,936 65000 60,362 70000 65,923 75000 80000 79,812 85000 90000 89,454 95000 91,457 100000 105000 110000 115000 114,528 120000 125000 130000 135000 140000 145000 150000 155000 160000 165000 170000 175000 180000 185000 190000 189,640 195000 200000 205000 210000 215000 220000 225000 230000 235000 240000 245000 250000 CDC 42,724 715,019 1,522,855 10,295,590 11,318,862 7,723,184 8,320,709 7,810,861 6,244,972 4,425,737 6,532,143 3,686,795 10,091,541 4,915,144 4,221,426 2,905,434 3,999,515 4,815,321 3,213,405 2,080,509 3,194,875 2,045,612 12,758,550 3,083,148 2,722,562 2,145,685 2,609,835 2,968,210 1,677,483 1,203,574 1,111,038 1,573,657 6,563,966 1,840,054 2,061,928 1,639,881 1,344,866 2,430,506 1,611,917 734,366 1,508,679 1,159,863 9,991,030 1,624,291 1,245,000 637,000 1,752,000 1,795,100 2,292,204 1,399,887 718,039 1,943,236 5,241,358 Percentage Total 81,068 1,112,373 1,985,292 12,278,010 12,292,563 8,291,481 8,886,683 8,183,377 7,450,491 4,649,135 6,721,914 3,770,811 10,189,249 5,018,212 4,279,362 2,965,796 4,065,438 4,815,321 3,293,217 2,080,509 3,284,329 2,137,069 12,758,550 3,083,148 2,722,562 2,260,213 2,609,835 2,968,210 1,677,483 1,203,574 1,111,038 1,573,657 6,563,966 1,840,054 2,061,928 1,639,881 1,344,866 2,430,506 1,611,917 734,366 1,698,319 1,159,863 9,991,030 1,624,291 1,245,000 637,000 1,752,000 1,795,100 2,292,204 1,399,887 718,039 1,943,236 5,241,358 0.0031 0.0421 0.0751 0.4644 0.4650 0.3136 0.3361 0.3095 0.2818 0.1759 0.2543 0.1426 0.3854 0.1898 0.1619 0.1122 0.1538 0.1821 0.1246 0.0787 0.1242 0.0808 0.4826 0.1166 0.1030 0.0855 0.0987 0.1123 0.0635 0.0455 0.0420 0.0595 0.2483 0.0696 0.0780 0.0620 0.0509 0.0919 0.0610 0.0278 0.0642 0.0439 0.3779 0.0614 0.0471 0.0241 0.0663 0.0679 0.0867 0.0530 0.0272 0.0735 0.1983 375
377. No . of Shareholders------Shareholding------ Physical CDC 376 6 5 2 4 5 2 2 2 28 3 3 3 2 2 3 4 1 2 7 1 3 5 5 3 1 1 4 16 7 2 2 1 3 1 1 3 2 10 1 2 1 2 6 1 3 24 4 1 4 2 2 1 7 1 1 2 3 2 2 1 Total 6 5 2 4 5 2 2 2 28 3 3 3 2 2 3 4 1 2 7 1 3 5 5 3 1 1 4 16 7 2 2 1 3 1 1 3 2 10 1 2 1 2 6 1 3 24 4 1 4 2 2 1 7 1 1 2 3 2 2 1 FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM From 255001 260001 265001 270001 275001 280001 285001 290001 295001 300001 305001 310001 315001 320001 325001 330001 335001 340001 345001 350001 355001 360001 365001 375001 380001 385001 390001 395001 400001 405001 410001 415001 420001 425001 430001 435001 440001 445001 450001 460001 465001 470001 475001 485001 490001 495001 500001 510001 520001 525001 535001 540001 545001 550001 555001 560001 565001 570001 575001 585001 & Its Subsidiaries TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO To Total Shares Held Physical 260000 265000 270000 275000 280000 285000 290000 295000 300000 305000 310000 315000 320000 325000 330000 335000 340000 345000 350000 355000 360000 365000 370000 380000 385000 390000 395000 400000 405000 410000 415000 420000 425000 430000 435000 440000 445000 450000 455000 465000 470000 475000 480000 490000 495000 500000 505000 515000 525000 530000 540000 545000 550000 555000 560000 565000 570000 575000 580000 590000 CDC 1,554,000 1,314,159 540,000 1,097,000 1,394,500 563,000 575,000 586,381 8,397,500 911,940 925,500 941,000 634,000 646,241 986,769 1,332,468 340,000 686,000 2,449,000 351,500 1,073,500 1,820,316 1,843,474 1,135,000 385,000 386,000 1,577,776 6,400,000 2,818,697 819,053 830,000 420,000 1,273,500 427,000 434,000 1,315,500 888,000 4,492,000 452,000 925,500 469,735 945,502 2,871,500 487,500 1,483,000 11,999,264 2,009,104 513,500 2,089,000 1,059,500 1,073,500 543,057 3,846,000 554,000 558,000 1,127,993 1,702,818 1,150,000 1,155,500 590,000 Percentage Total 1,554,000 1,314,159 540,000 1,097,000 1,394,500 563,000 575,000 586,381 8,397,500 911,940 925,500 941,000 634,000 646,241 986,769 1,332,468 340,000 686,000 2,449,000 351,500 1,073,500 1,820,316 1,843,474 1,135,000 385,000 386,000 1,577,776 6,400,000 2,818,697 819,053 830,000 420,000 1,273,500 427,000 434,000 1,315,500 888,000 4,492,000 452,000 925,500 469,735 945,502 2,871,500 487,500 1,483,000 11,999,264 2,009,104 513,500 2,089,000 1,059,500 1,073,500 543,057 3,846,000 554,000 558,000 1,127,993 1,702,818 1,150,000 1,155,500 590,000 0.0588 0.0497 0.0204 0.0415 0.0527 0.0213 0.0217 0.0222 0.3176 0.0345 0.0350 0.0356 0.0240 0.0244 0.0373 0.0504 0.0129 0.0259 0.0926 0.0133 0.0406 0.0689 0.0697 0.0429 0.0146 0.0146 0.0597 0.2421 0.1066 0.0310 0.0314 0.0159 0.0482 0.0162 0.0164 0.0498 0.0336 0.1699 0.0171 0.0350 0.0178 0.0358 0.1086 0.0184 0.0561 0.4539 0.0760 0.0194 0.0790 0.0401 0.0406 0.0205 0.1455 0.0210 0.0211 0.0427 0.0644 0.0435 0.0437 0.0223
378. No . of Shareholders------Shareholding------ Physical CDC 7 1 2 2 2 1 3 2 3 1 1 2 1 1 2 6 1 1 1 1 1 1 1 2 2 1 1 2 1 1 2 1 15 1 1 1 3 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Total 7 1 2 2 2 1 3 2 3 1 1 2 1 1 2 6 1 1 1 1 1 1 1 2 2 1 1 2 1 1 2 1 15 1 1 1 3 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM From 595001 620001 635001 645001 655001 660001 695001 720001 725001 730001 735001 745001 750001 770001 780001 795001 800001 805001 820001 825001 840001 845001 865001 890001 895001 900001 910001 920001 925001 935001 945001 970001 995001 1000001 1005001 1015001 1020001 1045001 1050001 1055001 1060001 1070001 1115001 1120001 1125001 1130001 1150001 1170001 1190001 1195001 1205001 1210001 1215001 1245001 1255001 1270001 1295001 1300001 1345001 1490001 TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO To Total Shares Held Physical 600000 625000 640000 650000 660000 665000 700000 725000 730000 735000 740000 750000 755000 775000 785000 800000 805000 810000 825000 830000 845000 850000 870000 895000 900000 905000 915000 925000 930000 940000 950000 975000 1000000 1005000 1010000 1020000 1025000 1050000 1055000 1060000 1065000 1075000 1120000 1125000 1130000 1135000 1155000 1175000 1195000 1200000 1210000 1215000 1220000 1250000 1260000 1275000 1300000 1305000 1350000 1495000 CDC 4,200,000 625,000 1,280,000 1,300,000 1,320,000 662,000 2,100,000 1,446,303 2,184,100 731,500 740,000 1,500,000 750,500 774,500 1,568,000 4,800,000 803,500 806,500 825,000 829,500 845,000 850,000 865,500 1,786,500 1,800,000 905,000 915,000 1,847,742 930,000 936,958 1,900,000 970,500 14,995,500 1,001,000 1,010,000 1,019,000 3,067,562 1,048,512 1,054,000 2,118,500 1,062,000 1,075,000 1,118,000 1,121,000 1,127,500 1,132,605 1,154,000 1,175,000 1,191,000 1,200,000 1,206,500 1,215,000 1,217,000 1,247,500 1,257,500 1,275,000 1,300,000 1,300,500 1,350,000 1,495,000 Percentage Total 4,200,000 625,000 1,280,000 1,300,000 1,320,000 662,000 2,100,000 1,446,303 2,184,100 731,500 740,000 1,500,000 750,500 774,500 1,568,000 4,800,000 803,500 806,500 825,000 829,500 845,000 850,000 865,500 1,786,500 1,800,000 905,000 915,000 1,847,742 930,000 936,958 1,900,000 970,500 14,995,500 1,001,000 1,010,000 1,019,000 3,067,562 1,048,512 1,054,000 2,118,500 1,062,000 1,075,000 1,118,000 1,121,000 1,127,500 1,132,605 1,154,000 1,175,000 1,191,000 1,200,000 1,206,500 1,215,000 1,217,000 1,247,500 1,257,500 1,275,000 1,300,000 1,300,500 1,350,000 1,495,000 0.1589 0.0236 0.0484 0.0492 0.0499 0.0250 0.0794 0.0547 0.0826 0.0277 0.0280 0.0567 0.0284 0.0293 0.0593 0.1816 0.0304 0.0305 0.0312 0.0314 0.0320 0.0322 0.0327 0.0676 0.0681 0.0342 0.0346 0.0699 0.0352 0.0354 0.0719 0.0367 0.5672 0.0379 0.0382 0.0385 0.1160 0.0397 0.0399 0.0801 0.0402 0.0407 0.0423 0.0424 0.0426 0.0428 0.0437 0.0444 0.0451 0.0454 0.0456 0.0460 0.0460 0.0472 0.0476 0.0482 0.0492 0.0492 0.0511 0.0565 377
379. No . of Shareholders------Shareholding------ Physical CDC 378 2 1 1 1 1 1 1 1 1 1 2 1 1 1 1 2 1 4 1 1 1 1 2 1 1 2 1 1 1 1 1 1 2 1 1 1 2 1 1 1 3 2 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 Total 2 1 1 1 1 1 1 1 1 1 2 1 1 1 1 2 1 4 1 1 1 1 2 1 1 2 1 1 1 1 1 1 2 1 1 1 2 1 1 1 3 2 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM FROM From 1495001 1505001 1510001 1530001 1560001 1570001 1640001 1645001 1665001 1675001 1695001 1725001 1735001 1745001 1760001 1795001 1985001 1995001 2000001 2135001 2150001 2185001 2195001 2295001 2360001 2495001 2515001 2715001 2725001 2760001 2895001 2950001 2960001 3010001 3095001 3330001 3495001 3500001 3555001 3610001 3995001 4495001 4515001 4600001 4645001 4695001 4800001 4945001 4995001 5005001 5925001 6455001 6475001 6780001 7600001 7995001 8245001 8495001 8925001 8960001 & Its Subsidiaries TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO TO To Total Shares Held Physical 1500000 1510000 1515000 1535000 1565000 1575000 1645000 1650000 1670000 1680000 1700000 1730000 1740000 1750000 1765000 1800000 1990000 2000000 2005000 2140000 2155000 2190000 2200000 2300000 2365000 2500000 2520000 2720000 2730000 2765000 2900000 2955000 2965000 3015000 3100000 3335000 3500000 3505000 3560000 3615000 4000000 4500000 4520000 4605000 4650000 4700000 4805000 4950000 5000000 5010000 5930000 6460000 6480000 6785000 7605000 8000000 8250000 8500000 8930000 8965000 CDC 3,000,000 1,509,000 1,515,000 1,531,334 1,563,500 1,575,000 1,642,561 1,650,000 1,666,336 1,679,000 3,400,000 1,729,500 1,737,000 1,750,000 1,765,000 3,600,000 1,988,000 8,000,000 2,004,000 2,137,500 2,153,000 2,190,000 4,400,000 2,296,998 2,363,000 5,000,000 2,520,000 2,717,000 2,726,000 2,763,000 2,900,000 2,951,850 5,924,500 3,015,000 3,096,566 3,332,000 7,000,000 3,503,500 3,559,064 3,611,000 12,000,000 9,000,000 4,519,025 4,602,000 4,647,500 4,700,000 4,804,500 4,948,500 5,000,000 5,007,000 5,925,500 6,459,500 6,476,000 6,785,000 15,205,000 8,000,000 8,246,500 8,500,000 8,928,383 8,961,500 Percentage Total 3,000,000 1,509,000 1,515,000 1,531,334 1,563,500 1,575,000 1,642,561 1,650,000 1,666,336 1,679,000 3,400,000 1,729,500 1,737,000 1,750,000 1,765,000 3,600,000 1,988,000 8,000,000 2,004,000 2,137,500 2,153,000 2,190,000 4,400,000 2,296,998 2,363,000 5,000,000 2,520,000 2,717,000 2,726,000 2,763,000 2,900,000 2,951,850 5,924,500 3,015,000 3,096,566 3,332,000 7,000,000 3,503,500 3,559,064 3,611,000 12,000,000 9,000,000 4,519,025 4,602,000 4,647,500 4,700,000 4,804,500 4,948,500 5,000,000 5,007,000 5,925,500 6,459,500 6,476,000 6,785,000 15,205,000 8,000,000 8,246,500 8,500,000 8,928,383 8,961,500 0.1135 0.0571 0.0573 0.0579 0.0591 0.0596 0.0621 0.0624 0.0630 0.0635 0.1286 0.0654 0.0657 0.0662 0.0668 0.1362 0.0752 0.3026 0.0758 0.0809 0.0814 0.0828 0.1664 0.0869 0.0894 0.1891 0.0953 0.1028 0.1031 0.1045 0.1097 0.1117 0.2241 0.1140 0.1171 0.1260 0.2648 0.1325 0.1346 0.1366 0.4539 0.3404 0.1709 0.1741 0.1758 0.1778 0.1817 0.1872 0.1891 0.1894 0.2241 0.2443 0.2450 0.2566 0.5751 0.3026 0.3119 0.3215 0.3377 0.3390
380. No . of Shareholders------Shareholding------ Physical CDC Total From To Total Shares Held Physical CDC Percentage Total 1 1 FROM 9455001 TO 9460000 9,459,478 9,459,478 0.3578 1 1 FROM 9495001 TO 9500000 9,500,000 9,500,000 0.3593 1 1 FROM 9995001 TO 10000000 10,000,000 10,000,000 0.3783 1 1 FROM 10275001 TO 10280000 10,279,500 10,279,500 0.3888 1 1 FROM 10910001 TO 10915000 10,913,500 10,913,500 0.4128 1 1 FROM 11350001 TO 11355000 11,351,934 11,351,934 0.4294 1 1 FROM 11745001 TO 11750000 11,750,000 11,750,000 0.4445 1 1 FROM 13445001 TO 13450000 13,447,500 13,447,500 0.5087 1 1 FROM 18120001 TO 18125000 18,121,000 18,121,000 0.6854 1 1 FROM 19105001 TO 19110000 19,108,500 19,108,500 0.7228 1 1 FROM 20050001 TO 20055000 20,053,231 20,053,231 0.7585 1 1 FROM 22065001 TO 22070000 22,070,000 22,070,000 0.8348 1 1 FROM 33315001 TO 33320000 33,320,000 33,320,000 1.2604 1 1 FROM 34770001 TO 34775000 34,770,500 34,770,500 1.3152 1 1 FROM 47895001 TO 47900000 47,900,000 47,900,000 1.8119 1 1 FROM 70695001 TO 70700000 70,697,465 70,697,465 2.6742 1 1 FROM 130335001 TO 130340000 130,335,500 130,335,500 4.9301 1 1 FROM 1519400001 TO 1519405000 1,519,404,845 1,519,404,845 57.4728 4445 13231 17676 1,527,418,480 1,116,273,900 2,643,692,380 100.0000 CATEGORIES OF SHAREHOLDERS As on December 31, 2021 Shareholder Category No. of Shareholders Physical Total No. of Shares Held CDCTotal Physical DIRECTORS 1 2 3 PROVINCIAL GOVERNMENT 1 0 1 ASSOCIATED COMPANIES FOREIGN FUNDS INDIVIDUALS (FOREIGN) INDIVIDUALS (LOCAL) 2,740 1,519,404,845 CDC 5,000 0 %Age Total 7,7400.0003% 1,519,404,845 57.4728% 0 0 0000 0.0000% 29 4 33 63,134 10,077,586 10,140,720 0.3836% 0 13 13 0 936,595 936,595 0.0354% 4,381 12,997 17,378 7,792,102 751,256,819 759,048,921 28.7117% 18 41 59 87,741 178,277,348 178,365,089 6.7468% 0 2 2 0 3,175 3,175 0.0001% 4 4 0 302,398 302,398 0.0114% BANK/NBFI/FIN.INST./INSURANCE CO./ MODARABAS MUTUAL FUNDS LEASING COMPANIES CHARITABLE TRUSTS 0 COOPERATIVE SOCIETIES 0 0 0000 0.0000% NIT 0 ICP 1 JOINT STOCK COMPANIES 14 OTHERS 0 TOTAL 4,445 5 5 0 1 145 0 975 159 66,943 18 18 13,231 17,676 3,061,000 0 97,875,668 3,061,000 0.1158% 9750.0000% 97,942,611 3.7048% 0 74,478,311 74,478,3112.8172% 1,527,418,480 1,116,273,900 2,643,692,380100.0000% 379
381. CATEGORIES OF SHAREHOLDING REQUIRED UNDER CODE OF CORPORATE GOVERNANCE (CCG) As on December 31, 2021 Sr. No. Name No. of Shares Held Percentage Associated Companies, Undertakings and Related Parties (Name Wise Detail): - Mutual Funds (Name Wise Detail) 1 CDC - TRUSTEE ABL STOCK FUND 503,500 0.0190% 2 CDC - TRUSTEE AKD INDEX TRACKER FUND 264,659 0.0100% 3 CDC - TRUSTEE AKD OPPORTUNITY FUND 2,000,000 0.0757% 4 CDC - TRUSTEE ALFALAH GHP ALPHA FUND 1,765,000 0.0668% 5 CDC - TRUSTEE ALFALAH GHP STOCK FUND 4,804,500 0.1817% 6 CDC - TRUSTEE ALFALAH GHP VALUE FUND 1,121,000 0.0424% 7 CDC - TRUSTEE FAYSAL MTS FUND - MT 7,601,000 0.2875% 8 CDC - TRUSTEE FIRST CAPITAL MUTUAL FUND 25,000 0.0009% 9 CDC - TRUSTEE FIRST HABIB ASSET SLLOCATION FUND 328,000 0.0124% 10 CDC - TRUSTEE FIRST HABIB STOCK FUND 995,500 0.0377% 11 CDC - TRUSTEE HBL INCOME FUND - MT 376,500 0.0142% 12 CDC - TEUSTEE NBP BALANCED FUND 2,500 0.0001% 13 CDC - TEUSTEE NBP FINANCIAL SECTOR FUND 774,500 0.0293% 14 CDC - TRUSTEE NBP FINANCIAL SECTOR INCOME FUND - MT 166,000 0.0063% 15 CDC - TRUSTEE NBP MAHANA AMDANI FUND - MT 14,500 0.0005% 16 CDC - TEUSTEE NBP STOCK FUND 5,925,500 0.2241% 17 CDC - TRUSTEE UBL RETIREMENT SAVINGS FUND - EQUITY SUB FUND 9,500 0.0004% 18 MC FSL - TRUSTEE JS GROWTH FUND 4,647,500 0.1758% 19 TRUSTEE-BMA CHUNDRIGAR ROAD SAVINGS FUND 10,000 0.0004% Directors and their Spouse and Minor Children (Name Wise Detail): 1 MS. NADIA REHMAN 2,740 0.0001% 2 MR. ASIF REZA SANA (CDC) 2,500 0.0001% 3 MR. MOHAMMAD MUDASSIR AMRAY (CDC) 2,500 0.0001% Public Sector Companies & Corporations: 1,519,404,84557.4728% Banks, Development Finance Institutions, Non Banking Finance 147,033,6055.5617% Companies, Insurance Companies, Takaful, Modarabas and Pension Funds: Shareholders holding five percent or more voting intrest in the listed company (Name Wise Detail) S. No. Name Holding Percentage 1 GOVERNMENT OF THE PUNJAB 1,519,404,845 57.4728% All trades in the shares of the listed company, carried out by its Directors, Executives and their spouses and minor children shall also be disclosed: S.No Name Sale 380 NIL & Its Subsidiaries Purchase
382. FORM OF PROXY I /We_______________________________________________S/o D/o W/o __________________________________________ of___________________ ____________________________________________________________________________ being a member of The Bank of Punjab and holder of __________________ ordinary shares as per share Registered Folio No.______________________________and/or CDC Participant ID No.__________________ and Account/Sub-Account No.____________________ do hereby appoint Mr./Mrs./Mis s_____________________________________________________ Folio No./CDC No.____________________ CNIC #_____________________________of ______________________________ as my/our proxy and to attend, speak and vote for me/us on my/our behalf at the Annual General Meeting of the Bank to be held on Wednesday, 30th March 2022 at 11:30 a.m. at Avari Hotel, Shahra-e-Quaid-e-Azam, Lahore and at any adjournment thereof in the same manner as I/we myself/ourselves would vote if personally present at such meeting. Signed this_______________________________________Day of _______________ 2022. Affix Revenue Stamp of Rs.50/Signature The signature should agree with the specimen registered with the Company WITNESSES: 1. Signature: _______________________________ 2. Signature: _______________________________ Name: ___________________________________ Name: __________________________________ Address: ________________________________ Address: _________________________________ ________________________________________ __________________________________ CNIC or Passport No. _______________________________ CNIC or Passport No. _____________________________ IMPORTANT NOTES: 1. A member entitled to attend and vote at a meeting is entitled to appoint another person as a proxy to attend, speak and vote for him/her. The proxy appointed should be a member of The Bank of Punjab. 2. For additional copies of the instrument of proxy, the shareholder may use photocopies of the instrument. 3. An instrument of proxy and a Power of Attorney or other authority (if any) under which it is signed, or notarized copy of such Power of Attorney must be valid and deposited at the Registered Office of the Bank not less than 48 hours before the time of the meeting. In calculating the 48 hours, no account shall be taken of any part of the day that is not a working day. 4. For CDC Account holders/Corporate Entities: i) ii) iii) 5. If a member appoints more than one proxy and more than one instrument of proxies are deposited with the Share Registrar, all such instruments of proxy shall be rendered invalid. 6. Members are requested to immediately notify changes in their registered address, if any, to Bank’s Share Registrar M/s. CORPLINK (Pvt) Limited, Wings Arcade, 1-K, Commercial, Model Town, Lahore before start of the book closure so that entitlement, if any, be dispatched at the correct address. Attested copies of Computerized National Identity Cards (CNIC) or the Passport of the beneficial owners and the proxy shall be provided with proxy form. The proxy shall produce his/her original CNIC or Passport at the time of meeting. In case of corporate entity, the Board of Directors’ resolution/power of attorney with specimen signatures shall be submitted along with proxy form to the company. 381
383. AFFIX The Company Secretary THE BANK OF PUNJAB BOP Tower , 10-B, Block-E-II, Main Boulevard, Gulberg-III, Lahore. Ph: 35783700-10 382 & Its Subsidiaries CORRECT POSTAGE
384. 383
385. AFFIX The Company Secretary THE BANK OF PUNJAB BOP Tower , 10-B, Block-E-II, Main Boulevard, Gulberg-III, Lahore. Ph: 35783700-10 384 & Its Subsidiaries CORRECT POSTAGE
386. 10-B , E-II, Main Boulevard, Gulberg III, Lahore www.bop.com.pk I 111 267 200