Meezan Bank: Annual Report 2019

Transcription

3. DIGITAL INNOVATION The history of mankind is marked by three industrial revolutions that have changed the world we live in . Today, as we stand at the horizon of the new decade, we are experiencing the fourth revolution – that of digitalization, which is transforming how people live, work & communicate. The dawn of the new decade brings with it new challenges and opportunities. We are about to face some of the biggest disruptions in the way we do business and believe that only those companies, especially in the financial services industry, that are agile, innovative and can effectively use technology to improve their services, are the ones that will succeed in the times ahead. It is often said that today’s consumers are living in the most exciting time in the history of mankind – and also perhaps the most disruptive. At Meezan Bank, our key focus has been on harnessing technology to ensure that in this exciting digital age, our customers’ banking experiences are pleasant, secure and convenient; the emphasis is on improving the ‘customer experience’.
4. DIGITAL CONVENIENCE SIMPLE AND SECURE INTERNET BANKING AND SMARTPHONE BANKING APP For us , true customer convenience means making the widest possible range of banking services available to our customers, at all times, wherever they may be. Our new Smartphone banking app makes this possible by providing a quick and easy interface through which customers can check balances, download statements, transfer funds, pay bills, block or unblock debit cards and do much more - 24 hours a day, anywhere in the world. With biometric login, they can securely log into the App using facial recognition or fingerprint technology. The App has been designed to ensure that any transaction can be completed in less than 30 seconds. Our Internet Banking interface offers an intuitive, customizable portal through which customers can perform a wide range of banking transactions such as issuing pay orders, managing mutual fund investments, accessing transaction receipts, managing cheques and downloading detailed account statements. As we continue to innovate, our focus is on developing new systems and security features that ensure that our Smartphone banking app and Internet Banking provide our customers the best security and convenient banking at their fingertips.
7. DIGITAL PAYMENTS FonePay As times are changing , our customers' payments needs are evolving. From being a largely cash-based society, Pakistanis are quickly adapting to new technologies to meet their day-to-day financial needs. Fortunately, Meezan Bank, being focused on the marriage of technology and banking, is uniquely positioned to partner with many of the country's leading FinTechs and startups. This is leading to the development of many new payment and money transfer systems, which is not only reducing dependence on cash, but is also contributing significantly towards financial inclusion and documentation of the economy. As a part of our strategy to collaborate with Fintechs to support innovation and grow the payments ecosystem, we signed up with Fonepay in 2017 which has now grown into the largest processor of QR Payments in Pakistan. Meezan Bank acquired over 10 Million QR transactions via Fonepay and MasterQR in 2019. Additionally, the Bank also partnered with Foree, a State Bank regulated payment and financial services provider and Nayapay, an upcoming fintech under EMI regulation, as the key settlement and trust bank. We will continue supporting aspiring Fintechs to strengthen our position as the most forward looking and Fintech friendly bank in Pakistan.
9. DIGITAL CARDS A WIDE RANGE OF SECURE AND VERSATILE VISA AND MASTERCARD DEBIT CARDS T DEBI plati 5 245 SOH A debit 8 8 0 0 890 567 567 789 789 6 7 234 456 234 456 345 1 1 2 3 1 1 2 3 250 211 250 211 5 5 5 5 75 5 75 45 5 24 / 25 1/ 2 14/ 32 15/ 22 14/ 32 15/ 2 num 2 211 VALID 0 THRU 20 ZA 01/ IL RA 5245 VALID FROM T DEBI VALID 0 VALID 0 1 THRU THRU 5245 20 20 20 A ID 01/ 01/ AZA VAL 01/ RAZ FROM AIL R HAIL 5245 VALID FROM SOH SO 0 VALID 0 VALID 0 5 5 THRU THRU 437 20 20 ID 01/ 0 1 / L S Y E D VAL ZIA FROM EE RAM 437 VAL ID FROM NAB AK The term digital cards appears to be an oxymoron at first glance, but this term truly reflects how much card payment systems have evolved over the last few years. Meezan Bank has the privilege of being at the forefront of this evolution in Pakistan, being the first bank in the country to offer many new features and advancements to our customers. We were the first bank to start issuing Near Field Communication (NFC) enabled debit cards in Pakistan - a technology that is quickly being adopted in the rest of the world to make payments by just tapping the card at the terminal without handing it over to anyone which makes the card usage very safe. We were also the first bank to introduce the Chip-and-PIN enabled Mastercard and Visa Debit Cards. These cards require additional security of PIN code to authenticate the transaction, hence these cards cannot be used if lost or stolen. We were also amongst the first few banks to launch 3DSecure for online payments using debit cards with two factor authentication. Meezan Bank’s customers can enjoy the convenience of safe and secure online payments from the comfort of their homes without any need for prior activation of their debit cards.
11. DIGITAL FOOTPRINT LARGEST SOCIAL MEDIA PRESENCE AMONG BANKS IN PAKISTAN Meezan Bank has the largest social media presence on Facebook , LinkedIn and Instagram in the banking industry of Pakistan. We also have significant following on Twitter, as well as a growing base of subscribers on YouTube where Meezan Bank is one of the only three banks in the country with over 1 million video views. Our user-friendly responsive website which recorded more than 4.9 million visits during 2019, is also an integral part of these digital channels. Every day, our digital footprint is increasing and our online presence is getting stronger. By using digital media efficiently and using advanced data analysis, we are able to deliver engaging, and more importantly, relevant communication to our customers. Through our digital channels, we are also enabling our customers to connect with us at their convenience for product inquiries and regular banking queries, saving them a visit to the branch or a call at the helpline; resulting in reduced load on these traditional channels and affording more ease to our customers.
13. DIGITAL PROTECTION ENSURING A SECURE BANKING EXPERIENCE FOR ALL OUR CUSTOMERS In today ’s world, where digital financial transactions are the norm, it is of utmost importance that our customers are safe from any online threat to their account. At Meezan Bank, we work hard, using the best available technology, to ensure that our customers’ accounts and banking transactions are safe and secure. Since the threat of debit card fraud at ATMs through ‘skimming’ is now a reality, we have implemented a security measure called SkimGuard, which automatically activates if sums exceeding a certain amount are requested for withdrawal from our customer’s account through an ATM, requiring the customer to confirm their identity using a code sent to their registered mobile number. For online transactions, we were one of the first banks to offer 3D Secure Debit Cards to our customers, controlling the possibility of online fraud on their cards, through two-factor authentication using their mobile phones and email addresses. Our ATMs now offer a wide variety of services using biometric identity verification, such as cash withdrawal, debit card activation etc. obviating the need to carry your debit card with you when going to the ATM. We continue to innovate, developing new services every day, helping make the digital world a better and safer place for our customers.
14. ABOUT THIS ANNUAL REPORT An Integrated Report The Annual Report and accounts have been prepared in accordance with the Integrated Reporting Framework to present the Bank ’s performance during year 2019. Its content is derived from finding out what is most important to the Bank and its stakeholders and focuses on qualitative and quantitative evidence to present the Bank’s performance. The adoption of the integrated framework is in its preliminary stages and the Bank will continue to improve on the information mentioned in this report. This report combines sustainability-related and corporate social responsibility topics along with the other information a reader would expect from an annual report including financial targets and performance information. Throughout this report, the Bank has made sincere efforts to keep its stakeholders abreast of key developments and initiatives, market challenges, achievements and the overall health of its operations in 2019. The Bank’s financial statements are independently audited and provide an in-depth and transparent disclosure of its financial performance. In preparing this report, the Bank was guided by the local statutory and regulatory requirements and is also in compliance with the following: ■ Banking Companies Ordinance, 1962 ■ Companies Act, 2017 ■ Listed Companies (Code of Corporate Governance) Regulations, 2017 ■ International Financial Reporting Standards ■ Islamic Financial Accounting Standards ■ Directives issued by the State Bank of Pakistan and Securities Exchange Commission of Pakistan Report Structure This Annual Report has been structured to provide a coherent read throughout and aims to provide a clear and compelling picture of how Meezan Bank creates long-term and sustainable value through its operations. Its content has been derived by what the Bank’s stakeholders and Meezan Bank itself, think are the most important elements of its performance. The Bank’s stakeholders and how the Bank interacts with them are explored in more depth later on. It also reflects the Bank’s strategic objectives, meaningful and most relevant indicators, performance, developments, governance, risks identified by the Bank’s risk management team as well as the opportunities identified in the Bank’s operating environment along with qualitative and quantitative assessment.
15. Audience The Annual Report and Financial Statements have been prepared to provide information to the Bank ’s stakeholders including investors (equity shareholders, Sukuk holders and prospective investors), employees, customers, regulators, research analysts, credit rating agencies and society at large. The annual accounts were approved by the Board of Directors on February 12, 2020 and signed on its behalf by the Chairman, CEO, CFO and two Directors. Reporting Period The 2019 Annual Report covers the financial and non-financial performance of Meezan Bank from the period January 01, 2019 to December 31, 2019. Any adjusting material events after this date and up to the Board of Directors approval date of February 12, 2020 have also been included. Publication Period Within 3 months of the date of the Statement of Financial Position. External Assurance The Bank’s financial statements are audited by external auditors, EY Ford Rhodes, Chartered Accountants and provide an in-depth and transparent disclosure of its financial performance. As a regulatory requisite, the auditors are rotated every five years to ensure their independence and transparency. Availability This report is printed for a limited audience and dispatched upon request. It is available online on the Bank’s official website in PDF in English as well as in electronic CD form. All three formats may be considered the audited, legally leading document. Some Facts about the Report ■ The reporting in the 2019 financial year is based on the same principle as the 2018 report. Any changes in the methods of calculation are explained in the text. ■ The cover and theme of the report depict the Bank’s commitment towards digital innovation and reinforces its aim to provide seamless Shariah-compliant financial solutions to its customers, people and partners. For further clarification and feedback on this report, please contact through the following email id: investor.relations@meezanbank.com When you see this icon, you will find more information on another page of this report When you see this icon, you will find more information on our website
16. CONTENTS Organizational Overview & External Environment 18 18 18 21 22 24 25 25 26 27 28 29 30 36 38 40 57 58 Performance Vision Mission Our Culture Quaid’s concept of Islamic Banking Highlights 2019 Our Presence Corporate Profile Credit Rating Shareholders Corporate Information Senior Management Team Organization Structure History of Meezan Bank Awards & Recognition Chairman’s Review Directors’ Report to the Members Directors’ Report to the Members (Urdu) Annexure to the Directors’ Report 62 Our Business Model 64 Business and Operations Review 92 Key Figures at a Glance 94 Six Years’ Horizontal Analysis 95 Six Years’ Vertical Analysis 96 Review of Six Years’ Performance 98 Financial Analysis 100 Market Statistics of Meezan Bank’s Share 101 Analysis of Non-Financial Performance 103 Cash Flow 104 Summary of Cash Flow 105 Allocation of Income and Expenses to Remunerative Depositors’ Pool 106 Statement of Value added and Distributed 107 How We Distribute the Value Created 108 Statement of Inventory 108 Statement of Financing Portfolio Income 109 Calendar of Major Events 110 Marketing & Corporate Communication Strategy & Resource Allocation Risk Management 114 115 115 115 116 SWOT Analysis Strategic Objectives Strategies in Place Resource Allocation Key Performance Indicators and Future Relevance 117 Products and Services 128 Risk Management Framework 129 Risk & Opportunity Report 134 Business Continuity Plan
17. Governance Stakeholders Relationship and Engagement 138 Best Corporate Governance Practices 139 Board Composition 140 Board of Directors 144 Shariah Supervisory Board 147 Board Committees 149 Management Committees 152 Performance Evaluation of the Board of Directors 153 Roles and Responsibilities 155 Election of the Board of Directors 156 Other Matters related to Corporate Governance 158 Report of the Board Audit Committee 159 Review Report to the Members 160 Statement of Compliance with Listed Companies Code of Corporate Governance 162 Statement of Internal Controls 163 Shariah Supervisory Board Report 171 Shariah Supervisory Board Report (Urdu) 172 Statement of Sources and Uses of Charity Fund Policies and Guidelines 173 Standard of Ethics, Business Practices & Code of Conduct 175 Guidelines on Whistle-Blowing 176 Guidelines for Safety of Records of the Company 176 Summary of Corporate Social Responsibility Policy 176 Summary of Sustainability Policy 177 Summary of Green Banking Policy 177 Summary of Information Security Policy 178 IT Governance Policy 179 Salient Features - Directors’ Remuneration Policy 182 How We Engage with Our Stakeholders 186 Investors’ Relations Section on Corporate Website 186 Steps to Encourage Minority Shareholders’ Participation in AGM 186 Summary of Analyst Briefings Sustainability & Corporate Social Responsibility 190 Corporate Social Responsibility Report 194 Sustainability Report 203 Meezan Bank’s Contribution to United Nations Sustainable Development Goals Unconsolidated Financial Statements 206 Auditors’ Report to the Members 211 Statement of Financial Position 212 Profit and Loss Account 213 Statement of Comprehensive Income 214 Statement of Changes in Equity 215 Cash Flow Statement 216 Notes to and forming part of the Financial Statements 284 Statement showing writtenoff Financing (Annexure 1) Consolidated Financial Statements 288 Auditors’ Report to the Members 293 Statement of Financial Position 294 Profit and Loss Account 295 Statement of Comprehensive Income 296 Statement of Changes in Equity 297 Cash Flow Statement 298 Notes to and forming part of the Financial Statements 370 Statement showing writtenoff Financing (Annexure 1) Additional Information 374 Pattern of Shareholding 376 Categories of Shareholders 377 Correspondent Banking Network 383 Branch Network 400 Glossary 409 Notice of Annual General Meeting (AGM) 415 Dividend Mandate Form 417 Proxy Form
19. ORGANIZATIONAL OVERVIEW & EXTERNAL ENVIRONMENT 18 18 18 21 22 24 25 25 26 27 28 29 30 36 38 40 57 58 Vision Mission Our Culture Quaid’s concept of Islamic Banking Highlights 2019 Our Presence Corporate Profile Credit Rating Shareholders Corporate Information Senior Management Team Organization Structure History of Meezan Bank Awards & Recognition Chairman’s Review Directors’ Report to the Members Directors’ Report to the Members (Urdu) Annexure to the Directors’ Report
20. VISION Establish Islamic banking as banking of first choice ... MISSION To be a premier Islamic bank, offering a one-stop shop for innovative value-added products and services to our customer within the bounds of Shariah... OUR CULTURE Core Values: Shariah compliance Integrity Service Excellence Staff: Committed, motivated and professionally trained employees who are empathic to their customers’ needs. Brand Personality: A sober and established, strong, empathic, professional person; who is an extremely loyal and dependable friend and business partner, and is committed to offering comprehensive value-based Shariah-compliant financial solutions. Relationships: Our relationships are long-term.We recognize and value our customers’ needs above all and strive to ensure their fulfillment. All customers are treated with professionalism and in a friendly manner. It is our endeavour to ensure that they receive efficient and timely service. The Meezan Bank experience is a unique one.
23. QUAID ’S CONCEPT OF ISLAMIC BANKING “I shall watch with keenness the work of your Research Organization in evolving banking practices compatible with Islamic ideas of social and economic life. The economic system of the West has created almost insoluble problems for humanity and to many of us it appears that only a miracle can save it from disaster that is now facing the world. It has failed to do justice between man and a man and to eradicate friction from the international field. On the contrary, it was largely responsible for the two world wars in the last half century. The Western world, inspite of its advantages of mechanisation and industrial efficiency is today in a worse mess than ever before in history. The adoption of Western economic theory and practice will not help us in achieving our goal of creating a happy and contended people. We must work our destiny in our own way and present to the world an economic system based on true Islamic concept of equality of manhood and social justice. We will thereby be fulfilling our mission as Muslims and giving to humanity the message of peace which alone can save it and secure the welfare, happiness and prosperity of mankind.” Quaid-e-Azam Mohammad Ali Jinnah Founder of the Islamic Republic of Pakistan On the occasion of the Opening Ceremony of The State Bank of Pakistan on July 1, 1948.
24. Highlights 2019 With the Addition of 100 branches 6th Largest Bank of Pakistan 760 branches in 223 cities Lead Arranger Led the Issuance of the Largest Shariah-compliant highest number of wind power projects Instrument in Pakistan with a total capacity of Rs 200 Billion 200MW Pakistan Energy Sukuk-I IFFSA ISLAMIC FINANCE FORUM OF SOUTH ASIA Islamic Finance Forum of South Asia 2019 HONORARY AWARD IN RECOGNITION FOR THE CONTRIBUTION TO THE IBF INDUSTRY Special Award in recognition of Contribution to the IBF Industry Globally recognized as Bank of the Year , Pakistan by The Banker a publication by The Financial Times Ltd. Launch of new Meezan Mobile Banking App, highest-rated Mobile Banking App in Pakistan on Play Store World’s Best Banks -Asia Pacific by Global Finance, New York
25. Deposits 1 ,121 15.23 933 Profit After Tax Total Assets Rs Rs Billion Billion Earnings Per Share Billion Deposit Growth 11.84 19 Rs % Biometric Enablement on Nationwide ATM Network + 11,500 Employees Rs and Ambassadors of Islamic Banking First bank to cross 1 Billion e-commerce Rs spend in a month on Debit Cards in Pakistan Only bank to launch SkimGuard protection for its customers on ATMs of other banks Installation of Solar Power systems at Head Office & 10 branches reducing 158,000 kgs of CO2 emissions
26. Our Presence   Branches ATMs Federal 34 38 Punjab 406 374 Sindh 238 246 KPK 48 46 Baluchistan 25 17 AJK 6 6 Gilgit Baltistan 3 2 760 729 Total Meezan Bank provides real-time online banking facility through an extensive network of 760 branches in more than 220 cities across Pakistan. For detailed addresses, please refer to Branch Network annexed in this report. 24 MEEZAN BANK LIMITED
27. Corporate Profile Founded with the Vision to ‘Establish Islamic banking as banking of first choice...’, the Bank commenced operations in 1997 as Al Meezan Investment Bank Limited. It converted to Meezan Bank Limited, a full-fledged Islamic commercial bank in 2002, when the State Bank of Pakistan issued it Pakistan’s first Islamic Commercial Banking license. Concurrently, the Bank acquired the Pakistan operations of Societe Generale, and started commercial banking with a small network of four branches, that has now grown to become one of the largest banking networks in the country with 760 branches in over 220 cities. Meezan Bank is a publicly listed company sponsored by leading financial institutions from Pakistan and the Middle East. The Bank offers a complete range of Islamic banking products and services through an extensive retail banking network. Meezan Bank has a strong Shariah compliance setup that comprises of a dedicated Shariah Compliance Department, a Resident Shariah Board Member and a Shariah Supervisory Board comprising of internationally renowned Shariah scholars. The Bank is well-recognized for its product development capability, Islamic banking research and advisory services, at both national and international levels. Credit Rating The VIS Credit Rating Company Limited, (Formerly JCR-VIS Credit Rating Company) has reaffirmed the Bank’s long-term entity rating to AA+ (Double A Plus) and short-term rating at A1+ (A One Plus) with stable outlook. The short-term rating of A1+ is the highest standard in short-term rating. The rating indicates sound performance indicators of the Bank. Meezan Bank is the only full-fledged Islamic bank with AA+ credit rating in the Islamic banking industry of Pakistan. 2019 2018 Long Term AA+ AA+ Short Term A1+ A1+
28. Shareholders Noor Financial Investment Company Noor Financial Investment Company is a Kuwaiti investment company engaged in investment and financial activities primarily in Kuwait , the Middle East, Asia and other emerging markets. The company was established as the financing arm of the National Industries Group (NIG), which is one of the largest private sector industrial groups in Kuwait. Noor Investment provides a broad range of financial services through its investment banking department. These activities/services broadly include private equity, investment strategy & implementation, mergers & acquisition advisory, valuations, hedging & risk management, local / foreign listing, long-term financial planning and innovative structuring. The asset management department of the company also engages in managing proprietary and client portfolios of quoted and unquoted securities, real estate and funds in Kuwait, GCC and the MENA region. Pakistan Kuwait Investment Company Pakistan Kuwait Investment Company (Private) Limited (PKIC), a joint venture between the Governments of Pakistan and Kuwait was established in 1979. PKIC is one of the most respected and profitable institutions in Pakistan. The company, operating for over 30 years in Pakistan, is engaged in investment and development banking activities in Pakistan. PKIC is the first financial institution in Pakistan that has been rated AAA (triple A) for the long-term by both PACRA and VIS Credit Rating Company, an affiliate of Japan Credit Rating Company. Islamic Development Bank (IsDB) Islamic Development Bank (IsDB) is located in Jeddah and is an International Financial Institution established in 1975 in pursuance of a declaration by the Conference of Finance Ministers of Muslim countries to foster economic development and social progress in member (Islamic) countries. IsDB has a subscribed capital of USD 70 Billion and enjoys presence in 57 member countries. The Bank participates in equity capital and grants loans for productive projects and enterprises besides providing financial assistance in other forms for economic and social development. Shareholding Structure Noor Financial Investment Co. Kuwait Pakistan Kuwait Investment Company (Pvt.) Ltd Islamic Development Bank Jeddah Others Paid up Capital 26 MEEZAN BANK LIMITED Rs in Million % 4,533 3,858 1,199 3,270 35.25 30.00 9.32 25.43 12,860 100.00
29. Corporate Information Board of Directors Riyadh S . A. A. Edrees Faisal A. A. A. AlNassar Bader H.A.M.A. AlRabiah Mubashar Maqbool Basil Y. A.Y. R. AlBader * Saad Fazil Abbasi Mohamed Guermazi Noorur Rahman Abid Nausheen Ahmad Atif Azim Irfan Siddiqui Chairman Vice Chairman President & CEO Shariah Supervisory Board Justice (Retd.) Muhammad Taqi Usmani Dr. Muhammad Imran Ashraf Usmani Sheikh Esam Mohamed Ishaq Mufti Muhammad Naveed Alam Management Irfan Siddiqui Ariful Islam Chairman Resident Shariah Board Member President & CEO Deputy CEO Auditors EY Ford Rhodes, Chartered Accountants Chief Financial Officer Shabbir Hamza Khandwala Company Secretary Muhammad Sohail Khan Registered Office Meezan House C-25, Estate Avenue, SITE, Karachi-75730, Pakistan. Contacts PABX: (92-21) 38103500, Fax: (92-21) 36406049 24/7 Call Centre: 111- 331-331 & 111- 331-332 Email: info@meezanbank.com Website: www.meezanbank.com, www.meezanbank.pk *The Bank has already submitted application for the Fit and Proper Test of the Director to the State Bank of Pakistan which is in process of reviewing the same. Meezan Bank Share Information Company Name Meezan Bank Limited Stock Name Financial Year End 31 MEBL 31 December Listed on Shares Registrar PSX THK Associates (Pvt.) Ltd. KSE 100 KSE ALL KSE 30 KMI 30 BKTI KMI ALL 1st Floor, 40-C, Block-6, P.E.C.H.S.,Karachi-75400, Pakistan. Ph: (92-21) 111-000-322, Fax: (92-21) 34168271 Email: secretariat@thk.com.pk Website: www.thk.com.pk ANNUAL REPORT 2019 27
30. Senior Management Team Irfan Siddiqui President & CEO Ariful Islam Deputy CEO Arshad Majeed Group Head Consumer Finance Faiz Ur Rehman Group Head Information Technology & Digital Banking Ijaz Farooq Group Head Retail Banking, Commercial, SME & Agriculture Finance Muhammad Abdullah Ahmed Group Head Corporate & Institutional Banking Shabbir Hamza Khandwala Chief Financial Officer & Group Head Finance Syed Tariq Hassan Chief Risk Officer & Group Head Risk Management Zia Ul Hassan Group Head Operations Ahmed Ali Siddiqui Group Head Shariah Compliance Khalid Zaman Khan Group Head Human Resources, Learning & Development Muhammad Raza Group Head Customer Support Muhammad Sohail Khan Company Secretary Munawar Rizvi Group Head General Services & Special Assets Management Ebrahim Yakoob Head Internal Audit & Business Risk Review Muhammad Ismail Head Compliance Shahzad Abdullah Head Treasury and Home Remittances Urooj ul Hasan Khan Head Investment Banking & Advisory Muhammad Farhan Ul Haq Usmani Head Shariah Audit Muhammad Umar Khan Fareedy Head Legal Affairs Regions Muhammad Saleem Khan General Manager – North Anwar Ul Haq General Manager – Lahore East Kazi Muhammad Aamir General Manager – Karachi West Syed Salman Ahmed General Manager – Hyderabad* Mashkoor A.G. Khan Regional Manager – Karachi East Moazzam Saeed Khan Regional Manager – Faisalabad Muhammad Tufail Regional Manager – Multan Sohail Munir Bana Regional Manager – Karachi North Abid Hussain Abid Regional Manager – Gujranwala Kamran M. Butt Regional Manager – Lahore West* Amir Ali Durrani Regional Manager – Balochistan Arif Aslam Khan Regional Manager – Khyber Pakhtunkhwa Syed Mohammed Asad Alvi Regional Manager – Karachi South Muhammad Ejaz Nadeem Regional Manager – Bahawalpur *Interim 28 MEEZAN BANK LIMITED
36. Organization Structure BOARD OF DIRECTORS SHARIAH SUPERVISORY BOARD AUDIT COMMITTEE Shariah Audit Resident Shariah Board Member Internal Audit & Business Risk Review Shariah Compliance PRESIDENT & CEO Company Secretariat Risk Management Compliance Finance Legal Affairs General Services & Special Assets Management Human Resources, Learning & Development DEPUTY CEO BRANCH NETWORK BUSINESS SEGMENTS SUPPORT Bahawalpur Retail Banking, Commercial, SME & Agriculture Operations Balochistan Treasury & Home Remittances Customer Support Faisalabad Corporate & Institutional Banking Information Technology & Digital Banking Gujranwala Consumer Finance Information Security Hyderabad Investment Banking & Advisory Karachi (East) Karachi (North) Karachi (South) Karachi (West) Lahore (East) Lahore (West) Multan North Islamabad Khyber Pakhtunkhwa Functional reporting Administrative reporting ANNUAL REPORT 2019 29
37. Awards and Recognition 2019 Mastercard 2018 MEA Acquirer Forum Structured Finance Deal of the Year – Avari Hotels transaction Pakistan Deal of the Year – Nasda Green Energy transaction Cross Border Deal of the Year – Nasda Green Energy transaction Best Islamic Bank in Pakistan Asset Triple A – Hong Kong Islamic Finance News (IFN) – Malaysia Spearheading Acceptance Location Growth Best Islamic Bank in Pakistan Best Islamic Trade Finance Bank in Pakistan Best Islamic Retail Bank in Pakistan Best Islamic Investment Bank in Pakistan Sukuk Adviser of the Year – Pakistan Asset Triple A Country Awards Asset Triple A Asia Infrastructure Awards Asset Triple A Asia Infrastructure Awards Global Finance – New York Best secondary offering, Pakistan – US$100 million placement Utility Deal of the Year, Pakistan – K-Electric Limited Rs 25 billion syndicated term finance facility in which Meezan Bank acted as a lead arranger and adviser, lead (Conventional facility) and lender (Islamic facility) Global Finance – New York Best Islamic Financial Institution in Pakistan Best Bank in Pakistan Best Trade Finance Provider in Pakistan World’s Best Banks – Asia Pacific Best Bank In Asia Pacific Islamic Finance Forum of South Asia (IFFSA) Awards Honorary Award in Recognition of Contribution to the IBF Industry Gold Award – Entity of the Year Gold Award – Bank of the Year Gold Award – Investment Bank of the Year Gold Award – Capital Markets Service Provider of the Year Gold Award – Advisory Services Provider of the Year Silver Award – Deal of the Year Bronze Award – Education Provider of the Year Renewable Energy Deal of the Year, Hydropower – Pakistan Oil and Gas Deal of the Year – Pakistan Best Islamic Financial Institution in Pakistan The Innovators – ‘The Innovator 2018’ for Masterpass QR Payments through FonePay Islamic Finance Forum of South Asia (IFFSA) Awards Gold Award for Islamic Finance Education Provider of the Year Gold Award for Islamic Finance Advisory Services Provider of the Year Gold Award for Islamic Finance Deal of the Year Gold Award for Islamic Investment Bank of the Year Silver Award for Bank of the Year The Banker Islamic Bank of the Year, Pakistan Global Islamic Finance Awards Shariah Authenticity Award Shariah Auditor of the Year Asian Banking and Finance Corporate & Investment Banking Awards Syndicated Loan of the Year, Pakistan ICAP and ICMAP The Banker 3rd Position - Best Corporate Reports Awards – Banking sector Global Islamic Finance Awards Islamic Bank of the Year Bank of the Year, Pakistan Shariah Authenticity Award Shariah Auditor of the Year GIFA Special Award (Shariah Advisory Role) Asian Banking and Finance Corporate & Investment Banking Awards Islamic Corporate & Investment Bank of the Year, Pakistan CFA Society Pakistan Islamic Bank of the Year (Runner-up) International Finance Award Most Innovative Islamic Bank, Pakistan PakWheels.com – People’s Choice Awards Most Popular Bank in Pakistan’s Islamic Auto Financing sector Employers Federation of Pakistan (EFP) 3rd Position - Employer of the Year J.P.Morgan Straight Through Processing Award 2018 Pakistan Banking Awards Best Bank - 2018 Islamic Finance News (IFN) – Malaysia Best Islamic Bank in Pakistan Best Islamic Bank for Treasury Management – Global Award 36 MEEZAN BANK LIMITED CFA Society Pakistan International Finance Award Most Innovative Islamic Bank, Pakistan PakWheels.com – People’s Choice Awards Most Popular Bank in Pakistan’s Islamic Auto Financing sector Employers Federation of Pakistan (EFP) Recognition Award - Best HRM Practices Recognition Award - Employer of the Year 2017 Pakistan Banking Awards Best Islamic Bank Global Finance – World’s Best Bank Awards Best Bank in Asia-Pacific Region Global Finance - World’s Best Islamic Financial Institutions Best Islamic Financial Institution in Pakistan Asset Triple A Islamic Finance Awards Islamic Bank of the Year, Pakistan Best Islamic Retail Bank, Pakistan Best Islamic Trade Finance Bank, Pakistan Best Islamic Investment Bank, Pakistan Sukuk House of the Year, Pakistan Best Supply Chain Finance Programme, for Meezan Bank and Karandaaz Pakistan Asset Triple A Asia Infrastructure Awards Transport deal of the year, Pakistan for Swat Expressway The Banker - United Kingdom Islamic Bank of the Year, Pakistan Global Islamic Finance Awards Shariah Authenticity Award Islamic Finance Forum of South Asia (IFFSA) Awards Gold Awards Best Islamic Bank Of The Year (Fully Fledged) Islamic Finance Entity Of The Year Islamic Finance Education Provider Islamic Finance Advisory Services Provider Islamic Finance Capital Markets Service Provider Islamic Investment Bank Of The Year Silver Award Islamic Finance Deal – For Syndicated Project Finance Facility Pakistan Society of Human Resource Management Best Place to Work in Top 10 Best Place to Work Category Best Place to Work in Financial Services Industry Category Employers Federation of Pakistan (EFP) 1st Position - Best HRM Practices 3rd Position - Employer of the Year 2016 PMI Karachi Pakistan Chapter PMO of the Year ICAP and ICMAP 3rd Position - Best Corporate Reports Awards Banking sector South Asian Federation of Accountants (SAFA) Certificate of Merit in the 'Private Sector Banks' category of Best Presented Accounts Award Pakistan Stock Exchange Limited 2016 Islamic Finance News (IFN) - Malaysia Best Islamic Bank in Pakistan Best Islamic Bank for Treasury Management - Global award Runner-up ‘Most Innovative Islamic Bank' - Global award Pakistan Deal of the Year Top 25 Companies of the Year, 2016 Best Islamic Bank in Pakistan Best Islamic Retail Bank - Global Award Pakistan Deal of the Year CFA Society Pakistan Islamic Bank of the Year Corporate Finance House - Fixed Income Mastercard MENA Acquirer Forum Most Innovative Solution Deployed for Cash Displacement World Islamic Banking Conference Country Level Award for the Banks Based In Pakistan Islamic Finance News (IFN) - Malaysia Global Finance - New York Best Islamic Bank in Pakistan The Innovators - ‘Innovator in Islamic Finance 2016’ Asset Triple A – Hong Kong Best Islamic Bank in Pakistan Best Bank for Digital Innovation
38. Best Digital Banking Product Meezan UPaisa Best Retail Bank Best Trade Finance Bank Best Investment Bank Sukuk House of the Year Best Deal , Pakistan Islamic Finance Forum of South Asia (IFFSA) Gold Award for ‘Islamic Bank of the Year - Pakistan’ Capital Markets Service Provider of the Year Islamic Microfinance Company/ Project of the Year Advisory Services Provider of the Year The Banker - United Kingdom Islamic Bank of the Year, Pakistan Pakistan Banking Awards Best Islamic Bank CFA Society of Pakistan Islamic Bank of the Year South Asian Federation of Accountants (SAFA) ‘Certificate of Merit’ - Best Presented Annual Report Awards ICAP & ICMAP 2nd Position - Best Corporate Reports Awards Banking sector Employers Federation of Pakistan 1 Prize - Best HRM Practices 2016 st PakWheels.com - People’s Choice Awards ‘Most Popular Bank’ in Pakistan’s Islamic Auto Financing sector – MasterCard, Titanium Debit Card South Asian Federation of Accountants (SAFA) Best Presented Accounts Award – Private Sector Bank Best Islamic Retail Bank in Pakistan Best Islamic Deal - Pakistan Highly Commended Deal - Pakistan Global Finance - New York Best Islamic Financial Institution in Pakistan ICAP & ICMAP Islamic Finance News (IFN) - Malaysia Pakistan Observer AsiaMoney 3rd Position - BCR Awards - Banking sector Largest Islamic Bank 2014 Islamic Finance News (IFN) - Malaysia Best Islamic Bank in Pakistan Musharakah Deal of the Year AsiaMoney Best Islamic Bank in Pakistan CFA Society of Pakistan Islamic Bank of the Year Asset Triple A – Hong Kong Best Islamic Bank in Pakistan Best Islamic Retail Bank in Pakistan Best Islamic Trade Finance Bank in Pakistan Sukuk House, Pakistan Best Deal, Pakistan Highly Commended - Best Islamic Structured Trade Finance Highly Commended Best Deal – Pakistan ICAP & ICMAP 3 Position - BCR Awards - Banking sector rd South Asian Federation of Accountants (SAFA) Best Presented Accounts Award - Private Sector Banks Best Deals of the Year Best Islamic Bank in Pakistan ICAP & ICMAP 4th Position - BCR Awards - Banking sector 2011 CFA Association Pakistan Islamic Bank of the Year Islamic Finance News (IFN) - Malaysia Best Islamic Bank in Pakistan Best Deal of the Year Asset Triple A – Hong Kong Best Islamic Bank in Pakistan Best Islamic Trade Finance Bank in Pakistan Best Islamic Deal - Pakistan Global Finance - New York Best Islamic Financial Institution in Pakistan 2010 CFA Association Pakistan Islamic Bank of the Year Islamic Finance News (IFN) - Malaysia Best Islamic Bank in Pakistan AsiaMoney Best Islamic Bank in Pakistan The Banker - United Kingdom Global Finance - New York Rozee.pk 2009 Global Islamic Finance Awards (GIFA) 2013 Best Islamic Bank in Pakistan Best Deal of the Year Islamic Finance News (IFN) - Malaysia Best Islamic Bank in Pakistan RTC-3 Potentials of Islamic Banking Forum Largest Islamic Bank in Pakistan 2015 Shariah Authenticity Award Best Islamic Retail Bank - Global Award 3rd Best Overall Islamic Bank – Global Award Best Islamic Bank in Pakistan Pakistan Deal of the Year Asset Triple A - Hong Kong Best Islamic Bank in Pakistan Best Islamic Retail Bank in Pakistan Best Islamic Trade Finance Bank in Pakistan Best Islamic Investment Bank Best Sukuk House in Pakistan Best Islamic Trade Finance Deal Top Islamic Bank in Pakistan Top Employer in the Islamic Banking Industry AsiaMoney CFA Society of Pakistan Islamic Bank of the Year Corporate Finance House of the Year (Fixed Income) Islamic Finance News (IFN) - Malaysia Best Islamic Bank in Pakistan Ijarah Deal of the Year Pakistan Deal of the Year Global Islamic Finance Awards (GIFA) Best Research and Development in Islamic Finance Global Finance - New York Global Finance - New York AsiaMoney Asset Triple A - Hong Kong Best Islamic Financial Institution in Pakistan Best Islamic Bank in Pakistan The Banker - United Kingdom Top Islamic Bank in Pakistan South Asian Financial Disclosure Index Rankings Leading Islamic Bank of the region Ranked 10th in the Top 15 global Islamic banks CFA Society of Pakistan Islamic Bank of the Year Corporate Finance House of the Year MasterCard Innovation Forum 2015 Best Shariah Compliant Product Best Islamic Financial Institution in Pakistan Best Islamic Bank in Pakistan Best Islamic Retail Bank in Pakistan Best Islamic Trade Finance Bank in Pakistan Highly Commended Best Islamic Deal Pakistan Best Islamic Financial Institution in Pakistan Islamic Finance News (IFN) - Malaysia Global Finance - New York Best Islamic Financial Institution in Pakistan ICAP & ICMAP 5th Position - BCR Awards - Banking sector 2008 Islamic Finance News (IFN) - Malaysia Best Islamic Bank in Pakistan Best Deal of the Year Global Finance - New York Best Islamic Financial Institution in Pakistan ICAP & ICMAP 4th Position - BCR Awards - Banking sector 2007 Islamic Finance News (IFN) - Malaysia Best Islamic Bank in Pakistan ICAP & ICMAP 3rd Position - BCR Awards - Banking sector 2012 CFA Association Pakistan Islamic Bank of the Year Asset Triple A – Hong Kong Best Islamic Bank in Pakistan Best Islamic Trade Finance Bank in Pakistan ANNUAL REPORT 2019 37
39. Chairman ’s Review Alhamdulillah, it gives me great pleasure to present the Annual Report of Meezan Bank for 2019. It is indeed heartening to note that Meezan Bank, in just 17 years since its inception, has grown to become the 6th largest bank in Pakistan in terms of both deposits and the size of its branch network. We thank Allah (SWT) for this extraordinary success and His continued blessings upon us. The Board appreciates the contribution and hard work of the Bank’s management team and the entire Meezan family of over 11,500 staff for their dedication, commitment and hard work that has made this possible. The Bank’s success and achievements in 2019 are evidenced by numerous awards that it received during the year including ‘The Best Bank in Pakistan’ award by Global Finance – New York, ‘The Best Islamic Bank in Pakistan’ by Islamic Finance News (IFN) of Redmoney Group, Malaysia and Bank of the Year – Pakistan by the highly reputed UK based publication – The Banker. The Bank’s strong focus on strengthening its digital platform and services is evidenced by a strong growth of 120% in both its Debit Card e-commerce transactions and the fact that it was the first bank in Pakistan to cross the Rs 1 Billion e-commerce spend in a month on Debit Cards in Pakistan. Meezan has also been a key player in promoting Green Energy in Pakistan by lead managing four wind power projects amounting to over USD 240M during the year. The Bank also crossed the one Trillion Rupee milestone in its Trade Finance business for the second year. Meezan Bank is cognizant of the responsibility that comes with its leadership position in the Islamic banking industry in Pakistan. Our relentless focus on delivering the absolute best in customer service across every channel has been at the heart of our success. We remain committed to our Vision of establishing ‘Islamic banking as banking of first choice...’, by continuing to expand our branch network and investing in technology to deliver a world class banking experience to our customers. 38 MEEZAN BANK LIMITED
40. Moody ’s upgrading Pakistan’s credit rating outlook to stable in December, 2009 is a very positive indication that the country’s economy is poised for a rebound in the medium term. We remain optimistic about Pakistan’s economy and are committed to contributing increasingly towards the progress of the country. I would like to take this opportunity to express my gratitude to the State Bank of Pakistan, Ministry of Finance and the Securities & Exchange Commission of Pakistan for their continuous commitment to establish a viable Islamic financial system in the country. I would also like to express my gratitude to our shareholders, members of Shariah Supervisory Board and my fellow Board members as well as all members of the Meezan team who worked determinedly to make Meezan Bank not only the leading Islamic financial institution but also a leading banking institution of the country. Finally, and most importantly, I want to thank our customers for bestowing their trust and confidence upon Meezan Bank and to the cause of Islamic banking. It is their trust that has led to the growth and success of Islamic banking and the Riba-free financial system in the country. Riyadh S. A. A. Edrees Chairman February 12, 2020 2020 12 ANNUAL REPORT 2019 39
41. Directors ' Report to the Members On behalf of the Board of Directors, we are pleased to present the twenty-third Annual Report of Meezan Bank Limited setting out the detailed financial results of the Bank for the year ended December 31, 2019. Economic Overview 2019 was a challenging year for Pakistan, from an economic perspective, due to the various corrective measures that were taken by the Federal Government resulting in an economic slowdown. GDP growth fell to 3.3% as compared to 5.5% in 2018 on the back of high fiscal and current account deficits. The State Bank of Pakistan (SBP) also made adjustments in the policy and exchange rates to contain aggregate demand while easing the pressure on the balance of payments. The policy rate was increased to 13.25% in July 2019 from 10% in 2018. The Government reached an agreement with the International Monetary Fund (IMF) in July, 2019 for a 39 month extended arrangement under the Extended Fund Facility (EFF) for Pakistan for US $6 billion. Economic reforms taken by the Government have resulted in gradual improvements emerging on both external and fiscal fronts. Disbursement of tranches under the IMF’s EFF and subsequent unlocking of multilateral flows from other agencies helped in averting the balance of payments crisis. The fiscal sector also showed improvements on account of broad-based taxation reforms and strict control over non-development expenditures undertaken by the Government. Tax collection also grew by 16% in the first half of the fiscal year 2019-20. Improvement on the external front resulted in a 4.6% appreciation of Rupee against the USD in the second half of the year 2019. The country’s foreign exchange reserves have also increased with improvement in current account deficit. In December 2019, Moody upgraded Pakistan’s credit rating outlook to stable, following the successful first review by the IMF in November. The Pakistan stock market (PSX) has also rebounded sharply and touched 40,735 points from its lowest level of 28,765 points in mid-August 2019. These positive developments indicate that Pakistan’s economy is poised to make a rebound in the medium term. Profit After Tax Our Performance By the Grace of Allah, the Bank continued on its growth trajectory and recorded excellent results for 2019 – witnessing an increase in assets size, deposits, branches, revenues and profitability. ■ ■ ■ ■ ■ Rupees in Million 16,000 15,232 14,000 The Bank’s total assets portfolio crossed Rs 1.1 trillion, recording a growth of 20%. Profit After Tax increased to Rs 15.2 billion as compared to Rs 8.96 billion in 2018, an impressive growth of 70%. Earnings per Share – on enhanced share capital increased to Rs 11.84 from Rs 6.97 per share. Total equity grew from Rs 40.3 billion to Rs 59.0 billion – an increase of Rs 18.7 billion or 46% which further strengthened the balance sheet. The book value per share on enhanced share capital increased to Rs 45.89 per share from Rs 31.36 per share last year. 12,000 10,000 8,962 8,000 6,000 5,023 5,562 6,313 4,000 2,000 0 2015 2016 2017 2018 2019 Key Business Results 2019 40 2018 Growth Profit After Tax Rs 15.23 Billion Rs 8.96 Billion 70% Investments Rs 226 Billion Rs 124 Billion 82% Financing Rs 494 Billion Rs 513 Billion 4% Deposits Rs 933 Billion Rs 785 Billion 19% Total Assets Rs 1.1 Trillion Rs 938 Billion 20% Equity Rs 59 Billion Rs 40.3 Billion 46% Capital Adequacy ratio 16.58% 14.55% 14% Dividend per share: Cash Dividend - Rs Bonus Issue 5.00 10% 3.50 10% 43% - Branch Network 760 Branches 660 Branches 15% Presence 223 Cities 181 Cities 23% Trade Business (Imports and Exports) Rs 1.08 Trillion Rs 1.01 Trillion MEEZAN BANK LIMITED 7%
42. Financial Results Rs in Million PROFIT AND LOSS ACCOUNT 2019 2018 Profit / return earned on financings, investments and placements 94,270 48,625 Return on deposits and other dues expensed (47,731) (20,457) Net spread earned 46,539 28,168 2,684 1,318 Fee, commission and other income 6,713 Foreign exchange income (Loss) / gain on securities - net and dividend income Non-funded and other income Total Income 5,569 (77) 575 9,320 7,462 55,859 Operating and other expenses Profit before provisions Provisions and write offs - net 35,630 (25,522) (19,670) 30,337 15,960 26,151 14,792 15,232 8,962 (4,186) Profit before taxation Taxation (1,168) (10,919) Profit after taxation Earnings per share - on enhanced capital - Rs (5,830) 11.84 6.97 The Investments portfolio of the Bank grew by 82% to Rs 226 billion compared to Rs 124 billion in December, 2018. A significant milestone achieved during the year was the successful issuance of Pakistan’s first ever Energy Sukuk issued by Power Holding (Private) Limited, a wholly owned subsidiary of Government of Pakistan (GoP) with Meezan Bank as a Lead Arranger. The Bank was also the largest investor in this Sukuk with a participation of Rs 85 billion in the total issue size of Rs 200 billion. The Sukuk is guaranteed by the GoP and is eligible for Statutory Liquidity Requirements of the State Bank of Pakistan (SBP). The market value of Sukuk as at December 31, 2019 is Rs 97 billion. Recognizing the increased risk factors that emanate from the overall slowdown in the economy, the Bank slowed the growth of its Islamic financing portfolio, closing the year at Rs 494 billion. The strategy is to maintain a diversified portfolio spread across its Corporate segment, Commercial & SME segment and the Consumer segment. The Bank’s non-performing financing ratio of 1.78% versus the industry average of 9% bears testimony to the Bank’s prudent lending practices and the high asset quality of its financing portfolio. Growth in Deposits The Bank’s deposit portfolio crossed the Rs 900 billion benchmark to close at Rs 933 billion recording a growth of Rs 148 billion – 19% higher than the previous year. Growth in the Bank’s deposits is almost double that of the banking industry as the total banking deposits grew by only 9.6% in 2019. As a result of stresses in certain sectors of the economy and in keeping with the prudent practices historically adopted by the Bank, an additional General Provision of Rs 1,525 million against any potential non-performing financings was approved by the Board. The total provision (net) against financings amounted to Rs 3 billion for the year 2019. The Bank maintains a comfortable level of provisions against its non-performing financings with a coverage ratio of 142% – one of the highest in the banking industry. Growth in Deposits Rupees in Million 932,579 18% 900,000 785,477 19% 800,000 700,000 667,181 19% 559,398 600,000 500,000 This is a direct result of the Bank’s expanding geographical outreach and its continuous focus on leveraging technology in improving customer experience and productivity. The Bank has also improved its deposit mix with CASA contributing to 74% of total deposits. 19% 1,000,000 468,281 400,000 300,000 200,000 100,000 0 2015 2016 2017 2018 2019 ANNUAL REPORT 2019 41
43. Branch Network Growth in Branch Network In line with its Vision of establishing ‘Islamic Banking as banking of first choice...’, the Bank further expanded its geographical presence and opened another one hundred new branches in forty-two new cities with an aim to cover certain cities where no Islamic banking alternate was available. The Bank’s network now stands at 760 branches in 223 cities (2018: 660 Branches in 181 cities). The Bank is focused on increasing its market share in the Pakistan’s growing banking industry by expanding its geographical outreach and investment in technology. 100 800 59 700 600 760 30 20 551 571 601 660 500 400 300 200 100 0 2015 2016 2017 2018 2019 Net Spread Return on financings, investments and placements increased from Rs 48.6 billion in 2018 to Rs 94.3 billion in 2019, an increase of 94% due to the Banks strong balance sheet growth and re-pricing of earning assets due to increase in SBP’s Target Rate. Correspondingly, the Bank’s return on deposits and other dues also increased from Rs 20.5 billion in 2018 to Rs 47.7 billion in 2019 – an increase of 133% primarily due to higher profit rates and increase in deposits. Growth in Fee and Commission Income The Bank’s non-funded and other income (NFI) grew by 25% to cross Rs 9 billion from Rs 7.5 billion. Growth in the trade (import & export) business of the Bank that resulted in increased fee income and foreign exchange income contributed to this increase in NFI. Improvement in Income Efficiency Ratio The Bank’s operating and other expenses increased to Rs 25.5 billion from Rs 19.7 billion primarily due to rising inflation, Rupee devaluation, IT infrastructure cost and increase in staff expenses, rent and costs associated with new branches – an investment in the future. The rise in expenses, however, was sufficiently absorbed by growth in the Bank’s income, resulting in improvement in the income efficiency ratio to 46% as compared to 55% last year. With PSX witnessing a volatile year in 2019 and PSX-100 index touching a low of 28,765 points in August, 2019 from 37,067 points at start of the year, the Bank recorded a capital loss of Rs 381 million and an impairment charge of Rs 1.1 billion on the listed equity investments. The Bank continued to contribute to the national exchequer and was awarded a Certificate of Appreciation by the Honorable Prime Minister of Pakistan in recognition of being amongst the Top 50 Corporate Tax payers in Tax year 2018. During the year 2019, the Bank paid Rs 9.3 billion in the form of direct taxes to the Government of Pakistan. In addition to this, the Bank also collected, withheld and deposited Rs 13.7 billion on account of Federal Excise Duty/Provincial Sales Tax on Services and as withholding tax agent on behalf of Federal Board of Revenue and Provincial Tax Authorities. The Finance Act 2019 (the Act) has reversed the phase-wise reduction in rate of Super Tax for banking companies from 4% to 3% for current year and further levied an additional Super Tax charge at 4% for Tax Year 2018 (Accounting Year 2017), which was previously not chargeable resulting in additional Super Tax charge of Rs 470 million in the current year. The total Super Tax charge amounted to Rs 1,670 million and has been duly accounted for in the total tax charge for the year 2019. Human Resources As a result of the increase in the branch network and the overall growth of the Bank, the total staff strength increased by 1,580 bringing the total to 11,649. The Bank views its human resources as a critical success factor in today’s competitive market and nurtures them by providing them a variety of trainings ranging from Islamic banking and role-based trainings to soft skills development, thus enabling them to provide a superior banking experience to its customers. 42 MEEZAN BANK LIMITED
44. Capital Adequacy Ratio The Bank ’s Capital Adequacy Ratio is at a comfortable level of 16.58% over and above the minimum regulatory requirement of 12.50% as of December 31, 2019. Dividend per Share We are pleased to inform you that the Board has approved final cash dividend of Rs 2 per share (20%) for the year 2019, bringing the total payout for the year to Rs 5 per share (50%) as Rs 3 per share i.e. 30% interim cash dividend was paid in addition to issuance of 10% Bonus Shares during the year. In 2019, quarterly dividend has been announced first time in the history of the Bank. The Bank has maintained its unbroken payout record since its date of listing on the Stock Exchange. Islamic Banking Industry Islamic banking has further strengthened its roots in Pakistan with Meezan Bank as the market leader offering a complete range of Islamic Banking products and services. Islamic banking Industry deposits account for almost 16% of the total banking industry deposits. Meezan Bank’s share of deposits amongst dedicated Islamic banks operating in Pakistan is approximately 58% while its share of the Islamic banking industry as a whole, including Islamic banking windows of conventional banks in Pakistan, is 35%. Capital Adequacy Ratio (CAR) Dec 31, 2019 Dec 31, 2018 Minimum Requirement Dec 31, 2019 Common Equity Tier I - (CET I) 11.30% 10.19% 8.50% Tier I 12.92% 12.00% 10.00% CAR 16.58% 14.55% 12.50% Dividend Per Share Cash Bonus Issue First Quarter 2019 - Interim Re 1 / share 10% Second Quarter 2019 - Interim Re 1 / share - Third Quarter 2019 - Interim Re 1 / share - Fourth Quarter 2019 - Final Rs 2 / share - Share of Meezan Bank in Islamic Banking Industry - Based on deposits 25% 35% Meezan Bank 16 Islamic Windows of Conventional Banks 4 Other Islamic Banks 40% Credit Rating The VIS Credit Rating Company Limited (formerly JCR-VIS Credit Rating Company Limited), has reaffirmed the Bank’s Entity Rating of ‘AA+’ (Double A Plus) for the Long Term and ‘A1+’ (A-One Plus) for the Short Term with stable outlook. The VIS Credit Rating Company Limited has also reaffirmed the rating of Subordinated Tier II Sukuk and Additional Tier I Sukuk of the Bank at ‘AA’ (Double A) and ‘AA-’ (Double A Minus) respectively. These ratings indicate sound performance of the Bank. Corporate Awards and Recognitions Meezan Bank won the following prestigious awards during the year, at national and international level, which recognize the degree of success enjoyed by Pakistan’s first and the largest dedicated Islamic Bank and one of the fastest growing banking institutions in the country: International Finance Award ■ Most Innovative Islamic Bank, Pakistan Global Finance ■ Best Islamic Financial Institution in Pakistan ■ Best Bank in Pakistan ■ Best Trade Finance Provider in Pakistan ■ Best Bank in Asia Pacific ■ Named among the World’s Best Banks – Asia Pacific The Banker ■ Bank of the Year, Pakistan Asset Triple A Country Awards ■ Best Deal, Pakistan - Best secondary offering, Pakistan for Meezan Bank US$100 million placement Asset Triple A Asia Infrastructure Awards ■ Utility Deal of the Year- K-Electric Limited 25 billion Pakistan rupee syndicated term finance facility Asian Banking and Finance Corporate & Investment Banking Awards ■ Islamic Corporate & Investment Bank of the Year, Pakistan CFA Society of Pakistan ■ Islamic Bank of the Year (Runner-up) Islamic Finance Forum of South Asia (IFFSA) Awards ■ Honorary Award in Recognition of Contribution to the IBF Industry ■ Gold Award for Entity of the Year ■ Gold Award for Bank of the Year ■ Gold Award for Investment Bank of the Year ■ Gold Award for Capital Markets Service Provider of the Year ■ Gold Award for Advisory Services Provider of the Year ■ Silver Award for Deal of the Year ■ Bronze Award for Education Provider of the Year Employers Federation of Pakistan (EFP) ■ Employer of the Year Islamic Finance News (IFN) – Malaysia ■ Structured Finance Deal of the Year for Avari Hotels transaction ■ Cross Border Deal of the Year for Nasda Green Energy transaction ■ Best Islamic Bank in Pakistan Global Islamic Finance Awards (GIFA) ■ Shariah Authenticity Award ■ Shariah Auditor of the Year ■ Special Award (Shariah Advisory Role) J.P. Morgan ■ Straight Through Processing Award ANNUAL REPORT 2019 43
45. Corporate Social Responsibility We are happy to report that as a socially responsible organization , the Bank has taken the decision to form a foundation, Meezan Bank Foundation, with an initial contribution of Rs 200 million. The mandate of the Foundation is to promote development and advance the welfare and well-being of the people of Pakistan. Meezan Bank has actively participated in charitable fundraising events for various NGOs that are working in the health and education sectors. The Bank has adopted Campus VI of Idara Al-Khair Welfare Society, a registered NGO, enabling it to provide free education to children in a much neglected locality. The Bank is also supporting the L.I.F.E (Learning Is For Everyone) school that is providing purpose-built education to special children and is also running a Cleanliness Drive in Karachi’s SITE Area in an effort to send the message of 'keep your country clean’. A successful Blood Donation Camp was set up at Meezan Bank's Head Office in collaboration with Indus Hospital, a not-for-profit entity that provides top-of-the-line, comprehensive and free of cost healthcare to people. The Bank hosted Iftar and dinner outside its Head Office for passersby during the entire month of Ramadan and extensively used its social media platform for spreading social awareness messages. Meezan Bank is also continuously striving to hire citizens-with-special needs in its workforce in an effort to empower differently-abled people and make them successful earning members of the society. Meezan Bank supports various charitable organizations by helping them collect donations and zakat through its alternate distribution channels. In 2019, total amount collected through Meezan Bank was Rs 157 million. Disclosure required under Company’s Corporate Social Responsibility (General Order, 2009) has been duly made in the Annual Report. Corporate Governance and Financial Reporting Framework The Board of Directors is fully cognizant of its responsibility to ensure requirements of Corporate Governance prescribed by the Securities and Exchange Commission of Pakistan. The requirements relating thereto and relevant for the year ended December 31, 2019, have been duly complied with by the Bank and a statement to this effect is included in the Annual Report. As a matter of best practice, the Directors are pleased to give the following statements: 1. The financial statements prepared by the Management of the Bank present fairly its state of affairs, the results of its operations, cash flow and changes in equity. 2. Proper books of account of the Bank have been maintained. 3. Appropriate accounting policies have been consistently applied in preparation of financial statements except for the change in accounting policy, as duly disclosed in notes to the financial statements. The accounting estimates are based on reasonable and prudent judgment. 4. International Financial Reporting Standards as applicable in Pakistan have been followed in preparation of financial statements and any departure from these has been adequately disclosed, if any. 5. The system of internal controls is sound in design and has been effectively implemented and monitored. The ultimate responsibility of the effectiveness of internal controls system and its monitoring lies with the Board. An Audit Committee has been formed for this purpose that meets periodically and independently throughout the year with the management and also the internal and external auditors to discuss the effectiveness of internal controls system and other financial reporting matters. In addition, there are financial forecasts and budgetary control procedures in place, which are reviewed and monitored throughout the year to indicate and evaluate variances from the budget. 6. There are no doubts upon the Bank’s ability to continue as a going concern, Insha’Allah. 7. Profit amounting to Rs 3 billion has been transferred to 44 MEEZAN BANK LIMITED Statutory Reserves for the year 2019 as required under Banking Companies Ordinance, 1962. 8. The Directors of the Bank are in compliance with respect to training requirements. The details of directors training programs are given in the Statement of Compliance with the Code of Corporate Governance in this report. 9. The appointment of the Chairman and other members of the Board and terms of their appointment along with the remuneration policy adopted are in the best interests of the Bank as well as in line with the best practices. 10. Key operating and financial data for the last six years in summarized form, categories and pattern of shareholding complying with the regulatory requirements is included in the annual report. 11. The principal risks and uncertainties facing the Bank have been adequately disclosed in the annual report. 12. The details of aggregate amount of remuneration separately of executive and non-executive directors is disclosed in note 39 of the unconsolidated financial statements. 13. The value of investments of the Bank’s recognized Provident Fund and Gratuity Fund as at December 31, 2019 are as under: ■ Staff Provident Fund Rs 3,470 million ■ Staff Gratuity Fund Rs 1,492 million 14. The purchase and sale of shares by the Directors, Chief Executive, Chief Financial Officer, Head of Internal Audit and Company Secretary during the year and pattern of shareholding is included in the annual report.
46. Risk Management Framework The Risk Management Framework in Meezan Bank includes policies , procedures and manuals, Board of Directors and Senior Management oversight, internal controls, and management information system. Risk Management activities are performed at strategic, macro and micro levels. The overall responsibility for risk management rests with the Board of Directors and it has constituted Board Risk Management Committee comprising of Board members with well-defined terms of reference. The Bank’s Risk governance is mainly exercised through following management committees: 1. Credit Risk Management Committee (CRMC) 2. Asset Liability Management Committee (ALCO) 3. Compliance & Operational Risk Management Committee (CORMC) The CRMC ensures that credit risk activities of the Bank fall within the ambit of approved policies, regulatory requirements and risk appetite thresholds. CRMC also provide support and guidance to business units in managing their portfolio with prudent approach. ALCO reviews market, liquidity and country risk exposures, assets and liabilities mix and maturity profile, sets pricing and takes decisions for sound liquidity management. The CORMC focuses on issues arising from compliance risk along with operational risk and control issues. An entity wide ‘Three Lines of Defence’ model for risk management with clearly defined roles and responsibilities is at the core of the Bank’s operations. Business lines serve as the first line of defence and are primarily responsible for managing risks on a day-to-day basis. Risk management and other control functions being the second line of defence are responsible for assisting business lines in designing and implementing adequate controls to manage risks. Internal Audit, being the third line of defence, provides independent assurance on adequacy of the Bank’s internal controls. The Bank has been identified as Sample Domestic Systemically Important Bank (D-SIB) by State Bank of Pakistan. Accordingly, the Board has established a comprehensive Recovery Plan dealing with various crisis scenarios along with trigger events, appropriate remedial action plans and communication strategy. The Internal Capital Adequacy Assessment Process is in line with the Board approved Risk Appetite Statement. Macro stress tests takes into account the impact of changes in macro indicators on the Bank’s business portfolio. The scope of Risk Management Group (RMG) has been continuously broadened mainly focusing on improving policies and procedures, limit structuring and strengthening systems and controls. Under Risk Management Group, credit risk function caters corporate, investment banking, commercial & SME, agriculture, supply chain and consumer business segments. The Bank has successfully implemented an automated financing approval system for corporate, commercial and SME customers that has further streamlined the approval process. Enterprise Risk Management (ERM) under RMG caters to market, liquidity, financial institutions, and operational, business continuity risks. It also deals with Basel implementation and development of risk related policy framework. The ERM function also plays important role in IFRS-9 implementation, capital strategy formulation and green banking practices in the Bank. The Bank recognizes the importance of environmental, sustainability, compliance and information security risks as distinct types of risks and continuously improves upon to cater these risks. Shariah Compliance Risk Management principles and practices are at the heart of business practices of the Bank. Various reports for all types of risk exposures, approval processes, awareness programs and growing understanding to view risk profile at enterprise level will further strengthen the risk management culture in the Bank. Statement of Internal Controls The Board is pleased to endorse the Statement made by the Management relating to internal controls over financial reporting alongwith overall internal controls. Pattern of Shareholding The pattern of Shareholding as at December 31, 2019 is included in the Annual Report. The Management’s Statement of Internal Controls is included in the Annual Report. ANNUAL REPORT 2019 45
47. Directors The Board consists of eleven directors including one female director and the CEO as deemed director . During the year, four meetings of the Board of Directors were held. The record of the meetings attended by the directors, alongwith composition of the Board is as follows: Name of Directors Category No. of meetings held in tenure No. of meetings attended Mr Riyadh S.A.A. Edrees – Chairman Non-Executive Director 4 4 Mr Faisal A.A.A. Al-Nassar – Vice Chairman Non-Executive Director 4 4 Mr Bader H.A.M.A. Al Rabiah Non-Executive Director 4 4 Mr Mubashar Maqbool* Non-Executive Director 1 1 Mr Saad Fazil Abbasi Non-Executive Director 4 4 Mr Mohamed Guermazi* Non-Executive Director 3 2 Mr Mansur Khan** Non-Executive Director 2 2 Mr Alaa A. Al-Sarawi** Non-Executive Director 4 3 Mr Noorur Rahman Abid Independent Director 4 4 Ms Nausheen Ahmad* Independent / Female Director 3 3 Mr Atif Azim* Independent Director 2 2 Mr Ariful Islam – Deputy CEO** Executive Director 1 1 Mr Irfan Siddiqui – President & CEO Executive Director 4 4 *Directors appointed during the year **Directors resigned during the year The Board welcomes the new directors Ms Nausheen Ahmad, Mr Mohamed Guermazi, Mr Mubashar Maqbool and Mr Atif Azim and wishes to place on record its sincere appreciation for the valuable services rendered by the outgoing directors Mr Ariful Islam, Mr Mansur Khan and Mr Alaa A. Al-Sarawi. The Board has constituted the following four Committees with defined Terms of Reference (ToRs): 1. 2. 3. 4. Human Resources and Remuneration Committee Risk Management Committee Audit Committee Information Technology Committee In addition to above committees, a new Board committee, with the title, ‘IFRS 9 Implementation Oversight Committee’ was formed in January 2020 to comply with the requirement of SBP BPRD Circular No. 04 of 2019 dated October 23, 2019. The names of members and their attendance in meetings of the Committees formed by the Board, held during the year is included in the Annual Report. Remuneration of the Board of Directors Remuneration of the Board members is recommended by Board and approved by the shareholders in the General Meeting. However, in accordance with the Code of Corporate Governance, it is ensured that no Director takes part in deciding his/her own remuneration. The Bank does not pay remuneration to non-executive directors except fee for attending the meetings. In order to retain the best talent, the Bank’s remuneration policies are structured in line with the SBP regulations, prevailing industry trends and business practices. For information on remuneration of Directors and CEO in 2019, please refer notes to the Financial Statements. Policy for Dealing with Conflict of Interest The Bank has a policy in place for dealing with conflicts of interest relating to members of the Board. Under this policy, any Director who has a business interest in a matter being presented at a Board meeting does not participate in neither the discussion nor the decision on that matter. The policy is applied consistently and there was no breach of this policy during the year. Performance Evaluation Mechanism for the Board The Board of Directors and its sub-committees are competent and experienced, representing diversified educational and vocational backgrounds which are invaluable in determining the overall direction of the organization. The Board of 46 MEEZAN BANK LIMITED
48. Directors is keen to ensure that it reviews the effectiveness of its performance periodically . To that end, all individual Board members answer a comprehensive questionnaire focused on evaluating, from various angles, whether the Board has discharged its duties diligently and with foresight. A committee of Directors is designated to collate individual responses and present them to the Board for deliberation and discussion. During the self-evaluation exercise, the Board evaluates itself from the following perspectives ■ Evaluation of the overall Board ■ Evaluation of the Chairperson ■ Evaluation of Individual Directors ■ Evaluation of Independent Directors ■ Evaluation of Board Committees ■ Evaluation of the CEO This exercise in critical self-assessment allows the Board to evaluate its performance and overall effectiveness in setting strategies, devising control processes, reading market trends by monitoring micro and macroeconomic factors and responding to adverse unforeseen situations to further the cause of a learning organization. This process also ensures that the Board is constantly growing intellectually and the responsibility of steering the Bank to new heights of success is discharged effectively and efficiently. The SBP Guidelines require that at least once in every three years, the evaluation should be conducted by an external independent evaluator. The Bank engaged Pakistan Institute of Corporate Governance (PICG), during the year as an independent evaluator to conduct this evaluation. Auditors The present auditors, EY Ford Rhodes, Chartered Accountants retire and being eligible, offer themselves for reappointment. As required under the Listed Companies (Code of Corporate Governance) Regulations, 2019 the Board and the Audit Committee has recommended the appointment of EY Ford Rhodes, Chartered Accountants as auditors of the Bank for the year ending December 31, 2020. Al Meezan Investment Management Limited – Subsidiary We acknowledge the excellent performance of our subsidiary, Al Meezan Investment Management Limited (Al Meezan). Al Meezan is the leading asset management company in Pakistan with a track record of 25 years of fund management operations and has the distinction of having an exclusive mandate of providing Shariah-compliant investments solutions to its investors. The Company offers a comprehensive product suite of 16 mutual funds and multiple investment plans spanning from basic equity and income funds to commodity funds, dedicated equity fund and aggressive asset allocation funds. The company also manages the largest Voluntary Pension Fund in Pakistan. With a healthy investor base of over 111,000 customers, Al Meezan is the largest and the only Shariah compliant asset management company of the Country with Assets under Management (AUMs) crossing Rs 123 Billion mark as at December 2019. Its AUMs represent around 18% of the total mutual funds industry and over 50% of the Shariah compliant mutual funds industry. The Company is also increasing its presence and now has 26 branches across Pakistan. Future Outlook and Strategy As Pakistan’s economy begins to show signs of improvement the Bank is well positioned to continue its journey of growth and strengthen its balance sheet for enhancing value for all its stakeholders. In January 2020, the Bank successfully issued second tranche of Sub-ordinated Tier II Sukuk of Rs 4 billion in the form of regulatory compliant unsecured, sub-ordinated privately placed Sukuk that has further strengthened the Bank’s Capital Adequacy Ratio. The Bank plans to pursue its branch expansion strategy in 2020, Insha’Allah, which will expand its geographical presence to three hundred cities of Pakistan. This expansion in its outreach will enable the Bank to continue its initiative of providing access to Islamic financial services to a growing percentage of the country’s population. The Bank will continue to increase its financing in different sectors of the economy while keeping all the risk acceptance parameters in check. At the same time, with its focus of improving customer experience and its understanding of customers, the Bank signed off two significant technology projects during the year. The first is to implement a new digital platform that will significantly improve cyber security and time-to-market launch of new products and Apps. The second is a data analytics project that will help the Bank to get better ‘customer insights’ and help the Bank with its cross-sell initiatives. Pursuant to its Vision, that is to ‘Establish Islamic banking as banking of first choice...’, the Bank has hired a very ANNUAL REPORT 2019 47
49. senior and experienced Islamic banking professional to oversee and conduct various Islamic banking awareness sessions for its customers and staff . The Board is confident that the Bank will Insha’Allah continue to play its leadership role in evolving Islamic Banking Industry in Pakistan. Islamic banking has a good future in Pakistan and its share in the country’s Banking Industry is continuously rising. We believe that a robust and viable Islamic Banking Industry will play a critical role in increasing the savings rate in the country. However, liquidity management remains a key challenge for Islamic Banking Industry of Pakistan as there are limited investment avenues despite sufficient liquidity. The First Energy Sukuk issued has partially addressed this liquidity deployment challenge. The Bank is actively involved in structuring and arranging various Shariah compliant instruments and advising the Government of Pakistan for issuance of SLR eligible Sukuk. We are hopeful that with the continued efforts of the SBP and the GoP, particularly the Ministry of Finance and the Ministry of Power there will be new Sovereign Sukuk issues in 2020 Insha’Allah to address the liquidity deployment challenge faced by the Islamic banking industry of Pakistan. Acknowledgement The landmark achievements of Meezan Bank would not have been possible without the proactive support of our diversified customer base, for which we remain indebted to them. We sincerely thank each one of our team members for their hard work and commitment. May Allah Almighty bestow His blessings on our entire team and their families. The Board would like to express its sincere thanks and gratitude to the State Bank of Pakistan, the Ministry of Finance, the Securities and Exchange Commission of Pakistan and our Shariah Supervisory Board for their continuous commitment to establish a viable Islamic financial system in the Country. We would also like to thank our Board members, shareholders, holders of Additional Tier I Sukuk and Sub-ordinated Sukuk (Tier II) for their continued support and the members of the Shariah Supervisory Board for their unrelenting efforts towards establishing Meezan Bank as the premier Islamic bank. Most importantly, we are thankful to Allah Almighty for his continued blessings on our Bank which has enabled us to achieve this incredible performance in a very short span of time and we pray that He gives us more strength and wisdom to further expand our Vision of establishing ‘Islamic banking as banking of first choice...’ On behalf of the Board Riyadh S.A.A. Edrees Chairman Karachi: February 12, 2020 48 MEEZAN BANK LIMITED Irfan Siddiqui President & CEO
50. ANNUAL REPORT 2019 49
51. 50 MEEZAN BANK LIMITED
52. ANNUAL REPORT 2019 51
53. 52 MEEZAN BANK LIMITED
54. ANNUAL REPORT 2019 53
55. Capital Adequacy Ratio (CAR) Dec 31, 2019 Dec 31, 2018 Minimum Requirement Dec 31, 2019 Common Equity Tier I - (CET I) 11.30% 10.19% 8.50% Tier I 12.92% 12.00% 10.00% CAR 16.58% 14.55% 12.50% Dividend Per Share First Quarter 2019 - Interim Cash Bonus Issue Re 1 / share 10% Second Quarter 2019 - Interim Re 1 / share - Third Quarter 2019 - Interim Re 1 / share - Fourth Quarter 2019 - Final Rs 2 / share - Share of Meezan Bank in Islamic Banking Industry - Based on deposits 25% 35% Meezan Bank 16 Islamic Windows of Conventional Banks 4 Other Islamic Banks 40% 54 MEEZAN BANK LIMITED
56. Branch Network 100 800 59 700 600 760 30 20 551 571 601 660 500 400 300 200 100 0 2015 2016 2017 2018 2019 ANNUAL REPORT 2019 55
57. Growth in Deposits Rupees in Million 19 % 1,000,000 785,477 19% 800,000 700,000 667,181 19% 559,398 600,000 500,000 932,579 18% 900,000 468,281 400,000 300,000 200,000 100,000 0 56 2015 2016 MEEZAN BANK LIMITED 2017 2018 2019
58. Profit After Tax Rupees in Million 16 ,000 15,232 14,000 12,000 10,000 8,962 8,000 6,000 6,313 5,023 5,562 4,000 2,000 0 2015 2016 2017 2018 2019 ANNUAL REPORT 2019 57
59. Annexure to the Directors ’ Report For the year ended December 31, 2019 The purchase and sale of shares by the Directors, Chief Executive, Chief Financial Officer (CFO) and Company Secretary, their spouses and minor children during the year are given below: Number of Shares as at Jan. 01, 2019 NAME OF DIRECTORS Mr. Noorur Rahman Abid Ms. Nousheen Ahmad Mr. Atif Azim Mr. Irfan Siddiqui * Mr. Ariful Islam CHIEF FINANCIAL OFFICER Mr. Shabbir Hamza Khandwala HEAD OF INTERNAL AUDIT Mr. Ebrahim Yaqoob COMPANY SECRETARY Mr. Muhammad Sohail Khan 3,332,057 500 500 Number of Shares purchased during the year Number of Shares sold during the year - - - - - - MEEZAN BANK LIMITED 333,205 50 - Right Shares Subscribed Number of Shares as at Dec. 31, 2019 - 3,665,262 - - 500 - - 375,226 209,459 - 2,304,052 646,115 - - 64,611 - 710,726 - - - - - 13,242 - - 1,323 - 2,094,593 - - - 550 3,752,264 *Mr. Ariful Islam Deputy CEO, has resigned from directorship on March 1, 2019. 58 Bonus Shares alloted during the year 4,127,490 - 14,565
60. DID YOU KNOW ISLAMIC BANKS MAINTAINING DEPOSITS WITH THE STATE BANK It is mandatory for every commercial bank to keep a specified percentage of deposits raised from Current and Saving account holders as reserves with the State Bank of Pakistan (SBP).The Cash Reserve Requirement (CRR) of Islamic banks is placed with SBP in a current account on which no return is paid to the bank. Besides CRR, Islamic Banks have to invest 14% of their deposits in Islamic financial securities such as GoP Ijarah Sukuk to fulfill Statutory Liquidity Requirement (SLR). The income earned from these securities is free from any Riba and is therefore fully Shariah-compliant. Furthermore, Islamic banking institutions are not allowed to invest in T-Bills or PIB’s to maintain their SLR’s. ANNUAL REPORT 2017 113
62. PERFORMANCE 62 64 92 94 95 96 98 100 101 103 104 105 106 107 108 108 109 110 Our Business Model Business and Operations Review Key Figures at a Glance Six Years ’ Horizontal Analysis Six Years’ Vertical Analysis Review of Six Years’ Performance Financial Analysis Market Statistics of Meezan Bank’s Share Analysis of Non-Financial Performance Cash Flow Summary of Cash Flow Allocation of Income and Expenses to Remunerative Depositors’ Pool Statement of Value added and Distributed How We Distribute the Value Created Statement of Inventory Statement of Financing Portfolio Income Calendar of Major Events Marketing & Corporate Communication
63. Our Business Model Key Resources Our Role Institutional Capital ● Automated 40 processes ● 30 awards won during the year ● Long-term credit rating AA+ & Short-term credit rating A1+ ● Largest processor of bill payments by value on 1Link ● World-renowned Shariah Supervisory Board Financial Capital Highest return on equity ● Rs 59,015 Million Total Equity ● Rs 932,579 Million Deposits ● Manufactured Capital Largest dedicated Islamic banking network in the country ● 729 biometric and cardless services enabled ATMs ● SkimGuard protection on other bank ATMs ● 3 dedicated learning centres at Karachi, Lahore & Islamabad; additional training facilities at Faisalabad, Gujranwala, Multan & Peshawar ● Internal state-of-the-art Learning Management System ● Highest rated Mobile Banking App in Pakistan on Playstore ● Human Capital Over 11,500 total strong workforce ● 927 female employees ● 98% workforce is Graduate ● 51% workforce below the age of 31 years ● Largest liability sales force in banking industry ● Social and Relationship Capital Largest following on Facebook, Instagram & LinkedIn in Pakistan’s banking industry ● 1st dedicated Islamic banking Youtube channel in Pakistan ● Robust complaint-handling mechanism ● Intranet portal to enable cross-functional knowledge sharing within the Bank Support our stakeholders through a commercially successful, Shariah-compliant business that generates long-term sustainable returns Provide superior Shariah-compliant services to our customers to help them save, invest and manage cash and payments ● Intellectual Capital Specialist expertise & track record in delivering, assessing & advising sustainable Islamic finance banking services ● Provision of index re-composition services to PSX for All Share Islamic Index & KSE Meezan Islamic (KMI) - 30 Index ● Robust IT infrastructure ● Comprehensive compliance framework ● EMV compliant debit cards ● EMV compliant ATM acquiring ● 3-D Secure compliant e-commerce ● Natural Capital Solar power at Head Office and 10 branches ● Annual solar power generation of 360,000 Units (Kwh) ● LED based branch signage ● Energy-efficient Head Office building structure ● 62 MEEZAN BANK LIMITED Provide innovative digital and technological banking capabilities and services alongwith world-class service quality Provide wide range of liability products offering fair financial returns with sustainable impact
64. FY2019 Performance Deliver long-term sustainable returns for our investors through our way of doing business Management of business and financial risks Work with Regulators to strengthen the Islamic banking landscape Maintain meaningful human relationships with customers and wider stakeholders Customers ● Over 2.6 million customers ● Over 379,000 New to Bank customers ● Over 145,000 new Asaan accounts ● 24% in new debit cards issued ● 119% in debit card e-commerce transactions ● 127% in online transactions ● 10 million QR acquiring transactions in 2019 Social and Environmental ● 225 kW shifted to green energy ● 158,000 kgs of CO2 reduced Employees ● Rs 12,739 Million salaries & benefits ● 1,474 Training Days ● 91% return to work after parental leave ● Rs 78 million invested in employee training ● 84,983 employees trained (10,840 unique) ● 2,578 employees added to workforce ● 12% females among total new joiners ● Approx. 4% reduction in attrition rate ● 76% employee satisfaction rate Financial 70% in profit after tax 31% Return on Average Equity 142% Non-performing Financing Coverage Ratio Rs 1.1 Trillion Trade Business Volume 9% improvement in Income Efficiency Ratio ANNUAL REPORT 2019 63
65. Business and Operations Review Business Review Meezan Bank continued its growth momentum and recorded excellent results for the year 2019 . The Bank’s total assets grew by 20% and crossed Rs 1.1 trillion as of December 31, 2019. The asset growth was fueled by the increase in deposits base which increased by Rs 148 billion in 2019 to close at Rs 933 billion. The Bank’s 2019 deposit growth of 19% was double the banking industry growth of 10%. The Bank is now the sixth largest bank in terms of deposits and branches with a network of 760 branches in 223 cities. The Bank’s higher deposit growth is attributed to its wide range of deposit products, the continuous support and patronage of its customers and its vast branch network coverage. During the year 2019, the Bank added another 100 new branches to its network while expanding its coverage to 42 new cities in Pakistan. The Bank’s increasing ‘brick & mortar’ network is strongly supplemented by a comprehensive array of digital services, including Internet Banking, Mobile App and other Alternate Distribution Channels (ADC) which also contributed to this growth. Despite the overall slowdown in the economy, the Bank maintained its financing portfolio across all segments comprising of top notch Corporate, Commercial, SME and Consumer clients. The Bank’s financing portfolio as of December 31, 2019 closed at Rs 494 billion slightly lower than 2018 level while the Bank’s ADR stood at 53%. The objective remains to provide comprehensive range of Shariah -compliant financing products across all the segments to achieve healthy growth in profitability consistent with the Bank’s risk appetite. The Bank’s lower infection ratio of less than 2% compared to the banking industry average of 9% is reflective of the Bank’s historical prudent lending practices while the Bank’s coverage ratio of 142% as of December 31, 2019 remains one of the highest in the banking industry. In 2019, the Bank’s investment portfolio increased by Rs 102 billion after investment of Rs 85 billion in Pakistan’s first ever Energy Sukuk issued by Power Holding (Private) Limited, a wholly owned subsidiary of Government of Pakistan with Meezan Bank as a Lead Arranger. On December 31, 2019, the Sukuk had a market value of Rs 97 billion and the Bank accordingly, recognized unrealized surplus of Rs 8.2 billion (net of tax) in the Bank’s equity. Due from Financial Institutions under Bai Muajjal also increased to Rs 224 billion from Rs 185 billion in 2018. The Bank’s continued focus on Trade Finance business has borne fruits in the shape of increase in non-funded income comprising of fee, commission and foreign exchange income while also contributing to the Bank’s current account deposits improving the overall profitability. The Bank’s income from ADC services also contributed to the increase in non-funded income. MORE THAN Rs 1.1 TRILLION ASSETS 19% DEPOSITS LESS THAN 2% INFECTION RATIO 142% COVERAGE RATIO Rs 102 BILLION INVESTMENT PORTFOLIO THE LARGEST ISLAMIC BANKING NETWORK OF PAKISTAN 760 223 Branches Cities 64 MEEZAN BANK LIMITED
66. Retail Banking Meezan Bank started its journey in 2002 as Pakistan ’s smallest bank with just four branches. Over the last seventeen years, the Bank has demonstrated impressive growth and in December 2019, it became the country’s sixth largest Bank in terms of both deposits and branch network. The key elements behind this extraordinary growth and success have been the Bank’s focus on providing a wide range of Deposit products and the continuous support and patronage of its customers. The Bank’s strategy of focusing on Financial Inclusion by opening branches in remote locations has also contributed to its success by giving Islamic banking a geographically diverse footprint and making it accessible to a large portion of the country’s population - an approach that is consistent with its Vision of establishing ‘Islamic banking as banking of first choice...’ Meezan Bank opened 100 new branches during the year, bringing the branch network to 760 branches operating in 223 cities across Pakistan. The Bank’s wide range of deposit products, covering all categories of customers (individual & business) has enabled it to achieve exponential growth through a large, well-diversified and stable customer and deposit base. Branch Network Branch network plays a key role in deposit mobilization. Meezan Bank opened 100 new branches during the year, bringing the branch network to 760 branches operating in 223 cities across Pakistan. In addition to a large brick-and-mortar branch network, the Bank’s Alternate Distribution Channels (ADCs) provide diverse touchpoints to its customers for conveniently conducting their banking transactions. ADCs include an extensive and growing ATM network, Internet Banking, Mobile and SMS banking – the Bank’s Mobile App is presently the top rated Mobile App in Pakistan on Google Playstore (see detailed write-up later in this report). Branch Network Branches 800 760 750 700 660 650 550 450 601 571 600 500 Cities Deposits 551 Rupees in billion 428 400 223 250 200 100 50 0 933 1000 350 300 150 The Bank’s total deposits as of December 31, 2019 stood at Rs 933 billion, increasing 18.7% over 2018. CASA mix remained stable at 74% as compared to the previous year. 117 143 146 154 181 900 785 800 667 700 559 600 468 500 2014 2015 2016 2017 2018 2019 450 350 339 300 The Bank’s focus for 2020 will be on further improving and enriching its customers’ banking experience. Deposits Meezan Bank offers an extensive range of deposit products - current, savings and term deposit accounts, and is a market leader in offering innovative Shariah-compliant products and services to cater to the diverse needs of both individuals and companies, ranging from SMEs to large corporates. 250 200 150 100 50 0 2014 2015 2016 2017 2018 2019 ANNUAL REPORT 2019 65
67. In order to meet the financial needs for different segments like senior citizens , widows and the disabled who are an important part of our society, Meezan Bank introduced the Mudarabah-based Meezan Amdan Certificate (MAC) where they can enjoy higher returns on monthly basis for a period of 5.5 years and 7 years. This served as an important step to satisfy the needs of an important and priority segment of the society. MEEZAN CERTIFICATE This Mudarabah certificate is only for senior citizens, disabled and widows Monthly Profit Payment 5.5 and 7 years of investment Invest Rs. 50,000 to Rs. 5,000,000 Meezan Kafalah As a part of Meezan Bank’s innovative products suite, the Bank offers Meezan Kafalah, a Shariah-compliant alternative to conventional Bancatakaful & insurance products available in the market. The product is designed for customers looking for long-term protection of Takaful along with an attractive savings plan to meet their future financial needs. The unique feature of Meezan Kafalah is that the Bank does not charge a high up-front commission; all of the customer’s initial investment is invested to generate profits for the customer. Meezan Kafalah also provides value-added features such as 100% accidental death benefits / Takaful coverage on permanent total disability and funeral expenses. These benefits can be availed by a minimum investment of only Rs 2,000. The maximum coverage can go up to Rs 15 million having lowest Takaful expense rate of 0.130%. The tenure of Meezan Kafalah is 3 to 15 years for every individual up to 55 years of age. By the end of December 2019, the Bank had provided Takaful coverage of approx. Rs 16.3 billion to more than 28,000 customers - an increase of over 41% from 2018. Meezan Premium Banking Meezan Premium Banking caters to the banking needs of high net worth individual customers and provides them with exclusive services and value-added benefits – from personalized banking services to exclusive discounts and other privileges. Premium Banking customers enjoy priority service at all Meezan Bank branches and also have access to state-of-the-art Premium Banking Centers in major cities of the country. Alternate Distribution Channels In addition to the traditional ‘Brick and Mortar’ branch network, Meezan Bank aims to make the life of its customers easier by providing instant access to banking services through a wide variety of channels, including: IT DEB pla 211 SOHA ATM Network Inter Bank Funds Transfer 66 MEEZAN BANK LIMITED Mobile Banking Application Internet Banking QuickPay Payments using QR Code SMS Alerts 0 0 0 678 678 789 789 789 4 5 4 5 456 456 456 123 123 2 3 2 3 2 3 501 501 211 211 5 2 5 2 25 40 31 7/ 2 5 40 31 7/ 2 5 01/ 5 5 5 5 2 4/ 2 5 VALID50 21 4/ 2 5 VALID 0 1 / 2 5 VALID 0 1 THRU THRU5245 THRU 5245 20 20 / 20 / 2 0 ZA VALID 0 1 01/ 01/ RA VALID RAZA RAZA 0 1 FROM FROM 524 5245 VALID FROM IL IT DEB debit tinum SOHA IL SOHA IL VALID VALID THRU THRU 437 2 0 ED 1 / 2 0 0 01/ SY VALID ZIA FROM 437 VALID FROM 5 NABE EL 5 AKRA M Debit Cards 24/7 Call Centre
68. These channels are often referred to collectively as Alternate Distribution Channels (ADC). In addition to these, the Bank also provides e-Statement, SMS Alert & Email Alerts facilities. A robust state-of-the-art ADC infrastructure is an integral part of the Bank’s corporate philosophy, which emphasizes digital innovation. The main focus of the Bank’s digital strategy is to provide customers with convenient and secure access to their accounts for all banking requirements, wherever and whenever they require. Customers can always perform all their basic banking transactions including; cash withdrawal, e-commerce i.e. online shopping on 3-D Secure websites, shopping & payments with debit cards, funds transfer, bill payments, balance and statement inquiries, product and services information, discount offers information and complaint registrations, among many other services. ATM Network Meezan Bank’s ATM network grew by 17% during 2019, reaching a size of 729 ATMs countrywide. During the year, the ATM network was widely used by majority of the debit cardholders for fastest debit card activation process. Moreover, ATM channel was upgraded to achieve 100% EMV compliance to curtail security threats. Biometric access to ATM was also launched at nationwide ATM network which enables customers to perform Cash Withdrawal, Account Verification, Funds Transfer, Bill Payments & much more. In addition, newly designed bilingual ATM screens were deployed across the fleet to provide a better customer experience. Internet Banking Meezan Bank Internet Banking offers user-friendly interface with aesthetically pleasing look and adaptive design that can easily be used on all types of devices including mobile and tablet. The dashboard view allows customers to access their frequently used features upfront; this helps in delivering one of the fastest Internet Banking experiences in Pakistan. The Bank’s Internet Banking also witnessed unprecedented growth in IBFT and Bill Payment transactions through this channel, which grew by over 52% in 2019 as compared to 41% in the previous year. Mobile Banking Application The Meezan Bank Mobile Banking App has recently been revamped and has become the most preferred and fastest growing medium of digital transactions among all ADC. Financial transactions using the Mobile App grew by 104% during 2019 and it is expected to remain the Bank’s fastest growing channel in the future. Currently, with over 500,000 downloads, the App has been amongst the most trending and best rated apps in its category on both Google’s Play Store and Apple Store. 17% ATM NETWORK 100% EMV COMPLIANT ATM NETWORK 52% IBFT & BILL PAYMENT TRANSACTIONS VIA INTERNET BANKING 104% Debit Cards Meezan Bank’s Debit Cards offer a wide range of features and benefits such as chip-based security, NFC payments, 3-D Secure e-commerce payments and quick debit card activation. The Bank has an extensive alliances and discounts program with special focus on e-commerce and POS promotions. The Bank’s discount program with leading e-commerce merchants including Daraz, Careem and Foodpanda has already become a hallmark of debit card discounts in the industry. TRANSACTIONS VIA MOBILE APP Meezan Bank Debit Cards portfolio continued growing in 2019. During the year, issuance rate of the new cards were 24% higher than last year. POS Transactions grew by 27% and e-commerce transactions grew by 119%. It is due to the long-standing patronage of Meezan Bank’s customers that the Bank now enjoys one of the highest usage and card activation ratios in the industry. POS TRANSACTIONS The Bank grew its Debit Card discount program by adding 180 new brands to become one of the largest discount programs among debit card issuing banks in Pakistan. 27% 119% E-COMMERCE TRANSACTIONS ANNUAL REPORT 2019 67
69. Inter Bank Funds Transfer (IBFT) Meezan Bank offers IBFT facility via its ATMs, Internet Banking and Mobile App, whereby customers can instantly transfer funds to any other bank account in Pakistan. Meezan Bank witnessed a healthy growth of 74% in IBFT transactions in 2019. QuickPay Meezan Bank’s QuickPay service offers a wide range of bill payment options including utility bill payments, mobile top-ups, educational institutions fees, internet service providers, Government entity payments and credit card, etc. through Mobile App, Internet Banking and ATMs. With the addition of 13 new billers, the total count now stands at 103 billers. QuickPay bill payment transactions grew by 67% in 2019. Payments using QR Code Meezan Bank has shown significant transactional growth in QR payment space. Meezan Bank, in partnership with Fonepay, acquired over 10 million QR transactions in 2019. In order to further expand the QR eco-system, Meezan Bank has partnered with Access Group as well to grow the QR merchant network. SMS Alerts Meezan Bank offers one of the most extensive SMS Alerts service to its customers so that they can stay informed about all activities and transactions in their accounts. Continuous efforts are being made to provide fastest delivery of SMS as well as to maintain a high uptime by effectively managing two of the leading SMS gateway providers simultaneously. Meezan Bank is also among one of the few banks that provide e-mail alerts together with SMS alerts as a complimentary service. In 2019, the number of subscribers to the Bank’s SMS Alert service grew by 23%. 24/ 7 Call Centre The in-house Call Centre of the Bank is managed by a professional team of telephone banking officers. The Call Centre facilitates customers by providing product information, performing various operations such as initiating service requests, activating debit cards and taking customer complaints and suggestions, etc. 74% IBFT TRANSACTIONS 67% QUICKPAY BILL PAYMENT TRANSACTIONS OVER 10 MILLION QR ACQUIRING TRANSACTIONS 23% SMS ALERT SERVICE SUBSCRIBERS Corporate Banking Meezan Bank offers a comprehensive array of Shariah based financing solutions to cater to the working capital finance, import, export re-finance, commodity operations financing, long-term finance, documentary credit requirements, and project based financing needs of a large number of corporate clientele comprising public sector entities and multinationals. The Corporate Banking relationship teams work closely with Treasury, Transaction Banking, Investment Banking and Consumer Banking departments to provide improved and newly develop suitable products that accomplish diverse business needs of the Bank’s corporate clients. Despite the economic slowdown and business challenges faced during the year caused by devaluation of Pak Rupee, declining imports, and increase in policy rate, the Bank was able to perform well in terms of Corporate Banking financing and Trade Business. The Corporate Banking Protfolio grew from Rs 312 billion in 2018 to Rs 352 billion in 2019, depicting a growth of 13%. The focused business development strategy adopted by the Bank to vigilantly build a high quality and well diversified portfolio has enabled the Bank to grow its net average corporate assets, with non-performing financing kept under 2%. A detailed description of corporate banking products offered by the Bank is on pg. 117 of this report. 68 MEEZAN BANK LIMITED Rs 352 BILLION CORPORATE ASSETS
72. Investment Banking Meezan Bank provides a wide range of financing solutions including structured finance , project financing, financial advisory services, Shariah advisory services, green and brown field project finance as well as equity and debt capital market arrangements to the Bank's extensive corporate client base. With a team of highly qualified and experienced professionals that include MBAs, ACAs, ACCAs, Engineers and CFA charterholders, the Bank is well equipped to offer a complete range of Investment Banking solutions to its ever demanding clients. Since its inception, the Bank has led advisory & arrangement mandates for a significant number of project finance, syndications & capital market transactions; bringing the total volume of Investment Banking transactions arranged by the Bank to the tune of over Rs 1 Trillion. Highlights of Investment Banking transactions of the Bank include: ■ Issued the first ever Shariah-compliant Additional Tier 1 Sukuk of Rs 7 billion in Pakistan; ■ Advised the first ever series of short-term Sukuk for HUBCO, KAPCO, LALPIR and ENGRO Fertilizers for over Rs 40 billion; ■ Advised and arranged the first ever innovative long term Air Time based Sukuk Issue for Pakistan Mobile Communications Limited (Mobilink); Undertook first ever 100% Shariah-compliant ■ renewable energy project for Foundation Wind Energy Limited; ■ Undertook first Islamic Project Financing deal in Pakistan for Attock Gen Limited; ■ Issued first ever Sukuk backed Project financing deal in Pakistan of over Rs 13 billion for Liberty Power Tech Limited. The year 2019 was yet another challenging year for Pakistan's economy. Amidst these challenges, the Bank was able to negotiate transactions worth Rs 194 billion and added high quality assets amounting to Rs 26 billion to its total financing portfolio through its Investment Banking activities. OVER 1 VOLUME OF Rs TRILLION INVESTMENT BANKING TRANSACTIONS SINCE INCEPTION Rs 194 BILLION WORTH TRANSACTIONS As a part of its efforts of supporting green financing, the Bank has achieved a key milestone for the year - the successful financial close of four Wind Power Projects out of a total of twelve wind power projects approved by the Government of Pakistan. It is pertinent to mention that Meezan Bank secured the maximum number of mandates amongst local banks. The projects include Din Energy Limited, Artistic Wind Power Private Limited, Gul Ahmed Electric Limited and NASDA Green Energy Private Limited. The Bank also continued its efforts towards developing and supporting financial capital market by structuring and arranging Rs 13 billion series of short-term Sukuk for The Hub Power Company Limited and advised & lead managed listing of Pakistan's largest ever listed Sukuk ‘Pakistan Energy Sukuk’ amounting to Rs 200 billion. In addition to this, the Bank structured and executed Islamic portion of Rs 45 billion syndicated finance facility for Pakistan Mobile Communications Limited as one of the Mandated Lead Advisor and Arranger for the purpose of renewing 2G license. During the year, the Shariah Advisory & Technical Services Unit of the Bank has been actively involved in providing Shariah Advisory services to various local and international clients. The unit is also playing a key role in creating awareness on Islamic banking and finance at large and providing training services at both the local and international level. Meezan Bank continues to be widely recognized and acknowledged by numerous local and international bodies for its capabilities in the field of Islamic finance through various awards and accolades. With its Vision to ‘Establish Islamic banking as banking of first choice...’, the Bank is committed to continue innovating in the field of Islamic investment and corporate financing, and maintain its position as the leader of Islamic banking industry in the country. FY2019 ANNUAL REPORT 2019 69
73. Commercial Banking (Including Small & Medium Enterprises (SME) and Agriculture Finance) Meezan Bank is cognizant of the fact that in order to achieve its Vision of establishing ‘Islamic banking as banking of first choice...’ it must increase the outreach of Islamic banking well beyond the blue-chip corporate sector. Accordingly, the Bank has developed a very clear focus on developing the SME and Agriculture sectors, which represent the backbone of Pakistan’s economy. The consistent growth of the Bank’s Commercial Banking business over the years reflects the level of trust and confidence the Bank has built with its customers. This year, in the backdrop of uncertain economic conditions, the Bank followed cautious approach to prevent the build-up of any non performing finances. Resultantly, the overall funded portfolio for this segment stands at Rs 95 billion in 2019 against Rs 108 billion in 2018. Financing Portfolio Commercial, SME & Agriculture Rupees in billion 120 108 95 100 75 80 60 48 40 20 0 28.2 18.5 2014 On the side of trade (Import/Export) mobilization, the Bank has registered a decent growth of 21% achieving a business volume of Rs 501 billion in 2019 against Rs 412 billion in 2018. Small & Medium Enterprises Growth and development of the Small and Medium Enterprises (SME) segment is of vital importance for sustainable socio-economic development of the Country. Meezan Bank is cognizant of this fact and is focused on supporting SMEs by providing modern and efficient Islamic financial services and products. 2015 2016 2017 2018 2019 Trade Mobilization 412 Rs billion FY2018 501 Rs billion FY2019 In addition to its SME business teams working on growing the Bank’s SME portfolio, Meezan Bank is also working with International Finance Corporation (IFC) for their advisory and technical services in this field. According to IFC, the Bank is well positioned to capitalize on the opportunities available in the industry. In this regard, a two-pronged approach has been adopted; the first is to strengthen & deepen relationship with the existing liability customer base by offering them products through program-based financing and the second is to attract new-to-bank financing customers through a lead generation strategy. Due to various economic challenges, the Bank maintained the size of its SME financing portfolio in 2019, keeping non performing finances at a reasonable level. Facilitating and growing trade business has been an area of concentration and plays a pivotal role in the overall SME banking philosophy. Despite an overall slow-down in trade (Import / Export) activities, especially on the import side, the Bank still managed to accelerate its pace of SME trade mobilization and recorded a growth of 22%, achieving Rs 254 billion trade volume in its SME business in 2019 as compared to Rs 208 billion in 2018. Karandaaz Program In 2015, Meezan Bank partnered with Karandaaz Pakistan to suppport Small & Medium size business. The partnership is based on a risk sharing mechanism between Karandaaz Pakistan and the Bank. Karandaaz Pakistan promotes access to finance for small businesses through a commercially directed investment platform and financial inclusion for individuals by employing technology enabled digital solutions. SME Trade Mobilization 208 Rs billion FY2018 254 Rs billion FY2019 Initially, the the program was started for structured products for financing vendors and distributors operating in organized supply chains in Pakistan. Later, the partnership was extended to cater other products like fleet financing, equipment Ijarah, agri value chain finance and other long-term & short-term products under SME financing. Meezan Bank and Karandaaz are both cognizant of the role and importance of SMEs for the growth of an economy. We are optimistic that this partnership will facilitate SMEs seeking Shariah based financing solutions to grow their businesses and contribute more towards the growth and stability of the economy. 72 MEEZAN BANK LIMITED
74. Commercial Vehicles Financing Meezan Bank entered the Commercial Vehicles financing business in January , 2016. The Bank offers financing under Ijarah module to SME and Corporate segment for commercial vehicles ranging from rigid trucks, vans, coasters, buses to heavy duty trucks, Prime movers etc. With quick and hassle-free processing, Meezan Commercial Fleet is now holding the largest market share in the industry. The specific product is tailored to assess and meet the financing needs of customer with the help of qualified and skilled professionals of the industry. This product offers to logistics, transportation, distribution, oil marketing companies etc. in a Shariah-compliant way. Agriculture Financing Agriculture contributes almost one fifth to the country’s GDP and is recognized as the cornerstone of the country’s economic wheel. Meezan Bank holds à critical responsibility in supporting agricultural production through serving the Shariah-compliant financial needs of farming communities who are the principle suppliers of raw material in the agriculture value chain. Increase in agricultural productivity leads to increase in the income of rural households, which in turn leads to more demand for industrial products. Progress of the Agriculture sector therefore provides a sound base for economic development and is considered one of the preconditions for take-off or self-sustained growth of any developing economy. Meezan Bank offers a diverse product suite which addresses the financial needs of a vast majority of farmers. The Bank serves the needs of individual farmers as well as provides tailor-made financial solutions to the value chain actors in the Agriculture Value Chain. The Bank has partnered with some of the country’s most well-reputed organizations to provide specialist banking solutions in rural communities. Through these tie-ups the Bank has been able to deliver easy access to banking solutions to the farming community. Meezan Bank is also supplementing its outreach to rural enterprises through Kissan Baithak - an innovative initiative aimed at developing collaboration with farmers through sharing information by qualified agriculture graduates serving as Agriculture Finance Officers. Some of the initiatives worth mentioning here are the successful implementation of computerized LRMIS-PLRA System, execution of SLAs with external Stakeholders Punjab Land Revenue Authority (PLRA), and Institutional collaborations with SEDF (Sindh Enterprise Development Fund). Portfolio Mix Meezan Bank has a diversified commodity financing portfolio, well-spread amongst Wheat, Edible Oil & Seed, Cotton Ginning, Fertilizer, Coal, Sugar, Rice, Feed, and Steel sectors. Furthermore, Meezan Bank is continuously exploring new and untapped sectors of the economy in order to enhance its portfolio and to diversify its risk. ANNUAL REPORT 2019 73
75. Consumer Finance Meezan Bank is the pioneer in providing Shariah-compliant consumer financing in the country and offers a diverse range of consumer asset products to its customers . The Bank’s performance of this important business vertical during 2019 is detailed below: Meezan Car Ijarah The automobile industry of Pakistan witnessed a steep decline of 16% in overall sales during 2019 as opposed to a growth of 21% in 2018. Car sales stood at 279,102 units as compared to 331,880 units last year. The key reasons behind the decline were escalating vehicle prices due to Rupee depreciation against the Dollar and an increasing discount rate which has been making car financing less enticing for buyers. Meezan Bank is among the leaders in the country’s auto-finance industry with a portfolio comprising of 35,000 active contracts for new, used & imported vehicles. The Bank follows a strategy of maintaining stringent credit criteria for the Consumer Finance segment. Meezan Easy Home Islamic banking has overtaken conventional banking in terms of value in housing finance for the first time in history. The industry as a whole exhibited an impressive performance to achieve this mark. According to the State Bank of Pakistan (SBP), the Islamic banking industry’s share in value stood at Rs 54.49 billion for housing finance by the end of September, 2019 against Rs 34.64 billion for conventional banking. Interestingly, the number of customers of the Islamic banking industry is slightly less than that of the conventional banking industry. The number of Islamic banking customers stood at 8,346 as against of 8,563 of conventional banks excluding their Islamic banking windows. Working towards the cause of promoting low cost housing in Pakistan, Meezan Bank took the initiative, with Akhuwat Foundation, of providing low cost housing finance in the country to the underprivileged classes of the society in order to improve their standards of living. Meezan Consumer Ease Meezan Bank’s Consumer Ease Unit offers Shariah-compliant consumer durable goods financing to its customers. This business segment is progressively growing and offers financing for a diverse range of Consumer Durables. Meezan Bank allows a limit based financing facility for acquisition of consumer durable goods. Once the limit of the customer is approved, the customer can utilize the limit for purchase of durable goods offered by the Bank. This facility has been well-received by the customers since it makes the acquisition of household durables quick and convenient. Meezan Bike Ijarah Meezan Bike Ijarah is Pakistan’s first Riba-free motorcycle financing facility which is based on the Islamic financing mode of Ijarah (leasing). In a short span of time, Meezan Bank has managed to form alliances with all major motorcycle producers of Pakistan and has financed over 5,000 bikes till December 2019 across all major cities of Pakistan. Labbaik Hajj & Umrah Meezan Labbaik, Hajj & Umrah Facility is a completely Halal & Riba-free travel solution for Hajj & Umrah, that was initiated by the Bank as a Corporate Social Responsibility project and has gained immense popularity over the years, especially after its enrolment in Government Hajj Scheme in 2015. Under Labbaik, Meezan Bank is enrolled in Govt. Hajj Scheme through which customers can file their Hajj applications through its branches and be eligible for Hajj ballot conducted by the Ministry of Religious Affairs and Inter Faith Harmony (MORA & IH). In its fifth year of enlistment i.e. 2019, the Bank collected over 30,654 Hajj applications and secured 3rd position among the fourteen Banks on MORA’s panel. 74 MEEZAN BANK LIMITED
76. Labbaik Travel Asaan provides an excellent opportunity to offer Private Hajj & Umrah to customers on convenient terms. The customer can either pay the complete cost before travelling or avail an Instalment Plan, at zero percent profit, in which the customer makes a down payment before travelling and the balance amount is paid in 12 equal monthly instalments without any additional charges. Labbaik Savings Asaan is another option offered to customers who wish to perform Hajj or Umrah later in life (6 months to 20 years ahead) for which they can save money under a Mudarabah based deposit account that gives profit every month on the deposited amount. Non Performing Finances The Bank has maintained strong credit screening and Risk Management criteria, since these form the backbone of any financing institution. Testimony to the effectiveness of the Bank’s credit approval criteria is the fact that its NPL ratio for the Commercial Banking segment is successfully maintained around 2.3% despite the challenges faced by banking sector owing to rising interest rates and overall economic slowdown during 2019. Supply Chain Financing The Bank established a Supply Chain Finance (SCF) Unit in 2016 to meet the financing needs of vendors and distributors operating in organized supply chains in Pakistan. Financing is provided under structured financing programs as agreed with reputable local corporates. Towards this end, the Bank has signed mandates with top tier corporates operating in Automotive, Fertilizer, Lubricants, and FMCG sectors of the economy. Through these partnerships with Corporates, the Bank has successfully brought a large number of SME customers in the financing net. The Bank grew its SCF customer base from 252 customers in 2018 to 294 customers in 2019 depicting a 16.67% growth over the year. Moreover, despite challenging financing environment, the SCF asset portfolio grew from Rs 2.76 billion in 2018 to Rs 3.78 billion in 2019, depicting growth of 37% over the year. The Bank is committed to scaling up its SCF program further and is working on a number of initiatives including purchase of a dedicated SCF Technology Platform, new product programs for vendors (Reverse Factoring) & distributors, and increased engagement with Corporates. The Bank is also engaged with State Bank of Pakistan to grow the SCF ecosystem in Pakistan. SCF Asset Portfolio 2.76 3.78 Rs billion Rs billion FY2018 FY2019 The Bank partnered with Engro Fertilizers for a pilot Agri Value Chain Financing Program. As part of this program, Meezan Bank provided financing to select farmers for their advisory, quality inputs, crop monitoring, farm support & market linkages requirements. The program included branchless banking services and clean financing facilities for the Kharif season. Trade Business Islamic banking is ideally suited to cater the trade finance needs of customers and the Bank’s trade business (Import & Export) performed very well in 2019, with a total volume of Rs 1.1 trillion. The Bank, with excellent service delivery capabilities and well equipped teams of professionals, has been trusted both by local customers and multinational companies to be the strategic banking partner for their 360 degrees banking needs. Trade Business Rupees in Billion 1200 1,013 1000 800 552 600 400 376 1,085 712 461 200 0 2014 2015 2016 2017 2018 2019 ANNUAL REPORT 2019 75
77. Transaction Banking The Bank realigned its product offerings consisting of International Trade , Domestic Payment & Collection Management and Corporate Remittances within Transaction Banking in 2019. The Bank successfully remained at the forefront of catering its customers for all their international trade needs and achieved a total trade (Import / Export) volume of Rs 1.1 trillion for the year 2019. The Bank is committed to ensuring the best level of services to this critical activity of the economy by providing superior services in a globally demanding market. Rs TRILLION TRADE VOLUME Meezan eBiz With the help of Meezan eBiz, customers can view and download their account balances, account details, and account statements. Meezan eBiz+ Meezan eBiz+ is a comprehensive customized online Cash Management solution which allows Corporate, Commercial, and SME customers to not only electronically manage their banking relationship, but also reduce operational burden by outsourcing the management of country wide collection, payment and trade related needs. Each implementation is tailor-made to meet customers’ specific MIS and reconciliation requirements. Functionality available in eBiz+ includes: Collection & Payment Module Manage collections through branches as well as electronic and Alternate Distribution Channels Manage payments like funds transfer, Inter Bank Funds Transfer, Pay Order issuance, RTGS, corporate cheques issuance, utility bills, as well as e-Dividend payments Real Time Information through online reporting for reconciliation and transactional alert through Secured File Transfer Protocol (SFTP), email and SMS Host to host integration with customer ERP system for both collection and payments execution Dedicated Customer Service Team with excellent system integration capabilities Trade Module Online transmission of Letter of Credit (LC) application and status monitoring Application transmission, status monitoring, and tracking Online view, download, and printing of draft & transmitted SWIFT messages Online view, download, and printing of order form and debit advice. Template creation 76 MEEZAN BANK LIMITED 1.1
78. Leveraging eBiz +, Meezan Bank continued to expand in the domestic payments & collections market, servicing a diverse base of customer segments including Manufacturing, Pharmaceuticals, Educational Institutions, Distribution Companies and Shipping. The Bank has not only received a very positive response from local companies but also from multinational companies and acts as a trusted strategic partner for their transaction banking needs. Home Remittance The Home Remittance Unit (HRU) of Meezan Bank plays an active role in the nationwide drive of stimulating and formalizing home remittances through banking channels under the Pakistan Remittance Initiative (PRI) and non-PRI arrangements. A focused approach towards this business has contributed in improving the banking experience of customers and has allowed the Bank to progressively grow this business segment. To facilitate its customers, the Bank continues to run a dedicated Home Remittance Customer Support service which directly resolves queries of Home Remittance customers in order to provide them better service and prompt resolution of complaints. In the year 2019, the Unit established presence in a new market of South Africa and increased clientele in UAE, UK and USA. Many new clients were integrated with the core system to ensure smooth and undisrupted processing of transactions. In addition to widening its customer base, the prime focus of the Unit this year was on optimizing operational efficiencies. To this end, a home remittance system was implemented in the year which has not only enabled seamless transaction processing and automation of operations but also ensured enhanced compliance checks and due diligence. Heading into 2020, the Bank’s focus will be on offering tech savvy solutions and digitalization of the customer experience to further facilitate customers. Shariah Advisory Services Meezan Bank regularly facilitates banking as well as non-banking financial institutions, including mutual funds, stock exchange, Takaful companies, microfinance companies and other corporate entities, both locally and internationally, in developing Shariah-compliant products for their business needs. In recognition of Shariah advisory services provided, the Bank has been awarded with the GIFA special award in ‘Shariah Advisory Role’ 2019. GIFA Special Award (Shari’a Advisory Role) 2019 MEEZAN BANK LIMITED During the year, the Shariah Advisory & Technical Services Unit of the Bank has been actively involved in providing advisory services to various local and international clients. The Unit is also playing a key role in creating awareness on Islamic banking and finance at large and providing training services at both the local and international level. The Bank has successfully facilitated the country’s first electronic Commodity Murabaha transaction through Pakistan Mercantile Exchange (PMEX). Meezan Bank served as the only Shariah Technical Services and Support Provider for the development of this Shariahcompliant trading platform at PMEX. ANNUAL REPORT 2019 77
79. The Bank provides Shariah advisory services in Australia to an Islamic Cooperative Financial Institution related to housing finance and conducted training for their directors and staff . The Bank has also developed Takaful product to introduce Takaful services in Australia. The Bank also conducted training on Takaful for the senior members of the institution and relevant staff. Meezan Bank also provides services to Bahrain Institute of Banking and Finance (BIBF) through sharing its expertise, knowledge and experience by preparing content for their AAOIFI courses. For this purpose, the Bank prepared presentations simplifying the clauses, short case study / practical examples and self-assessment exercises for all AAOIFI Shariah and Accounting Standards. The Bank also offers distance learning programs on Islamic Finance to professionals and students through an internally established unit ‘International Institute of Islamic Bankers’ (IIIB), which is Pakistan’s first distance learning institute accredited by Finance Accreditation Agency (FAA), Malaysia. In the area of Capital Markets, the Bank facilitated its clients in launching several investment funds and plans across the year, bringing total funds and plans under advisory to more than 60 with a total size of over Rs 170 billion. OVER Rs 170 BILLION TOTAL FUNDS & PLANS UNDER ADVISORY Financial Institutions and Correspondent Banking In order to provide its services over a wide global network, the Bank has further expanded its financial institutions & correspondent banking network, which now spreads to over 80 countries with more than 700 correspondents. This network provides customers with a one-stop solution for their banking needs including export & import transactions, foreign remittances, etc. The Bank has also established a Compliance Unit under the Financial Institutions Department this year in order to address the increasing need of compliance and Know Your Customer (KYC) for correspondent banking. The unit acts as a liaison and focal point for compliance and KYC responses to correspondent banks for remittance and trade transactions and also conducts KYC reviews of all trade correspondents in close co-ordination with the Compliance Department of the Bank. OVER 700 CORRESPONDENTS OVER 80 COUNTRIES A Euroclear custody account was opened for the custody and settlement of the foreign Sukuk holding of the Bank with First Abu Dhabi Bank, which is the largest bank in UAE and has an AA credit rating by all three international credit rating agencies. This enables the safe custody and settlement of transactions of the Sukuk portfolio, which earns an Islamic return for the Bank. The Financial Institutions Department added the Bank’s confirmation to inward international letters of credit for renowned exporters whereby the Bank assumes the payment risk of LCs opened by foreign banks for exports from Pakistan. This is offered as a trade service in a Shariah-compliant manner in return for a fee. Back-to-back guarantee business has also expanded with an increased number of international banks including China CITIC Bank, ICBC China, Commerzbank Germany, Wells Fargo USA, etc. approaching Meezan Bank to issue guarantees against their counter guarantees. This reflects on an improved image of Meezan Bank internationally and enhanced level of comfort of the correspondent banks working with the Bank. The beneficiaries of these guarantees include Government and private entities including SSGC, Pakistan Railways, CMA, Civil Aviation Authority, and various others with applicants belonging to 18 different countries. Treasury Meezan Bank has one of the most well equipped Treasuries in the country, both in terms of people and systems. The Bank offers a wide range of Shariah-compliant products that not only serves the foreign exchange needs of its clients but also makes effective utilization of excess liquidity to generate profits that are paid as return to depositors. 78 MEEZAN BANK LIMITED The year 2019 presented its fair share of challenges for banks, both in terms of a volatile FX market, a rising interest rate environment and a drop in the country’s overall trade volumes. Despite these conditions, Meezan Bank’s Treasury with its well-equipped systems, dedicated team and wide array of Shariah-compliant offerings not only captured higher trade volumes, but also optimized liquidity
80. management and prudently managed the markets risks , which led to higher profits and enhanced the value proposition of the Bank. The Bank achieved trade volumes of approximately USD 7.14 billion, an 18% growth over the previous year. Volumes increased through strong focus of the sales team to ensure that the Bank’s clientele was given the right advice to successfully navigate through a volatile market, and competitive pricing done by the FX Interbank desk. The Bank’s FX interbank desk not only continued to facilitate the sales desk in managing the flow of % business, but also TRADE managed the exchange VOLUMES rate risk of the Bank’s profitably in a market where volatility reached 7% and the overall currency value eroded by 16%-18%. The FX desk also engaged with global FX liquidity providers to broaden its execution capabilities, which in turn allowed the Bank to facilitate its customers with lean pricing. 18 Volume of FX Business routed through Treasury USD Billion 8000 6,877 7000 6000 5000 7,145 5,807 5,235 4000 3000 2000 1000 0 2016 2017 2018 2019 The Bank’s ALM desk successfully optimized the banking book despite a rising interest rate environment, an increasing deposit base, maturity of GoP Ijarah Sukuk 17 and 18, and limited avenues for Shariahcompliant investments. The ALM desk was able to defer the maturity of the maturing Sukuks under Bai Muajjal with both the Ministry of Finance and the State Bank of Pakistan for medium-to-long dates, with overall volume close to Rs 100 billion – this placed the Bank in a comfortable position in respect to reserve requirements as well as strengthened its position in the market. Meezan Bank was also the lead participant in the Pakistan Energy Sukuk auction with participation of Rs 85 billion against a total issue size of Rs 200 billion. Al Meezan Investment Management Limited Asset Management The asset management business of Meezan Bank is managed by its subsidiary, Al Meezan Investment Management Limited (Al Meezan). The company has been in operation since 1995 and has one of the longest and most consistent track records among private sector companies managing mutual funds in Pakistan. It also has the distinction of being the only asset management company in Pakistan with the exclusive mandate of providing Shariah-compliant investments solutions to its investors. Apart from asset management, Al Meezan is also licensed to render Investment Advisory Services and manage Voluntary Pension Schemes. Al Meezan, with a track record of 25 years of Fund Management operations, reflects strong Islamic asset-management franchise and healthy assets under management (AUM) profile with sizeable retail AUMs, adequate governance & control framework, stable & professional management team and well defined investment process. The Company has also always strived to serve its esteemed clientele with distinction and service excellence. This is evident in the fact that over these two decades, Al Meezan has managed to amass a healthy investor base of over 111,000 customers, who have entrusted the company with providing them unique investment options and competitive returns. The Company has grown considerably, since inception, and has recorded to its credit multiple achievements. The Company offers a comprehensive product suite of 17 mutual funds and multiple investment plans spanning from basic equity and income funds to commodity funds, dedicated equity fund and aggressive asset allocation funds. The company also manages the largest Voluntary Pension Fund in Pakistan, with Assets Under Management (AUM) crossing Rs 123 billion mark as at December, 2019. Al Meezan is the largest Shariah-compliant asset management company of the country. The company, subsequent to year end, has also surpassed milestone of Rs 125 billion AUMs. The company is also increasing its presence and now has 26 branches across Pakistan. Al Meezan’s AUM represents around 18.27% of the total mutual funds industry, and 49.45% of the Shariah-compliant mutual funds industry as at December 31, 2019. ANNUAL REPORT 2019 79
81. Al Meezan was also granted with multiple accolades during the year 2019 as given below : Award Awarded By The Islamic Asset Manager of the Year 2019, Pakistan The Asset Triple A Best Investment Management Company - 2019 - Pakistan World Finance Media Global Islamic Fund Awards – Equity 10 year: Al Meezan Mutual Fund Refinitv (Lipper) Best Islamic Asset Management Company 2019 IFFSA Most Innovative Sharia Compliant Fund – Meezan Islamic Fund – Pakistan, 2019 Global Business Outlook Magazine Best Islamic Mutual Fund Al Huda CIBE Funds Under Management of Al Meezan Rupees in Billion Funds under Management Discretionary Portfolios 135 140 118 107 100 60 66 40 20 0 103 78 59 56 2014 61 2015 10 9 94 91 123 2017 2018 2019 Dec-2019 71 2016 The Product Development team at Al Meezan works proactively to introduce new Shariah-compliant investment structures, while the Product Development and Shariah Compliance teams of Meezan Bank ensure Shariah compliance of funds under management of Al Meezan. During the year, Al Meezan successfully launched Meezan Strategic Allocation Fund III (MSAF-III), the Al Meezan Mutual Fund (AMMF) Meezan Islamic Fund (MIF) KSE Meezan Index Fund (KMIF) Meezan Energy Fund Meezan Dedicated Equity Fund MEEZAN BANK LIMITED Annualized Return since Inception till December 31, 2019 CY19 Returns 5,037 15.76% 4.51% 29,675 16.01% 3.87% 1,913 608 11.56% -5.42% 6.77% 0.65% 1,255 -7.26% 0.55% 21,438 15.32% 10.83% 10,308 11.77% 10.49% 3,910 11.29% 10.40% 32,040 11.46% 11.47% 1,644 0.35% 7.80% 4,682 12.66% 6.99% 327 145 169 326 8.65% 8.37% 7.63% 1.48% 5.99% 8.01% 9.53% -5.73% 929 548 877 967 239 843 -4.98% -5.78% -6.98% -6.83% -2.46% 4.84% -2.16% 5.77% 5.40% 5.44% 5.30% 9.35% 1,376 306 300 169 99 5.11% 5.84% 6.23% 8.11% 7.51% 9.10% 9.31% 8.42% 9.56% 7.75% 99 N/A N/A 361 11.15% 22.29% 4,666 2,897 2,628 92 12.90% 11.96% 11.75% 9.88% 5.59% 10.22% 10.14% 21.43% Fixed Income Funds Meezan Islamic Income Fund (MIIF) Meezan Cash Fund (MCF) Meezan Sovereign Fund (MSF) Meezan Rozana Amdani Fund (MRAF) Asset Allocation Fund Meezan Asset Allocation Fund Balanced Fund Meezan Balanced Fund (MBF) Fund of Funds Meezan Financial Planning Fund of Fund Aggressive Moderate Conservative MAAP-I Meezan Strategic Allocation Fund MSAP-I MSAP-II MSAP-III MSAP-IV MSAP-V MCPP-III Meezan Strategic Allocation Fund - II MCPP-IV MCPP-V MCPP-VI MCPP-VII MCPP-VIII Meezan Strategic Allocation Fund – III* MCPP-IX Commodity Fund Meezan Gold Fund Pension Fund Meezan Tahaffuz Pension Fund Equity Sub fund Debt Sub Fund Money Market sub fund Gold sub Fund Total *launched in CY-2019 80 Net Assets Rs. million (December 31, 2019) Equity Funds The AUMs of Al Meezan have recorded an average annual growth of over 18% during the last five years, as shown below: 80 The fund-wise break up of assets under management along with return on these funds since inception and for calendar year 2019, are as under: Islamic Mutual Funds Al Meezan has been assigned the highest Asset Management Quality rating of AM1 (AM-One) with stable outlook by both the VIS Credit Rating Company Limited and PACRA Limited. During the period, the outlook on the assigned rating to Al Meezan was improved by VIS to ‘Stable’. The rating incorporates the company’s strong brand name, structured investment process and sold track record of AUMs growth, reflecting established standing of Al Meezan in the asset management industry, as the largest AMC in terms of AUMs and pioneer in Shariah-complaint investments in Pakistan. The rating also denotes excellent management characteristics exhibited by the Fund Manager. 120 third instalment in the series, after an enthusiastic response from investors for MSAF-I and MSAF-II. 123,153
82. Operations Review For an organization to deliver products and services that consistently meet the demands of its customers , it needs to have an efficient support functions infrastructure. At Meezan Bank, the support units work together to ensure that all transactions undertaken by the Bank are in accordance with the directives of its Resident Shariah Board Member (RSBM) and the Shariah Supervisory Board (SSB) as well as with the Bank’s Policies and Procedures. Following is a brief introduction of the support units and their role in the organization: Service Quality Service Excellence is one of the three core values of Meezan Bank along with Shariah Compliance and Integrity. In addition, customer centricity is also one of the Bank’s core strategic goals as it aspires to be a World-class Customer Centric Bank. The Bank believes in nurturing a service culture that ensures consistent delivery of its products and services to customers across all banking channels within stringent service standards monitored regularly by a dedicated team. A Service Board, chaired by the Bank’s President & CEO and comprising senior level representation from key business and support units, meets regularly to review service delivery performance of the Bank and takes measures to ensure that the Bank delivers a superior banking experience to its customers. A dedicated Service Quality team regularly monitors the performance of branches on service standards defined by the Service Board and evaluates branch service quality. The Bank also uses service evaluation techniques such as Mystery Shopping and Customer Satisfaction Surveys for obtaining feedback for improving its products and services. The Bank has a dedicated Complaint Management team that handles customer complaints under the Customer Grievances Handling policy approved by the Board. The Bank’s robust complaint handing mechanism allows its customers to log complaints through a number of channels, including a 24/7 Call Centre, website, a dedicated email address for complaints and ‘Hearing and Caring’ drop boxes placed at branches nationwide. A Complaint Management Dashboard keeps the Bank’s senior management updated on the status of complaints resolution. During 2019, the Bank has paid special attention to keeping its customers as well as the general public aware of financial safety and security measures to protect them against frauds and scams. OVER 9.4 9 MILLION SMS SENT IN AWARENESS CAMPAIGNS Information Technology and Digital Banking Meezan Bank uses state-of-the-art technology to consistently deliver a world-class banking experience that is reliable, efficient and secure. The Bank is constantly striving to improve its offerings through meticulous process streamlining, expanding its integrations with external applications, increasing customer touchpoints, continuous in-house development, persistent workflow automations and maintaining a secure and quality focused infrastructure. The Bank synergizes digital and ADC alongwith data analytics to drive innovation and automation through state-of-the-art technological solutions. Customers, be they corporates, medium and small enterprises or individuals have the advantage of a consistent, pleasant and Shariah-compliant multichannel experience at Meezan Bank as its services are available to them whenever, wherever and however they choose to avail them, whether digitally or in-branch. OVER 40 PROCESSES AUTOMATED FY2019 ANNUAL REPORT 2019 MILLION 81
83. Major technology-related initiatives of the Bank in 2019 were : Digital Banking Platform Easy to use mobile apps and user-friendly experience on web banking applications are only the initial steps towards digitization. Meezan Bank believes that digitization is about improving customer insights, implementing end-to-end secured digital processes and products that optimize performance, taking actions in real-time through data-driven business decisions and promoting a digital culture that supports internal transformation and responds to evolving customer behaviors. Having established a differentiator in the mobile app and web banking space, Meezan Bank has invested in a unified digital banking platform that will enable it to maximize the use of intelligent technology for delivering innovation in customer services with an expansive set of digital capabilities. 9:41 AM 100% Meezan SMS & Email Alert Service Your SMS Alert service has been activated. Our codes for sending SMS Alerts are 8079 and 9779, save them on your phone as “Meezan Bank”. Expanding Customer Touchpoints Digitization and customer facilitation have been the hallmarks of Meezan Bank’s recent growth initiatives. A key focus is to increase customer touchpoints and provide a consistent experience across each touchpoint. Towards this goal, the Bank has launched a new mobile app that comes with additional security features and an improved customer experience, including the capability to register and login using fingerprints and securely add beneficiaries. Meezan Bank has also switched all its magnetic strip cards to chip-based and NFC-compliant Tap and Pay cards providing greater security to its customers when using Point-of-Sale devices and ATMs. The Bank’s consistent focus on increasing and securing customer touchpoints has ensured that Meezan Bank becomes the first bank in Pakistan to launch NFC-enabled cards. The Bank’s focus on efficiency and sustainability has led it to directly integrate with Mastercard, adding speed while eliminating dependency on a local switch. The Bank’s new feature of fingerprint login on ATMs enables card-less cash withdrawals, fund transfers and bill payments, providing convenience to customers by enabling them to make transactions securely without the need to carry debit cards. Increasing External Application Integrations The growth of Fintechs that serve diverse new customer segments and offer an assortment of services has opened new avenues for Meezan Bank to form partnerships and enrich its portfolio of services. To facilitate this integration, the Bank has continued to expand its enterprise integration architecture - adding flexibility, agility and fine-grained visibility to successfully integrate a variety of payment originating applications throughout 2019. Notable successes include inward remittance and billing applications. 82 MEEZAN BANK LIMITED
84. Product Development The Bank has a dedicated Product Development Unit that works as an autonomous unit under its Customer Support Group . The Bank does extensive research on new and upcoming products having prime focus on Retail, Consumer and Branchless Banking products and services. Major functions of the Product Development Unit comprise: Coordination and collaboration with business support functions including IT, Operations & Compliance to competently manage product improvement and execution. Coordination with SBP Islamic Banking Department for Retail Banking products. Overall management of the Bank’s deposit pools. Research on new Product Development, Consumer, Retail and Branchless Banking products. Staff training related to Retail, Consumer and Branchless Banking products. Shariah Compliance Shariah compliance is a way of life at Meezan Bank and the Bank has a zero-tolerance policy in this regard. Various checks and balances ensure that all the products, services, processes, policies and procedures of the Bank are fully Shariah-compliant. To continually meet this objective, a dedicated department was established in 2005 to provide a centralized hub for research and product development activities, finding practical and Shariah-compliant solutions for different financial needs and conducting Islamic banking trainings and Shariah compliance exercises. The Shariah Compliance Department works under the guidance and direct supervision of the Bank’s Shariah Supervisory Board (SSB) for the following functions: Facilitating new research development activities. and product of existing Facilitating the refinement products and procedures. Providing Islamic banking trainings to new and existing staff members. Conducting regular Shariah branches and departments. Coordinating with Supervisory Board. the reviews Bank’s of Shariah Facilitating learning programs of Islamic banking, both in-house and at external avenues including educational institutes and training companies. The Bank has achieved such success and recognition in its research and product development activities that the practices and procedures adopted by Meezan Bank are accepted as benchmarks of the Islamic banking industry, both locally and internationally. Shariah Structuring and Review The Bank has a dedicated Shariah structuring team that works with Product Development, clients, Shariah scholars, lawyers, law firms and accountants to advise client-specific structures for obtaining Shariahcompliant financing facilities. More than 3,000 such cases were processed during 2019. The Bank’s staff also visited over 225 clients to gain hands-on understanding of their business processes to structure Shariah-compliant financing solutions that suit their needs. During 2019, the Bank successfully played the roles of Mandated Lead Arranger, Shariah Advisor and Investment Agent for execution of Rs 200 billion Pakistan Energy Sukuk-I. The Sukuk is an SLR-eligible instrument which also supported the Islamic Banking Institutions in maintaining their SLR instruments inventory. The Sukuk has also been listed in Pakistan Stock Exchange (PSX) and can be traded by institutions as well as individuals. Rs 200 BILLION PAKISTAN ENERGY SUKUK-I The Bank is also playing its leading role as part of Joint Financial Advisors to the Government of Pakistan for Sukuk Program. ANNUAL REPORT 2019 83
85. During the year , the Bank worked on the Shariah Structure and legal documentation of GoP Ijarah Sukuk on Jinnah International Airport Karachi. The Bank actively provided its support to SBP in adopting various AAOIFI Shariah standards in Pakistan. The Bank launched three Shariah-compliant refinance schemes, namely Islamic Financing Facility for Renewable Energy, Islamic Financing Facility for Storage of Agricultural Produce and Islamic Financing Facility for Modernization of SMEs. The Bank partnered with Akhuwat Foundation to provide low cost Diminishing Musharakah based housing finance product to low income segment of the society and will continue to explore more avenues for providing financial solutions to this segment. The Bank has contributed in providing an enabling financing environment to SME and Agriculture sector by providing different Murabaha, Salam and Tijarah based solutions for addressing their financing requirements. The Bank continued its efforts to increase Shirkat-ul-Aqd based financings, as a result of which the quantum of Running Musharakah transactions continued to rise and the total Running Musharakah financing at year-end stood at slightly over Rs 154 billion, which is now 30% of the Bank’s total financing portfolio. The Bank worked on 23 syndicated / structured transactions including a shortterm Sukuk based on Shirkat-ul-Aqd, Diminishing Musharakah based Project Financing, long-term Diminishing Musharakah for Wind Power Projects through the State Bank of Pakistan’s Renewable Refinance facility and Working Capital Financing based on Running Musharakah. Some of the major transactions are as follows: 3 SHARIAH-COMPLIANT REFINANCE SCHEMES LAUNCHED LOW COST HOUSING FINANCE PRODUCT 23 SYNDICATED/ STRUCTURED TRANSACTIONS PROCESSED The Bank has structured and developed a customized Diminishing Musharakah – Sale & Lease Bank based syndicated financing solution for RLNG based power plant of National Power Parks Management Company (Private) Limited. In line with its commitment to support green and environment friendly projects, the Bank has provided long-term Diminishing Musharakah & short term working capital syndicated Running Musharakah-based solutions to 5 Wind Power Projects. The Bank has structured and developed a customized short-term working capital Sukuk based on Shirkat-ul-Aqd for Hub Power Company and long-term Sukuk based on Shirkat-ul-Aqd for Engro Powergen Thar (Private) Limited. Contributions Towards the Islamic Banking Industry of Pakistan ■ ■ ■ 84 The Bank continued to play a key role in supporting IBA-CEIF towards the common aim of capacity building for the Islamic banking industry. Various sessions for banking practitioners, Shariah scholars, judges and academicians were conducted at IBA-CEIF with Meezan Bank’s support. The programs offered vary from a wide range of introductory level programs to AAOIFI certification level programs. Meezan Bank is also a strategic partner for Lahore University of Management Sciences (LUMS) and Institute of Management Sciences, Peshawar in supporting the activities and sessions organized by these institutes. The Bank has been actively working with the State Bank of Pakistan on various matters relating to the Islamic Banking industry, such as improvement of Shariah Governance Framework, issuance of AAOIFI Shariah standards, liquidity management solutions, etc. The Bank’s senior officials held meetings with various Government officials, ministers and policy makers including those of Ministry of Religious Affairs, Pakistan Bait-ul-Mal for creating awareness about Islamic banking and finance. MEEZAN BANK LIMITED
86. Internal Training Meezan Bank has put into place a rigorous training regime for its staff to enhance their knowledge and skills in Islamic finance . The learning initiatives include basic orientation for all new staff, specialized functional modules on various business products and processes, certificate programs on Islamic banking as well as refresher programs. 100 TRAINING SESSIONS During the year, 100 training sessions comprising more OVER than 1,450 man hours were organized for the staff members across the country MAN HOURS catering to more than 3,800 employees of the Bank. This number includes orientation OVER sessions for new joiners, refresher programs like Asset Refresher, Deposit Refresher, EMPLOYEES TRAINED Trade Finance & Treasury Operations and certification programs in Islamic financial products. The Bank also focused on utilizing different mediums for dispensing learning activities which include development of training videos on various topics of Islamic banking and finance and implementing a test-based learning management system. 1,450 3,800 The Bank invited a number of professionals and academicians from abroad to share their knowledge on various practical and academic issues with the Bank’s middle and senior level staff. External Training (Customer & Public Awareness Initiatives) Meezan Bank’s efforts towards realizing its Vision have led to numerous projects and partnerships focused on creating awareness about Islamic banking among different segments of the society. The Bank arranged approximately 143 seminars in major cities of Pakistan which were attended by more than 13,800 participants. During the year, the Bank arranged specialized full day workshops for its corporate clients in 5 cities of Pakistan which were well attended by corporate customers of those cities. The Bank’s staff members conducted various training programs at IBA-CEIF, National Institute of Banking & Finance (NIBAF) and Institute of Bankers Pakistan (IBP). Meezan Bank’s staff taught Islamic banking courses and conducted seminars in a number of reputable universities across the country. 143 SEMINARS OVER 13,800 PARTICIPANTS TRAINED In the academic field, Meezan Bank also provided support to Journal of Islamic Banking and Finance through contribution of academic and scholarly articles / research papers. Shariah Audit Meezan Bank has a dedicated and independent Shariah Audit Department that plays a vital role in ensuring that all the Bank’s operations are carried out according to the rules and principles prescribed by its Shariah Supervisory Board, Resident Shariah Board Member (RSBM) and the State Bank of Pakistan. This department also serves to ensure that a robust Shariah control system is in place and is working effectively to mitigate Shariah non-compliance risks associated with the Bank’s operations. This department is equipped with a large team of Shariah Auditors and Advisers certified by AAOIFI. In recognition of the Bank’s efforts, it has been recognized as ‘Shariah Auditor of the Year’ for the second consecutive year & received ‘Shariah Authenticity Award’ by Global Islamic Finance Awards (GIFA) UK in 2019. Shari’a Auditor of the Year 2019 Shari’a Authenticity Award 2019 MEEZAN BANK LIMITED MEEZAN BANK LIMITED ANNUAL REPORT 2019 85
87. To ensure the effectiveness of Shariah controls , the Bank emphasizes on the following areas: Preparation of comprehensive ‘Yearly Shariah Audit Plan’ to ensure coverage of all high risk areas. Eradication of Shariah non-compliant income, if any, and evaluation of Shariah-compliant returns. Conducting on-site sessions with staff members to enhance their Islamic banking knowledge; Conducting training sessions on ‘How to improve Shariah Audit Rating’ at every Region of the Bank. Evaluation of Treasury operations on an on-going basis to assist Treasury in ensuring Shariah compliance in their day-to-day operations Conducting quarterly audits of pool management, profit calculation and distribution process in order to ensure Shariah-compliance in the profit calculation & distribution process. Continuous improvement through changes in manual, risk based evaluation methodologies, audit programs and checklists to cope with the constantly evolving and improving Islamic banking environment, products and structures. Conducting specialized training programs on Shari’ah Audit and Islamic Financial Reporting in collaboration with prestigious Islamic Finance Institutions for capacity building of the industry. Human Resources Meezan Bank believes in building a dynamic and professionally competent workforce that is fully capable of providing a world-class banking experience to its customers. The Bank has a large network of 760 branches in more than 220 cities supported by a workforce of over 9,900 full-time employees and 1,600 outsourced staff. With an aim to become ‘Employer of First Choice’ in the industry, this year the Bank’s focus remained on attracting, developing, engaging and retaining its team members. The Bank uses various strategies for sourcing talent. For entry-level positions, recruitment is primarily done through Batch-hiring and Campus-drives besides lateral hiring; while for middle to senior-level positions where skilled and experienced professionals are required, the talent is sourced from both within and outside the Bank. In 2019, the Bank inducted 2,628 staff in total. Out of which, Approx. 28% were inducted through Batch-hiring. Main job families for batch-hiring were Branch Service Officers, Personal Banking Officers, Trade Officers, Credit Officers, Head Office-based Operations staff and other supporting staff. Batch-hiring enables the Bank to develop a pipeline of young talent for fulfilling its Human Capital needs in various functions. The Bank strongly believes in developing its people. It not only provides learning opportunities to its staff but also offers career growth by filling vacancy gaps through internally-sourced talent using Internal Job Posts (IJP) or Elevations. This year, 94 Jobs were filled via IJP, whereas, 595 Elevations were made across the Bank at different levels. With ‘Diversity’ being a key area of focus, emphasis during the year was on getting more females in new hires. As a result, 322 female staff joined the Bank that comprises 12% of the total new joiners of 2019, resulting in increasing the overall female employee ratio of the Bank to 9.3%. For retaining talent, the Bank has a comprehensive reward system in place based on Performance and Conduct. Meezan Bank believes in appreciating 86 MEEZAN BANK LIMITED Region-wise staff count 2018 2019 Central South North Head Office 3,078 2,392 1,196 1,891 3,698 2,732 1,375 2,132 Total 8,557 9,937 2,628 TOTAL INDUCTIONS 28 APPROX. % THROUGH BATCH HIRING 94 INTERNAL JOB ROTATIONS 595 ELEVATIONS 12% NEW JOINERS ARE FEMALES
88. performers by rewarding them with lucrative increments and bonuses and at the same time having zero-tolerance towards integrity lapses , policy violations and negligence. This culture creates transparency in the system. The Bank’s last year’s Performance Appraisal was appreciated across the industry. In addition to the above, employee benefit initiatives such as amendment in profit rate of staff house financing, advance accelerated bonus, cash-handling allowance, Saturday allowance, revision in medical coverage, rewards upon passing JAIBP qualification etc. also played a key role in motivating and retaining employees. Employee engagement being at the core of its culture, the Bank regularly holds Employee Satisfaction Survey (ESS) exercises. In 2019, the Bank launched its 4th ESS. It has served as an effective retention tool since it has enabled the Bank to take a number of initiatives for staff under ‘Your Voice Matters’ in terms of policy, system and process changes, resulting in enhancing staff motivation and loyalty and thereby reducing the attrition rate. In line with the Bank’s drive towards automation, the Bank has successfully migrated to the latest version of Enterprise Resource Planning (ERP) system. This update includes several significant functional innovations around user-experience and will enable new functionalities with more agility. Moreover, several system generated automated alerts have been implemented this year helping the staff perform their duties with ease and accuracy. Attrition Trend (%) 20 18.93% 15 15.09% 14.01 13.85% 10 9.86% 5 2015 2016 2017 2018 2019 NB: The attrition rate has gone down significantly over the last few years Meezan Bank has always been cognizant of the importance of caring for its employees and their families. The Bank established Employee Benevolent Fund Trust (EBFT) in 2012 for providing financial assistance to its employees and their families regarding medical, marriage and education purely on need and merit basis. This year, the Bank supported 187 families through EBFT. Learning & Development The Bank believes in creating a culture of continuous learning through trainings, enabling its people to constantly evolve and develop. Following this belief, the Bank ensures that the Learning and Development agenda is in synchronization with its future capability and knowledge needs. In 2019, the Bank provided 807 class-room trainings including 603 internal training sessions (over 999 training days) covering 18,797 (7,851 unique) staff and 204 external training sessions (over 475 training days) covering 765 (563 unique) staff. In addition, 16 learning interventions were launched via Learning Management System. LATEST VERSION OF ERP SYSTEM IMPLEMENTED 187FAMILIES SUPPORTED VIA EBFT 603 INTERNAL CLASSROOM TRAININGS 7,851 UNIQUE STAFF TRAINED (INTERNAL) 204 EXTERNAL CLASSROOM TRAININGS 563 UNIQUE STAFF TRAINED (EXTERNAL) ANNUAL REPORT 2019 87
89. The Bank conducts a wide range of training programs covering areas such as staff Induction & Orientation, Islamic Banking, Role-specific trainings, Leadership & Soft-skill etc. Internal & External Trainings Summary Category-wise Staff Covered (Internal & External) Internal 100 80 External 1% 93% 2% 1% 15% 75% Awareness 68% 10% 60 Induction Islamic Banking Leadership Role-specific 40 Soft-skill 32% 25% Conference 1% 20 7% 0 Training Session Training Days 70% Staff Covered (Unique) Staff Induction Induction Training Programs are for new joiners to familiarize them with the Bank’s Vision, Mission, Culture, Values, History, and key Policies & Procedures. In 2019, 2,263 new staff members were trained through Induction Trainings. Currently, there are six types of Induction Training Programs: Orientation Learning Program for New Joiners Branch Services Officers Batch Training Personal Banking Officers Batch Training Trade Batch Training Operations Officers Batch Training Credit Officers Batch Training Islamic Banking Training Under Islamic Banking trainings, this year, 94 training sessions were held. These trainings mainly included Advance Certification in AAOIFI Shariah Standards, Islamic Finance for Managers, Islamic Banking Certification Level II, Asset Refresher Programs, Retail Refresher Programs etc. Role-specific Training Role-specific trainings are focused on imparting the knowledge and skills needed for specific roles. This year, 563 such trainings were held. Key trainings for frontline roles included Sales Management Process and Sales Process with 51 sessions across Pakistan covering 1,721 staff. Customer Service Excellence is another area of training for frontline roles covering 1,239 staff in 49 sessions. Other trainings in this category were Product Knowledge, Wealth Management & X-Sell, Account Opening Refresher, Branch Operations Refresher, etc. Compliance Training As Compliance & Governance was the highlighted theme across the Bank in 2019, 105 sessions were held on the subject including Anti-Money Laundering and Combating The Financing of Terrorism (AML/CFT), Trade-based Money Laundering, covering more than 2,900 staff. Besides this, leveraging technology, the Bank also launched short-video training on AML/CFT covering more than 6,600 employees. Other trainings in the area of Compliance and Governance include Prevention of Fraud & Forgery, Operational Risk and Control, Information Security, Fair Treatment of Customers (FTC), etc. 88 MEEZAN BANK LIMITED 94 ISLAMIC BANKING TRAININGS 563 ROLE-SPECIFIC TRAININGS 105 AML/CFT TRAININGS
90. Leadership & Soft-skill In the area of Leadership and Soft-skills, the key trainings conducted were in Management Development Program, Building High Performance Teams, Shaping-up for Higher Realities, Negotiation Skills and Communication for Personal and Organizational Effectiveness from renowned institutes. It is worth mentioning that besides engaging several renowned institutes, the Bank also launched in-house courses on Ethics & Values and Positive Psychology and a short video-training on Personal Grooming. International Trainings / Certifications For giving international exposure, some of the key trainings / certifications during the year were OMEGA CSA, Advance Certification related to AAOIFI Shariah Standards, Executive Financial Training Program and Kaplan-Norton Balanced Scorecard Certification. In addition to this, the Bank participated for the first time in Asian Management Games (which is an International Competition of Strategy & Management) and secured 3rd Position. Diversity & Inclusion With its special focus on Diversity and Inclusion (D&I), the Bank nominated 41 female staff members to participate in various D&I Conferences and Seminars including 9th International Women Leaders’ Summit, 11th Women In Business Leadership Conference (WIBCON) 2019 and OICCI Women Empowerment Awards 2019. Awards & Recognition Meezan Bank has been regularly recognized at different forums for its best HR practices. This has also helped the Bank in developing a better understanding of best practices being followed at successful organizations. During 2019, the Bank was awarded 3rd position as ‘Employer of the Year’ by Employer's Federation of Pakistan (EFP), which is the largest representative body of employers in Pakistan. Operations Meezan Bank’s Operations Department works as a partner of all business units and is responsible for end-to-end operations of Retail Banking, Trade Finance, Credit Administration, Centralized Operations, Debit Cards, Cash Houses, Treasury and Capital Market Operations, Mutual Funds, Reconciliation, SWIFT and Central Bank Reporting. The primary function of the Operations Department is to ensure that all transactions are accurately processed in line with Meezan Bank’s internal policies, procedures and standard operating procedures (SOPs) as well as Shariah guidelines, SBP regulations and all related legal requirements. Proper alignment of operations capabilities with overall organizational goals and objectives has a significant impact on business performance, and consequently, on competitive strength. Cognizant of this fact, Meezan Bank has developed its Operations function into a strong, resilient and effective business partner for revenue generating functions, thus providing the needed impetus to its efforts of establishing ‘Islamic banking as banking of first choice...’ The Bank has focused on continuous improvement of policies, procedures and turnaround time (TAT), thus enhancing controls, operational efficiency and improving effective utilization of resources. The emphasis has been on leveraging latest technologies to improve operating efficiency and staff productivity. The Bank is committed to making substantial investments to achieve this objective. ANNUAL REPORT 2019 89
91. Compliance Meezan Bank has a zero tolerance policy on non-compliance with regulatory requirements and has worked hard to inculcate an entity-wide compliance culture . A dedicated Compliance Department, driven by a team of experience professionals, is primarily responsible for assisting the various business and support units in designing and implementing adequate controls to safeguard the Bank from various compliance risks. The Bank’s Compliance Department also assesses the compliance risk faced by the Bank and escalates the findings to the Board and management committees on a periodic basis. The implementation and execution of policies and procedures relating to regulatory affairs and Anti-Money Laundering / Combating Financing Terrorism (AML / CFT) function is rigorously performed. The Bank has taken a number of specific measures to strengthen its management of Compliance risks including utilization of a technologically advanced transactions monitoring system (Oracle Financial Crime Compliance Management ‘FCCM’) and customers screening solution (Acuity Compliance Link). The Bank will further upgrade itself to use technology to prevent Trade Based Money Laundering. The Bank will continue to invest in both technology and people to ensure that a robust and strong Compliance framework is implemented across all levels of the Bank. Major Capital Expenditure for 2019 & Next Year The major capital expenditure of the Bank during the year was its investment in expanding its branch network by 100 branches. The Bank, true to its Vision of establishing ‘Islamic Banking as banking of first choice…’ believes that expansion in branch network provides the outreach it requires to gain new customers and increase its deposit base. A large geographical footprint also strengthens the Bank’s online banking services, thus improving customer facilitation that ultimately contributes to strengthening the Bank’s deposit base. Deposits play a key impact on the Bank’s profitability and the size of the branch network directly influences the deposit base. For the year 2020, the Bank aims to further invest in expanding its branch network, enhancing the reach of Islamic banking. 90 MEEZAN BANK LIMITED Our Focus on Cyber Security Digital technology is revolutionizing economic and social interaction and is transforming the way we do business, educate ourselves, buy and sell products and share data. The use of Internet is growing and the ways in which it is being used are also diversifying. Malicious cyber attackers are fully aware of this revolution and are taking full advantage of it. Cyber risk has therefore emerged as a significant threat to the financial system. Successful attacks result in data breaches in which hackers gain access to confidential information and the financial sector is especially vulnerable to such attacks. With increase in the number of digital transactions, Cyber Security threats are expected to increase and the Bank has taken steps to enhance its internal capabilities to cope with such threats, To strengthen Meezan Bank’s security posture on a continuous basis, local and international experts of the Cyber Security domain are regularly engaged to review the Bank’s information assets and controls and to conduct Penetration Test exercises. Security awareness initiatives are also rolled out for staff and customers to keep them aware of social scams such as Phishing and Skimming. The Bank is also investing in resources to develop its expertise in areas such as IT, Information Security and Internal Audit to further strengthen and secure its operations, assessment and IT audits. To cope with the rapidly increasing Cyber Security challenges, the Bank has implemented state-of-the-art threat protection technologies & regularly upgrades its defence structures to minimize the risk of any Cyber Attack.
92. OUR FOCUSON SHARIAH COMPLIANCE Meezan Bank , being an Islamic Financial Institution, does not invest in non-Shariah compliant shares. However, investment can be made in companies which are Shariah-compliant as per the criteria set by Shariah scholars. Islamic Indices are also available at PSX which consist of various Shariah-compliant companies. Currently, there are two Islamic Indices, under the name of KMI 30 Index and PSX-KMI All Share Index. KMI 30 Index reflects the performance of thirty most liquid Shariah-compliant stocks, whereas PSX-KMI All Share Index reflects all available Shariah-compliant stocks. These Indices have the following objectives: ■ To create awareness for the general public regarding Shariah-compliant shares ■ To provide investors relevant benchmark for returns on Shariah-compliant equity investments List of Shariah-compliant companies on PSX website updates semi-annually.
93. Key Figures at a Glance 2019 2018 2017 Profit and Loss Account Profit and Loss Account Return on financings , investments and placements 94,270 48,625 36,427 Return on financings, investments and placements Return on deposits and other dues expensed 47,731 20,457 15,684 Return on deposits and other dues expensed Net Spread earned 46,539 28,168 20,743 Net Spread earned Fee, commission, forex and other income 9,396 6,887 5,622 Fee, commission, forex and other income (Loss) / gain on securities - net and dividend income (76) 575 2,002 (Loss) / gain on securities - net and dividend income Total income 55,859 35,630 28,367 Total income Operating and other expenses 25,522 19,670 16,832 Operating and other expenses Profit before Provisions 30,337 15,960 11,535 Profit before Provisions Provisions and write offs - net 4,186 1,168 1,283 Provisions and write offs - net Profit before Taxation 26,151 14,792 10,252 Profit before Taxation Taxation 10,919 5,830 3,939 Taxation Profit after Taxation 15,232 8,962 6,313 Profit after Taxation 2019 2016 2018 2015 2014 2017 31,027 32,893 28,487 94,270 48,625 36,427 13,239 15,181 15,539 47,731 20,457 15,684 17,788 17,712 12,948 46,539 28,168 20,743 4,102 3,617 3,387 9,396 6,887 5,622 1,622 971 1,432 (76) 575 2,002 23,512 22,300 17,767 55,859 35,630 28,367 14,787 13,313 10,402 25,522 19,670 16,832 8,725 8,987 7,365 30,337 15,960 11,535 (218) 535 467 4,186 1,168 1,283 8,943 8,452 6,898 26,151 14,792 10,252 3,381 3,429 2,328 10,919 5,830 3,939 5,562 5,023 4,570 15,232 8,962 6,313 2016 2015 2014 31,027 13,239 17,788 4,102 1,622 23,512 14,787 8,725 (218) 8,943 3,381 5,562 32,893 15,181 17,712 3,617 971 22,300 13,313 8,987 535 8,452 3,429 5,023 28,48 15,53 12,94 3,38 1,43 17,76 10,40 7,36 46 6,89 2,32 4,57 207,569 175,71 535,864 440,14 468,281 378,74 10,027 10,02 Statement of Financial Position Statement of Financial Position Islamic Financing and Related Assets 493,775 512,564 420,029 311,530 207,569 175,712 Islamic Financing and Related Assets 493,775 512,564 420,029 311,530 Total Assets 1,121,258 937,915 788,808 662,055 535,864 440,149 Total Assets 1,121,258 937,915 788,808 662,055 Total Deposits 932,579 785,477 667,181 559,398 468,281 378,744 Total Deposits 932,579 785,477 667,181 559,398 Share Capital 12,861 11,692 10,629 10,027 10,027 10,027 Share Capital 12,861 11,692 10,629 10,027 Sub-ordinated sukuk 14,000 14,000 7,000 7,000 Sub-ordinated sukuk 14,000 14,000 7,000 7,000 Total Shareholders Equity (incl. Surplus / Deficit on rev. of Assets) 59,015 40,333 35,077 30,474 26,347 23,890 Total Shareholders Equity (incl. Surplus / Deficit on rev. of Assets) 59,015 40,333 35,077 30,474 Market Capitalization 122,348 108,022 71,321 67,422 45,875 47,129 Market Capitalization 122,348 108,022 71,321 67,422 Number of Staff 11,649 10,069 9,551 9,168 8,581 7,429 Number of Staff 11,649 10,069 9,551 9,168 Number of Branches 760 660 601 571 551 428 Number of Branches 760 660 601 571 Ratios Book Value (Rs) Market Value per Share (Rs) Price to Book Value Ratio Cash Dividend (%) Stock Dividend (%) Right Shares at par (%) Price Earning Ratio Ratios 45.89 Book Value (Rs) 95.13 Market Value per Share (Rs) 2.07 Price to Book Value Ratio 50.00 Cash Dividend (%) 10.00 Stock Dividend (%) Right Shares at par (%) 8.03 Price Earning Ratio 26,347 23,89 45,875 47,12 8,581 7,42 551 42 32.31 67.10 2.08 30.00 6.00 12.07 28.07 45.89 67.24 95.13 2.40 2.07 30.00 50.00 10 12.34 8.03 23.21 32.31 47.00 67.10 2.02 2.08 27.50 30.00 6.00 10.31 12.07 28.07 67.24 2.40 30.00 12.34 25.49 45.75 1.79 30.00 9.13 23.2 47.0 2.0 27.5 10.3 Earnings per Share (Rs) 11.84 6.97 Earning per Share (Rs) Net Spread to Gross Return (%) 49.37 57.93 Net Spread to Gross Return (%) Profit Before Tax to Gross Income (%) 25.24 26.37 Profit Before Tax to Gross Income (%) Profit After Tax to Gross Income (%) 14.70 15.98 Profit After Tax to Gross Income (%) Operating & Other Expenses to Income before Operating & Other Expenses to Income before provisions (%) 45.69 55.21 provisions (%) 5.56 56.94 23.27 14.33 5.45 5.01 4.56 11.84 6.97 5.56 57.33 53.85 45.45 49.37 57.93 56.94 24.33 22.55 20.71 25.24 26.37 23.27 15.13 13.40 13.72 14.70 15.98 14.33 5.45 57.33 24.33 15.13 5.01 53.85 22.55 13.40 4.5 45.4 20.7 13.7 59.34 62.89 59.70 58.55 45.69 55.21 59.34 62.89 59.70 58.5 63.0 17.87 12.89 0.87 19.26 55.7 44.3 46.4 52.9 65.3 63.0 23.27 31.24 30.12 24.20 15.75 17.87 12.91 10.98 11.88 16.58 14.55 12.89 0.93 1.03 1.18 1.48 1.04 0.87 19.58 20.00 21.35 30.66 23.77 19.26 55.7 23.27 12.91 0.93 19.58 44.3 31.24 10.98 1.03 20.00 46. 30.1 11.8 1.1 21.3 (Comparitive information has been reclassified / rearranged for better presentation) 92 - 34.50 92.39 2.68 35.00 10.00 13.26 Financing / Advances to Deposit Ratio-ADR (%) 52.9 65.3 Financing / Advances to Deposit Ratio-ADR (%) Investment to Deposit Ratio - IDR (%) 24.20 15.75 Investment to Deposit Ratio - IDR (%) Capital Adequacy Ratio (%) 16.58 14.55 Capital Adequacy Ratio (%) Return on Average Assets (%) 1.48 1.04 Return on Average Assets (%) Return on Average Equity (%) 30.66 23.77 Return on Average Equity (%) 25.49 34.50 45.75 92.39 1.79 2.68 30.00 35.00 10 9.13 13.26 - MEEZAN BANK LIMITED
94. Rupees in Million 13 016 658 358 971 539 868 128 740 93 647 690 957 2012 21 ,592 11,385 10,207 1,413 986 12,606 6,925 5,681 451 5,230 1,722 3,508 2011 2013 2010 2009 2012 2011 17,809 12,094 9,911 23,016 21,592 17,809 8,666 6,606 4,970 12,658 11,385 8,666 9,143 5,488 4,941 10,358 10,207 9,143 1,347 2,056 1,332 1,971 1,413 1,347 1,158 419 266 1,539 986 1,158 11,648 7,963 6,539 13,868 12,606 11,648 5,903 4,340 3,267 8,128 6,925 5,903 5,745 3,623 3,272 5,740 5,681 5,745 1,389 1,497 1,532 93 451 1,389 4,356 2,126 1,740 5,647 5,230 4,356 965 477 715 1,690 1,722 965 3,391 1,649 1,025 3,957 3,508 3,391 2010 12,094 6,606 5,488 2,056 419 7,963 4,340 3,623 1,497 2,126 477 1,649 2009 9,911 4,970 4,941 1,332 266 6,539 3,267 3,272 1,532 1,740 715 1,025 Profit After Taxation Rupees in Million 16,000 15,232 15,000 14,000 13,000 12,000 11,000 10,000 8,962 9,000 8,000 7,000 5,562 6,000 5,000 4,570 5,023 2014 2015 6,313 4,000 3,000 2,000 1,000 0 2016 2017 88,678 095 278,084 433 229,892 027 9,034 - - 913 16,563 488 27,147 248 5,953 351 310 .86 .38 .20 .00 .97 .95 .00 .29 .92 70,377 60,265 46,985 127,623 88,678 70,377 203,439 157,389 126,677 332,095 278,084 203,439 169,429 131,070 100,333 288,433 229,892 169,429 8,030 6,983 6,650 10,027 9,034 8,030 13,781 11,080 9,184 18,913 16,563 13,781 13,956 11,801 10,467 39,488 27,147 13,956 4,900 4,364 3,669 6,248 5,953 4,900 275 222 201 351 310 275 60,265 46,985 157,389 126,677 131,070 100,333 6,983 6,650 - - 11,080 9,184 11,801 10,467 4,364 3,669 222 201 2019 Total Deposits Rupees in Million 975,000 932,579 910,000 845,000 785,477 780,000 623 2018 715,000 667,181 650,000 559,398 585,000 520,000 468,281 455,000 390,000 378,744 325,000 260,000 195,000 130,000 65,000 0 2014 2015 2016 2017 2018 2019 Total Assets 17.14 30.05 1.75 15.00 11.00 8.59 3.50 47.27 21.80 14.62 16.60 15.38 13.67 17.86 17.14 17.38 16.90 15.74 39.38 30.05 1.05 1.10 1.15 2.20 1.75 10.00 20.00 15.00 12.50 15.00 5.00 11.00 4.63 8.24 9.72 9.97 8.59 3.75 2.05 1.62 3.95 3.50 51.34 45.38 49.85 45.00 47.27 21.44 14.59 15.12 21.29 21.80 16.69 11.32 8.91 14.92 14.62 16.60 17.38 1.05 10.00 12.50 4.63 15.38 16.90 1.10 15.00 8.24 13.67 15.74 1.15 5.00 9.72 3.75 51.34 21.44 16.69 2.05 45.38 14.59 11.32 1.62 49.85 15.12 8.91 54.93 50.68 49.96 54.93 50.68 54.50 49.96 4.2 .56 .48 .30 .31 38.6 66.32 14.08 1.46 23.12 41.5 46.0 46.8 44.2 38.6 58.13 41.94 23.21 52.56 66.32 14.89 12.41 12.77 12.48 14.08 1.88 1.16 0.95 1.30 1.46 27.28 16.28 13.52 22.31 23.12 41.5 58.13 14.89 1.88 27.28 46.0 41.94 12.41 1.16 16.28 46.8 23.21 12.77 0.95 13.52 1,121,258 1,140,000 1,080,000 1,020,000 960,000 937,915 900,000 840,000 788,808 780,000 720,000 662,055 660,000 600,000 535,864 540,000 480,000 .61 58.61 54.50 Rupees in Million 1,200,000 440,149 420,000 360,000 300,000 240,000 180,000 120,000 60,000 0 2014 2015 2016 2017 2018 2019 Total Shareholders Equity Rupees in Million 70,000 59,015 60,000 50,000 40,333 40,000 30,474 30,000 23,890 35,077 26,347 20,000 10,000 0 2014 2015 2016 2017 2018 2019 ANNUAL REPORT 2019 93
95. Six Years ’ Horizontal Analysis Statement of Financial Position / Profit & Loss Account Rupees in Million Statement of Financial Position 2019 19 Vs 18 % Assets Cash and balances with treasury banks 92,194 42 Balances with other banks 15,372 86 Due from financial institutions 223,689 21 Investments 225,646 82 Islamic financing and related assets 493,775 (4) Fixed assets 23,285 77 Intangible assets 780 25 Deferred tax asset (100) Other assets 46,517 62 1,121,258 20 2018 18 Vs 17 % 65,022 8,255 184,815 123,743 512,564 13,129 625 983 28,779 937,915 2017 17 Vs 16 % 2016 16 Vs 15 % 2015 15 Vs 14 % 2014 14 Vs 13 % 43,686 47 11,175 103 101,079 11 146,305 28 207,569 18 7,596 32 461 (12) - (100) 17,993 4 535,864 22 29,729 4 5,501 55 90,766 1,119 114,089 (25) 175,712 38 5,748 8 525 96 815 522 17,264 129 440,149 33 1 69 26 4 22 16 22 37 19 64,556 4,896 147,229 119,238 420,029 11,364 512 20,984 788,808 15 (59) 14 (8) 35 34 13 47 19 56,037 12,021 129,115 130,156 311,530 8,470 455 14,271 662,055 28 8 28 (11) 50 11 (1) (21) 24 23,751 38 36,408 (1) 785,477 18 14,000 100 (100) 37,946 48 897,582 19 17,175 36,813 667,181 7,000 8 25,554 753,731 25 15 19 (99) 42 19 13,757 32,006 559,398 7,000 1,362 18,058 631,581 36 135 19 247 5 24 10,100 13,610 468,281 393 17,133 509,517 38 (12) 24 16 22 7,298 15,465 378,744 14,752 416,259 46 36 31 76 33 Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Deferred tax liabilities Other liabilities Net Assets Represented by: Share capital Reserves Unappropriated profit Surplus / (Deficit) on revaluation of assets 17,187 42,047 932,579 14,000 2,830 53,600 1,062,243 (28) 15 19 41 18 59,015 46 40,333 15 35,077 15 30,474 16 26,347 10 23,890 26 12,861 18,207 18,546 10 20 37 11,692 15,161 13,526 10 13 31 10,629 13,369 10,340 6 38 23 10,027 9,700 8,422 13 21 10,027 8,588 6,942 18 17 10,027 7,289 5,958 105 38 (46) (106) 739 (68) 2,325 194 790 28 616 (39) 35,077 15 30,474 16 26,347 10 23,890 26 9,401 204 times 59,015 46 40,333 15 Profit & Loss Account 2019 19 Vs 18 % 2018 18 Vs 17 % 2017 17 Vs 16 % 2016 16 Vs 15 % 2015 15 Vs 14 % 2014 14 Vs 13 % Profit on financing, investments and placements Profit on deposits and other dues expensed 94,270 94 48,625 33 36,427 17 31,027 (6) 32,893 15 28,487 24 (47,731) 133 (20,457) 30 (15,684) 18 (13,239) (13) (15,181) (2) (15,539) 23 Net spread earned 46,539 65 28,168 36 20,743 17 17,788 - 17,712 37 12,948 25 6,887 23 5,622 37 4,102 13 3,617 7 3,387 72 (71) 26 2,002 28,367 23 21 1,622 23,512 67 5 971 22,300 (32) 26 1,432 17,767 (7) 28 Fee, commission, forex and other income (Loss) / gain on securities - net and dividend income Total income 9,396 36 (76) 55,859 (113) 57 575 35,630 Operating and other expenses (25,522) 30 (19,670) 17 (16,832) 14 (14,787) 11 (13,313) 28 (10,402) 28 Profit before Provisions 30,337 90 15,960 38 11,535 32 8,725 (3) 8,987 22 7,365 28 Provisions and write offs - net (4,186) 258 (1,168) (9) (1,283) (689) 218 (141) (535) 15 (467) 402 Profit before taxation 26,151 77 14,792 44 10,252 15 8,943 6 8,452 23 6,898 22 Taxation (10,919) 87 (5,830) 48 (3,939) 17 (3,381) (1) (3,429) 47 (2,328) 38 Profit after taxation 15,232 70 8,962 42 6,313 14 5,562 11 5,023 10 4,570 15 (Comparitive information has been reclassified / rearranged for better presentation) 94 MEEZAN BANK LIMITED
96. Six Years ’ Vertical Analysis Statement of Financial Position / Profit & Loss Account Statement of Financial Position Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Fixed assets Intangible assets Deferred tax assets Other assets Rupees in Million 2019 % 92,194 15,372 223,689 225,646 493,775 23,285 780 46,517 1,121,258 8 2 20 20 44 2 4 100 17,187 42,047 932,579 14,000 2,830 53,600 1,062,243 59,015 2018 % 2017 % 2016 % 2015 % 2014 % 65,022 7 8,255 1 184,815 20 123,743 13 512,564 55 13,129 1 625 983 28,779 3 937,915 100 64,556 4,896 147,229 119,238 420,029 11,364 512 20,984 788,808 8 1 19 15 53 1 3 100 56,037 12,021 129,115 130,156 311,530 8,470 455 14,271 662,055 8 2 20 20 47 1 2 100 43,686 11,175 101,079 146,305 207,569 7,596 461 17,993 535,864 8 2 19 27 39 2 3 100 29,729 5,501 90,766 114,089 175,712 5,748 525 815 17,264 440,149 7 1 21 26 40 1 4 100 2 4 83 1 5 95 5 23,751 36,408 785,477 14,000 37,946 897,582 40,333 3 4 84 1 4 96 4 17,175 36,813 667,181 7,000 8 25,554 753,731 35,077 3 5 84 1 3 96 4 13,757 32,006 559,398 7,000 1,362 18,058 631,581 30,474 2 5 84 1 3 95 5 10,100 13,610 468,281 393 17,133 509,517 26,347 2 3 87 3 95 5 7,298 15,465 378,744 14,752 416,259 23,890 2 4 86 3 95 5 12,861 18,207 18,546 1 2 2 11,692 15,161 13,526 1 2 1 10,629 13,369 10,340 1 2 1 10,027 9,700 8,422 2 2 1 10,027 8,588 6,942 2 2 1 10,027 7,289 5,958 2 2 1 9,401 59,015 5 (46) 40,333 4 739 35,077 4 2,325 30,474 5 790 26,347 5 616 23,890 5 2019 % 2018 % 2017 % 2016 % 2015 % 2014 % 94,270 91 48,625 87 36,427 82 31,027 85 32,893 87 28,487 86 (47,731) (46) 45 (20,457) (37) (15,684) (36) (13,239) (35) (15,181) (41) (15,539) (47) 46,539 20,743 46 17,788 50 17,712 46 12,948 39 9,396 9 6,887 12 5,622 13 4,102 11 3,617 10 3,387 10 Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Deferred tax liabilities Other liabilities Net Assets Represented by: Share capital Reserves Unappropriated profit Surplus / (Deficit) on revaluation of assets Profit & Loss Account Profit on financing, investments and placements Profit on deposits and other dues expensed Net spread earned Fee, Commission, forex and other income (Loss) / gain on securities - net (76) - 28,168 575 50 1 2,002 5 1,622 4 971 3 1,432 4 Total income 55,859 54 35,630 63 28,367 64 23,512 65 22,300 59 17,767 53 Operating and other expenses (25,522) (25) (19,670) (35) (16,832) (38) (14,787) (40) (13,313) (36) (10,402) (31) 28 11,535 26 8,725 25 8,987 23 7,365 22 (4,186) (4) (1,168) (2) (1,283) (3) 218 1 (535) (1) (467) (1) and dividend income Profit before Provisions Provisions and write offs - net 30,337 29 15,960 Profit before taxation 26,151 25 14,792 26 10,252 23 8,943 24 8,452 22 6,898 21 Taxation (10,919) (10) (5,830) (10) (3,939) (9) (3,381) (9) (3,429) (9) (2,328) (7) Profit after taxation 15,232 15 8,962 16 6,313 14 5,562 15 5,023 13 4,570 14 (Comparitive information has been reclassified / rearranged for better presentation) ANNUAL REPORT 2019 95
97. Review of Six Years ’ Performance The summary of financial performance of Meezan Bank Limited over the last six years (2014 – 2019) is as under: Statement of Financial Position Assets In 2019, the Bank’s total assets grew to Rs 1.1 trillion from Rs 332 billion in 2013 recording a six year Compound Annual Growth Rate (CAGR) of 22%. The proportion of Islamic Financing and related assets to total assets increased to 44% in 2019 as compared to 38% in 2013, growing at a six year CAGR of 25%. During the six year period, the Bank continued to actively pursue growth in financings in all segments including Corporate, SME/Commercial and Consumer Financing (primarily Car Ijarah and Easy Home), consequently, the Bank’s Advances to Deposits Ratio (ADR) stood at 53% in 2019 as compared to 44% in 2013. The Investment portfolio of the Bank represents 20% of its total assets as of 2019 as compared to 46% in 2013 which substantiate that liquidity deployment remains a key challenge for Islamic Banking Industry of Pakistan as there are limited investment avenues despite sufficient liquidity. The Energy Sukuk issued by Power Holding (Private) Limited during 2019 has partially addressed this liquidity deployment challenge and the Bank expects that with the continued efforts of the Government of Pakistan and the State Bank of Pakistan, there will be further issue of Sovereign Sukuk in 2020 Insha’Allah. The share of ‘Due from Financial Institutions’ in relation to Total Assets has also, accordingly, increased to 20% as compared to 2% in 2013. The Bank’s fixed assets (excluding right-of-use assets recognized under IFRS 16) has increased to Rs 16 billion in 2019 from Rs 5 billion in 2013. Over the last six years, the Bank has made sizable investment in its Branch network and IT infrastructure to ensure seamless delivery of its banking services across the length and breadth of Pakistan. The Bank has doubled its branch network from 2013 as it has added 409 new branches in this period to bring its network to 760 branches in 2019. This expansion in Branch Network has reaped fruits for the Bank, as is evident from the strong growth in deposits and profits over the years. The Bank has duly complemented its extended branch network with comprehensive array of digital services, including Internet Banking, Mobile App and other Alternate Distribution Channels. Liabilities On the liabilities side, deposits of the Bank grew from Rs 288 billion in 2013 to Rs 933 billion in 2019 growing at a six year CAGR of 22%. More importantly, the Bank’s current deposits grew at six year CAGR of 26% during the six year period. This growth in Bank’s deposits was significantly higher than banking industry deposits which grew at six years CAGR of 12% in the same period. The significant increase in the Bank’s footprint of 760 branches in 223 cities in 2019 as compared to 351 branches in 103 cities in 2013 played a pivotal role in its deposit growth. The wide range of deposit products and the continuous support and patronage of Bank’s customers also contributed to this growth. With deposits of Rs 933 billion and 760 branches as of December 2019, the Bank became the sixth largest bank of Pakistan in terms of both deposits and branches. Due to significant growth in the Bank’s business, the strategic direction set by the Board of Directors, and the enhanced capital adequacy requirement of the State Bank of Pakistan under Basel Framework; the Bank successfully issued subordinated Tier II sukuk of Rs 7 billion in 2016. This was followed by issuance of first ever Shariah-compliant Additional Tier I Sukuk of Rs 7 billion in 2018 to further strengthen its regulatory capital base. Both issues received an overwhelming response from the investors and the Bank was able to issue these Sukuk at a very attractive pricing under Mudaraba arrangement which is indicative of the strong brand value and standing of the Bank. 96 MEEZAN BANK LIMITED
98. Equity The Bank ’s total equity stood at Rs 59 billion as of December 31, 2019. The Bank’s Board and management is committed to maintaining a sound balance between depositors' liability and shareholders' funds so that optimal capital / debt ratio is maintained. This optimal capital / debt ratio provide reasonable assurance to depositors about safety and security of their funds and at the same time provide impetus to the management to invest these funds into profitable ventures without compromising the risk profile of the Bank. The Bank’s equity (excluding surplus on revaluation of assets) recorded a threefold increase as it reached to Rs 50 billion from Rs 18 billion in 2013 while maintaining the record of unbroken payout since the date of listing on the Stock Exchange. Profit and Loss Account The Bank’s net spread grew to 49% in 2019 as compared to 45% in 2014 on the backdrop of strong balance sheet growth, particularly growth in Current Account as mentioned above. The Bank’s fee, commission, foreign exchange and other income increased three times from Rs 3.3 billion in 2014 to Rs 9.3 billion in 2019. This growth was achieved through increase in the Trade Finance business volume handled by the Bank which grew to Rs 1.1 trillion in 2019 compared to Rs 376 billion in 2014 – a three time growth. The increase in customer base, range of products and services including ADC business, number of branches, and coverage of new cities also played a significant role in this achievement. The Bank’s operating expenses rose to Rs 26 billion in 2019 from Rs 10 billion in 2014, mainly due to opening of 409 branches, higher IT infrastructure, inflation, Rupee devaluation and staff related cost. The Bank now employs more than 11,600 staff across Pakistan as compared to 7,429 staff in 2014. Despite the increase in operating expenses, the Bank’s Cost to Income Ratio improved to 46% in 2019 from 59% in 2014. The Bank further strengthened its NPL coverage ratio which stood at 142% in 2019 as compared to 110% in 2014. The Bank’s direct contribution to national exchequer also increased manifold with the total taxation charge for the year 2019 increasing to Rs 10.9 billion from Rs 2.3 billion for 2014 on account of higher profitability and imposition of Super Tax by the Government. Resultantly, the Bank’s Profit after Tax has grown from Rs 4.6 billion in 2014 to Rs 15.2 billion in 2019 with an Average Return on equity of more than 20% during the six years’ period while maintaining an unbroken payout to its shareholders. ANNUAL REPORT 2019 97
99. Financial Analysis Statement of Financial Position The Bank ’s deposits grew by 19% in 2019 – almost twice the average banking industry growth of 10%, closing at Rs 933 billion. The Bank’s market share of deposits grew to 6.4% as compared to 5.9% in 2018. The Bank is now the sixth largest bank in Pakistan in terms of deposits and branches as of December 31, 2019. The total assets of the Bank grew by 20% to reach Rs 1.1 trillion from Rs 938 billion in 2018. The Bank’s investments increased to Rs 226 billion as compared to Rs 124 billion in 2019 after investment of Rs 85 billion in Pakistan’s first ever Energy Sukuk issued by Power Holding (Private) Limited, a wholly owned subsidiary of Government of Pakistan with Meezan Bank as a Lead Arranger. The Sukuk has a market value of Rs 97 billion. Accordingly, the surplus on revaluation of the Sukuk amounting to Rs 8.2 billion (net of tax), is reflected in the Bank’s equity. Due from Financial Institutions under Bai Muajjal also increased to Rs 224 billion from Rs 185 billion in 2018. Financing portfolio of the Bank stood at Rs 494 billion, slightly lower than 2018 in line with the overall slowdown in the economy of Pakistan. The Bank has one of the lowest infection ratio of 1.8% - as compared to the industry average of 9%. The Bank’s coverage ratio increased to 142% as compared to 139% in 2018 - one of the highest in the Banking industry in Pakistan. The Advance to Deposits ratio (ADR) of the Bank stood at 53%. During the year, the Bank further expanded its foot prints and opened 100 new branches bringing the total number of branches to 760 in 223 cities from 660 branches in 181 cities last year. The Bank remains committed to continuously raise service quality standards and set new benchmarks in customer care to ensure service delivery across all channels. The Bank’s equity increased to Rs 59 billion as compared to Rs 40 billion last year on account of higher profitability and unrealized surplus on Energy Sukuk. The Board has recommended the final cash dividend of Rs 2 per share (20%) bringing the total payout to Rs 5 per share (50%) as Rs 3 per share i.e. 30% interim cash dividend was paid during the year in addition to issuance of 10% Bonus Shares. Statement of Financial Position The Bank maintains a comfortable Capital Adequacy Ratio of 16.58% over and above the minimum regulatory requirement of 12.50% as of December 31, 2019. To further strengthen regulatory capital base, in January 2020, the Bank successfully issued second tranche of Sub-ordinated Tier II Sukuk of Rs 4 billion in the form of regulatory compliant unsecured, subordinated privately placed Sukuk. Rupees in Million Equity Assets Liabilities 201 8 201 9 59,015 40,333 897,582 937,915 1,062,243 1,121,258 Islamic Financing and Related Assets (Gross) 2019 2018 14% 14% 21% 3% 3% 22% 3% 3% 3% 2% 4% 17% 4% 5% 16% 7% 5% 4% 10% 10% 16% Food Textile Power (electricity) Individuals Transport, Storage and Communication Oil and Gas Construction and allied industries Automobile and transportation equipment Cement Chemical and Pharmaceuticals Others 14% Deposits 2019 1% 2018 2% 1% 2% 28% 28% 2% 2% 67% 98 MEEZAN BANK LIMITED Government Individuals Public Sector Entities Private Sector Others 67%
100. Profit and Loss Account The Bank recorded Profit after tax of Rs 15 .23 billion as compared to Rs 8.9 billion in 2018 – a growth of 70%. The return on average equity (including surplus) increased to 30.7% while Earnings Per Share – on enhanced capital clocked at Rs 11.84 per share as compared to Rs 6.97 in 2018. The Bank’s total provision against financing amount to Rs 3.1 billion – Rs 1.6 billion specific provision (net) and Rs 1.5 billion – general provision duly approved by the Board. The Bank also incurred a capital loss of Rs 381 million and provided an impairment charge of Rs 1.1 billion on the listed equity investments owing to volatile movement in PSX-100 index. The Bank’s net spread grew by 65% primarily due to higher return on financings, investments and placements which rose by 94% due to the Banks strong balance sheet growth and re-pricing of earning assets due to increase in SBP’s Target Rate. The Bank’s return on deposits and other dues also increased significantly from Rs 20.5 billion in 2018 to Rs 47.7 billion in 2019 – an increase of 133% primarily due to higher profit rates and increase in deposits. Operating and other expenses increased to Rs 25.6 billion from Rs 19.7 billion primarily due to increase in costs associated with hundred new branches, IT infrastructure cost, rising inflation and rupee devaluation. However, the rise in expenses is sufficiently absorbed by the growth in the Bank’s income resulting in improvement in income efficiency ratio to 46% - lower by 9% from last year. Fee and commission income of the Bank grew by 17% to Rs 6.1 billion with major contribution from trade finance related income, branch banking income and income from Alternate Distribution Channels. The Bank considers trade finance as a core business activity which while contributing to fees and foreign exchange income, also attracts current account balances thereby contributing to the overall profitability of the Bank. The Bank’s foreign exchange income crossed Rs 2.5 billion as compared to Rs 1.3 billion last year. CASA to Total Deposit 70 75 72 71 The total tax charge for the year, including Super Tax charge, increased to Rs 10.9 billion as compared to Rs 5.8 billion due to higher profitability. The Super Tax charge for the year included an additional Super Tax charge of Rs 470 million (4% for Tax Year 2018 / Accounting Year 2017) levied through Finance Act, 2019. Profit and Loss Year-wise trend in % 80 The Bank is in the process of forming Meezan Bank Foundation to promote development and advance the welfare and well-being of the people of Pakistan. The Board has approved an initial contribution of Rs 200 million for the Foundation which is included under donations in the financial statements for the year. 75 74 73 2019 Profit before tax 26,151 Profit after tax 15,232 60 50 40 Provisions 4,186 30 20 Net spread 46,539 10 0 2014 2015 2016 2017 2018 2019 NPL and Coverage Ratios 2018 11 10 133% 139% 142% 118% 120 110% 110 6 100 5 90 4 3 3.80% 80 3.30% 70 2.14% 1.78% 2 1 Profit before tax 14,792 Non funded income 9,320 Profit after tax 8,962 130 116% 1.54% 2014 2015 2016 2017 1.34% 2018 2019 60 50 Coverage Ratio NPL Ratio 7 150 140 9 8 Operating Expense 25,522 Provisions 1,168 Net spread 28,168 Operating Expense 19,670 Non funded income 7,462 ANNUAL REPORT 2019 99
101. DuPont Analysis Description 2019 2018 2017 2016 2015 2014 Profit Margin - % 14.7% 16.0% 14.3% 15.1% 13.4% 13.7% Asset Turnover 0.10 0.06 0.06 0.06 0.08 0.09 Equity Multiplier - Times 20.73 22.90 22.13 21.08 19.43 18.04 30.66% 23.77% 19.26% 19.58% 20.00% 21.35% Return on Equity (ROE) - % Following are the main DuPont analysis highlights: ■ ■ ■ ■ The Bank’s profit margin depicts an increasing trend due to strong balance sheet growth, increase in non-funded income and improvement in the income efficiency ratio The asset turnover also depicts an increasing trend pursuant to repricing of earning assets due to increase in the SBP’s target rate The equity multiplier is directly dependent on the Bank’s equity in relation to total assets The Bank’s Return on Equity is dependent on above mentioned three factors Market Statistics of Meezan Bank’s Share during 2019 Share Price Sensitivity 140 Share Price (Rupees) 120 100 80 60 40 Jan Feb Mar Apr May Jun Jul High Aug Sept Oct Nov Share Price Low 105.00 43,000 100.00 41,000 95.00 39,000 90.00 37,000 85.00 35,000 80.00 33,000 75.00 31,000 70.00 29,000 65.00 Dec Closing Rupees Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Daily average Volume Market Capitalization Share Value Capital Number of trading days Rupees in Million First Quarter 105.98 86.50 99.05 456,825 63 11,692 115,809 Second Quarter 101.00 81.31 87.16 590,229 59 12,861 112,097 Third Quarter 89.39 69.00 72.04 366,992 60 12,861 92,651 Fourth Quarter 100.00 72.15 95.13 756,346 65 12,861 122,348 Below are the key factors that may influence the share price of the Bank: ■ ■ ■ ■ 100 KSE 100 Index Share Price Rupees in Billion Bank's Performance Regulatory Changes specifically in Banking sector Changes in Macro Economic scenario of Pakistan Changes in Political Environment of Pakistan MEEZAN BANK LIMITED 27,000 KSE 100 Index Market Capitalisation
102. Analysis of Non-Financial Performance Non-financial measures form an important element of how the Bank evaluates its performance towards achieving its targets as well as delivering sustainable results for its stakeholders . Non-financial performance measures include the impact the Bank has on its key stakeholders and are monitored through strict adherence to the Bank’s internal policies and guidelines. Human Capital Meezan Bank remains focused on creating a diverse and inclusive workforce; encouraging participation of female employees as well as specially-skilled individuals. The Bank also ensures an equitable environment where all employees are given an equal opportunity to realize their full potential. In line with these goals, the Bank, throughout the year, provided a multitude of training and coaching opportunities to its employees. The Bank also has in place a comprehensive compensation framework that maintains a more direct link between employee performance and compensation. During 2019, the Bank continued to drive fair practice to increase gender diversity and inclusion across its entire workforce. A key element of this year’s performance was the Bank’s focus on automation and digitization which has also had a significant impact on HR processes and operations. The Bank successfully migrated to the latest version of Enterprise Resource Planning (ERP) system which has provided significant functional innovations around user-experience and has enabled new functionalities with more agility. Moreover, several system generated automated alerts have been implemented this year helping the staff perform their duties with ease and accuracy. Rs 78m Invested In Training 91% Return-to-work after Parental Leave 76% Employee Satisfaction Rate Approx. 4% Reduction in Attrition Rate 12% Females Among Total New Joiners 2,578 New Recruitments 595 Elevations Over 11,500 Total Strong Workforce Manufactured Capital The manufactured capital of the Bank includes its branches, computer systems, Alternate Distribution Channels as well as all such operational tools that contribute to the flow of information across and outside the organization. During the year 2019, Meezan Bank opened 100 new branches, bringing the branch network to 760 branches operating in 223 cities across Pakistan. Meezan Bank’s ATM Network grew by 17% during 2019, reaching a size of to 729 ATMs countrywide. The ATM channel was also upgraded to 100% EMV-compliant network to curtail security threats. Biometric access to ATM was also launched nationwide which enables customers to perform cash withdrawal, account verification, funds transfer, bill payments & much more. The Bank’s Internet Banking also witnessed unprecedented growth in IBFT and Bill Payment transactions through this channel, which grew by over 52% in 2019 as compared to 41% in the previous year. 6th Largest Bank Network in Pakistan 729 Biometric and Cardless Services Enabled ATMs SkimGuard Protection on ATMs of Other Banks 24% Increase in New Debit Cards ANNUAL REPORT 2019 101
103. Natural Capital During 2019 , the Bank has made good progress in increasing access to green finance and has taken lead among all local financial institutions by handling the highest number of wind power projects. The Bank has also installed Solar Systems in 10 Branches and the Head Office in an effort to reduce its Carbon footprint. The Bank further aims to convert 100 branches to Solar Energy in the future thus creating a positive contribution towards clean energy initiatives. The Bank is also working towards the aim of educating its staff towards more responsible energy consumption through workshops on ‘Energy Saving and Mitigation of Adverse Effects of Climate Change’ that shall cover all branches. Solar power installation at Head Office and 10 branches 225 kW shifted to green energy 158,000 kgs of CO2 reduced Intellectual Capital The Bank’s intellectual capital is composed of all intangible assets that are related to the Bank’s brand as well as its intellectual property such as patents, licences, etc. It also includes all solutions in information technology as well as operational and functional improvements. During 2019, the Bank focused on enhancing customer experience by automating a total of 40 processes for both internal and external customers. The Bank also aims to build brand affinity by ensuring consistent delivery of service across all branches in Pakistan. In addition, with a focus on technological innovation, the Bank focused on digital security to become 100% EMV compliant. As Pakistan’s largest Islamic bank, Meezan Bank has specialist expertise & track record in delivering, assessing & advising sustainable Islamic banking services. The Bank also provided index re-composition services to PSX for All Share Islamic Index & KSE Meezan Islamic (KMI) - 30 Index. EMV compliant debit cards EMV compliant ATM acquiring 3-D Secure compliant e-commerce Social and Relationship Capital The Bank believes in maintaining close ties with its stakeholders to create long-term value and to support individual as well as collective growth. Throughout 2019, the Bank continued dialogue and interactions with its customers through various channels to understand and meet their needs and to gather feedback. In addition, in an effort to increase awareness regarding digital threats and financial frauds, the Bank ran various education and awareness campaigns via SMS, emails and on social media platforms for its customers. During 2019, the Bank maintained its social media presence with the largest footprint in the industry providing its cusotmers with a responsive channel as well as product and service awareness. Over 2.6 million customers 379,484 New to Bank customers 145,081 new Asaan accounts 9,437,220 customer awareness SMS sent 102 MEEZAN BANK LIMITED
104. Cash Flow Direct Method For the year ended December 31 , 2019 Profit / return and other income received Profit / return paid Payment to employees, suppliers and others (Increase) / decrease in operating assets Due from financial institutions Islamic financing and related assets Other assets Increase / (decrease) in operating liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities Income tax paid Net cash flow from operating activities 2019 2018 Rupees in Million 84,051 (44,572) 52,066 (19,380) (16,805) (16,555) (38,875) (37,585) 22,674 15,732 1,154 16,131 (93,412) (4,322) (21,989) (135,319) (6,564) 6,576 147,102 118,296 144,721 133,071 136,081 8,732 5,640 (1,457) (9,325) (405) 8,604 (5,151) CASH FLOW FROM INVESTING ACTIVITIES Net (investments) / redemption in - available for sale securities - held to maturity securities - associated entities Dividends received Investments in fixed assets Investments in intangible assets Proceeds from sale of fixed assets Net cash used in investing activities CASH FLOW FROM FINANCING ACTIVITIES (116,446) 28,000 - 342 (7,113) - 1,060 589 (4,914) (3,338) 164 140 (410) (93,264) (332) (8,994) Payment of lease liability against right-of-use assets (2,448) Dividend paid (6,080) Net cash (used in) / flow from financing activities (8,528) (2,913) Increase in cash and cash equivalents 34,289 3,825 73,277 69,452 Issuance of Sub-ordinated Sukuk - Additional Tier I Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year - 107,566 - 7,000 4,087 73,277 Cash flow statement in annual financial statements is required to prepare in line with the format prescribed by the State Bank of Pakistan under its BPRD Circular No. 02 dated January 25, 2018, 'Revised Forms of Annual Financial Statements'. ANNUAL REPORT 2019 103
105. Summary of Cash Flow Rupees in Million 2019 2018 2017 2016 2015 2014 Cash flow from / (used in) operating activities 136,081 8,732 (3,149) (7,741) 52,687 (44,417) Cash (used in) / flow from investing activities (93,264) (8,994) 4,543 16,945 (30,048) 49,515 Cash (used in) / flow from financing activities (8,528) 4,087 3,993 (3,008) (2,005) Cash and cash equivalents at the beginning of year 73,277 69,452 68,058 54,861 35,230 32,137 107,566 73,277 69,452 68,058 54,861 35,230 Cash and cash equivalents at the end of year - Rupees in Million 150,000 136,081 100,000 52,687 50,000 8,732 0 (8,528) 4,087 (8,994) 16,945 3,993 4,543 (3,149) (150,000) (30,048) (44,417) (93,264) 2019 2018 Operating activities 104 (2,005) (3,008) (7,741) (50,000) (100,000) 49,515 MEEZAN BANK LIMITED 2017 Investing activities 2016 2015 Financing activities 2014
106. Allocation of Income and Expenses to Remunerative Depositors ’ Pool For the year ended December 31, 2019 2019 2018 Rupees in '000 Income from financing activities 51,368,119 29,061,728 Income from placements with financial institutions 17,334,544 11,522,776 Total Income 93,696,566 49,441,222 Less: Directly attributable charges to pools including takaful (Note) (1,844,037) (1,431,931) Income from investments 19,726,781 Other income attributable to pools 6,139,566 5,267,122 Less: Profit on assets allocated to IERS and other special pools Less: Profit share allocated to bank's equity and other 2,717,152 (23,858,852) (8,676,943) pools in Mudaraba pools (15,058,921) (11,717,502) Gross distributable Income 52,934,756 27,614,846 Mudarib (Bank) share of profit before hiba 26,905,125 14,057,355 Net Mudarib (Bank) Share of profit 17,917,445 12,668,727 35,017,311 14,946,119 Less: Hiba from Mudarib (Bank) share (8,987,680) (1,388,628) 35,017,311 Rab-ul-Maal share of profit Rab-ul-Maal share of profit is distributed as follows: Remunerative depositor's profit share in Mudaraba pools 14,946,119 The Bank maintain following four remunerative general pools: Rupee deposit pool Dollar deposit pool Pound deposit pool Euro deposit pool Rupee deposit pool Dollar deposit pool Pound deposit pool Euro deposit pool Net Income allocated to General Pool and bank's equity Profit share allocated to bank's equity and other pools 65,737,333 2,158,183 79,988 18,173 67,993,677 Mudarib (Bank) share of profit Hiba from Mudarib (Bank) share Net Mudarib (Bank) share of profit Remunerative depositors' share in Mudaraba pool 14,515,984 507,406 30,654 4,877 2019 Rupees in '000 25,610,676 8,987,680 1,238,082 44,400 11,967 - 16,622,996 1,238,082 44,400 11,967 34,598,353 412,695 4,934 1,329 15,058,921 26,905,125 8,987,680 17,917,445 35,017,311 38,060,143 1,231,221 37,775 3,209 11,430,491 270,257 15,365 1,389 2018 Rupees in '000 13,314,826 1,388,628 720,723 20,169 1,637 - 11,926,198 720,723 20,169 1,637 14,703,454 240,241 2,241 183 39,332,348 11,717,502 14,057,355 12,668,727 14,946,119 1,388,628 Note: Administrative and operating expenses (including salaries and marketing costs) are paid by the Bank and not charged to the Depositors’ pool as per the guidelines of Mudaraba pools. ANNUAL REPORT 2019 105
107. Statement of Value Added and Distributed 2019 Rupees in ‘000 Value Added Profit / return on Islamic financings, investments and placements - net of provision % 2018 Rupees in ‘000 % 90,084,031 100.8% 47,456,407 100.0% 6,174,644 6.9% 5,257,170 11.1% 341,464 0.4% 567,429 1.2% 2,684,097 3.0% 1,318,460 2.8% 119,981 99,404,217 0.1% 319,444 54,918,910 0.7% (10,004,864) 89,399,353 (11.2%) 100% (7,471,033) 47,447,877 (15.8%) 100% To Depositors / Financial Institutions Profit on deposits and other dues expensed 47,731,080 53.4% 20,456,948 43.1% To Employees Salaries, allowances & other benefits 12,739,695 14.3% 10,092,557 21.3% 6,079,801 1,169,192 7,248,993 6.8% 1.3% 8.1% 2,922,981 1,062,902 3,985,883 6.2% 2.2% 8.4% 609,524 10,918,605 11,528,129 0.7% 12.2% 12.9% 363,001 5,830,206 6,193,207 0.8% 12.3% 13.1% 1,965,875 7,983,081 9,948,956 2.2% 8.9% 11.1% 1,735,045 4,976,317 6,711,362 3.6% 10.5% 14.1% 202,500 89,399,353 0.2% 100% 7,920 47,447,877 0.0% 100% Fee and commission income Dividend income Foreign Exchange Income Gain on securities and other income Operating and other expenses excluding salaries, depreciation, amortisation and workers welfare fund Value allocated as follows: To Shareholders Cash Dividend Bonus Shares To Government Workers Welfare Fund Income Tax To Expansion Depreciation & Amortisation - owned assets Retained in business To promote development and welfare of the society Donations Statement of Value Added & Distributed 2019 Statement of Value Added & Distributed 2018 0.2% 11.1% 14.1% 12.9% 0.0% 13.1% 53.4% 43.1% 8.1% 8.4% 14.3% 21.3% To Depositors/Financial Insitutions 106 MEEZAN BANK LIMITED To Employees To Shareholders To Government To Expansion To Society
108. How We Distribute the Value Created In fulfilling our promise to our stakeholders , Meezan Bank distributes the value created in relevant and meaningful ways – and for some stakeholders, beyond financial means. Stakeholders receive intangible benefits ranging from employee upskilling programmes to diverse avenues of alternate Shariah-complaint investments & financings, in our effort to ‘Establish Islamic Banking as banking of first choice...’ To our Employees 14.3% Rs 12,740 Mn Salaries, allowance & other benefits to Bank’s employees amounted to Rs 12,740 Mn To the Economy 12.9% Rs 11,528 Mn A total of Rs 11,528 Mn in Workers Welfare Fund & Income Tax to Government, contributing to the development of the country’s economy Rs 89,399 Mn To Society 0.2% Rs 202 Mn Donations to promote development and welfare of the society 53.4% Rs 47,731 Mn To Depositors / Financial Institutions Profit paid to depositors and financial institutions To our Shareholders 8.1% Rs 7,249 Mn We rewarded our equity shareholders with a cash dividend of Rs 5.00 (50%) per share and bonus shares at 10% 11.1% Rs 9,949 Mn Depreciation & amortization and reinvestment of retained profits To Expansion ANNUAL REPORT 2019 107
109. Statement of Inventory Meezan Bank Limited provides financing through various sale-based modes including Murabaha , Musawamah, Istisna, Tijarah, Salam, etc. Under these modes, the Bank either purchases the goods to be financed or gets them manufactured. It then sells the goods to the customer on spot / deferred basis. This statement signifies the difference of Islamic modes of financing that is based on trade of real assets and goods. It also demonstrates the exposure that the Bank takes in different sectors. The goods lying unsold at the date of the financial statements are carried as inventory in the financial statements of the Bank. The sector wise detail of inventory held by the Bank as at December 31, 2019 is as follows: Sector Nature of Inventory Agriculture & Food Products 2019 Rs in ‘000 2018 Rs in ‘000 11,597,939 14,588,574 10,689,500 7,274,000 5,906,976 Corn, Sugar, Soyabean, Ghee, Canola, Rice (Grain, Paddy), Wheat, Syrups, Oil Cake, Edible Oil Petroleum Products High Speed Diesel, Low Sulphur Furnace Fuel Oil, High Sulphur Furnace Fuel Oil, Textile Cotton (Raw Cotton, Bales, Fabric, Yarn), Bed Sheets, Garments, Home Textile Premium Motor Gasoline Products (Towels, Pillow Covers, etc) 4,325,201 Construction Iron & Steel, Sanitary items & Fittings, Pipes, Cement Bags 2,837,677 797,283 Wholesale & Retail Trade Rock Phosphate, Coal, Caps and Corks, Confectionary Items, Medical Machinery 2,683,854 1,617,206 Chemical & Pharmaceutical Chemicals, Medicines, Paints, Fertilizer, Polymers 1,594,852 3,291,088 Others Poultry Feed, Float Glass, Copper Wire, Bottle Caps, Ship Scrap, Battery Lead Panels, Electronic Components, Sport Goods, Cars, ATM Machines, Fans, Foam, Auto Spare, Finished Leather, Parts, Paper, Packaging & Material (Chip Boards, Glass Vials, Glass Bottles) Grand Total 4,218,848 3,113,706 37,947,871 36,588,833 Sector-wise Breakup 11% 31% 4% 7% Agriculture & Food Products Petroleum Products Textile Construction Wholesale & Retail Trade Chemical & Pharmaceuticals Others 8% 11% 28% Statement of Financing Portfolio Income Meezan Bank provides financing to its Corporate, Commercial, SME, Agriculture and Consumer banking customers using a variety of Shariah-compliant modes of financing. The below mentioned matrix shows the percentage of income earned on different financing modes, and depicts a well balanced and diversified financing portfolio of the Bank. The diversification has been achieved by using arrangements based on trade, rent, joint ownership, profit / loss partnership and agency, to suitably meet the needs of customers and provide a halal return. Rs in Million Islamic mode of financing % Amount 2018 % Running Musharakah 18,892 34.51% 9,425 31.20% Diminishing Musharakah 12,390 22.64% 7,403 24.51% Istisna 5,603 10.24% 3,084 10.21% Ijarah 5,052 9.23% 3,173 10.50% Wakalah 4,704 8.59% 2,888 9.56% Musawamah 3,375 6.17% 1,820 6.03% Murabaha 1,762 3.22% 1,196 3.96% Tijarah 1,530 2.80% 614 2.03% Salam 930 1.70% 292 0.97% 500 0.90% 311 1.03% 54,738 100% 30,206 100% Others Total 108 Amount 2019 MEEZAN BANK LIMITED
110. Calendar of Major Events Incorporation Acquisition of HSBC Pakistan Commencement of Business 1997 2002 Issuance of Scheduled Islamic Commercial Bank license 2014 2015 Acquisition of Pakistan operations of HSBC Oman Commencement of Operations as Scheduled Islamic Commercial Bank Acquisition of Societe Generale Financial Calendar 2019 1st Quarter Results issued on 2nd Quarter Results issued on 3rd Quarter Results issued on Extraordinary General Meeting (EOGM) Annual Results issued on 24th Annual General Meeting 2018 1st Quarter Results issued on 2nd Quarter Results issued on Extraordinary General Meeting (EOGM) 3rd Quarter Results issued on EOGM/Election of Directors held on Annual Results issued on 23rd Annual General Meeting 2017 1st Quarter Results issued on 2nd Quarter Results issued on 3rd Quarter Results issued on Annual Results issued on 22nd Annual General Meeting April 25, 2019 August 28, 2019 October 24, 2019 December 18, 2019 February 12, 2020 Scheduled on March 26, 2020 April 19, 2018 August 29, 2018 October 2, 2018 October 24, 2018 November 17, 2018 February 21, 2019 March 28, 2019 April 20, 2017 July 26, 2017 October 25, 2017 February 14, 2018 March 28, 2018 ANNUAL REPORT 2019 109
111. Marketing & Corporate Communication During 2019, the Bank launched several initiatives for re-enforcing its Vision of establishing ‘Islamic banking as banking of first choice...’, enhancing its brand image and increasing visibility to existing and potential customers. Major Initiatives The marketing campaigns listed below utilized Print, Radio and Social & Digital Media. ■ Deposit Account with Free Services ■ Senior Citizens MAC campaign ■ Smart Remittance Wallet and Easy Remit campaign ■ Government Hajj Application collection campaign ■ To support the Islamic pages of major newspapers, Meezan Bank also placed a weekly masthead ad on these pages. A number of corporate and product related ads like Car Ijarah, Easy Home, Bike Ijarah, Labbaik etc. were placed here. Events & Sponsorships The Bank sponsored and participated in more than 30 public events nationwide that provided excellent marketing mileage and increased its brand visibility. The Bank also organized more than 30 Area-wise Islamic banking seminars, including a few at Chambers of Commerce in various cities, to increase awareness of Islamic banking in the general public. Corporate Publications ■ ■ ■ The Bank also conducted the following activities exclusively on Digital & Social Media: ■ ■ ■ ■ ■ ■ 110 28 product-focused campaigns for Home Remittance, Kafalah, Consumer Ease, Meezan Express Account, Bike Ijarah, Car Ijarah, Easy Home, etc. Over 60 videos on corporate, as well as product campaigns Ramadan campaign based on good deeds Blessed Friday discount campaign Campaigns on major days including Independence Day, Pakistan Day, International Day of Disabled Persons and Quaid-e-Azam Day Coverage of CSR initiatives such as Tree Plantation Drive, Cleanliness Drive, adoption of Idara Al Khair Welfare Society school, etc. MEEZAN BANK LIMITED ■ Annual Report: The Bank’s Annual Report is a comprehensive document which comprises financial highlights and accomplishments of the past year. PR & Newsletter: The Bank regularly disseminates information to its customers, general public about its achievements as well as business and operational milestones through Press Releases in print, electronic and social media. The Bank’s official newsletterPAGES and its intranet portal- ‘Meezan World’ both serve as very effective channels to disseminate news, information and announcements to the Bank’s staff across the country. Calendars: The Bank continued to research, design and produce informative calendars for distribution to existing and potential customers. These calendars are developed in English and Urdu languages. A digital calendar is also made available on the Bank's website. Ramadan Cards: The Bank continued to distribute Ramadan cards to highlight the importance of this Holy Month.
112. Followers Followers More than More than 123 ,200 10,200 78% 77% Growth Growth since 2018 The highest number of followers amongst all banks in Pakistan since 2018 First dedicated Islamic Banking Channel in the country MEEZAN BANK’S SOCIAL MEDIA FOOTPRINT Likes Over 1.98m Followers More than 6,600 Largest fan base in Pakistan’s banking industry 19 th in World’s Top 100 Banks on Facebook by The Financial Brand Launch of Meezan Careers Facebook Page More than 12,300 Likes Followers More than 38,500 Growth 39% since 2018 Growth 125% since 2018 The highest number of followers amongst all banks in Pakistan www.facebook.com/MeezanBank www.facebook.com/MeezanBankCareers www.twitter.com/MeezanBankLtd www.linkedin.com/company/meezan-bank-ltd www.youtube.com/c/MeezanBankLtd1 www.instagram.com/meezanbanklimited
114. STRATEGY & RESOURCE ALLOCATION 114 115 115 115 116 SWOT Analysis Strategic Objectives Strategies in Place Resource Allocation Key Performance Indicators and Future Relevance 117 Products and Services
115. SWOT Analysis Being aware of the environment in which one operates , as well as of one's own strengths and weaknesses, is a key element in the success or failure of any business. Meezan Bank's management is cognizant of the fact that the economy and the banking industry are in a state of flux and regularly conducts SWOT analysis of the organization to capitalize on its strengths and work on its weaknesses in view of the opportunities available in its environment and the threats that it needs to overcome. A SWOT summary of the business as it stands today is given below: STRENGTHS Pakistan’s largest Islamic bank Brand image Shariah credibility Comprehensive product suite WEAKNESSES Limited opportunities for investment of surplus liquidity Limited availability of human resources with Islamic banking knowledge Dedicated Shariah Supervisory Board of comprising of world-renowned Shariah scholars OPPORTUNITIES Increasing awareness about Islamic financial services and demand for Shraiah-compliant products and services Conventional banks entering Islamic banking market Growing local and international Islamic banking market Macroeconomic uncertainty Significant potential for market penetration 114 THREATS MEEZAN BANK LIMITED Alternate business models
116. Strategic Objectives Formulation , execution and monitoring of strategic goals and initiatives are keys to ensuring optimum organizational productivity. Meezan Bank has continued to ensure that its direction and the pace with which it moves in a given direction is constantly reviewed, deliberated upon and monitored to keep it aligned with the organizational Vision and Mission. In line with the vision and mission, Meezan Bank has established for itself the following set of objectives: Long Term Objectives ■ ■ Establish Islamic banking as banking of first choice Enhance and reinforce the Bank’s brand by maintaining its values and Shariah credibility Medium Term Objectives ■ ■ Become the best customer franchise by offering innovative and value added services Collaborate with educational institutes to nurture Islamic bankers Short Term Objectives ■ ■ Provide financial solutions aligned with needs and expectations of an increasingly technology-oriented customer base Ensure consistent profitability to exceed shareholder and market expectations Strategies in Place With nearly two-thirds of the country’s population in the millennial and post-millennial age group, proliferation of smart devices and internet connections throughout Pakistan, and adoption of digital channels is increasing at an exponential pace. Customers now demand the ability of conducting both personal as well as business transactions using digital channels and Meezan has put strategies in place to provide end-to-end digital solution to all customers. Moreover, Meezan Bank keeps recalibrating its product portfolio and financing mix to deliver the optimum results to its customer base as well as all other stakeholders. Meezan Bank focuses on developing creative action plans in accordance with the market dynamics. Meezan Bank has always conducted awareness sessions on Islamic banking throughout Pakistan, with audiences from all age groups, professions and socio-economic strata. As a consequence, Meezan Bank’s efforts in increasing the size of the Islamic banking market have borne tremendous fruit. This effort will continue with renewed vigour and will constitute a central strategy for achieving long-term and medium-term organizational objectives. Significant Plans and Decisions To achieve organizational objectives, the senior management discusses various strategies and monitors their implementation and efficacy routinely. These strategic objectives form the basis of the high level organizational Balanced Scorecard. Meezan Bank will continue to expand its branch network and product portfolio, and invest in latest technologies to not just keep abreast of the changing transactional climate but to also stay ahead of the market. Significant Changes in Objectives and Strategies There have been no significant changes in organizational objectives or strategies over the past year. Strategy to Overcome Liquidity Problem The Bank has one of the largest branch networks in the country that supports its deposit generation efforts. The strategy to overcome liquidity shortage is two pronged. At one end, the Bank is constantly focusing on increasing its deposits base, which allows the liquidity to fund its financing activities (Advances). The deposit base of the Bank is also highly granular, meaning that it does not run the risk of liquidity shortage due to losing a single large deposit. The stable and regularly growing deposit base ensures that the supply side of the Bank’s liquidity never comes under stress. On the financing end, the Bank manages a Deposit to Advances ratio (ADR) within prudent levels, thus ensuring that the financing facilities being provided are within comfortable limits of the total deposits available with the Bank. Resource Allocation Human Capital Meezan Bank reaffirms its dedication towards codifying and putting to use the organization's combined human capability for solving business problems. This includes capacity enhancement through job rotations, formal and informal mentorship and counselling programs, trainings and specific engagements in order to promote a learning culture throughout the organization. Meezan Bank will provide an environment where an individual’s learning can translate into optimal business improvement. The organization will redeploy resources to afford an even better work-life balance for its employees. It is foremost among the organization’s priorities to develop its employees professionally and intellectually, as well as to imbue the new individual depth into the organizational culture. ANNUAL REPORT 2019 115
117. Manufactured Capital Meezan Bank will increase its investment in providing physical infrastructure that is sustainable and more flexible than ever before . Branches, IT infrastructure and locations will reflect this drive. The organization will ensure that its physical infrastructure exceeds customer expectations and generates greater returns by employing design thinking principles and utilizing resources in an optimal manner. Financial Capital The Bank’s Board and the management is committed to maintaining a sound balance between depositors' liability and shareholders' funds so that optimal capital / debt ratio is maintained. The Bank prepares Annual Budget and Three Year Plan for purpose of the growth map and future direction. Bottom up approach is used to prepare Annual Budget and detailed deliberations are held while preparing Three Year Plan. The capital requirement of the Bank is determined based on the projected growth plan to be achieved in the next 3 years in all areas of business operations. Natural Capital Meezan Bank will decrease its carbon footprint per employee by maintaining its movement towards digitalization of back-end services, centralization of processes in certain key areas, as well as digitizing processes to place minimal burden on the environment. Reduced use of paper will be complemented with greater investment in green power for various physical locations spread throughout the country. Intellectual Capital Meezan Bank will gather and collate all the banking and service wisdom spread throughout the organization and transform its processes accordingly to provide the best possible banking experience to its customers. Concurrently, Meezan Bank will seek to further enrich its social fabric by weaving Shariah and regulatory compliance into the organizational cultural tapestry. The organizational value will be developed via an emergent process focused on the capability to leverage, develop and enhance the values inherent in Islamic banking. Social and Relational Capital Meezan Bank will invest in deepening customer relations by introducing more touch points for customers, gathering and synthesizing data for deepened customer insights, and designing customer journeys to better suit the banking needs and taste preferences of the burgeoning customer base. Moreover, the organization will take measures to enhance its brand position as the premier Islamic bank as well as one of the leading and fastest growing banks of the nation and utilize its network to add value to its offerings. Key Performance Indicators and Future Relevance Key Performance Indicators (KPIs) are a tool for measuring the success and performance of specific initiatives, projects, as well as routine operational activities. Meezan Bank uses KPIs at multiple levels so that smart business decisions may be made regarding the direction of all current and future projects. ■ ■ ■ ■ Promoter Score so as to retain focus on what customers really value. Customer feedback is collected continuously and studied to determine where and in what form would a given organizational response provide the greatest value for customers. This interaction and study of customer preferences helps in identifying new opportunities and redesigning process flows. Meezan Bank tracks the growth of the Islamic banking industry continuously, and as a corollary, tracks its share in the Islamic as well as the conventional banking industry, employing branch expansion and relocation, deposit products, tailored services for individual and commercial customers as tools to augment market position. Meezan Bank focuses on diverting its financing mix towards the most profitable business segments, and keeps working towards the target by introducing new products and services, inducting an immersive customer experience for specific segments. This focus leads to greater shareholder returns and a favourable market perception. Meezan Bank keeps track of all traditional financial and profitability ratios. Meezan Bank keeps interacting deeply with all business segments, and determines the Net ■ Meezan Bank keeps a keen eye on the regulatory regime and strives to predict future courses of action from relevant national and international bodies which could have a bearing on its financial performance and sustainability. Systems are in place to stay ahead of the curve with respect to regulatory compliance, as well the high internal Shariahcompliance standards the organization has set for itself. The above mentioned KPIs will remain relevant for future endeavours. 116 MEEZAN BANK LIMITED
118. Products and Services Meezan Bank offers a diverse range of Shariah-compliant banking products and services to cater customer requirements . All products of the Bank are approved by the Shariah Supervisory Board and are completely Riba-free. Meezan Rupee Current Account Meezan Rupee Savings Account Meezan Asaan Current Account Meezan Asaan Savings Account Meezan Express Current Account Meezan Express Savings Account *Terms and conditions apply *Terms and conditions apply Foreign Currency Current Account Foreign Currency Savings Account This is a checking account that works on the basis of 'Qard' and provides the convenience of conducting day-to-day transactions with ease and comfort. There is no restriction on withdrawals or number of transactions and there is no deduction of service charges if the balance maintained is low. The account is ideal for daily transactional needs of individuals and business entities. Meezan Asaan Current Account is specifically designed for low income, unbanked and under-banked population that provides swift and hassle-free account opening process, since there is no requirement of submitting any proof of income document for opening this account. It works on the basis of ‘Qard’ and can be opened with a minimum deposit of Rs 100 and a valid CNIC. Maximum credit balance and withdrawal limit is Rs 500,000 per month. Meezan Express Current Account has been designed to facilitate the beneficiaries of home remittance and encourage them to use formal banking channels. The biggest advantage of Meezan Express Current Account is that it can be opened on the basis of a CNIC only* & there is no withholding tax on cash withdrawals through cheque or ATM. Meezan Express Current account can only be fed through home remittances, no other credits are allowed. Meezan Foreign Currency Current Account is a ‘Qard’ based account that can be opened with just 100 USD / Pound / Euro. There is no deduction of service charges if the balance maintained is low. Meezan Bank's Rupee Savings Account is ideal for savings, investments and transactional needs. It works on the basis of ‘Mudarabah’ and provides monthly profit, along with a variety of free packaged benefits. Profit is calculated on daily balance and credited into the account on a monthly basis. Minimum investment required for opening an account is Rs 100 and there is no deduction of service charges if the balance maintained is low. Meezan Asaan Savings Account is specifically designed for low income unbanked and under-banked population with the motive of saving money in a bank account. It provides swift and hassle-free account opening process, since there is no requirement of submitting any proof of income document for opening this account. Account works on the basis of ‘Mudarabah’ and can be opened with a minimum deposit of Rs 100 and a valid CNIC. Maximum credit balance and withdrawal limit is Rs 500,000 per month. Meezan Express Savings Account is based on Mudarabah and has been designed to facilitate the beneficiaries of home remittance and encourage them to use formal banking channels. The biggest advantage of Meezan Express Savings Account is that it can be opened on the basis of a CNIC only* & there is no withholding tax on cash withdrawals through cheque or ATM. Meezan Express Savings account can only be fed through home remittances, no other credits are allowed. Meezan Foreign Currency Saving Account is an excellent business tool for individuals and corporate clients to meet their business needs and to diversify their investment in different foreign currencies. It works on the basis of ‘Mudarabah’ and allows customers to earn Halal profits every month and safeguard their investment against currency fluctuations. Meezan Foreign Currency Savings Account can be opened by individuals, sole-proprietorships, partnerships and limited companies in 100 USD / Pound / Euro only. ANNUAL REPORT 2019 117
119. Meezan Bachat Account Karobari Munafa Account Meezan Kids Club Account Meezan Teens Club Account Meezan Bachat Account is a premium savings account that offers a higher expected profit . The minimum investment required for opening an account is Rs 50,000. Profit is calculated with a higher weightage for account balance. There is no restriction on withdrawals or numbers of transactions and there is no deduction of service charges if the balance maintained is low. Meezan Kids Club Account is introduced for children under the age of 12 years to cultivate the habit of saving in the early years. The account can be opened with Rs 500 only. The profit is paid on monthly basis. VISA debit card fee is waived for the first year. Exciting gifts are given to Kids Club members on account opening. Meezan Teens Club Account is designed to cater the requirements of the age group of 12 to 18 years. It can be opened from Rs 1,000 only. The profit is paid on monthly basis. VISA debit card fee is waived for the first year. Exciting gifts await the Teens Club members upon account opening. Meezan Kafalah Meezan Labbaik Monthly Mudarabah Certificate Certificates of Islamic Investment Meezan Kafalah is a savings plan with Takaful coverage up to Rs 15 million through which customers can save for their future plans such as education or wedding of their child, going for Hajj, planning for old age etc. Meezan Kafalah is a Shariahcompliant alternative to bancassurance with easy exit option at any time. An individual can start his plan with monthly contribution as low as Rs 2,000. Plans are available from 3 to 15 years. The Monthly Mudarabah Certificate is a short-term deposit product for an investment period of one month only. Profit is paid on maturity with reinvestment option available on a continuous basis. Minimum investment required is Rs 50,000. Pre-mature withdrawal can be made as per the approved schedule. 118 Karobari Munafa Account is specifically tailored for large corporates or GoP controlled entities where profit is calculated on daily balance and credited into the account on a monthly basis. The minimum investment required for opening an account is Rs 1 million. There is no restriction on withdrawals or number of transactions and there is no deduction of service charges if the balance maintained is low. MEEZAN BANK LIMITED Meezan Labbaik facilitates customers who wish to perform Hajj & Umrah via renowned agents on the Bank’s panel. Customers have multiple Travel Asaan payment options allowing them to decide when and how they want to pay off the plan. Alternatively, customers can also avail Mudarabah based Labbaik Savings Asaan Account in which customers can save for Hajj & Umrah of their parents, spouse, children or other family members on some future date. Customers can also apply for Hajj through the Bank’s branches on the Govt. Hajj Scheme as announced by the Government of Pakistan from time to time. Certificates of Islamic Investment are Term Deposit Certificates for investment periods ranging from 3 months to 5 years with profit payment on monthly and maturity basis. Minimum investment required is Rs 50,000. There is no limit on maximum investment. Pre-mature withdrawal can be made as per the approved schedule.
120. Mobile Banking App Meezan Bank Platinum Debit Card Meezan Bank Mobile Banking App is a one-stop solution to all day-to-day banking needs of customers including mobile top-ups , bill payments, funds transfer or donations. The new Meezan Bank Mobile App has been designed to provide customers with an easy and fast user experience while maintaining absolute security at all times. Using the biometric login feature, users can now perform their transactions in seconds. Moreover, now customers can stay updated with all Meezan Bank Debit Card discounts and promotions, locate and navigate to Meezan Bank branches and ATMs and find the Qibla direction, all within the App. Meezan Bank Platinum Debit Card is designed to meet the needs of high net-worth customers who are frequent travellers and high spenders. It offers maximum usage limits with exclusive discounts at partnered brands across the country along with complimentary access to CIP lounges at airports in Pakistan. Meezan Bank Platinum Debit Card gives access to premium customers at over 20 airport lounges worldwide and comes with NFC feature to provide quick transaction (Tap & Go) experience at all NFC enabled terminals globally. Moreover, this card is secured with CHIP & PIN for POS transactions and 3-D Secure for e-commerce transactions. Internet Banking Meezan Bank Titanium Debit Card Meezan Bank Internet Banking is a safe and convenient way to bank for customers who feel comfortable with desktop computers. Internet Banking offers various features such as mobile top up, bill payments, funds transfer, making donations and viewing and downloading the account statements. In addition to this, customers can also lodge complaints, request cheque books & pay orders as well as issue stop cheque instructions. Moreover, customers can also manage their investments in Al-Meezan Mutual Funds. Meezan Bank Titanium Debit Card is designed to meet the needs of emerging affluent customers who seek unique life experiences. It not only comes with higher limits for shopping and withdrawals but also offers amazing deals and discounts at hundreds of retail brands as well as e-commerce merchants across Pakistan. This card is NFC enabled and secured with CHIP & PIN for POS transactions and 3-D Secure for ecommerce transactions. With Meezan Bank Titanium Debit Card, customers can access selected international lounges as well. SMS Alerts Meezan Bank's SMS Alerts service keeps customers updated about the activity in their accounts on real time basis enabling them to keep track of their financial transactions along with latest account balance. Meezan Bank customers also get email alerts of their transactions which is particularly helpful for customers travelling abroad. For institutional clients, corporate SMS Alert service is also available tailored to their specific needs. Meezan SMS Alerts Meezan Bank Gold Debit Card Meezan Bank Gold Debit Card is designed to meet the needs of customers in pursuit of higher value than the basic category. Gold card customers can also avail hundreds of deals and discounts all over Pakistan. These cards are NFC enabled and secured with CHIP & PIN for POS transactions and 3-D Secure for e-commerce transactions. MEEZAN BANK GOLD DEBIT CARD THE CARD TO GO WITH YOUR LIFESTYLE Enjoy contactless payments worldwide (+92 21) 111-331-331 or 111-331-332 SMS Banking Meezan SMS Banking is an interactive service that allows customers to access their account anytime, anywhere by using the SMS channel. It is particularly useful for customers who have limited access to smartphones or internet. Meezan Bank Classic Debit Card Meezan Bank Classic Debit Cards are designed to meet the needs of day-to-day payments. Cardholders are eligible to avail discounts at partner merchants nationwide. These cards are NFC enabled and secured with CHIP & PIN for POS transactions and 3-D Secure for e-commerce transactions. www.meezanbank.com MEEZAN BANK CLASSIC DEBIT CARD THE CARD TO GO WITH YOUR LIFESTYLE Enjoy contactless payments worldwide (+92 21) 111-331-331 or 111-331-332 www.meezanbank.com ANNUAL REPORT 2019 119
121. Discounts & Privileges Meezan PayPak Debit Card Meezan Bank PayPak Debit Card is designed to meet the needs of customers who are looking for seamless ATM withdrawal and POS purchasing within Pakistan. Meezan Bank PayPak Debit Cards are also secured with CHIP & PIN. MEEZAN BANK PAYPAK DEBIT CARD Meezan Bank offers its customers best in class deals and discounts at over 200 brands & merchants nationwide. The Bank also offers attractive discounts at leading e-commerce websites throughout the year. Meezan Bank Platinum Debit cardholders can avail airport CIP lounge facility in major cities of Pakistan. Additionally, Meezan Bank Mastercard Platinum and Titanium Debit Card customers can enjoy the lounge facility at various International Airports. For further details, please visit the Bank’s official website. Supplementary Debit Cards Meezan ATM Network Meezan Bank Supplementary Debit Cards allow our customers to offer the convenience of debit card to their family members so that they become financially independent. Supplementary Debit Card offers the same features and benefits as a primary card. For easy tracking, all transactions on Supplementary Cards are shown in the account statement of primary cardholder. Contactless Payments – NFC Tap & Go Meezan Bank is the first bank to introduce Near Field Communication (NFC) Cards in Pakistan. All Meezan Bank Debit Cards are NFC enabled, providing the convenience to make contactless payments seamlessly across the globe. Customers can now experience faster payments on NFC powered terminals showing [ ] sign by simply tapping the card instead of dipping or swiping it. Fonepay Meezan Bank has partnered with Mastercard and Fonepay to launch the latest award-winning innovation in payments based on QR technology. Meezan Bank customers can now simply scan Fonepay QR displayed at shops to make the payment at thousands of merchants in Pakistan. 120 MEEZAN BANK LIMITED Meezan Bank offers a nationwide network of over 725 ATMs across the country both with branches and at prominent off-site locations. All Meezan Bank ATMs are EMV compliant and are equipped with biometric functionality to allow card-less access for withdrawal and other ATM based services. In addition to conventional services, Meezan Bank ATMs offer various value-added services like Debit Card Activation, ATM PIN Change and Biometric Account Verification etc. Contactless Payments – NFC Tap & Go Meezan Fonepay SkimGuard Meezan Bank has introduced an innovative ‘SkimGuard’ security mechanism for the first time in Pakistan to reduce exposure to skimming frauds. When a high value transaction is initiated on Meezan Bank’s ATM, a passcode is sent via SMS on customer’s registered mobile number and after entering the same on ATM, the transaction is completed successfully. Similarly withdrawal transactions from other bank ATMs in Pakistan are verified over a Robocall sent to registered numbers of our customers on real-time basis. Online Branches Meezan Bank offers free online banking facility on all Pak Rupee accounts to online banking customers. This enables the Bank’s customers to access their accounts and conduct transactions from any of Meezan Bank’s 760 branches nationwide, regardless of which branch or city they have their account in. This facility provides great convenience for depositing and withdrawing cash, making pay orders and availing numerous other banking services. Online Banking
122. Smart Remittance Wallet Smart Remittance Wallet is a unique wallet account with a saving facility that allows customers to receive remittances directly in their account and get free airtime of Rs 2 against each dollar credited . The Smart Remittance Wallet holder can maintain balance up to Rs 1.5 million. The account also gives good profit rates on savings, with the flexibility to use the money at any time. Key features of the product include no minimum deposit requirement, no withholding tax on withdrawals and instant account registration through the use of biometric technology. Along with availability of ATMs, Mobile App and Internet Banking services, the introduction of biometric cash withdrawal from Meezan Bank Branches will provide an option of instant access to cash for the customers. Dollar Mudarabah Certificate Dollar Mudarabah Certificate is a foreign currency term deposit certificate through which the customer can invest US Dollars for defined period ranging from 3 months to 3 years and earn profit six-monthly or at maturity. Minimum investment required is $10,000 and there is no maximum investment limit. Pre-mature withdrawals can be made as per approved schedule. Takaful Coverage In line with its customer-oriented strategy, Meezan Bank is offering Takaful coverage to all of its account holders in case of Accidental Death or Permanent Disability. Customers maintaining an average monthly balance of Rs 10,000 or above, are entitled to a Takaful cover of up to Rs 1 million. In addition, ATM cash withdrawal Takaful Coverage, on the amount withdrawn from any ATM, is offered to all the account holders, in case money is snatched within the radius of 2 kms and 45 minutes. *Terms and conditions apply Meezan Amdan Certificate for Senior Citizens, Widows & Disabled Persons Meezan Amdan Certificate (Senior) is a long-term investment product that offers a higher expected monthly profit to investors for periods of 5 1/2 & 7 years. It is solely structured to cater the needs of the special segment of our society who are in need of a regular stream of monthly income. Elderly individuals (60+ years of age), widows and disabled persons only can avail this product. Minimum investment required is Rs 50,000. However, there is no limit on maximum investment. Pre-mature withdrawal can be made as per the approved schedule. Meezan Amdan Certificate (Senior) Meezan Premium Banking Meezan Premium Banking is the Bank’s Shariah-compliant priority banking service developed to cater the banking needs of high-net worth customers. Premium Banking customers enjoy special privileges such as: Smart Payroll Solution Smart Payroll Solution enables companies to manage payments (salary, pension, staff reimbursements and bonus) in a cost effective, secure and efficient manner. It not only allows cash withdrawals through ATMs, but also allows customers to pay bills, top-up mobile credits and transfer funds to any 1Link member bank through Meezan Bank ATMs, Mobile Application and Internet Banking. Companies can easily disburse salary to their employees and once employees’ salaries are loaded onto Smart Payroll Wallets, the account holders can immediately utilize the funds through the aforementioned channels. ■ Meezan Platinum Debit Card - a very ■ ■ ■ ■ prestigious card, offering discounts at selected retail outlets and restaurants across the country, along with higher transactional, withdrawal and fund transfer limits. Access to International Airport lounges at selected Airports in major cities of Pakistan and abroad during international flights. Dedicated Premium Banking Centres at Karachi, Lahore, Islamabad, Rawalpindi, Faisalabad and Sialkot. Premium Phone Banking is a dedicated Call Centre exclusively for Premium Banking customers. Fee waivers on selected basic banking transactions and ADC services. ANNUAL REPORT 2019 121
123. Meezan Consumer Ease Durable Goods Meezan Consumer Ease – Durable Goods Financing is first ever Shariah-compliant limit based financing facility, which allows customers to purchase laptops, generators and various consumer durable items such as LED screens, air conditioners, washing machines, mobile phones etc. on easy and affordable monthly instalments. A one-time limit approval makes the process simple and hassle-free for the customer, making him / her eligible for multiple financing facilities for Riba-free goods. The Consumer Ease products are based on Shariah concept of Musawamah, which is a general and regular kind of sale. Meezan Amdan Certificate Meezan Amdan Certificate is a long-term investment product that offers a higher expected monthly profit to investors for periods of 5 1/2 & 7 years. It is ideal for those individuals and organizations that need a regular stream of monthly income. Minimum investment required is Rs 100,000. However, for senior citizens, widows and disabled persons, minimum investment required is Rs 50,000. Pre-mature withdrawal can be made as per the approved schedule. Commercial Vehicle Financing Meezan Commercial Vehicle offers financing facility under Ijarah module to SME and Corporate segment. This facility ranges from rigid trucks, vans, coasters, buses to heavy duty trucks, Prime movers etc. With quick and hassle-free processing, Meezan Commercial Fleet is now holding the largest market share in the industry. The specific product is tailored to assess and meet the financing needs of customer with the help of qualified and skilled professionals of the industry. This product is offered to logistics, transportation, distribution, oil marketing companies etc. in Shariah-compliant way. Bike Ijarah Meezan Bike Ijarah is a Shariahcompliant solution which is based on Ijarah principle, under this facility; the Bank purchases the bike and rents it out to the customer for a period of 1 to 3 years, agreed at the time of the contract. Rental payments start after delivery of vehicle to the customer. The facility includes full comprehensive Takaful cover as well. 122 MEEZAN BANK LIMITED Car Ijarah Based on Ijarah principle, Meezan Car Ijarah is an auto finance facility. It is a car rental agreement under which the Bank purchases a new / used / imported car of the customer's choice and rents it out for a period of 1 to 7 years, agreed at the time of the contract. Car Ijarah rental payment is inclusive of comprehensive Takaful and tracker facility which is applicable after one month delivery of vehicle to the customer. Meezan Bank Car Ijarah also offer residual value (RV) package for new variants’ that allows the customer to take a car on significantly lower rental amount. The Bank bears the Withholding Tax amount. Easy Home Based on the principle of Diminishing Musharakah, Meezan Easy Home is a Shariah-compliant home financing facility, in which a customer can buy or build a house, renovate an existing house or replace the conventional house loan with Islamic house finance. With flexible financing tailored to support the customer's need, Meezan Easy Home provides one of the best home financing solutions in the country with hassle-free process and quick turn-around time. Financing Products Meezan Bank offers a wide range of products to its Corporate, Commercial and SME Customers to meet their financial needs. Following is a list of generic products that are used to offer financing solutions: Murabaha Meezan Bank offers a convenient and easy-to-use solution for financing raw material and inventory requirements of the customer through Islamic mode of Murabaha. Murabaha is a sale transaction where the seller discloses the cost and profit to the buyer at the time of execution of sale. Murabaha is a short-term Islamic facility for meeting asset-based working capital requirement of customers where instead of providing a loan, Meezan Bank sells the required asset to the customer on spot or deferred basis. Musawamah Musawamah is a bargain sale in which the Bank does not disclose the cost and profit to the customer. Istisna Meezan Bank offers an Istisna based solution to finance complete working capital requirements of its customers. Istisna is a type of sale transaction where the buyer places an order with the seller to manufacture certain asset and the sale is completed upon delivery of the asset to the
124. buyer . Under this facility, Meezan Bank provides funds to customers for manufacturing certain assets for the Bank and then, upon delivery, sells the assets in the market. Commodity Salam This is a working capital financing solution whereby the Bank and customer enter into a sale contract in which sale price is paid by the Bank in advance and customer delivers the commodity / goods on deferred basis. Upon delivery, the Bank sells the goods in the market. Tijarah This is a working capital solution especially for those customers who sell their inventory on credit and require funds for operations during the credit period. In Tijarah, the Bank purchases the finished goods from the customer and after taking the delivery, sells the goods in the market. Ijarah Meezan Bank provides Ijarah based products to provide flexible solution for meeting long term financing requirements of the customers. Ijarah technically means to give something on rent. The Bank uses this product for medium and long-term financing purposes where the Bank acquires the asset required by the customer and then leases it to the customer for a fixed period. This product is used for the financing of fixed assets such as plant, machinery, generators, equipment, vehicles etc. Running Musharakah This is a Shirkatul-aqd based financing facility offered to the customers where the Bank participates in the operating activities of the customer and shares profit and loss as per the actual performance of the business. This product is also used as a viable financing solution for the service industry and travel agents whose financing needs are generally not addressed by other asset backed products. This product is used to meet the working capital requirement of the customer. Diminishing Musharakah This is a medium and long-term financing product, where the Bank and the customer jointly purchase an asset and create joint ownership in the asset. The Bank then leases its share in the asset to the customer while the customer purchases units of ownership in the asset from the Bank at periodic intervals. Upon purchase of all the units, the customer becomes the owner of the asset. This mode is used for financing of fixed assets such as land, factory, building, machinery, equipment, vehicles etc. Structured Finance Solutions In order to provide solutions to unique financing requirements of the customers such as project financing, CAPEX and BMR requirements, short-term retail Sukuks etc, Meezan Bank offers specialized hybrid solutions that are specifically developed as per the special financing requirement of the customer. Shariah-compliant range of Trade Financing Solutions Import Financing Meezan Bank offers a comprehensive solution for all the import related financing requirement of its customers. Some of the major import financing products are as follows: Letter of Credit Services In order to facilitate imports of customers, Meezan Bank offers letter of credit establishment services on Wakalah basis at competitive rates and unmatched service quality. Short-term Import Financing Meezan Bank offers flexible and convenient import financing facility on the basis of Musawamah / Murabaha. If the customer wants to finance its letter of credit, the Bank appoints the customer as its agent to import the goods and customer establishes the LC as an agent of the Bank. Upon receiving possession of the goods, the Bank sells the goods to the customer on a deferred payment basis. Finance against Imported Merchandize Meezan Bank also offers finance against imported merchandize facilities to its customers on the basis of Musawamah / Murabaha. Under this facility, the Bank appoints the customer as its agent to import the goods and the customer establishes the LC as an agent of the Bank. Upon receiving possession of the goods, the Bank sells the goods to the customer on deferred payment basis and then keeps the same goods under its pledge for securing the payment obligations of the customer. Hedging Facilities In order to hedge the risk of foreign currency price fluctuations, Meezan Bank offers a Shariah-compliant hedging facility on the basis of Wa’ad. Long-term Import Financing Meezan Bank offers long-term import finance facilities on the basis of Ijarah or Diminishing Musharakah where the customer imports the asset either as the Bank’s agent (in case of Ijarah) or as the Bank’s partner (in case of Diminishing Musharakah). Upon receipt of the asset, the asset is leased to the customer for a specified period as per the rules of Ijarah. Export Financing Meezan Bank also offers a full range product menu for exporters where all the requirements of the exporters can be fulfilled under one roof in a convenient manner. Some of the major facilities for exporters are as follows: Hedging Facilities In order to hedge the risk of foreign currency price fluctuations, Meezan Bank offers Shariah-compliant hedging facility on the basis of Wa’ad. ANNUAL REPORT 2019 123
125. Salam & Murabaha as alternative to Export Bill Discounting In order to provide financing for the immediate financing needs of the exporters, Meezan Bank offers a Shariah-compliant alternative to export bill discounting where instead of providing loan against the export order, Meezan Bank keeps the export bill as security and extends a fresh Murabaha financing facility to the customer or purchases FCY against Pak rupees from the customer on Salam basis at spot rates to cater to the financing requirements of the customer. Islamic Export Refinance Scheme Meezan Bank with the collaboration of the State Bank of Pakistan offers subsidized rate financing solutions through modes of Murabaha, Istisna, Tijarah and Running Musharkah under Islamic Export Refinance Scheme. Islamic Long-term Finance Facility Meezan Bank with the collaboration of the State Bank of Pakistan provides subsidized rate long term financing facilities through modes of Ijarah and Diminishing Musharakah under Islamic Long Term Finance Facility. Guarantee Services In order to facilitate trade, Meezan Bank offers Shariah-compliant guarantee facility to its customers where the Bank provides different types of payment and performance guarantees on behalf of the customer. Meezan eBiz Meezan eBiz allows customers to execute critical banking transactions in real time over the internet while maintaining the security of information exchanged over this channel. With the help of Meezan eBiz, customers can view their account balances, account details, account statements as well as efficiently conduct their day-to-day transactions such as fund transfers, IBFT, salary payments, bill payments, payment orders etc. via an automated, secure and versatile electronic processing platform. Meezan eBiz+ Meezan eBiz+ is a comprehensive customized Cash Management solution which allows Corporate, Commercial and SME customers to not only electronically manage their banking relationship, but also reduce operational burden by outsourcing the management of country wide collection, payment and Trade related needs. Each implementation is tailor-made to meet customers’ specific requirements including MIS, reconciliation and Host to Host integrations with customer ERP system. Functionality available, in addition to features of eBiz+, includes: One window solution for all your Cash Management needs 124 MEEZAN BANK LIMITED Collection & Payment Module: ■ Manage collections through branches as well as electronic and Alternate Distribution Channels ■ Manage payment like Funds Transfer, Inter Bank Funds Transfer, Payorder Issuance, RTGS, Corporate Cheques issuance, Utility Bills as well as e-Dividend payments. ■ Real-time Information through online reporting for reconciliation and transactional alert through Secured File Transfer Protocol (SFTP), email and SMS and web services (API) based alerts. ■ Host to host integration with customer ERP system for both collection and payments execution ■ Dedicated Customer Service / Client Service Team with excellent system integration capabilities. Trade Module: Online transmission of Letter of Credit (LC) application and status monitoring ■ Online view, download and printing of draft & transmitted SWIFT messages. ■ Online view, download and printing of order form and debit advice ■ Template creation ■
126. YOU DON ’T NEED TO VISIT A BRANCH TO RECEIVE YOUR REMITTANCE Now receive remittance in your Smart Remittance Wallet and get FREE AIR TIME of Rs. 2 against each dollar! Instant account opening No Withholding Tax on cash withdrawals Simplest cash withdrawal at any Meezan Bank branch through biometric verification ■ Shariah-compliant return on savings ■ No initial deposit requirement ■ PayPak Debit Card Terms and conditions apply ■ ■ ■ Best Bank in Pakistan 2018 Follow us on ANNUAL REPORT 2017 113
128. RISK MANAGEMENT 128 Risk Management Framework 129 Risk & Opportunity Report 134 Business Continuity Plan
129. Risk Management Framework The Risk Management Framework in Meezan Bank includes policies , procedures and manuals, Board of Directors’ and Senior Management oversight, internal controls, and management information system. Risk Management activities are performed at strategic, macro and micro levels. The overall responsibility for risk management rests with the Board of Directors and it has constituted Board Risk Management Committee, comprising Board members, with well-defined terms of reference. The Bank’s risk governance is mainly exercised through the following management committees: ■ ■ ■ Credit Risk Management Committee (CRMC) Asset Liability Management Committee (ALCO) Compliance & Operational Risk Management Committee (CORMC) The CRMC ensures that credit risk activities of the Bank fall within the ambit of approved policies, regulatory requirements and risk appetite thresholds. CRMC also provides support and guidance to business units in managing their portfolio with a prudent approach. ALCO reviews market, liquidity and country risk exposures, assets and liabilities mix and maturity profile, sets pricing and takes decisions for sound liquidity management. The CORMC focuses on issues arising from compliance risk along with operational risk and control issues. An entity wide ‘Three Lines of Defence’ model for risk management with clearly defined roles and responsibilities is at the core of Bank’s operations. Business lines serve as first line of defence and are primarily responsible for managing risks on day-to-day basis. Risk management and other control functions being the second line of defence are responsible for assisting business lines in designing and implementing adequate controls to manage risks. The Internal Audit being the third line of defence, provides independent assurance on adequacy of Bank’s internal controls. The Bank has been identified as Sample Domestic Systemically Important Bank (D-SIB) by State Bank of Pakistan. Accordingly, the Board has established a comprehensive Recovery Plan dealing with various crisis scenarios along with trigger events, appropriate remedial action plans and communication strategy. The Internal Capital Adequacy Assessment Process is in line with the Board approved Risk Appetite Statement. Macro stress tests take into account the impact of changes in macro indicators on the Bank’s business portfolio. The scope of Risk Management Group (RMG) has been continuously broadened mainly focusing on improving policies and procedures, limit structuring and strengthening systems and controls. Under Risk Management Group, the credit risk function caters Corporate, Investment Banking, Commercial & Sme, Agriculture, Supply Chain and Consumer business segments. The Bank has successfully implemented automated financing approval system for Corporate, Commercial and SME customers that has further streamlined the approval process. Enterprise Risk Management (ERM) under RMG caters to market, liquidity, financial institutions, operational, business continuity risks. It also deals with Basel implementation and development of risk related policy framework. The ERM function also plays an important role in IFRS-9 implementation, capital strategy formulation and green banking practices in the Bank. The Bank recognizes the importance of environmental, sustainability, compliance and information security risks as distinct types of risks and continuously improves upon catering to these risks. Shariah Compliance Risk Management principles and practices are at the heart of business practices of the Bank. Various reports for all types of risk exposures, approval processes, awareness programs and growing understanding to view risk profile at enterprise level will further strengthen the risk management culture in the Bank. Definition of Our Three Lines of Defence First Line ■ Business Units / Front Offices Primarily Responsible for managing risk on day-to-day basis Second Line ■ Risk Management, Compliance & other control functions Responsibility for assisting business units for designing and implementing adequate control to manage risk with in prescribed limits. Third Line ■ Internal Audit, Shariah Audit & Business Review functions Provides independent assurance on adequacy of Bank's internal controls. 128 MEEZAN BANK LIMITED
130. Risk and Opportunity Report Opportunity loss is one of the most important concerns haunting all entities , irrespective of the nature, size and complexity of their business; caused by missing opportunities that arise when necessary risks are not taken. Pursuing opportunities requires taking risks, which people are often reluctant to do because of fear of the potential negative consequences. This requires periodic review of risk appetite in line with strategic objectives and goals. This equally applies to the Banking business which by its very nature is risky coupled with enhanced opportunities in a rapidly changing environment. Key Sources of Uncertainity Banks are typically exposed to commercial and financial risks such as credit, concentration, liquidity, market, operational, information security/ cyber and compliance risks. Importantly, Meezan Bank being the largest Islamic Bank in the country is fully cognizant of the importance of Shariah compliance risk. Changing dynamics result in uncertainties for different sectors of the economy. Pakistan entered into Extended Fund Facility arrangement with IMF to reduce economic vulnerabilities and generate sustainable and balanced growth focusing on fiscal consolidation, public debt reduction, building foreign reserves and having flexible exchange rate to restore competitiveness. Hike in the policy rate, high level of inflation rate, low GDP growth, gap in tax revenue and implementing structural reforms remained key sources of challenges at the macro level. These factors contributed to slowdown in the private sector financing and may continue to affect in the near future. Regulatory reforms aimed at to get removal from the FATF grey list necessitated for banks to improve upon their compliance culture. Shrinking current account deficit in the backdrop of reduced imports and increased exports, recent surge in the stock market, improved foreign exchange reserves, correction in the exchange rate, tax revenue growth though still lower than the targets and improvement in the credit rating outlook of the country are seen as positive signs for the economy and banking sector. The issuance of Energy Sukuks to manage circular debt provided some respite to Islamic banks in managing their high liquidity position. The Banking sector remained well capitalized to bear shocks. Initiatives of elected Government with reference to austerity measures, ease of doing business environment, environmental protection drives and plans to give relief to trodden down segments of the society are steps in the right direction. Increase in policy rate has positive impact on performance of Banks; however, it may also lead to increased level of non-performing financing and this requires a cautious approach in booking new assets. The management of foreign currency reserves, exchange rate parity, movement of policy rate, balance of payment position, circular debt management, requirements for private and public sector funding and structural reforms will play a major role in determining the course of economy that will also have a direct bearing on the performance of banking sector. In the context of Islamic banks, deployment of excess liquidity remains a challenge that needs continuous support from regulators and Government at par with conventional banks, especially in medium to long-term scenario. Meezan Bank has a ‘Three Lines of Defence’ model for risk management with clearly defined roles and responsibilities that are at the core of Bank’s operations. Statement of Board of Directors on Risk Assessment The Board of Directors and its sub-committees comprising of Board members thoroughly assessed all principal risks including but not limited to credit, liquidity, solvency and compliance risks through various reports and early warning indicators so as to ensure that the Bank has in place necessary policies, procedures, systems and controls to mitigate risks that may affect its business objectives, further performance, financial viability and sustainability. Materiality Approach The Bank gives due consideration to materiality concept while managing its risks. Resources are deployed efficiently to medium to high risky areas while minor risks are typically managed through transfer and outsourcing arrangements. The Bank manages all of its core operations on its own. Regulatory and Shariah compliance is at the heart of materiality approach while managing existing operations and taking new initiatives. ANNUAL REPORT 2019 129
131. The Bank will continue to explore new business opportunities equally supported by effective risk measures , robust products and technological support to serve a wide range of customers Insha’Allah. Following are the key financial and non-financial risks faced by the Bank which may impact its capital adequacy, profitability, liquidity and reputation. 130 Risk Type Materiality Strategy / Controls in place Market Risk Medium Market Risk is the risk of loss due to change in market factors like profit rates, foreign exchange, equity prices, commodity prices, etc. Considering the trend in profit benchmark rates, exchange rate and stock market • Bank has a well-defined governance structure in place in shape of approved policies and procedures to measure monitor & report market risk exposures faced by the Bank & ensure that these are within the defined risk appetite of the Bank. • Comprehensive limit structure is already in place to monitor the market risk. Tools like value at risk, internal Stress Testing, and re-pricing mismatches are used to monitor and control the risk. • Comprehensive Recovery Plan provides framework to manage unforeseen circumstances on proactive basis. Capital Adequacy Risk Medium The risk that the Bank is unable to meet sufficient capital to continue business or meet regulatory Capital Adequacy Ratio (CAR) requirement. Bank has maintained its CAR well above the regulatory thresholds throughout the year under the prescribed Basel-III regulations Credit Risk High Credit Risk is the possibility of a loss resulting from a borrower's failure to repay financing or meet contractual obligations. Considering the size of financing portfolio coupled with challenging economic situation and significant hike in profit benchmark rates of the Bank Liquidity Risk High Liquidity Risk refers that the Bank is unable to meet its financial obligations. Considering the surplus liquidity available with Islamic Banks, Bank has ability to meet its contractual or any un foreseen outflow MEEZAN BANK LIMITED • Bank manages its demand for capital by aligning its capital strategy in line with the business objectives, assets mix and regulatory requirements. • The Bank closely monitors its Risk Weighted Assets (RWA) growth and actively manages its risk assets under its risk appetite. The Internal Capital Adequacy Assessment Process (ICAAP) is updated and reviewed on annual basis. • Close monitoring of capital adequacy in view of the business targets supported the Bank to have an effective capital plan in place ahead of the regulatory capital adequacy road map without sacrificing its growth journey. • Bank manages credit risk through effective credit appraisal mechanism, well established approving and reviewing authorities, limit structures, internal credit risk rating system, collateral management and post disbursement monitoring so as to ensure prudent and sound financing portfolio under the umbrella of number of Board approved financing polices. • The Bank also ensures diversification of its portfolio into different business segments, products and sectors. Further, to avoid risk concentration; counter party limits and industry concentration limits are also established and monitored. • Comprehensive Recovery Plan deals with scenarios to manage its credit risk through various strategies. • Tools like Internal stress testing, maturity mismatches, and liquidity ratios are used to monitor and control the risk. • Comprehensive Recovery Plan is already in place that covers the mechanisms to overcome crisis like situation including liquidity risk. • Compliance of regulatory requirements of Cash Reserve Requirement (CRR), Statutory Liquidity Requirement (SLR), Liquidity Coverage Ratio (LCR), Net Stable Funding Ratio (NSFR) is ensured and closely monitored to mitigate liquidity risk.
132. Risk Type Materiality Strategy / Controls in place Operational Risk High Operational Risk is the prospect of loss resulting from inadequate or failed procedures, systems or policies. Employee errors. Systems failures. Fraud or other criminal activity. As the Bank is growing with tremendous pace, the magnitude of operational risk is also increasing • The Bank has strengthened its risk management framework by developing polices, strategies, manuals and standard operating procedures. • Improved organizational structure, defined job descriptions, periodic job rotations, application of maker and checker concept, internal and external trainings and availability of adequate human resources, process and systems are key factors in managing operational risk of the Bank. • The Bank continued its efforts for collection, consolidation and reporting of operational risk losses and key risk indicators along with conducting risk and control assessment of various functions. Compliance Risk High Compliance Risk is the potential for losses and legal penalties due to failure to comply with laws and regulations. Considering the international environment of curbing money laundering and terrorist financing along with recent Government’s focus on enhancing compliance culture in financial sector had resulted in importance of compliance risk Country Risk Low Country Risk refers to the uncertainty associated by taking exposure in a particular country, and more specifically the degree to which that uncertainty could lead to loss. Bank’s Country Risk Exposure is diversified in shape of different countries, counter parties, and products Information/Cyber Security Risk High Loss arising due to technological disruption or cyber-attack. Considering the continuous growth of digital banking, it had resulted in high risk Shariah Compliance Risk High Shariah Compliance Risk refers to involvement in any activity against the parameters of Shariah resulting in reputational risk/loss to the Bank. Being the largest Islamic Bank in Pakistan • Compliance Risk Strategy has been devised to support overall Bank’s Risk Management Strategy. Compliance risk management principles and practices are implemented all across the organization by using a risk-based approach in line with regulatory requirements and best industry practices. • Bank manages Compliance risk through advising and supporting the management and functions regarding adherence to rules and regulations as well as acting to implement effective procedures for compliance and reporting to the management and Board as per regulatory requirements. • The Bank has internal policies, rules and procedures to ensure that the Bank complies with relevant laws and regulations. • Country Risk is managed through the Country Risk Policy approved by the Board of Directors. • Country Risk limits are reviewed and approved on annual basis and country risk exposures are monitored on periodic basis to ensure that exposures are within approved limits. • Limits like FX Limits with foreign Banks, Nostro Limits, and other limits are also in place to ensure diversification of country risk exposure. • Selection and implementation of counter measures against the identified information technology and cyber security risks along with reduction of those risks to acceptable levels is being ensured. • Continuous awareness of cyber security risk and mitigation to staff and customers of the Bank is a continuous process. • A very strong Shariah Supervisory Board comprising of internationally renowned Shariah scholars provides necessary guidance and framework to manage Shariah Compliance Risk. The Bank has robust Shariahcompliance setup that comprises of dedicated Product Development Department and Shariah Compliance Department and a Resident Shariah Board Member. • The Bank provides periodic trainings to its staff and conducts awareness sessions for its customers on Shariah related matters. • The Shariah audit department also conducts regular audits to ascertain the level of Shariah-compliance. ANNUAL REPORT 2019 131
133. Risk Type Materiality Strategy / Controls in place Domestic Systemically Important Bank (D-SIB) Risk High • The Bank has successfully implemented the requirements of sample D-SIB prescribed by State Bank of Pakistan including preparation of comprehensive Recovery Plan, implementation of Macro Stress Testing, and preparation of comprehensive Risk Appetite of the Bank. • All other risk management policies, procedures, techniques and tools including recovery plan helps in managing risks that may arise to a domestic systemically important bank. It refers to the risk that the Bank may be declared as D-SIB by regulator and it has to comply with the prescribed requirement imposed by regulator. The Bank was declared as sample D-SIB by State Bank of Pakistan Information about Defaults in Payment of any Acceptances/Borrowings/ Capital Sukuk Obligations There is no default by the Bank in payments of any acceptances/ borrowings/ Capital Sukuk obligations during the year. Inadequacy in the Capital Structure and Plans to Address such Inadequacy The Bank is not facing any kind of inadequacy in capital structure. Rather, the Bank is maintaining sufficient capital over and above the regulatory requirements. Risk Type Materiality Strategy to Materialise External Increasing Market Share of Islamic Banking • Expanding the outreach of its branch network all across the country • Continuous development of Islamic banking products & services to meet the needs of a wide range of customers • Coordination with regulator and industry players to promote the cause of Islamic banking External Digital Banking / Channels • Improving digital penetration through business partnership with financial technology companies External Green Banking • Booking of financing portfolio in the green banking segment and reducing carbon footprint Internal Expansion in the assets base • Exploring business opportunities in all business segments supported by sufficient capital adequacy ratio and expanded branch network Factors Affecting the External Environment High level of inflation rate, low GDP growth, gap in the tax revenue, slowdown in the private sector demand for financing and regulatory reforms aimed at removal from the FATF grey list, increase in digital footprint and environmental hazards; all are factors that have an impact on the banking industry. Considering the performance of various sectors of the economy, the financing decisions are being taken within the Bank’s risk appetite limits. To promote social well-being of the society, Meezan Bank has been working as a socially responsible institute. The Bank has been booking assets in environmentally friendly avenues and implementing use of alternate energy resources to perform its operations. 132 MEEZAN BANK LIMITED
134. The Bank has also been continuously striving to improve upon its information security framework and compliance culture through necessary capacity building . Upgrade of Mobile App and enhancement of the level of security features of its Alternate Distribution Channels too, have helped to promote the cause of digitization of economy and paperless environment. The Bank also ensures adequacy of its people, processes and systems on an on-going basis. Significant Changes from Prior Years The Bank has further elaborated and emphasized its Three Lines of Defence under the Risk & Opportunity Report. Major risk types, their materiality and controls are described in detail. Scope of the Bank’s risk control environment being strengthened over the period of time has been emphasized upon. Board’s Efforts for Determining the Level of Risk Tolerance Meezan Bank’s Risk Appetite statement under the Internal Capital Adequacy Assessment Process (ICAAP) approved by the Board of Directors is in place to manage its risk profile and exposures within the parameters established by the Board. The Risk Appetite statement is being updated on proactive basis after necessary deliberations at various levels in the Bank. The scope of risk appetite/tolerance levels and risk management policies has been enhanced to capture variety of risks in view of the external environment and overall strategy of the Bank. Following are the major comprehensive risk policies, criterion and plans in place to control and monitor the risks at entity level • Financing Policy • Market & Liquidity Risk Policy • Country Risk Policy • Stress Testing Policy • Operational Risk Management Policy • Operational Risk Loss Data Management Policy • Internal Credit Risk Rating Policy • Recovery Plan • Disaster Risk Management Policy • Criterion for establishing limits for Takaful companies and financial institutions Statement from the Board of Directors The Board of Directors and its sub-committees comprising Board members thoroughly assessed all principal risks including but not limited to credit, liquidity, solvency and compliance risks through various reports and early warning indicators so as to ensure that the Bank has in place necessary policies, procedures, systems and controls to mitigate risks that may affect its business objectives, further performance, financial viability and sustainability. ANNUAL REPORT 2019 133
135. Business Continuity Management Business Continuity Management (BCM) is a management process to avoid and manage risks associated with disruption of mission critical activities so as to ensure resilience of the Bank’s operations. It details plans and procedures to be implemented before, during and after disaster events. In Meezan Bank, the business continuity is managed at strategic, tactical and operational level. It involves well defined approved plans, effective decision-making processes, description of distressed scenarios, coordinated efforts among stakeholders and operational continuity to safeguard the interests of the Bank’s key stakeholders, reputation, brand image and value creating activities. The Bank has in place a comprehensive business continuity framework with clear set of governance structure, business continuity plans, clearly defined roles and responsibilities of individuals and teams for disaster response, recovery, resumption and restoration of activities to a pre-defined level of operation following disruption. BCM is in line with the guidelines issued by the regulator and industry standards and is subject to periodic reviews and exercises. It sets out the agreed arrangements for bringing disaster events under control and ensures availability of necessary resources for maintaining critical business functions. Having a BCM framework in place helps the Bank to ensure safety of human resources, protection of critical assets and resumption of mission critical activities from alternate processing site(s) in case the primary site(s) are not accessible or available. In Meezan Bank, the first priority is always to ensure the safety of human life in case of any disaster. Meezan Bank has the following BCM Structure: ■ ■ ■ ■ ■ Board approved Master Business Continuity Plan (BCP) BCP at Regional and Departmental levels Business Continuity Steering Committee Three Alternation Processing Sites in Karachi Periodic Evacuation and Mock drills ■ ■ ■ ■ Board Approved IT Disaster Recovery Plan Branch Evacuation Procedure Emergency Response Team IT Disaster Recovery Setup in Islamabad The Bank’s Alternate Processing Sites are aimed at ensuring resumption of Mission Critical Activities (MCAs) in case of disaster. The Bank’s BCM team continuously strives to improve upon business continuity preparedness which enables the Bank to continuously deliver its mission critical services and products to its customers. Over the period, the Bank has streamlined the process of active communication and escalation of events that may impact business continuity. Rapid response to such events lead to minimal disruptions. Coordination among various stakeholders has been further strengthened for cohesive planning and response. Moreover, the Bank has continued testing the effectiveness of business continuity arrangements through periodic drills and performance of critical operations from alternate sites. Emergency response teams have been further streamlined to help to identify the gaps and provides an opportunity to address and close these corrective actions over time. The Bank continued with its practice of conducting evacuation drills for its entire branch network successfully that further strengthens the Bank’s preparations to cope with unwarranted eventualities. To ascertain the resilience of the banking system as a whole, State Bank of Pakistan organized joint industry wide BCP/ DR drills. Meezan Bank actively participated in the drills so as to achieve the objectives set by SBP. The drills help in strengthening the confidence of stakeholders regarding the availability of products and services under stress scenarios and embeds business continuity within the organizational culture of the Bank. 134 MEEZAN BANK LIMITED
136. ANNUAL REPORT 2017 113
138. GOVERNANCE 138 139 140 144 147 149 152 153 155 156 158 159 160 Best Corporate Governance Practices Board Composition Board of Directors Shariah Supervisory Board Board Committees Management Committees Performance Evaluation of the Board of Directors Roles and Responsibilities Election of the Board of Directors Other Matters related to Corporate Governance Report of the Board Audit Committee Review Report to the Members Statement of Compliance with Listed Companies Code of Corporate Governance 162 Statement of Internal Controls 163 Shariah Supervisory Board Report 171 Shariah Supervisory Board Report (Urdu) 172 Statement of Sources and Uses of Charity Fund Policies and Guidelines 173 Standard of Ethics, Business Practices & Code of Conduct 175 Guidelines on Whistle-Blowing 176 Guidelines for Safety of Records of the Company 176 Summary of Corporate Social Responsibility Policy 176 Summary of Sustainability Policy 177 Summary of Green Banking Policy 177 Summary of Information Security Policy 178 IT Governance Policy 179 Salient Features - Directors’ Remuneration Policy
139. Best Corporate Governance Practices Governance practices positively impact long-term corporate performance and therefore , the Bank is careful about their implementation. The Bank has a system in place to ensure that it is fully compliant to all the legal requirements for e.g. Company Secretary’s Office itself ensures that all the relevant regulatory requirements are complied with within the given deadlines. Furthermore, a dedicated Compliance Department is also functional which remains in contact with the regulators as well as with the internal departments to ensure timely compliance with the legal requirements. The Bank’s Best Corporate Governance Practices include the following: 138 Build a Strong, Qualified Board of Directors and Evaluate Performance The Board comprises of Directors who are knowledgeable and have expertise relevant to the business, are qualified and competent, and have strong ethics and integrity, diverse backgrounds and skill sets. Further, as per regulatory requirement, the Board performance is evaluated periodically. Define Roles and Responsibilities The Board establishes clear lines of roles and responsibilities among the Directors, Chairman and CEO. Emphasize Integrity and Ethical Dealing The Directors declare conflicts of interest and refrain from voting on matters in which they have an interest. The Bank has adopted a Conflict of Interest Policy, a Code of Business Conduct that sets out the Bank’s requirements and a Whistle-blowing Policy. Formation of Various Board Committees The Board of Directors has constituted various sub-committees, namely Board Audit Committee, Board Human Resources and Remuneration Committee, Board Risk Management Committee, Board IT Committee and Board IFRS9 Implementation Oversight Committee to manage the relevant areas and to give their recommendations to the Board. The TORs of these Committees are approved by the Board of Directors. Engage in Effective Risk Management The Board has established its sub-committees, who regularly identify and assess the risks including financial, operational, reputational, environmental, industry-related and legal risks. MEEZAN BANK LIMITED
140. Board Composition Category 1 Executive director Board Composition Non-Executive Directors Mr . Riyadh S.A.A. Edrees – Chairman Mr. Faisal A.A.A. AlNassar Mr. Bader H.A.M.A. AlRabiah Mr. Mubashar Maqbool Mr. Saad Fazil Abbasi Mr. Basil Y.A.Y.R. AlBader* Mr. Mohamed Guermazi Independent Directors Mr. Noorur Rahman Abid Ms. Nausheen Ahmad (Female Director) Mr. Atif Azim Executive Director Mr. Irfan Siddiqui - President & CEO 3 Independent directors/ non-executive 11 7 Non-executive directors Areas of Expertise Management Finance/Accounting Law Engineering IT 3 2 2 3 1 Names *The Bank has already submitted application for the Fit and Proper Test of the Director to the State Bank of Pakistan which is in process of reviewing the same. Directors’ Profiles and their Involvement / Engagement in other Companies This information has been incorporated in the Directors’ profiles. Independent Directors The Board has three (3) Independent Directors who meet the criteria of independence under Companies Act 2017 and the directive issued by the State Bank of Pakistan. Representation of Female Director on Board Ms. Nausheen Ahmad is the female Director on the Board. Non-Executive Directors At present all Directors on the Board are non-executives except the President & CEO. Executive Director serving as Non – Executive Director in other Company The Executive Director does not serve as a Non-Executive Director in any other company. Security Clearance of Foreign Directors Security clearance of Foreign Directors is initially done by the sponsor shareholders being their nominee directors. Subsequently Meezan Bank conducts verification as per FPT requirements. Finally it is carried out by the Regulators as per law / regulatory requirements, as their appointment is subject to clearance by the Regulators. Payment of Directors’ Remuneration As per Policy, the Board of Directors shall, from time to time, determine and recommend remuneration of the Non-Executive Directors (Chairman, Vice Chairman and members of the Board) for attending Board Meetings, for approval by the shareholders on a pre or post facto basis in the Annual General Meeting (AGM), as per State Bank of Pakistan Prudential Regulations. Remuneration from Nomination on the Board of Other Companies If an employee receives any fee exceeding Rs 25,000/- in a tax year (July 1st to June 30th) on account of director’s fee or attendance fee from any one board membership, the entire fee will be passed on to Meezan Bank. This amount will not be counted towards the income of employee but will be credited towards the Bank’s income. Details of Board Meetings held outside Pakistan A total of four meetings were held during the year 2019, and all were held in Pakistan. ANNUAL REPORT 2019 139
141. Board of Directors Mr . Riyadh S.A.A. Edrees Chairman/Non-Executive Director Mr. Riyadh S.A.A. Edrees has been a Director of Meezan Bank since October, 2012. In addition to being the Chairman of the Board, he is also a member of the Human Resources and Remuneration Committee, Information Technology Committee and IFRS 9 Implementation Oversight Committee of the Board. Mr. Riyadh has also previously served as the Vice Chairman of Meezan Bank’s Board. Mr. Riyadh S.A.A. Edrees holds a B.Sc. degree in Chemical Engineering from Newcastle Upon Tyne University, U.K. and M.Sc. in Chemical Engineering from Kuwait University. He has held directorships in other offices including as Vice Chairman, Airport International Group – Jordan, Board Member in Investment Committee of Bunyah Fund of Kuwait Investment Co. – Bahrain, Vice Chairman of Gas & Oil Fields Services Co. – Kuwait, Board member at Kuwait Rock Company - Kuwait, Vice Chairman at Eastern United Petroleum Services – Kuwait, Board member at Kuwait Ceramic Company – Kuwait, Director at Sajaa Gas Private Limited Co. – UAE, Board Member at United Gas Transmissions Company Limited Co. – UAE, Advisory Board Member, Markaz Energy Fund – Kuwait. Current Directorships ■ ■ ■ ■ ■ ■ ■ Deputy CEO, National Industries Group Holding – Kuwait Chairman, Privatization Holding Company – Kuwait Chairman & CEO, Ikarus Petroleum Industries – Kuwait Chairman, IT Partners Information Technology Company – Kuwait Chairman, Middle East Complex for Engineering, Electronics and Heavy Industries Company – Jordan Board Member, Noor Financial Investment Company – Kuwait Mr. Faisal A.A.A. AlNassar ■ ■ ■ ■ ■ Chairman, Audit Committee, Noor Financial Investment Company – Kuwait Member, Risk Management Committee, Noor Financial Investment Company – Kuwait Member, Nomination & Remuneration Committee, Noor Financial Investment Company – Kuwait Board Member, Sahara International Petrochemical Company (SIPCHEM) – KSA Advisory Board Member, Cleantech I & II Zouk Venture Limited – U.K. Board member, K-Electric – Pakistan Non-Executive Director Mr. Faisal A.A.A. AlNassar has been a Director of Meezan Bank since March, 2015. He is Vice Chairman of the Board and Chairman of the Risk Management Committee as well as member of the Audit Committee and Information Technology Committee of the Board. Mr. Faisal A. A. A. AlNassar has a Bachelor’s degree in Accounting and Finance from Kuwait University and has occupied many Senior Managerial positions in the Financial Sector including Deputy CEO for Finance and Administration at National Industries Group Holding Co., Auditor for government agencies in Kuwait Bureau of Accountancy and Head of Taxation Department, Ministry of Finance, Kuwait. He has vast experience across industries in Board positions in Kuwait and abroad. Current Directorships ■ ■ ■ ■ ■ ■ ■ ■ ■ Deputy CEO, Finance and Administration, National Industries Group Holding Company – Kuwait Chairman and CEO, Al Durra National Real Estate Company – Kuwait Chairman and Director, Noor Al Salhia Real Estate – Kuwait Director, Noor Financial Investment Company – Kuwait. Member Audit Committee, Noor Financial Investment Company – Kuwait Member Risk Management Committee, Noor Financial Investment Company – Kuwait Member Nomination & Remuneration Committee, Noor Financial Investment Company – Kuwait Director, Proclad Group Limited – UAE Mr. Bader H.A.M.A. AlRabiah ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Chairman of Audit and Risk Committee, Proclad Group Limited – UAE Chairman, Shorfat Al Safwa – KSA Chairman, Durrat Al Shameya Investment – KSA Vice Chairman, Abu Dhabi Marina Real Estate Investment – UAE Director and Chairman Audit Committee, Abu Dhabi Marina Real Estate Investment – UAE General Manager, IKARUS Real Estate – UAE Executive Committee Member, ARADI Abu Dhabi Investment – UAE Board Member, Hotels Global Group – Jordan Board Member, Al Ruwad Company – Kuwait Chairman, Al Manar Financing & Leasing – Kuwait Chairman, Nomination & Remuneration Committee, Al Manar Financing & Leasing – Kuwait Non-Executive Director Mr. Bader H.A.M.A. AlRabiah has been a Director of Meezan Bank since November, 2015. He is also a member of the Audit Committee of the Board. Mr. Bader H.A.M.A. AlRabiah has a strong academic background in accounting and a focused experience in investments honed over the past 14 years. He was involved in establishing the Real Estate Investment Department at Noor Financial Investment Company and served as the Chairman at Arab Investment, Real Estate and Agricultural Development Group, Egypt. 140 MEEZAN BANK LIMITED
142. Current Directorships ■ ■ ■ ■ ■ ■ Vice Chairman & CEO Noor Salhia Real Estate Company – Kuwait Chairman, Palms Agro Production Company – Kuwait Vice Chairman, Al-Manar Financing and Leasing Company – Kuwait Board Member, Noor Financial Investment Company – Kuwait Member Audit Committee, Noor Financial Investment Company – Kuwait Mr. Mubashar Maqbool ■ ■ ■ ■ ■ ■ ■ Chairman Risk Management Committee, Noor Financial Investment Company – Kuwait Board Member, Savola Group – KSA Board Member, International Hotels Group – Jordan Reserve Director, Kuwait Finance House – Kuwait General Manager, Tamouh National General Trading & Contracting Company – Kuwait Vice Chairman, Al-Durra National Real Estate Company – Kuwait General Manager, Ikarus Real estate – UAE Board Member, Abu Dhabi Marina Real Estate Investment – UAE Non-Executive Director Mr. Mubashar Maqbool has been a Director of Meezan Bank since October, 2019. He is also a member of the Risk Management Committee and Chairman of Information Technology Committee of the Board. Mr. Mubashar Maqbool holds an MBA degree in Finance and International Business from University of Miami, U.S.A. and another MBA in Finance from Quaid-e-Azam University, Pakistan. Mr. Mubashar has a long, diversified and successful track record in Corporate Banking, Corporate Finance, Project Finance, Commercial Banking, SME Banking as well as General Management. In a career spanning over thirty years, he has held senior positions in renowned local and multinational organizations like Citigroup, Samba Financial Group, Habib Bank Limited etc. both in Pakistan and abroad. Mr. Mubashar started his banking career with Citibank Pakistan where he held various positions in Corporate Banking Group. In 1997, he was transferred to Saudi American Bank (Samba), Saudi Arabia. He was Division Head, Corporate Banking in Samba Bank till 2004. Mr. Mubashar joined Habib Bank Limited in 2004 and held various senior positions there including Corporate Head – Central, Group Head – Commercial Banking & Retail Lending, Group Head – Commercial Banking and Country Manager / CEO, HBL – UAE. He also represented HBL on the Board of Pakistan Agricultural Storage and Services Corporation (PASSCO). Current Directorships ■ Managing Director, Pak Kuwait Investment Co. (Private) Limited *Mr. Basil Y. A. Y. R. AlBader Non-Executive Director Mr. Basil AlBader joined Meezan Bank as a Board Member in December, 2019. He has 16 years of diversified experience in accounting, finance and control. Mr. Basil holds the position of Division Manager of Future Generations Fund Accounts at Kuwait Investment Authority (KIA). He started his career in accounting and financial control in investment sector with progressive and diverse responsibilities, followed by that, he oversaw the internal audit activities in telecom sector before joining the KIA. Mr. Basil has a Bachelor’s degree in Accounting from Kuwait University in 2002, and holds several professional certifications i.e. Certified Management Accountant (CMA), Certified Financial Manager (CFM), Diploma in Financial Reporting Standards from EY, and a registered auditor (Non-practitioner) by Ministry of Commerce and Industry in Kuwait. Recent Directorships ■ ■ Board Member, Gulf Bank – Kuwait Vice Chairman, Audit Committee, Gulf Bank – Kuwait *The Bank has already submitted application for the Fit and Proper Test of the Director to the State Bank of Pakistan which is in process of reviewing the same. Mr. Saad Fazil Abbasi Non-Executive Director Mr. Saad Fazil Abbasi joined the Board of Directors of Meezan Bank in February, 2018. He is also a member of the Risk Management Committee of the Board. Mr. Saad Fazil Abbasi holds an LL.M. degree in International Economics & Business Law from Kyushu University, Japan. Mr. Saad Fazil Abbasi is a Joint Secretary to the Government of Pakistan and is presently posted in the Regulation Wing of the Ministry of Finance. He has served as the Joint Secretary to the Government of Pakistan (Privatization Division) / Director General (Privatization Commission). Apart from Government of Pakistan, he has also worked with multilateral agencies such as the Asian Development Bank and the Department for International Development (DFID) as a consultant. His Government experience includes serving in all major Ministries at the Federal level and on the Provincial Government level as an aide to the Chief Minister of KPK. He has also worked with Regulators such as PEMRA and PPRA where he drafted Pakistan’s first law on procurement. ANNUAL REPORT 2019 141
143. Mr . Mohamed Guermazi Non-Executive Director Mr. Mohamed Guermazi joined the Board of Directors of Meezan Bank in 2018. He is also a member of the Risk Management Committee of the Board. He is currently serving as Senior Awqaf Investment Specialist in the Islamic Development Bank (IsDB). Mr. Guermazi holds a Master’s Degree in Engineering from the National School of Bridges and Roads in Paris (Ecole Nationale des Ponts etChaussées - Ponts PariTech). He is also serving as Member of the Board of Irada for Microfinance Co. Ltd. which is part of Bank of Khartoum Group in Sudan. Prior to joining the IsDB in 2010, and over a period of 15 years, he had been serving as Director of Equities, Asset Management, Treasury and Financial Markets at Banque de Tunisie, one of the most prominent private commercial banks in Tunisia. Besides his operational responsibilities within Banque de Tunisie, he also served as Chairman of the ‘Société de Bourse de Tunisie’ – a subsidiary of the bank specialized in brokerage in securities; General Manager and Chairman of the Board of ‘Placements de Tunisie’ – an affiliated investment company; Board Member and Chairman of the Audit Committee of ASTREE Insurance company; Board Member of the Tunis Stock Exchange, as well as Board Member of several companies in which Banque de Tunisie holds a participation of reference. Previously, Mr. Guermazi had also served as Deputy Managing Director of the Investment Loan Department at Banque de Tunisie, Project Officer at the Tunisian Qatari Bank for Investment and Senior Engineer in charge of the budget and follow-up of the activity of the fertilizer plants at the Tunisian Chemical Group. Mr. Guermazi has been nominated by the Islamic Development Bank to be its representative on the Board of the Waqf BID Guinée (WBG), which is a not-for-profit organization to support the development of the education and health sectors in Guinea. Current Directorship ■ Irada for Microfinance Co. Ltd. Mr. Noorur Rahman Abid Independent Director Mr. Noorur Rahman Abid has been a Director of Meezan Bank since January, 2014. He is also the Chairman of the Audit Committee and Human Resources & Remuneration Committee of the Board. Mr. Noorur Rahman Abid is a Fellow Chartered Accountant from Institute of Chartered Accountants in England and Wales and has held several senior management positions including Assurance Leader for Ernst & Young Middle East and North Africa, Engagement Partner for audits of large wholesale bank based in Bahrain as well as the largest investment bank based in Bahrain, Chairman of Auditing Standards Committee and Deputy Chairman of Accounting and Auditing Standards Board of AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions). He played an instrumental role in promoting several successful initiatives, including the Islamic Banking Center of Excellence in Bahrain and was declared winner of the World Islamic Banking Conference 2012 Industry Leadership Award in recognition of his contribution to Islamic banking. Current Directorships ■ ■ ■ ■ Kuwait Finance House – Kuwait Kuwait Finance House – Bahrain Kuwait Finance House – Malaysia Ms. Nausheen Ahmad ■ ■ Arcapita Investment Management – Bahrain Member of Board of Trustees, Accounting and Auditing Organization for Islamic Financial Institutions Dr Solaiman Fakeeh Hospital – Saudi Arabia Independent Director Ms. Nausheen Ahmad joined the Board of Directors of Meezan Bank in April, 2019. She is also a member of the Human Resources & Remuneration Committee of the Board. She holds an LL.B. from Kings College London, and LL.M. degree from the University of London and a degree in the Philosophy of Religion from Kings College London. She was called to the Bar from the Honorable Society of Grays Inn London and is registered as an Advocate of the Sindh High Court. She was also accredited as a mediator and master trainer by the Centre for Effective Dispute Resolution, UK. She currently serves as the General Counsel, Company Secretary & Head of Corporate Communication at ICI Pakistan Limited. Having spent over three decades in the corporate sector, Ms. Ahmad brings with her a tremendous amount of experience and expertise in the legal field, as well as proven leadership skills. She began her legal practice with the corporate law firm Surridge and Beecheno. Later, she went on to hold the position of Legal Counsel at Pakistan Petroleum Ltd., Unilever Pakistan Ltd. and ICI Pakistan Ltd. before moving on to Habib Bank Limited as the Company Secretary and General Counsel. Ms. Ahmad has been associated with the Legal and Regulatory Committees of the Pakistan Bank Association and the Pakistan Business Council and has held several leadership positions throughout her professional career. She was Non-Executive Director of First Women Bank Limited (FWBL) and played an active role in setting up the Pakistan Mortgage Refinance Company (PMRC). With her strong interest in Corporate Governance and Training, Ms. Ahmad has been undertaking training assignments with the Pakistan Mediators Association, SZABIST and the Institute of Business Administration, Karachi. Current Directorship ■ 142 International Steels Limited (ISL) MEEZAN BANK LIMITED
144. Mr . Atif Azim Independent Director Mr. Atif Azim has been a Director of Meezan Bank since July, 2019. He is also a member of the Information Technology Committee of the Board. Mr. Azim holds a Master’s degree in Computer Science from Stanford University in California and B.Sc. degree in Electrical Engineering from Imperial College of Science, Technology and Medicine, London. He is a seasoned professional with over 15 years’ experience in the technology industry across the Silicon Valley in the United States, United Arab Emirates and Pakistan. He is the Founder and Chief Executive of VentureDive, a technology solutions company that develops and invests in products and services that positively impact the lives of millions globally. VentureDive’s customers include Careem and Islamic Finder. Prior to this, Mr. Azim was Founder and Vice President of Solutions at Perfigo, a San Francisco based technology startup that was acquired by Cisco Systems. While at Cisco, he was responsible for growing the network security product line to a $200m business. Mr. Azim is actively involved with the entrepreneurial ecosystem in Pakistan. He is a Founder and Board Member of DotZero, a first of its kind technology incubator in Pakistan. He has also served as an advisor and mentor to a number of entrepreneurs and has also been an early investor in a number of technology startups. He is also part of the Angel Investor Community at Invest to Innovate. He was the Director of Al-Meezan Investment Management Ltd. Current Directorships ■ Director, Dotzero (Pvt) Ltd. Mr. Irfan Siddiqui ■ Director, Cleanry (Pvt) Ltd. ■ Director, Artsy (Pvt) Ltd. President & CEO/Executive Director Mr. Irfan Siddiqui is the Founding President and Chief Executive Officer of Meezan Bank. He is also a member of the Information Technology Committee and of IFRS 9 Implementation Oversight Committee of the Board. Having articled with Coopers & Lybrand, London from 1975 - 1979, Mr. Irfan Siddiqui qualified as a Chartered Accountant from the Institute of Chartered Accountants in England and Wales. He has held several senior management positions including Chief Executive Officer at Al Meezan Investment Bank Limited, General Manager at Pakistan Kuwait Investment Company, Advisor to the Managing Director at Kuwait Investment Authority, Manager Finance and Operation at Abu Dhabi Investment Company and Senior Business Analyst at Exxon Chemical (Pakistan) Ltd. Directorships and other recent offices held ■ ■ ■ ■ Member of Board of Trustees, Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) – Bahrain Member of Managing Committee, Overseas Investors Chamber of Commerce and Industry President of the Islamic Finance Association of Pakistan ■ ■ Member of Government of Pakistan Steering Committee for ‘Promotion of Islamic Banking in Pakistan’ (2013 – 2016) Member of Government of Pakistan sub-committee on awareness, training and capacity building for Promotion of Islamic Banking in Pakistan ■ Member of IBA CEIF Board of Management ■ Member of PBA Sub-Committee on Islamic Banking Chairman of Steering Committee on Media Campaign – Improving Islamic Finance Literacy ANNUAL REPORT 2019 143
145. Shariah Supervisory Board Justice (Retd.) Muhammad Taqi Usmani Chairman – Shariah Supervisory Board Justice (Retd.) Muhammad Taqi Usmani is a renowned figure in the field of Shariah, particularly in Islamic finance. He currently holds advisory positions in a number of financial institutions practicing Islamic banking and finance. Justice (Retd.) Muhammad Taqi Usmani has vast experience in Islamic Shariah, teaching various subjects on Islam for more than 50 years. He has served as a Judge in the Shariat Appellate Bench, Supreme Court of Pakistan from 1982 to 2002. He is also a permanent member of the International Islamic Fiqh Academy, an organ of OIC based in Jeddah, Saudi Arabia. He has served as the Vice Chairman of the above mentioned Academy for nine years. He is generally known as one of the leading Shariah scholars active in the field of Islamic finance. For more than a decade he has served as Chairman or Member of Shariah supervisory boards of a dozen Islamic banks and financial institutions in various parts of the world. He presently serves as Chairman of the International Shariah Council for the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in Bahrain. He has held many positions in the higher echelons of the education sector of Pakistan and has participated in numerous commissions set up by the Government of Pakistan in the field of education and economics. Since 1967, he has been the Chief Editor of the monthly Urdu-Language magazine ‘Albalagh’ and since 1990, he has been Chief Editor of the monthly English-language magazine ‘Albalagh International’ He has also contributed articles to leading Pakistani newspapers on a range of issues. He has authored more than 60 books in Arabic, English and Urdu. Justice (Retd.) Muhammad Taqi Usmani graduated from Punjab University, Pakistan in 1970 and also holds an LL.B. from Karachi University, Pakistan. Prior to these, he completed the Takhassus course, which is the specialization course of Islamic Fiqh and Fatwa (Islamic Jurisprudence) from Jamia Darul Uloom Karachi, Pakistan. In March 2004, His Highness Sheikh Mohammad Bin Rashid Al Maktoum (Dubai Crown Prince and UAE Minister of Defense) presented a special award to Justice (Retd.) Muhammad Taqi Usmani in recognition of his lifetime service and achievement in Islamic finance at the occasion of International Islamic Finance Forum, Dubai, which is one of the biggest events in the Islamic finance industry. Justice (Retd.) Muhammad Taqi Usmani is the Chairman of Meezan Bank’s Shariah Supervisory Board since inception of Meezan Bank. Current Board Memberships: ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 144 Vice President and Shaikul-Hadith, Jamia Darul Uloom Karachi Chairman International Shariah Standard Council set up by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), Bahrain. Permanent Member International Islamic Fiqh Academy, Jeddah, sponsored by OIC Member, Islamic Fiqh Academy of Rabita-al’Alam-e-Islami, Makkah Fellow of the Royal Al al-Bayt Academy, Jordan Chairman Centre for Islamic Economics Pakistan since 1991 Chairman Shariah Board, Abu Dhabi Islamic Bank U.A.E. Chairman Shariah Board, Meezan Bank Ltd. Karachi, Pakistan Chairman Shariah Board, Pak-Kuwait Takaful, Karachi Chairman Shariah Board, Arif Habib Investments – Pakistan International Islamic Fund, Karachi MEEZAN BANK LIMITED ■ ■ ■ Chairman Shariah Board Arcapita Investment Fund, Bahrain Member Unified Shariah Board Islamic Development Bank Jeddah Member Shariah Board Guidance Financial Group, USA Awards Received His Highness King Abdullah (of Jordan) Award (Royal Aal al Bayt Institute for Islamic Thought, Jordan) 2019 IDB Prize in Islamic Banking and Finance Lifetime Achievement Award presented by the Islamic Business and Finance Magazine 2014 His Highness King Abdullah (of Jordan) Award Wisamul Istiqlal Award presented by 2011 His Highness King Abdullah of Jordan 2010 His Highness Prince Muhammad bin Raashid Aal Maktoom Award 2004 2011
146. Dr . Muhammad Imran Ashraf Usmani Board Member – Shariah Supervisory Board Dr. Mufti Muhammad Imran Ashraf Usmani, son of Justice (Retd.) Mufti Muhammad Taqi Usmani, graduated with specialization in Islamic Fiqh (Islamic jurisprudence) from Jamia Darul-Uloom, Karachi, where he has been teaching Fiqh since 1990. He also holds an LL.B. and Ph.D. in Islamic finance. He is a member of the administration board of Jamia Darul Uloom, Karachi. Presently Dr. Usmani is a Member of Shariah Supervisory Board at Meezan Bank. Dr. Usmani is the author of numerous publications related to Islamic finance and other Shariah related subjects. He has presented papers in numerous national and international seminars and has delivered lectures at academic institutions including Harvard, LSE, LUMS and IBA. In the past, Dr. Usmani has served as an advisor / member of Shariah Boards of several renowned institutions since 1997 including the State Bank of Pakistan, HSBC - Amanah Finance, UBS Switzerland, Guidance Financial Group USA, Lloyds TSB Bank - UK, Japan Bank for International Cooperation (JABIC), Credit Suisse Switzerland, RBS Global, Old Mutual Albarakah Equity & Balanced Funds South Africa, AIG Takaful, ACR ReTakaful Malaysia, Capitas Group USA, Bank of London and Middle East Kuwait, BMI Bank Bahrain, Al Khaliji Bank Qatar, Sarasin Bank Switzerland, DCD Group Dubai, International Centre for Education in Islamic Finance (INCEIF) and other mutual and property funds, Takaful Companies and international Sukuk etc. Dr. Muhammad Imran Ashraf Usmani had served as the Resident Member of Meezan Bank’s Shariah Supervisory Board since inception of Meezan Bank, and is serving as member Shariah Supervisory Board since inception. At present, Dr. Usmani is serving at different capacities at various organizations which are as under: Current Board Memberships: ■ Director – Hira Foundation School ■ Director – Center for Islamic Economics (CIE) ■ ■ ■ ■ ■ ■ ■ ■ ■ Member Shariah Supervisory Board – Meezan Bank Faculty Member – Jamia Darul Uloom Research Faculty Member – Department of Economics Karachi University President & Founder Trustee – Ihsan Trust Academic Committee Chairman / Board Member / Faculty Member – Center for Excellence In Islamic Finance (CEIF) at IBA ■ ■ Shariah Board Member – Sarasin Bank Switzerland ■ Shariah Board Member – AAOIFI Dubai ■ ■ ■ Shariah Board Member – Al Meezan Mutual Funds ■ Shariah Board Member – AAOIFI Shariah Committee Member Central Shariah Supervisory Board – Chartis Takaful Company (Global) ■ Shariah Board Member – Chairman Shariah Board NBP Fullerton Asset Management Company (NAFA) Chairman – Islamic Index Pakistan Stock Exchange (PSX) Shariah Advisor / Shariah Board Secretary – Guidance Financial Group USA ■ ■ Shariah Board Member – International Islamic Financial Market Bahrain IIFM Board Member – International Islamic Rating Agency Bahrain Shariah Board Member – Amanah Islamic Finance (AIFA) Australia Chairman Shariah Supervisory Council – Amanah Bank Sri Lanka President and CEO – Usmani and Co. PVT Ltd. President and CEO – Usmani and Co. Shariah Advisors PVT Ltd. ANNUAL REPORT 2019 145
147. Sheikh Esam Mohamed Ishaq Board Member – Shariah Supervisory Board Sheikh Esam Mohamed Ishaq graduated from McGill University, Montreal, Canada. He was born in Bahrain and studied Shariah with a number of Sheikhs in the traditional manner. He is a member of the High Council of Islamic Affairs of the Government of Bahrain and holds various Shariah positions in many social, commercial and educational institutions. Currently, he also teaches Fiqh, Aqeeda and Tafseer courses in various Centers of Islamic studies, supervised by the Ministry of Islamic Affairs in Bahrain. Sheikh Esam Mohamed Ishaq has served as member Shariah Supervisory Board since inception of Meezan Bank. He holds memberships of the following institutions: Current Board Memberships: ■ ■ ■ ■ The Governance Board of Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), Bahrain The Shariah Council of the Maldives Monetary Authority (MMA), Maldives The Shariah Panel of International Islamic Financial Market (IIFM), Bahrain Advisory Panel in Bahrain Institute of Banking and Finance (BIBF), Bahrain In addition to membership of the Shariah Supervisory Boards of a number of local, regional and international Islamic Financial Institutions (IFIs), he is the Chairman of Shariah Supervisory Boards of the following IFIs: ■ The Family Bank for Microfinance, Bahrain ■ Tamweel Africa Holding, Senegal ■ Investment Dar Bank, Bahrain ■ Eco Islamic Bank, Kyrgyzstan ■ Al Barakah Islamic Bank, Pakistan Furthermore, Sheikh Esam is Chairman of the Muslim Educational Society, Vice Chair & Shariah Advisor for Discover Islam Centre & member of the Board of Trustees of Al- Iman Islamic Schools, Bahrain. Mufti Muhammad Naveed Alam Resident Shariah Board Member Mufti Muhammad Naveed Alam holds a Masters in Islamic Banking and Finance from University of Karachi and Shahadat ul Alamiyah and Takhassus (specialization in Islamic Jurisprudence and Fatwa) from Jamia Darul Uloom, Karachi. He is also a Certified Shariah Advisor & Auditor (CSAA) from Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Mufti Muhammad Naveed Alam joined Meezan Bank in 2013 as a member of the Shariah Compliance Department of the Bank. His main responsibilities include Islamic banking training, Shariah Compliance review and Shariah Audit of different departments and branches. He is an active teacher / trainer at Center for Excellence in Islamic Finance (CEIF) of Institute of Business Administration (IBA) Karachi, Center of Islamic Economics (CIE) of Jamia Darul Uloom Karachi, as well as several other renowned universities. He is also a member of the Shariah Board of NBP Funds. Prior to joining as RSBM, Mufti Muhammad Naveed Alam has served as Shariah Advisor of Premier Window Takaful Operations and also as Shariah Coordinator at Indus Hospital. Mufti Muhammad Naveed Alam is serving as the Resident Member of Meezan Bank’s Shariah Supervisory Board since October 1, 2018. 146 MEEZAN BANK LIMITED
148. Board Committees Board Human Resources and Remuneration Committee Mr . Noorur Rahman Abid (Chairman) – Independent Director Mr. Riyadh S.A.A. Edrees – Non-Executive Director Ms. Nausheen Ahmad – Independent Director Terms of Reference The Board Human Resources and Remuneration Committee (BHR&RC) is responsible for ensuring that the Bank manages its Human Resource in light of the best practices of the industry. The responsibilities of the BHR&RC include reviewing and recommending Human Resource Management policies to the Board of Directors in light of local and international best practices which also include but is not limited to remuneration practices defined by the State Bank of Pakistan, recommending to the Board the selection, evaluation, compensation (including retirement benefits) and succession planning of key personnel. The Committee also makes recommendations to the Board regarding the structure of compensation package of Executive Directors, President & Chief Executive Officer, Key Executives and of any other employee or group of employees along with ensuring implementation of separate remuneration structures for material risk takers and material risk controllers. The Committee also monitors the training activities, utilization of training and development budget and implementation of approved training and development policy of the Bank to ensure that members of staff the are adequately trained for the job they are expected to perform. Board Risk Management Committee Mr. Faisal A.A.A. AlNassar (Chairman) – Non-Executive Director Mr. Saad Fazil Abbasi – Non-Executive Director Mr. Mohamed Guermazi – Non-Executive Director Mr. Mubashar Maqbool – Non-Executive Director Terms of Reference The Board Risk Management Committee (BRMC) is responsible for assessing the Bank’s policies on all major risk categories including credit, market, liquidity and operational risk and adequacy of the risk management function of the Bank. The BRMC reviews adequacy of the Bank’s capital in accordance with laid down rules and regulations as per Basel Accord. It also reviews the techniques developed and implemented to measure the Bank’s risk exposure. Its responsibilities also include evaluation of the risk profile and appetite of the Bank and ensuring that systems are in place for monitoring overall risk of the Bank. The Committee reviews exception reports highlighting deviations from the approved policies as well as deliberates upon risk related reports including early warning signals of potential risks emerging from Bank’s activities. Board Audit Committee Mr. Noorur Rahman Abid (Chairman) – Independent Director Mr. Faisal A.A.A. AlNassar – Non-Executive Director Mr. Bader AlRabiah – Non-Executive Director Terms of Reference The Board Audit Committee (BAC) is responsible for determination of appropriate measures for safeguarding the Bank’s assets; review of quarterly, half-yearly and annual financial statements; review of management letter issued by external auditors and management’s response thereto; review and implementation of the scope, extent and plan of internal audit / Shariah audit; review of internal audit strategy; consideration of major findings, internal investigations of activities characterized by fraud, corruption and abuse of power and management's response thereto; ascertaining that the internal control systems are adequate and effective; determination of compliance with relevant statutory requirements; monitoring compliance with the best practices of corporate governance and identification of significant violations thereof and oversight of implementation of Internal Controls over Financial Reporting (ICFR) program across the Bank, review effectiveness of whistle blowing procedures; ensure effectiveness of overall management of compliance and AML risk and consideration of any other issue or matter as may be assigned by the Board of Directors. ANNUAL REPORT 2019 147
149. Board Information Technology Committee Mr . Mubashar Maqbool (Chairman) – Non-Executive Director Mr. Riyadh S.A.A. Edrees – Non-Executive Director Mr. Faisal A.A.A. AlNassar – Non-Executive Director Mr. Atif Azim – Independent Director Mr. Irfan Siddiqui – (President & CEO) – Executive Director Terms of Reference The Board Information Technology Committee (BoIT) is responsible for advising and reporting to the Board on status of technology activities and digital initiatives for their ease in decision making, reviewing IT and digital strategies as well as relevant policies before submission to Board. BoIT reviews and approves technology-related policies periodically in light of major technological/regulatory developments and ensures risk management strategies are designed and implemented to achieve resilience such as ability to respond to wide scale disruptions, including cyber-attacks and attacks on multiple critical infrastructure sectors. The Committee also receives periodic updates from IT Steering Committee to monitor all technology-related projects and ensures that technology procurements are aligned with the IT strategy approved by the Board. If deemed necessary, the Committee may seek expert opinion from independent sources wherein the quorum will comprise of any two members. Board IFRS 9 Implementation Oversight Committee* Mr. Riyadh S. A. A. Edrees (Chairman) – Non-Executive Director Mr. Irfan Siddiqui – (President & CEO) – Executive Director Terms of Reference The Committee is responsible for reviewing and approving the Bank's transition plan for IFRS 9 implementation. It is required to review progress against the transition plan on a quarterly basis. The Committee is also responsible to ensure smooth implementation of IFRS 9 within the timelines stipulated by the State Bank of Pakistan. Board and Committees’ Composition and Attendance - 2019 Total No. of Meetings held during the year Board of Directors Board HR & R Committee Board Risk Management Committee Board Audit Committee Board IT Committee 4 4 4 4 4 N/A N/A N/A Name of Director Nature of Directorship Mr. Riyadh S.A.A. Edrees Non-Executive Director / Chairman 4 4 Mr. Faisal A.A.A. AlNassar Non-Executive Director 4 N/A 4 3 N/A Mr. Bader H.A.M.A. AlRabiah Non-Executive Director 4 N/A N/A 3 N/A Mr. Mubashar Maqbool Non-Executive Director 1 N/A 1 N/A 1 Mr. Saad Fazil Abbasi Non-Executive Director 4 N/A 4 N/A N/A Mr. Mohamed Guermazi Non-Executive Director 2 N/A 1 N/A N/A Mr. Noorur Rahman Abid Independent Director 4 4 N/A 4 2 Ms. Nausheen Ahmad Independent / Female Director 3 2 N/A N/A N/A Mr. Atif Azim Independent Director 2 N/A N/A N/A 2 Mr. Irfan Siddiqui - President & CEO Executive Director 4 N/A N/A N/A 2 Mr. Ariful Islam - Deputy CEO*** Executive Director 1 N/A 1 N/A 1 Mr. Mansur Khan*** Non-Executive Director 2 N/A 2 N/A 2 Mr. Alaa A. Al- Sarawi*** Non-Executive Director 3 3 N/A 3 N/A Meetings Attended** NOTES: *Board IFRS 9 Implementation Oversight Committee was constituted on January 2, 2020. **The number of meetings attended by a Director will vary depending on his / her tenure. The State Bank of Pakistan (SBP) conveyed its in principle clearance to Mr. Mohamed Guermazi on April 8, 2019. He is a member of Board Risk Management Committee. Ms. Nausheen Ahmad was appointed as Director on February 21, 2019 (Subject to clearance of SBP) and SBP conveyed its in principle clearance on April 8, 2019. She is a member of Board Human Resource & Remuneration Committee. Mr. Mubashar Maqbool was appointed as Director on May 24, 2019 (Subject to clearance of SBP) and SBP conveyed its in principle clearance on October 15, 2019. He is Chairman of the Board IT Committee and Member of the Board Risk Management Committee. Mr. Atif Azim was appointed as Director on April 25, 2019 (Subject to clearance of SBP) and SBP conveyed its in principle clearance on July 11, 2019. He is a Member of Board IT Committee. Mr. Irfan Siddiqui is a Member of Board IT Committee. ***Mr. Ariful Islam, Mr. Mansur Khan and Mr. Alaa A. Al-Sarawi resigned from the Board with effect from March 1, May 15, and November 20, 2019 respectively. 148 MEEZAN BANK LIMITED
150. Management Committees Asset Liability Management Committee President & CEO - Chairman Deputy CEO - Alternate Chairman Chief Financial Officer & Group Head Finance CRO & Group Head Risk Management Group Head Retail, Commercial, SME & Agriculture Finance Group Head Corporate & Institutional Banking Group Head Consumer Finance Head Treasury & Home Remittances Terms of Reference The Asset Liability Management Committee (ALCO) is responsible for reviewing the Asset and Liability structure of the Bank, transfer pricing, monitoring the liquidity situation, evaluating asset classes and taking decisions with regards to risks and rewards associated with purchasing and selling of these assets. Market and liquidity risks are examined based on stress testing exercises and gap analysis while considering the overall economic environment of the country. The ALCO is also responsible for monitoring policy rate movements and taking necessary steps across all assets and liabilities to ensure that the overall profitability of the Bank is maximized. This is mainly performed by alterations in the profit rates offered across different deposit products. It is also responsible for ensuring that the Bank’s overall operations are fully compliant with regulatory framework for the business as provided by the State Bank of Pakistan. Business Continuity Steering Committee Terms of Reference Management Committee Terms of Reference Deputy CEO - Chairman CRO & Group Head Risk Management Group Head Operations Group Head Retail, Commercial, SME & Agriculture Finance Group Head General Services & Special Assets Management Group Head Information Technology & Digital Banking Head Compliance Manager IT Disaster Recovery Head Enterprise Risk Management Group Head Information Technology & Digital Banking Group Head Retail, Commercial, SME & Agriculture Finance Group Head Treasury & Home Remittances Group Head Consumer Finance Chief Financial Officer & Group Head Finance Group Head Corporate & Institutional Banking Group Head Operations Group Head Human Resources, Learning & Development Group Head Shariah Compliance Group Head Customer Support Group Head General Services & Special Assets Management CRO & Group Head Risk Management Company Secretary Head Internal Audit & Business Risk Review Head Compliance Head Shariah Audit & Advisory Head Legal Affairs Head Investment Banking & Advisory Senior Advisor to CEO The Business Continuity Steering Committee (BCSC) is responsible for ensuring that adequate business continuity / disaster recovery plans are prepared, tested and that decision making authority in the event of a crisis is clearly defined. The BCSC reviews and recommends Business Continuity Plan (BCP) for approval of the Board. It facilitates in execution of BCP as and when invoked and in resumption of critical business activities. BCSC steers BCP project(s) and their implementation and provides guidance on project direction to ensure that organizational requirements are met. It is also responsible for reviewing the findings of mock drills / actual disasters and facilitating in removal of identified gaps. The Management Committee (MC) is responsible for monitoring and overseeing the administrative, operational and business matters of the Bank to ensure that they are carried out keeping the founding principles, objectives and values in view. It also spearheads the adoption of best practices in all operations of the Bank, makes all processes and procedures efficient and effective and encourages and facilitates improvement at all levels and in all functions of the Bank. The MC achieves this objective by scanning the market for latest developments in banking practices and procedures, with focus on effective delivery of Islamic banking to Meezan Bank’s customers. It also makes recommendations to the CEO / Deputy CEO in light of local and international best practices in both business and operations. The MC is also responsible for keeping the CEO / Deputy CEO fully informed of their actions and ensures reporting and obtains approval from the CEO / Deputy CEO before making decisions. ANNUAL REPORT 2019 149
151. Credit Risk Management Committee Terms of Reference Disciplinary Action Committee Terms of Reference Disciplinary Action Review Committee Terms of Reference Compliance & Operational Risk Management Committee Terms of Reference President & CEO - Chairman Deputy CEO Chief Financial Officer & Group Head Finance Group Head Information Technology & Digital Banking Group Head Retail, Commercial, SME & Agriculture Finance Group Head Operations Group Head Shariah Compliance CRO & Group Head Risk Management Group Head Human Resources Learning & Development Head Compliance Head Enterprise Risk Management The Compliance & Operational Risk Management Committee (CORMC) is responsible for overseeing compliance risk by reviewing the adequacy of controls in place to meet regulatory requirements. The Committee is responsible for promoting compliance culture in the Bank, facilitate in implementation of Compliance Program and oversee Money Laundering and Financing Terrorism risk. In addition, the Committee also oversees Operational Risk Framework by ensuring that policies and procedures are in place in all key risk areas and by reviewing Key Risk Indicators. The Committee also monitors level of compliance of major unresolved and recurring issues pointed out in the Internal Audit, Shariah Audit and SBP Inspection Report. IT Steering Committee Terms of Reference President & CEO - Chairman Deputy CEO Chief Financial Officer & Group Head Finance CRO & Group Head Risk Management Group Head Retail, Commercial, SME & Agriculture Finance Group Head Corporate & Institutional Banking Head Treasury & Home Remittances Head Credit Risk Head of Compliance - Chairman Group Head General Services & Special Assets Management CRO & Group Head Risk Management Group Head Human Resources, Learning & Development Head Internal Audit & Business Risk Review Deputy CEO - Chairman Company Secretary Head Legal Affairs Deputy CEO - Chairman Group Head Information Technology & Digital Banking Group Head Operations CRO & Group Head Risk Management Head Compliance Group Head Consumer Finance Group Head Corporate & Institutional Banking Group Head Retail, Commercial SME & Agriculture Finance Group Head Customer Support Manager Information Security 150 MEEZAN BANK LIMITED The Credit Risk Management Committee (CRMC) is responsible for overseeing credit risk activities on Bank-wide basis while ensuring compliance with regulatory requirements and internal policies. The CRMC’s responsibilities also include providing support and guiding front lines in managing their businesses, performing finance portfolio review, establishing financing standards and benchmarks, maintaining adequate industry diversification and deciding upon provisioning. It is also required for delegating financing approval powers and prudential limits on large financing exposures. The Disciplinary Action Committee (DAC) is responsible for taking action on any violation of policies and procedures, acts of fraud and forgery, breaches of discipline and code of conduct, ethics and business practices, law of the land and statutory regulations of SBP by employees. The Disciplinary Action Review Committee (DARC) is responsible for reviewing the appeals of the staff against whom DAC has already taken disciplinary action. The DARC is formed with a view to ensure a fresh review of each appeal filed against the DAC decision. The IT Steering Committee (ITSC) is responsible for assisting the Senior Management in implementing IT and digital strategies approved by the Board of Directors and for playing an advisory role to the Senior Management in all technology-related matters. The ITSC monitors implementation of technology-related projects, ensuring that the IT procurement is in line with the business plan. It shall ensure an efficient IT operating environment that supports the institution's goals and objectives. The ITSC may also review and determine the adequacy of training plan(s) and shall review significant incidents, major risks and breaches submitted by Information Security. The ITSC may also further review the status of projects assigned to PMO on periodic basis.
152. Lorem ipsum Investment Committee Deputy CEO - Chairman Chief Financial Officer & Group Head Finance Chief Executive Officer Al Meezan Investment Management Limited Chief Investment Officer Al Meezan Investment Management Limited Terms of Reference The Investment Committee (IC) is responsible for ensuring that the Bank's investments in listed equity securities are made in compliance with the: (i) Investment Policy of the Bank (ii) Limits prescribed under Prudential Regulations issued by the State Bank of Pakistan and (iii) Directives of Shariah Supervisory Board of the Bank The IC also reviews the performance of equity investment portfolio through its regular meetings and discussions wherein the members also discuss the forgoing investments and future strategies in line with investment policy and market dynamics. Service Board President & CEO - Chairman Deputy CEO Group Head Operations Group Head Information Technology & Digital Banking Group Head Retail, Commercial, SME & Agriculture Finance Group Head Consumer Finance Group Head Customer Support Group Head Human Resources, Learning & Development Group Head General Services & Special Assets Management Head Service Quality Unit Head - Service Analytics IFRS 9 Project Steering Committee Deputy CEO - Chairman Chief Financial Officer & Group Head Finance CRO & Group Head Risk Management Group Head Information Technology & Digital Banking Terms of Reference Service Board is responsible for overseeing service quality of the Bank. The Board chaired by the President & CEO has representation of respective Group Heads with an objective of reviewing performance against service standards to ensure quality banking experience for customers. Service Board drives the continuous improvement process and provides direction for achieving service excellence in line with the Bank’s strategic aspiration to be a world class customer-centric bank. Terms of Reference The Committee is responsible to ensure compliance with the requirements of SBP in respect of IFRS 9 implementation. It is also responsible to perform initial diagnostic and quantitative impact analysis to determine gaps and develop transition plan for the application of IFRS 9. The Committee is required to inform the Board / Board IFRS 9 Implementation Oversight Committee about the progress made and key issues that need to be addressed. It is responsible for developing appropriate staffing and training strategies, collect data and other risk inputs, assess existing infrastructure and provide recommendations on the required changes or upgrades and monitor progress against defined timelines. ANNUAL REPORT 2019 151
153. Performance Evaluation of the Board of Directors The Board of Directors of Meezan Bank sets the Bank ’s strategic direction and ensures that the organization stays true to this direction - enabling it to achieve its long-term objectives while ensuring regulatory compliance. To discharge its fiduciary responsibility of safeguarding the stakeholders’ interests, the Board of Directors has developed criteria for its performance evaluation as required by the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan. The Board of Directors discusses strategic objectives, budgetary expenses and projected national and international macroeconomic indicators to ensure that the Bank’s business strategy stays aligned with the macroeconomic indicators. The Board of Directors and its sub committees are competent and experienced, representing diversified educational and vocational backgrounds which are invaluable in determining the overall direction of the organization. As per the guidelines issued by the State Bank of Pakistan, the Board decided to opt for an in-house approach with quantitative technique; and accordingly evaluated performance of overall Board, Board Committees and individual Board Members as per the following categories: ■ ■ Complete Board Independent Directors ■ ■ Chairman Chief Executive Officer ■ ■ Individual Directors Board Committees Performance Evaluation by External Consultant Evaluation of Board of Directors is conducted annually as per the State Bank of Pakistan's requirement. Further, SBP Guidelines also require that at least once in every three years, the evaluation should be conducted by an external independent evaluator. The Bank engaged Pakistan Institute of Corporate Governance (PICG) during the year as an independent evaluator to conduct the Board’s evaluation. Criteria for Performance Evaluation The Board of Directors, while ensuring regulatory compliance, is also vested with fiduciary responsibility on behalf of the shareholders to protect the Bank’s interests, provide strategic direction and monitor the achievement of strategic objectives. The Companies Act 2017, Banking Companies Ordinance 1962, SBP’s Prudential Regulations and Code of Corporate Governance (the Code) describes the role of Board of Directors along with its responsibilities and functions. To comply with the requirement of the Code, the Board, in the year 2014, put in place an effective mechanism for Board Evaluation. All individual Board members answer a comprehensive questionnaire focused on evaluating, from various angles, whether the Board has discharged its duties diligently and with foresight. A committee of Directors is designated to collate individual responses and present them to the Board for deliberation and discussion. As per process, the responses / feedback from the Directors on each of the above-mentioned categories is compiled and submitted to the Chairman. First Stage Board Evaluation Process Briefing and Board Questionnaire The Chairman discusses the results / findings with each individual Board Member. The authorized Independent Directors communicate the feedback in respect of the Chairman for incorporation in the consolidated Performance Report. Accordingly, the analysis comprises of consolidated evaluation results and Action Plan forwarded by the Chairman to further strengthen comparatively weaker areas and is submitted to the Board of Directors for consideration in its meeting. This exercise in critical self-assessment allows the Board to evaluate its performance and overall effectiveness in setting strategies, devising control processes, reading market trends by monitoring micro and macroeconomic factors, and responding to adverse unforeseen situations to further the cause of a learning organization. This process also ensures that the Board is constantly growing intellectually and the responsibility of steering the Bank to new heights of success is discharged effectively and efficiently. Second Stage Results collated, reported and presented to Board for deliberation Third Stage Collated feedback from Board submitted to Chairman for evaluation Performance Report One-on-one discussion with the Board 152 MEEZAN BANK LIMITED
154. Induction and Training of Directors Directors Training Program - DTP The Bank places keen focus on regular trainings regarding updates in law / regulations for the Directors. During 2019, a training on ‘Listed Companies (Code of Corporate Governance) Regulations’ was done. In addition, Shariah training is also arranged for the Directors as per the State Bank of Pakistan’s ‘Shariah Governance Framework for Islamic Banking Institutions’. The Bank is compliant to the training requirements of Listed Companies (Code of Corporate Governance) Regulations, 2019. During 2019, Mr. Saad Fazil Abbasi attended the Director Training Program from Pakistan Institute of Corporate Governance (PICG). No Director availed exemption during the year 2019. Members of Meezan Bank’s Board are experienced and qualified professionals who bring a diverse range of professional and technical expertise to the organization. Roles and Responsibilities Role and Responsibilities of the Board of Directors The Board of Directors is involved in strategic level decisions to establish and review the strategies and medium to long-term goals of the Bank, overseeing the business and affairs of the Bank in light of emerging risks and opportunities. The Management of the Bank is responsible for managing day-to-day business affairs in an effective and ethical manner in conformity with the strategies and goals approved by the Board and to identify and manage the principal risks and opportunities which could impact the Bank in the course of carrying out its business. It is also the responsibility of the Management, with the oversight of the Board and its sub-committees, to produce financial statements that fairly present the financial conditions and results of operations of the Bank in accordance with applicable accounting standards and to make timely disclosures to investors as required under regulatory requirements. Further, the Management also stays aware of the business and competitive environment and develops strategies to maintain the Bank’s competitive business edge. Role and Responsibilities of the Chairman The Chairman of the Board of Directors ensures that the organization keeps true to its long-term Vision. Responsible for leadership of the Board, the Chairman ensures that the Board plays an effective role in fulfilling all its responsibilities. The role entails the following: All members of the Board may participate in all meetings and have the opportunity to express their opinion. Dissent of Directors, if any, is properly recorded in the minutes. CHAIRMAN Minutes truly reflect what transpired during the meeting. The Board discharges its role effectively and swiftly in line with regulatory requirements. The Board sub-committees perform their designated functions with due diligence. ANNUAL REPORT 2019 153
155. Role and Responsibilities of the President & CEO The President & CEO’s role constitutes an absolutely engaged position, demanding complete involvement and shepherding of the organization. The role entails the following: Provide an enabling environment within the Bank to facilitate promulgation of a culture of Shariah compliance. Ensure execution of the strategy developed by the Board. Ensure that the Bank maintains its business position and brand image as the leading Islamic Bank of the country. PRESIDENT & CEO Efficiently allocate and manage organizational resources and budgets to ensure achievement of short and medium term objectives that contribute to the attainment of the long-term strategic goals. Establish a system of checks and controls to supplement the fast-paced growth of the Bank. Provide liaison between the Board and the Bank’s management to ensure alignment of managerial efforts with Board’s directives. Foster a culture of professionalism and high ethical standards within the Bank. Facilitate an organizational culture of development of innovative products and services to meet the growing needs of a diverse range of customers. Performance Review of the President & CEO The President & CEO of Meezan Bank is responsible for supervising and leading the strategic and managerial affairs of the Bank. Various elements of the President & CEO’s performance are monitored continuously and discussed periodically by the Board. As leader of the organization and executor of the strategy approved by the Board to further the interests of all stakeholders of the Bank, the President & CEO is evaluated on parameters such as financial performance and profitability, budget allocation and utilization of resources, organizational expansion, sustainability of product lines, credit ratings and inculcation of the desired organizational culture which is conducive to professional and ethical excellence. Role of Shariah Supervisory Board The Shariah Supervisory Board (SSB) is entrusted with the duty of directing, reviewing and supervising the activities of the Bank in order to ensure that they are in compliance with the rules and principles of Shariah. All products and services of the Bank are launched with the approval of the Shariah Supervisory Board whose role also entails the following: To develop a comprehensive Shariah compliance framework for all areas of operations of the Bank that serves as a guiding principle to the Bank for maintaining its commitment towards adherence to principles of Shariah. SHARIAH SUPERVISORY BOARD Ensure Shariah-compliance of all aspects of the Bank by virtue of having unhindered access to all books of accounts, records and documents. Guide and direct the Bank through rigorous deliberation on issues placed before the Shariah Supervisory Board. Monitor the Shariah compliance of the Bank through Shariah Audit and Shariah compliance reviews and prescribe appropriate enforcements whenever needed. 154 MEEZAN BANK LIMITED
156. Election of the Board of Directors Procedures for Appointment Election and Removal of Directors There are formal , considered and transparent procedures for nominating candidates to stand for election as directors. The process of composition of the Board is ongoing to ensure that the Board retains its effectiveness at all times. Directors are subject to re-election / re-appointment at regular intervals defined under the relevant laws and regulations. The sponsor shareholders of Meezan Bank nominate Directors on the Board as per their respective shareholding. The Independent Directors also file their nomination and are elected as per law. Minority shareholders are also given the right to participate in election as per law. The Board of Directors fixes the number of Directors for the next term of the Board, 35 days before election of the Board as per Companies Act 2017. Election of Directors is held as per law and all regulatory requirements are complied with. Appointment and Election of Directors Election of Directors at the General Meetings According to Companies Act, 2017, at General Meeting, the shareholders entitled to vote for the election of directors must, by unanimous resolution, elect or appoint a Board for a term of three years, consisting of the number of directors for the time being set, as per provisions of Companies Act. All on the directors cease to hold office immediately before such election or appointment, but are eligible for re-election or re-appointment. Directors may Fill Casual Vacancies Any casual vacancy in the Board may be filled by the Directors and the person so appointed shall hold office for the remainder of the term of the Director in whose place he/she is appointed. Information on the Directorship Candidates To enable shareholders to make an informed decision on their election at a General Meeting, names of all candidates submitted for election or re-election as a director are set out in a Notice sent to shareholders prior to the meeting, as per Companies Act, 2017. Removal of Directors Removal of Director by Shareholders Shareholders may remove any director before the expiration of his or her term of office by a resolution in General Meeting, as per section 163 of the Companies Act 2017. Resignation / Removal of Director by Board The Board may remove any Director before the expiration of his or her term of office, or the Director may resign at his / her own, if the Director ceases to be qualified to act as a Director of a company and the Board may appoint a Director to fill the resulting casual vacancy as per Companies Act 2017. ANNUAL REPORT 2019 155
157. Other Matters Related to Corporate Governance Governance Practices Exceeding Legal Requirements The Board of Directors , as a whole respects the country laws and ensures meticulous compliance of applicable laws, rules & regulations and being the Premier Islamic Bank, Meezan Bank always adheres to provide information and disclosures above the minimum regulatory requirements. The Board never gives room for any sort of non-compliance and takes it as reputational risk for the Bank. The Management also regularly updates the Board with the latest developments in regulatory environment and maintains stringent control over regulatory compliance, through designated resources. Following are some of the practices of the Bank which exceed the minimum legal requirement: ■ The Bank has only one Executive Director (President & CEO) though it has been permitted two executive directors by SBP. ■ The Bank reports additional information in the Annual Report for stakeholders which is not required by law. Code of Conduct & Ethical Standards for Directors The Bank has also developed ‘Code of Conduct & Ethical Standards for Directors’ as per requirements of Code of Corporate Governance which is signed by every Director of the Bank. Presence of the Chairman of Audit Committee at the AGM The Chairman of the Audit Committee attends the Annual General Meeting (AGM) and this is duly recorded in the minutes of AGM. Policies for Sustainability and Corporate Social Responsibility (CSR) Policies for Sustainability and Corporate Social Responsibility (CSR) are annexed in Policies and Guidelines Section of this report. Statement of Compliance with the Code of Corporate Governance The Statement of Compliance with Code of Corporate Governance is annexed with this annual report. Informing the Company Secretary's Office on Sale or Purchase of Meezan Shares Executives are required to inform the Company Secretary about any change in the shareholding in his/her own name, in the name of his/her spouse and/or dependent/minor children to the Company Secretary through a written notice regarding complete details of the actual transaction within two days of its execution, enabling the Company Secretary to immediately notify the transaction to Pakistan Stock Exchange in terms of the revised listing rules and also to subsequently report the transaction to the Board of Directors. Diversity The Board of Directors firmly believes that the diverse mix of gender, knowledge, expertise and skill sets of the members / employees enhances the effectiveness of the Bank. The Bank embraces and encourages employees with a diverse mix of age, family ethnicity, language, socio-economic status, physical disability and other characteristics that make its employees unique. 156 MEEZAN BANK LIMITED Investor Grievances Meezan Bank has established a robust grievance reporting mechanism which seeks to resolve any complaints or unattended issues if, despite all vigilance, do occur. The mechanism put in place allows for such matters to be reported electronically, in writing or over the phone. To ensure that the stakeholders may register their complaints conveniently, a multitude of online forms are available on Meezan Bank’s corporate website (www.meezanbank.com). The Investor Complaints Form, on submission, is sent directly to the Office of the Company Secretary. Similarly, a general complaints form for reporting and resolution of business-related complaints sends registered issues to relevant departments. A dedicated email (complaints@meezanbank.com) is also in place for the express purpose of reporting issues if the stakeholder feels the need to email rather than use online forms. Furthermore, grievances may also be lodged by calling the Bank’s Call Center (UAN: 111-331-331 & 111-331-332), which is functional round the clock, where officers are available to assist stakeholders with their queries and complaints. Managing Conflict of Interest The Bank has a policy in place for dealing with conflicts of interest relating to members of the Board. Under this policy, any Director who has a business interest in a matter being presented at a Board meeting does not participate in neither the discussion nor the decision on that matter. The policy is applied consistently and there was no breach of this policy during the year.
158. Board ’s Function and Decision Making The Board plays an effective role and provides entrepreneurial leadership and direction to the Management of the Bank within a framework of prudent and effective controls. It promotes collective Vision of the Bank’s purpose, its culture, values and also demonstrates ethical leadership. Matters delegated to the Management During 2019, the key areas that the Board focused on included: Areas of Focus Strategic direction The Board sets the strategic objectives and takes the overall responsibilities of overseeing its implementation. The Board performs its duties by giving guidelines to the Management, setting performance targets and monitoring their achievement. The Management is primarily responsible for implementing the strategies as approved by the Board of Directors in conducting the operations of the Bank effectively. Cyber resilience Responsibility of the Management and the Board of Directors towards preparation and presentation of Financial Statements Annual and quarterly accounts reporting The Management has fulfilled its responsibility for preparation and fair presentation of the financial statements in accordance with the financial reporting frameworks as applicable in Pakistan. These include the requirements of Banking Companies Ordinance 1962 and the Companies Act 2017 (XIX of 2017). The Management also acknowledges its responsibility for designing, implementing, and maintaining internal controls relevant to the preparation and fair presentation of financial statements. The Bank’s Board of Directors is responsible for overseeing the financial reporting process. Unreserved Compliance of International Financial Reporting Standards Risk review and monitoring Policy reviews and updates Regulatory and external affairs Digital banking Capital structure and planning The Management believes in ensuring unreserved compliance with the applicable International Financial Reporting Standards (IFRSs) issued by International Accounting Standard Board (IASB) for true and fair presentation of financial statements of the Bank. The financial statements of the Bank for the year ended December 31, 2019 have been prepared in accordance with the accounting and reporting standards (including IFRSs). For further details please refer to the Statement of Compliance in note 3 of the financial statements of the Bank. Human Resources Management Policies and Succession Planning Human Resources Policies are approved by the Board of Directors of the Bank on the recommendation of Human Resource & Remuneration Committee of Board in order to provide clear and definitive directions on Human Resource (HR) related matters. Board’s Review of Business Continuity Plan The Board of Directors reviewed and approved Business Continuity and Information Technology Disaster Recovery Plans. This exercise is being performed on an annual basis. Stakeholders’ Engagement Stakeholders’ engagement and the steps taken to solicit and understand the views of the shareholders is detailed in stakeholders’ engagement section of this report. Accessibility of Annual Report Annual Reports and other information of the Bank are accessible on Bank’s website: www.meezanbank.com ANNUAL REPORT 2019 157
159. Report of the Board Audit Committee Board Audit Committee (BAC) comprises of four non-executive directors having vast experience and knowledge of finance and accounting. The Chairman of BAC is an independent director. Bank has adopted Committee of Sponsoring Organizations (COSO) Integrated Internal Control Framework and the Charter of Internal Audit & BRR Department (IAD) provides complete independence to Head - IAD along with free access to BAC. BAC has been proactively focusing on effectiveness of internal controls, risk management, compliance and governance processes in accordance with the requirements of Code of Corporate Governance and Audit Committee Charter (ACC) also referred to as Terms of Reference (ToRs) of BAC duly approved by the Board of Directors. During the year 2019, four BAC meetings were held and following major activities were performed by BAC in accordance with its approved Charter. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ BAC reviewed quarterly, half yearly and annual financial statements of the Bank and recommended the same for approval of the Board. BAC reviewed management letters issued by the external auditors, management's response and their compliance status and held discussions with external auditors on major observations. BAC also recommended the appointment of external auditors and their fees to the Board. BAC reviewed and approved the audit plan, scope and extent of the work to be performed by internal audit (IAD) and Shariah audit and recommended the audit strategy for approval of the Board. BAC also reviewed adequacy of resources as per the scope. BAC reviewed significant findings of internal audit and Shariah audit along with monitoring of its timely compliance. BAC also reviewed the whistle blowing mechanism. BAC reviewed major findings of internal investigations with respect to fraud & forgery and whistle blowing along with management’s action thereto. BAC also reviewed annual review report of fraud, forgeries and robberies. BAC reviewed related party transactions and recommended the same for Board’s approval. BAC reviewed the AML environment, compliance and AML activity report, compliance policy, AML policy, compliance program, Institutional Risk Assessment Framework (IRAF) – Self Assessment Questionnaire, details and action plan of SBP penalty items and SBP inspection reports along with monitoring of its compliance status. BAC also reviewed minutes of Compliance and Operational Risk Management Committee meetings. BAC reviewed Internal audit manuals, programs, revision in polices, IAD Charter, ACC and recommended the same for Board’s approval. BAC reviewed Shariah audit manual and ensured compliance of corrective actions determined by Shariah Supervisory Board on the reports of Shariah audit. BAC reviewed the independent assurance report on compliance with Shariah rules and principles along with monitoring of its compliance status. BAC reviewed and had an oversight of implementation of Internal Controls over Financial Reporting (ICFR) program across the Bank. BAC reviewed Internal Audit Department assessment, internal quality assurance reviews and compliance of SBP guidelines on Internal Audit function along with progress and implementation status. BAC conducted self assessment of its performance to review compliance with SECP Code of Corporate Governance and SBP circulars. Self-assessment report was also presented to the Board. BAC reviewed statement on internal control system and recommended the same for endorsement by the Board. BAC also held separate meetings with external auditor and internal auditor without the CFO and the management in line with the Code of Corporate Governance. Mr. Noorur Rahman Abid Chairman-BAC 158 MEEZAN BANK LIMITED
160. ANNUAL REPORT 2019 157
161. Statement of Compliance with Listed Companies (Code of Corporate Governance) Regulations, 2019 Meezan Bank Limited for the year ended December 31, 2019 The Bank has complied with the requirements of the Code of Corporate Governance Regulations, 2019 (“Regulations” or “Code”) in the following manner: 1. The total number of directors are eleven including CEO as a deemed director as per the following: a. Male: b. Female: 2. Ten (10) One (1) The composition of the Board is as follows: Category Names Independent Directors Mr. Noorur Rahman Abid Ms. Nausheen Ahmad Mr. Atif Azim Non-Executive Directors Mr. Riyadh S.A.A. Edrees – Chairman Mr. Faisal A.A.A. AlNassar Mr. Bader H.A.M.A. AlRabiah Mr. Mubashar Maqbool Mr. Saad Fazil Abbasi Mr. Basil Y.A.Y.R. AlBader* Mr. Mohamed Guermazi Executive Directors Mr. Irfan Siddiqui - President & CEO Female Director Ms. Nausheen Ahmad *The Bank has submitted application for Fit and Proper Test of the Director in the State Bank of Pakistan, which is in process of reviewing the same. 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. 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 Companies Act, 2017 (Act) and these Regulations. 7. The meetings of the Board were presided over by the Chairman and the Board has complied with the requirements of the Companies Act, 2017 (Act) and the Regulations with respect to frequency, recording and circulating minutes of meeting of the Board. 8. The Board has a formal policy and transparent procedures for remuneration of directors in accordance with the Act and these Regulations; and directives of the State Bank of Pakistan (SBP). 9. The Bank is compliant to the training requirements of Listed Companies (Code of Corporate Governance) Regulations, 2019. During 2019, Mr. Saad Fazil Abbasi has attended the Director Training Program from Pakistan Institute of Corporate Governance (PICG). 10. There was no appointment of CFO, Company Secretary and Head of Internal Audit during the year. The Board has approved their remuneration and terms and conditions of their employment are complied with relevant requirements of the Regulations. 11. The Chief Financial Officer and the Chief Executive Officer duly endorsed the Financial Statements before approval of the Board. 160 MEEZAN BANK LIMITED
162. 12 . The Board has formed committees comprising of members given below: Committees Composition Audit Committee Mr. Noorur Rahman Abid - Chairman Mr. Faisal A.A.A. AlNassar Mr. Bader AlRabiah HR and Remuneration Committee Mr. Noorur Rahman Abid - Chairman Mr. Riyadh S.A.A. Edrees Ms. Nausheen Ahmad Risk Management Committee Mr. Faisal A.A.A. AlNassar - Chairman Mr. Saad Fazil Abbasi Mr. Mohamed Guermazi Mr. Mubashar Maqbool Information Technology Committee Mr. Mubashar Maqbool – Chairman Mr. Riyadh S.A.A. Edrees Mr. Faisal A.A.A. AlNassar Mr. Atif Azim Mr. Irfan Siddiqui IFRS 9 Implementation Oversight Committee* Mr. Riyadh S.A.A. Edrees – Chairman Mr. Irfan Siddiqui *The Committee was formed on January 2, 2020. 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 of the Committee was as follows: a) Audit Committee b) HR and Remuneration Committee c) Risk Management Committee d) Information Technology Committee Quarterly Quarterly Quarterly Quarterly 15. The Board has set up an effective internal audit function / team who are considered suitably qualified and experienced for the purpose and are conversant with the policies and 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. Irfan Siddiqui President & CEO Riyadh S.A.A. Edrees Chairman February 12, 2020 ANNUAL REPORT 2019 161
163. Statement of Internal Controls This statement is presented to comply with the requirements of State Bank of Pakistan (SBP)’s BSD Circular No. 7 of 2004 dated May 27, 2004 “Guidelines on Internal Controls” and SBP’s OSED Circular No.01 dated February 07, 2014 “Instructions on Internal Controls over Financial Reporting (ICFR)”. The management of the Bank is responsible for establishing and maintaining an adequate and effective system of internal controls which has the main objective of ensuring effectiveness and efficiency of operations, reliability of financial reporting, safeguarding of assets and compliance with applicable laws and regulations. The control activities are being closely monitored across the Bank through Compliance, Risk Management, Shariah and Internal Audit departments, which covers all banking activities in general and key risk areas in particular. The Management has Compliance and Operational Risk Management Committee (CORMC) which focuses on compliance risk issues and reviews the adequacy of controls and systems to meet the regulatory requirements. The Board of Directors has formed an Audit Committee which has direct oversight responsibility to ensure the independence of the internal and external audit function. The Audit Committee meets at least once every quarter to discuss the scope and results of the work performed by the Compliance, Shariah and Internal Audit departments. The Audit Committee also meets with external auditors prior to approval of half-yearly and annual results of the Bank. Based on observations and weaknesses found and identified by the auditors both internal and external and the Compliance, Risk Management and Shariah audit teams, improvements are brought about by the management in internal controls to ensure non-recurrence of those exceptions and elimination of such weaknesses to the maximum possible level. While the Internal Controls System is effectively implemented and monitored, there are inherent limitations in the effectiveness of any system, including the possibility of human error or system failure, circumvention and overriding of controls. Accordingly even an effective internal control system can provide reasonable but not absolute assurance that the system's objective will be achieved. Alhamdulillah, the Bank had successfully completed all stages of its ICFR program during 2014 and has been granted exemption from the requirement of submission of Auditor-issued Long Form Report through SBP OSED letter /SU-12/017(01)/358/15 dated January 05, 2015. As required by the State Bank of Pakistan, the Bank now submits annual assessment report on efficacy of ICFR duly signed by the Chairman, Audit Committee within the regulatory timeline. Having successfully achieved closure on ICFR, the Bank remains cognizant of its responsibility to continuously improve and with this view continues to strengthen its system of Internal Controls on an on-going basis. Based on the above, the Board of Directors endorses the management's evaluation of Internal Controls. On behalf of the Board. Ariful Islam Deputy CEO February 12, 2020 162 MEEZAN BANK LIMITED Irfan Siddiqui President & CEO
164. Shariah Supervisory Board Report - 2019 All praises to Allah ( ). This was the eighteenth year of Islamic commercial banking for Meezan Bank which is under review. During the year, the Shariah Supervisory Board (SSB) of Meezan Bank held five meetings to review various matters referred to them by the Bank. Meezan Bank has a team of professionals in the Shariah Compliance Department (SCD) working under the guidance of SSB. The main objective of this department is to facilitate and ensure Shariah-compliance in all the new processes, procedures and products, refine existing products and procedures, manage Islamic banking trainings and awareness sessions and conduct Shariah-compliance reviews of transactions. The SCD also serves as secretariat to the Bank’s Shariah Supervisory Board. In addition to the above, a separate Shariah Audit Department (SAD) is working under the Board of Director’s Audit Committee to review Shariah-compliance in the Bank’s activities. This department submits its Audit report to the Resident Shariah Board Member (RSBM) and Shariah Supervisory Board for their information, review and determination of appropriate corrective actions. We appreciate the efforts of the staff of Shariah Compliance Department and Shariah Audit Department for their efforts in promoting and strengthening the environment of Shariah compliance in the Bank. It gives us comfort to observe high level of commitment of the staff, management and the Board members of the Bank. It is also encouraging to know that there are more than 11,500 staff members in the Bank who are a source of halal income for their families. We are pleased to share the major achievements of Meezan Bank towards the cause of Islamic banking during the year ending December 31, 2019. Research and New Product Development The SSB recognizes the efforts of the SCD for conducting around 225 customer and industry visits to understand the business model and reviewing more than 3,000 different types of transactions as per the guidance of RSBM/SSB. During the year, more than 23 Shariah-compliant syndicated transactions involving various structures such as Ijarah, Diminishing Musharakah and Running Musharakah were executed by the Bank under the supervision of RSBM/SSB. These transactions provided Shariah-compliant financial solutions to various Government and private entities such as National Power Parks Management Company (Private) Limited, Hub Power Company, Engro Powergen Thar (Private) Limited, Sindh Engro Coal Mining Company (SECMC). These syndicated transactions provided support to various needs including infrastructure development, capital expansion and project financing. Green Energy (Private Limited), Metro Wind Power Limited, Gul Ahmed Electric Limited, Artistic Wind Power (Private Limited), and Din Energy Limited. The Bank has actively supported the State Bank of Pakistan for adoption of various AAOIFI Shariah Standards in Pakistan and for resolution of numerous issues faced by the Islamic Banking Industry. During the year, the Bank conducted Islamic Banking awareness programs for religious scholars, Parliamentarians, Bureaucrats and Government officials, both independently and in collaboration with IBA CEIF. The Bank’s staff also met various Government officials to discuss and promote Islamic banking in Pakistan. During the year, the SSB provided guidance for different matters, most noteworthy of them being: ■ ■ SSB is pleased by the Bank’s efforts towards the execution of Rs 200 billion Pakistan Energy Sukuk which not only helped in reducing the issues of circular debt but also supported the liquidity deployment needs of the Islamic Banking Industry. It is also to be noted that during 2019, the Sukuk was also listed in Pakistan Stock Exchange and can be traded by institutions as well as individuals. ■ In line with the UNDP’s Sustainable Development Goals and Meezan Bank’s commitment to promote and lead Shariah-compliant Green Banking initiatives, the Bank provided Green Islamic syndicated financing solutions for five projects based on wind power generation plants to its customers NASDA ■ ■ Approval for Shariah Structure of GoP Ijarah Sukuk on Jinnah International Airport Karachi Development of Product manuals for three Shariah-compliant refinance schemes namely Islamic Financing Facilities for Renewable Energy, Storage of Agricultural Produce and Modernization of SMEs Development of guidelines for development of a digital platform for providing FinTech financing solutions to its retail customers Development of guidelines for dealing with Fintechs under Electronic Money Institutions (EMI) regulations that are involved in facilitating payments and settlement related needs of the customers Approval for tailor made specialized low-cost housing finance product based on Diminishing Musharakah for the under-privileged segment of the society ANNUAL REPORT 2019 163
165. Training & Development SSB is pleased to note that the year 2019 was highly productive in terms of training and awareness of Islamic Banking Products. A special training session was also arranged for members of the Board of Directors of the Bank which was delivered by Dr. Imran Ashraf Usmani and Sheikh Esam M. Ishaq. During the year, 100 training sessions comprising more than 1,450 man-hours were organized for staff members across the country catering to more than 3,800 employees of the Bank. This number includes orientation and batch trainings for new joiners, refresher programs like Asset Refresher, Deposit Refresher, Trade Finance & Treasury Operations and certification programs in Islamic financial products. Two Islamic Banking e-Leanings were launched covering 4,900 staff. In order to create awareness of Islamic banking in the general public, the Bank conducted 143 seminars in major cities such as Karachi, Islamabad, Lahore, Peshawar, Rawalpindi, Faisalabad, Multan, Hyderabad, Azad Jammu & Kashmir, Hazara, Abbottabad and DG Khan which were attended by more than 13,800 participants representing customers, general public, professionals, Ulema, Muftian-e-karam and students of various universities. During the year, the Bank developed various learning videos on Islamic banking concepts and has disseminated them through an internal learning management system for their optimal use and effectiveness. During the year, around 32 members of the senior management and executives of the Bank were given training on Islamic banking. The Bank also arranged 5 special workshops for its corporate customers in major cities of Pakistan in collaboration with IBA CEIF. We are hopeful that the Bank will continue such initiatives in the future. It is heartening to observe that in order to disseminate the teachings of Holy Quran, 12 Quran learning sessions on 7 topics were held for Head Office staff. Shariah Advisory and Industry Support SSB is also pleased to share that the Bank is actively supporting the Islamic finance industry across the globe by providing tailor-made Shariah advisory solutions. Following are the notable advisory services provided by the Bank during the year: ■ ■ ■ ■ ■ Advisory services to Islamic Co-operative Finance, Australia related to Takaful services in Australia Capacity building & training session in Australia and Bahrain on Islamic banking & finance Technical services and support to Akhuwat Islamic Microfinance for Islamic housing finance product development along with training to their senior team members Representation in Capital Market session of AAOIFI-World Bank Conference held in Bahrain in November, 2019 Facilitation of Bank’s capital market clients for launching various Shariah-compliant funds and plans; bringing the total number of funds and plans under its advisory to more than 60 which covers a major share of the Islamic mutual funds industry Review of Assets During the year, the Bank primarily used Diminishing Musharakah, Running Musharakah, Istisna, Ijarah, Murabaha, Musawamah, Salam – Bills, Wakalah Tul Istithmar, Tijarah, Salam – Commodity, Musharakah and Bai Muajjal for its financing activities. We appreciate that the Bank is keenly focused on promoting Green and Sustainable banking products by financing alternative energy projects to reduce Carbon footprint. 164 MEEZAN BANK LIMITED The Bank has moved towards diversification in the usage of various financing products and has reduced the reliance on Murabaha, as is evident from the Bank’s financing portfolio. There is a growth of 16.79% in Diminishing Musharakah from previous year. Bank has mainly focused on financing through Musharakah modes, including Diminishing Musharakah and Running Musharakah and these modes of financing constitute 53% of the Bank’s total financing. The Bank’s total financing portfolio reached Rs 507 billion (gross) as of December 31, 2019. Financing Modes 2019 2018 Growth / % in total portfolio % in total portfolio (Decline)% in total portfolio Diminishing Musharakah 22.58 18.75 3.83 Musharakah & Running Musharakah 30.48 30.50 (0.02) Istisna 11.52 14.06 (2.54) Ijarah 10.91 10.57 0.34 Murabaha 3.27 3.82 (0.55) Musawamah 5.42 7.63 (2.21) Salam - Bills 1.47 1.10 0.37 Wakalah Tul Istithmar 8.06 7.82 0.24 Tijarah 2.57 2.57 0.00 Salam - Commodity 2.07 1.82 0.25 Other 1.65 1.36 0.29
166. We have noted that as per our guidelines , the Bank reversed the financing of Rs 648 million provided to its customers under Murabaha & Musawamah without any profit as those transactions could not be converted into real trade due to genuine business reasons. Similarly, in Ijarah financing, the Bank being the owner of asset bore the loss of Rs 0.58 million resulting from shortfall in Takaful claims. Summary of Direct Payment in Murabaha Financing During the year, direct payment for Murabaha financings to Corporate and SME/Commercial customers was 92%. It is highly recommended that efforts be continued to increase this percentage of direct payment of Murabaha transactions. Summary of Direct Payment in Murabaha Financing 2019 2019 % Overall Portfolio 2018 % Growth/ (Decline)% 92 93 (1 ) Corporate 97 96 1 SME/Commercial 91 92 (1 ) Segment wise 100% 92% 93% 97% 2018 96% Growth / (Decline) 91% 92% 80% 60% 40% 20% (1%) 0 Overall Portfolio 1% Corporate (1%) SME/Commercial It is worth mentioning that to strengthen the Shariah-compliance control, physical inspection of delivery of goods was carried in almost all the Istisna and Tijarah transaction. Liquidity Management For the purpose of the liquidity management, the Bank invested Rs 85 billion in Pakistan Energy Sukuks. Also, due to lack of availability of venues for Shariah-compliant investments, Bai Muajjal transactions worth Rs.222 billion were outstanding at the year end. Review of Deposits The Bank continued to offer deposit products based on Shariah-compliant modes such as ‘Mudarabah’ & ‘Qard’. It is heartening to see deposits grow by 19% to reach a sum of Rs 933 billion as on December 31, 2019. During the year, the process of allocation of assets and funds to various deposit pools, announcement of overall profit sharing ratios for Mudarabah-based deposits, monthly allocation of weightages, and distribution of income to deposit accounts was monitored and reviewed in accordance with the respective pool management guidelines of SBP and Meezan Bank Limited. During the year, the Bank continued to develop and revamp its deposit products. COII of 1.5 Years with monthly profit payment option was introduced during the year for those depositors who seek high yielding monthly income products. Shariah Audit The Shariah Audit function plays a key role in ensuring Shariah-compliance by evaluating adherence to Shariah guidelines in each and every activity undertaken by the Bank. In compliance of the Shariah Governance Framework, issued by the State Bank of Pakistan (SBP), a separate Shariah Audit Department reporting to the Board of Directors’ Audit Committee is in place. This department ensures Shariah compliance by evaluating adherence to Shariah guidelines prescribed by Shariah Supervisory Board, Resident Shariah Board Member and Shariah guidelines of Islamic Banking Division of SBP. The Shariah Audit function keeps a continuous check on all activities starting right from the time of opening of a branch and goes hand in hand at each step of product offering till the stage of final profit distribution to the customers. During the year under review, Shariah Audit of 615 branches, Area offices, Consumer and Corporate hubs and Head Office departments was conducted as a part of the Bank’s efforts to strengthen the internal Shariah control mechanism. These audits not only cover the assessment of financial transactions and operational activities that the branches and departments undertake but also include an evaluation of Islamic finance knowledge of staff. Charity During the year, an amount of Rs 64.2 million was transferred to the Charity Payable Account. This includes Rs 5.27 million to eliminate the non-compliant income portion which was identified during Shariah audits, Rs. 9.8 million to purify the dividend income earned from the investment made in Shariah-compliant stocks by the Bank and Rs 49.11 million transferred to Charity Payable Account in the normal course of business on account of non-timely payments by customers in various financial transactions. An amount of Rs 49.85 million was disbursed from the Charity Account after approval of the RSBM/SSB. Details of Charity Account are available in note # 20.4 of this Annual Report. ANNUAL REPORT 2019 165
167. Suggestions For the purpose of further improving the Bank ’s business, the SSB suggests the following: ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ In line with the vision of an Islamic welfare state, the Bank should approach the Government for creation of a high power committee for elimination of Riba from society. As a socially responsible organization, the Bank should focus on providing green financing solutions that have a positive effect on the energy sector and also ensure environmental preservation. The Bank should explore new avenues for providing solutions to various business needs of small entrepreneurs, youths and startups. Government has taken the initiative of providing low cost housing schemes for the low income group of society. The Bank should coordinate and collaborate with SBP and Government of Pakistan to maximize the financing of this project through Islamic mode of finance. It is suggested that the Bank should launch innovative and user-friendly digital banking products to promote financial inclusion and well-being in the banking ecosystem. It is suggested that public-private sector partnership be encouraged for issuance of Sukuk to support financing requirements of the Government. The Bank should collaborate with SBP for implementation of IFSB standard on Capital Adequacy for Islamic Financial Institutions. The Bank is encouraged to work with the SBP for introduction of Shariah-compliant alternatives for Discount Window and Liquidity Management Framework. Government has undertaken several infrastructure projects like Dams, Motorways etc. The Bank should pursue the Government to generate maximum financing for these projects under Islamic modes of finance. It is suggested to explore the possibility of launching welfare Sukuk for uplifting the underprivileged segment of the society. Recommendations Based on the review of various transactions, reports of Internal and External Shariah Audit and Shariah Compliance of the Bank, it is recommended that: ■ ■ ■ 166 The Bank should work on modernizing and upgrading the controls and oversight mechanism based on digital technology, to create efficiency. Proper measures should be adopted with regards to commitment and mind-set of the resources in the hiring process. The Bank should work on developing learning and awareness programs to disseminate religious, moral and ethical values among its staff. MEEZAN BANK LIMITED ■ ■ ■ ■ ■ For liquidity management purposes, the Bank should use Bai Muajjal when other avenues like Musharakah placement and Sukuk are not available. The Bank should continue to focus on creating awareness regarding misconceptions of Islamic banking by conducting seminars / programs and awareness sessions for the masses at public level. The Bank, in collaboration with academia, Higher Education Commission and educational text boards, should take initiatives to design the courses or chapters related to the benefit of Islamic financial system on society. Training should be conducted for relevant departments to update them regarding current practices, manuals and guidelines prescribed by Shariah Supervisory Board and SCD. Conventional insurance is not permissible from Shariah perspective. Therefore, it is again recommended to convert more clients to Islamic Insurance i.e. Takaful as soon as possible Conclusion It is mandatory on the Management and employees to ensure application of Shariah principles and guidelines issued by the Shariah Supervisory Board and Resident Shariah Board Member and to ensure Shariah compliance in all its activities. The prime responsibility for ensuring Shariah-compliance of the Bank’s operations thus lies with the Board of Directors and Executive Management. Based on the extensive reviews of sample cases for each class of transaction, related documentations, processes, profit distribution mechanism for the depositors by SCD, review of Internal Shariah Audit and External Shariah Audit reports and Management’s representation made in this regard, the Bank, in our opinion, has complied with the rules & principles of Islamic Shariah in light of the guidelines and directives given by the Shariah Supervisory Board, Resident Shariah Board Member of Meezan Bank and guidelines issued by Shariah Supervisory Board of SBP related to Shariah-compliance. The non-compliant income identified during the review is being transferred to Charity Account through a well-defined system and being utilized properly in accordance with the instructions of SSB. Based on the strength and capacity of the full-fledged SCD and policies and guidelines for Shariah-compliance issued at the Bank, we are of the opinion that an effective mechanism is in place to ensure Shariah compliance in overall operations of the Bank.
168. May Allah ( ) bless us with the best Tawfeeq to accomplish His cherished tasks, make us successful in this world and in the life hereafter and forgive our mistakes. Wassalam Alaikum WaRahmat Allah Wa Barakatuh. Mufti Muhammad Naveed Alam Resident Shariah Board Member Sheikh Esam Mohamed Ishaq Member Shariah Supervisory Board Dr. Muhammad Imran Ashraf Usmani Member Shariah Supervisory Board Justice (Retd.) Muhammad Taqi Usmani Chairman Shariah Supervisory Board Dated: 3th Jamadi us Sani 1441 H / January 29, 2020 ANNUAL REPORT 2019 167
169. 168 MEEZAN BANK LIMITED
170. 2019 100 % 92% 93% 97% 96% 2018 91% 92% 2018 % 80% 60% 2019 % (1) 93 92 1 96 97 (1) 92 91 40% 20% 0 (1%) 1% (1%) ANNUAL REPORT 2019 169
171. 2018 % 170 MEEZAN BANK LIMITED 2019 %
172. 2019 ■ ■ ■ ■ ■ ANNUAL REPORT 2019 171
173. Statement of Sources and Uses of Charity Fund For the year ended December 31 , 2019 2019 2018 Rupees in '000 Opening Balance at January 01 1,086 2,398 49,110 9,847 5,269 238 64,464 32,376 3,396 1,150 166 37,088 (38,100) (4,450) (7,300) (49,850) (30,250) (5,050) (3,100) (38,400) 15,700 1,086 Additions during the year Received from customers on delayed payment Dividend Purification Amount Non-shariah Compliant Income Profit on Charity Saving Account (net of bank charges) 65,550 39,486 Distribution of Charity Education Health Community Development Closing Balance at December 31 Note: Details of charity payments of Rs 100,000 and above are disclosed in note 20.4.1 to the financial statements of the Bank. 172 MEEZAN BANK LIMITED
174. Policies and Guidelines Standards of Ethics , Business Practices & Code of Conduct The objective of these standards is to promote business practices within Meezan Bank, which are Shariah - compliant, fair, reasonable and reflect high standards of ethical behavior. The standards of ethics and business practices, which the Bank expects from all of its employees, is a condition of employment with the Bank and may be considered at the time of performance appraisal of an employee. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Code of Conduct, during office hours or otherwise, shall always be that of a good citizen. Act with integrity, competence, dignity, and ethically while dealing with the customers, shareholders, vendors and colleagues. Understand and comply with the legal / regulatory requirements and internal policies and procedures of the Bank that apply to the duties assigned to the employee. Never willingly enter into a business transaction, which shall violate any law or principles of Islamic finance. Never use their position to force, induce, coerce, harass and intimidate any other person, including sub-ordinate to provide any force, gift or benefit, whether financial or otherwise, to themselves or others. Avoid professional misconduct involving dishonesty, fraud, deceit or misrepresentation. Any unintentional mistake, wherever possible, shall be immediately rectified and reported to the line manager. Not make use of any information including Bank's trade secrets, proprietary, confidential information, gained in the performance of official Bank duties as a means of making any personal profit, gain or benefit for themselves or connected persons. Immediately report to the management of pre-existing personal relationship with any existing or potential customer, industry representative or government employee with whom the Bank has a business relationship. Pending clearance from the management, the employee shall take no further action associated with the business in which a personal relationship exists. Will not use the Bank's services or facilities for private purposes except with prior permission. Conduct Bank's business with honesty, integrity and in a professional manner. Avoid any action on his / her part that may be repugnant, unethical or unlawful. Avoid any action on his / her part that may be viewed as repugnant, unethical or unlawful by customers or public at large or the Bank itself. Avoid any activities that could involve or lead to involvement in any unlawful or unethical governance practice. Avoid participation in any political activities. Avoid participation in any other subversive activities. Abstain from gambling, betting and wagering contracts. Be exemplary in personal conduct towards the Bank, other employees and customers of the Bank. Safeguard the confidential information of the Bank and its customers. ■ ■ Avoid actual or potential conflicts of interests in transactions on behalf of the Bank. Provide accurate and reliable information in records submitted. Code of Conduct Confidential Information Employees shall maintain strict secrecy regarding the Bank's affairs and shall not (except so far as is necessary and appropriate in the normal course of their employment) disclose to any person, any information as to the practice, dealing or affairs of the Bank or any of their customers, which may come to their knowledge by reason of their employment. During the course of employment and after its termination for whatever reason, the employee must not disclose to anyone (nor use for any purpose other than the business of the Bank) any information relating to the Bank or its employees which is not already available to the public, unless authorized to do so. Such information includes customer data, product manuals, technical secrets, confidential research work, technical processes, operating manuals, marketing plans and strategies and other confidential financial or business information of the Bank. Recording of Information No unrecorded fund or assets of Bank shall be established or maintained for any reason. No false, artificial or misleading entries in the books and records of Bank shall be made for any reason. All reporting of information should be accurate, honest and timely and should be a fair representation of the facts. Conflict of Interest It is obligatory that: ■ ■ An employee may not hold a position of director, consultant, employee, representative or agent with any supplier, competitor, customer, individual or organization either doing or seeking to do business with the Bank without prior written consent of the Bank's President & CEO. If any immediate family member holds a position, with any organization doing or seeking to do business with the Bank, a written disclosure must be made promptly to line manager / HRD. An employee may not hold any interest in any organization doing business with the Bank without the written consent of Regional Manager or Department Head, unless it is a company / establishment quoted on a Stock Exchange and the interest is less than 1 percent. Mis-declaration/Concealment of Facts An employee shall not make any mis-declaration or conceal the facts in knowledge. The following are illustrative examples, but are not all-inclusive: ■ An employee issuing an incorrect account statement, ANNUAL REPORT 2019 173
175. ■ ■ salary certificate or any other information for any customer or staff member. An employee issuing a fake claim for reimbursement of any expenses whereby either the expenses are inflated and/or the difference between expenses claimed and actually incurred are pocketed by the staff member. An employee at the time of induction in Meezan Bank (i.e. during interview and in testimonials) provided a false, forged, misleading information or concealed, hide, incompletely stated, any information regarding credentials, academic record(s), previous employment(s) and demographic details. Know Your Customer, Vendors and Counter Parties In order to safeguard the Bank's reputation and integrity, it is not only necessary for employees to discipline their own actions, it is also necessary to be aware of the character and actions of customers, vendors and counter parties. Care must be exercised in selecting those with whom we deal. Each Meezan Bank business must have processes in place for checking on the credit and character of customers, vendors and counter parties. Employees must ensure that the Bank establishes relationship with only those individuals, businesses, and entities who have a sound reputation and whose true identity has been established. Employees should conduct maximum caution in opening new accounts and before opening, ensure that due diligence steps are completed. Gifts & Entertainment Money Laundering The Bank has set its priority not to become implicated, in any way, with individuals or firms involved in criminal activities and money laundering. The employees are expected to exercise maximum caution in this regard. The employee should know the customer, be vigilant for unusual circumstances and immediately report any suspected case to the Manager / Area Manager / Regional Manager / Compliance Department/Audit Department, who will arrange for appropriate follow-up action to be taken. Failure to report any such activity will be subject to disciplinary action. Courtesy & Manners Employees of Meezan Bank shall maintain utmost courtesy and exemplary manners when interacting with clients or with each other. Employees are dealing on behalf of the Bank, so they are required to keep high standards of professionalism and ethics. Any violations of this code shall be brought to the attention of supervising officials as well as the Human Resources Department for their information, record and remedial disciplinary action. At certain times of the year, some customers, suppliers, contractors and consultants to the Bank may present gifts or arrange entertainment for employees. While the sentiments behind such actions are usually genuine, there is a possibility that others may misconstrue them. In a minority of cases such actions may not be in the best interest of good working relationships. Gifts may be presented locally or internationally in the form of Cash or in kind of Services, either free or discounted. Honesty & Integrity Bribery & Misconduct No employee shall take part in, subscribe in aid of, or assist in anyway in any political movement in Pakistan during the office timing at the office premises. No employee shall use official influence in connection with or take part in any election to a legislative body, whether in Pakistan or elsewhere. An employee will be guilty of an offence, who, without lawful authority or reasonable excuse: ■ ■ ■ ■ ■ ■ Solicits or accepts any advantage as an inducement or reward for doing or intending to commit any action in relation to the Bank's affairs or business. Showing or intending to show favors or disfavors to any person in relation to the Bank's affairs or business. Offers any advantage to any one as an inducement or reward for any favor/disfavor or otherwise. Intends to deceive the Bank by using any receipt, account or other document which is false or erroneous or defective in any way and which to employee's knowledge is intended to mislead the Bank. Take any cash or near-to-cash benefit from any stake holder of the bank to provide undue advantage. Pay any cash or near-to-cash benefit to any stake holder of the Bank to take undue advantage. Fraud, Theft or Illegal Activities Employees shall be alert and vigilant with respect to 174 frauds, thefts or illegal activities committed within the office. If any such activity comes to the attention of an employee, the employee must immediately report the same to the Head of Audit, Head of Operations and Head of Human Resources; who will arrange for appropriate follow-up action to be taken. Failure to report any such activity will be subject to disciplinary action. MEEZAN BANK LIMITED Employees shall serve the Bank, devote whole time during office hours and discharge their duties honestly, faithfully and use their utmost endeavors to promote the interest of the Bank. They shall behave with decorum, integrity, show courtesy and attention in all dealings with customers, government officials, senior officers, colleagues, subordinates and general public. Participation in Political Organizations Ideology of Pakistan No employee shall express views detrimental to the ideology or integrity of Pakistan. Direct Representations to the High Govt. & Meezan Bank Officials No employee shall make any personal representations directly to Chairman, Directors or Members of the Board, or Government functionaries. Such representations must be addressed to the President & CEO through the immediate supervisor of the employee. However this policy does not, in any way, seek to block a citizen's redress to the judiciary and other statutory redresses.
176. Core Values ■ ■ ■ Shariah Compliance Integrity Service Excellence Meezan Bank's Personality The Bank expects its employees to be: ■ ■ ■ ■ ■ ■ ■ ■ ■ Sober Truthful Committed to excellence Empathetic Professional Extremely loyal Dependable friend Trustworthy business partner Committed to the cause of Islamic banking Health & Hygiene Personal Hygiene is the most important aspect of our daily life. The personality is perceived by its degree of neatness. The personal hygiene covers care of body odor, bad breath, teeth, nails, ears, nose, hair, daily shower, shave (if not keeping proper beard), daily wear washed, clean, pressed clothes etc. access rights, information and software, which are intended to promote effective communication within and outside the Bank, on matters relating to its business and facilitate routine information flow and smooth and safe transactions. The e-mail system should therefore only be used for official/business purpose. All communication and information are the property of Meezan Bank and the Bank reserves the right to retrieve the contents of the messages for the purpose of monitoring. The employee shall be held accountable for all activities under his/her password. Dress Code & Professional Attire Attire is a reflection of professionalism as well as that of the Bank's brand and personality. A professional business appearance together with a high standard of personal hygiene is expected from all employees. The Official Dress Code of Meezan Bank is professional corporate attire inline with traditional Islamic modesty. At Meezan Bank every staff member is expected to have a professional business appearance together with a high standard of personal hygiene. Computer, E-mail, Information Security Meezan Bank computer system contains an e-mail facility, Guidelines on Whistle-Blowing The purpose of these whistle blowing guidelines is to provide a mechanism to Bank’s stakeholders (employees, customers, vendors, etc.) to report any activity which in their opinion may cause financial and/or reputational loss to the Bank. The major objectives of whistle blowing policy can be classified as: ■ ■ ■ ■ To provide an environment whereby stakeholders feel confident to blow the whistle without any fear of reprisal, subsequent discrimination and of being disadvantaged in any way; To develop a culture of accountability and integrity; To create awareness amongst stakeholders regarding the whistle blowing function; and To be a source of early warning signal. Scope The scope of these guidelines includes, without limitation, disclosure of all types of unlawful acts / orders, fraud, corruption, misconduct, collusive practices or any other activity which undermines Bank’s operations, financial position, reputation and mission. Who must blow the whistle and how? It is the responsibility of each and every stakeholder of the Bank, instead of limiting it to a particular department or senior management only, that if any stakeholder observes any suspicious, fraudulent or unethical activity, transaction or act that may cause a potential threat to the Bank or could be against the interest of the Bank, he / she must immediately report this to Whistle Blowing Unit through various modes including but not limited to Meezan Bank’s website, E-mail, fax, mobile and landline. Confidentiality & protection of whistle blowers The whistle blowing mechanism has been designed to ensure complete confidentiality of the entire process and also enables the Bank to take immediate corrective measures. Identification of the whistleblower is kept completely confidential except as required by law or who have legitimate right to know. The Bank stands committed to protect whistleblowers for whistle blowing and any subsequent harassment or victimization of the whistleblower is not tolerated. ANNUAL REPORT 2019 175
177. Guidelines for Safety of Records of the Company Comprehensive guidelines are in place at Meezan Bank for ensuring that physical documents are being archived in an organized , efficient and reliable manner. These guidelines encompass detailed processes for preservation, organization, transfer, retrieval and destruction of physical records. The guidelines comprise of the following elements: General Guidelines This section deals with the role of the Administration Department in providing an Archive facility outside the branch and provides guidelines on when old records will be transferred to the archive, signatories that may authorize retrieval of records, treatment of records under litigation / dispute, type of records that may be kept under fire-proof cabinet, and the convention to be followed for allocating serial numbers to archived records. Preservation of Old Records This section deals with maintenance of old records in a secured environment and the procedure for documenting their complete details to facilitate retrieval and destruction after expiry of retention timelines. This section also defines the responsibilities of the Archiving Officer. Procedures to Handle Records at Archives These are detailed procedures with clearly allocated responsibilities of Branch / Head Office departments and archiving officers for transferring/retrieval of records to and from Archives. Destruction of Records This section provides guidelines about the type of records that need to be retained permanently or till the time approval from Regulators is obtained for their destruction. e.g. cases in litigation, records relating to suspicious transactions, etc. Relevant Branch Manager / Area Manager / Departmental Head is responsible for checking and verifying the list of records that need to be destroyed. For branch records, Head Office operations will finally approve branch's request for destruction of record, which will be carried out in the presence of Branch Manager & Operations Manager. Retention of Old Records These guidelines outline the various types of records and the recommended period for their retention and subsequent destruction in view of the Banking Companies Ordinance, SBP Prudential Regulations and other regulatory requirements. Standardized Formats Formats for forms and registers have been provided to facilitate standardization and controls across Meezan Bank's network. Summary of Corporate Social Responsibility Policy Scope of Corporate Social Responsibility Policy The CSR Policy pertains to all corporate social responsibility activities undertaken by Meezan Bank and applies to all employees of the Bank. Activities undertaken by the Bank may include projects being implemented independently by Meezan Bank or projects undertaken in coordination with other entities. Objective of Meezan Bank’s CSR initiatives To contribute as a responsible corporate citizen to the community and environment in which the Bank is operating. Areas of Focus Meezan Bank may contribute in the form of financial assistance, providing logistic support and availability of human resources for charitable causes in various sectors including, but not limited to the ones mentioned below, as per the Management’s discretion: • • • • Health Social & Environment Sustainability Education Creating awareness about the prohibition of Riba and the available alternatives The Bank may also encourage its employees to volunteer and contribute to its own or other organizations’ CSR initiatives. Summary of Sustainability Policy Purpose The purpose of the Sustainability Policy is to provide a framework for incorporating sustainability into the Bank’s business operations and to minimize the environmental, social, ethical and financial and Shariah risks to the Bank’s stakeholders and to the organization itself. Scope of Sustainability Policy The Sustainability Policy shall support business decision 176 MEEZAN BANK LIMITED making at all levels of the Bank and will provide a frame of reference for dealing with direct and indirect sustainability risks. It is applicable to all of the Bank’s products and services, organizational units and departments and may include projects and activities being implemented independently by Meezan Bank or projects undertaken in coordination with other entities.
178. Summary of Green Banking Policy Scope and Objective The Green Banking Policy of Meezan Bank Limited has been prepared in light of the 'Green Banking Guidelines' issued vide IH & SMEFD Circular # 08 dated October 09, 2017 of State Bank of Pakistan. The objective of this policy is to institutionalize Green Banking across Meezan Bank by focusing on the following major aspects: • • • • • • Governance Structure and Responsibilities Organizational Structure Environmental Risk Management Framework Green Business Facilitation Own Impact Reduction/ In-house Environment Management General Guidelines Summary of Information Security Policy Information Security relates to protection of valuable assets against loss, misuse, disclosure or damage. Each asset has to be reviewed from the perspective of its Confidentiality, Integrity and its Availability to the authorized personnel. A number of factors play a critical role in the successful implementation of information security. Information Security Policy The Information Security Policy defines the policies and supporting standards that guide the consistent application of information security and ensure that the interests / information are adequately protected against loss, improper disclosure and unauthorized modification. Meezan Bank's Information Security Policy is based on ISO 27001. The policy comprises of the following domains: Organization of Information Security In order to manage information security within the Bank, a framework has been established by the Bank's management to initiate and control the implementation of information security within the organization. Risk Assessment & Treatment Physical and Environmental Security To prevent unauthorized physical access, damage to, and interference with the Bank's premises (head office and branches) and information. Operations Security To ensure correct and secure operation of information processing facilities. Communications Security To maintain the integrity and availability of information and information processing facilities. Information Systems Acquisition, Development and Maintenance To ensure that security measures are always built into and are an integral part of all information systems. Supplier Management To ensure the protection of the organization’s information assets that is accessible by IT suppliers for providing IT service delivery. To review IT System and Operation for identifying and mitigating the risk that could affect Meezan Bank’s infrastructure through internal and external attacks. The basis of these assessments is the Confidentiality, Integrity and Availability (CIA) of the information assets and services. Information Security Incident Management Human Resources Security Information Security Aspects of Business Continuity Management This segment of the policy ensures that the Bank's employees, contractors and third party users understand their responsibilities and are suitable for the roles they are considered for, thereby reducing the risk of theft, fraud or misuse of facilities. Asset Management To achieve and maintain appropriate protection of the Bank's Information Assets. Access Control To control the access to information, information processing facilities and business processes based on business and security requirements. Cryptography To protect the confidentiality, authenticity and integrity of information by Cryptography (The conversion of data into a secret code for transmission over a public network.) To ensure that information security events and weaknesses associated with the Bank's information systems are communicated in a manner that allows timely corrective action to be taken. To counteract interruptions to business activities and to protect critical business processes from the effects of major failures of information systems or disasters and to ensure their timely resumption. Compliance To ensure that any law, statutory, regulatory or contractual obligations and security requirements are not breached. Information Security Trainings and Awareness Appropriate awareness programs and regular updates in organizational IT security policy and procedures, as relevant for their job function are conducted. Each of the above domains comprise of multiple processes and controls to ensure promotion of an information security. ANNUAL REPORT 2019 177
179. IT Governance Policy Scope This policy creates the governance for the Information Technology Division for the Bank under the supervision of IT Steering Committee , Board IT Committee and Board of Directors. This policy describes and create a framework that will pave the roadmap on which IT Division will provide services to Bank’s business functions and to ensure that the Bank’s business operations are driven based on Technology Solutions. Objective To put in place the policy framework for IT Governance at the Bank in order to provide services to the Bank’s Business functions. This policy framework is also aligned with the IT Security Policy of the Bank which is based on the standard ISO 27001. Executive Summary Establish Partnership with business to enrich Business and IT alignment and by delivering cost effective technology solutions and services. This model describes all functions of the IT Division in the form of services which results in business benefits. It consists of five core services area (IT Service Strategy, IT Service Design, IT Service Transition, IT service Operations and Continual IT Service Improvement) that covers best practices and guidelines within IT management. Key Areas – IT Management Policy Key areas in Meezan Bank IT Management Policy are as follows: 1. IT Capacity and Performance Management provides guidelines for maintaining scalable IT capacity and making the best and optimal use to meet the performance requirements expected by the business. 2. IT Project Management defines standard and best practice guidelines for project management to assure that they are accomplished in timely, cost effective manner. It is governed by PMO Charter. 3. Change Management emphasizes on managing all changes within the IT environment including emergency changes, fixes and patch management to minimize the disruption in services. 4. IT Helpdesk and Problem Management ensures incidents and problems related to systems are reported, tracked investigated and resolved in effective and efficient manner. 5. Service Level Agreement Management ensures the SLA’s are established, agreed between vendors and IT in line with Business needs to gauge the service delivery performance. 178 MEEZAN BANK LIMITED 6. IT System Acquisition Management caters the way the IT Systems should be procured in line with Bank’s expenditure policy. 7. Configuration Management covers the rules for configuration of information technology devices and infrastructure for tracking and controlling all changes to information systems of the Bank. 8. IT Compliance Management defines the way ITD works under compliance guidelines. 9. IT Continuity Management covers the aspect of Business Continuity Plan and Disaster Recovery Plan in case of any service disruption. 10. IT Backup and Restoration Management defines the rules for backup and storage of electronic information within the entity that are responsible for electronic data stored in archive. 11. IT Outsourcing Management defines the framework for outsourcing of IT services. 12. Software Solution Development and Maintenance Management facilitates the effective development and maintenance of Software solutions to compliment business functions. 13. IT Infrastructure Management determines the process for requirements analysis, planning, design, deployment and on-going operation management. It also ensures technology is accessible and equipped with current hardware and software for application management. 14. Network Management defines the principles covering internal and external network environment operated by the Bank including Logical Access Management, Infrastructure security, Operational Management and Bandwidth Management. 15. Database Management aims at ensuring the availability, integrity, security, consistency and accuracy of the Bank’s database. 16. Virus and Malware Management ensures that systems, database and software are protected against the risk to malicious software and unauthorized code. 17. Internet and Intranet Usage Management defines the rules for Internet usage. 18. Desktop Support Management defines the principle covering the IT related Support activities and covers the Installation and configuration of desktops in branches and providing first level support.
180. Salient Features - Directors ’ Remuneration Policy 1. Remuneration shall be fixed in Pakistani Rupees (PKR) invariably; nevertheless, payment of the same can be made to foreign Directors in equivalent foreign currency(ies), where necessary, after obtaining the regulatory approvals as may be required from time to time. 2. No single member of the Board of Directors shall determine his/her own remuneration. 3. Proper and transparent disclosure of remuneration and other benefits/facilities provided to the Board members shall be made in the annual financial statements of the Bank, as per SBP instructions issued from time to time. 4. The Fees for attending the Board and its Committee meetings shall be as follows: Board Meeting Fee Rs. per meeting Committee Meeting Fee Rs. per meeting Chairman 960,000 650,000 Other Non-executive Directors 800,000 650,000 5. The Board and Committee meeting fees will be approved by the shareholders in Annual General Meeting on pre or post facto basis on the recommendation of the Board and Board HR&R Committee. The meeting fee, in any case, shall not exceed the limits prescribed by the Regulators. 6. All traveling/boarding/lodging expenses of the Directors related to Attendance of Board Meeting(s)/ Committee Meetings will be borne by the Bank at actuals. Expenses such as hotel stay etc. incurred due to personal reason or reason other than performance of Bank’ duties and business will be borne by the concerned Director. 7. No additional payments or perquisites will be paid to the Non-Executive Directors and Chairman except as mentioned in above clauses. 8. 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/she individually and/or in concert with other Directors of the Bank, holds substantial interest. 9. No remuneration under this policy would be paid to the Executive Directors except travel and boarding costs as per the Bank’s standard rules and regulations and relevant laws. ANNUAL REPORT 2019 179
182. STAKEHOLDERS RELATIONSHIP AND ENGAGEMENT 182 How We Engage with Our Stakeholders 186 Investors ’ Relations Section on Corporate Website 186 Steps to Encourage Minority Shareholders’ Participation in AGM 186 Summary of Analyst Briefings
183. How we engage with our Stakeholders Meezan Bank is committed to sustain and maintain stakeholder relationship and keep them at the core of its business strategy . These relationships are long-term, which are handled professionally and with sincerity. It is our Mission to optimize stakeholders’ value through an organizational culture of fairness and respect. The following table provides an overview of stakeholder engagements at Meezan Bank: For detailed disclosure, please refer to the Sustainability Report 2019 annexed in this report. Stakeholder Owners Minority Shareholders Individual and Institutional Investors Why do they matter? How did we engage them? Frequency of Engagement To maintain longterm shareholder value and generate long-term sustainable returns for the shareholders. Financial statements Quarterly, semi-annually and annually Annual reports Annually Annual General Meeting Annually Extraordinary General Meeting On need basis Press releases Continuous Analyst briefing followed by Q&A session On need basis Feedback from institutional investors and ESG analysts On need basis Dedicated investor relations mailbox / email Continuous Focused investor presentations On need basis Media releases Continuous Why do they matter? How did we engage them? Frequency of Engagement Our Key Initiatives The Bank's employees are considered as its most valuable asset. The Bank engages with its employees for the following: ■   To ensure that the employees stay motivated and committed to the cause of Islamic banking. ■ To ensure that the Bank remains an employer of choice by providing the employees an inclusive environment that recognizes and rewards their contributions. Frequent CEO communication to all colleagues on regular and topical subjects On need basis ■ Training and workshops Regularly Analysts Our Key Initiatives ■ ■ ■ ■ ■ Stakeholder Employees 182 MEEZAN BANK LIMITED ■ ■ ■ Employee Satisfaction Survey Bi-annual ■ HR policies and procedures Continuous ■ Compensation & benefits Continuous ■ Medical benefits Continuous End of Service benefits Continuous Performance bonus Annual Offsite strategy session Annual and on need basis Two analyst briefings held Consistent payment of dividends Participated in the Tundra Fonder ESG Questionnaire 2019 Participated in the Terra Nova ESG due diligence Questionnaire Participated in the Overseas Investors Chamber of Commerce and industry (OICCI) CSR report Participated in the OICCI Gender Survey 2019 Participated in Global Islamic Bankers' Survey 2020 Titled Beyond Digitalization: Fintech and Customer Experience Incorporated employee feedback in enhancing training programmes and people management skills Fire & safety drills Awareness campaign on water conservation & energy wastage Invested Rs 78 million in training our employees Incorporated employee feedback in enhancing compensation & benefits policies
184. Stakeholder Why do they matter ? Employees ■ ■ Stakeholder Customers/ Depositors To ensure fair and equitable opportunities for all staff To encourage feedback, promote teamwork, maintain workplace health and safety and to empower our staff to be informed and effectively engaged How did we engage them? Frequency of Engagement Our Key Initiatives One-on-one sessions with managers On need basis ■ Periodic performance reviews Annual and on need basis Regular town hall meetings Annual Internal newsletter and intranet Quarterly and Continuous ■ ■ Inter-departmental games and recreational activities Regularly Employee induction training Regularly Why do they matter? How did we engage them? Frequency of Engagement Customers are at the core of our business strategy. The Bank engages with customers for the following: ■  To provide them awareness on Islamic Banking concepts and misconceptions. ■  To maintain the highest levels of professionalism and service quality ■  To focus on the personal and business financial needs of our customers when designing our products and services ■  To provide information & advice ■  Ensure timely access to our products & services and ensure fair treatment Face-to-Face meetings Regularly and on need basis Interactions at branches Continuous Call Centre service Continuous Website and social media channels and campaigns Continuous Free Islamic banking education initiatives including workshops and seminars Regularly News generated and covered in the media Regularly Marketing and advertising campaigns Regularly Mystery shopping programmes On need basis Various branch-based events to engage customers Regularly Added 360-degree feedback to the strategy and performance assesment sessions Launched a series of Employee Testimonial Messages on Official Facebook Page for the 'International Week of Happiness at Work' Launched an Employee Branding Video on social media titled: 'Best Bank ki Best Life' to highlight the Bank's work environment as well as to share why our employees feel happy working at this organization. Our Key Initiatives ■ ■ ■ ■ ■ ■ ■ ■ ■ 9,437,220 customer awareness SMS sent through 9 campaigns Upgraded systems to provide more secure financial services as well as protection of data and privacy Partnered with Fintechs to deepen engagement of our customers Launch of New Mobile Banking App for greater convenience Helped educate more than 1,075 farmers through Kissan Baithak initiative 143 Islamic banking awareness seminars conducted nationwide, attended by more than 13,500 participants Held an exclusive Islamic banking seminar for our females customers only Branch opening events Independence Day celebration events at Head Office & branches ANNUAL REPORT 2019 183
185. Stakeholder Government & Regulators Stakeholder Suppliers / Service Providers Why do they matter? How did we engage them? Frequency of Engagement Our Key Initiatives The Bank engages with Government and Regulators for the following: ■  To maintain transparent relationship and ensure meticulous compliance with legal and regulatory requirements ■ To facilitate development of legislations and policies pertaining to Islamic banking ■ To build strong and constructive relationship with Government, both as a partner in the development of the country and as a potential client ■ To contribute in the legislative development in order to support the Islamic banking industry ■ To counter the financing of terrorism ■ To maintain financial stability Regular engagement with regulators for compliance matters through written and telephonic communication Daily, weekly, quarterly ■ One-on-one meetings with authorities to address matters impacting business On need basis Submission of regulatory and statutory information. Responding on various queries and information On need basis Consultations with regulatory bodies On need basis ■ ■ ■ Annual reports Annual Audit reports Annual Why do they matter? How did we engage them? Frequency of Engagement The Bank engages with suppliers for the following: ■  Adhere to proper procurement regulations while maintaining a good business relationship with service providers ■ Ensure integrity in all purchasing decisions Rigorously following internal procurement policies and upgrading the policy regularly to ensure strong control and fair treatment of suppliers Requests for quotations and proposals Vendor briefings Purchase agreements Annual reviews 184 ■ MEEZAN BANK LIMITED Our Key Initiatives ■ Routine basis/ on need basis Contributed to development of local economies through efforts such as achieving financial close for 4 wind power projects Active support to the State Bank of Pakistan for adoption of various AAOIFI Shariah Standards in Pakistan Lead Arranger of issuance of Rs 200 billion Pakistan Energy Sukuk to help in reducing circular debt Enhanced focus on the Bank's AML/CFT compliance systems and capabilities Enhanced training on AML/CFT compliance and risk management across the Bank The Bank is working on creating a Central Procurement System to improve efficiency and to ensure fair vendor selection and ethical conduct in its purchase decisions
186. Stakeholder Communities Why do they matter ? How did we engage them? Frequency of Engagement Our Key Initiatives The Bank engages with Communities for the following: ■  To fulfil its social responsibilities as a responsible corporate entity ■ To create an inclusive workplace through local talent induction ■ To understand the needs of the communities the Bank serves Active participation in various social work initiatives as part of its corporate social responsibility Regularly ■ Hiring individuals with hearing and visual impairments Regularly Sponsoring various outreach programmes, education programmes, prize distribution ceremonies etc. On need basis Financial literacy initiatives Regularly Sponsoring various fundraising events On need basis Donations in cash or in kind to support various causes related to education and health Regularly Zakat collection and contribution Continuous Building the Islamic Financial Industry Continuous Why do they matter? How did we engage them? Frequency of Engagement Our Key Initiatives The Bank engages with Media for the following: ■  Provide timely and transparent information/updates on subjects relevant to the Bank, its industry and stakeholders ■ To encourage prompt and accurate reporting of the Bank's intiatives, developments and progress Advertisements through print, electronic, social media, website Regularly ■ Media interviews Regularly Ongoing engagement sessions with media in person Regularly Social media platforms Continuous ■ ■ ■ ■ ■ Stakeholder Media ■ ■ ■ ■ ■ Increased the number of employees with special abilities Provided financing to projects for clean energy and worked on Government's low cost financing programme Made monetary contributions to two schools providing education for the underprivileged Engaged employees in providing Islamic finance education in various graduate and post graduate programmes at the top business schools of the country Co-authored case studies and research papers for Centres for Excellence in Islamic Finance Provided Islamic Finance Literacy through International Institute of Islamic Bankers (IIIB) which is a dedicated initiative of Meezan Bank to develop the Islamic Finanical industry in Pakistan. Interacted regularly and frequently with the local, regional and international media Issued more than 25 press releases to keep the media abreast of developments in the Bank Issued multiple interviews of Senior Management in local and international publications Support to Journal of Islamic Banking and Finance through contribution of academic and scholarly articles/ research papers. Responded relevantly to media queries Generated social media content to increase financial literacy and awareness ANNUAL REPORT 2019 185
187. Investors ' Relations Section on Corporate Website Meezan Bank places great emphasis on ensuring two-way, regular engagement with its investors through various channels. The Bank’s corporate website is one such channel that is regularly updated with all important business announcements, financial results as well as regulatory information. The Investor Relations section of the Bank’s website serves to connect its stakeholders with the Bank as per the applicable regulatory framework. The Bank’s website also includes all latest information regarding the Bank, including its financial highlights, dividend information, investor information and a link to Securities and Exchange Commission of Pakistan’s (SECP) investor education portal – Jamapunji. For the shareholders, analysts and for investors; the Bank also updates contact details for investor relations and Company Secretariat. The relevant section is available on the Bank’s website: https://www.meezanbank.com/investor-relations/ Steps to encourage minority shareholders' participation in Annual General Meeting (AGM) The Bank ensures that the interest of the minority Shareholders is protected. In order to ensure their participation in general meetings, the Bank takes the following measures: ■ ■ ■ ■ ■ ■ ■ All notices of the Shareholders’ meetings are timely announced on Pakistan Stock Exchange (PSX), published in nationwide newspapers All notices of the Shareholders’ meetings are dispatched at the registered addresses of the Shareholders as per regulatory requirement Annual Reports are sent to each member of the Bank before the AGM in hard copy and/or in electronic form Shareholders are facilitated in appointing proxies in case they are unable to attend the AGM in person Shareholders are provided with a detailed overview of the Bank’s performance, future outlook in both English and Urdu languages Shareholders are encouraged to comment, raise queries and provide feedback related to the Bank’s operations The Bank also ensures compliance to all the regulatory requirements and takes all possible steps to encourage attendance of minority shareholders in their meetings. Matters Raised in the Last Annual General Meeting (AGM) No significant issue was raised in the last AGM. Summary of Analyst Briefings Analyst briefings provide the Bank and the investor community with an opportunity to share business updates that are relevant to the analysts’ coverage areas. As per the requirements of the SECP, the Bank held two analysts briefings during the year, which were attended by leading global and local investors, brokerage houses, fund managers as well as other stakeholders. The interactive session served to apprise the investor community of a detailed overview of the Bank’s performance, its business environment as well as future prospects and strategy. The audience was also informed about the Bank’s focus on digital transformation and process innovation. The engagement session served to give the right perspective of the Bank’s business affairs. To accommodate regional analysts and fund managers, conference call facilities are provided to ensure full access to all necessary stakeholders. The information and presentations are subsequently uploaded onto the Investor Relations segments on the Bank’s website. Dates February 26, 2019 August 29, 2019 186 MEEZAN BANK LIMITED
190. SUSTAINABILITY & CORPORATE SOCIAL RESPONSIBILITY 190 Corporate Social Responsibility Report 194 Sustainability Report 203 Meezan Bank’s Contribution to United Nations Sustainable Development Goals
191. Corporate Social Responsibility Report As Meezan Bank continues to grow as a nationwide leader in Islamic banking , it stands aware of its responsibility for developing and implementing sustainable business practices that fully meet the expectations that the society has from responsible corporate citizens. Meezan Bank's consciousness of its responsibility towards society and stakeholders is also expressed in its Vision and Mission statements. Some of our most recent projects are mentioned below: Education The Citizens Foundation (TCF) The Citizens Foundation (TCF) is one of Pakistan’s leading non-profit organizations in the field of education for the less privileged set up in 1995 by a group of citizens concerned with the dismal state of education in the country. In an effort to help educate the less privileged children of our society, Meezan Bank supported the 16th Annual TCF Golf Tournament 2019 – a fundraiser event held on December 15, 2019 at Karachi Golf Club, Karsaz. The event supported TCF in educating 252,000 children at 1,567 schools across Pakistan. Idara Al-Khair Welfare Society Idara Al-Khair Welfare Society is a non-profit private organization which has been working for the cause of education for over 30 years. Meezan Bank has signed an agreement with Idara Al-Khair to support the school - Campus VI Yaroo Goth, Karachi, that is currently providing free education to 400 children. The Bank has provided financial assistance to the Campus, playing a key role in spreading education in hard-to-reach and under-privileged areas that are currently not fully covered by the country’s education system. LIFE School Meezan Bank believes in having an inclusive culture in all walks of life. In line with this belief, the Bank provided support to Learning Is For Everyone (LIFE) School – a school in Karachi for special children – in terms of education material, furniture and other expenses. Centres for Excellence in Islamic Finance at Institute of Business Administration (IBA), Lahore University of Management Sciences (LUMS) and IM Sciences (Peshawar) Meezan Bank supports many educational institutions to help foster the learning and development of Islamic banking and finance across the country including Institute of Business Administration (IBA), Lahore University of Management Sciences (LUMS) and IM Sciences (Peshawar), which are among Pakistan’s leading private sector educational institutions. 190 MEEZAN BANK LIMITED
192. With an altruistic motivation to support the cause of Shariah-compliant banking services and increase the awareness of Islamic finance , Meezan Bank supports their Centres for Excellence in Islamic Finance to facilitate development and launch of training programs on Islamic banking and finance and co-author case studies and research papers. The strategic partnership with IBA in particular has proven to be a great success and during 2019, 33 events including awareness seminars and executive learning programs were held at IBA Centre for Excellence in Islamic Finance, which were attended by over 500 participants. Meezan Bank’s employees also participated as guest speakers in several executive programs at these educational institutions. This contribution plays an instrumental role in the promotion of ethical practices across the country, as the Bank aims to equip students and executives with adequate Islamic knowledge as well as professional skills. Charity Funds Management through Ihsan Trust Meezan Bank has a social purpose culture that focuses on applying its principles and values in areas where they create a positive impact on people and communities. The Bank has adopted stringent Shariah Compliance and Shariah Audit standards that allow it to screen all income and in case of any non-compliance, to transfer the same to a charity account. During 2019, the Bank supported a number of NGOs and philanthropic organizations including Omair Sana Welfare Foundation, The Indus Hospital, Alamgir Welfare Trust, Afzaal Memorial Thalassemia Foundation, Bait-Us-Salam Welfare Trust, Patients Behbud Society, AKUH, Diya Pakistan and many others. As an extension of the same initiative, Ihsan Trust was launched as the operator of Ihsan Trust Fund which is a ‘Waqf’ made through a separate Waqf deed. Meezan Bank is the biggest supporter of Ihsan Trust, supporting the organization through its human resource and other utility-related expenses. Ihsan Trust is the largest interest-free loan provider for higher education in Pakistan that reaches out to the under-privileged sector of the society to help such individuals escape the cycle of poverty that they are stuck in. The Trust provides Qarz-e-Hasna (Interestfree loan) facility to students who want to pursue higher education. More than 2,600 students from 140 universities, educational institutions and professional bodies across Pakistan have benefited from this facility since its inception, including Institute of Business Administration (IBA), Ghulam Ishaq Khan Institute of Engineering Sciences and Technology (GIKI), COMSATS University Islamabad, FAST National University, National University of Sciences and Technology (NUST), DOW University of Health Sciences (DUHS) etc. Healthcare The Indus Hospital Since its inception in 2005, The Indus Hospital (TIH) has been running an unparalleled and unique healthcare business model, whereby it provides premium healthcare at no cost at all to low income populations. The Bank, in addition to hosting collection boxes at all branches has taken the following initiatives as part of its CSR activities: Blood Donation Drive Since 2014, the Bank is supporting TIH through successful voluntary Blood Donation Drives at its Head Office located in Karachi. Staff members from Head Office and branches participated in this activity with great enthusiasm. In addition to proper screening for blood donation, the staff members were also screened for various diseases including Hepatitis and other infectious diseases for free. TIH Golf Fundraiser Meezan Bank, supported The Indus Hospital in its 3rd Indus Annual Golf Tournament 2019. The event engaged more than 100 golfers and top CEOs of several organizations. This fundraiser not only helped create awareness about the network and philanthropic activities of TIH, Karachi, but also helped collect voluntary financial support to expand and continue providing free quality health care to all. ANNUAL REPORT 2019 191
193. Layton Rahmatulla Benevolent Trust (LRBT) Layton Rahmatulla Benevolent Trust (LRBT) is Pakistan's largest non-governmental organization working to fight blindness in the country. Meezan Bank participated in the 3rd LRBT Golf Tournament fundraiser event. This event was held to raise funds for the free treatment of eye diseases such as Cataract, Glaucoma, retinal and corneal diseases among children and adults in Pakistan. Aga Khan University Hospital (AKUH) Over 60,000 infants in Pakistan are born with congenital heart disease (CHD) each year and most are unable to survive beyond their first few years. In an effort to raise funds and awareness for CHD, Meezan Bank participated in AKUH’s annual AKU Golf Tournament to support the Mending Kids’ Hearts Campaign. Lady Dufferin Hospital The Dufferin Hospital has been providing exceptionally high quality services to a large population of low-income women and children at subsidized rates or even free of cost. In an effort to create awareness of maternal mortality and raise funds to save lives of mothers during childbirth, Meezan Bank supported the Lady Dufferin Hospital Golf Tournament – a fundraiser event held at Karachi Golf Club. Honourable Dr. Arif Alvi – President of Pakistan also attended this event. Other Initiatives Alamgir Welfare Trust Meezan Bank welcomed the Trustees of Alamgir Welfare Trust at Meezan House to raise awareness about the Trust’s charitable work. Alamgir Welfare Trust has been giving back to the society for the past many years through its various initiatives in health, education, provision of food, marriage assistance, emergency relief and rescue services amongst many others. Cleanliness Drive in Karachi’s SITE Area With a strong belief that everyone should play their role in keeping our country clean, Meezan Bank conducted a Cleanliness Drive in Karachi’s SITE Area as part of its Corporate Social Responsibility programme. 192 MEEZAN BANK LIMITED
194. Iftar & Dinner for the General Public during Ramadan-ul-Mubarak In line with the true spirit of giving during the Holy Month of Ramadan-ul-Mubarak, Meezan Bank arranged iftar for the general public outside its Head Office in Karachi throughout the Holy Month. The Bank's staff served iftar and dinner to people outside the Head Office. Donation for Diamer-Bhasha and Mohmand Dams Meezan Bank continues to collect donations and contributions for the Diamer-Bhasha and Mohmand Dams through its nationwide network of 760 branches as well as ATMs, internet banking and mobile banking channels, in accordance with the directives of the State Bank of Pakistan, fulfilling its commitment to Corporate Social Responsibility and this national cause. Raising Awareness of Social Causes on Social Media Meezan Bank has raised awareness of various social causes on social media on a regular basis including food wastage, water preservation, taking care of the environment, the importance of cleanliness, inclusion of disabled persons, etc. ANNUAL REPORT 2019 193
195. Sustainability Report As Pakistan ’s leading Islamic Bank, Meezan Bank believes in playing a prominent role in contributing to the United Nations Sustainable Development Goals (SDGs). With a key focus on responsible growth as well as its environmental, social and governance impact, the Bank aims to develop and implement sustainable business practices that fully meet the expectations that the society has from responsible corporate citizens. Meezan Bank's consciousness of its responsibility towards society and stakeholders is also expressed in its Vision and Mission statements. Stakeholders Stakeholder Engagement Meezan Bank's stakeholders are the people and organizations that affect or are affected by its operations. The Bank’s commitment to its stakeholders is central to its sustainability strategy and reflects the values that allow it to create shared success with its clients, communities and other stakeholders. MEEZAN BANK’S STAKEHOLDERS Meezan Bank engages its stakeholders through numerous channels, while maintaining focus on its Mission to optimize stakeholders' value through an organizational culture based on learning, fairness, respect for individual enterprise and performance. Institutional Investors Meezan Bank holds regulatory and internal meetings with its Institutional Investors which are planned and announced on a periodic basis. Shareholders Shareholders’ engagement is ensured through Annual General Meeting held every year, which all shareholders are invited to attend. This meeting provides the shareholders an opportunity to interact with the Bank’s senior management and share their suggestions, concerns and views. The Bank held an Annual General Meeting and one Extraordinary General Meeting in 2019. Shareholders, represented by the Board of Directors Customers: Retail, Corporate, Consumer and Commercial Banking customers Depositors Regulators (Government) Employees Business partners: Suppliers & Service Providers Peers: Other financial institutions (Islamic as well as conventional) Trade Associations Opinion-formers: Journalists, special interest groups, public via multiple communication channels Customers & Public Meezan Bank's customers include individual and corporate depositors, large corporations as well as small & medium enterprises. The Bank ensures that all customer segments are engaged through numerous forums and via multiple channels. To achieve this, the Bank regularly conducts a number of activities during the year for its customers as well as the general public, such as Islamic banking seminars, workshops, local get-togethers on new branch openings and occasion based activities. Islamic Banking Seminars & Workshops are a series of free Islamic banking education initiatives that are conducted across the country on a regular basis in order to enhance awareness and dispel common confusions about Islamic banking. Developed in partnership with the Bank’s leading Shariah finance experts who break-down Islamic finance topics into approachable and tailored content; the seminars help individuals understand the concepts of Islamic finance and thereby promote the cause of Islamic banking as a whole. The Islamic banking seminars and workshops are open-to-public local events that are attended by residents and traders of the locality as well as members of local trade bodies and chambers. The seminars also give the Bank an opportunity to interact, understand and get feedback from customers for further improvement of products and services. In 2019, 143 Islamic banking seminars and workshops were conducted nationwide that were attended by more than 13,800 participants. 194 MEEZAN BANK LIMITED
196. Branch Opening Events offer another opportunity where all staff members of a new branch meet the residents and businessmen of the locality . This event adds value by giving a jump-start to the business activities as well as giving the potential customers an opportunity to meet the new branch team and develop a better understanding of Islamic banking, and the products and services that Meezan Bank offers. Independence Day Celebrations are hosted across the country including the Bank’s Head Office, Branches and Regional Offices. Customers are invited with their friends and families to visit their branch and interact with branch staff. These events further emphasize the inculcation of positive image building in our children and also give Meezan Bank's staff the opportunity to connect with customers and their families, hence strengthening their relationship. Employees Critical to fostering sustainable growth and development is the Bank’s focus on investing in its employees and providing them with an environment where they can thrive. Considered as Meezan Bank’s most valuable asset; the Bank provides its employees with an inclusive environment that provides them with multiple growth opportunities, recognizes and rewards their performance and supports them in ensuring their financial, physical and emotional wellness. Meezan Bank uses various means to ensure that its employees stay motivated and committed to the cause of Islamic banking and are groomed into better professionals as well as productive members of the society. Some of the initiatives undertaken by the Bank for its staff are: Staff Get-togethers The Bank makes efforts to ensure that the quality of working relationships is improved through the following: Townhalls On-site & off-site Strategy Sessions Departmental meetings Focus Groups Staff gatherings at local & regional levels Service Conference Retail Banking Conference Customer Support Group Conference Intranet Internal email/ Communication Appreciation of Achievements Meezan Bank acknowledges the outstanding performance of its team members through the following: Shields & Certificates 01 02 03 04 Newsletter ANNUAL REPORT 2019 195
197. Employee Benevolent Fund Trust (EBFT) The Bank realizes its responsibility towards its employees and their families, encouraging a culture of respect and care. In addition to providing an extensive healthcare coverage to help meet the expenses of employees; the Bank also has a joint employee and company-funded Employee Benevolent Fund Trust (EBFT) that allows eligible employees to seek financial support for themselves and for their families during difficult times. The Bank processed a total of 267 cases during the year 2019, out of which 187 cases were approved. Nature of Approved EBFT Cases The Bank processed a total of 267 cases during the year 2019, out of which 187 cases were approved. 200 150 100 50 0 Medical Marriage Education Financial Assistance Others Recruitment Meezan Bank aims to strengthen its capabilities and secure customers primarily through recruitment of skilled professionals. The Bank believes that a sustainable and resilient organizational hierarchy forms the foundation for sustainable growth. The Bank develops sustainable policies for retaining and managing human capital at the Bank. Given the rapid expansion of the Bank, the Board of Human Resources & Remuneration Committee (BHR&RC) made recommendations to the Management for the implementation of an effective Succession Plan. The recruitment process is transparent and is detailed in the Human Resource Manual accessible to all staff via the Intranet. Meezan Bank uses, where applicable, all available media for job advertisement as part of its recruitment process, including the Bank's corporate website, social media channels - Facebook & LinkedIn, and print advertising in prominent local newspapers. The Bank's management encourages existing employees to apply for vacant positions to allow staff to grow professionally. Towards this end, internal searches are conducted to fill vacant slots within the organization as well. In 2019, the Bank recruited staff through batch hiring across the country for the positions of Branch Service Officers who are responsible for managing day-to-day operational tasks in the branches. All the batches were hired under a transparent and merit-driven process. The Bank held 17 induction sessions through participation in Job Fairs to benefit from the entourage of competent and capable young individuals. Succession Planning The Bank also ensures implementation of the Bank's Succession Planning Policy. The policy and procedure for design and implementation of succession planning is anchored by the Bank’s top management and facilitated by the HR team. Successors are identified on the basis of their potential as well as their performance and experience. Internal & External Communication Channels The Bank disseminates information about its various achievements, activities and initiatives to the external world by engaging the internal staff and external stakeholders through the following: Annual Report Regular Press Releases Customer Letters e-Statements Electronic & Print Media 196 MEEZAN BANK LIMITED Call Centre Newsletter Direct Customer Communications such as SMS, Emails etc. Social Media Channels Seminars & Conferences Surveys Complaints & feedback System at Branches
198. Our Focus on Diversity & Inclusion Board’s Policy on Diversity Women on Key Positions of the Bank As an equal opportunity employer, Meezan Bank emphasizes the need for diversity in the work place. The Board of Human Resources & Remuneration Committee (BHR&RC) has encouraged the Bank to implement gender initiatives which encourage and support female employment. Meezan Bank is an equal opportunity employer and there are females on many key positions of the Bank including Branch Banking, Product Development, Finance and Support functions such as Training and Communication. In line with the same approach, the Bank increased its total number of female employees from 716 in 2018 to 927 in 2019. Employment of Special Persons Provision of Accelerated / Advance Bonus Under the accelerated bonus concept, the Bank facilitates its employees through provision of advance bonus opportunity that allows them greater financial freedom. In addition, the Bank’s pay-for performance philosophy extends to Saturday Allowances for branches, paying eligible employees with additional wages for any additional hours they put in. Meezan Bank operates under its corporate philosophy of providing merit-based support to people with disabilities, providing them with livelihood and self-reliance opportunities. During 2019, the Bank hired people who face challenges such as lack of speech, visual impairment, inadequate or no hearing and physical deformity. These persons have been placed on jobs where they can be productive despite the challenges they face. Day Care Facility for Working Parents In order to facilitate working parents at Meezan Bank, a Day Care facility is available at its Head Office located in Karachi. Equipped with all the key requirements, this facility caters to children aged two months to two years. The child-friendly environment gives an opportunity to many ambitious women who want to contribute to the cause of Islamic banking while maintaining a balance with their responsibilities at home. Launched in 2015, this facility has been warmly welcomed by employees and till date, twenty two children have been enrolled. Our Focus on Employee Development Meezan Bank offers an extensive range of training opportunities to employees for their professional development. Training includes technical training courses and workshops as well as specialized soft skills trainings. Staff Training ■ ■ The internal learning programs are managed under an organized learning calendar through a large pool of internal trainers whereas externally offered opportunities are used for developing and enhancing specialized technical as well as soft skills. The Bank has mock branches in Karachi, Lahore and Islamabad which enable the staff to get trained in a simulated branch environment and equip them with the practical elements of their day-to-day core banking systems related to work. The mock branch in Karachi is also equipped with an ATM for hands-on ATM-related trainings. In 2019, the Bank provided 807 class-room trainings including 603 internal training sessions (with 999 training days) and 204 external training sessions (with 475 training days) covering 18,797 (7,851 unique staff) and 765 (563 unique staff) respectively. In addition, 16 learning interventions were launched via Learning Management System (LMS). Staff Trained 55% 3% 42% External (Local & International) In-house E-learning ANNUAL REPORT 2019 197
199. ISQ-Junior Associate Program of Institute of Bankers Pakistan Meezan Bank is also keen to inculcate a learning culture by encouraging staff to obtain additional qualifications for their development . IBP Superior Qualification (ISQ) Exams is one such certification that is regarded as an esteemed qualification for bankers. Meezan Bank motivates its employees to acquire ISQ-Junior Associate Program of Institute of Bankers Pakistan (JAIBP) through a highly attractive incentive structure based on cash rewards, salary increment as well as reimbursement of registration and course fees. Our Focus on Employee Health & Recreation The Bank believes in promoting a healthy lifestyle for its employees to create a healthier, more productive workforce. The following efforts evidence the Bank’s commitment to adopting healthy habits and in making it an excellent workplace. Medical Benefits & Health Facilities The medical assistance benefits give peace of mind to employees and enables them to focus on their professional responsibilities without having to worry about financial risks in the event of a medical problem. Hospitalization coverage therefore forms an integral component of the total compensation package offered by Meezan Bank. The Bank has instituted outpatient, hospitalization and maternity benefit plans for its employees by providing coverage for these eventualities. Cafeteria at Subsidized Cost The Bank also provides hygienically cooked meals at a subsidized cost to its staff at the Head Office; which is prepared in an on-location kitchen. The staff is also provided with multiple tea and coffee areas for refreshments throughout the day. Company Sports Meezan Bank organizes a variety of sports activities for its employees. Cricket, a national favourite, is promoted within the organization and financial industry through participation of the Bank's cricket team in local cricket tournaments. The Bank regularly organizes cricket tournaments for inter-department, inter-branch and inter-region teams that travel and compete within the country. Gym & Swimming Pool The Bank encourages a healthy lifestyle for its employees by providing both male and female employees access to independent and modern gymnasium facilities and separate recreational areas at Meezan House along with a 1,200 sqft swimming pool. The facilities are supported by specialized swimming and fitness trainers to assist the staff in their exercise and diet routine. Our Focus on Employee & Customer Safety The Bank has invested in protecting its employees through the following means: Medical and Life Takaful coverage Shuttle transportation with security at subsidized cost for travelling to and from Meezan House (Head Office) High-tech security systems and security guards are deployed at the Bank's premises EMPLOYEES Well-designed fire fighting system, with availability of trained fire fighters at the location Regular fire training and evacuation drills to help employees become aware of the safety steps in case of an emergency Provision of a trained and assigned a team to provide assistance to staff in the case of a fire or natural calamity 198 MEEZAN BANK LIMITED
200. The Bank has invested in protecting its customers through the following means : Launch of Skimguard service – protecting customers from skimming frauds on all ATMs across Pakistan. Unique device registration feature on Meezan Mobile Banking App & Internet Banking. Compliance of Regulations for the Security of Internet Banking. CUSTOMERS Setup of global limit structure on international payment schemes (VISA and MasterCard) systems for both domestic and cross-border transactions daily – confining the Bank ‘s exposure to a significantly reduced amount in case of any cyber threat. Enablement of Biometrics on all Meezan ATMs nationwide allowing secured card-less cash withdrawals from Meezan ATMs First bank to introduce EMV CHIP and PIN security to its debit cards which is complemented with No-Fallback mechanism. With this, Meezan Bank Debit Cards are fully secured against any skimming frauds from international ATM and POS, and domestic POS. Implementation of various checks to detect frauds against Internet Banking and Mobile App. Blocking and unblocking of debit cards via Mobile App and Internet Banking. Setup of 24/7 monitoring team to detect and respond to any fraud attempts through Meezan Bank digital banking channels. Activation of financial transactions upon biometric consent of the customers to protect against any spoofing frauds. The Bank has taken the following measures to provide financial risk coverage to its deposit account holders and consumer finance customers: Takaful Coverage for ‘Accidental Death and Permanent Disability’ and ‘ATM Cash Withdrawal Theft’ to all checking account holders who are maintaining an average monthly balance of Rs 10,000/- or more. FINANCIAL RISK COVERAGE The critical need of Life Takaful Coverage has been addressed for Housing Finance customers by providing a completely Shariah-compliant Life Takaful cover. In the event of death of a customer, the Takaful benefit covers the outstanding amount payable to the Bank. The Takaful cover is also available in case of customer's natural or accidental disability. The Bank's Auto, Bike and Commercial Vehicle Finance operates under the Ijarah model, in which the Bank takes responsibility for comprehensive Takaful coverage of the vehicle over the complete financing period. The Bank also offers an additional facility of tracker with free monitoring and Accidental Death Coverage to Car Ijarah customers. ANNUAL REPORT 2019 199
201. Business Ethics & Anti-Corruption Measures Meezan Bank has a comprehensive Code of Conduct and Standard of Ethics that forms part of its Human Resource Policy. The Bank's Disciplinary Action Committee (DAC) takes action on any violation of policies & procedures, acts of fraud & forgery, breaches of discipline and code of conduct, ethics & business practices, law of the land and any statutory regulations by an employee. Appeals of the staff against which DAC takes disciplinary actions are reviewed by an independent Disciplinary Action Review Committee, which has been formed with a view to ensure a fresh review of each appeal filed against the DAC decision. Furthermore, to ensure dignified and healthy work environment, the Bank has also established an Anti-Harassment Committee that deals with the instances of sexual harassment reported either verbally or in writing. Selection of Business Partners Meezan Bank ensures that its business partners are selected and approved through a detailed review and selection process. The Bank's procurement team is empowered to finalize the best supplier and service provider based on quality, costing, historic performance and market reputation. The process is reviewed by the Internal Audit team to ensure compliance to the approved internal processes as well as market norms. Our Focus on Service Quality Monitoring Complaint Management System The Bank has a dedicated team which handles and addresses customer complaints as per the Customer Grievance Handling Policy approved by the Board. All complaints of the customers that are received through various channels are logged in a Complaint Management System to keep track of their resolution. The Bank has a complaint escalation mechanism whereby all complaints are escalated to the senior management if not resolved within the stipulated time. The Bank has upgraded its Complaint Management System by implementing a system of acknowledging complaints through automated SMS which resulted in process automation of complaint management. In addition, the Bank enhanced its complaint monitoring mechanism by introducing Complaint Management Dashboard which is regularly reviewed by the senior management to ensure timely resolution of customer complaints. During the year 2019, the Bank received 109,634 customer complaints and the average complaint resolution time was 7.4 working days. Our Focus on Supporting Our Communities Rural Development Program Considering the importance of agriculture for the country and inherent market potential for agriculture finance, Meezan Bank has established a dedicated Agriculture Finance Department. There has always been a great demand from rural households to have Islamic financing products. Meezan Bank Agriculture Finance is set to further enhance outreach with the induction of dedicated team of agricultural graduates from Punjab, Sindh and Khyber Pakhtunkhwa. The Bank's agriculture finance product suite primarily constitutes of agriculture inputs and Ijarah-based agriculture development facilities for meeting the mechanization requirements of agriculture farming. The Bank is also considering innovative financing solutions like leveraging technology for digital inclusion and value chain financial interventions for agricultural growers. 200 MEEZAN BANK LIMITED
202. Extending support to farmers through Kissan Baithak ‘Kissan Baithak’ is an innovative initiative that aims to develop collaboration between farmers and the Bank through a specifically-designed financial literacy and inclusion campaign. It aims to spread awareness regarding agricultural finance in rural areas to enhance the agricultural productivity. Kissan Biathak is an on-going activity that will serve multiple purposes among the following: • Enhance interactions with farming community in the core agricultural belt of the country • Resolve the farmers’ queries about the Bank’s Islamic products for the rural masses • Utilize cross-selling strategies, as many rural farmers are unable to visit the branch or read the Bank’s message on print/digital media Apart from credit, Pakistan’s rural population requires access to a wide variety of financial services including savings, money transfer facilities and Takaful. These communities need secure and convenient deposit services that allow for small balances, small transactions and easy access to funds. Kissan Baithak is an effort to educate the rural clients regarding the Bank’s tailor-made services to further expand their scope and financial independence. The Bank conducted around 39 sessions in Sindh, Punjab & KPK. A total no. of 1,075 farmers attended these sessions. In addition, the Bank facilitated more than 454 customers through Commercial Vehicles financing. Kissan Baithak Sessions 39 Sessions 1,075 No. of farmers Our Focus on Green Banking Meezan Bank is committed to driving growth for green banking initiatives and is therefore continuously exploring opportunities to support and finance environment friendly projects as its contribution towards making our planet more sustainable. Leading the highest number of wind power projects with a total capacity of 200MW In 2019, Meezan Bank has led the financing of four wind power projects - the highest number of projects handled by any single local financial institution. ■ ■ A comprehensive ‘Green Banking Policy’ in line with the instructions and guidelines of the State Bank of Pakistan duly approved in the Board Meeting of the Bank is in place that outlines the compliance measures to be put in place to ensure smooth and transparent operations of the Bank. The Board of Directors has also implemented a Policy Framework that delineates broader guidelines to the management for ensuring that adequate controls are maintained and risk is managed within acceptable limits. ANNUAL REPORT 2019 201
203. Our Focus on Introducing Energy Efficiency at Work In line with United Nations Sustainable Development Goals , Meezan Bank is working to reduce its energy footprint through better usage of its information technology and communication infrastructure. Some of the key initiatives are as follows: Luminaries 1 • Using re-designed branch signage with energy-saving LED lights • Replacing halogen bulbs with LED lights in the entire Head Office Paper Consumption 1 • Installation of multi-function printer / photocopier machines that allow decommissioning two devices, a laser copier and a scanner, resulting in elimination of separate machines and reduction of overall paper consumption • Implementing electronic process flows for certain HR-related processes • Implementing electronic IT help-desk and document repository system • Introducing an eco-printing campaign for dual-sided printing and paper usage reduction • Implementing a tracking system for photocopied documents at the Head Office to control paper wastage • Provision of e-statements via email 202 MEEZAN BANK LIMITED Building Structure 2 • Utilizing glass panels and atriums in office building structure to reduce need for lighting • Revising chiller temperature set point for energy optimization • Maintaining a large plantation section at the Head Office that utilizes recycled ablution water from the in-house mosque ATMs 2 • Deployment of energy efficient ATMs to reduce the usage of diesel and electricity Solar Power 3 • Installing Solar Power Systems at Head Office and 10 branches • Shifting 225 kW to green energy • Generating annually 360,000 Units (Kwh) of electrical power by solar systems saving 158,000 kgs of Carbon dioxide Automation 3 • Implementing state-of-the-art Data Centre to deploy more efficient remote working technologies • Automation of approximately 40 business processes to optimize the utilization of existing systems • Conducting online Employee Satisfaction Survey to eliminate paper-consumption and improve efficiency • Implementing comprehensive intranet portal as a Business Continuity Planning tool, allowing employees to work from any Meezan office, in case of an emergency • Implementing state-of-the-art T24 software to shift from paper-cheque payments to electronic payments • Implementing Centralized Account Opening (CAO) Workflow to streamline the document movement between branches and Head Office
204. Meezan Bank ’s Contribution to United Nations Sustainable Development Goals 4 QUALITY EDUCATION AND 7 AFFORDABLE CLEAN ENERGY WORK AND 8 DECENT ECONOMIC GROWTH 17 PARTNERSHIPS FOR THE GOAL Meezan Bank operates with a Vision to ‘…facilitate the implementation of an equitable economic system, providing a strong foundation for establishing a fair and just society for mankind.’ As a result, our focus on sustainability is embedded deep in our business model. In September 2015, the United Nations (UN) introduced a set of goals to end poverty, protect the planet and ensure prosperity for all as part of a new sustainable development agenda that has been adopted by 195 countries across the world. During 2019, Meezan Bank focused on the following Sustainable Development Goals (SDGs), which it believes are in line with its sustainability strategy. 4 7 8 17 Through its strategic initiatives, Centres for Excellence in Islamic Finance at Lahore University of Management Sciences (LUMS), Institute of Business Administration (IBA) and IM Sciences (Peshawar), the Bank is making a substantial contribution in increasing the relevant skills for employment and entrepreneurship of youth in the country. Through the ‘Islamic Finance Young Leaders Program’, the Bank, along with IBA Centre for Excellence in Islamic Finance is providing exposure and learning to students and young professionals from different parts of the country. After the Issuance of Islamic Financing Facility for Renewable Energy (IFRE) by State Bank of Pakistan (SBP), the Bank remains committed to promoting and leading green energy initiatives. During 2019, the Bank has achieved financial close for four wind power projects including NASDA Green Energy (Private Limited), Gul Ahmed Electric Limited, Artistic Wind Power (Private Limited) and Din Energy Limited, whilst providing working capital facility for Gul Ahmed Electric Limited, Din Energy Limited and Metro Wind Power Limited - the highest number of wind power projects handled by any single local financial institution. Through its focus on employee development, training and championing public education and awareness regarding finance, the Bank is not only promoting a healthy work environment but is also strengthening the country’s economy by expanding the access of individuals to Islamic banking. During 2019, the Bank held 143 Islamic finance awareness seminars in different cities of Pakistan which were attended by more than 13,800 participants. To support Digital Payments in Pakistan and to bring greater transparency to the economy, the Bank signed up with Fonepay in 2017 which has now grown into the largest processor of QR Payments in Pakistan. Meezan Bank acquired over 10 Million QR transactions via Fonepay and MasterQR in 2019. Additionally, the Bank also partnered with upcoming Fintechs, like Nayapay and Foree as the key settlement bank. Meezan Bank will continue to support aspiring Fintechs to strengthen its position as the most forward looking and Fintech friendly bank in Pakistan. As Pakistan’s first Bank to partner with Karandaaz Pakistan for specialized Supply Chain Partnership Program, the Bank is strengthening domestic resource mobilization as well as mobilizing financial resources for SMEs in the country. ANNUAL REPORT 2019 203
206. UNCONSOLIDATEDUNCONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS 01 01 01 01 01 01 01 Auditors ’ Report to the Members 206 Auditors’ Report to the Members Statement of Financial Position 211 Statement of Financial Position Profit and Loss Account 212 Profit and Loss Account Statement of Comprehensive Income213 Statement of Comprehensive Income Statement of Changes in Equity 214 Statement of Changes in Equity Cash Flow Statement 215 Cash Flow Statement Notes to and forming part of the Financial 216 Notes to and forming part of the Financial Statements Statements 01 Statement showing written- off loans284 Statement showing written-off Financing (Annexure 1) (Annexure 1)
212. Unconsolidated Statement of Financial Position As at December 31 , 2019 Note 2019 2018 Rupees in ‘000 ASSETS Cash and balances with treasury banks Balances with other banks Due from financial institutions - net Investments - net Islamic financing and related assets - net Fixed assets Intangible assets Deferred tax asset Other assets - net 7 8 9 10 11 12 13 19 14 92,193,361 15,372,233 223,689,325 225,646,162 493,775,346 23,284,415 780,381 46,517,031 1,121,258,254 65,022,041 8,255,187 184,814,600 123,742,867 512,564,522 13,129,126 624,534 982,936 28,779,592 937,915,405 15 16 17 18 19 20 17,186,807 42,047,390 932,579,114 14,000,000 2,829,858 53,599,673 1,062,242,842 59,015,412 23,750,543 36,407,811 785,476,944 14,000,000 37,947,052 897,582,350 40,333,055 Share capital Reserves Unappropriated profit Surplus / (deficit) on revaluation of assets - net of tax 21 22 12,861,116 18,207,664 18,545,797 9,400,835 59,015,412 11,691,924 15,161,249 13,525,765 (45,883) 40,333,055 CONTINGENCIES AND COMMITMENTS 24 LIABILITIES Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Deferred tax liabilities Other liabilities NET ASSETS REPRESENTED BY 23 The annexed notes 1 to 50 and Annexure 1 form an integral part of these unconsolidated financial statements. Riyadh S. A. A. Edrees Chairman Irfan Siddiqui President & CEO Faisal A. A. A. Al-Nassar Director Noorur Rahman Abid Director Shabbir Hamza Khandwala Chief Financial Officer ANNUAL REPORT 2019 211
213. Unconsolidated Profit and Loss Account For the year ended December 31 , 2019 Note 2019 2018 Rupees in ‘000 Profit / return earned on Islamic financing and related assets, investments and placements Profit on deposits and other dues expensed Net spread earned OTHER INCOME Fee and Commission Income Dividend income Foreign Exchange Income (Loss) / gain on securities - net Other income 25 26 94,270,461 47,731,080 46,539,381 48,624,458 20,456,948 28,167,510 27 6,174,644 341,464 2,684,097 (417,599) 537,580 9,320,186 55,859,567 5,257,170 567,429 1,318,460 8,308 311,136 7,462,503 35,630,013 30 20.6 31 24,830,659 609,524 82,275 25,522,458 30,337,109 19,290,136 363,001 16,419 19,669,556 15,960,457 32 4,186,430 1,168,051 28 29 Total income OTHER EXPENSES Operating expenses Workers Welfare Fund Other charges Total other expenses Profit before provisions Provisions and write offs - net Extra ordinary / unusual items - Profit before taxation Taxation 33 Profit after taxation - 26,150,679 14,792,406 10,918,605 5,830,206 15,232,074 8,962,200 Rupees Basic and diluted earnings per share 34 11.84 Restated 6.97 The annexed notes 1 to 50 and Annexure 1 form an integral part of these unconsolidated financial statements. Riyadh S. A. A. Edrees Chairman 212 MEEZAN BANK LIMITED Irfan Siddiqui President & CEO Faisal A. A. A. Al-Nassar Director Noorur Rahman Abid Director Shabbir Hamza Khandwala Chief Financial Officer
214. Unconsolidated Statement of Comprehensive Income For the year ended December 31 , 2019 Note 2019 2018 Rupees in ‘000 Profit after taxation for the year 15,232,074 8,962,200 14,547,307 (1,241,550) (5,091,557) 9,455,750 434,542 (807,008) 124,144 1,998 (43,450) 80,694 (699) 1,299 (9,785) 34,080 3,425 (6,360) (11,928) 22,152 9,530,084 (783,557) 24,762,158 8,178,643 Other comprehensive income Items that may be reclassified to profit and loss account in subsequent periods: Surplus / (deficit) on revaluation of investments 23 Deferred tax on revaluation of investments Items that will not be reclassified to profit and loss account in subsequent periods: Remeasurements of defined benefit plan 37 Tax on remeasurements of defined benefit plan (Deficit) / surplus on revaluation of non-banking assets 23 Deferred tax on revaluation of non-banking assets Other Comprehensive Income / (loss) for the year Total Comprehensive Income for the year The annexed notes 1 to 50 and Annexure 1 form an integral part of these unconsolidated financial statements. Riyadh S. A. A. Edrees Chairman Irfan Siddiqui President & CEO Faisal A. A. A. Al-Nassar Director Noorur Rahman Abid Director Shabbir Hamza Khandwala Chief Financial Officer ANNUAL REPORT 2019 213
215. Unconsolidated Statement of Changes in Equity For the year ended December 31 , 2019 Capital reserves Share capital Share premium Statutory reserve* Revenue reserves Non Distributable Capital Reserve - Gain on Bargain Purchase Surplus / (deficit) on revaluation of General Unappropriated Investments Non-banking reserve profit Assets Total Rupees in ‘000 10,629,022 Balance as at January 01, 2018 2,406,571 7,777,925 3,117,547 66,766 10,340,589 738,973 35,077,393 - 8,962,200 Profit after taxation for the year - - - - - 8,962,200 Other Comprehensive loss for the year - net of tax - - - - - 1,299 (807,008) 22,152 (783,557) - - - - - 8,963,499 (807,008) 22,152 8,178,643 - - - - (1,792,440) - - - - Other appropriations Transfer to statutory reserve 1,792,440 - - Transactions with owners recognised directly in equity Issue of bonus shares 1,062,902 - - - - (1,062,902) - - Final cash dividend for the year 2017 - - - - - (1,328,628) - - (1,328,628) Interim cash dividend for the year 2018 - - - - - (1,594,353) (2,922,981) - - (1,594,353) (2,922,981) 11,691,924 Balance as at December 31, 2018 2,406,571 9,570,365 3,117,547 66,766 13,525,765 (68,035) - 22,152 - 40,333,055 Profit after taxation for the year - - - - - 15,232,074 15,232,074 Other Comprehensive income for the year - net of tax - - - - - 80,694 9,455,750 (6,360) 9,530,084 15,312,768 9,455,750 (6,360) 24,762,158 Transfer from surplus in respect of incremental depreciation of Non-banking assets to unappropriated profit - net of tax - - - - - 79 - (79) - Transfer from surplus upon disposal of Non-banking assets to unappropriated profit - net of tax - - - - - 2,593 - (2,593) - Other appropriations Transfer to statutory reserve - - - - (3,046,415) - - - - 3,046,415 Transactions with owners recognised directly in equity Issue of bonus shares 1,169,192 - - - - (1,169,192) - - Final cash dividend for the year 2018 - - - - - (2,338,385) - - (2,338,385) First interim cash dividend for the year 2019 - - - - - (1,169,192) - - (1,169,192) Second interim cash dividend for the year 2019 - - - - - (1,286,112) - - (1,286,112) Third interim cash dividend for the year 2019 Balance as at December 31, 2019 12,861,116 2,406,571 12,616,780 3,117,547 66,766 (1,286,112) (6,079,801) 18,545,797 9,387,715 13,120 (1,286,112) (6,079,801) 59,015,412 *This represents reserve created under section 21(i)(a) of the Banking Companies Ordinance, 1962. The annexed notes 1 to 50 and Annexure 1 form an integral part of these unconsolidated financial statements. Riyadh S. A. A. Edrees Chairman 214 MEEZAN BANK LIMITED Irfan Siddiqui President & CEO Faisal A. A. A. Al-Nassar Director Noorur Rahman Abid Director Shabbir Hamza Khandwala Chief Financial Officer
216. Unconsolidated Cash Flow Statement For the year ended December 31 , 2019 Note 2019 2018 Rupees in ‘000 CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Less: Dividend income 26,150,679 (341,464) 25,809,215 14,792,406 (567,429) 14,224,977 1,711,278 254,597 3,127,929 4,186,430 384,532 (102,905) 9,561,861 35,371,076 1,514,837 220,208 1,168,051 351,317 (83,432) 3,170,981 17,395,958 (38,874,725) 15,732,429 (18,437,316) (41,579,612) (37,585,379) (93,411,858) (7,765,391) (138,762,628) (6,563,736) 5,639,579 147,102,170 5,759,621 151,937,634 145,729,098 (323,223) (9,324,903) 136,080,972 6,575,508 (405,484) 118,296,079 11,224,937 135,691,040 14,324,370 (441,125) (5,150,807) 8,732,438 (116,445,527) 28,000,000 341,726 (4,913,840) (410,444) 163,833 (93,264,252) (7,113,572) 1,060,000 589,003 (3,338,121) (332,252) 140,458 (8,994,484) Payment of lease liability against right-of-use assets Issuance of Sub-ordinated Sukuk - Additional Tier I Dividend paid Net cash (used in) / flow from financing activities (2,447,737) (6,080,617) (8,528,354) 7,000,000 (2,912,712) 4,087,288 Increase in cash and cash equivalents 34,288,366 3,825,242 Adjustments for non-cash charges and other items: Depreciation Amortization Non cash items related to right-of-use assets Provisions and write offs - net Charge for defined benefit plan Gain on sale of fixed assets (Increase) / decrease in operating assets Due from financial institutions Islamic financings and related assets Other assets Increase / (decrease) in operating liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities Contribution to defined benefit plan Income tax paid Net cash flow from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net (investments) / redemption in - available for sale securities - held to maturity securities - associated entities Dividends received Investments in fixed assets Investments in intangible assets Proceeds from sale of fixed assets Net cash used in investing activities CASH FLOW FROM FINANCING ACTIVITIES Cash and cash equivalents at the beginning of the year 35 73,277,228 69,451,986 Cash and cash equivalents at the end of the year 35 107,565,594 73,277,228 The annexed notes 1 to 50 and Annexure 1 form an integral part of these unconsolidated financial statements. Riyadh S. A. A. Edrees Chairman Irfan Siddiqui President & CEO Faisal A. A. A. Al-Nassar Director Noorur Rahman Abid Director Shabbir Hamza Khandwala Chief Financial Officer ANNUAL REPORT 2019 215
217. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 1 2 LEGAL STATUS AND NATURE OF BUSINESS 1.1 Meezan Bank Limited (the Bank) was incorporated in Pakistan on January 27, 1997, as a public limited company under the Companies Act, 2017 (previously Companies Ordinance, 1984), and its shares are quoted on the Pakistan Stock Exchange Limited. The Bank was registered as an ‘Investment Finance Company’ on August 8, 1997, and carried on the business of investment banking as permitted under SRO 585(I)/87 dated July 13, 1987, in accordance and in conformity with the principles of Islamic Shariah. A ‘Certificate of Commencement of Business' was issued to the Bank on September 29, 1997. 1.2 The Bank was granted a ‘Scheduled Islamic Commercial Bank’ license on January 31, 2002 and formally commenced operations as a Scheduled Islamic Commercial Bank with effect from March 20, 2002, on receiving notification in this regard from the State Bank of Pakistan (the SBP) under section 37 of the State Bank of Pakistan Act, 1956. Currently, the Bank is engaged in corporate, commercial, consumer, investment and retail banking activities. 1.3 The Bank was operating through seven hundred and sixty branches as at December 31, 2019 (2018: six hundred and sixty branches). Its registered office is at Meezan House, C-25, Estate Avenue, SITE, Karachi, Pakistan. 1.4 Based on the financial statements of the Bank for the year ended December 31, 2018, the VIS Credit Rating Company Limited has reaffirmed the Bank's medium to long-term as 'AA+' and the short-term rating as ‘A1+’ with stable outlook. BASIS OF PRESENTATION The Bank provides Islamic financing and related assets mainly through Murabaha, Istisna, Tijarah, Ijarah, Diminishing Musharakah, Running Musharakah, Bai Muajjal, Musawamah, Service Ijarah, Wakalah, Wakalah Tul Istithmar, and Export Refinance under Islamic Export Refinance Scheme and long term financing facility under Islamic Long Term Financing Facility of the State Bank of Pakistan respectively as briefly explained in note 6.3. The purchases and sales arising under these arrangements are not reflected in these financial statements as such but are restricted to the amount of facility actually utilised and the appropriate portion of profit thereon. The income on such financing is recognised in accordance with the principles of Islamic Shariah. However, income, if any, received which does not comply with the principles of Islamic Shariah is recognised as charity payable if so directed by the Resident Shariah Board Member (RSBM) of the Bank. 3 STATEMENT OF COMPLIANCE 3.1 These unconsolidated financial statements (here-in-after referred to as "financial statements") have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards comprise of: - International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as are notified under the Companies Act, 2017; - Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as are notified under the Companies Act, 2017; - Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017; and - Directives issued by the State Bank of Pakistan (SBP) and the Securities Exchange Commission of Pakistan (SECP). Whenever the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 or the directives issued by the SBP and the SECP differ with the requirements of IFRS or IFAS the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 and the said directives, shall prevail. 216 3.2 The SBP, through its BSD Circular No. 10 dated August 26, 2002, has deferred the implementation of International Accounting Standard (IAS) 39 - "Financial Instruments: Recognition and Measurement" and IAS 40 - "Investment Property" for Banking Companies in Pakistan, till further instructions. Accordingly, the requirements of these Standards have not been considered in the preparation of these financial statements. Further, the SECP has deferred the applicability of International Financial Reporting Standard (IFRS) 7 "Financial Instruments: Disclosures" through its S.R.O. 411(I)/2008 dated April 28, 2008. Accordingly, the requirements of this standard have also not been considered in the preparation of these financial statements. However, investments and non-banking assets have been classified and valued in accordance with the requirements prescribed by the SBP through various circulars. 3.3 The SBP vide its BPRD Circular No. 04 dated February 25, 2015 has clarified that the reporting requirements of IFAS 3 for Islamic Banking Institutions (IBIs) relating to annual, half yearly and quarterly financial statements would be notified by SBP through issuance of specific instructions and uniform disclosure formats in consultation with IBIs. These reporting requirements have not been ratified to date. Accordingly, the disclosures requirements under IFAS 3 have not been considered in these financial statements. MEEZAN BANK LIMITED
218. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 3.4 Standards, interpretations and amendments to published accounting and reporting standards that are effective in the current year The Bank has adopted the following accounting standards, interpretations and amendments of IFRSs and the improvements to accounting standards which became effective for the current year: 3.4.1 IFRS 15 ‘Revenue form contracts with customers’ In May 2014, the IASB issued IFRS 15 ‘Revenue from Contracts’ with Customers which is effective for annual periods beginning on or after July 01, 2018. The standard establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled to in exchange for transferring goods or services to a customer. The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The Bank’s revenue streams that are within the scope of IFRS 15 relate to certain fee and commission income. The accounting policy for recognition of such income is disclosed in note 6.18 to these financial statements. The application of this standard did not have any material impact on these financial statements, except for change in description of accounting policy. 3.4.2 IFRS 16 ‘Leases’ During the year, the SBP, vide its BPRD Circular Letter No. 8 dated April 30, 2019 and BPRD Circular No. BPRD/RPD/2019/17 dated July 26, 2019 has directed all Islamic Banks to apply IFRS 16 'Leases' in all Ijarah (lease) contracts where the Islamic Banks acts in capacity of Mustajir (lessee) and accordingly, the Bank has adopted the standard. The IFAS 2 - Ijarah would continue to be applicable on all the Ijarah contracts where the Islamic Banks acts as Mujir (lessor). The Bank has lease contracts in the capacity of lessees for various properties used by the Bank's branches. The Bank has adopted modified retrospective approach for transition to IFRS 16. The standard also provides practical expedients, which has been applied by the Bank. The Bank has recognised right-of-use assets and lease liabilities for those leases which were previously accounted for under IFAS 2 Ijarah and recognised/ classified as rent expense. Lease liabilities were discounted using the incremental borrowing rate at the date of initial application. Right-of-use asset is depreciated over lease term and classified as depreciation expense. The overall impact of the initial application of IFRS 16 on these financial statements is summarized below: Impact on Statement of Financial Position Increase in fixed assets - right-of-use assets Decrease in other assets - Advances, deposits, advance rent and other prepayments Increase in other liabilities - lease liability against right-of-use assets Impact on Profit and Loss account Increase in Profit on deposits and other dues expensed - Amortisation of lease liability against right-of-use assets Increase / (decrease) in operating expenses - Depreciation on right-of-use assets - Rent and taxes As at January 01, 2019 (Rupees in '000) 7,940,336 560,789 7,379,547 For the year ended December 31, 2019 (Rupees in '000) 966,630 2,161,299 (2,316,225) (154,926) Profit after tax for the year ended December 31, 2019 decreased by Rs 495 million. 3.4.3 IFRIC 23 - Uncertainty over Income Tax Treatments The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 ‘Income Taxes’. It does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation did not have any material impact on these financial statements. ANNUAL REPORT 2019 217
219. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 3.5 Standards, interpretations and amendments to published accounting and reporting standards that are not yet effective 3.5.1 IFRS 9 'Financial Instruments' IFRS 9 'Financial Instruments' - the SBP vide its BPRD Circular No. 04 of 2019 dated October 23, 2019 directed the banks in Pakistan to implement IFRS 9 with effect from January 01, 2021. IFRS 9 replaces the existing guidance in IAS 39 ‘Financial Instruments: Recognition and Measurement’. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. The SBP has directed the Bank to conduct an impact assessment as at December 31, 2019 and the Bank is in the process of complying with the requirements. 3.5.2 Further, the following IFRS as notified under the Companies Act, 2017 and the amendments thereto will be effective for accounting periods beginning on or after January 01, 2020: Effective date (accounting Standard and Amendments periods beginning on or after) - IAS 1 - Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendments) - IFRS 3 - Definition of a Business (Amendments) - IFRS 14 - Regulatory Deferral Accounts January 01, 2020 January 01, 2020 July 01, 2019 Further, following new standards have been issued by IASB which are yet to be notified by SECP for the purpose of applicability in Pakistan. Effective date (accounting periods beginning on or after) Standards - IFRS 1 - First time adoption of IFRSs - IFRS 17 - Insurance Contracts 4 January 01, 2004 January 01, 2021 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS 4.1 The preparation of the financial statements in conformity with the accounting and reporting standards as applicable in Pakistan requires the use of certain critical accounting estimates. It also requires management to exercise judgments in the process of applying the Bank’s accounting policies. The significant accounting areas where various assumptions and estimates are significant to the Bank's financial statements or where judgment was exercised in the application of the accounting policies are as follows: (a) (b) (c) (d) (e) (f) (g) Classification of investments in accordance with the Bank's policy (notes 6.4 and 10); Provision against non-performing Islamic financing and related assets (notes 6.3.2 and 11); Impairment of investments in equity instruments of subsidiary, associates and non associate entities (notes 6.4.5, 10 and 32); Accounting for defined benefit plan (notes 6.11 and 37); Depreciation / amortisation of fixed assets and intangible assets (notes 6.5, 12 and 13); Assumption and estimation in recognition of provision for taxation (current and prior years) and deferred taxation (notes 6.6,19, 20 and 33); and Determination of the lease term and incremental borrowing rate for lease contracts of various properties used by the Bank's branches (notes 6.5.2, 12 and 20). Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. 5 BASIS OF MEASUREMENT 5.1 5.2 These financial statements have been prepared under the historical cost convention except that certain investments, foreign currency balances, Non-banking assets acquired in satisfaction of claims and commitments in respect of certain foreign exchange contracts have been marked to market and carried at fair value in accordance with the requirements of the SBP. In addition, obligation in respect of staff retirement benefit and employees compensated leave balances are carried at present value as per actuarial valuation. Functional and Presentation Currency Items included in the financial statements are measured using the currency of the primary economic environment in which the Bank operates. These financial statements are presented in Pakistani Rupees, which is the Bank's functional and presentation currency. 5.3 Rounding off Figures have been rounded off to the nearest thousand rupees unless otherwise stated. 218 MEEZAN BANK LIMITED
220. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of these financial statements are set out below. 6.1 Cash and cash equivalents Cash and cash equivalents comprise of cash and balances with treasury banks and balances with other banks in current and deposit accounts. 6.2 Due to / from financial institutions Bai Muajjal In Bai Muajjal, the Bank sells sukuk on credit to other financial institutions. The credit price is agreed at the time of sale and such proceeds are received at the end of the credit period. Musharaka / Mudaraba In Musharaka / Mudaraba, the Bank invests in the shariah compliant business pools of the financial institutions at the agreed profit and loss sharing ratio. Musharaka from the SBP under IERS Under IERS, the Bank accepts funds from the SBP under shirkat-ul-aqd to constitute a pool for investment in export refinance portfolio of the Bank under the guidelines issued by the SBP. The profit of the pool is shared as per the agreed weightages between the partners. Mudaraba investment from the SBP under ILTFF Under ILTFF, the Bank accepts funds from the SBP to allow eligible export-oriented sectors through purchase of imported or locally manufactured plant and machinery. These funds are received on Mudaraba basis for investment in general pool of the Bank. The profit of the pool is shared as per the announced profit sharing ratio of the pool and the weightages assigned to these investments. 6.3 Islamic financing and related assets Murabaha In Murabaha transactions, the Bank purchases the goods and after taking the possession, sells them to the customer on cost plus profit basis either in a spot or credit transaction. Ijarah Ijarah assets are stated at cost less depreciation and are disclosed as part of 'Islamic financing and related assets'. The rental received / receivable on Ijarah under Islamic Financial Accounting Standard - 2 ‘Ijarah’ (IFAS 2) are recorded as income / revenue. The Bank charges depreciation from the date of recognition of Ijarah of respective assets to mustajir. Ijarah assets are depreciated over the period of Ijarah using the straight line method. Ijarah rentals outstanding are disclosed in 'other assets' on the Statement of Financial Position at amortized cost. Impairment of Ijarah assets is determined in accordance with the Prudential Regulations issued by the SBP. The provision for impairment of Ijarah assets is shown as part of 'Islamic financing and related assets'. Istisna In Istisna financing, the Bank places an order to purchase some specific goods / commodities from its customers to be delivered to the Bank within an agreed time. The goods are then sold by the customer on behalf of the Bank and the amount hence financed along with profit is paid back to the Bank. Tijarah In Tijarah financing, the Bank purchases specific goods / commodities on cash basis from its customers for onward sale by the customer on behalf of the Bank and on subsequent sale, the financed amount along with profit is paid back by the customer to the Bank. Diminishing Musharakah In Diminishing Musharakah financing, the Bank enters into Musharakah based on Shirkat-ul-milk for financing an agreed share of fixed asset (e.g. house, land, plant or machinery) with its customers. The customers pay periodic profit as per the agreement for the utilisation of the Bank's Musharakah share and also periodically purchase the Bank's share over the tenure of the transaction. Running Musharakah In Running Musharakah financing, the Bank enters into financing with the customer based on Shirkatul Aqd or Business Partnership in the customer's operating business. Under this mechanism the customer can withdraw and return funds to the Bank subject to his Running Musharakah Financing limit during the Musharakah Period. At the end of each quarter / half year the customer pays the provisional profit as per the desired profit rate which is subject to final settlement based on the relevant quarterly / half yearly / annual accounts of the customer. ANNUAL REPORT 2019 219
221. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 Bai Muajjal In Bai Muajjal financing, the Bank sells Shariah compliant sukuk on credit to customers. The credit price is agreed at the time of sale and such proceeds are received at the end of the credit period. Service Ijarah In Service Ijarah financing, the Bank provides financing by acquiring certain agreed services from the customer. After the purchase of services, the Bank appoints the customer to sell these services in the market over a period and provide a sale confirmation of such sale. The profit is only accrued from the date of receipt of such confirmation. Wakalah Wakalah is an agency or a delegated authority where the Muwakkil (principal) appoints the Wakil (agent) to carry out a specific job on behalf of the Muwakkil. Funds disbursed are initially recorded as ‘Advance against Wakalah'. On culmination, the same are recorded as financing. Wakalah tul Istithmar In Wakalah tul Istithmar financing, the Bank enters into investment agency transaction with customer acting as an agent of the Bank. Under this mechanism, the funds disbursed are invested by the customer on behalf of the Bank and are recorded as financing upon their investment in the business. At the end of each quarter / half year / other defined period, the customer pays the provisional profit which is subject to adjustment upon actual declaration of wakala business performance by the agent. Musawamah In Musawamah financing, the Bank purchases the goods and after taking the possession, sells them to the customer either in spot or credit transaction, without disclosing the cost. 6.3.1 Islamic financing and related assets are stated net of specific and general provisions against non-performing Islamic financing and related assets which are charged to the profit and loss account. Funds disbursed, under financing arrangements for purchase of goods / assets are recorded as advance. On culmination, financing are recorded at the deferred sale price net of profit. Goods purchased but remaining unsold at the statement of financial position date are recorded as inventories. 6.3.2 Provision against non-performing Islamic financing and related assets Specific provision The Bank determines provisions against Islamic financing and related assets on a prudent basis in accordance with the requirements of the Prudential Regulations issued by the SBP. General provision In accordance with Prudential Regulations issued by the SBP, general provision against consumer financing and house financing should be maintained at varying percentages based on the non-performing loan ratio present in the portfolio. These percentages range from 0.5% to 2.5% for secured and 4% to 7% for unsecured portfolio. In addition to the above mentioned requirements, the Bank has also created a general provision in respect of financing against potential losses present in the portfolio. This provision is based on management's best estimate and is approved by the Board of Directors of the Bank. The net provisions made / reversed during the year is charged to the profit and loss account and accumulated provision is netted off against Islamic financing and related assets. Islamic financing and related assets are written off when there are no realistic prospects of recovery. 6.3.3 Inventories The Bank values its inventories at the lower of cost and net realisable value. The net realisable value is the estimated selling price in the ordinary course of business less the estimated cost necessary to make the sale. Cost of inventories represents actual purchases made by the Bank / customers as an agent of the Bank for subsequent sale. 220 MEEZAN BANK LIMITED
222. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 6.4 Investments 6.4.1 Classification The Bank classifies its investments as follows: - Held for trading These are investments which are either acquired for generating profits from short-term fluctuations in market prices or are securities included in a portfolio for which there is evidence of a recent actual pattern of short-term profit taking. - Held to maturity These are investments with fixed or determinable payments and maturity that the Bank has the positive intent and ability to hold till maturity. - Available for sale These are investments, which do not fall under 'held for trading' or 'held to maturity' categories. - Associates Associates are all entities over which the Bank has significant influence but not control. - Subsidiary Subsidiary is an entity over which the Bank has control. 6.4.2 Regular way contracts All purchases and sales of investments that require delivery within the time frame established by regulation or market convention are recognised at the trade date, which is the date on which the Bank commits to purchase or sell the investments. 6.4.3 Initial recognition and measurement Investments other than those categorised as 'held for trading' are initially recognised at fair value which includes transaction costs associated with the investments. Investments classified as 'held for trading' are initially recognised at fair value and transaction costs are expensed in the profit and loss account. 6.4.4 Subsequent measurement Subsequent to initial recognition investments are valued as follows: - Held for trading These are measured at subsequent reporting dates at fair value. Gains and losses on remeasurement are included in the net profit and loss for the year. - Held to maturity These are measured at amortised cost using the effective profit rate method, less any impairment loss recognised to reflect irrecoverable amount. - Available for sale In accordance with the requirements specified by the SBP, quoted securities (other than those classified as 'held to maturity' and 'investments in associates and subsidiary'), are subsequently re-measured to market value. Unquoted equity securities are valued at the lower of cost and break-up value. Break-up value of unquoted equity securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements. Investment in other unquoted securities are valued at cost less impairment losses, if any. Surplus / deficit arising on revaluation of quoted securities which are classified as 'available for sale', is included in the Statement of Comprehensive Income. On derecognition of available-for-sale investments, the cumulative gain or loss previously reported in other comprehensive income is transferred to profit and loss for period within Statement of Comprehensive Income. ANNUAL REPORT 2019 221
223. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 - Investments in associates and subsidiary Investment in associates and subsidiary is carried at cost less accumulated impairment losses, if any. 6.4.5 Impairment Available for sale and Held to maturity investments Impairment loss in respect of investments classified as available for sale and held to maturity (except sukuk certificates) is recognised based on management's assessment of objective evidence of impairment as a result of one or more events that may have an impact on the estimated future cash flows of the investments. A significant or prolonged decline in fair value of an equity investment below its cost is also considered an objective evidence of impairment. Provision for diminution in the value of sukuk certificates is made as per the Prudential Regulations issued by the SBP. In case of impairment in available-for-sale investments, the related loss previously reported in other comprehensive income is transferred to profit and loss for period. For investments classified as held to maturity, the impairment loss is recognised in the profit and loss account. Investment in associates and subsidiary In respect of investment in associates and subsidiary, the Bank reviews their carrying values at each reporting date to assess whether there is an indication of impairment. Such indication may include significant and prolonged decline in the market value, significant changes with an adverse impact on the entity, carrying amount of net assets in excess of market capitalisation etc. Management also takes into account that these investments are held for long term and therefore considers decline of up to 40% in value (applying significant decline criteria) and up to 12 months (for applying prolonged criteria) for the purposes of assessing significant and prolonged decline for listed investments. However, any threshold should be justifiable in view of other factors present for the entity. The amount of impairment loss would be determined based on the higher of value in use and fair value less cost to sell. Impairment loss is recognised in the profit and loss account. 6.4.6 6.5 Cost of investment is determined on moving average basis. Operating fixed assets 6.5.1 Tangible assets Tangible fixed assets are stated at cost less accumulated depreciation and any identified impairment loss. Items of fixed assets costing Rs 20,000 or less are not capitalised and are charged off in the month of purchase. Profit or loss on disposal of fixed assets is included in the profit and loss account currently. 6.5.2 Right-of-use assets and Lease liabilities At the inception of the contract, the Bank assesses whether a contract is, or contains, a lease. The Bank applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Bank recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. Right-of-use assets are depreciated on a straight-line basis over the lease term. The right-of-use assets are presented within note 12 and are subject to impairment in line with the Bank’s policy as described in note 6.5.8. At the commencement date of the lease, the Bank recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The Bank determines the 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. The Bank cannot readily determine the discount rate implicit in the lease, therefore, it uses its incremental borrowing rate to measure lease liabilities. 6.5.3 Intangible assets Intangible assets comprise of computer software. Intangible assets with definite useful lives are stated at cost less accumulated amortisation and impairment losses (if any). 222 MEEZAN BANK LIMITED
224. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 6.5.4 Subsequent costs Subsequent costs are included in the asset's carrying amounts or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. All other repairs and maintenance expenditure are charged to the profit and loss account as and when incurred. 6.5.5 Depreciation / amortisation Depreciation / amortisation is charged to the profit and loss account by applying the straight line method in accordance with the rates specified in notes 12.2 and 13 whereby the depreciable value of an asset is written off over its estimated service life. The Bank charges depreciation / amortisation from the month of acquisition and upto the month preceding the disposal. Right-of-use assets are depreciated on a straight line basis over the lease term specified in note 12.3. 6.5.6 Capital work-in-progress Capital work-in-progress is stated at cost less accumulated impairment losses, if any. 6.5.7 Useful lives and residual values Useful lives and residual values are reviewed at each Statement of Financial Position date and adjusted if impact on depreciation / amortisation is significant. 6.5.8 Impairment The Bank assesses at each Statement of Financial Position date whether there is any indication that the operating fixed assets may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amounts. Where carrying values exceed the respective recoverable amounts, assets are written down to their recoverable amounts and the resulting impairment charge is recognised in the profit and loss account. 6.6 Taxation Income tax expense comprises of current and deferred tax. Income tax expense is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current The charge for current taxation is based on expected taxable income for the year at the current rates of taxation, after taking into consideration available tax credits, rebates, tax losses, etc. The charge for current tax also includes adjustments to tax payable in respect of previous years including those arising from assessments finalised during the year and are separately disclosed. Deferred Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes. Deferred tax is not recognised for the temporary differences relating to initial recognition of goodwill, initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realised. In making the estimates for current and deferred taxes, the management considers the income tax law and the decisions of appellate authorities on certain issues in the past. ANNUAL REPORT 2019 223
225. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 6.7 Non-banking assets acquired in satisfaction of claims The non-banking assets acquired in satisfaction of claims are carried at revalued amounts less accumulated depreciation. The useful lives are reviewed annually and adjusted, if appropriate. These assets are revalued by professionally qualified valuers with sufficient regularity to ensure their net carrying value does not differ materially from their fair value. Surplus arising on revaluation of property, if any, is credited to the 'surplus on revaluation of assets' account in the Statement of Comprehensive Income. Any deficit arising on revaluation is taken to profit and loss account directly. On derecognition of the assets, the cumulative gain or loss previously reported in other comprehensive income is transferred directly to unappropriated profit through the statement of changes in equity. Legal fees, transfer cost and direct cost of acquiring title to property is charged to the profit and loss account. 6.8 Deposits Deposits are generated on the basis of two modes i.e. Qard and Mudaraba. Deposits taken on Qard basis are classified as 'Current accounts' and Deposits generated on Mudaraba basis are classified as 'Savings deposits' and 'Fixed deposits'. No profit or loss is passed on to current account depositors, however the funds of current accounts are treated as equity for the purpose of profit calculation and any profit earned / loss incurred on those funds are allocated to the equity of the Bank. While the product features of each product differ, there is usually no restriction on withdrawals or number of transactions in current and saving accounts. In case of fixed deposits, pre-mature withdrawals can be made as per approved terms only. Profits realised in investment pools are distributed in pre-agreed profit sharing ratio. Rab-ul-Maal share is distributed among depositors according to weightages assigned at the inception of profit calculation period. Mudarib can distribute its share of profit to Rab-ul-Maal upto a maximum of 50% of their profit as Incentive profits (Hiba). Profits are distributed from the pool such that the depositors (remunerative) only bear the risk of assets in the pool during the profit calculation period. In case of loss in a pool during the profit calculation period, the loss is distributed among the depositors (remunerative) according to their ratio of Investments. Asset pools are created at the Bank’s discretion and the Bank can add, amend, transfer an asset to any other pool in the interests of the deposit holders. 6.9 Sub-ordinated Sukuk The Bank records sub-ordinated sukuk initially at the amount of proceeds received. Profit accrued on sub-ordinated sukuk is charged to the profit and loss account. 6.10 Pool Management The Bank operates general and specific pools for deposits and inter-bank funds accepted / acquired under Mudaraba and Musharakah modes. Under the general deposits pools, the Bank accepts funds on Mudaraba basis from depositors (Rab-ul-Maal) where the Bank acts as Manager (Mudarib) and invests the funds in the Shariah Compliant modes of financing, investments and placements. When utilising investing funds, the Bank prioritizes the funds received from depositors over the funds generated from own sources after meeting the regulatory requirement relating to such deposits. Specific pools are operated for funds acquired / accepted from the State Bank of Pakistan and other banks for Islamic Export Refinance to the Bank's customers and liquidity management respectively under the Musharakah / Mudaraba modes. The profit of each deposit pool is calculated on all the remunerative assets booked by utilising the funds from the pool after deduction of expenses directly incurred in earning the income of such pool along with related fee income, if any. The directly related costs comprise of depreciation on ijarah assets, takaful premium, documentation charges etc. No expense of general or administrative nature is charged to the pools. No provisions against any non-performing asset of the pool is passed on to the pool except on the actual loss / write-off of such non-performing asset. The profit of the pool is shared between equity and other members of the pool on the basis of Musharakah at gross level (before charging of mudarib fee) as per the investment ratio of the equity. The profit of the pool is shared among the members of the pool on pre-defined mechanism based on the weightages announced before the profit calculation period after charging of mudarib fee. During the year, the Bank has given General Hiba to the depositors of PKR General Pool, keeping in view the prescribed guidelines of Pool Management provided by the SBP and with the approval of the Bank's Resident Shariah Board Member. However, Hiba are given at the sole discretion of the Bank without any contractual commitment and can be withdrawn or reduced by the Bank at its sole discretion. 224 MEEZAN BANK LIMITED
226. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 The risk characteristic of each pool mainly depends on the assets and liability profile of each pool. As per the Bank's policy, relatively low risk / secured financing transactions and assets are allocated to general depositors pool of PKR, USD, GBP and Euro. The Bank maintains General Pools (PKR, USD, EUR, GBP), FI Pools, IERS Pool and Equity Pool. The general pools are exposed to general credit risk, asset ownership risk and profit rate risk of the underlying assets involved. General Pools: For General Pools (PKR, USD, EUR, GBP), the Bank allocates PKR financing to Corporate, Commercial, SME and Consumer Finance customers in diversified sectors and avenues of the economy / business as mentioned in note 46.1.1.3. Investments in Sovereign Guarantee Sukuk, Bai Muajjal with State Bank of Pakistan, are also done through General Pools. All remunerative deposits are tagged to these general pools and their funds generated from the depositors are invested on priority basis. Investments from the SBP under ILTFF, and sub-ordinated sukuk are also remunerated through the General Pool PKR. Due to limited investment options in USD, GBP and EURO pool, funds from FCY pools are invested in available International Sukuk, Shariah Compliant Nostro accounts, FCY financing and the remaining funds are taken out and invested in PKR general pool as part of equity. In such cases return from PKR General Pool is given back to FCY pools, so that returns can be passed on to FCY pool customers accordingly. The Bank as Mudarib in the general pools is responsible for financing costs / assets such as land, building, furniture, fixtures, computers and IT system from its own sources / equity. IERS Pools: The IERS pool assets comprise of Sovereign Guarantee Sukuk, and financing to / sukuk of blue chip companies and exporters as allowed under the applicable rules and regulations, and as such are exposed to lower credit risk. The Musharakah with SBP under IERS is tagged to the IERS pool. FI Pools: The FI pool assets generally comprise of Sovereign Guarantee Sukuk and financing under diminishing musharakah mode only and the related liability of the FI pool comprise of Musharakah / Mudarabah from other banks and financial institutions. These pools are created to meet the liquidity requirements of the Bank. Equity Pools: All other assets including fixed assets, exposure in shares, PKR bai-salam financing and subsidized financing to the Bank's employees are tagged to equity pool. To safeguard the interest of customers, all high risk investments are also done through equity pool. 6.11 Staff retirement benefits Defined benefit plan The Bank operates an approved Gratuity Funded Scheme for its permanent employees. The scheme was approved by the tax authorities in April 2000. The liability recognised in the Statement of Financial Position in respect of Gratuity Funded Scheme is the present value of the defined benefit obligation at the Statement of Financial Position date less the fair value of plan assets. Contributions to the fund are made on the basis of actuarial recommendations. The defined benefit obligation is calculated periodically by an independent actuary using the projected unit credit method. Last valuation was conducted as on December 31, 2019. The Bank also operates End of Service Unfunded Defined Benefit Scheme as approved by the Board of Directors for the benefit of the founding President and Chief Executive Officer of the Bank. The defined benefit obligation for this benefit has been calculated by an independent actuary using the projected unit credit method. The valuation has been carried out on December 31, 2019. Amounts arising as a result of "Remeasurements", representing the actuarial gains and losses and the difference between the actual investment returns and the return implied by the net interest cost are recognised in the Statement of Financial Position immediately, with a charge or credit to "Other Comprehensive Income" in the periods in which they occur. The actuarial valuations involve assumptions about discount rates, expected rates of return on assets, future salary increases and future inflation rates as disclosed in note 37. Defined contribution plan The Bank also operates a recognised contributory provident fund for all permanent employees. Equal monthly contributions are made, both by the Bank and the employees, to the fund at a rate of 10% of basic salary. ANNUAL REPORT 2019 225
227. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 6.12 Compensated absences The Bank recognises liability in respect of employees compensated absences in the period in which these are earned upto the date of Statement of Financial Position. The provision is recognised on the basis of actuarial valuation using projected unit credit method. 6.13 Dividend and reserves Dividend declared and appropriations, except for transfer to statutory reserve, made subsequent to the date of Statement of Financial Position are considered as non adjusting events and are recorded in the financial statements in the year in which these are approved by the directors / shareholders as appropriate. 6.14 Foreign currency transactions Transactions and balances Foreign currency transactions are recorded in rupees at exchange rates prevailing on the date of transaction. Monetary assets, monetary liabilities and contingencies and commitments in foreign currencies except forward contracts are reported in Rupees at exchange rates prevalent on the Statement of Financial Position date. Forward contracts other than contracts with the SBP relating to the foreign currency deposits are valued at forward rates applicable to the respective maturities of the relevant foreign exchange contracts. Forward contracts with the SBP relating to foreign currency deposit, are valued at spot rate prevailing at the Statement of Financial Position date. Exchange gains and losses are included in the profit and loss account currently. Commitments Commitments for outstanding forward foreign exchange contracts are disclosed at the rates applicable at the reporting date. Contingent liabilities / commitments for letters of credit, and letters of guarantee denominated in foreign currencies are expressed in rupee terms at the exchange rates ruling on the reporting date. Translation gains and losses are included in the profit and loss account. 6.15 Provisions and contingent assets and liabilities Provisions are recognised when the Bank has a present legal or constructive obligation arising as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Contingent assets are not recognised, and are also not disclosed unless an inflow of economic benefits is probable. Contingent liabilities are not recognised and are disclosed unless the probability of an outflow of resources embodying economic benefits are remote. 6.16 Acceptances Acceptances comprise undertakings by the Bank to pay bills of exchange drawn on customers. The Bank expects most acceptances to be settled simultaneously with the reimbursement from the customers. Acceptances are accounted for as on-balance sheet transactions and related balances are disclosed under other assets and other liabilities. 6.17 Offsetting Financial assets and financial liabilities are offset and the net amount is reported in the Statement of Financial Position when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the approved accounting standards as applicable in Pakistan. 6.18 226 Revenue recognition i) Profit on Murabaha (including Commodity Murabaha) and Musawamah is recognised on an accrual basis. Profit on murabaha and musawamah transactions for the period from the date of disbursement to the date of culmination of murabaha is recognised immediately upon the later date. ii) Rental on Ijarah contracts under Islamic Financial Accounting Standard - 2 Ijarah (IFAS 2) are recognised as income on an accrual basis. iii) Profit on Bai Muajjal transaction is recognised on an accrual basis. iv) Profit on Diminishing Musharakah financing is recognised on an accrual basis. MEEZAN BANK LIMITED
228. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 6.19 v) Profit on Running Musharakah financing is booked on an accrual basis and is adjusted upon declaration of profit by Musharakah partners. vi) Profit on Tijarah and Istisna financing is recognised on an accrual basis commencing from time of sale of goods till the realisation of sale proceeds by the Bank. vii) Profit on Service Ijarah is recognised on an accrual basis commencing from the date of confirmation of sale. viii) Profit on Wakalah tul Istithmar / Wakalah is recognized on an accrual basis and is commensurate with the Wakalah business performance / work done by the agent. ix) Profit on Sukuk is recognised on an accrual basis. Where Sukuk (excluding held for trading securities) are purchased at a premium or discount, those premiums / discounts are amortised through the profit and loss account over the remaining maturity. x) Commission on letters of credit, acceptances and guarantees is recognised on receipt basis, except for commission on guarantees in excess of Rs 200,000 which is recognised over the period of the guarantee. xi) The Bank also earns fee and commission income from certain other non-funded banking services. The related fee and commission income is recognised at an amount that reflects the consideration to which the Bank expects to be entitled in exchange for providing the services. The bank recognises fees earned on transaction-based arrangements at a point in time when the Bank has fully provided the service to the customer. Where the contract requires services to be provided over time, the income is recognised on a systematic basis over the life of the related service. xii) Dividend income is recognised when the Bank’s right to receive dividend is established. xiii) Gain or loss on sale of investments is included in the profit and loss account. xiv) Gain or loss on disposal of fixed assets, intangible assets, ijarah assets and musharaka assets is taken to the profit and loss account in the period in which they arise. xv) Profit suspended in compliance with the Prudential Regulations issued by the SBP is recorded on receipt basis. Profit on rescheduled / restructured financing and investments are recognised as permitted by the SBP. Segment reporting A segment is a distinguishable component of the Bank that is engaged in providing products or services (business segment) or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Bank's primary format of reporting is based on business segments. Operating segments are reported in a manner consistent with the internal reporting provided to the management. Management monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. 6.19.1 Business segments Corporate and Commercial Banking It includes trade finance, export finance, project finance, Ijarah, guarantees and bills of exchange relating to its Corporate and Commercial customers, investment banking, syndications, IPO related activities (excluding investments), secondary private placements, underwriting and securitisation. Retail Banking It includes retail financing, deposits and banking services offered to its retail customers and small and medium enterprises. Trading and Sales It includes equity, foreign exchanges, commodities, own securities and placements. Others It includes functions which cannot be classified in any of the above segments. 6.19.2 Geographical segments The Bank operates only in Pakistan. 6.20 Impairment The carrying amount of the assets are reviewed at each Statement of Financial Position date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the relevant asset is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the profit and loss account. An impairment loss is reversed if the reversal can be objectively related to an event occurring after the impairment loss was recognised. ANNUAL REPORT 2019 227
229. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 6.21 Earnings per share The Bank presents basic and diluted earnings per share (EPS). Basic EPS is calculated by dividing profit after tax for the year attributable to equity holders of the Bank by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is calculated by dividing the net profit of Bank (after adjusting for return - net of tax) on the convertible instruments by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. 7 CASH AND BALANCES WITH TREASURY BANKS Note 7.1 7.1 With the National Bank of Pakistan in - local currency current accounts National Prize Bonds 8 228 2018 Rupees in ‘000 In hand - local currency - foreign currencies With the State Bank of Pakistan in - local currency current accounts - foreign currency current accounts 2019 7.2 14,487,106 1,854,081 10,754,777 2,122,435 33,981,833 6,609,487 25,130,062 5,305,332 35,077,734 21,709,435 183,120 92,193,361 65,022,041 7.1 These include local and foreign currency amounts required to be maintained by the Bank with the SBP as stipulated by the SBP. These accounts are non-remunerative in nature. 7.2 The Bank, as a matter of Shariah principle, does not deal in prize bonds. These represent the national prize bonds received from customers for onward surrendering to the SBP. BALANCES WITH OTHER BANKS Note 2018 Rupees in ‘000 In Pakistan - in current accounts - in deposit accounts 8.1 Outside Pakistan - in current accounts - in deposit accounts 8.2 8.1 The return on these balances is around 10.16% (2018: Nil) per annum. 8.2 The return on these balances is around 1.56% (2018: 0.85%) per annum. MEEZAN BANK LIMITED 2019 7,723,912 3,750,000 5,858,646 - 1,876,378 2,021,943 15,372,233 2,089,540 307,001 8,255,187
230. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 9 Note DUE FROM FINANCIAL INSTITUTIONS - NET 2019 2018 Rupees in ‘000 Bai Muajjal: With State Bank of Pakistan With Scheduled Banks - Secured With other Financial Institution 9.1 9.2 9.3 9.4 Musharakah Commodity Murabaha Provision against non-performing amounts due from financial institutions 9.6 13,682,452 208,096,873 15,500 221,794,825 1,910,000 26,066 223,730,891 (41,566) 223,689,325 184,814,600 15,500 184,830,100 26,066 184,856,166 (41,566) 184,814,600 9.1 The average return on these Bai Muajjal is 10.55% (2018: Nil) per annum. These balances are maturing latest by February 2020 (2018: Nil). 9.2 The average return on this product is 13.05% (2018: 7.87%) per annum. The balances have maturities ranging between January 2020 to October 2020 (2018: January 2019 to April 2019). These Bai Muajjal are secured against Federal Government securities received as collateral and having market value of Rs 215,020 million as at December 31, 2019 (2018: Rs 179,574 million). 2019 2018 Rupees in ‘000 9.3 Bai Muajjal Placements Less: Deferred Income Profit Receivable shown in other assets Bai Muajjal Placements 240,471,829 (8,990,054) (9,686,950) 221,794,825 191,381,750 (1,137,552) (5,414,098) 184,830,100 9.4 The average return on this product is 11.25% (2018: Nil) per annum. The balances are maturing latest by January 2020 (2018: Nil). 2019 9.5 2018 Rupees in ‘000 Particulars of due from financial institutions - net In local currency In foreign currencies 223,689,325 223,689,325 2019 9.6 Category of classification Loss Non-performing due from financial institutions 41,566 184,814,600 184,814,600 2018 Provision held Non-performing due from financial institutions Rupees in ‘000 41,566 41,566 Provision held 41,566 ANNUAL REPORT 2019 229
231. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 10 INVESTMENTS - NET 10.1 Investments by types Available for sale securities - Federal Government Securities - Shares (including units of fund) - Non Government Sukuk - Foreign Securities Note 10.5.1 10.5.2 & 10.5.3 10.5.4 10.5.5 Held to maturity securities - Federal Government Securities 2019 2018 Cost / Amortised cost Provision Surplus / for (Deficit) diminution 96,658,346 6,809,714 101,427,363 7,774,672 212,670,095 (213,851) 2,201,501 1,674,958 162,883 12,662,650 318,883 2,364,384 14,442,640 - - - Carrying Value Cost / Provision Amortised for cost diminution Surplus / (Deficit) Carrying Value 61,420,405 5,981,168 21,246,732 7,576,263 96,224,568 (271,470) 277,249 (110,446) (104,667) 61,148,935 5,154,207 21,076,097 7,465,817 94,845,056 Rupees in ‘000 96,444,495 6,283,171 113,927,130 8,093,555 224,748,351 - 1,104,210 170,635 1,274,845 28,000,000 - - 28,000,000 In related parties Subsidiary (unlisted) - Shares 10.1.1 63,050 - - 63,050 63,050 - - 63,050 Associates (listed) - Units of funds 10.1.1 834,761 - - 834,761 834,761 - - 834,761 225,646,162 125,122,379 Total Investments 213,567,906 2,364,384 14,442,640 1,274,845 (104,667) 123,742,867 10.1.1 Details of investment in subsidiary and associates 2019 Percentage of holding Assets Liabilities Revenue Profit after taxation 65% 4,290,160 947,839 1,576,434 557,709 566,794 N/A 6% 7% 2% 22% 7% 4,809,980 5,237,358 30,702,005 371,688 2,035,666 128,436 200,705 1,027,243 10,835 122,717 418,138 191,547 1,549,108 92,783 159,648 233,297 12,091 572,878 78,111 121,731 233,297 12,091 572,878 78,111 121,731 291,045 358,384 718,937 78,305 136,049 Rupees in ‘000 Total Market comprehensive Value (Net income Assets Share) Subsidiary (unlisted) Al Meezan Investment Management Limited Associates (listed and open ended) Meezan Balanced Fund Al Meezan Mutual Fund Meezan Islamic Fund Meezan Gold Fund KSE Meezan Index Fund 230 MEEZAN BANK LIMITED
232. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 2018 Assets 65% 3,525,273 649,746 1,474,704 504,222 496,537 N/A Meezan Balanced Fund 4% 6,844,559 144,844 (149,885) (370,344) (372,085) 271,969 Meezan Islamic Fund 2% 33,901,644 1,302,695 (3,352,098) (4,577,270) (4,573,578) 692,116 8% 1,627,605 75,574 (185,845) (216,065) (216,065) Subsidiary (unlisted) Al Meezan Investment Management Limited Associates (listed and open ended) Al Meezan Mutual Fund 6% Meezan Gold Fund 20% KSE Meezan Index Fund Liabilities Revenue Market Total comprehensive Value (Net income / (loss) Assets Share) Percentage of holding Profit / (Loss) after taxation Rupees in ‘000 6,291,952 214,737 331,830 (594,757) 9,798 (815,586) 70,917 (827,804) 60,278 60,278 342,821 64,150 127,427 Subsidiary and associates are incorporated / registered in Pakistan. Shares in subsidiary are placed in custody account with Central Depository Company of Pakistan and cannot be sold without the prior approval of the SECP in accordance with the SECP's circular No. 9 of 2006 dated June 15, 2006. 10.2 Investments by segments Note 2019 Cost / Amortised cost Federal Government Securities - Sukuk - Bai Muajjal with Government of Pakistan (through State Bank of Pakistan) 10.5.1 Shares Listed Companies Units of funds Unlisted Companies 10.5.2 10.5.2 10.5.3 Non Government Sukuk Listed Unlisted 10.2.1 & 10.5.4 10.5.4 Foreign Securities Government Sukuk Non Government Sukuk Shares 10.5.5 10.5.5 10.5.5 Associates Meezan Balanced Fund Al Meezan Mutual Fund Meezan Islamic Fund Meezan Gold Fund KSE Meezan Index Fund Subsidiary Al Meezan Investment Management Limited Total Investments 10.2.1 10.6 Provision for diminution 13,006,137 - 83,652,209 96,658,346 - 2018 Surplus / (Deficit) Carrying Value Cost / Provision Amortised for cost diminution Surplus / (Deficit) Carrying Value Rupees in ‘000 (213,851) 12,792,286 46,986,693 - (271,470) 46,715,223 83,652,209 96,444,495 (271,470) 42,433,712 89,148,935 - 12,662,650 162,883 162,883 12,662,650 97,362,650 16,564,480 113,927,130 275,766 1,483 277,249 - 4,347,184 51,483 755,540 5,154,207 84,700,000 16,727,363 101,427,363 42,433,712 89,420,405 5,080,386 50,000 850,782 5,981,168 21,246,732 21,246,732 - 5,958,932 850,782 6,809,714 (213,851) 2,089,064 1,674,958 112,437 2,201,501 1,674,958 21,076,097 21,076,097 4,926,425 3,156,741 10,389 8,093,555 4,788,337 2,777,537 10,389 7,576,263 - (61,003) (49,443) (110,446) 4,727,334 2,728,094 10,389 7,465,817 1,008,968 95,242 1,104,210 170,635 170,635 4,666,473 3,097,810 10,389 7,774,672 - 161,345 302,366 221,050 50,000 100,000 834,761 - - 161,345 302,366 221,050 50,000 100,000 834,761 161,345 302,366 221,050 50,000 100,000 834,761 - - 161,345 302,366 221,050 50,000 100,000 834,761 63,050 - - 63,050 63,050 - - 63,050 225,646,162 125,122,379 213,567,906 259,952 58,931 318,883 5,544,826 738,345 6,283,171 2,364,384 14,442,640 1,274,845 (104,667) 123,742,867 During the year, the Bank invested Rs 85 billion in Pakistan Energy Sukuk-I issued by Power Holding (Private) Limited, wholly owned by the Government of Pakistan. These Energy Sukuks are guaranteed by the Government of Pakistan and are eligible for Statutory Liquidity Requirements. These Energy Sukuk are based on Islamic mode of Ijarah and has a 10 year maturity with semi-annual rental payments. ANNUAL REPORT 2019 231
233. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 2019 10.3 Provision against diminution in value of investments Opening balance Charge / (reversals) for the year On available for sale securities - charge for the year on equity investments - reversals for the year upon cash recovery on debt instruments - reversals on disposals of equity investments Closing balance Rupees in ‘000 2018 1,274,845 967,444 1,385,492 (7,752) (288,201) 1,089,539 2,364,384 505,484 (11,047) (187,036) 307,401 1,274,845 10.4 Particulars of provision against Sukuk 2019 Non-performing Investment Category of classification 2018 Provision Non-performing held Investment Rupees in ‘000 Provision held Domestic Loss 162,883 162,883 170,635 170,635 10.5 Quality of Available for Sale Securities Details regarding quality of Available for Sale (AFS) securities are as follows: Cost 2019 10.5.1 Federal Government Securities Bai Muajjal with Government of Pakistan (through State Bank of Pakistan) GOP Ijarah Sukuk - GISF-3 GOP Ijarah Sukuk - GISF-1 GOP Ijarah Sukuk - GISF-2 10.5.2 2018 83,652,209 13,006,137 96,658,346 42,433,712 15,890,974 3,005,830 89,889 61,420,405 95,934 930,380 173,286 791,579 1,564,981 535,578 385,910 490,964 15,227 66,390 55,920 306,866 191,232 96,523 258,162 5,958,932 183,786 1,144,900 224,084 613,808 1,051,875 568,756 236,346 358,048 66,390 51,889 306,866 45,328 24,931 36,207 4,701 162,471 50,000 5,130,386 Shares and units of funds - Listed Automobile Assembler Construction and materials (cement) Power Generation and Distribution Oil and Gas Marketing Companies Oil and Gas Exploration Companies Fertilizers Chemicals Pharmaceuticals Investment Companies Mudarabas Technology and Communication Paper and Board Textile (Composite) Glass and Ceramics Vanaspati and Allied Industries Food and Personal Care Products Engineering Units of open end funds 232 Rupees in ‘000 MEEZAN BANK LIMITED
234. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 10.5.3 Shares - Unlisted Fatima Energy Limited Sapphire Electric Company Limited Daewoo Pakistan Express Bus Service Limited Pak Kuwait Takaful Company Limited * Based on latest available audited financial statements 10.5.4 Cost 2019 2018 Rupees in ‘000 250,553 318,864 253,240 28,125 850,782 Breakup value per share* 2019 2018 Rupees 250,553 318,864 253,240 28,125 850,782 8.70 31.58 56.66 0.60 9.40 29.10 58.70 0.60 Cost Non Government Sukuk 2019 Rupees in ‘000 2018 Listed - Government guaranteed 84,700,000 Unlisted - Government guaranteed 11,690,970 14,128,470 1,800,000 3,073,510 162,883 5,036,393 3,428,333 3,519,294 170,635 7,118,262 - Unlisted Credit Ratings - AA / AA+, AA, AA- A / A+, A, A- Unrated 10.5.5 Foreign Securities - Government Sukuk Hong Kong Saudi Arabia Qatar Luxembourg Indonesia 2019 Cost Rating Rupees in ‘000 1,560,902 780,524 2,325,047 4,666,473 2018 Cost Rating Rupees in ‘000 N/A A Aa3 N/A Baa2 694,270 1,267,122 701,777 39,709 2,085,459 4,788,337 Non Government Sukuk - Unlisted Cost 2019 Credit Ratings - Aa3 / A - Baa1 Equity securities - Unlisted S.W.I.F.T. SCRL 10.6 Investment in subsidiary Al Meezan Investment Management Limited Aa2 A+ Aa3 AAA Baa2 2018 2,320,891 776,919 3,097,810 2,080,042 697,495 2,777,537 10,389 10,389 Cost 2019 2018 Rupees in ‘000 63,050 Rupees in ‘000 63,050 Breakup value per share* 2019 2018 Rupees 668.46 575.11 * Based on latest available audited financial statements ANNUAL REPORT 2019 233
235. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 11 Note 11.1 8,633,318 4,902,247 2,095,550 369,441 540,715 16,541,271 8,021,609 7,657,780 3,818,550 344,573 130,491 19,973,003 129,472,197 24,671,638 154,143,835 142,433,085 16,430,165 158,863,250 4,684,962 34,435,537 11,117,387 189,215 6,967,796 975,428 58,370,325 3,440,669 56,972,563 8,069,320 74,732 4,388,971 508,535 73,454,790 561,345 11,032,825 1,070,970 353,531 13,018,671 394,041 12,371,614 364,949 271,085 13,401,689 11,009,024 5,759,913 9,618,012 886,944 123,500 45,000 27,442,393 12,450,345 16,505,491 9,890,657 875,001 124,950 39,846,444 811,378 6,947,051 2,710,138 10,468,567 590,001 7,281,394 1,659,072 9,530,467 11.5 7,461,667 1,738 7,463,405 1,474,998 5,725,100 1,738 5,726,838 11.6 113,501 48,493,395 58,118 48,665,014 3,727,830 118,905 52,511,749 116,259 46,836,155 46,952,414 6,253,140 53,205,554 13,232,142 79,167,336 14,645,228 1,955,071 5,378,299 114,378,076 248,880 40,825,200 250,000 2,765,026 4,672 4,228,869 2,376,639 14,150,878 74,800,828 8,490,933 490,628 97,933,267 414,800 40,825,200 475,000 2,000,000 5,153 3,712,540 2,326,136 11.2 Running Musharakah financing - Running Musharakah financing - Financing under Islamic Export Refinance - Running Musharakah Istisna financing and related assets - Istisna financing - Advances against Istisna - Istisna inventory - Financing under Islamic Export Refinance - Istisna - Advances under Islamic Export Refinance - Istisna - Inventory under Islamic Export Refinance - Istisna Tijarah financing and related assets - Tijarah financing - Tijarah inventory - Financing under Islamic Export Refinance - Tijarah - Inventory under Islamic Export Refinance - Tijarah Musawamah financing and related assets - Musawamah financing - Advances against Musawamah - Musawamah Inventory - Financing under Islamic Export Refinance - Musawamah - Advances under Islamic Export Refinance - Musawamah - Inventory under Islamic Export Refinance - Musawamah 11.3 11.4 Salam Financing and related assets - Salam Financing - Advances against Salam - Salam Inventory Financing against bills - Financing against bills - Salam - Advance against bills - Salam Bai Muajjal financing Ijarah financing and related assets - Net investment in Ijarah - Net book value of assets/investment in Ijarah under IFAS 2 - Net book value of assets/investment in Ijarah under IFAS 2 (SBP's ILTFF) - Advances against Ijarah - Advances against Ijarah under SBP's ILTFF Diminishing Musharakah financing and related assets - Diminishing Musharakah financing - housing - Diminishing Musharakah financing - others - Advances against Diminishing Musharakah - Diminishing Musharakah financing - SBP's ILTFF - Advances against Diminishing Musharakah under SBP's ILTFF Musharakah financing Advances against Wakalah Tul Istithmar Wakalah Tul Istithmar financing Wakalah financing Advance against Service Ijarah Labbaik (Qard for Hajj and Umrah) Staff financing Other financing 11.7 569,632 Gross Islamic Financing and Related Assets 11.8 506,512,576 522,263,763 Less: Provision against non-performing Islamic financing and related assets - Specific Less: Provision against non-performing Islamic financing and related assets - General 11.10 11.10 (8,284,519) (4,452,711) (6,771,530) (2,927,711) 493,775,346 512,564,522 Islamic financing and related assets - net of provision 234 2018 Rupees in ‘000 ISLAMIC FINANCING AND RELATED ASSETS In Pakistan Murabaha financing and related assets - Murabaha financing - Advances against Murabaha - Murabaha inventory - Financing under Islamic Export Refinance - Murabaha - Advance against Islamic Export Refinance - Murabaha 2019 MEEZAN BANK LIMITED
236. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 Note 2019 2018 Rupees in ‘000 11.1 Murabaha receivable - gross Less: Deferred income Profit receivable shown in other assets Murabaha financing 11.1.1 Murabaha Sale Price Murabaha Purchase Price 11.1.2 The movement in Murabaha financing during the year: Opening balance Sales during the year Adjusted during the year Closing balance 11.1.3 Deferred murabaha income Opening balance Arising during the year Recognised during the year Closing balance 11.1.1 11.1.3 11.2 Financing under Islamic Export Refinance - Murabaha - gross Less: Deferred income Profit receivable shown in other assets Financing under Islamic Export Refinance - Murabaha 11.2.1 The movement in Islamic Export Refinance Murabaha financing during the year: Opening balance Sales during the year Adjusted during the year Closing balance 11.2.2 Deferred Islamic Export Refinance murabaha income Opening balance Arising during the year Recognised during the year Closing balance 11.3 Musawamah financing - gross Less: Deferred income Profit receivable shown in other assets Musawamah financing 11.4 Financing under Islamic Export Refinance - Musawamah - gross Less: Deferred income Profit receivable shown in other assets Financing under Islamic Export Refinance - Musawamah 11.5 Bai Muajjal financing - gross Less: Deferred income Profit receivable shown in other assets Bai Muajjal financing 9,171,941 (198,327) (340,296) 8,633,318 8,434,743 (142,250) (270,884) 8,021,609 9,171,941 (8,633,318) 538,623 8,434,743 (8,021,609) 413,134 8,021,609 47,186,165 (46,574,456) 8,633,318 7,854,995 47,580,002 (47,413,388) 8,021,609 142,250 1,800,684 (1,744,607) 198,327 110,813 1,218,659 (1,187,222) 142,250 382,945 (836) (12,668) 369,441 353,984 (1,725) (7,686) 344,573 344,573 1,459,464 (1,434,596) 369,441 599,862 684,949 (940,238) 344,573 1,725 17,106 (17,995) 836 1,848 9,507 (9,630) 1,725 11,610,569 (292,915) (308,630) 11,009,024 12,998,576 (298,927) (249,304) 12,450,345 899,031 (7,015) (5,072) 886,944 885,568 (4,387) (6,180) 875,001 1,701,154 (146,846) (79,310) 1,474,998 615,345 (26,426) (19,287) 569,632 11.6 Net book value of assets / investments in Ijarah under IFAS 2 is net of depreciation of Rs 35,450 million (2018: Rs 25,267 million). 11.7 This includes Rs 487 million (2018: Rs 484 million) representing profit free financing to staff advanced under the Bank's Human Resource Policies. ANNUAL REPORT 2019 235
237. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 11.8 Particulars of financing - gross 2019 In - local currency 493,186,199 - foreign currencies 11.9 Rupees in ‘000 2018 513,035,591 13,326,377 9,228,172 506,512,576 522,263,763 Islamic financing and related assets include Rs 8,996 million (2018: Rs 6,985 million) which have been placed under non-performing status as detailed below: 2019 Non Performing Amount 2018 Provision Held Non Performing Amount Rupees in ‘000 Category of classification Provision Held Domestic Other Assets Especially Mentioned 22,534 28,157 - Substandard 557,679 132,042 137,429 30,927 Doubtful 446,866 212,837 49,514 8,523 7,968,640 7,939,640 6,770,142 6,732,080 8,995,719 8,284,519 6,985,242 6,771,530 Loss 11.10 - Particulars of provision against non-performing Islamic financing and related assets: 2018 2019 Specific General Total Specific General Total Rupees in ‘000 Opening balance 6,771,530 2,927,711 9,699,241 6,426,731 2,377,711 8,804,442 Charge for the year 1,905,342 1,525,000 3,430,342 552,977 550,000 1,102,977 (357,571) (208,111) 3,072,771 344,866 (34,782) (67) 12,737,230 6,771,530 Less: Reversals (357,571) 1,547,771 Amount Written off Closing balance (34,782) 8,284,519 1,525,000 4,452,711 550,000 2,927,711 (208,111) 894,866 (67) 9,699,241 11.10.1 The Bank maintains general reserve (provision) in accordance with the applicable requirements of the Prudential Regulations for Consumer Financing and House Financing issued by the SBP. In addition, the Bank has also maintained a general provision of Rs 4,050 million (2018: Rs 2,525 million) against financing made on prudent basis, in view of prevailing economic conditions. This general provision is in addition to the requirements of Prudential Regulations. 11.10.2 In accordance with BSD Circular No. 2 dated January 27, 2009 issued by the SBP, the Bank has availed the benefit of Forced Sales Value (FSV) of collaterals against the non-performing financing. The accumulated benefit availed amounts to Rs 33.4 million (2018: Rs 17.9 million). The additional profit arising from availing the FSV benefit - net of tax amounts to Rs 21.7 million (2018: Rs 11.6 million). The increase in profit, due to availing of the benefit, is not available for distribution of cash and stock dividend to share holders. 236 MEEZAN BANK LIMITED
238. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 11.10.3 Particulars of provision against non-performing financing: 2018 2019 Specific General Total Specific General Total Rupees in ‘000 In local currency In foreign currencies 8,021,468 263,051 8,284,519 4,452,711 4,452,711 12,474,179 263,051 12,737,230 6,515,997 255,533 6,771,530 Note 2,927,711 2,927,711 2019 2018 Rupees in ‘000 11.11 Particulars of write offs Against provisions Directly charged to profit and loss account 9,443,708 255,533 9,699,241 11.10 Write offs Rs. 500,000 and above - Domestic Write offs below Rs. 500,000 - Domestic 34,782 34,782 67 67 34,782 34,782 67 67 11.11.1 Details of financing written off of Rs 500,000 and above In term of sub-section (3) of section 33A of the Banking Companies Ordinance, 1962, the Statement in respect of written off financing or any other financial relief of five hundred thousand rupees or above allowed to any person during the year ended December 31, 2019 is given as Annexure 1. 12 FIXED ASSETS Capital work-in-progress Property and equipment Right-of-use assets 12.1 Note 2019 2018 Rupees in ‘000 12.1 12.2 12.3 3,185,241 13,168,734 6,930,440 23,284,415 1,644,436 11,484,690 13,129,126 2,171,210 271,621 126,203 552,430 63,777 3,185,241 1,009,074 174,250 152,864 263,986 44,262 1,644,436 Capital work-in-progress Advances to suppliers and contractors for: - civil works - computer hardware - purchase of vehicles - office machines - furniture and fixtures ANNUAL REPORT 2019 237
239. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 12.2 Property and equipment 2019 Leasehold Furniture Leasehold Buildings on leasehold improvements and fixtures Land land Electrical, office and computer equipments Vehicles Total Rupees in ‘000 At January 1, 2019 Cost Accumulated depreciation Net book value 4,578,013 4,578,013 1,514,872 515,452 999,420 5,893,257 2,806,259 3,086,998 672,755 380,911 291,844 5,308,744 3,807,413 1,501,331 1,658,110 19,625,751 631,026 8,141,061 1,027,084 11,484,690 4,578,013 223,361 4,801,374 999,420 234,545 83,215 (83,984) 1,233,196 3,086,998 694,379 (21) (530,272) 3,251,084 291,844 111,988 (125) (57,942) 345,765 1,501,331 1,281,083 (482) (662,642) 2,119,290 1,027,084 827,679 (60,300) (376,438) 1,418,025 4,801,374 4,801,374 1,832,632 599,436 1,233,196 6,587,594 3,336,510 3,251,084 783,078 437,313 345,765 6,578,906 4,459,616 2,119,290 2,221,608 22,805,192 803,583 9,636,458 1,418,025 13,168,734 - 5 10 10 10 and 20 20 Electrical, office and computer equipments Vehicles Year ended December 31, 2019 Opening net book value Additions Transfer from other assets Net book value of disposals Depreciation charge Net book value as at December 31, 2019 11,484,690 3,373,035 83,215 (60,928) (1,711,278) 13,168,734 Year ended December 31, 2019 Cost Accumulated depreciation Net book value as at December 31, 2019 Rate of depreciation (percentage) 2018 Leasehold Furniture Leasehold Buildings on leasehold improvements and fixtures Land land Total Rupees in ‘000 At January 1, 2018 Cost Accumulated depreciation Net book value 4,306,133 4,306,133 1,363,692 441,612 922,080 5,649,484 2,295,990 3,353,494 628,556 329,680 298,876 4,535,112 3,270,980 1,264,132 1,233,646 17,716,623 545,602 6,883,864 688,044 10,832,759 4,306,133 271,880 4,578,013 922,080 151,180 (73,840) 999,420 3,353,494 254,184 (1,062) (519,618) 3,086,998 298,876 47,670 (282) (54,420) 291,844 1,264,132 833,224 (3,107) (592,918) 1,501,331 688,044 665,656 (52,575) (274,041) 1,027,084 4,578,013 4,578,013 1,514,872 515,452 999,420 5,893,257 2,806,259 3,086,998 672,755 380,911 291,844 5,308,744 3,807,413 1,501,331 1,658,110 19,625,751 631,026 8,141,061 1,027,084 11,484,690 10 10 10 and 20 Year ended December 31, 2018 Opening net book value Additions Net book value of disposals Depreciation charge Net book value as at December 31, 2018 10,832,759 2,223,794 (57,026) (1,514,837) 11,484,690 Year ended December 31, 2018 Cost Accumulated depreciation Net book value as at December 31, 2018 Rate of depreciation (percentage) 12.2.1 238 - 5 20 Included in cost of property and equipment are fully depreciated items still in use aggregating Rs 4,134 million (2018: Rs 3,158 million). MEEZAN BANK LIMITED
240. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 12.2.2 The Bank has not carried out any revaluation of property and equipment at the recent date as the Bank uses cost model for measurement of its property and equipment. 12.2.3 Details of disposal of fixed assets to related parties or other persons having net book value of Rs 500,000 or above are as follows: Description Vehicles Honda Civic Honda Civic Toyota Corolla Toyota Corolla Honda City Honda City Honda City Honda City Honda City Honda City Honda City Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Honda City Suzuki Cultus Cost Accumulated Net book Sale depreciation value proceeds Rupees in ‘000 2,533 2,425 1,753 1,753 1,678 1,664 1,648 1,547 1,545 1,534 1,524 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,245 1,245 1,129 1,129 1,129 1,104 1,104 1,104 1,104 1,104 1,104 1,104 1,104 1,104 1,104 1,104 1,099 1,074 1,074 1,074 1,074 1,017 2,154 2,035 1,864 1,789 1,900 1,245 65,024 1,351 1,617 1,198 1,081 1,035 999 1,071 387 515 690 838 375 521 562 396 417 375 437 500 436 332 546 395 527 460 570 405 534 497 570 497 405 405 405 570 476 573 573 555 573 407 359 475 590 835 253 124 27,712 1,182 808 555 672 643 665 577 1,160 1,030 844 686 875 729 688 854 833 875 813 750 809 913 583 734 602 644 534 699 570 607 534 607 699 699 699 534 623 501 501 519 501 610 1,795 1,560 1,274 954 1,647 1,121 37,312 1,579 1,528 931 1,016 1,022 965 955 1,486 1,725 2,025 1,790 1,300 1,360 1,325 1,259 1,225 1,272 1,450 942 1,480 1,216 1,006 979 1,000 947 953 912 931 1,040 973 958 931 921 922 1,007 1,040 893 875 962 924 942 2,229 2,054 1,678 1,678 1,713 1,264 57,583 199,157 176,169 22,988 104,493 10,921 10,439 482 1,299 1,665 1,540 125 395 42 21 21 63 276,809 215,881 60,928 163,833 Mode of disposal MBL Staff Policy MBL Staff Policy MBL Staff Policy MBL Staff Policy MBL Staff Policy MBL Staff Policy MBL Staff Policy Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Particulars of purchaser Mr Faisal Iqbal (Executive, Employee) Mr Khalid Zaman Khan (Executive, Employee) Mr Kashif Zaidi (Executive, Employee) Mr Asif Abdul Aziz (Executive, Employee) Syed Muhammad Uzair (Executive, Ex-employee) Mr Muhammad Zahid (Executive, Employee) Mr Javaid Ahmed Kashif (Executive, Employee) Mr Wasim Mirza M/s Carfirst M/s Augmentech Business Solution M/s Augmentech Business Solution M/s Augmentech Business Solution M/s Augmentech Business Solution M/s Augmentech Business Solution Mr Sajjad Rahman Paracha M/s Augmentech Business Solution M/s Augmentech Business Solution M/s Augmentech Business Solution Mr Rizwan Mazhar M/s Augmentech Business Solution Mr Tanveer Afzal M/s Augmentech Business Solution Mr Adnan Naseer Ahmed M/s Carfirst Mr Waqar Ahmed Khan M/s Augmentech Business Solution Mr Waqar Ahmed Khan Mr Saleem Akhter M/s Augmentech Business Solution M/s Augmentech Business Solution M/s Augmentech Business Solution Mr Saeed Ahmed Mr Wasim Mirza Mr Waqar Ahmed Khan M/s Augmentech Business Solution M/s Augmentech Business Solution Mr Saleem Ahmed Siddiqui Mr Mumtaz Ali Mr Khurram Imtiaz Mr Khurram Imtiaz Mr Rizwan Mazhar M/s EFU General Insurance Limited M/s EFU General Insurance Limited M/s EFU General Insurance Limited M/s EFU General Insurance Limited M/s EFU General Insurance Limited M/s EFU General Insurance Limited Other disposals Vehicles Electrical, office and computer equipments Furniture and Fixtures Leasehold improvements ANNUAL REPORT 2019 239
241. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 2019 Cost 12.3 Right-of-use assets At January 1, Recognized upon initial adoption of IFRS 16 Additions during the year Depreciation Charge Derecognition during the year At December 31, Net Book Value Accumulated Depreciation Rupees in ‘000 7,940,336 1,151,403 (211,059) 8,880,680 (2,161,299) 211,059 (1,950,240) Useful life 7,940,336 1,151,403 (2,161,299) 6,930,440 1 - 7 years 2019 2018 Rupees in ‘000 13 INTANGIBLE ASSETS Computer Software Advance against computer software 13.1 At January 1, Cost Accumulated amortisation Net book value Year ended December 31, Opening net book value Additions - directly purchased Amortisation charge Closing net book value Year ended December 31, Cost Accumulated amortisation Net book value Rate of amortisation (percentage) Useful life 13.1.1 1,660,942 1,108,812 552,130 1,368,316 888,604 479,712 552,130 317,039 (254,597) 614,572 479,712 292,626 (220,208) 552,130 1,977,981 1,363,409 614,572 1,660,942 1,108,812 552,130 10-20 5 - 10 years 10-20 5 - 10 years Profit / return accrued in local currency - net of provisions Profit / return accrued in foreign currencies - net of provisions Acceptances Advances, deposits, advance rent and other prepayments Non-banking assets acquired in satisfaction of claims Unrealised gain on forward foreign exchange contracts - net Dividends receivable Stamps Security deposits Advance for Investments Other 2019 2018 Rupees in ‘000 14 OTHER ASSETS 14.1 14.2 20.5 Provision against other assets 14.3.1 Other Assets (Net of Provision) Surplus on revaluation of non-banking assets acquired in satisfaction of claims 23 Other Assets - total 240 552,130 72,404 624,534 Included in cost of intangible assets are fully amortised items still in use aggregating Rs 987 million (2018: Rs 542 million). Note 14.1 614,572 165,809 780,381 34,765,016 76,791 9,033,110 1,904,437 145,503 12,963 172,596 55,542 405,575 46,571,533 (74,686) 46,496,847 20,184 46,517,031 13,851,168 63,744 10,634,901 2,269,774 240,607 1,335,392 262 13,037 119,510 288,419 28,816,814 (71,302) 28,745,512 34,080 28,779,592 This includes prepaid takaful aggregating Rs 971 million (2018: Rs 959 million) which is being amortized over a period of one year. MEEZAN BANK LIMITED
242. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 2019 2018 Rupees in ‘000 14.2 Market value of Non-banking assets acquired in satisfaction of claims 155,687 264,687 Market value of the non-banking assets acquired in satisfaction of claims has been carried out by an independent valuer, M/s Joseph Lobo (Private) Limited based on prevailing market values determined through independent market inquiries from local active realtors and adjusted for the physical condition of the property as more detailed in note 40.3. 14.2.1 Non-banking assets acquired in satisfaction of claims Note 2018 Rupees in ‘000 Opening Balance Depreciation Transfer to fixed assets Disposal Closing Balance 14.3 2019 240,607 (471) (83,215) (11,418) 145,503 246,201 (5,594) 240,607 10,000 41,132 23,554 74,686 10,000 35,451 25,851 71,302 71,302 49,999 (4,174) (42,441) 96,234 9,755 (27,349) (7,338) 74,686 71,302 17,186,807 17,186,807 23,750,543 23,750,543 42,047,390 42,047,390 36,407,811 36,407,811 16.1.1 33,861,385 22,737,094 16.1.2 16.1.3 7,268,122 909,114 433,990 627,075 8,769 42,047,390 409,652 12,200,000 36,407,811 Provision held against other assets Non-banking assets acquired in satisfaction of claims Acceptances Others 14.3.1 Movement in provision held against other assets Opening balance Charge for the year Reversals during the year Amount adjusted / written off during the year Closing balance 15 BILLS PAYABLE In Pakistan Outside Pakistan 16 DUE TO FINANCIAL INSTITUTIONS In Pakistan Outside Pakistan 16.1 Details of due to financial institutions secured / unsecured Secured Musharakah from the State Bank of Pakistan under Islamic Export Refinance Scheme Investment from the State Bank of Pakistan under Islamic Long Term Financing Facility Other financial institution Unsecured Overdrawn nostro accounts Other Musharakah ANNUAL REPORT 2019 241
243. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 16.1.1 These Musharakah are on a profit and loss sharing basis maturing between January 2020 to June 2020 and are secured against demand promissory notes executed in favor of SBP. A limit of Rs 38,473 million (2018: Rs 33,422 million) has been allocated to the Bank by SBP under Islamic Export Refinance Scheme. 16.1.2 These Investment are on Profit Loss sharing basis which has been invested in general pool of the Bank. 16.1.3 These Musharakah are on Profit Loss sharing basis. A limit of USD 10 million has been allocated to the Bank under the agreement with Karandaaz. 2019 2018 16.2 Particulars of due to financial institutions with respect to currencies Rupees in ‘000 In local currency In foreign currencies 42,038,621 8,769 42,047,390 35,998,159 409,652 36,407,811 35,104,360 6,943,030 42,047,390 35,346,747 1,061,064 36,407,811 16.3 Particulars of due to financial institutions Short - term Long - term 17 DEPOSITS AND OTHER ACCOUNTS 2019 In Local currency In Foreign currencies Customers - Current accounts - non-remunerative - Savings deposits - Fixed deposits - Margin Financial institutions - Current accounts - non-remunerative - Savings deposits - Fixed deposits 2018 Total In Local currency Rupees in ‘000 In Foreign currencies Total 312,409,384 318,577,677 228,503,227 4,949,165 864,439,453 20,464,919 26,796,248 13,342,660 8,692 60,612,519 332,874,303 345,373,925 241,845,887 4,957,857 925,051,972 267,855,629 255,706,358 197,008,707 5,335,289 725,905,983 15,590,028 23,494,221 10,109,048 41,896 49,235,193 283,445,657 279,200,579 207,117,755 5,377,185 775,141,176 1,208,228 3,799,833 2,519,081 7,527,142 871,966,595 60,612,519 1,208,228 3,799,833 2,519,081 7,527,142 932,579,114 597,730 4,607,308 5,130,730 10,335,768 736,241,751 49,235,193 597,730 4,607,308 5,130,730 10,335,768 785,476,944 2019 17.1 Composition of deposits - Individuals - Government (Federal and Provincial) - Public Sector Entities - Banking Companies - Non-Banking Financial Institutions - Private Sector 17.2 Particulars of deposits and other accounts in Pakistan - in local currency Mudaraba based deposits Qard based deposits - in foreign currencies Mudaraba based deposits Qard based deposits 2018 Rupees in ‘000 628,758,131 20,376,156 14,838,591 34,475 7,492,667 261,079,094 932,579,114 521,789,397 14,958,796 15,385,523 67,656 10,268,111 223,007,461 785,476,944 556,561,420 315,405,175 871,966,595 466,196,269 270,045,482 736,241,751 40,138,908 20,473,611 60,612,519 932,579,114 33,603,269 15,631,924 49,235,193 785,476,944 17.3 Eligible deposits covered under deposit protection scheme (including call deposit receipts disclosed under bills payable) amount to Rs 758,498 million (2018: Rs 628,119 million). 242 MEEZAN BANK LIMITED
244. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 Note 2019 2018 Rupees in ‘000 18 SUB-ORDINATED SUKUK Additional Tier I Sukuk Tier II Sukuk 18.1 18.2 7,000,000 7,000,000 14,000,000 7,000,000 7,000,000 14,000,000 18.1 In August 2018, the Bank issued regulatory Shariah compliant unsecured, sub-ordinated privately placed Additional Tier I Sukuk based on Mudaraba of Rs 7,000 million as instrument of redeemable capital under section 66 of the Companies Act, 2017. The brief description of Additional Tier I sukuk is as follows: Credit Rating AA- (Double A minus) by VIS Credit Rating Company Limited Issue Date August 01, 2018 Tenor Perpetual Profit payment frequency Monthly in arrears Redemption Perpetual Expected Periodic Profit Amount (Mudaraba Profit Amount) The Mudaraba Profit is computed under General Pool on the basis of profit sharing ratio and monthly weightages announced by the Bank under the SBP guidelines of pool management. Last announced profit rate on the Sukuk is 15.29% per annum. Call Option The Bank may call Additional Tier I Sukuk with prior approval of SBP on or after five years from the date of issue. Loss Absorbency The Additional Tier I Sukuk, at the option of the SBP, will be fully and permanently converted into common shares upon the occurrence of a point of non-viability trigger event as determined by SBP or for any other reason as may be directed by SBP. Lock-in-Clause Profit and/or redemption amount can be held back in respect of the Additional Tier I Sukuk, if such payment will result in a shortfall in the Bank’s minimum capital or capital adequacy ratio requirement. 18.2 In September 2016, the Bank issued regulatory Shariah compliant unsecured, sub-ordinated privately placed Tier II Sukuk based on Mudaraba of Rs 7,000 million as instrument of redeemable capital under section 66 of the Companies Act, 2017. The brief description of Tier II sukuk is as follows: Credit Rating AA (Double A) by VIS Credit Rating Company Limited Issue Date September 22, 2016 Tenor 10 years from the issue date Profit payment frequency Semi-annually in arrears Redemption Bullet payment at the end of the tenth year Expected Periodic Profit Amount (Mudaraba Profit Amount) The Mudaraba Profit is computed under General Pool on the basis of profit sharing ratio and monthly weightages announced by the Bank under the SBP guidelines of pool management. Last announced profit rate on the Sukuk is 14.57% per annum. Call Option The Bank may call Tier II Sukuk with prior approval of SBP on or after five years from the date of issue. Loss Absorbency The Tier II Sukuk, at the option of the SBP, will be fully and permanently converted into common shares upon the occurrence of a point of non-viability trigger event as determined by SBP or for any other reason as may be directed by SBP. Lock-in-Clause Profit and/or redemption amount can be held back in respect of the Tier II Sukuk, if such payment will result in a shortfall in the Bank’s minimum capital or capital adequacy ratio requirement. ANNUAL REPORT 2019 243
245. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 19 DEFERRED TAX LIABILITIES / (ASSETS) 2019 At January 1 Taxable temporary differences due to: Excess of accounting book values over tax written down values of owned assets (Deficit) / surplus on revaluation of available for sale investments Surplus on revaluation of Non-banking assets acquired in satisfaction of claims Deductible temporary differences due to: Provision for diminution / impairment in value of investments Income not accrued due to non-culmination of financing Provision against non-performing Islamic financing and related assets Provision against non-banking assets acquired in satisfaction of claims and others Recognised Recognised in Profit & in OCI Loss Rupees in ‘000 At December 31 411,918 (36,632) 11,928 387,214 (21,081) (1,439) (22,520) 5,091,557 (3,425) 5,088,132 390,837 5,054,925 7,064 5,452,826 (470,528) (812,904) (86,718) (1,370,150) (982,936) (436,378) (623,029) (109,358) (84,053) (1,252,818) (1,275,338) 5,088,132 (906,906) (1,435,933) (109,358) (170,771) (2,622,968) 2,829,858 2018 At January 1 Taxable temporary differences due to: Excess of accounting book values over tax written down values of owned assets Surplus on revaluation of Non-banking assets acquired in satisfaction of claims Deductible temporary differences due to: Provision for diminution / impairment in value of investments Surplus / (deficit) on revaluation of available for sale investments Income not accrued due to non-culmination of financing Provision against non-banking assets acquired in satisfaction of claims and others 20 OTHER LIABILITIES Return on deposits and other dues - payable in local currency - payable in foreign currencies Unearned income Accrued expenses Current taxation (provision less payments) Acceptances Unclaimed dividends Payable to defined benefit plan Provision against off-balance sheet obligations Charity payable Security deposits against Ijarah Payable on account of credit murabaha / ijarah / musawamah Security deposits against lockers Retention Money Unrealised loss on forward foreign exchange contracts - net Advance against future Diminishing Musharakah Withholding taxes payable Lease liability against right-of-use assets Workers Welfare Fund payable Others 244 MEEZAN BANK LIMITED Recognised Recognised in Profit & in OCI Loss Rupees in ‘000 At December 31 498,700 498,700 (86,782) (86,782) 11,928 11,928 411,918 11,928 423,846 (302,905) 397,910 (495,668) (89,855) (490,518) 8,182 (167,623) (317,236) 3,137 (481,722) (568,504) (434,542) (434,542) (422,614) (470,528) (36,632) (812,904) (86,718) (1,406,782) (982,936) Note 2019 2018 Rupees in ‘000 20.1 20.2 37.3 & 37.15 20.3 20.4 20.5 3.4.2 20.6 6,434,891 112,161 56,738 6,840,577 5,894,386 9,033,110 16,214 561,242 29,339 995 14,206,800 60,307 117,792 70,687 368,207 67,227 152,711 7,049,842 1,897,436 629,011 53,599,673 3,388,288 75,272 32,521 3,721,994 2,981,896 10,634,901 17,030 624,077 35,020 942 13,623,020 75,439 100,532 60,688 123,762 1,287,912 1,163,758 37,947,052
246. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 20.1 This includes Rs 158 million (2018: Rs 121 million) in respect of return accrued on borrowings from SBP under the Islamic Export Refinance Scheme and Rs 25.0 million (2018: Rs 2.9 million) in respect of return accrued on borrowings from SBP under the Islamic Long Term Financing Facility. 20.2 This includes Rs 2.5 million (2018: Rs 2.9 million) in respect of payable to Al Meezan Investment Management Limited (Subsidiary). Note 2019 20.3 Provision against off-balance sheet obligations Opening balance (Reversal) / charge for the year Closing balance 20.3.1 2018 Rupees in ‘000 20.3.1 35,020 (5,681) 29,339 33,200 1,820 35,020 This represents provision recognized against guarantees of non-performing customers. Note 2019 2018 Rupees in ‘000 20.4 Reconciliation of charity payable Balance as at January 1 Additions during the year Less: Transferred to charity savings account (included in deposits and other accounts) Balance as at December 31 20.4.1 20.4.1 942 64,226 139 36,922 (64,173) 995 (36,119) 942 Charity paid through saving account during the year is Rs 49.9 million (2018: Rs 38.4 million). Charity of Rs 100,000 or higher was paid to the following organizations: ANNUAL REPORT 2019 245
247. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 2019 2018 Rupees in ‘000 Ihsan Trust - Related Party Institute of Business Administration - Centre for Excellence in Islamic Finance Lahore Businessmen Association For Rehabilitation of the Disabled Learning Is For Everyone (L.I.F.E.) School Rashid Memorial Walfare Organization Preventation of Blindness Trust Health Promotion Foundation World Memon Organization Chhipa Welfare Association Medical Aid Foundation (Rahat Kada) Family Educational Services Foundation Fatima Kidney Care Hospital Burhani Medical Welfare Association The Garage School Frontier Foundation Welfare Hospital And Blood Transfusion Service Pakistan Eye Bank Parents Voice Association Zubaida Machiyara Trust Cancer Care Hospital and Research Centre Memon Health and Education Foundation Lady Dufferin Hospital Manzil Education Organization Centre For Development of Social Services Khwendo Kor Muslim Welfare Centre Patients Aid Foundation - Jinnah Hospital Al-Mustafa Trust Rawalpindi Care Foundation Child Aid Association Mercy Pak Noor e Ali Trust (JS Academy of Deaf) The Kidney Centre, Karachi Welfare Society for Patient Care Eye Donor Organization - Taxila Pakistan Association of Blind Health Oriented Preventive Education Jinnah Foundation Poor Patient Aid Society - Civil Hospital Aiwan-e-Sannat O Tijarat Hospital Okara Patients Welfare Association Bait Ul Sukoon Bunyad Foundation Lahore / Bunyad Literacy Community Council Rising Sun Education and Welfare Society Markaz e Umeed Nigheban Trust Pakistan Association of Deaf Saylani Welfare SOS Children Village, Islamabad SOS Children Village, Multan SOS Children Village, Karachi Patients' Behbud Society for the Aga Khan University Hospital The Indus Hospital Pakistan Disabled Foundation Idara - Al Khair Omair Sana Foundation Helping Hands Foundation Afzaal Memorial Thalassemia Foundation Behbud Association, Karachi Bin Qutub Foundation, Chakwal Health and Nutrition Development Society Kiran Foundation Muhammadi Blood Bank Sargodhian Spirit Trust Patients Welfare Association Health Education and Livelihood Promoter Jamal Noor Hospital Karigar Training Institute Marie Adeliade Leprosy Centre SINA Health, Education and Welfare Trust Health Oriented and Preventative Education Trust Jamiat Taleem Ul Quran Women Islamic Lawyer's Forum 246 MEEZAN BANK LIMITED 29,400 4,000 3,500 2,500 1,000 500 500 500 500 500 500 300 300 300 300 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 150 150 150 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 49,850 28,000 1,000 200 250 200 300 300 100 200 200 200 200 100 100 100 100 100 150 300 100 100 100 100 100 100 100 1,000 1,000 400 300 300 250 200 200 200 200 200 200 200 150 100 100 100 100 100 100 100 100 38,400
248. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 21 20.4.2 The balance in Charity's savings account is Rs 14.705 million (2018: Rs 0.144 million). 20.4.3 Charity was not paid to any organization in which a director or his spouse had any interest at any time during the year. 20.5 This is net off gain on forward foreign exchange contracts of Rs 2,169 million (2018: loss on forward foreign exchange contracts of Rs 1,132 million). 20.6 The Bank has made full provision for Workers Welfare Fund (WWF) based on profit for the respective years (2008-2019). In 2016, the Supreme Court of Pakistan vide its order dated November 10, 2016 has held that the amendments made in the law introduced by the Federal Government for the levy of WWF were not lawful. The Federal Board of Revenue filed review petitions against this order which are currently pending. Legal advice obtained on the matter indicates that consequent to filing of these review petitions the judgment may not be treated as conclusive. Accordingly, the Bank continues to maintain the provision in respect of WWF. SHARE CAPITAL 21.1 Authorised capital 2019 2019 2018 (Number of Shares) 2,572,180,000 2,338,380,000 Ordinary shares of Rs 10 each 21.2 516,517,908 652,674,492 1,169,192,400 Ordinary shares Fully paid in cash Issued as bonus shares 23,383,800 2019 2018 Rupees in ‘000 5,165,179 7,695,937 12,861,116 5,165,179 6,526,745 11,691,924 Shareholding held by associated companies are as follows: 2019 Name of Shareholders Noor Financial Investment Company, Kuwait Pakistan Kuwait Investment Company (Private) Limited Islamic Development Bank, Jeddah CDC - Trustee Meezan Islamic Fund CDC - Trustee Al Meezan Mutual Fund CDC - Trustee Meezan Balanced Fund CDC - Trustee KSE Meezan Index Fund CDC - Trustee Meezan Asset Allocation Fund CDC - Trustee Meezan Dedicated Equity Fund 22 2018 25,721,800 2019 2018 (Number of Shares) 516,517,908 769,593,714 1,286,111,622 Rupees in ‘000 RESERVES Share Premium Statutory reserve Non Distributable Capital Reserve - Gain on Bargain Purchase General reserve 2018 Number of shares held Percentage of Shareholding Number of shares held 453,337,898 385,833,481 119,916,248 9,119,097 1,364,050 1,064,885 675,000 553,446 536,005 35.25% 30.00% 9.32% 0.71% 0.11% 0.08% 0.05% 0.04% 0.04% 446,432,362 350,757,710 109,014,771 6,950,134 1,331,500 889,350 488,951 430,550 Note Percentage of Shareholding 38.18% 30.00% 9.32% 0.59% 0.11% 0.08% 0.00% 0.04% 0.03% 2019 2018 Rupees in ‘000 22.1 2,406,571 12,616,780 3,117,547 66,766 18,207,664 2,406,571 9,570,365 3,117,547 66,766 15,161,249 22.1 Under section 21 of the Banking Companies Ordinance, 1962, an amount not less than 20% of the profit is to be transferred to create a reserve fund till such time the reserve fund and the share premium account equal the amount of the paid up capital. ANNUAL REPORT 2019 247
249. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 23 SURPLUS / (DEFICIT) ON REVALUATION OF ASSETS - NET OF TAX Note Less: Deferred tax asset / (liability) on - Available for sale securities - Non-banking assets acquired in satisfaction of claims 2018 Rupees in ‘000 Available for sale securities - Listed shares / units of mutual fund - Sukuk Non-banking assets acquired in satisfaction of claims 2019 23.1 23.1 1,674,958 12,767,682 14,442,640 277,249 (381,916) (104,667) 20,184 34,080 14,462,824 (70,587) (5,054,925) (7,064) (5,061,989) 9,400,835 36,632 (11,928) 24,704 (45,883) 23.1 Surplus on revaluation of non-banking assets acquired in satisfaction of claims 22,152 Surplus on revaluation as at January 1 - net of deferred tax Recognised during the year net of deferred tax of Rs 1.750 million (2018: Rs 11.928 million) 3,250 Adjusted upon transfer to fixed assets during the year net of deferred tax of Rs 5.175 million (2018: Nil) (9,610) - Transferred to unappropriated profit in respect of disposal during the year - net of deferred tax of Rs 1.397 million (2018: Nil) (2,593) - (79) - Transferred to unappropriated profit in respect of incremental depreciation charged during the year - net of deferred tax of Rs 0.042 million (2018: Nil) CONTINGENCIES AND COMMITMENTS Note Guarantees Commitments Other contingent liabilities 24.1 24.2 24.3 24.2 Commitments: Documentary letters of credit 24.2.1 Commitments for acquisition of: - fixed assets - intangible assets Other commitments 248 MEEZAN BANK LIMITED 22,152 2019 2018 Rupees in ‘000 24.1 Guarantees: Financial guarantees Performance guarantees Other guarantees Commitments in respect of: - forward foreign exchange contracts 22,152 13,120 Surplus on revaluation as at December 31 - net of deferred tax 24 - 24.2.2 38,843,277 711,444,851 1,802,000 752,090,128 31,724,600 432,428,900 1,802,000 465,955,500 8,598,348 16,037,636 14,207,293 38,843,277 7,561,791 12,533,871 11,628,938 31,724,600 98,437,653 92,343,175 267,088,452 118,865,324 514,594 257,790 313,580 87,475 345,146,362 711,444,851 220,819,346 432,428,900
250. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 Note 24.2.1 2018 Rupees in ‘000 Commitments in respect of forward foreign exchange contracts Purchase Sale 24.2.2 2019 151,033,720 116,054,732 267,088,452 74,321,214 44,544,110 118,865,324 345,146,362 220,819,346 Other Commitments Commitments in respect of financing 24.2.2.1 24.2.2.1 The Bank makes commitments to extend credit (including to related parties) in the normal course of business but these being revocable commitments do not attract any significant penalty or the expense if the facility is unilaterally withdrawn, other than commitments in respect of syndicated / long term financing amounting to Rs 88,634 million (2018: Rs 26,732 million). 24.3 Other contingencies The Income Tax Department has amended the deemed assessment orders of the Bank for prior years including the tax year 2018. The additions / disallowances were mainly due to allocation of expenses relating to dividends and capital gain, allowability of provision against loans and advances, provision against investments and provision against other assets. In the amended order for tax year 2015, additional issues with respect to the taxability of gain on bargain purchase and non-adjustment of loss pertaining to HSBC Bank Middle East – Pakistan Branches have also been raised. The Bank has obtained stay order from the High Court of Sindh against the demands raised through the amended order for the tax year 2015. Both the Bank and the department have filed appeals with the Appellate Authorities in respect of the aforementioned matters. The management of the Bank, in consultation with its tax advisors, is confident that the decision in respect of the above matters would be in Bank’s favour and accordingly no provision has been made in these financial statements with respect thereto. The additional tax liability in respect of gain on bargain purchase and non-adjustment of loss pertaining to HSBC Bank Middle East – Pakistan Branches is Rs 1,096 million and Rs 706 million respectively. 25 PROFIT / RETURN EARNED ON FINANCING, INVESTMENTS AND PLACEMENTS Note On financing 25.1 On investments in - Available for sale securities - Held to maturity securities On deposits / placements with financial institutions 25.1 2019 2018 Rupees in ‘000 54,737,673 30,205,819 22,052,445 145,799 5,330,663 1,565,200 17,334,544 94,270,461 11,522,776 48,624,458 The income on Ijarah under IFAS 2 is net off takaful of Rs 1,787 million (2018: Rs 1,359 million) recovered from customers. ANNUAL REPORT 2019 249
251. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 26 PROFIT ON DEPOSITS AND OTHER DUES EXPENSED Deposits and other accounts Sub-ordinated Sukuk Other Musharakahs / Mudarabas Amortisation of lease liability against right-of-use assets 27 Note 2019 2018 Rupees in ‘000 26.1 26.2 43,742,331 1,793,554 1,228,565 966,630 47,731,080 18,191,908 849,039 1,416,001 20,456,948 26.1 This includes conversion cost of Rs 2,172 million (2018: Rs 638 million) against foreign currency deposits. 26.2 This includes Rs 592 million (2018: Rs 445 million) paid / payable to SBP under Islamic Export Refinance Scheme and Rs 86.7 million (2018: Rs 2.9 million) paid / payable to SBP under the Islamic Long Term Financing Facility. FEE AND COMMISSION INCOME Note 2019 2018 Rupees in ‘000 Trade related fees and commissions 2,487,031 1,821,762 110,334 90,830 Branch banking customer fees 1,472,109 1,482,742 Credit processing related fees 108,098 122,941 1,398,843 1,127,899 232,988 228,653 Commission on guarantees Debit card related fees Investment banking related fees Cash management fees Home remittance related fees Others 28 28.1 142,920 186,585 6,174,644 5,257,170 28.1 (417,599) 8,308 Realised (loss) / gain on: Listed Shares Federal Government Securities Non Government Debt Securities Associates (380,704) 23,921 (77,759) (18,195) 40,864 - 2,582 (417,599) 8,308 380,404 43,153 102,905 (2,529) 11,198 2,449 537,580 198,793 21,388 83,432 5,989 1,534 311,136 OTHER INCOME Gain on termination of - Ijarah financing - Diminishing Musharakah financing Gain on sale of fixed assets Loss on disposal of non-banking assets Rental income Others 250 44,625 151,133 (LOSS) / GAIN ON SECURITIES - NET Realised 29 65,076 157,245 MEEZAN BANK LIMITED
252. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 30 OPERATING EXPENSES Note 2019 2018 Rupees in ‘000 Total compensation expense 30.1 & 30.2 Property expense Depreciation on right-of-use assets Rent and taxes Utilities cost (including electricity and diesel) Security (including guards) Repair and maintenance (including janitorial charges) Depreciation Others Information technology expenses Software maintenance Hardware maintenance Depreciation Amortisation Network charges Other operating expenses Communication (including courier) Local transportation and car running Depreciation on vehicles, equipments etc. Legal and professional charges NIFT and other clearing charges Travelling and conveyance Training and Development Stationery and printing (including debit card related costs) Marketing, advertisement and publicity Fees, subscription and other charges Office supplies Entertainment Takaful expense Security charges - cash transportation Outsourced services costs Auditors' Remuneration Repairs and maintenance Brokerage and bank charges Shariah Board's fees and allowances Non-executive Directors' fee Donation Others 30.1 Total compensation expense Managerial Remuneration i) Fixed ii) Cash Bonus / Awards etc. Charge for defined benefit plan Contribution to defined contribution plan Compensated Absences Others including EOBI, SESSI, uniform, sports etc. Total compensation expense 30.2 30.3 39 39 30.4 12,739,695 10,044,454 2,161,299 111,361 891,749 628,569 504,205 614,256 52,325 4,963,764 2,010,229 723,796 526,788 397,332 593,458 55,401 4,307,004 427,118 296,132 325,402 254,597 220,383 1,523,632 203,423 190,466 283,385 220,208 181,381 1,078,863 477,458 513,552 771,620 117,509 125,654 139,876 78,097 918,842 566,727 245,641 268,908 89,646 101,098 370,823 9,331 11,024 306,920 177,843 27,133 57,418 202,500 25,948 5,603,568 24,830,659 315,338 391,980 637,994 73,274 148,890 94,803 84,286 494,155 313,152 166,812 221,369 74,914 119,620 256,322 12,011 17,311 167,361 175,475 23,082 48,542 7,920 15,204 3,859,815 19,290,136 7,814,858 3,808,019 384,532 313,163 90,876 328,247 6,596,596 2,467,549 351,317 271,165 36,685 321,142 12,739,695 10,044,454 ANNUAL REPORT 2019 251
253. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 30.2 Total cost for the year relating to outsourced activities is Rs 1,958 million (2018: Rs 1,593 million) entirely relating to companies incorporated in Pakistan and mainly on account of security guards, janitorial staff and courier services. This also includes portfolio management fee to Al Meezan Investment Management Limited (subsidiary) amounting to Rs 9.3 million (2018: Rs 12.0 million) as outsourced services costs disclosed separately under other operating expenses. 30.3 Auditors’ remuneration Note Sindh sales tax on services Out of pocket expenses 30.4.1 – Diamer Bhasha and Mohmand Dams Fund 30.4.1 3,900 800 9,671 14,371 1,150 1,790 11,024 17,311 200,000 2,500 202,500 7,920 7,920 The Bank is in the process of establishing Meezan Bank Foundation (the Foundation) with an initial contribution of Rs 200 million to promote development and advance the welfare and well-being of the people of Pakistan. Certain key management personnel of the Bank would be appointed to manage the affairs of the Foundation. Note 2019 2018 Rupees in ‘000 OTHER CHARGES Penalties imposed by the State Bank of Pakistan 32 4,400 800 4,096 9,296 851 877 Donation Meezan Bank Foundation Learning Is For Everyone (L.I.F.E.) School The Supreme Court of Pakistan and the Prime Minister of Pakistan 31 2018 Rupees in ‘000 Audit fee Fee for interim review Special certifications / review 30.4 2019 82,275 16,419 PROVISIONS AND WRITE OFFS - NET Provision against non-performing islamic financing and related assets - net Provision against diminution in the value of investments Other provision / (reversals) Bad debts written off directly (Reversals) / provision against off-balance sheet obligations Recovery against written off financings 11.10 10.3 32.1 20.3 32.2 3,072,771 1,089,539 45,825 (5,681) (16,024) 4,186,430 894,866 307,401 (17,594) 464 1,820 (18,906) 1,168,051 32.1 This mainly represents provision on account of operational losses incurred by the Bank in the current year. 32.2 This includes recoveries against financing written off by HSBC ME prior to its acquisition by the Bank. 33 TAXATION Current - for the year - for prior year Deferred - for the year 252 MEEZAN BANK LIMITED Note 2019 2018 Rupees in ‘000 33.1 11,723,913 470,030 12,193,943 6,398,710 6,398,710 (1,275,338) 10,918,605 (568,504) 5,830,206
254. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 33.1 The Finance Supplementary (Second Amendment) Act 2019 has reversed the phase-wise reduction in rate of Super Tax for banking companies from 4% to 3% and further levied an additional Super Tax charge at 4% for Tax Year 2018 (Accounting Year 2017), which was previously not chargeable resulting in additional Super Tax charge of Rs 470 million in the current year. The aggregate Super Tax charge for the year ended December 31, 2019 is Rs 1,670 million. 33.2 Relationship between tax expense and accounting profit Note 2019 2018 Rupees in ‘000 Profit before taxation Effects of: - Tax calculated at the applicable rate of 35% - Super tax @ 4% - Prior year Super tax - Permanent differences - Others Tax charge for the year 34 26,150,679 14,792,406 9,152,738 1,199,643 470,030 49,614 46,580 10,918,605 5,177,342 660,333 3,494 (10,963) 5,830,206 2019 BASIC AND DILUTED EARNINGS PER SHARE 2018 Rupees in ‘000 Profit for the year 15,232,074 8,962,200 (Number) Weighted average number of ordinary shares 1,286,111,622 1,286,111,622 (Rupees) Restated Basic and diluted earnings per share 34.1 11.84 6.97 34.1 The Bank has issued bonus shares during the year and accordingly the earnings per share for the comparative year has been restated. Note 35 7 8 92,193,361 15,372,233 107,565,594 2019 STAFF STRENGTH Permanent Contractual basis Bank's own staff strength at the end of the year Outsourced Total Staff Strength 2018 Rupees in ‘000 CASH AND CASH EQUIVALENTS Cash and balances with treasury banks Balances with other banks 36 2019 65,022,041 8,255,187 73,277,228 2018 Number of Staff 36.1 8,886 1,140 10,026 1,623 11,649 7,545 1,050 8,595 1,474 10,069 36.1 This excludes outsourced security guards and janitorial staff. 37 DEFINED BENEFIT PLAN 37.1 Meezan Bank Gratuity Funded Scheme The activities of the Gratuity Funded Scheme are governed by Meezan Bank Limited Staff Gratuity Fund established in 2000 under the provisions of a Trust Deed. Plan assets held in trust are governed by the Trust Deed as is the nature of the relationship between the Bank and the trustees and their composition. Responsibility for governance of the plan including the investment decisions lies with the Trustees. The Board of Trustees comprise of representatives of the Bank and scheme participants in accordance with the Fund's trust deed. ANNUAL REPORT 2019 253
255. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 2019 37.2 Number of Employees under the Gratuity Funded Scheme Number of Employees eligible under the Gratuity Funded Scheme 37.3 8,788 2019 Reconciliation of amount payable to defined benefit plan Present value of defined benefit obligations Fair value of plan assets 37.4 7,464 Rupees in ‘000 2018 1,735,808 1,386,260 (1,491,746) (1,063,037) 244,062 323,223 Plan assets consist of the following: 2019 Rupees in '000 % Meezan Aamdan Certificates Al Meezan Mutual Fund Meezan Asset Allocation Plan Fatima Fertilizer Company Limited - Sukuk Bank Islami Pakistan Limited - Additional Tier 1 Sukuk Fixed deposit with Dubai Islamic Bank Limited Savings account with Meezan Bank Limited 37.5 2018 (Number) 1,005,447 56,629 63,881 5,886 5,000 350,000 4,903 1,491,746 2018 Rupees in '000 % 918,936 56,293 59,694 8,829 19,285 1,063,037 86.44 5.30 5.62 0.83 1.81 100.00 67.40 3.80 4.28 0.39 0.34 23.46 0.33 100.00 The movement in the defined benefit obligation over the year is as follows: 2019 Present value of obligation Fair value of plan assets Total Rupees in ‘000 At January 1 Current service cost Return expense / (income) Remeasurements: - Return on plan assets, excluding amounts included in return expense / (income) shown as above - Experience gains Contribution Benefit payments At December 31 254 MEEZAN BANK LIMITED 1,386,260 308,887 182,129 1,877,276 (1,063,037) (163,407) (1,226,444) 323,223 308,887 18,722 650,832 (69,007) (69,007) 1,808,269 (72,461) 1,735,808 (14,540) (14,540) (1,240,984) (323,223) 72,461 (1,491,746) (14,540) (69,007) (83,547) 567,285 (323,223) 244,062
256. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 2018 Present value of obligation Fair value of plan assets Total Rupees in ‘000 At January 1 Current service cost Return expense / (income) Remeasurements: - Return on plan assets, excluding amounts included in return expense / (income) shown as above - Experience gains Contribution Benefit payments At December 31 37.6 1,297,029 291,330 115,726 1,704,085 (855,904) (96,168) (952,072) 441,125 291,330 19,558 752,013 (189,487) (189,487) 1,514,598 (128,338) 1,386,260 201,822 201,822 (750,250) (441,125) 128,338 (1,063,037) 201,822 (189,487) 12,335 764,348 (441,125) 323,223 Charge for defined benefit plan (in respect of the Gratuity Funded Scheme) 37.6.1 Cost recognised in profit and loss Current service cost Net return cost 37.6.2 Re-measurements recognised in OCI during the year Loss on obligation - experience adjustment Return on plan assets over expected return Total re-measurements recognised in OCI 2019 Rupees in ‘000 2018 308,887 18,722 327,609 291,330 19,558 310,888 (69,007) (14,540) (83,547) (189,487) 201,822 12,335 Total expense recognized in Profit and Loss Account amounted to Rs 384.532 million (2018: Rs 351.317 million) of which Rs 327.609 million (2018: Rs 310.888 million) pertains to approved Gratuity Funded Scheme and Rs 56.923 million (2018: Rs 40.429 million) pertains to End of Service Unfunded Defined Benefit Scheme. Total credit recognized in Other Comprehensive Income amounted to Rs 124.144 million (2018: credit of Rs 1.998 million) of which credit of Rs 83.547 million (2018: charge of Rs 12.335 million) pertains to Gratuity Funded Scheme and credit of Rs 40.597 million (2018: credit of 14.333 million) pertains to End of Service Unfunded Defined Benefit Scheme. 37.7 The plan assets and defined benefit obligations (in respect of the Gratuity Funded Scheme) are based in Pakistan. 37.8 Principal actuarial assumptions Discount rate Expected rate of increase in salaries Expected rate of return on investments Normal retirement age 37.9 2019 2018 13.00% p.a 12.00% p.a 13.00% p.a 60 years 13.75% p.a 12.75% p.a 13.75% p.a 60 years Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in Pakistan. The rates assumed are based on the adjusted SLIC 2001 - 2005 mortality tables. ANNUAL REPORT 2019 255
257. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 37.10 The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is: Impact on defined benefit obligation - Increase / (Decrease) Change in assumption Discount rate Increase in Decrease in assumption assumption Rupees in ‘000 1% Salary growth rate Withdrawal rate (179,969) 212,867 1% 221,547 (189,896) 10% 4,013 (4,183) The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the gratuity liability recognised within the Statement of Financial Position. 37.11 The weighted average duration of the defined benefit obligation is 10.92 years. 37.12 Expected maturity analysis of undiscounted defined benefit obligation for the Gratuity Funded Scheme is as follows: At December 31, 2019 Less than a year Between 1-2 years Between 2-5 years Over 5 years Total Rupees in ‘000 Gratuity 109,607 104,800 276,556 12,749,713 13,240,676 37.13 Funding levels are monitored on an annual basis and are based on actuarial recommendations. Contribution for the next year works out to Rs 321.943 million as per the actuarial valuation report of the Bank as of December 31, 2019. 37.14 Through its Gratuity Funded Scheme, the Fund is exposed to a number of risks, the most significant of which are detailed below: 37.15 Asset volatility The plan liabilities are calculated using a discount rate set with reference to corporate sukuk yields; if plan assets underperform to the yield, this will create a deficit. The Fund believes that due to long-term nature of the plan liabilities and the strength of the Bank's support, the current investment strategy manages this risk adequately. Changes in Sukuk yields A decrease in corporate sukuk yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans' sukuk holdings. Inflation risk The majority of the plans' benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities. However, plan assets are variable rate instruments and are re-priced at regular intervals to off set inflationary impacts. Life expectancy / Withdrawal rate The majority of the plans' obligations are to provide benefits on severance with the Bank on achieving retirement. Any change in life expectancy / withdrawal rate would impact plan liabilities. End of Service Unfunded Defined Benefit Scheme The Bank also operates an End of Service Unfunded Defined Benefit Scheme for the founding President and Chief Executive Officer. The charge in respect of current service cost is recognised based on expected period of future service. The net charge for the year of this benefit amounted to Rs 16.326 million. The charge of Rs 56.923 million has been recognized in the Profit and Loss Account and the credit / reversal of Rs 40.597 million has been recognized in Other Comprehensive Income. The present value of defined benefit obligation recognised in respect of this scheme amounts to Rs 317.180 million. The principal actuarial assumptions comprise of discount rate of 13 percent and salary increase rate of 12 percent. The retirement age used by the actuary is 66 years. The sensitivity of the defined benefit obligation due to a one percent change in discount rate would be Rs 1.394 million (in case the discount rate is increased) and Rs 1.413 million (in case the discount rate is decreased). The sensitivity of the defined benefit obligation due to change in withdrawal rates would be higher by Rs 0.03 million (in case of ten percent increase in assumption) and lower by Rs 0.03 million (in case of ten percent decrease in assumption). These sensitivities are calculated using the same methodology as explained in note 37.10. 256 MEEZAN BANK LIMITED
258. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 37.16 38 The disclosures made in notes 37.1 to 37.15 are based on the information included in the actuarial valuation reports of the Bank as of December 31, 2019. DEFINED CONTRIBUTION PLAN The Bank also operates a recognized contributory provident fund for all permanent employees. Equal monthly contributions are made, both by the Bank and the employees, to the fund at a rate of 10% of basic salary. 2019 2018 Rupees in ‘000 Contribution from the Bank Contribution from the employees 39 313,163 313,163 626,326 271,165 271,165 542,330 COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL 2019 Directors Chairman Executives (other than CEO) NonExecutives Members Shariah Board President / CEO Key Management Personnel Other Material Risk Takers/ Controllers Rupees in ‘000 Fees and allowances Managerial remuneration i) Fixed ii) Cash Bonus Charge for gratuity fund / EOSB Contribution to defined contribution plan Others Number of persons 12,219 12,219 1 - 45,199 45,199 10 27,133 27,133 4 - - - 70,506 126,911 16,326 288,201 294,065 8,248 316,399 250,000 14,429 1,333 215,076 1 9,743 1,508 601,765 19 17,116 597,944 57 2018 Directors Chairman Executives (other than CEO) NonExecutives Members Shariah Board President / CEO Key Management Personnel Other Material Risk Takers/ Controllers Rupees in ‘000 Fees and allowances Managerial remuneration i) Fixed ii) Cash Bonus / Awards Charge for gratuity fund / EOSB Contribution to defined contribution plan Others Number of persons 10,011 10,011 1 - 38,531 38,531 8 23,082 23,082 4 - - - 70,506 105,759 26,096 252,218 194,189 8,623 299,736 175,718 13,268 1,297 203,658 1 9,054 1,322 465,406 17 15,590 504,312 57 39.1 The Chief Executive, the key management personnel and certain material risk takers / controllers have been provided with free use of the Bank's cars. 39.2 The amount of cash bonus to the key management personnel and other material risk takers / controllers, is based on the management's best estimate. ANNUAL REPORT 2019 257
259. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 39.3 Remuneration to Directors for participation in Board and Committee Meetings 2019 Meeting Fees and Allowances For Board Committees Sr. No. Name of Director For Board Meetings Risk Board Audit Management Committee Committee Information Technology Committee Human Resources and Remuneration Committee Total Amount 1,222 909 1,217 624 596 4,568 12,219 8,771 5,186 4,999 2,500 4,764 1,711 7,289 3,895 2,807 3,277 57,418 Human Resources and Remuneration Committee Total Amount 1,001 1,001 1,001 3,003 10,011 7,257 3,504 4,504 4,502 5,503 5,503 3,253 4,505 48,542 Rupees in ‘000 1 2 3 4 5 6 7 8 9 10 11 Mr Riyadh S.A.A. Edrees (Chairman) Mr Faisal A.A.A. Al-Nassar (Vice Chairman) Mr Bader H.A.M.A. Al Rabiah Mr Alaa A. Al-Sarawi Mr Mohamed Guermazi Mr Saad Fazil Abbasi Mr Mubashar Maqbool Mr Noorur Rahman Abid Ms Nausheen Ahmad Mr Atif Azim Mr Mansur Khan 10,997 6,752 4,277 3,181 2,190 3,705 1,089 4,261 3,271 2,183 2,085 43,991 939 909 909 1,217 3,974 1,080 310 1,059 311 2,760 311 594 624 596 2,125 2018 Meeting Fees and Allowances For Board Committees Sr. No. Name of Director For Board Meetings Risk Board Audit Management Committee Committee Information Technology Committee Rupees in ‘000 1 2 3 4 5 6 7 8 9 39.4 Mr Riyadh S.A.A. Edrees (Chairman) Mr Faisal A.A.A. Al-Nassar (Vice Chairman) Mr Bader H.A.M.A. Al Rabiah Mr Alaa A. Al-Sarawi Mr Mansur Khan Mr Noorur Rahman Abid Mr Mohammad Abdul Aleem Mr Muhammad Zarrug Rajab Mr Talal S.A. Al-Shehab 9,010 6,256 3,504 3,503 3,501 3,501 3,501 2,530 3,504 38,810 Remuneration to Members Shariah Board Fee and allowances - Total number of persons 1 MEEZAN BANK LIMITED 1,001 1,001 1,001 1,001 2,002 2019 Chairman 258 1,001 1,001 1,001 723 3,726 2018 Resident Member Non Resident Members 2,912 24,221 1 2 Chairman Rupees in ‘000 1 Resident Member Non Resident Members 1,780 21,302 1 2
260. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 40 FAIR VALUE OF FINANCIAL INSTRUMENTS 40.1 The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: (a) Financial instruments in level 1 Financial instruments included in level 1 comprise of investments in listed ordinary shares, listed sukuk, units of open end mutual fund and global sukuk bonds classified as available for sale. (b) Financial instruments in level 2 Financial instruments included in level 2 comprise of GoP Ijarah sukuk classified as available for sale. (c) Financial instruments in level 3 Currently, no financial instruments are classified in level 3. The Bank's policy is to recognise transfers into and out of the different fair value hierarchy levels at the date the event or change in circumstances that caused the transfer occurred. There were no transfers between levels 1 and 2 during the year. Valuation techniques used in determination of fair values Item Valuation approach and input used GoP Sukuk The fair value of GoP Ijarah Sukuk quoted are derived using PKISRV rates. The PKISRV rates are announced by FMA (Financial Market Association) through Reuters. The rates announced are simple average of quotes received from eight different pre-defined/ approved dealers / brokers. Forward foreign exchange contracts The valuation has been determined by interpolating the mid rates announced by SBP. Foreign Sukuk The valuation has been determined through closing rates of Bloomberg. Listed Securities The valuation has been determined through closing rates of Pakistan Stock Exchange. Mutual Funds The valuation has been determined based on Net asset values declared by respective funds. Fair value of Islamic financing and related assets, other assets, other liabilities and fixed deposits and other accounts cannot be calculated with sufficient reliability due to absence of current and active market for such assets and liabilities and reliable data regarding market rates for similar instruments. The provision for impairment of Islamic financing and related assets has been calculated in accordance with the Bank’s accounting policy as stated in note 6.3.2. 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 assets and liabilities are short term in nature or in the case of financings and deposits are frequently repriced. 40.2 The table below analyses financial and non-financial assets carried at fair value, by valuation method. The different levels have been defined as follows: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). - Inputs for the assets or liabilities that are not based on observable market data (i.e. unobservable inputs e.g. estimated future cash flows) (Level 3). ANNUAL REPORT 2019 259
261. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 2019 Recurring Fair Value Measurements Level 1 Level 2 Rupees in ‘000 Level 3 Total ON BALANCE SHEET FINANCIAL INSTRUMENTS Investments - Net Financial Assets Available for sale securities Ordinary shares - listed Pakistan Energy Sukuk - listed GoP Sukuk Foreign Sukuk 5,544,826 97,362,650 8,083,166 12,792,286 - - 5,544,826 97,362,650 12,792,286 8,083,166 154,054,304 118,014,717 - 154,054,304 118,014,717 OFF BALANCE SHEET FINANCIAL INSTRUMENTS Forward purchase of foreign exchange contracts Forward sale of foreign exchange contracts - 2018 Recurring Fair Value Measurements Level 1 Level 2 Rupees in ‘000 Level 3 Total ON BALANCE SHEET FINANCIAL INSTRUMENTS Investments - Net Financial Assets Available for sale securities Ordinary shares - listed Units of open end fund GoP Sukuk PIA Sukuk Foreign Sukuk 4,347,184 51,483 7,455,428 18,715,223 1,500,000 - - 4,347,184 51,483 18,715,223 1,500,000 7,455,428 74,597,244 44,659,254 - 74,597,244 44,659,254 OFF BALANCE SHEET FINANCIAL INSTRUMENTS Forward purchase of foreign exchange contracts Forward sale of foreign exchange contracts - Investment in associates (listed - mutual funds) have market value of Rs 1,583 million (2018: Rs 1,498 million) which is being valued under level 2. These are carried at cost in the financial statements in accordance with the bank's accounting policy. 40.3 Fair value of non-financial assets Non-banking assets acquired in satisfaction of claims have been carried at revalued amounts determined by professional valuers (level 3 measurement) based on their assessment of the market values as disclosed in note 14. The valuations are conducted by the valuation experts appointed by the Bank which are also on the panel of State Bank of Pakistan. The valuation experts used a market based approach to arrive at the fair value of the Bank’s properties. The market approach used prices and other relevant information generated by market transactions involving identical or comparable or similar properties. These values are adjusted to reflect the current condition of the properties. The effect of changes in the unobservable inputs used in the valuations cannot be determined with certainty, accordingly a qualitative disclosure of sensitivity has not been presented in these financial statements. 40.4 Financial assets not measured at fair value 2019 Carrying Value 2018 Rupees in ‘000 Cash and balances with treasury banks Balances with other banks Due from financial institutions - net Investments - net Islamic financings and related assets - net Other assets - net 260 MEEZAN BANK LIMITED 92,193,361 15,372,233 223,689,325 101,863,234 493,775,346 44,508,630 65,022,041 8,255,187 184,814,600 91,673,549 512,564,522 26,293,396
262. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 41 SEGMENT ANALYSIS 41.1 Segment Details with respect to Business Activities: 2019 Corporate and Commercial banking Retail banking Trading and Others sales Rupees in ‘000 Inter-segment Eliminations 51,893,574 51,893,574 3,276,695 41,590,952 44,867,647 1,418,899 5,607,028 9,320,828 75,722,753 85,043,581 68,331,140 68,331,140 1,670,240 15,042,201 39,940,952 39,940,952 842,189 34,329,578 35,171,767 1,097,291 3,671,894 2,435,293 197,777 2,633,070 803,514 803,514 1,829,556 (75,920,530) (75,920,530) (75,920,530) (75,920,530) - 103,590,647 103,590,647 73,253,538 73,253,538 4,186,430 26,150,679 Statement of Financial Position Cash and Bank balances Due from financial institutions - net Investments - net Net inter segment lending Islamic financings and related assets - net Others Total Assets 16,564,479 407,789,877 18,646,459 443,000,815 100,667,273 792,265,062 85,985,469 28,202,430 1,007,120,234 6,898,321 223,689,325 209,081,683 23,732,938 463,402,267 529,069 529,069 (792,794,131) (792,794,131) 107,565,594 223,689,325 225,646,162 493,775,346 70,581,827 1,121,258,254 Due to financial institutions Deposits and other accounts Subordinated Sukuk Net inter segment borrowing Others Total liabilities Equity Total Equity and liabilities 41,129,507 14,000,000 354,244,023 10,310,734 419,684,264 23,316,551 443,000,815 909,114 932,579,114 62,323,490 995,811,718 11,308,516 1,007,120,234 8,769 438,550,108 453,045 439,011,922 24,390,345 463,402,267 529,069 529,069 529,069 (792,794,131) (792,794,131) (792,794,131) 42,047,390 932,579,114 14,000,000 73,616,338 1,062,242,842 59,015,412 1,121,258,254 Contingencies and Commitments 411,637,486 73,364,190 267,088,452 Profit and Loss Account   External Revenue Inter segment revenue - net Total Income Segment direct expenses Inter segment expense allocation Total expenses Provisions and write offs - net Profit before tax - - Total 752,090,128 ANNUAL REPORT 2019 261
263. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 2018 Corporate and Commercial banking Retail banking Trading and Others sales Rupees in ‘000 Inter-segment Eliminations Total External Revenue Inter segment revenue - net 28,610,386 - 5,880,628 39,985,198 19,411,444 - 2,184,503 92,553 (40,077,751) 56,086,961 - Total Income Segment direct expenses Inter segment expense allocation Total expenses Provisions and write offs - net Profit before tax 28,610,386 1,802,047 23,370,533 25,172,580 826,756 2,611,050 45,865,826 36,514,095 36,514,095 22,847 9,328,884 19,411,444 1,262,603 16,707,218 17,969,821 318,448 1,123,175 2,277,056 547,759 547,759 1,729,297 (40,077,751) (40,077,751) (40,077,751) - 56,086,961 40,126,504 40,126,504 1,168,051 14,792,406 Statement of Financial Position Cash and Bank balances Due from financial institutions - net Investments - net Net inter segment lending Islamic financings and related assets - net Others Total Assets 21,076,097 431,967,241 16,888,683 469,932,021 70,880,687 671,148,377 80,597,281 20,233,304 842,859,649 2,396,541 184,814,600 102,666,770 6,394,201 296,272,112 297,553 297,553 (671,445,930) (671,445,930) 73,277,228 184,814,600 123,742,867 512,564,522 43,516,188 937,915,405 Due to financial institutions Deposits and other accounts Subordinated Sukuk Net inter segment borrowing Others Total liabilities Equity Total Equity and liabilities 23,171,084 14,000,000 400,580,898 11,971,613 449,723,595 20,208,426 469,932,021 627,074 785,476,944 49,371,553 835,475,571 7,384,078 842,859,649 12,609,653 270,865,032 56,876 283,531,561 12,740,551 296,272,112 297,553 297,553 297,553 (671,445,930) (671,445,930) (671,445,930) 36,407,811 785,476,944 14,000,000 61,697,595 897,582,350 40,333,055 937,915,405 Contingencies and Commitments 301,374,997 45,715,180 118,865,323 Profit and Loss Account   42. - - 465,955,500 TRUST ACTIVITIES The Bank provides trustee services in respect of Islamic Financing transactions. The services primarily includes holding of assets as security trustee on behalf of investors. 43 RELATED PARTY TRANSACTIONS 43.1 Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions and includes a subsidiary company, associated companies, retirement benefit funds, directors, and key management personnel and their close family members. 43.2 The Bank enters into transactions with related parties in the ordinary course of business and on substantially the same terms as for comparable transactions with person of similar standing. Contributions to and accruals in respect of staff retirement benefits and other benefit plans are made in accordance with the actuarial valuations / terms of the contribution plan. Remuneration to the key management personnel is determined in accordance with the terms of their appointment. 43.3 Subsidiary company - Al Meezan Investment Management Limited 43.4 Key management personnel - President and Chief Executive Officer - Deputy Chief Executive Officer 262 MEEZAN BANK LIMITED
264. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 43.5 Details of transactions with related parties and balances with them (other than those disclosed in respective notes) as at the year-end as are follows: Total 2019 Subsidiary 2018 2019 Associates 2018 2019 Directors 2018 2019 Key Management Personnel 2018 2019 2018 Other Related Parties 2019 2018 Rupees in ‘000 Islamic financing and related assets At January 1, Addition during the year Deletion during the year At December 31 Investments At January 1, Addition during the year Deletion during the year At December 31 Due from financial institutions At January 1, Addition during the year Deletion during the year At December 31 437,528 776,443 3,458,959 3,732,561 (3,327,239) (4,071,476) 569,248 437,528 - 897,811 1,957,811 - (1,060,000) 897,811 897,811 63,050 63,050 24,985,377 24,985,377 - - 99,939 (99,939) - 437,528 676,504 3,458,959 3,732,561 (3,327,239) (3,971,537) 569,248 437,528 - - - - - - 63,050 63,050 834,761 1,894,761 - (1,060,000) 834,761 834,761 - - - - - - - - - - - - - 24,985,377 24,985,377 - Balances pertaining to parties that were related at the beginning of the year but ceased to be related during any part of the current year are not reflected as part of the closing balance. However, new related parties have been added during the year. The same are accounted for through the movement presented above. ANNUAL REPORT 2019 263
265. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 Total 2019 Subsidiary 2018 2019 Associates 2018 2019 Directors 2018 2019 Key Management Personnel 2018 2019 107,304 171,382 Other Related Parties 2018 2019 2018 Rupees in ‘000 Deposits Other Assets Profit receivable on financing / investments / placements Fee and other receivable Sub-ordinated Sukuk (Tier II) Other Liabilities Payable to defined benefit plan Accrued Expenses Contingencies and Commitments Letters of credit (unfunded) Letters of Guarantee (unfunded) Transactions, income and expenses Profit earned on financing / investments / placements Fees and other income earned Dividend income earned Capital gain - net Return on deposits / borrowing expensed Recovery of expenses Charge for defined benefit plan Contribution to defined contribution plan Contribution to staff benevolent fund Fees expensed Donation Charity Paid Remuneration to key management personnel Fee to non-executive directors (note 39) 44 5,164,559 5,255,327 10,349 32,351 1,171,564 1,125,645 710,269 24,011 568,000 12,820 26,855 618,000 22,408 - 22,355 - 561,242 202,500 624,077 2,921 2,500 2,921 26,076 100 27,572 100 100 100 26,076 - 27,572 - 735,170 117,417 65,000 705,697 2,616 244,062 313,163 20,000 9,331 200,000 29,400 352,828 57,418 49,035 161,328 325,000 2,582 250,890 323,223 271,165 20,000 12,011 28,000 325,879 48,542 99,691 65,000 2,425 9,331 - 2,378 97,868 325,000 1,211 12,011 - 735,170 17,726 270,336 - 46,657 63,460 2,582 43,468 - 710,269 1,603 568,000 - 12,820 1,000 618,000 - 95,662 - - - - - - 1,166 57,418 1,463 48,542 317,180 - 27,991 352,828 - 523,483 300,854 - 12,303 325,879 - 3,715,602 3,466,544 - 244,062 323,223 200,000 - Capital structure The State Bank of Pakistan (SBP) introduced updated guidelines with respect to disclosure of capital adequacy related information in the financial statements of banks vide its communication dated November 5, 2014. These guidelines are based on the requirements of Basel III which were introduced earlier by the SBP in August 2013 for implementation by banks in Pakistan. The SBP had specified a transitional period for implementing new standards which came to its end on December 31, 2019. The disclosures below have been prepared on the basis of these new guidelines. The comparative information is as per requirements which were applicable last year. Capital structure Under Basel III framework, the Bank's regulatory capital has been analysed into two tiers as follows: - Tier 1 capital (going concern capital) which is sub divided into: a) Common Equity Tier 1 (CET1), which includes fully paid up capital, balance in share premium account, reserve for bonus issue, general reserves and unappropriated profits (net of losses), after regulatory deductions for investment in own shares, and book value of intangibles. b) Additional Tier 1 capital (AT1), which includes perpetual, unsecured, sub-ordinated, non-cumulative and contingent convertible Sukuk instrument issued by the Bank. - 264 Tier II capital, which includes sub-ordinated sukuk, general provisions for loan losses (upto a maximum of 1.25% of credit risk weighted assets), reserves on revaluation of available for sale investments after deduction of indirect holding of own capital. MEEZAN BANK LIMITED - 403,779 192,445 2,616 244,062 323,223 313,163 271,165 20,000 20,000 200,000 29,400 28,000 - CAPITAL ASSESSMENT AND ADEQUACY BASEL SPECIFIC 44.1 3,500 -
266. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 Banking operations are categorised in either the trading book or the banking book and risk weighted assets are determined according to the specified requirements that seek to reflect the varying levels of risk attached to assets and off balance sheet exposures. The required capital adequacy ratio is achieved by the Bank through: (a) (b) (c) (d) 44.2 Adequate level of paid up capital; Adequate risk profile of asset mix; Ensuring better recovery management; and Maintaining acceptable profit margins Capital adequacy ratio The main objective of the capital management is to improve the financial position and strengthen the statement of financial position of the Bank to support the growth in business, provide protection to depositors and enhance shareholders' value. The Bank’s Board and the management is committed to maintaining a sound balance between depositors' liability and shareholders' funds so that optimal capital / debt ratio is maintained. The optimal capital / debt ratio will provide reasonable assurance to depositor's about safety and security of their funds and at the same time provide impetus to the management to invest their depositors’ funds into profitable ventures without compromising the risk profile of the Bank. The capital requirement of the Bank has been determined based on the projected growth plan to be achieved in the next 3 years in all areas of business operations. Further, it also takes into account a road map for capital enhancement as directed by the SBP vide its various circulars issued from time to time. The Bank prepares Annual Budget and Three Year Plan for purpose of the growth map and future direction. Bottom up approach is used to prepare annual budget and detailed deliberations are held while preparing Three Year Plan. The growth prospects takes into consideration prevailing economic and political factors in Pakistan and abroad. In implementing current capital requirements the SBP requires banks to maintain minimum Capital Adequacy Ratio (CAR) of 12.50% as of December 31, 2019 whereas CAR stood at 16.58% at the year ended December 31, 2019. The Bank calculates capital adequacy ratio for credit risk, market risk and operational risk based upon requirements under Basel Accord as per guidelines issued by the SBP from time to time in this regard. Sensitivity and stress testing of the Bank under different risk factors namely yield rate, forced sale value of collateral, non-performing financings and foreign exchange rate depicts that the Bank’s capital adequacy ratio is above the regulatory requirements. The Bank has taken into account credit risk, market risk and operational risk when planning its assets. ANNUAL REPORT 2019 265
267. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 45 CAPITAL ADEQUACY, LEVERAGE RATIO & LIQUIDITY REQUIREMENTS 2019 2018 Rupees in ‘000 Minimum Capital Requirement Paid-up capital (net of losses) 12,861,116 11,691,924 Capital Adequacy Ratio Eligible Common Equity Tier 1 Capital Eligible Additional Tier 1 Capital Total Eligible Tier 1 Capital Eligible Tier 2 Capital Total Eligible Capital (Tier 1 + Tier 2) 48,792,920 7,000,000 55,792,920 15,831,790 71,624,710 39,591,737 7,000,000 46,591,737 9,916,173 56,507,910 342,265,372 14,948,695 74,650,912 431,864,979 323,126,915 11,628,453 53,645,290 388,400,658 Risk Weighted Assets Credit Risk Market Risk Operational Risk Total Common Equity Tier 1 Capital Adequacy ratio Tier 1 Capital Adequacy Ratio Total Capital Adequacy Ratio Leverage Ratio Tier-1 Capital Total Exposures Leverage Ratio 10.19% 12.00% 14.55% 55,792,920 1,306,069,711 4.27% 46,591,737 1,054,746,721 4.42% Liquidity Coverage Ratio Total High Quality Liquid Assets Total Net Cash Outflow Liquidity Coverage Ratio 173,028,388 90,017,680 192% 120,562,308 94,253,108 147% Net Stable Funding Ratio Total Available Stable Funding Total Required Stable Funding Net Stable Funding Ratio 874,633,651 536,584,783 163% 716,111,391 550,702,281 130% 45.1 46 11.30% 12.92% 16.58% Full disclosure on Capital Adequacy, Leverage Ratio & Liquidity Requirements prepared as per SBP instructions is available at http:// www.meezanbank.com RISK MANAGEMENT The wide variety of the Bank’s business activities require the Bank to identify, assess, measure, aggregate and manage risks effectively which are constantly evolving as the business activities expand in response to the Bank's strategy and growth. The Bank manages the risk through a framework of risk management encompassing policies and procedures, organisational structures, risk measurement and monitoring processes and techniques that are closely aligned with business activities of the Bank. Risk management principles 266 - The Board of Directors (the Board) provides overall risk management supervision. The Board Risk Management Committee regularly reviews the Bank’s risk profile. - The Bank has set up objectives and policies to manage the risks that arise in connection with the Bank’s activities. The risk management framework and policies of the Bank are guided by specific objectives to ensure that comprehensive and adequate risk management tools and techniques are established to mitigate the salient risk elements in the operations of the Bank. - The establishment of the overall financial risk management objectives is consistent and in tandem with the strategy to create and enhance shareholders’ value, whilst guided by a prudent risk management framework. - The structure of risk management function is closely aligned with the organisational structure of the Bank. - The risk management function is independent of the Bank’s operations. MEEZAN BANK LIMITED
268. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 Risk management organisation The Board Risk Management Committee comprises of four non-executive directors. One of the non-executive directors of the Bank chairs the Risk Management Committee. Specialized Committees comprising of Senior Management team members perform their functions in line with the strategic direction set by the Board while ensuring that there is optimal balance between risk reward trade-off. The Committees include: Name of the sub-committee Chaired by Credit Risk Management Committee (CRMC) Asset and Liability Management Committee (ALCO) Compliance & Operational Risk Management Committee (CORMC) President & CEO President & CEO President & CEO CRMC is responsible to oversee credit risk activities on bank wide basis while ensuring compliance with regulatory requirements and internal policies. Its responsibilities also include to provide support and guide front lines in managing their businesses, perform finance portfolio review, establish financing standards and benchmarks, maintain adequate industry diversification and decide upon provisioning. It is also required to delegate financing approving powers & prudential limits on large financing exposures. Credit Committee, a sub-committee of CRMC is the highest level body for approval of financing transactions. ALCO is responsible for reviewing the Asset and Liability structure of the Bank, monitoring the liquidity situation and overall changing market scenario. Market and Liquidity risks are examined based on stress testing exercises and gap analysis. ALCO is also responsible for monitoring policy rate movements and taking necessary steps across various products to ensure that the overall profitability of the Bank is maximized without compromising on risk appetite. ALCO also ensures that the Banks’ overall operations are fully compliant with regulatory framework for the business as provided by the State Bank of Pakistan. The CORMC is responsible for overseeing compliance risk by reviewing the adequacy of controls in place to meet regulatory requirements. The Committee is responsibe for promoting compliance culture in the Bank, facilitate in implementation of Compliance Program and oversee Money Laundering and Financing Terrorism risk. In addition, the Committee also oversees Operational Risk Framework by ensuring that policies and procedures are in place in all Key risk areas and by reviewing Key Risk Indicators. The Committee also monitors level of compliance of major unresolved and recurring issues pointed out in the Internal Audit, Shariah Audit and SBP Inspection Report. The Bank’s risk management, compliance, internal audit and legal departments support the risk management function. The role of the risk management department is to assess, measure, identify risks and established risk mitigants through a detailed policy and monitoring framework. The compliance department ensures that all the directives and guidelines issued by the SBP are being complied with in order to mitigate the compliance risk. The internal audit and BRR department reviews the compliance of internal control procedures with internal and regulatory standards. 46.1 Credit Risk Credit risk arises from the potential that an obligor is either unwilling to perform on an obligation or its ability to perform such obligations is impaired resulting in economic loss to the Bank. This credit risk arises mainly from both direct financing activities as well as contingent liabilities. Credit risk management and structure The Bank manages credit risk by effective credit appraisal mechanism, approving and reviewing authorities, limit structures, internal credit risk rating system, collateral management and post disbursement monitoring so as to ensure prudent financing activities and sound financing portfolio under the umbrella of a comprehensive Financing Policy approved by the Board of Directors. A comprehensive financing procedural manual approved by the senior management is also in place. The Bank also ensures diversification of its portfolio into different business segments, products and sectors. Further, to avoid risk concentration; counterparty limits, counterparty group limits and industry concentration limits are also established, monitored and assessed in the light of changing counterparty and market conditions. Watchlist procedure is also functioning which identifies financings with early warning indicators in respect of clients having the potential to become non performing. The risk management function also monitors the non-performing financing portfolio of the Bank and reports all significant matters to the Board Risk Management Committee. The Bank takes into account the risk mitigating effect of the eligible collaterals for the calculation of capital requirement for credit risk. Use of Credit Risk Mitigation (CRM) resulted in the total credit risk weighted amount of Rs 342,265.372 million (2018: Rs 323,126.915 million). Thus, use of CRM resulted in capital adequacy ratio of the Bank of 16.58%. ANNUAL REPORT 2019 267
269. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 46.1.1 Segmental information 46.1.1.1 Due from financial institutions Credit risk by public / private sector Gross amount due from financial institutions 2019 2018 Non-performing amount due from financial institution 2019 2018 Provision held 2019 2018 Rupees in ‘000 Public/ Government Private 46.1.1.2 163,347,061 60,383,830 223,730,891 75,782,901 109,073,265 184,856,166 41,566 41,566 41,566 41,566 41,566 41,566 41,566 41,566 Investment in debt securities Credit risk by industry sector Gross investments 2019 2018 Non-performing investments 2019 2018 Provision held 2019 2018 Rupees in ‘000 Automobile and transportation equipment Cement Chemical and Pharmaceuticals Construction and allied industries Federal Government Securities Fertilizer Financial Foreign Government Securities Oil and Gas Power (electricity) Textile Transport, Storage and Communication 776,919 500,000 45,896 400,000 96,658,346 2,986,023 4,666,473 4,350,000 95,199,348 266,987 205,849,992 697,495 500,000 53,648 400,000 89,420,405 175,000 2,773,756 4,788,337 5,800,000 11,074,050 116,987 2,433,333 118,233,011 45,896 116,987 162,883 53,648 - 45,896 - 53,648 - 116,987 170,635 116,987 162,883 116,987 170,635 Credit risk by public / private sector Gross investments 2019 2018 Non-performing investments 2019 2018 Provision held 2019 2018 Rupees in ‘000 Public/ Government Private 268 MEEZAN BANK LIMITED 198,315,800 7,534,192 205,849,992 110,137,212 8,095,799 118,233,011 162,883 162,883 170,635 170,635 162,883 162,883 170,635 170,635
270. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 46.1.1.3 Islamic financing and related assets Credit risk by industry sector Gross amounts 2019 2018 Non-performing amounts 2019 Provision held 2018 2019 2018 Rupees in ‘000 Agriculture, Feed Mills, Poultry, Dairy, Forestry and Fishing 6,532,725 Automobile and transportation equipment 17,428,237 Cement 14,735,150 Chemical and Pharmaceuticals 14,159,334 Construction and allied industries 21,959,860 Electronics and electrical appliances 5,556,206 Exports/Imports 2,424,536 Fertilizer 6,254,098 Financial 778,364 Food 106,554,649 Footwear and Leather garments 3,641,150 Individuals 49,641,378 Insurance 247,572 Mining and Quarrying 6,284,400 Oil and Gas 22,022,980 Paper, board and packaging 9,808,539 Power (electricity) 80,339,579 Services 7,979,122 Sugar 6,511,846 Textile 85,320,362 Transport, Storage and Communication 23,973,248 Wholesale and Retail Trade 10,940,491 Others 3,418,750 506,512,576 6,375,526 10,788,382 13,151,742 13,500,193 26,154,132 5,382,465 2,953,481 9,758,803 1,359,991 118,998,351 3,028,701 50,039,790 211,676 2,727,796 35,817,044 10,221,330 71,885,424 4,754,839 11,456,405 82,653,750 23,466,606 12,699,242 4,878,094 522,263,763 54,637 642,232 75,137 462,354 155,324 38,833 999,984 201,201 383,905 285,327 846,119 24,220 108,718 4,323,075 92,884 153,068 148,701 8,995,719 631,912 88,671 36,443 37,800 154,767 38,833 439,156 230,006 334,438 99,905 19,616 108,718 4,336,655 53,791 279,220 95,311 6,985,242 53,338 642,232 75,137 139,135 155,324 38,833 972,992 201,201 241,345 190,601 846,119 21,909 108,718 4,278,286 41,417 140,868 137,064 8,284,519 628,164 81,421 36,443 37,800 154,767 38,833 435,968 230,006 228,583 97,890 19,616 108,718 4,272,687 30,534 275,010 95,090 6,771,530 Credit risk by public / private sector Gross amounts 2019 2018 Non-performing amounts 2019 Provision held 2018 2019 2018 Rupees in ‘000 Public/ Government 121,590,108 138,584,630 - - - - Private 384,922,468 383,679,133 8,995,719 6,985,242 8,284,519 6,771,530 506,512,576 522,263,763 8,995,719 6,985,242 8,284,519 6,771,530 ANNUAL REPORT 2019 269
271. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 46.1.1.4 Contingencies and Commitments Credit risk by industry sector 2019 2018 Rupees in ‘000 Agriculture, Feed Mills, Poultry, Dairy, Forestry and Fishing Automobile and transportation equipment Cement Chemical and Pharmaceuticals Construction and allied industries Electronics and electrical appliances Exports/Imports Fertilizer Financial Food Footwear and Leather garments Individuals Insurance Mining and Quarrying Oil and Gas Paper, board and packaging Power (electricity) Services Sugar Textile Transport, Storage and Communication Wholesale and Retail Trade Others Credit risk by public / private sector Public/ Government Private 46.1.1.5 3,888,017 10,379,265 2,205,610 16,519,610 20,041,620 5,637,909 1,114,977 10,264,420 202,504,092 48,788,281 5,025,428 20,880,737 146,942 2,778,730 32,763,650 11,008,615 72,679,466 43,451,226 20,553,186 183,142,496 12,157,381 18,985,405 7,173,065 752,090,128 10,427,720 7,746,560 7,054,100 15,021,157 24,290,006 5,390,375 899,538 19,817,808 110,082,698 38,801,583 5,036,464 26,649,477 2,272,204 9,840,327 7,973,098 31,795,720 25,106,116 17,893,407 83,632,808 1,859,337 7,973,811 6,391,186 465,955,500 92,505,223 659,584,905 752,090,128 37,375,897 428,579,603 465,955,500 Concentration of Top 10 exposures Top 10 exposures on the basis of total funded and non-funded expsoures aggregated to Rs 264,457 million (2018: Rs 180,712 million) as follows: 2019 Funded Exposure Non Funded Exposure Total Exposure Rupees in ‘000 213,395,745 51,061,637 264,457,382 2018 145,056,016 35,655,566 180,711,582 The sanctioned limits against these top 10 exposures aggregated to Rs 326,544 million (2018: Rs 205,451 million). None of the exposure against these top 10 customers is in classified stage. 270 MEEZAN BANK LIMITED
272. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 46 .1.1.6 Islamic Financings and related assets - Province / Region-wise Disbursement and Utilization 2019 Disbursements Utilization Rupees in ‘000 Punjab Province / Region Punjab Sindh KPK including FATA Balochistan Islamabad AJK including Gilgit-Baltistan 263,517,532 256,420,540 1,248,056 772,392 38,469,256 Total 561,044,733 KPK including Balochistan FATA Sindh 263,517,532 3,280,581 251,802,543 - 616,957 - 627,755 1,248,056 - - 266,798,113 251,802,543 Islamabad 671,012 772,392 - - 38,469,256 - 1,875,811 AJK including Gilgit-Baltistan - 1,443,404 38,469,256 38,649 616,957 655,606 2018 Disbursements Utilization Rupees in ‘000 Punjab Province / Region Punjab Sindh KPK including FATA Balochistan Islamabad AJK including Gilgit-Baltistan Total Sindh KPK including Balochistan FATA Islamabad AJK including Gilgit-Baltistan 299,569,251 297,780,172 2,476,320 347,823 111,318,054 299,569,251 28,501,991 252,632,490 - 4,084,133 2,476,320 - 11,487,367 347,823 - 1,073,801 111,318,054 390 - 747,443 712,239,063 328,071,242 252,632,490 6,560,453 11,835,190 112,391,855 747,443 747,833 46.1.2 Credit Risk - General Disclosures The Bank has adopted Standardised Approach of Basel Accord for calculation of capital charge against credit risk. Therefore, risk weights for the credit risk related assets (on-balance sheet and off-balance sheet - market and non market related exposures) are assigned on basis of standardised approach. The Bank is committed to further strengthen its risk management framework which will enable the Bank to move ahead for adopting Foundation Internal Ratings Based (IRB) approach of Basel II. Meanwhile, none of the Bank's asset class is subject to the Foundation IRB or advanced IRB approaches. 46.1.2.1 Credit Risk: Disclosures for portfolio subject to the Standardised Approach Under standardised approach the capital requirement is based on the credit rating assigned to the counterparties by the External Credit Assessment Institutions (ECAIs) duly recognised by the SBP for capital adequacy purposes. In this connection, the Bank utilises the credit ratings assigned by ECAIs and has recognised agencies such as PACRA (Pakistan Credit Rating Agency) and VIS Credit Rating Company which are also recognised by the SBP. In case of foreign currency exposures against banks, ratings assigned by S&P, Fitch and Moody’s have been applied. In case of exposure against banks, some banks have multiple ratings but those ratings do not result in mapping with different risk weights. Types of Exposure and ECAI’s used 2019 Exposures VIS PACRA Standard & Poors (S&P) Fitch Moody’s Corporate √ √ √ √ √ Banks √ √ √ √ √ Public Sector Entities √ √ - - - ANNUAL REPORT 2019 271
273. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 Use of ECAI Ratings The Bank prefers solicited ratings over unsolicited ratings at all times, owing to the greater degree of accuracy (in general) associated with solicited ratings. Unsolicited ratings may only be used in cases where a solicited rating is not available. Mapping to SBP Rating Grades The alignment of the Alphanumerical scale of each agency used with risk buckets is as per instructions laid down by SBP under Basel III requirements. 46.1.2.2 Credit exposures subject to standardised approach 2019 On-balance sheet Exposures Amount Outstanding Deduction Credit Risk Management 2018 Net amount Amount Outstanding Deduction Credit Risk Management Net amount Rupees in ‘000 Banks 20% 50% 100% 150% Unrated 213,139,950 2,947,550 665,142 57,283 11,872,860 172,015,972 - 41,123,978 2,947,550 665,142 57,283 11,872,860 194,020,323 985,696 83,328 451,096 143,659,107 - 50,361,216 985,696 83,328 451,096 Sovereigns 0% 20% 50% 100% 216,586,461 2,813,316 213,088 31,286,757 - 185,299,704 2,813,316 213,088 173,195,662 276,755 2,051,928 151,309 30,719,089 - 142,476,573 276,755 2,051,928 151,309 Public Sector entities 20% Unrated (50%) 28,487,673 172,718,924 18,750,845 178,650,321 9,736,828 - 32,314,645 91,677,679 13,052,617 91,947,049 19,262,028 - Corporate 20% 50% 100% 150% Unrated 1 (100%) Unrated 2 (125%) 94,332,322 75,285,341 11,258,273 71,775,088 62,331,059 1,557,502 40,000 5,959,663 10,532,509 92,774,820 75,245,341 11,258,273 65,815,425 51,798,550 93,937,224 55,606,232 3,258,718 1,019,233 92,818,644 57,987,218 1,784,000 2,329,667 4,798,516 2,624,655 92,153,224 53,276,565 3,258,718 1,019,233 88,020,128 55,362,563 Retails 75% 58,377,604 11,778,165 46,599,439 60,304,873 10,700,598 49,604,275 102,828 613,339 32,248 22,146 70,580 591,193 54,913 246,140 27,743 10,386 27,170 235,754 33,417 15,515 17,902 17,790 10,242 7,548 1,023,611,518 430,641,643 598,901,272 860,459,406 301,663,669 559,065,107 Past Due 50% 100% 150% Total 46.1.2.3 Credit Risk: Disclosures with respect to Credit risk mitigation for Standardised approach and IRB The Bank obtains capital relief for both its on-balance and off-balance sheet non-market related exposures by using simple approach for credit risk mitigation (CRM). Off-balance sheet items under the simplified standardised approach are converted into credit exposure equivalents through the use of credit conversion factors. Under the standardised approach the Bank has taken advantage of the cash collaterals available with the Bank in the form of security deposits, cash margins, certificates of islamic investment, monthly mudaraba certificate, saving accounts, guarantees, shares and Government securities. Valuation and management of eligible collaterals for CRM is being done in accordance with the conditions laid down by the State Bank of Pakistan. Eligible collaterals for CRM purposes do not expose the Bank to price risk as they are in the form of cash/cash equivalent collaterals. Since eligible collaterals for CRM purposes are all in the form of cash/cash equivalent collaterals, they generally do not pose risk to the Bank in terms of change in their valuation due to changes in the market condition. The credit equivalent amount of an off-balance sheet market related foreign exchange contracts are determined by using the current exposure (mark to market) method. 272 MEEZAN BANK LIMITED
274. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 The total benefit of Rs 430,641.643 million was availed through CRM against total on-balance sheet exposure of Rs 1,118,550.993 million. Under off-balance sheet, total benefit of Rs 13,602.003 million was availed by the Bank through CRM against total off-balance sheet, non-market related exposure of Rs 485,001.676 million. In the year 2019, total CRM benefit was Rs 444,243.646 million as against amount of Rs 319,304.216 million in year 2018. 46.1.2.4 Credit concentration risk Credit concentration risk arises mainly due to concentration of exposures under various categories viz., industry, geography, and single / group borrower obligor. Within credit portfolio, as a prudential measure aimed at better risk management and avoidance of concentration of risks, the SBP has prescribed regulatory limits on banks’ maximum exposure to single and group obligors. Within the SBP limits, the Bank has further defined limits to avoid excessive concentration of portfolio. 46.2 Market risk Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk reflects yield rate risk, currency risk and other price risks. Banks could be adversely affected by movements in market rates or prices such as benchmark rates, deposit rates, foreign exchange rates, equity prices and market conditions resulting in a loss to earnings and capital. 46.2.1 Equity position in the banking and trading book The Bank classifies and values its investment portfolio in accordance with the directives of SBP as stated in note 6.4 to these financial statements. Trading book Held for trading and available for sale securities with trading intent; - They are marked to market daily; and - Any valuation difference is charged / credited to the profit and loss account in case of held for trading securities and to surplus on revaluation of investments - net of tax under equity in case of available for sale securities. Banking book Assets outside trading book are part of the banking book. These may include assets classified as available for sale and held to maturity investments. 46.2.2 Balance sheet split by trading and banking books 2019 Banking Book Cash and balances with treasury banks Balances with other banks Due from financial institutions Investment - net Islamic financings and related assets - net Fixed assets Intangible assets Deferred tax asset Other assets - net Trading Book 2018 Banking Book Total Trading Book Total 5,233,428 65,022,041 8,255,187 184,814,600 123,742,867 Rupees in ‘000 92,193,361 15,372,233 223,689,325 219,266,575 493,775,346 23,284,415 780,381 46,517,031 1,114,878,667 6,379,587 6,379,587 92,193,361 15,372,233 223,689,325 225,646,162 65,022,041 8,255,187 184,814,600 118,509,439 493,775,346 23,284,415 780,381 46,517,031 512,564,522 13,129,126 624,534 982,936 28,779,592 1,121,258,254 932,681,977 5,233,428 512,564,522 13,129,126 624,534 982,936 28,779,592 937,915,405 ANNUAL REPORT 2019 273
275. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 The Bank uses a number of methods to monitor and control market risk exposures. One of the major tools used by the Bank to monitor and limit market risk is Value at Risk (VaR). VaR is defined as the estimated loss that will arise on a position or a portfolio over a particular (holding) period of time from an adverse market movement with a specific probability (confidence level). The VaR model used by the Bank takes 99% confidence level and assumes a 1 to 10 days holding period whilst using the historical simulation taking the data of the last three years. Daily VaR figures are circulated to the senior management and regular summaries are reported in ALCO meetings. The VaR reports are complemented by various other position and sensitivity limit structures, including stress, sensitivity, gap and scenario analysis. The capital charge for market risk has been calculated by using Standardized Approach. 46.2.3 Foreign exchange risk The foreign exchange risk is defined as the current or prospective risk to earnings and capital arising from adverse movements in currency exchange rates. It refers to the impact of adverse movement in currency exchange rates on the value of open foreign currency position. The objectives of the foreign exchange risk management is to minimise the adverse impact of foreign exchange rate movements on the assets and liabilities mismatch (tenor and position) and maximise their earnings. Whenever a commercial bank deals in foreign currency, it is exposed to risk of exchange rate. The Bank's assets and liabilities in foreign currencies give rise to foreign exchange risk which has to be managed by the Bank; this risk is mitigated by using different hedging techniques. Hedging is a way used by a bank to eliminate or minimize its risk exposures. Hedging can be done using different ways like gap analysis, hedging (forwards), assigning limits in terms of amount, tenor, currency, product, countries, counterparties etc. The Bank limits its currency exposure to the extent of statutory net open position prescribed by the SBP except in the cases where exemption is provided by the SBP. Foreign exchange open and mismatch positions are controlled through close monitoring and are marked to market on a daily basis. The analysis below represents the concentration of the Bank's foreign currency risk for on and off balance sheet financial instruments: Assets Pakistan Rupees 2019 Off-balance sheet items Rupees in ‘000 987,250,649 (34,978,988) Net foreign currency exposure 58,861,986 United States Dollars Great Britain Pounds Japanese Yen Euro Singapore Dollars Australian Dollars Canadian Dollars United Arab Emirates Dirham Swiss Francs Saudi Riyal Swedish Krona Malaysian Ringgit Hongkong Dollar Thailand Bhat Norwegian Krone Danish Krone Chinese Offshore Spot Chinese Yuan 37,480,391 706,604 48,430 1,177,207 123,245 21,101 46,414 106,543 19,479 3,244 1,643 1,323 1,177 4,086 36,194 2,488 387,062 66,756,731 4,516,282 4,449 3,234,587 6,491 1,976 1,470 100,172 35 370,000 29,327,718 3,838,766 (49,893) 2,089,398 11,504 (141,022) (11,513) (42,157) (1,599) (30,204) (12,010) 51,378 29,088 (5,912) 32,018 5,013 (19,753) 8,118 4,257 4,772 19,479 3,244 1,643 1,288 1,177 4,086 5,990 2,488 5,052 Total foreign currency exposure 40,166,631 74,992,193 34,978,988 153,426 1,121,258,254 1,062,242,842 Total currency exposure 274 1,081,091,623 Liabilities MEEZAN BANK LIMITED - 59,015,412
276. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 Assets Liabilities 2018 Off-balance sheet items Rupees in ‘000 Pakistan Rupees United States Dollars Great Britain Pounds Japanese Yen Euro Singapore Dollars Australian Dollars Canadian Dollars United Arab Emirates Dirham Swiss Francs Saudi Riyal Swedish Krona Malaysian Ringgit Hongkong Dollar Thailand Bhat Norwegian Krone Danish Krone Chinese Offshore Spot Chinese Yuan Total foreign currency exposure Total currency exposure Net foreign currency exposure 904,402,897 834,273,614 (29,777,104) 40,352,179 30,482,064 677,715 34,146 1,715,095 5,162 68,746 165,561 62,398 4,867 18,551 436 1,247 993 1,086 1,428 1,046 2,019 269,948 33,512,508 55,168,119 3,995,066 45 3,876,456 4 3,077 1,387 34 264,548 63,308,736 24,656,496 3,330,962 (28,994) 2,119,253 (101,482) (163,246) (30,244) (5,641) 29,777,104 (29,559) 13,611 5,107 (42,108) 5,158 (35,813) 928 32,154 (774) 18,551 436 1,247 959 1,086 1,428 1,046 2,019 5,400 (19,124) 937,915,405 897,582,350 - 40,333,055 2019 Banking book 2018 Trading book Banking book Trading book Rupees in ‘000 Impact of 1% change in foreign exchange rates - Profit and Loss Account - Other Comprehensive Income - 1,992 - - 992 - 46.2.4 Equity position risk Equity position risk is defined as the risk to earnings or capital arising from adverse changes in value of equity portfolios of Bank. The limits assigned to various individual scrips and total portfolio investments are fixed as per the guidelines issued by the SBP. The Bank invests in only Shariah compliant equities as advised by the Resident Shariah Board Member. 2019 Banking book 2018 Trading book Banking book Trading book Rupees in ‘000 Impact of 5% change in equity prices - Profit and Loss Account - Other Comprehensive Income - 162,186 - 141,284 ANNUAL REPORT 2019 275
277. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 46.2.5 Yield / profit rate risk Yield risk occurs when there is a mismatch between positions, which are subject to profit rate alterations within a particular time period. The Bank’s financing, placement and investment activities give rise to profit rate risk. The effect of changes in profit rate is on the Bank’s income, and resultant impact is on the Bank’s net worth. Profit rate risk is primarily managed by monitoring the rate sensitive gaps and by having the pre-approved limits for repricing buckets. ALCO is the supervising body for adherence with these, complemented by the monitoring of sensitivity of the Bank’s financial assets and liabilities to various scenarios. The Bank estimates changes in the market value of equity due to changes in the yield rates on on-balance sheet positions and their impact on capital adequacy ratio by conducting stress tests. It also assesses risk on earnings of the Bank by various shocks. 2019 Banking book 2018 Trading book Banking book Trading book Rupees in ‘000 Impact of 1% change in discount rates - Profit and Loss Account - Other Comprehensive Income 46.2.6 833,288 - - 854,073 - - Mismatch of yield rate sensitive assets and liabilities Effective yield rate % Total Upto 1 month Over 1 to 3 months Over 3 to 6 months 2019 Exposed to yield risk Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years Non-yield bearing financial instruments Rupees in ‘000 On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Other assets 0.80 11.31 11.17 12.36 - Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Other liabilities 92,193,361 15,372,233 223,689,325 225,646,162 493,775,346 44,508,630 1,095,185,057 5,771,943 53,211,438 738,367 166,792,950 226,514,698 67,361,553 100,397,792 72,353,643 240,112,988 31,204,048 25,583,255 50,157,224 106,944,527 71,912,286 775,240 13,757,900 86,445,426 42,433,712 7,517,591 49,951,303 42,185,876 10,606,330 52,792,206 4,350,115 16,840,760 21,190,875 1,990,434 3,401,060 5,391,494 - 92,193,361 9,600,290 7,191,371 152,347,888 44,508,630 305,841,540 3.27 5.44 12.81 - 17,186,807 42,047,390 932,579,114 14,000,000 39,239,569 1,045,052,880 50,132,177 41,701,568 584,522,985 14,000,000 640,224,553 (413,709,855) 188,330 10,217,343 10,405,673 229,707,315 46,934 1,460,000 1,506,934 105,437,593 268 500,000 500,268 85,945,158 21,279 21,279 49,930,024 13,918 13,918 52,778,288 66,324 66,324 21,124,551 5,391,494 - 17,186,807 8,769 335,878,786 39,239,569 392,313,931 (86,472,391) - 151,033,720 116,054,732 34,978,988 - (51,493,403) On-balance sheet gap Non financial assets - Fixed assets - Intangible assets - Deferred tax assets - Other assets Non financial liabilities - Other liabilities - Deferred tax liabilities Total net assets 23,284,415 780,381 2,008,401 26,073,197 14,360,104 2,829,858 17,189,962 59,015,412 Off-balance sheet financial instruments Forward purchase of foreign exchange contracts Forward sale of foreign exchange contracts Off-balance sheet gap 276 151,033,720 116,054,732 34,978,988 - - - - - - - - Total yield risk rate sensitivity gap (413,709,855) 229,707,315 105,437,593 85,945,158 49,930,024 52,778,288 21,124,551 5,391,494 Cumulative yield risk rate sensitivity gap (413,709,855) (184,002,540) (78,564,947) 7,380,211 57,310,235 110,088,523 131,213,074 136,604,568 MEEZAN BANK LIMITED 136,604,568 85,111,165
278. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 Effective yield rate % Total Upto 1 month Over 1 to 3 months Over 3 to 6 months 2018 Exposed to yield risk Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years Non-yield bearing financial instruments Rupees in ‘000 On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Other assets 0.31 6.28 5.65 7.90 - 65,022,041 8,255,187 184,814,600 123,742,867 512,564,522 26,293,396 920,692,613 307,001 112,255,476 2,304,228 179,575,584 294,442,289 63,354,736 34,162,300 92,482,198 189,999,234 9,204,388 13,928,470 69,817,791 92,950,649 2,233,979 11,757,760 13,991,739 16,478,405 6,274,079 22,752,484 42,433,712 9,389,053 51,822,765 4,195,450 15,009,074 19,204,524 1,667,139 2,074,916 3,742,055 276,777 276,777 65,022,041 7,948,186 6,062,407 126,184,067 26,293,396 231,510,097 Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Other liabilities 4.01 2.57 8.55 - 23,750,543 36,407,811 785,476,944 14,000,000 24,256,491 883,891,789 36,800,824 35,371,084 470,739,460 7,000,000 513,110,544 (218,668,255) 24,158,618 7,000,000 31,158,618 158,840,616 4,228,460 4,228,460 88,722,189 673,000 673,000 13,318,739 22,752,484 51,822,765 19,204,524 3,742,055 276,777 23,750,543 1,036,727 285,677,406 24,256,491 334,721,167 (103,211,070) On-balance sheet gap Non financial assets - Fixed assets Intangible assets Deferred tax assets Other assets 13,129,126 624,534 982,936 2,486,196 17,222,792 Non financial liabilities - Other liabilities - Deferred tax liabilities Total net assets 13,690,561 13,690,561 40,333,055 Off-balance sheet financial instruments Forward purchase of foreign exchange contracts Forward sale of foreign exchange contracts Off-balance sheet gap 74,321,214 44,544,110 29,777,104 - - - - - - - - - 74,321,214 44,544,110 29,777,104 Total yield risk rate sensitivity gap (218,668,255) 158,840,616 88,722,189 13,318,739 22,752,484 51,822,765 19,204,524 3,742,055 276,777 (73,433,966) Cumulative yield risk rate sensitivity gap (218,668,255) (59,827,639) 28,894,550 42,213,289 64,965,773 116,788,538 135,993,062 139,735,117 140,011,894 66,577,928 The Bank takes on exposure to the effects of fluctuations in the prevailing levels of market profit rates on both its fair value and cash flow risks. Profit margins may increase as a result of such changes but may reduce to losses in the event that unexpected movement arise. 46.3 Liquidity risk Liquidity risk is the potential for loss to the Bank arising from either its inability to meet its obligations or to fund increases in assets as they fall due without incurring an unacceptable cost. The Bank’s Board of Directors sets the Bank’s policy for managing liquidity risk and entrusts accountability for supervision of the implementation of this strategy to senior management. Senior management exercises its responsibilities for managing market and liquidity risk through various committees including the Asset & Liability Management Committee (ALCO). Treasury department manages the Bank’s liquidity position on daily basis. The Bank’s main approach of managing the liquidity risk is to make certain that it will always have adequate liquidity to meet its liabilities when they are due in normal and stressed scenarios without incurring any untoward expenditure or risking reputational harm. ALCO monitors the maintenance of liquidity ratios, depositor's concentration both in terms of the overall funding mix and avoidance of undue reliance on large individual deposits. Regular liquidity stress testing is conducted under a variety of scenarios covering both normal and more severe market conditions. ANNUAL REPORT 2019 277
279. 278 MEEZAN BANK LIMITED Share capital Reserves Unappropriated profit Surplus on revaluation of assets Net assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Deferred tax liabilities Other liabilities 59 ,015,412 12,861,116 18,207,664 18,545,797 9,400,835 17,186,807 42,047,390 932,579,114 14,000,000 2,829,858 53,599,673 1,062,242,842 59,015,412 92,193,361 15,372,233 223,689,325 225,646,162 493,775,346 23,284,415 780,381 46,517,031 1,121,258,254 Total 5,671,646 232,531 688,766,008 7,861 165,793 694,843,839 (523,722,051) 30,423,808 6,186,116 221,793 134,023,901 10,656 527 254,987 171,121,788 Upto 1 Day 3,837,814 230,832 18,571,404 47,164 3,850,581 26,537,795 30,052,022 20,589,851 6,186,117 16,576,749 1,108,965 10,432,916 63,651 3,154 1,628,414 56,589,817 Upto 7 Days 3,837,814 163,416 18,614,941 55,026 1,404,334 24,075,531 18,524,624 20,589,851 11,713,028 1,275,310 5,070,508 74,259 3,679 3,873,520 42,600,155 Upto 14 Days Maturities of assets and liabilities based on contractual maturities Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Fixed assets Intangible assets Deferred tax assets Other assets 46.3.1 3,839,533 586,610 33,059,099 125,770 2,474,682 40,085,694 32,358,578 20,589,851 3,000,000 24,921,661 2,938,758 14,227,764 180,342 8,935 6,576,961 72,444,272 Upto 1 month 13,848,089 16,546,999 235,822 5,802,861 36,433,771 56,552,062 46,811,741 39,593,919 405,458 24,432 6,150,283 92,985,833 Upto 2 months Over 3 to 6 months 8,063,415 15,599,382 235,822 4,984,309 28,882,928 20,918,322 20,549,812 130,000 21,639,592 405,675 24,432 7,051,739 49,801,250 11,765,032 20,955,042 707,465 8,734,846 42,162,385 69,547,136 31,204,048 13,695,377 61,633,801 1,001,011 48,829 4,126,455 111,709,521 Rupees in ‘000 Upto 3 months 2019 214,435 29,581,392 1,414,928 6,051,191 37,261,946 64,285,777 71,912,286 1,897,483 20,126,208 2,032,839 99,191 5,479,716 101,547,723 Over 6 months to 1 Years 646,184 54,734,432 3,503,865 58,884,481 29,281,388 44,693,640 33,964,982 3,998,401 191,933 5,316,913 88,165,869 Over 1 to 2 Years 872,916 7,518,851 4,628,995 13,020,762 84,147,571 46,146,675 42,039,856 3,802,204 166,087 5,013,511 97,168,333 Over 2 to 3 years 2,532,447 11,633,489 4,346,718 18,512,654 56,514,175 9,763,936 61,107,183 3,248,083 182,798 724,829 75,026,829 Over 3 to 5years 2,891,483 16,998,075 7,000,000 7,641,492 34,531,050 103,248,055 102,643,120 32,294,942 2,504,964 26,384 309,695 137,779,105 Over 5 to 10 years 7,000,000 10,006 7,010,006 17,307,753 1,131,105 17,619,774 5,556,872 10,008 24,317,759 Above 10 years Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2019
280. 11 ,691,924 15,161,249 13,525,765 (45,883) Share capital Reserves Unappropriated profit Deficit on revaluation of assets 582,057,056 (411,526,752) 8,075,185 496,366 573,359,841 125,664 21,457,274 4,127,594 908,933 143,920,374 52,660 681 2,731 60,057 170,530,304 Upto 1 Day (3,760,149) 51,606,781 5,225,119 12,470,460 32,577,225 1,333,977 14,521,589 4,127,593 19,205,698 866,310 7,842,269 315,961 4,084 16,382 946,746 47,846,632 Upto 7 Days 50,758,712 24,199,098 5,225,119 110,411 17,472,856 1,390,712 14,521,589 53,240,917 1,098,195 4,767,501 368,621 4,764 19,113 937,110 74,957,810 Upto 14 Days 46,668,529 38,859,863 5,225,120 404,595 29,575,318 3,654,830 14,521,589 39,808,861 2,704,894 24,972,247 842,564 10,889 43,686 2,623,662 85,528,392 Upto 1 month 31,894,717 48,297,174 12,871,833 29,421,284 6,004,057 43,516,511 3,006,392 28,834,181 259,652 30,007 81,911 4,463,237 80,191,891 Upto 2 months Over 3 to 6 months 28,721,260 46,797,018 4,496,541 20,294,930 3,929,789 19,838,225 28,341,657 24,703,611 114,823 30,006 81,911 2,408,045 75,518,278 35,361,918 52,341,502 4,496,541 20,572,571 10,292,806 9,204,388 1,159,534 71,147,499 354,452 59,249 245,734 5,532,564 87,703,420 Rupees in ‘000 Upto 3 months (351,373) 36,386,292 27,133,880 9,252,412 4,320,420 21,102,254 690,692 87,317 491,468 9,342,768 36,034,919 Over 6 months to 1 Years 6,062,238 34,434,106 5,496,273 565,965 18,128,237 20,258,507 1,268,210 149,775 691,615 40,496,344 Over 1 to 2 Years Current and Savings deposits have been classified under maturity upto one day as these do not have any contractual maturity. 40,333,055 40,333,055 Net assets 897,582,350 23,750,543 36,407,811 785,476,944 14,000,000 37,947,052 65,022,041 8,255,187 184,814,600 123,742,867 512,564,522 13,129,126 624,534 982,936 28,779,592 937,915,405 Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Deferred Tax liabilities Other liabilities Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Fixed assets Intangible assets Deferred tax assets Other assets Assets Total 2018 7,604,043 61,726,131 627,074 6,421,521 555,448 46,158,113 21,295,023 1,074,233 121,708 681,097 69,330,174 Over 2 to 3 years 58,499,086 12,759,339 107,610 11,814,447 837,282 7,787,206 60,784,958 1,481,885 115,795 1,088,581 71,258,425 Over 3 to 5years 56,860,669 18,663,178 326,380 11,336,798 7,000,000 - 7,770,924 66,268,129 1,474,535 10,259 75,523,847 Over 5 to 10 years 7,004,110 15,990,859 7,000,000 4,110 1,492,052 16,667,969 4,830,838 4,110 22,994,969 Above 10 years Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2019 ANNUAL REPORT 2019 279
281. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 46.3.2 Maturities of assets and liabilities based on expected maturities Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months 2019 Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years Above 10 Years Rupees in ‘000 Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Operating fixed assets Intangible assets Deferred tax assets Other assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Deferred tax liabilities Other liabilities Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of assets 92,193,361 15,372,233 223,689,325 225,646,162 493,775,346 23,284,415 780,381 46,517,031 1,121,258,254 92,193,361 15,372,233 53,211,438 5,544,826 71,410,519 328,908 16,295 12,333,882 250,411,462 67,361,553 130,000 91,038,670 811,133 48,864 13,202,022 172,592,242 31,204,048 13,695,377 89,358,276 1,001,011 48,829 4,126,455 139,433,996 71,912,286 1,897,483 54,941,144 2,032,839 99,191 5,479,716 136,362,659 44,693,640 33,964,982 3,998,401 191,933 5,316,913 88,165,869 46,146,675 42,039,856 3,802,204 166,087 5,013,511 97,168,333 9,763,936 61,107,183 3,248,083 182,798 724,829 75,026,829 102,643,120 32,294,942 2,504,964 26,384 309,695 137,779,105 1,131,105 17,619,774 5,556,872 10,008 24,317,759 17,186,807 42,047,390 932,579,114 14,000,000 2,829,858 53,599,673 1,062,242,842 59,015,412 17,186,807 1,213,389 119,385,214 235,821 7,895,390 145,916,621 104,494,841 21,911,504 68,589,546 471,644 10,787,170 101,759,864 70,832,378 11,765,032 54,872,846 707,465 8,734,846 76,080,189 63,353,807 214,435 77,557,953 1,414,928 6,051,191 85,238,507 51,124,152 646,184 122,536,448 3,503,865 126,686,497 (38,520,628) 872,916 59,556,140 4,628,995 65,058,051 32,110,282 2,532,447 94,176,651 4,346,718 101,055,816 (26,028,987) 2,891,483 168,674,435 7,000,000 7,641,492 186,207,410 (48,428,305) 167,229,881 7,000,000 10,006 174,239,887 (149,922,128) Over 3 to 6 Months Over 6 Months to 1 Year Over 2 to 3 Years Over 3 to 5 Years 12,861,116 18,207,664 18,545,797 9,400,835 59,015,412 2018 Total Upto 1 Month Over 1 to 3 Months Over 1 to 2 Years Over 5 to 10 Years Above 10 Years Rupees in ‘000 Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Operating fixed assets Intangible assets Deferred tax assets Other assets Liabilities BBills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Deferred tax liabilities Other liabilities 65,022,041 8,255,187 184,814,600 123,742,867 512,564,522 13,129,126 624,534 982,936 28,779,592 937,915,405 65,022,041 8,255,187 112,255,476 5,578,332 81,961,222 1,579,806 20,418 81,912 4,567,575 279,321,969 63,354,736 31,348,049 87,847,815 374,475 60,013 163,822 6,871,282 190,020,192 9,204,388 1,159,534 103,062,351 354,452 59,249 245,734 5,532,564 119,618,272 4,320,420 54,418,548 690,692 87,317 491,468 9,342,768 69,351,213 18,128,237 20,258,507 1,268,210 149,775 691,615 40,496,344 46,158,113 21,295,023 1,074,233 121,708 681,097 69,330,174 7,787,206 60,784,958 1,481,885 115,795 1,088,581 71,258,425 7,770,924 66,268,129 1,474,535 10,259 75,523,847 1,492,052 16,667,969 4,830,838 4,110 22,994,969 23,750,543 36,407,811 785,476,944 14,000,000 37,947,052 897,582,350 23,750,543 13,481,832 125,711,284 6,505,183 169,448,842 17,368,374 86,607,369 9,933,846 113,909,589 4,496,541 54,888,366 10,292,806 69,677,713 75,663,743 9,252,412 84,916,155 74,127,863 565,965 74,693,828 627,074 59,084,393 555,448 60,266,915 107,610 95,325,715 837,282 96,270,607 326,380 214,068,211 7,000,000 221,394,591 7,000,000 4,110 7,004,110 Net assets 40,333,055 Share capital Reserves Unappropriated profit Deficit on revaluation of assets 11,691,924 15,161,249 13,525,765 (45,883) 40,333,055 109,873,127 76,110,603 49,940,559 (15,564,942) (34,197,484) 9,063,259 (25,012,182) (145,870,744) 15,990,859 Regarding behaviour of non-maturity deposits (non-contractual deposits), the Bank has carried out a behavioural study using the Value at Risk (VaR) methodology based on 5 years data. On the basis of its findings, 28.7% of current accounts and 19.3% of saving accounts are bucketed into 'Upto 1-Year maturity' whereas, 71.3% of current accounts and 80.7% of savings accounts are bucketed into maturities of above 1-Year. 280 MEEZAN BANK LIMITED
282. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 46.4 Operational risk The Bank uses Basic Indicator Approach (BIA) for assessing the capital charge for operational risk. Under BIA the capital charge is calculated by multiplying average positive annual gross income of the Bank over past three years with 15% as per guidelines issued by SBP under Basel II. To reduce losses arising from operational risk, the Bank has strengthened its risk management framework by developing polices, strategies, guidelines and manuals. It also includes set up of functions like operational risk management, prevention of fraud and forgery and information security function, defining responsibilities of individuals, implementing four eye principle, enhancing security measures, improving efficiency and effectiveness of operations, outsourcing and improving quality of human resources through trainings and development. 47 PROFIT / (LOSS) DISTRIBUTION TO DEPOSITORS' POOLS AND SPECIFIC POOLS 47.1 The Bank managed following general and specific pools during the year: 2019 General Remunerative (Savings and Fixed) Depositors' Pools Profit Rate and weightage announcement period Profit rate return earned Average Profit Sharing Ratio of Mudarib Mudarib Fee Profit rate return Percentage of distributed to Mudarib remunerative Share deposits transferred (Savings and through Hiba Fixed) - Average Rupees in ‘000 PKR Pool USD Pool GBP Pool EUR Pool Monthly Monthly Monthly Monthly 11.62% 4.63% 2.21% 1.06% 50% 75% 90% 90% 25,610,675 1,238,082 44,400 11,967 Amount of Mudarib Share transferred through Hiba to remunerative deposits Rupees in ‘000 7.88% 1.16% 0.22% 0.11% 35% - 8,987,680 - 2018 General Remunerative (Savings and Fixed) Depositors' Pools Profit Rate and weightage announcement period Profit rate return earned Average Profit Sharing Ratio of Mudarib Mudarib Fee Profit rate return Percentage of distributed to Mudarib remunerative Share deposits transferred (Savings and through Hiba Fixed) - Average Rupees in ‘000 PKR Pool USD Pool GBP Pool EUR Pool Monthly Monthly Monthly Monthly 7.06% 3.81% 1.18% 0.17% 50% 75% 90% 90% 13,314,826 720,723 20,169 1,637 Amount of Mudarib Share transferred through Hiba to remunerative deposits Rupees in ‘000 3.91% 0.95% 0.12% 0.02% 10% - 1,388,628 - 2019 Percentage of Mudarib Investment Profit rate return Share ratio distributed transferred through Hiba Amount of Mudarib Share transferred through Hiba to remunerative deposits Profit Rate and weightage announcement period Profit rate return earned Profit Sharing Ratio Monthly 7.74% -* -* 2.06% N/A N/A Inter Bank Musharaka / Mudaraba borrowing Pool As required 14.88% - 5.24% -* -* 13.75% - 4.50% N/A N/A Special Sharikah Certificate Musharaka / Mudaraba borrowing Pool As required 16.85% - 5.24% -* -* 14.85% - 4.00% N/A N/A Specific Pools Islamic Export Refinance (IERS) Musharaka Pool * The profit sharing ratio and the investment ratio varies on case to case basis. ANNUAL REPORT 2019 281
283. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 2018 Percentage of Mudarib Investment Profit rate return Share ratio distributed transferred through Hiba Amount of Mudarib Share transferred through Hiba to remunerative deposits Profit Rate and weightage announcement period Profit rate return earned Profit Sharing Ratio Monthly 5.16% -* -* 2.19% N/A N/A Inter Bank Musharaka / Mudaraba borrowing Pool As required 11.46% - 5.24% -* -* 10.70% - 5.60% N/A N/A Special Sharikah Certificate Musharaka / Mudaraba borrowing Pool As required 15.55% - 5.24% -* -* 10.80% - 3.50% N/A N/A Specific Pools Islamic Export Refinance (IERS) Musharaka Pool * The profit sharing ratio and the investment ratio varies on case to case basis. 47.2 Following weightages have been assigned to different major products under the General pools during the year: Percentage to Total Mudaraba based Deposits 2019 47.3 Maximum Weightage Minimum Weightage Maximum Weightage Minimum Weightage 2018 2019 2019 2018 2018 PKR Pool Saving Accounts Meezan Bachat Account Karobari Munafa Account Certificate of Islamic Investment Meezan Aamdan Certificate 21.83% 17.63% 9.29% 16.23% 7.15% 24.05% 18.69% 10.11% 3.07% 7.80% 0.65 0.78 1.00 1.27 1.34 0.39 0.39 0.39 0.45 0.70 0.67 0.88 1.36 1.72 1.72 0.57 0.57 0.57 0.70 1.19 USD Pool Saving Accounts Certificate of Islamic Investment 4.12% 2.37% 4.64% 2.33% 0.45 1.35 0.45 0.77 0.45 1.35 0.45 0.77 GBP Pool Saving Accounts 0.41% 0.49% 0.27 0.27 0.27 0.27 EUR Pool Saving Accounts 0.21% 0.27% 0.27 0.27 0.27 0.27 Allocation of Income and Expenses to Depositors' Pools Following are material items of revenues, expenses, gains and losses 2019 2018 Rupees in ‘000 Profit / return earned on islamic financing and related assets, investments and placements Other Income (including other charges and interpool income) Directly related costs attributable to pool 282 MEEZAN BANK LIMITED 88,429,444 5,267,122 (1,844,037) 46,724,070 2,717,152 (1,431,931)
284. Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31 , 2019 48 GENERAL Comparative information has been re-classified, re-arranged or additionally incorporated in these financial statements, wherever necessary to facilitate comparison and better presentation. 49 NON-ADJUSTING EVENT 49.1 The Board of Directors in their meeting held on February 12, 2020 has announced final cash dividend of Rs 2 per share (20%). The financial statements for the year ended December 31, 2019, do not include the effect of this appropriation which will be accounted for in the financial statements for the year ending December 31, 2020. 49.2 On January 09, 2020, the Bank has issued second tranche of Tier II capital of Rs 4 billion, in form of privately placed, unsecured and sub-ordinated Sukuk. The Sukuk carry an expected profit rate of 6 month KIBOR plus 0.9% payable on semi-annual basis. The Sukuk has a maturity of 10 years and the Sukuk is fully redeemable at the maturity. The sukuk has been rated AA (Double AA) by VIS Credit Rating Company Limited. 50 DATE OF AUTHORISATION These financial statements were authorised for issue on February 12, 2020 by the Board of Directors of the Bank. Riyadh S. A. A. Edrees Chairman Irfan Siddiqui President & CEO Faisal A. A. A. Al-Nassar Director Noorur Rahman Abid Director Shabbir Hamza Khandwala Chief Financial Officer ANNUAL REPORT 2019 283
285. Statement Showing Written-Off Financing or Any Other Financial Relief of Rupees 500 ,000 or Above (Annexure 1) During the year ended December 31, 2019 Rupees in ‘000 Statement showing written-off financing or any other financial relief of rupees 500,000 and above during the year ended December 31, 2019. S. Name and No. address of the borrower 1 2 Outstanding liabilities as at January 1, 2019 CNIC No. Father’s / Husband’s Name Principal Profit Others 3 4 5 6 7 1. Mian Muhammad 35202-3392038-3 Aslam Total (5+6+7) 8 Principal written-off Profit written-off 9 10 Other Financial Relief 11 Total (9+10+11) 12 Mian Feroz ud din 705 5,988 230 6,923 - 5,671 230 5,901 34101-0264801-5 Muhammad Hassan 6,803 7,048 430 14,281 - 7,283 430 7,713 Babar Ali Bhatti 35202-2848882-3 Muhammad Shafi 2,538 4,231 214 6,983 - 4,426 214 4,640 Shabir Ahmed Desai 42301-2624689-9 Dawood Moosa Desai 42301-1697255-1 Muhammad Sadique Desai 42301-2624784-9 Shahid Mahmood Desai 42301-2625734-9 Muhammad Amin Desi 42301-8645590-1 Haji Moosa Desai 54,034 4,127 - 58,161 34,782 4,127 - 38,909 Shabir Ahmed Desai 42301-2624689-9 Dawood Moosa Desai 42301-1697255-1 Muhammad Sadique Desai 42301-2624784-9 Shahid Mahmood Desai 42301-2625734-9 Muhammad Amin Desi 42301-8645590-1 Haji Moosa Desai 33,253 2,717 - 35,970 - 2,717 - 2,717 House # 149, Block G, State Enterprise Officers Co-operative Housing Scheme, Margzar Colony, Lahore 2. Muhammad Ramzan House # 326 Block J-1, Johar Town, Lahore 3. House # 176, Block E, Punjab Small Industries Employees Co-Operative Housing Society, Lahore 4. D.S.I. Corporation (Private) Limited Plot No. 50, Sector 7-A, Korangi Industrial Area, Karachi 5. D.S.I. Pakistan (Private) Limited Plot No. 50, Sector 7-A, Korangi Industrial Area, Karachi 284 MEEZAN BANK LIMITED
286. Statement Showing Written-Off Financing or Any Other Financial Relief of Rupees 500 ,000 or Above (Annexure 1) During the year ended December 31, 2019 Rupees in ‘000 S. Name and No. address of the borrower 1 2 Outstanding liabilities as at January 1, 2019 CNIC No. Father’s / Husband’s Name Principal Profit Others 3 4 5 6 7 Total (5+6+7) 8 Fayyaz Ahmed Shaikh 130,000 808 - 227,333 24,919 874 6. Prima Marine Oil & Faisal Fayyaz Lubricants Shaikh (Private) Limited 42301-0942295-7 Shehla Faisal Khayban-e-Ittehad 42301-0896563-2 Road, Phase VI, Muslim Commercial Area, Defence Housing Authority, Karachi Principal written-off Profit written-off Other Financial Relief 11 Total (9+10+11) 9 10 130,808 - 1,717 - 1,717 253,126 34,782 25,941 874 61,597 12 Faisal Fayyaz Shaikh ANNUAL REPORT 2019 285
288. CONSOLIDATED CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS 288 Auditors ’ Report to the Members 293 Auditors’ Report to the Members 294 Statement of Financial Position 295 Profit and Loss Account Statement of Comprehensive Income 296 297 Statement of Changes in Equity 298 Cash Flow Statement Notes to and forming part of the Financial 370 Statements 01 Statement showing written- off loans (Annexure 1) 01 01 01 01 01 01 01 Statement of Financial Position Profit and Loss Account Statement of Comprehensive Income Statement of Changes in Equity Cash Flow Statement Notes to and forming part of the Financial Statements Statement showing written-off Financing (Annexure 1)
294. Consolidated Statement of Financial Position As at December 31 , 2019 Note 2019 2018 Rupees in ‘000 ASSETS Cash and balances with treasury banks Balances with other banks Due from financial institutions - net Investments - net Islamic financing and related assets - net Fixed assets Intangible assets Deferred tax asset Other assets - net 7 8 9 10 11 12 13 19 14 92,193,877 15,414,833 223,689,325 229,667,072 493,775,346 23,663,521 800,532 46,910,457 1,126,114,963 65,022,412 8,277,146 184,814,600 127,115,376 512,564,522 13,228,398 644,956 868,024 29,215,973 941,751,407 15 16 17 18 19 20 17,186,807 42,047,390 932,568,765 14,000,000 3,008,451 54,522,604 1,063,334,017 62,780,946 23,750,543 36,407,811 785,444,592 14,000,000 38,571,522 898,174,468 43,576,939 21 22 12,861,116 18,231,980 21,117,202 9,400,835 61,611,133 1,169,813 62,780,946 11,691,924 15,185,565 15,738,899 (45,883) 42,570,505 1,006,434 43,576,939 LIABILITIES Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Deferred tax liabilities Other liabilities NET ASSETS REPRESENTED BY Share capital Reserves Unappropriated profit Surplus / (deficit) on revaluation of assets - net of tax 23 NON-CONTROLLING INTEREST 24 CONTINGENCIES AND COMMITMENTS 25 The annexed notes 1 to 51 and Annexure 1 form an integral part of these consolidated financial statements. Riyadh S. A. A. Edrees Chairman Irfan Siddiqui President & CEO Faisal A. A. A. Al-Nassar Director Noorur Rahman Abid Director Shabbir Hamza Khandwala Chief Financial Officer ANNUAL REPORT 2019 293
295. Consolidated Profit and Loss Account For the year ended December 31 , 2019 Note 2019 2018 Rupees in ‘000 Profit / return earned on Islamic financing and related assets, investments and placements Profit on deposits and other dues expensed Net spread earned OTHER INCOME Fee and commission income Dividend income Foreign exchange income Loss on securities - net Other income 26 27 94,278,810 47,746,059 46,532,751 48,629,139 20,453,359 28,175,780 28 7,427,474 276,464 2,684,097 (428,782) 535,615 10,494,868 57,027,619 6,822,735 242,429 1,318,460 (39,376) 313,486 8,657,734 36,833,514 31 20.5 32 25,454,005 628,458 82,275 26,164,738 30,862,881 301,295 31,164,176 19,787,222 383,801 16,419 20,187,442 16,646,072 (298,031) 16,348,041 33 4,186,430 1,168,051 29 30 Total income OTHER EXPENSES Operating expenses Workers Welfare Fund Other charges Total other expenses Share of results of associates before taxation Profit before provisions Provisions and write offs - net Extraordinary / unusual items - Profit before taxation Taxation 34 Profit after taxation Attributable to: Shareholders of the Holding company Non-controlling interest 24 - 26,977,746 15,179,990 11,198,107 6,046,080 15,779,639 9,133,910 15,584,441 195,198 15,779,639 8,957,761 176,149 9,133,910 Rupees Basic and diluted earnings per share 35 12.12 Restated 6.96 The annexed notes 1 to 51 and Annexure 1 form an integral part of these consolidated financial statements. Riyadh S. A. A. Edrees Chairman 294 MEEZAN BANK LIMITED Irfan Siddiqui President & CEO Faisal A. A. A. Al-Nassar Director Noorur Rahman Abid Director Shabbir Hamza Khandwala Chief Financial Officer
296. Consolidated Statement of Comprehensive Income For the year ended December 31 , 2019 Note 2019 2018 Rupees in ‘000 Profit after taxation for the year attributable to: Shareholders of the Holding company Non-controlling interest 15,584,441 195,198 15,779,639 8,957,761 176,149 9,133,910 14,547,307 (5,091,557) 9,455,750 (1,241,550) 434,542 (27,420) (49,902) (884,330) 133,229 (43,450) 89,779 (8,980) 2,595 (6,385) (9,785) 3,425 (6,360) 34,080 (11,928) 22,152 9,539,169 (868,563) 25,318,808 8,265,347 25,120,429 198,379 25,318,808 8,091,888 173,459 8,265,347 Other Comprehensive income Items that may be reclassified to profit and loss account in subsequent periods: Surplus / (deficit) on revaluation of investments Deferred tax on revaluation of investments Share in profits of associates relating to investment classified as 'available for sale' Deferred tax on share of results of associates 23 Items that will not be reclassified to profit and loss account in subsequent periods: Remeasurements of defined benefit plan Tax on remeasurements of defined benefit plan (Deficit) / surplus on revaluation of non-banking assets Deferred tax on revaluation of non-banking assets 23 Other Comprehensive Income / (loss) for the year Total Comprehensive Income for the year Attributable to: Shareholders of the Holding company Non-controlling interest 24 The annexed notes 1 to 51 and Annexure 1 form an integral part of these consolidated financial statements. Riyadh S. A. A. Edrees Chairman Irfan Siddiqui President & CEO Faisal A. A. A. Al-Nassar Director Noorur Rahman Abid Director Shabbir Hamza Khandwala Chief Financial Officer ANNUAL REPORT 2019 295
297. Consolidated Statement of Changes in Equity For the year ended December 31 , 2019 Capital reserves Share capital Balance as at January 1, 2018 Share premium 10,629,022 2,406,571 Statutory reserve* 7,777,925 Revenue reserves Non Distributable Capital Reserve - Gain on Bargain Purchase 3,117,547 Surplus / (deficit) on revaluation of General Unappropriated reserve profit Investments Non-banking Assets Noncontrolling Interest Total Rupees in ‘000 91,082 12,563,156 816,295 1,007,975 38,409,573 - 176,149 9,133,910 22,152 (2,690) (868,563) 22,152 173,459 8,265,347 - - - - - 8,957,761 Other Comprehensive loss for year - net of tax - - - - - (3,695) (884,330) - - - - - 8,954,066 (884,330) - - - - (1,792,440) - - - - (1,062,902) - - - - Other appropriations Transfer to statutory reserve 1,792,440 - - Profit after taxation for the year Transactions with owners recognised directly in equity Issue of bonus shares 1,062,902 - - - - Final cash dividend for the year 2017 - - - - - (1,328,628) - - - (1,328,628) Interim cash dividend for the year 2018 - - - - - (1,594,353) - - - (1,594,353) - - - - - (2,922,981) - - - (2,922,981) - - - - - - - Dividend payout by Subsidiary Balance as at December 31, 2018 11,691,924 2,406,571 9,570,365 3,117,547 91,082 15,738,899 (68,035) 1,006,434 43,576,939 195,198 15,779,639 - - - - - 15,584,441 Other Comprehensive income for the year - net of tax - - - - - 86,598 9,455,750 (6,360) 3,181 9,539,169 - - - - - 15,671,039 9,455,750 (6,360) 198,379 25,318,808 - - - - - 79 - (79) - - - - - - - 2,593 - (2,593) - - - - - - (3,046,415) - - - - - - (1,169,192) - - - - Transfer from surplus upon disposal of Non-banking assets to unappropriated profit - net of tax - (175,000) Profit after taxation for the year Transfer from surplus in respect of incremental depreciation of Non-banking assets to unappropriated profit - net of tax - 22,152 (175,000) Other appropriations Transfer to statutory reserve 3,046,415 Transactions with owners recognised directly in equity Issue of bonus shares 1,169,192 - - Final cash dividend for the year 2018 - - - - - (2,338,385) - - - (2,338,385) First interim cash dividend for the year 2019 - - - - - (1,169,192) - - - (1,169,192) Second interim cash dividend for the year 2019 - - - - - (1,286,112) - - - (1,286,112) Third interim cash dividend for the year 2019 - - - - - (1,286,112) (6,079,801) - - - Dividend payout by Subsidiary Balance as at December 31, 2019 12,861,116 2,406,571 12,616,780 3,117,547 91,082 21,117,202 9,387,715 13,120 (35,000) (1,286,112) (6,079,801) (35,000) 1,169,813 62,780,946 * This represents reserve created under section 21(i)(a) of the Banking Companies Ordinance, 1962. The annexed notes 1 to 51 and Annexure 1 form an integral part of these consolidated financial statements. Riyadh S. A. A. Edrees Chairman 296 MEEZAN BANK LIMITED Irfan Siddiqui President & CEO Faisal A. A. A. Al-Nassar Director Noorur Rahman Abid Director Shabbir Hamza Khandwala Chief Financial Officer
298. Consolidated Cash Flow Statement For the year ended December 31 , 2019 Note 2019 CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Less: Dividend income Rupees in ‘000 2018 26,977,746 (276,464) 26,701,282 15,179,990 (242,429) 14,937,561 1,763,927 267,293 3,177,545 4,186,430 396,854 (100,940) (301,295) 9,389,814 36,091,096 1,562,971 230,168 1,168,051 359,607 (85,781) 298,031 3,533,047 18,470,608 (38,874,725) 15,732,429 (18,418,008) (41,560,304) (37,585,379) (93,511,797) (7,920,096) (139,017,272) Contribution to defined benefit plan Income tax paid Net cash flow from operating activities (6,563,736) 5,639,579 147,124,173 6,454,118 152,654,134 147,184,926 (338,731) (9,577,019) 137,269,176 6,575,508 (405,484) 118,271,224 11,112,744 135,553,992 15,007,328 (449,616) (5,515,941) 9,041,771 CASH FLOWS FROM INVESTING ACTIVITIES Net investment in securities Dividend received Investments in fixed assets Investments in intangible assets Proceeds from sale of fixed assets Net cash used in investing activities (88,792,633) 276,726 (5,002,083) (422,869) 171,503 (93,769,356) (5,828,877) 264,003 (3,389,050) (345,511) 148,435 (9,151,000) CASH FLOWS FROM FINANCING ACTIVITIES Payment of lease liability against right-of-use assets Issuance of Sub-ordinated Sukuk - Additional Tier I Dividend paid to equity shareholders of the Bank Dividend paid to non controlling interest Net cash (used in) / flow from financing activities (3,075,051) (6,080,617) (35,000) (9,190,668) 7,000,000 (2,912,712) (175,000) 3,912,288 Increase in cash and cash equivalents 34,309,152 3,803,059 Adjustments for non-cash charges and other items: Depreciation Amortization Non cash item related to right-of-use assets Provisions and write offs - net Charge for defined benefit plan Gain on sale of fixed assets Share of results of associates (Increase) / decrease in operating assets Due from financial institutions Islamic financing and related assets Other assets Increase / (decrease) in operating liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities Cash and cash equivalents at the beginning of the year 36 73,299,558 69,496,499 Cash and cash equivalents at the end of the year 36 107,608,710 73,299,558 The annexed notes 1 to 51 and Annexure 1 form an integral part of these consolidated financial statements. Riyadh S. A. A. Edrees Chairman Irfan Siddiqui President & CEO Faisal A. A. A. Al-Nassar Director Noorur Rahman Abid Director Shabbir Hamza Khandwala Chief Financial Officer ANNUAL REPORT 2019 297
299. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 1 THE GROUP AND ITS OPERATIONS 1.1 The "Group" consists of: Holding Company - Meezan Bank Limited Subsidiary Company - Al Meezan Investment Management Limited 1.2 Meezan Bank Limited (the Bank / Holding company / MBL) was incorporated in Pakistan on January 27, 1997, as a public limited company under the Companies Act, 2017 (previously Companies Ordinance, 1984), and its shares are quoted on the Pakistan Stock Exchange Limited. The Bank was registered as an ‘Investment Finance Company’ on August 8, 1997, and carried on the business of investment banking as permitted under SRO 585(I)/87 dated July 13, 1987, in accordance and in conformity with the principles of Islamic Shariah. A ‘Certificate of Commencement of Business' was issued to the Bank on September 29, 1997. 1.3 The Bank was granted a ‘Scheduled Islamic Commercial Bank’ license on January 31, 2002 and formally commenced operations as a Scheduled Islamic Commercial Bank with effect from March 20, 2002, on receiving notification in this regard from the State Bank of Pakistan (the SBP) under section 37 of the State Bank of Pakistan Act, 1956. Currently, the Bank is engaged in corporate, commercial, consumer, investment and retail banking activities. 1.4 The Bank was operating through seven hundred and sixty branches as at December 31, 2019 (2018: six hundred and sixty branches). Its registered office is at Meezan House, C-25, Estate Avenue, SITE, Karachi, Pakistan. 1.5 Al Meezan Investment Management Limited (AMIML) ('the Subsidiary company') is involved in asset management, investment advisory, portfolio management, equity research, underwriting and corporate finance. The Bank holds 65% of the share capital of AMIML. 1.6 The Group’s associates are as follows: The Group considers the following open end funds managed by AMIML as its associates: - Meezan Islamic Fund - Meezan Balanced Fund - Meezan Islamic Income Fund - Al Meezan Mutual Fund - KSE Meezan Index Fund - Meezan Sovereign Fund - Meezan Tahaffuz Pension Fund - Meezan Energy Fund - Meezan Gold Fund - Meezan Cash Fund - Meezan Dedicated Equity Fund - Meezan Strategic Allocation Fund - Meezan Strategic Allocation Fund II - Meezan Strategic Allocation Fund III - Meezan Asset Allocation Fund - Meezan Financial Planning Fund of Funds - Meezan Rozana Amdani Fund The country of establishment in respect of all of the above funds is Pakistan. Further, all the above funds are individual open-end schemes and have been established by execution of trust deeds between AMIML and the Central Depository Company of Pakistan Limited (CDC) as the Trustee. 298 MEEZAN BANK LIMITED
300. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 2 BASIS OF PRESENTATION AND CONSOLIDATION 2.1 These consolidated financial statements have been prepared from the information available in the audited financial statements of the Meezan Bank Limited (Holding company) for the year ended December 31, 2019 and the condensed interim financial statements of Al Meezan Investment Management Limited (AMIML) for the six months period ended December 31, 2019 which have only been subjected to review but are not audited. AMIML prepares its annual financial statements up to June 30 each year. In preparing the consolidated profit and loss account for the year ended December 31, 2019 the results for the period from January 1, 2019 to June 30, 2019 have been calculated from the audited financial statements of AMIML for the year ended June 30, 2019 after eliminating the reviewed results for the six months period ended December 31, 2018. These consolidated financial statements comprise of the consolidated statement of financial position as at December 31, 2019 and the consolidated profit and loss account, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement together with the notes forming part thereof for the year ended December 31, 2019. The associates have been accounted for in these consolidated financial statements under the equity method of accounting on the respective basis as follows: Entity Source of information Meezan Balanced Fund Financial statements for the half years ended December 31, 2019 and 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year ended June 30, 2019. Al Meezan Mutual Fund Financial statements for the half years ended December 31, 2019 and 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year ended June 30, 2019. Meezan Islamic Fund Financial statements for the half years ended December 31, 2019 and 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year ended June 30, 2019. Meezan Islamic Income Fund Financial statements for the half years ended December 31, 2019 and 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year ended June 30, 2019. KSE Meezan Index Fund Financial statements for the half years ended December 31, 2019 and 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year ended June 30, 2019. Meezan Cash Fund Financial statements for the half years ended December 31, 2019 and 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year ended June 30, 2019. Meezan Tahaffuz Pension Equity Sub Fund Financial statements for the half years ended December 31, 2019 and 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year ended June 30, 2019. Meezan Financial Planning Fund of Funds - Conservative Financial statements for the half years ended December 31, 2019 and 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year ended June 30, 2019. Meezan Gold Fund Financial statements for the half years ended December 31, 2019 and 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year ended June 30, 2019. Meezan Tahaffuz Pension Gold Sub Fund Financial statements for the half years ended December 31, 2019 and 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year ended June 30, 2019. Meezan Energy Fund Financial statements for the the half years ended December 31, 2019 and 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year ended June 30, 2019. Meezan Strategic Allocation Fund - MSAP II Financial statements for the half years ended December 31, 2019 and 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year ended June 30, 2019. ANNUAL REPORT 2019 299
301. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 2.2 Meezan Rozana Amdani Fund Financial statements for the half year ended December 31, 2019 and period from December 28, 2018 to December 31, 2018 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the period from December 28, 2018 to June 30, 2019. Meezan Strategic Allocation Fund III - Meezan Capital Preservation Plan - MCPP IX Financial Statements for the half year ended December 31, 2019 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the period May 20, 2019 to June 30, 2019. Subsidiaries are those enterprises in which the Holding company directly or indirectly exercises control over investee, and / or beneficially owns or holds more than 50 percent of the voting securities or otherwise, has power to elect and appoint more than 50 percent of its directors. The financial statements of the subsidiary are included in these consolidated financial statements from the date when the control commenced. The financial statements of AMIML have been consolidated on a line-by-line basis. The Group applies uniform accounting policies for similar transactions and events in similar circumstances except where specified otherwise. Associates are entities over which the Group has a significant influence but not control over investee. The Group's share in an associate is the aggregate of the holding in that associate by the Holding company and by the Subsidiary. Investments in associates are accounted for under the equity method of accounting and are initially recognised at cost, thereafter for the post acquisition change in the Group's share of net assets of the associates. The profit and loss account reflects the Group’s share of the results of operations of the associate. Any change in Other Comprehensive Income (OCI) of associates is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the associate, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. These consolidated financial statements include the Group's share of income and expenses of associates from the date that significant influence commences until the date that such influence ceases. Non-controlling interest is that part of the net results of operations and of net assets of the subsidiary attributable to interests which are not owned by MBL. All material inter-group balances, transactions and resulting profits / losses have been eliminated. 3 STATEMENT OF COMPLIANCE 3.1 These consolidated financial statements (here-in-after referred to as "financial statements") have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards comprise of: - International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as are notified under the Companies Act, 2017; - Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as are notified under the Companies Act, 2017; - Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017; and - Directives issued by the State Bank of Pakistan (SBP) and the Securities Exchange Commission of Pakistan (SECP). Whenever the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 or the directives issued by the SBP and the SECP differ with the requirements of IFRS or IFAS the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 and the said directives, shall prevail. 300 3.2 The SBP, through its BSD Circular No. 10 dated August 26, 2002, has deferred the implementation of International Accounting Standard (IAS) 39 - "Financial Instruments: Recognition and Measurement" and IAS 40 - "Investment Property" for Banking Companies in Pakistan, till further instructions. Accordingly, the requirements of these Standards have not been considered in the preparation of these consolidated financial statements. Further, the SECP has deferred the applicability of International Financial Reporting Standard (IFRS) 7 "Financial Instruments: Disclosures" through its S.R.O. 411(I)/2008 dated April 28, 2008. Accordingly, the requirements of this standard have also not been considered in the preparation of these consolidated financial statements. However, investments and non-banking assets have been classified and valued in accordance with the requirements prescribed by the SBP through various circulars. 3.3 The SBP vide its BPRD Circular No. 04 dated February 25, 2015 has clarified that the reporting requirements of IFAS 3 for Islamic Banking Institutions (IBIs) relating to annual, half yearly and quarterly financial statements would be notified by SBP through issuance of specific instructions and uniform disclosure formats in consultation with IBIs. These reporting requirements have not been ratified to date. Accordingly, the disclosures requirements under IFAS 3 have not been considered in these consolidated financial statements. MEEZAN BANK LIMITED
302. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 3.4 Standards, interpretations and amendments to published accounting and reporting standards that are effective in the current year The Group has adopted the following accounting standards, interpretations and amendments of IFRSs and the improvements to accounting standards which became effective for the current year: 3.4.1 IFRS 15 'Revenue from contracts with customers' In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers which is effective for annual periods beginning on or after July 1, 2018. The standard establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled to in exchange for transferring goods or services to a customer. The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The Group’s revenue streams that are within the scope of IFRS 15 relate to certain fee and commission income. The accounting policy for recognition of such income is disclosed in note 6.18 to these consolidated financial statements. The application of this standard did not have any material impact on these consolidated financial statements, except for change in description of accounting policy. 3.4.2 IFRS 16 'Leases' During the year, the SBP, vide its BPRD Circular Letter No. 8 dated April 30, 2019 and BPRD Circular No. BPRD/RPD/2019/17 dated July 26, 2019 has directed all Islamic Banks to apply IFRS 16 'Leases' in all Ijarah (lease) contracts where the Islamic Banks acts in capacity of Mustajir (lessee) and accordingly, the Group has adopted the standard. The IFAS 2 - Ijarah would continue to be applicable on all the Ijarah contracts where the Islamic Banks acts as Mujir (lessor). The Group has lease contracts in the capacity of lessees for various properties used by the Group's branches. The Group has adopted modified retrospective approach for transition to IFRS 16. The standard also provides practical expedients, which has been applied by the Group. The Group has recognised right-of-use assets and lease liabilities for those leases which were previously accounted for under IFAS 2 Ijarah and recognised/ classified as rent expense. Lease liabilities were discounted using the incremental borrowing rate at the date of initial application. Right-of-use asset is depreciated over lease term and classified as depreciation expense. The overall impact of the initial application of IFRS 16 on these consolidated financial statements is summarized below: Impact on Consolidated Statement of Financial Position Increase in fixed assets - right-of-use assets Decrease in other assets - Advances, deposits, advance rent and other prepayments Increase in other liabilities - lease liability against right-of-use assets Impact on Consolidated Profit and Loss account Increase in Profit on deposits and other dues expensed - Amortisation of lease liability against right-of-use assets (Increase) / decrease in administrative expenses - Depreciation on right-of-use assets - Rent and taxes As at January 01, 2019 (Rupees in '000) 8,226,423 584,437 7,641,986 For the year ended December 31, 2019 (Rupees in '000) 984,034 2,193,511 (2,385,868) (192,357) Profit after tax for the year ended December 31, 2019 decreased by Rs 483 million. ANNUAL REPORT 2019 301
303. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 3.4.3 IFRIC 23 - Uncertainty over Income Tax Treatments The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 Income Taxes. It does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation did not have any material impact on the consolidated financial statements of the Group. 3.4.4 3.5 The SECP vide its notification SRO 56 (1) /2016 dated January 28, 2016, has notified that the requirements of IFRS 10 (Consolidated Financial Statements) and section 228 of the Companies Act, 2017, will not be applicable with respect to the investment in mutual funds established under Trust structure. Standards, interpretations and amendments to published accounting and reporting standards that are not yet effective 3.5.1 IFRS 9 'Financial Instruments' - SBP vide its BPRD Circular No. 04 of 2019 dated October 23, 2019 directed the banks in Pakistan to implement IFRS 9 with effect from January 1, 2021. IFRS 9 replaces the existing guidance in IAS 39 ‘Financial Instruments: Recognition and Measurement’. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. The SBP has directed the Holding company to conduct an impact assessment as at December 31, 2019 and the Holding company is in the process of complying with the requirements. 3.5.2 Further, the following IFRSs as notified under the Companies Act, 2017 and the amendments and interpretations thereto will be effective for accounting periods beginning on or after January 01, 2020: Standard, Interpretations and Amendments Effective date (accounting periods beginning on or after) - IAS 1 - Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendments) - IFRS 3 - Definition of a Business (Amendments) - IFRS 14 - Regulatory Deferral Accounts January 01, 2020 January 01, 2020 July 01, 2019 Further, following new standards have been issued by IASB which are yet to be notified by SECP for the purpose of applicability in Pakistan. Standard, Interpretations and Amendments - IFRS 1 - First time adoption of IFRSs - IFRS 17 - Insurance Contracts 4 Effective date (accounting periods beginning on or after) January 01, 2004 January 01, 2021 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS 4.1 The preparation of the consolidated financial statements in conformity with the accounting and reporting standards as applicable in Pakistan requires the use of certain critical accounting estimates. It also requires management to exercise judgments in the process of applying the Group’s accounting policies. The significant accounting areas where various assumptions and estimates are significant to the Group's financial statements or where judgment was exercised in the application of the accounting policies are as follows: (a) Classification of investments in accordance with the Group's policy (notes 6.4 and 10); (b) Provision against non-performing Islamic financing and related assets (notes 6.3.2 and 11); (c) Impairment of investments in equity instruments of associates and non associate entities (notes 6.4.5, 10 and 33); (d) Accounting for defined benefit plan (notes 6.11 and 38); (e) Depreciation / amortisation of fixed assets and intangible assets (notes 6.5, 12 and 13); (f) Assumption and estimation in recognition of provision for taxation (current and prior years) and deferred taxation (g) Determination of the lease term and incremental borrowing rate for lease contracts of various properties used by (notes 6.6,19, 20 and 34); and the Group's branches (notes 6.5.2, 12 and 20). Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. 302 MEEZAN BANK LIMITED
304. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 5 BASIS OF MEASUREMENT 5.1 5.2 These consolidated financial statements have been prepared under the historical cost convention except that certain investments, foreign currency balances, Non-banking assets acquired in satisfaction of claims and commitments in respect of certain foreign exchange contracts have been marked to market and carried at fair value in accordance with the requirements of the SBP. In addition, obligation in respect of staff retirement benefit and employees compensated leave balances are carried at present value as per actuarial valuation. Functional and Presentation Currency Items included in the consolidated financial statements are measured using the currency of the primary economic environment in which the Group operates. These financial statements are presented in Pakistani Rupees, which is the Group's functional and presentation currency. 5.3 Rounding off Figures have been rounded off to the nearest thousand rupees unless otherwise stated. 6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of these consolidated financial statements are set out below. 6.1 Cash and cash equivalents Cash and cash equivalents comprise of cash and balances with treasury banks and balances with other banks in current and deposit accounts. 6.2 Due to / from financial institutions Bai Muajjal In Bai Muajjal, the Group sells sukuk on credit to other financial institutions. The credit price is agreed at the time of sale and such proceeds are received at the end of the credit period. Musharaka / Mudaraba In Musharaka / Mudaraba, the Group invests in the shariah compliant business pools of the financial institutions at the agreed profit and loss sharing ratio. Musharaka from State Bank of Pakistan under IERS Under IERS, the Group accepts funds from the SBP under shirkat-ul-aqd to constitute a pool for investment in export refinance portfolio of the Group under the guidelines issued by the SBP. The profit of the pool is shared as per the agreed weightages between the partners. Investment from State Bank of Pakistan under ILTFF Under ILTFF, the Bank accepts funds from the SBP for investment in general pool of the Bank. The profit of the pool is shared as per the agreed profit sharing ratio and assigned weightages to these investments. 6.3 Islamic financing and related assets Murabaha In Murabaha transactions, the Group purchases the goods and after taking the possession, sells them to the customer on cost plus profit basis either in a spot or credit transaction. Ijarah Ijarah assets are stated at cost less depreciation and are disclosed as part of 'Islamic financing and related assets'. The rental received / receivable on Ijarah under Islamic Financial Accounting Standard - 2 ‘Ijarah’ (IFAS 2) are recorded as income / revenue. The Group charges depreciation from the date of recognition of Ijarah of respective assets to mustajir. Ijarah assets are depreciated over the period of Ijarah using the straight line method. Ijarah rentals outstanding are disclosed in 'other assets' on the Consolidated Statement of Financial Position at amortized cost. Impairment of Ijarah assets is determined in accordance with the Prudential Regulations issued by the SBP. The provision for impairment of Ijarah assets is shown as part of 'Islamic financing and related assets'. Istisna In Istisna financing, the Group places an order to purchase some specific goods / commodities from its customers to be delivered to the Group within an agreed time. The goods are then sold by the customer on behalf of the Group and the amount hence financed along with profit is paid back to the Group. ANNUAL REPORT 2019 303
305. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 Tijarah In Tijarah financing, the Group purchases specific goods / commodities on cash basis from its customers for onward sale by the customer on behalf of the Group and on subsequent sale, the financed amount along with profit is paid back by the customer to the Group. Diminishing Musharakah In Diminishing Musharakah financing, the Group enters into Musharakah based on Shirkat-ul-milk for financing an agreed share of fixed asset (e.g. house, land, plant or machinery) with its customers. The customers pay periodic profit as per the agreement for the utilisation of the Group's Musharakah share and also periodically purchase the Group's share over the tenure of the transaction. Running Musharakah In Running Musharakah financing, the Group enters into financing with the customer based on Shirkatul Aqd or Business Partnership in the customer's operating business. Under this mechanism the customer can withdraw and return funds to the Group subject to his Running Musharakah Financing limit during the Musharakah Period. At the end of each quarter / half year the customer pays the provisional profit as per the desired profit rate which is subject to final settlement based on the relevant quarterly / half yearly / annual accounts of the customer. Bai Muajjal In Bai Muajjal financing, the Group sells Shariah compliant sukuk on credit to customers. The credit price is agreed at the time of sale and such proceeds are received at the end of the credit period. Service Ijarah . In Service Ijarah financing, the Group provides financing by acquiring certain agreed services from the customer. After the purchase of services, the Group appoints the customer to sell these services in the market over a period and provide a sale confirmation of such sale. The profit is only accrued from the date of receipt of such confirmation. Wakalah Wakalah is an agency or a delegated authority where the Muwakkil (principal) appoints the Wakil (agent) to carry out a specific job on behalf of the Muwakkil. Funds disbursed are initially recorded as ‘Advance against Wakalah'. On culmination, the same are recorded as financing. Wakalah tul Istithmar In Wakalah tul Istithmar financing, the Group enters into investment agency transaction with customer acting as an agent of the Group. Under this mechanism, the funds disbursed are invested by the customer on behalf of the Group and are recorded as financing upon their investment in the business. At the end of each quarter / half year / other defined period, the customer pays the provisional profit which is subject to adjustment upon actual declaration of wakala business performance by the agent. Musawamah In Musawamah financing, the Group purchases the goods and after taking the possession, sells them to the customer either in spot or credit transaction, without disclosing the cost. 6.3.1 Islamic financing and related assets are stated net of specific and general provisions against non-performing Islamic financing and related assets which are charged to the consolidated profit and loss account. Funds disbursed, under financing arrangements for purchase of goods / assets are recorded as advance. On culmination, financing are recorded at the deferred sale price net of profit. Goods purchased but remaining unsold at the consolidated statement of financial position date are recorded as inventories. 6.3.2 Provision against non-performing Islamic financing and related assets Specific provision The Group determines provisions against Islamic financing and related assets on a prudent basis in accordance with the requirements of the Prudential Regulations issued by the SBP. 304 MEEZAN BANK LIMITED
306. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 General provision In accordance with Prudential Regulations issued by the SBP, general provision against consumer financing / house financing should be maintained at varying percentages based on the non-performing loan ratio present in the portfolio. These percentages range from 0.5% to 2.5% for secured and 4% to 7% for unsecured portfolio. In addition to the above mentioned requirements, the Group has also created a general provision in respect of financing against potential losses present in the portfolio. This provision is based on management's best estimate and is approved by the Board of Directors of the Holding company. The net provisions made / reversed during the year is charged to the consolidated profit and loss account and accumulated provision is netted off against Islamic financing and related assets. Islamic financing and related assets are written off when there are no realistic prospects of recovery. 6.3.3 Inventories The Group values its inventories at the lower of cost and net realisable value. The net realisable value is the estimated selling price in the ordinary course of business less the estimated cost necessary to make the sale. Cost of inventories represents actual purchases made by the Group / customers as an agent of the Group for subsequent sale. 6.4 Investments 6.4.1 Classification The Group classifies its investments as follows: - Held for trading These are investments which are either acquired for generating profits from short-term fluctuations in market prices or are securities included in a portfolio for which there is evidence of a recent actual pattern of short-term profit taking. - Held to maturity These are investments with fixed or determinable payments and maturity that the Group has the positive intent and ability to hold till maturity. - Available for sale These are investments, which do not fall under 'held for trading' or 'held to maturity' categories. 6.4.2 Regular way contracts All purchases and sales of investments that require delivery within the time frame established by regulation or market convention are recognised at the trade date, which is the date on which the Group commits to purchase or sell the investments. 6.4.3 Initial recognition and measurement Investments other than those categorised as 'held for trading' are initially recognised at fair value which includes transaction costs associated with the investments. Investments classified as 'held for trading' are initially recognised at fair value and transaction costs are expensed in the consolidated profit and loss account. 6.4.4 Subsequent measurement Subsequent to initial recognition, investments are valued as follows: - Held for trading These are measured at subsequent reporting dates at fair value. Gains and losses on remeasurement are included in the net profit and loss for the year. ANNUAL REPORT 2019 305
307. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 - Held to maturity These are measured at amortised cost using the effective profit rate method, less any impairment loss recognised to reflect irrecoverable amount. - Available for sale In accordance with the requirements specified by the SBP, quoted securities (other than those classified as 'held to maturity' and 'investments in associates and subsidiary'), are subsequently re-measured to market value. Unquoted equity securities are valued at the lower of cost and break-up value. Break-up value of unquoted equity securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements. Investment in other unquoted securities are valued at cost less impairment losses, if any. Surplus / deficit arising on revaluation of quoted securities which are classified as 'available for sale', is included in the Consolidated Statement of Other Comprehensive Income. On derecognition of available-for-sale investments, the cumulative gain or loss previously reported in consolidated other comprehensive income is transferred to consolidated profit and loss for period within consolidated statement of other comprehensive income. 6.4.5 Impairment Available for sale and Held to maturity investments Impairment loss in respect of investments classified as available for sale and held to maturity (except sukuk certificates) is recognised based on management's assessment of objective evidence of impairment as a result of one or more events that may have an impact on the estimated future cash flows of the investments. A significant or prolonged decline in fair value of an equity investment below its cost is also considered an objective evidence of impairment. Provision for diminution in the value of sukuk certificates is made as per the Prudential Regulations issued by the SBP. In case of impairment in available-for-sale investments, the related loss previously reported in consolidated other comprehensive income is transferred to consolidated profit and loss for period. For investments classified as held to maturity, the impairment loss is recognised in the consolidated profit and loss account. 6.4.6 6.5 Cost of investment is determined on moving average basis. Operating fixed assets 6.5.1 Tangible assets Tangible fixed assets are stated at cost less accumulated depreciation and any identified impairment loss. Items of fixed assets costing Rs 20,000 or less are not capitalised and are charged off in the month of purchase. Profit or loss on disposal of fixed assets is included in the consolidated profit and loss account currently. 6.5.2 Right-of-use assets and Lease liabilities At the inception of the contract, the Group assesses whether a contract is, or contains, a lease. The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. Right-of-use assets are depreciated on a straight-line basis over the lease term. The right-of-use assets are presented within note 12 and are subject to impairment in line with the Group’s policy as described in note 6.5.8. At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The Group determines the 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. The Group cannot readily determine the discount rate implicit in the lease, therefore, it uses its incremental borrowing rate to measure lease liabilities. 6.5.3 Intangible assets Intangible assets comprise of computer software. Intangible assets with definite useful lives are stated at cost less accumulated amortisation and impairment losses (if any). 306 MEEZAN BANK LIMITED
308. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 6.5.4 Subsequent costs Subsequent costs are included in the asset's carrying amounts or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance expenditure are charged to the consolidated profit and loss account as and when incurred. 6.5.5 Depreciation / amortisation Depreciation / amortisation is charged to the consolidated profit and loss account by applying the straight line method in accordance with the rates specified in notes 12.2 and 13 whereby the depreciable value of an asset is written off over its estimated service life. The Group charges depreciation / amortisation from the month of acquisition and upto the month preceding the disposal. Right-of-use assets are depreciated on a straight line basis over the lease term. 6.5.6 Capital work-in-progress Capital work-in-progress is stated at cost less accumulated impairment losses, if any. 6.5.7 Useful lives and residual values Useful lives and residual values are reviewed at each Consolidated Statement of Financial Position date and adjusted if impact on depreciation / amortisation is significant. 6.5.8 Impairment The Group assesses at each Consolidated Statement of Financial Position date whether there is any indication that the operating fixed assets may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amounts. Where carrying values exceed the respective recoverable amounts, assets are written down to their recoverable amounts and the resulting impairment charge is recognised in the consolidated profit and loss account. 6.6 Taxation Income tax expense comprises of current and deferred tax. Income tax expense is recognised in the consolidated profit and loss account except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current The charge for current taxation is based on expected taxable income for the year at the current rates of taxation, after taking into consideration available tax credits, rebates, tax losses, etc. The charge for current tax also includes adjustments to tax payable in respect of previous years including those arising from assessments finalised during the year and are separately disclosed. Deferred Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes. Deferred tax is not recognised for the temporary differences relating to initial recognition of goodwill, initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realised. In making the estimates for current and deferred taxes, the management considers the income tax law and the decisions of appellate authorities on certain issues in the past. ANNUAL REPORT 2019 307
309. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 6.7 Non-banking assets acquired in satisfaction of claims The non-banking assets acquired in satisfaction of claims are carried at revalued amounts less accumulated depreciation. The useful lives are reviewed annually and adjusted, if appropriate. These assets are revalued by professionally qualified valuers with sufficient regularity to ensure their net carrying value does not differ materially from their fair value. Surplus arising on revaluation of property, if any, is credited to the 'surplus on revaluation of assets' account in the consolidated statement of other comprehensive income. Any deficit arising on revaluation is taken to consolidated profit and loss account directly. On derecognition of the assets, the cumulative gain or loss previously reported in consolidated other comprehensive income is transferred directly to unappropriated profit in the consolidated statement of changes in equity. Legal fees, transfer cost and direct cost of acquiring title to property is charged to the consolidated profit and loss account. 6.8 Deposits Deposits are generated on the basis of two modes i.e. Qard and Mudaraba. Deposits taken on Qard basis are classified as 'Current accounts' and Deposits generated on Mudaraba basis are classified as 'Savings deposits' and 'Fixed deposits'. No profit or loss is passed on to current account depositors, however the funds of current accounts are treated as equity for the purpose of profit calculation and any profit earned / loss incurred on those funds are allocated to the equity of the Holding company. While the product features of each product differ, there is usually no restriction on withdrawals or number of transactions in current and saving accounts. In case of fixed deposits, pre-mature withdrawals can be made as per approved terms only. Profits realised in investment pools are distributed in pre-agreed profit sharing ratio. Rab-ul-Maal share is distributed among depositors according to weightages assigned at the inception of profit calculation period. Mudarib can distribute its share of profit to Rab-ul-Maal upto a maximum of 50% of their profit as Incentive profits (Hiba). Profits are distributed from the pool such that the depositors (remunerative) only bear the risk of assets in the pool during the profit calculation period. In case of loss in a pool during the profit calculation period, the loss is distributed among the depositors (remunerative) according to their ratio of Investments. Asset pools are created at the Holding company’s discretion and the Holding company can add, amend, transfer an asset to any other pool in the interests of the deposit holders. 6.9 Sub-ordinated Sukuk The Group records sub-ordinated sukuk initially at the amount of proceeds received. Profit accrued on sub-ordinated sukuk is charged to the consolidated profit and loss account. 6.10 Pool Management The Holding company operates general and specific pools for deposits and inter-bank funds accepted / acquired under Mudaraba and Musharakah modes. Under the general deposits pools, the Holding company accepts funds on Mudaraba basis from depositors (Rab-ul-Maal) where the Holding company acts as Manager (Mudarib) and invests the funds in the Shariah Compliant modes of financing, investments and placements. When utilising investing funds, the Holding company prioritizes the funds received from depositors over the funds generated from own sources after meeting the regulatory requirement relating to such deposits. Specific pools are operated for funds acquired / accepted from the State Bank of Pakistan and other banks for Islamic Export Refinance to the Holding company's customers and liquidity management respectively under the Musharakah / Mudaraba modes. The profit of each deposit pool is calculated on all the remunerative assets booked by utilising the funds from the pool after deduction of expenses directly incurred in earning the income of such pool along with related fee income, if any. The directly related costs comprise of depreciation on ijarah assets, takaful premium, documentation charges etc. No expense of general or administrative nature is charged to the pools. No provisions against any non-performing asset of the pool is passed on to the pool except on the actual loss / write-off of such non-performing asset. The profit of the pool is shared between equity and other members of the pool on the basis of Musharakah at gross level (before charging of mudarib fee) as per the investment ratio of the equity. The profit of the pool is shared among the members of the pool on pre-defined mechanism based on the weightages announced before the profit calculation period after charging of mudarib fee. During the year, the Holding company has given General Hiba to the depositors of PKR General Pool, keeping in view the prescribed guidelines of Pool Management provided by the SBP and with the approval of the Holding company's Resident Shariah Board Member. However, Hiba are given at the sole discretion of the Holding company without any contractual commitment and can be withdrawn or reduced by the Holding company at its sole discretion. 308 MEEZAN BANK LIMITED
310. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 The risk characteristic of each pool mainly depends on the assets and liability profile of each pool. As per the Holding company's policy, relatively low risk / secured financing transactions and assets are allocated to general depositors pool of PKR, USD, GBP and Euro. The Holding company maintains General Pools (PKR, USD, EUR, GBP), FI Pools, IERS pool and Equity pool. The general pools are exposed to general credit risk, asset ownership risk and profit rate risk of the underlying assets involved. General Pools: For General Pools (PKR, USD, EUR, GBP), the Bank allocates PKR financing to Corporate, Commercial, SME and Consumer Finance customers in diversified sectors and avenues of the economy / business as mentioned in note 47.1.1.3. Investments in Sovereign Guarantee Sukuk, Bai Muajjal with State Bank of Pakistan, are also done through General Pools. All remunerative deposits are tagged to these general pools and their funds generated from the depositors are invested on priority basis. Due to limited investment options in USD, GBP and EURO pool, funds from FCY pools are invested in available International Sukuk, Shariah Compliant Nostro accounts, FCY financing and the remaining funds are taken out and invested in PKR general pool as part of equity. In such cases return from PKR General Pool is given back to FCY pools, so that returns can be passed on to FCY pool customers accordingly. The Holding company as Mudarib in the general pools is responsible for financing costs / assets such as land, building, furniture, fixtures, computers and IT system from its own sources / equity. IERS Pools: The IERS pool assets comprise of Sovereign Guarantee Sukuk, and financing to/ sukuk of blue chip companies and exporters as allowed under the applicable rules and regulations, and as such are exposed to lower credit risk. The Musharakah with SBP under IERS is tagged to the IERS pool. FI Pools: The FI pool assets generally comprise of Sovereign Guarantee Sukuk and financing under diminishing musharakah mode only and the related liability of the FI pool comprise of Musharakah / Mudarabah from other banks and financial institutions. These pools are created to meet the liquidity requirements of the Holding company. Equity Pools: All other assets including fixed assets, exposure in shares, PKR bai-salam financing and subsidized financing to the Holding company's employees are tagged to equity pool. To safeguard the interest of customers, all high risk investments are also done through equity pool. 6.11 Staff retirement benefits Defined benefit plan of MBL The Holding company operates an approved Gratuity Funded Scheme for its permanent employees. The scheme was approved by the tax authorities in April 2000. The liability recognised in the Consolidated Statement of Financial Position in respect of Gratuity Funded Scheme is the present value of the defined benefit obligation at the Consolidated Statement of Financial Position date less the fair value of plan assets. Contributions to the fund are made on the basis of actuarial recommendations. The defined benefit obligation is calculated periodically by an independent actuary using the projected unit credit method. Last valuation was conducted as on December 31, 2019. The Holding company also operates End of Service Unfunded Defined Benefit Scheme as approved by the Board of Directors of the Holding company for the benefit of the founding President and Chief Executive Officer of the Holding company. The defined benefit obligation for this benefit has been calculated by an independent actuary using the projected unit credit method. The valuation has been carried out on December 31, 2019. Amounts arising as a result of "Remeasurements", representing the actuarial gains and losses and the difference between the actual investment returns and the return implied by the net interest cost are recognised in the Consolidated Statement of Financial Position immediately, with a charge or credit to "Consolidated Other Comprehensive Income" in the periods in which they occur. The actuarial valuations involve assumptions about discount rates, expected rates of return on assets, future salary increases and future inflation rates as disclosed in note 38. Defined contribution plan The Group also operates a recognised contributory provident fund for all permanent employees. Equal monthly contributions are made, both by the Group and the employees, to the fund at a rate of 10% of basic salary. ANNUAL REPORT 2019 309
311. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 6.12 Compensated absences The Group recognises liability in respect of employees compensated absences in the period in which these are earned upto the date of Consolidated Statement of Financial Position. The provision is recognised on the basis of actuarial valuation using projected unit credit method. 6.13 Dividend and reserves Dividend declared and appropriations, except for transfer to statutory reserve, made subsequent to the date of Consolidated Statement of Financial Position are considered as non adjusting events and are recorded in the financial statements in the year in which these are approved by the directors / shareholders as appropriate. 6.14 Foreign currency transactions Transactions and balances Foreign currency transactions are recorded in rupees at exchange rates prevailing on the date of transaction. Monetary assets, monetary liabilities and contingencies and commitments in foreign currencies except forward contracts are reported in Rupees at exchange rates prevalent on the Consolidated Statement of Financial Position date. Forward contracts other than contracts with the SBP relating to the foreign currency deposits are valued at forward rates applicable to the respective maturities of the relevant foreign exchange contracts. Forward contracts with the SBP relating to foreign currency deposit, are valued at spot rate prevailing at the Consolidated Statement of Financial Position date. Exchange gains and losses are included in the consolidated profit and loss account currently. Commitments Commitments for outstanding forward foreign exchange contracts are disclosed at the rates applicable at the reporting date. Contingent liabilities / commitments for letters of credit, and letters of guarantee denominated in foreign currencies are expressed in rupee terms at the exchange rates ruling on the reporting date. Translation gains and losses are included in the consolidated profit and loss account. 6.15 Provisions and contingent assets and liabilities Provision are recognised when the Group has a present legal or constructive obligation arising as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Contingent assets are not recognised, and are also not disclosed unless an inflow of economic benefits is probable. Contingent liabilities are not recognised and are disclosed unless the probability of an outflow of resources embodying economic benefits are remote. 6.16 Acceptances Acceptances comprise undertakings by the Group to pay bills of exchange drawn on customers. The Group expects most acceptances to be settled simultaneously with the reimbursement from the customers. Acceptances are accounted for as on-balance sheet transactions and related balances are disclosed under other assets and other liabilities. 6.17 Offsetting Financial assets and financial liabilities are offset and the net amount is reported in the Consolidated Statement of Financial Position when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the approved accounting standards as applicable in Pakistan. 6.18 310 Revenue recognition i) Profit on Murabaha (including Commodity Murabaha) and Musawamah is recognised on an accrual basis. Profit on murabaha and musawamah transactions for the period from the date of disbursement to the date of culmination of murabaha is recognised immediately upon the later date. ii) Rental on Ijarah contracts under Islamic Financial Accounting Standard - 2 Ijarah (IFAS 2) are recognised as income on an accrual basis. iii) Profit on Bai Muajjal transaction is recognised on an accrual basis. iv) Profit on Diminishing Musharakah financing is recognised on an accrual basis. MEEZAN BANK LIMITED
312. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 6.19 v) Profit on Running Musharakah financing is booked on an accrual basis and is adjusted upon declaration of profit by Musharakah partners. vi) Profit on Tijarah and Istisna financing is recognised on an accrual basis commencing from time of sale of goods till the realisation of sale proceeds by the Group. vii) Profit on Service Ijarah is recognised on an accrual basis commencing from the date of confirmation of sale. viii) Profit on Wakalah tul Istithmar / Wakalah is recognized on an accrual basis and is commensurate with the Wakalah business performance/ work done by the agent. ix) Profit on Sukuk is recognised on an accrual basis. Where Sukuk (excluding held for trading securities) are purchased at a premium or discount, those premiums / discounts are amortised through the profit and loss account over the remaining maturity. x) Commission on letters of credit, acceptances and guarantees is recognised on receipt basis, except for commission on guarantees in excess of Rs 200,000 which is recognised over the period of the guarantee. xi) The Group also earns fee and commission income from certain other non-funded banking services. The related fee and commission income is recognised at an amount that reflects the consideration to which the Holding company expects to be entitled in exchange for providing the services. The Group recognises fees earned on transaction-based arrangements at a point in time when the Group has fully provided the service to the customer. Where the contract requires services to be provided over time, the income is recognised on a systematic basis over the life of the related service. xii) Dividend income is recognised when the right to receive dividend is established. xiii) Gain or loss on sale of investments is included in the consolidated profit and loss account. xiv) Gain or loss on disposal of fixed assets, ijarah assets and musharaka assets is taken to the profit and loss account in the period in which they arise. xv) Profit suspended in compliance with the Prudential Regulations issued by the SBP is recorded on receipt basis. Profit on rescheduled / restructured financing and investments are recognised as permitted by the SBP. xvi) Remuneration from funds (management fee) is recognized based on the net asset value of the funds calculated on daily basis. Segment reporting A segment is a distinguishable component of the Group that is engaged in providing products or services (business segment) or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Group's primary format of reporting is based on business segments. Operating segments are reported in a manner consistent with the internal reporting provided to the management. Management monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. 6.19.1 Business segments Corporate and Commercial Banking It includes trade finance, export finance, project finance, Ijarah, guarantees and bills of exchange relating to its Corporate and Commercial customers, investment banking, syndications, IPO related activities (excluding investments), secondary private placements, underwriting and securitisation. Retail Banking It includes retail financing, deposits and banking services offered to its retail customers and small and medium enterprises. Asset Management It includes asset management, investment advisory, portfolio management, etc. Trading and Sales It includes equity, foreign exchanges, commodities, own securities and placements. Others It includes functions which cannot be classified in any of the above segments. ANNUAL REPORT 2019 311
313. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 6.19.2 Geographical segments The Group operates only in Pakistan. 6.20 Impairment The carrying amount of the assets are reviewed at each Consolidated Statement of Financial Position date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the relevant asset is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the consolidated profit and loss account. An impairment loss is reversed if the reversal can be objectively related to an event occurring after the impairment loss was recognised. 6.21 Earnings per share The Group presents basic and diluted earnings per share (EPS). Basic EPS is calculated by dividing profit after tax for the year attributable to equity holders of the Holding company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is calculated by dividing the net profit of Holding company (after adjusting for return (net of tax) on the convertible instruments by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. 7 CASH AND BALANCES WITH TREASURY BANKS Note 7.1 7.1 With the National Bank of Pakistan in - local currency current accounts National Prize Bonds 8 312 2018 Rupees in ‘000 In hand - local currency - foreign currencies With the State Bank of Pakistan in - local currency current accounts - foreign currency current accounts 2019 7.2 14,487,566 1,854,081 10,755,092 2,122,435 33,981,833 6,609,487 25,130,062 5,305,332 35,077,790 21,709,491 183,120 92,193,877 65,022,412 7.1 These include local and foreign currency amounts required to be maintained by the Holding company with the SBP as stipulated by the SBP. These accounts are non-remunerative in nature. 7.2 The Group, as a matter of Shariah principle, does not deal in prize bonds. These represent the national prize bonds received from customers for onward surrendering to SBP. BALANCES WITH OTHER BANKS Note 2018 Rupees in ‘000 In Pakistan - in current accounts - in deposit accounts 8.1 Outside Pakistan - in current accounts - in deposit accounts 8.2 8.1 The return on these balances is around 10.16% (2018: Nil) per annum. 8.2 The return on these balances is around 1.56% (2018: 0.85%) per annum. MEEZAN BANK LIMITED 2019 7,764,509 3,752,003 5,877,231 3,374 1,876,378 2,021,943 15,414,833 2,089,540 307,001 8,277,146
314. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 9 Note DUE FROM FINANCIAL INSTITUTIONS - NET 2019 2018 Rupees in ‘000 Bai Muajjal: With State Bank of Pakistan With Scheduled Banks - Secured With other Financial Institution 9.1 9.2 9.3 9.4 Musharakah Commodity Murabaha Provision against non-performing amounts due from financial institutions 9.6 13,682,452 208,096,873 15,500 221,794,825 1,910,000 26,066 223,730,891 (41,566) 223,689,325 184,814,600 15,500 184,830,100 26,066 184,856,166 (41,566) 184,814,600 9.1 The average return on these Bai Muajjal is 10.55% (2018: Nil) per annum. These balances are maturing latest by February 2020 (2018: Nil). 9.2 The average return on this product is 13.05% (2018: 7.87%) per annum. The balances have maturities ranging between January 2020 to October 2020 (2018: January 2019 to April 2019). These Bai Muajjal are secured against Federal Government securities received as collateral and having market value of Rs 215,020 million as at December 31, 2019 (2018: Rs 179,574 million). 2019 2018 Rupees in ‘000 9.3 Bai Muajjal Placements Less: Deferred Income Profit Receivable shown in other assets Bai Muajjal Placements 240,471,829 (8,990,054) (9,686,950) 221,794,825 9.4 The average return on this product is 11.25% (2018: Nil) per annum. The balances are maturing latest by January 2020 (2018: Nil). 9.5 Particulars of due from financial institutions - net In local currency In foreign currencies 223,689,325 223,689,325 2019 9.6 Category of classification Loss 191,381,750 (1,137,552) (5,414,098) 184,830,100 Non-performing due from financial institutions 41,566 184,814,600 184,814,600 2018 Provision held Non-performing due from financial institutions Rupees in ‘000 41,566 41,566 Provision held 41,566 ANNUAL REPORT 2019 313
315. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 10 INVESTMENTS - NET 10.1 Investments by types 2019 Note Cost / Amortised cost Available for sale securities - Federal Government Securities - Shares (including units of fund) - Non Government Sukuk - Foreign Securities 10.5.1 10.5.2 & 10.5.3 10.5.4 10.5.5 Held to maturity securities - Federal Government Securities - Non Government Sukuk 10.6 49,707 - Associates (listed) - Units of funds 10.7 4,869,014 - 96,658,346 6,809,714 101,429,663 7,774,672 212,672,395 217,591,116 Total Investments 2018 Provision Surplus / for (Deficit) diminution 2,201,501 165,183 2,366,684 2,366,684 (213,851) 1,674,958 12,662,650 318,883 14,442,640 Carrying Value Cost / Amortised cost Rupees in ‘000 Provision Surplus / for (Deficit) diminution 96,444,495 6,283,171 113,927,130 8,093,555 224,748,351 61,420,405 5,981,168 21,249,032 7,576,263 96,226,868 - 49,707 28,000,000 74,307 - - 28,000,000 74,307 - 4,869,014 4,196,013 - - 4,196,013 229,667,072 128,497,188 Carrying Value Cost / Amortised cost 14,442,640 1,104,210 172,935 1,277,145 1,277,145 (271,470) 277,249 (110,446) (104,667) Carrying Value 61,148,935 5,154,207 21,076,097 7,465,817 94,845,056 (104,667) 127,115,376 Provision Surplus / for (Deficit) diminution Carrying Value 10.2 Investments by segments Note 2019 Cost / Amortised cost Federal Government Securities - Sukuk - Bai Muajjal with Government of Pakistan (through State Bank of Pakistan) Shares Listed Companies Units of funds Unlisted Companies Non Government Sukuk Listed Unlisted Foreign Securities Government Sukuk Non Government Sukuk Shares Associates Meezan Balanced Fund Al Meezan Mutual Fund Meezan Islamic Fund Meezan Strategic Allocation Fund - III - MCPP-IX Meezan Financial Planning Fund of Funds - Conservative KSE Meezan Index Fund Meezan Cash Fund Meezan Islamic Income Fund Meezan Tahaffuz Pension - Gold sub-fund Meezan Tahaffuz Pension - Equity sub-fund Meezan Energy Fund Meezan Strategic Allocation Fund - MSAP II Meezan Gold Fund Meezan Rozana Amdani Fund Total Investments 314 MEEZAN BANK LIMITED 10.5.1 2018 Provision Surplus / for (Deficit) diminution Rupees in ‘000 13,006,137 - (213,851) 12,792,286 46,986,693 - (271,470) 46,715,223 83,652,209 96,658,346 - (213,851) 83,652,209 96,444,495 42,433,712 89,420,405 - (271,470) 42,433,712 89,148,935 1,674,958 1,674,958 5,544,826 738,345 6,283,171 5,080,386 50,000 850,782 5,981,168 275,766 1,483 277,249 4,347,184 51,483 755,540 5,154,207 12,662,650 97,412,357 74,307 12,662,650 16,564,480 113,976,837 21,249,032 21,323,339 241,031 77,852 318,883 4,907,504 3,175,662 10,389 8,093,555 4,788,337 2,777,537 10,389 7,576,263 - 284,938 1,135,372 1,239,256 - - - - 10.5.2 10.5.2 10.5.3 5,958,932 850,782 6,809,714 10.2.1, 10.5.4 and 10.6 10.5.4 84,749,707 16,729,663 101,479,370 2,089,064 112,437 2,201,501 165,183 165,183 10.5.5 10.5.5 10.5.5 4,666,473 3,097,810 10,389 7,774,672 - 10.7 10.7 10.7 304,924 868,670 718,937 - - 304,924 868,670 718,937 10.7 76,253 - - 76,253 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 7,513 730,063 41,355 118,719 225,508 78,305 1,698,767 4,869,014 217,591,116 2,366,684 14,442,640 7,513 730,063 41,355 118,719 225,508 78,305 1,698,767 4,869,014 229,667,072 6,857 462,754 52 315,642 34,059 112,431 161,205 78,944 64,150 300,353 4,196,013 128,497,188 1,008,968 95,242 1,104,210 172,935 172,935 1,277,145 - 74,307 - 21,076,097 21,150,404 (61,003) (49,443) (110,446) (104,667) 4,727,334 2,728,094 10,389 7,465,817 284,938 1,135,372 1,239,256 6,857 462,754 52 315,642 34,059 112,431 161,205 78,944 64,150 300,353 4,196,013 127,115,376
316. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 10.2.1 During the year, the Holding company invested Rs 85 billion in Pakistan Energy Sukuk-I issued by Power Holding (Private) Limited, wholly owned by the Government of Pakistan. These Energy Sukuks are guaranteed by the Government of Pakistan and are eligible for Statutory Liquidity Requirements. These Energy Sukuk are based on Islamic mode of Ijarah and has a 10 year maturity with semi-annual rental payments. 2019 10.3 Provision against diminution in value of investments 2018 Rupees in ‘000 Opening balance Charge / (reversals) for the year On available for sale securities - charge for the year - reversals for the year upon recovery on debt instruments - reversals on disposals Closing balance 1,277,145 969,744 1,385,492 (7,752) (288,201) 1,089,539 505,484 (11,047) (187,036) 307,401 2,366,684 1,277,145 10.4 Particulars of provision against Sukuk 2019 Non-performing Investment Category of classification Loss 165,183 2018 Provision Non-performing held Investment Rupees in ‘000 165,183 Provision held 172,935 172,935 2019 2018 10.5 Quality of Available for Sale Securities Details regarding quality of Available for Sale (AFS) securities are as follows: 10.5.1 Federal Government Securities Bai Muajjal with Government of Pakistan (through State Bank of Pakistan) GOP Ijarah Sukuk - GISF-3 GOP Ijarah Sukuk - GISF-1 GOP Ijarah Sukuk - GISF-2 Cost Rupees in ‘000 83,652,209 13,006,137 96,658,346 42,433,712 15,890,974 3,005,830 89,889 61,420,405 ANNUAL REPORT 2019 315
317. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 2019 10.5.2 Shares and units of funds - Listed Rupees in ‘000 Automobile Assembler Construction and materials (cement) Power Generation and Distribution Oil and gas marketing Oil & Gas Exploration Companies Fertilizers Chemicals Pharmaceuticals Investment Companies Modarabas Technology and Communication Paper and Board Textile (Composite) Glass & Ceramics Vanaspati and Allied Industries Food and Personal Care Products Engineering Units of open end funds 10.5.3 Unlisted Companies Fatima Energy Limited Sapphire Electric Company Limited Daewoo Pakistan Express Bus Service Limited Pak Kuwait Takaful Company Limited * Based on latest available audited financial statements 10.5.4 Non Government Sukuk 2018 95,934 930,380 173,286 791,579 1,564,981 535,578 385,910 490,964 15,227 66,390 55,920 306,866 191,232 96,523 258,162 5,958,932 Cost 2019 2018 Rupees in ‘000 250,553 318,864 253,240 28,125 850,782 183,786 1,144,900 224,084 613,808 1,051,875 568,756 236,346 358,048 66,390 51,889 306,866 45,328 24,931 36,207 4,701 162,471 50,000 5,130,386 Breakup value per share* 2019 2018 Rupees 250,553 318,864 253,240 28,125 850,782 8.70 31.58 56.66 0.60 9.40 29.10 58.70 0.60 Cost 2019 Rupees in ‘000 2018 Listed - Government guaranteed 84,700,000 Unlisted - Government guaranteed 11,690,970 14,128,470 1,800,000 3,073,510 165,183 5,038,693 3,428,333 3,519,294 172,935 7,120,562 - Unlisted Credit Ratings - AA / AA+, AA, AA- A / A+, A, A- Unrated 316 MEEZAN BANK LIMITED
318. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 10.5.5 Foreign Securities - Government Sukuk Hongkong Saudi Arabia Qatar Luxembourg Indonesia 2019 Cost Rating Rupees in ‘000 1,560,902 780,524 2,325,047 4,666,473 2018 Cost Rating Rupees in ‘000 N/A A Aa3 N/A Baa2 694,270 1,267,122 701,777 39,709 2,085,459 4,788,337 Non Government Sukuk - Unlisted Cost 2019 Credit Ratings - AA+, AA, AA- A+, A, A- Equity securities - Unlisted S.W.I.F.T. SCRL Aa2 A+ Aa3 AAA Baa2 Rupees in ‘000 2018 2,320,891 776,919 3,097,810 2,080,042 697,495 2,777,537 10,389 10,389 49,707 74,307 10.6 Particulars relating to Held to Maturity securities are as follows: Non Government Sukuk - Listed Fatima Fertilizer Company Limited The market value of securities classified as held-to-maturity as at December 31, 2019 amounted to Rs 49.42 million (2018: Rs 74.19 million). ANNUAL REPORT 2019 317
319. 318 MEEZAN BANK LIMITED (16,734) Share of loss in associates - OCI 24,769 Share of profit / (loss) in associates - P&L Closing balance - December 31, 2019 868,670 - (291,471) (Redemption) / investment during the year Dividend received 1,135,372 Closing balance - December 31, 2018 Dividend received - (137,488) Share of profit / (loss) in associates - P&L 718,937 - 43,847 (564,166) 1,239,256 - (9,643) (125,084) (67,258) 30,000 Opening balance - January 1, 2018 Investment / (redemption) during the year Meezan Islamic Fund 1,441,241 Al Meezan Mutual Fund 304,924 - 19,986 - 284,938 - (1,043) (14,985) - 300,966 Meezan Balanced Fund 118,719 730,063 - 1,698,767 (2,421) - 41,355 104,003 (104,003) (4,098) 65,044 - 1,398,414 6,288 (309,123) - - 7,296 - 202,265 (313) 300,353 (17,356) 315,642 462,754 112,431 34,059 - - 313 300,353 - Meezan Rozana Aamdani Fund - 40,831 (737,571) 106,600 (61,101) 1,029,738 Meezan Islamic Income Fund 417,255 KSE Meezan Index Fund - (14,099) - 126,530 Meezan Tahaffuz Pension Equity Sub Fund - 5,907 - 28,152 Meezan Tahaffuz Pension Gold Sub Fund Associates accounted for under the equity method of accounting 1,259,594 10.7 - - (52) - 52 - - (154) (530,000) 530,206 Rupees in ‘000 Meezan Cash Fund 78,305 - 14,155 - 225,508 - 18,972 45,331 7,513 76,253 - - 4,869,014 - 301,295 (106,424) - 478,130 7,377 - - 656 68,876 - (6,948) (71,996) 4,196,013 (17,669) - - - 6,857 78,944 - 161,205 (27,420) - 64,150 (298,031) 23,956 4,541 - (1,240,567) 5,779,700 Total - (162,516) 138,560 Meezan Financial Planning Fund of Funds MAAP III - (31,658) 27,117 Meezan Financial Planning Fund of Funds MAAP II 67 - - Meezan Strategic Allocation Fund III MCPP IX - - 6,790 Meezan Financial Planning Fund of Funds Conservative (6,219) - 85,163 Meezan Strategic Allocation Fund MSAP II - (26,396) (148,517) 336,118 Meezan Energy Fund - 11,880 - 52,270 Meezan Gold Fund Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2019
320. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 11 Note 11.1 8,633,318 4,902,247 2,095,550 369,441 540,715 16,541,271 8,021,609 7,657,780 3,818,550 344,573 130,491 19,973,003 129,472,197 24,671,638 154,143,835 142,433,085 16,430,165 158,863,250 4,684,962 34,435,537 11,117,387 189,215 6,967,796 975,428 58,370,325 3,440,669 56,972,563 8,069,320 74,732 4,388,971 508,535 73,454,790 561,345 11,032,825 1,070,970 353,531 13,018,671 394,041 12,371,614 364,949 271,085 13,401,689 11,009,024 5,759,913 9,618,012 886,944 123,500 45,000 27,442,393 12,450,345 16,505,491 9,890,657 875,001 124,950 39,846,444 811,378 6,947,051 2,710,138 10,468,567 590,001 7,281,394 1,659,072 9,530,467 11.5 7,461,667 1,738 7,463,405 1,474,998 5,725,100 1,738 5,726,838 11.6 113,501 48,493,395 58,118 48,665,014 3,727,830 118,905 52,511,749 116,259 46,836,155 46,952,414 6,253,140 53,205,554 13,232,142 79,167,336 14,645,228 1,955,071 5,378,299 114,378,076 248,880 40,825,200 250,000 2,765,026 4,672 4,228,869 2,376,639 14,150,878 74,800,828 8,490,933 490,628 97,933,267 414,800 40,825,200 475,000 2,000,000 5,153 3,712,540 2,326,136 11.8 506,512,576 522,263,763 11.10 11.10 (8,284,519) (4,452,711) (6,771,530) (2,927,711) 493,775,346 512,564,522 11.2 Running Musharakah financing - Running Musharakah financing - Financing under Islamic Export Refinance - Running Musharakah Istisna financing and related assets - Istisna financing - Advances against Istisna - Istisna inventory - Financing under Islamic Export Refinance - Istisna - Advances under Islamic Export Refinance - Istisna - Inventory under Islamic Export Refinance - Istisna Tijarah financing and related assets - Tijarah financing - Tijarah inventory - Financing under Islamic Export Refinance - Tijarah - Inventory under Islamic Export Refinance - Tijarah Musawamah financing and related assets - Musawamah financing - Advances against Musawamah - Musawamah Inventory - Financing under Islamic Export Refinance - Musawamah - Advances under Islamic Export Refinance - Musawamah - Inventory under Islamic Export Refinance - Musawamah 11.3 11.4 Salam Financing and related assets - Salam Financing - Advances against Salam - Salam Inventory Financing against bills - Financing against bills - Salam - Advance against bills - Salam Bai Muajjal financing Ijarah financing and related assets - Net investment in Ijarah - Net book value of assets/investment in Ijarah under IFAS 2 - Net book value of assets/investment in Ijarah under IFAS 2 (SBP's ILTFF) - Advances against Ijarah - Advances against Ijarah under SBP's ILTFF Diminishing Musharakah financing and related assets - Diminishing Musharakah financing - housing - Diminishing Musharakah financing - others - Advances against Diminishing Musharakah - Diminishing Musharakah financing - SBP's ILTFF - Advances against Diminishing Musharakah under SBP's ILTFF Musharakah financing Advances against Wakalah Tul Istithmar Wakalah Tul Istithmar financing Wakalah financing Advance against Service Ijarah Labbaik (Qard for Hajj and Umrah) Staff financing Other financing Gross Islamic Financing and Related Assets Less: Provision against non-performing Islamic financing and related assets - Specific Less: Provision against non-performing Islamic financing and related assets - General Islamic financing and related assets - net of provision 2018 Rupees in ‘000 ISLAMIC FINANCING AND RELATED ASSETS In Pakistan Murabaha financing and related assets - Murabaha financing - Advances against Murabaha - Murabaha inventory - Financing under Islamic Export Refinance - Murabaha - Advance against Islamic Export Refinance - Murabaha 2019 11.7 569,632 ANNUAL REPORT 2019 319
321. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 Note 2019 2018 Rupees in ‘000 11.1 Murabaha receivable - gross Less: Deferred murabaha income Profit receivable shown in other assets Murabaha financing 11.1.1 Murabaha Sale Price Murabaha Purchase Price 11.1.2 The movement in Murabaha financing during the year: Opening balance Sales during the year Adjusted during the year Closing balance 11.1.3 Deferred murabaha income Opening balance Arising during the year Recognised during the year Closing balance 11.1.1 11.1.3 11.2 Financing under Islamic Export Refinance - Murabaha - gross Less: Deferred income Profit receivable shown in other assets Financing under Islamic Export Refinance - Murabaha 11.2.1 The movement in Islamic Export Refinance Murabaha financing during the year: Opening balance Sales during the year Adjusted during the year Closing balance 11.2.2 Deferred Islamic Export Refinance murabaha income Opening balance Arising during the year Recognised during the year Closing balance 11.3 Musawamah financing - gross Less: Deferred income Profit receivable shown in other assets Musawamah financing 11.4 Financing under Islamic Export Refinance - Musawamah - gross Less: Deferred income Profit receivable shown in other assets Financing under Islamic Export Refinance - Musawamah 11.5 Bai Muajjal financing - gross Less: Deferred income Profit receivable shown in other assets Bai Muajjal financing 320 9,171,941 (198,327) (340,296) 8,633,318 8,434,743 (142,250) (270,884) 8,021,609 9,171,941 (8,633,318) 538,623 8,434,743 (8,021,609) 413,134 8,021,609 47,186,165 (46,574,456) 8,633,318 7,854,995 47,580,002 (47,413,388) 8,021,609 142,250 1,800,684 (1,744,607) 198,327 110,813 1,218,659 (1,187,222) 142,250 382,945 (836) (12,668) 369,441 353,984 (1,725) (7,686) 344,573 344,573 1,459,464 (1,434,596) 369,441 599,862 684,949 (940,238) 344,573 1,725 17,106 (17,995) 836 1,848 9,507 (9,630) 1,725 11,610,569 (292,915) (308,630) 11,009,024 12,998,576 (298,927) (249,304) 12,450,345 899,031 (7,015) (5,072) 886,944 885,568 (4,387) (6,180) 875,001 1,701,154 (146,846) (79,310) 1,474,998 615,345 (26,426) (19,287) 569,632 11.6 Net book value of assets / investments in Ijarah under IFAS 2 is net of depreciation of Rs 35,450 million (2018: Rs 25,267 million). 11.7 This includes Rs 487 million (2018: Rs 484 million) representing profit free financing to staff advanced under the Holding company’s Human Resource Policies. MEEZAN BANK LIMITED
322. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 11.8 Particulars of financing - gross 2019 In - local currency 493,186,199 - foreign currencies 11.9 Rupees in ‘000 2018 513,035,591 13,326,377 9,228,172 506,512,576 522,263,763 Islamic financing and related assets include Rs 8,996 million (2018: Rs 6,985 million) which have been placed under non-performing status as detailed below: 2019 Non Performing Amount 2018 Provision Held Non Performing Amount Rupees in ‘000 Category of classification Provision Held Domestic Other Assets Especially Mentioned 22,534 28,157 - 557,679 132,042 137,429 30,927 Doubtful 446,866 212,837 49,514 8,523 7,968,640 7,939,640 6,770,142 6,732,080 8,995,719 8,284,519 6,985,242 6,771,530 Loss 11.10 - Substandard Particulars of provision against non-performing Islamic financing and related assets: 2019 Specific General 2018 Total Specific General Total Rupees in ‘000 Opening balance 6,771,530 2,927,711 9,699,241 Charge for the year 1,905,342 1,525,000 Less: Reversals (357,571) 1,547,771 Amount Written off Closing balance (34,782) 8,284,519 1,525,000 4,452,711 6,426,731 2,377,711 8,804,442 3,430,342 552,977 550,000 1,102,977 (357,571) (208,111) 3,072,771 344,866 (34,782) (67) 12,737,230 6,771,530 550,000 (208,111) 894,866 2,927,711 (67) 9,699,241 11.10.1 The Group maintains general reserve (provision) in accordance with the applicable requirements of the Prudential Regulations for Consumer Financing issued by the SBP. In addition, the Group has also maintained a general provision of Rs 4,050 million (2018: Rs 2,525 million) against financing made on prudent basis, in view of prevailing economic conditions. This general provision is in addition to the requirements of Prudential Regulations. 11.10.2 In accordance with BSD Circular No. 2 dated January 27, 2009 issued by the SBP, the Group has availed the benefit of Forced Sales Value (FSV) of collaterals against the non-performing financing. The accumulated benefit availed amounts to Rs 33.4 million (2018: Rs 17.9 million). The additional profit arising from availing the FSV benefit - net of tax amounts to Rs 21.7 million (2018: Rs 11.6 million). The increase in profit, due to availing of the benefit, is not available for distribution of cash and stock dividend to share holders. ANNUAL REPORT 2019 321
323. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 11.10.3 Particulars of provision against non-performing financing: 2018 2019 Specific General Total Specific General Total 2,927,711 2,927,711 9,443,708 255,533 9,699,241 Rupees in ‘000 In local currency In foreign currencies 8,021,468 263,051 8,284,519 4,452,711 4,452,711 12,474,179 263,051 12,737,230 6,515,997 255,533 6,771,530 Note 2019 11.11 Particulars of write offs Against provisions Directly charged to profit and loss account 2018 Rupees in ‘000 11.10 Write offs Rs 500,000 and above - Domestic Write offs below Rs 500,000 - Domestic 34,782 34,782 67 67 34,782 - 67 34,782 67 11.11.1 Details of financing written off of Rs 500,000 and above In term of sub-section (3) of section 33A of the Banking Companies Ordinance, 1962, the Consolidated Statement in respect of written off financing or any other financial relief of five hundred thousand rupees or above allowed to any person during the year ended December 31, 2019 is given as Annexure 1. 12 OPERATING FIXED ASSETS Capital work-in-progress Property and equipment Right-of-use assets 12.1 2019 2018 Rupees in ‘000 12.1 12.2 12.3 3,185,241 13,293,965 7,184,315 23,663,521 1,644,436 11,583,962 13,228,398 2,171,210 271,621 126,203 552,430 63,777 3,185,241 1,009,074 174,250 152,864 263,986 44,262 1,644,436 Capital work-in-progress Advances to suppliers and contractors for: - civil works - computer hardware - purchase of vehicles - office machines - furniture and fixtures 322 Note MEEZAN BANK LIMITED
324. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 12.2 Property and equipment 2019 Leasehold Furniture Leasehold Buildings on leasehold improvements and fixtures Land land Rupees in ‘000 At January 1, 2019 Cost Accumulated depreciation Net book value Electrical, office and computer equipments Vehicles Total 4,578,013 4,578,013 1,514,872 515,452 999,420 5,893,257 2,806,259 3,086,998 735,418 431,701 303,717 5,475,767 3,922,016 1,553,751 1,722,479 19,919,806 660,416 8,335,844 1,062,063 11,583,962 4,578,013 223,361 4,801,374 999,420 234,545 83,215 (83,984) 1,233,196 3,086,998 694,379 (21) (530,272) 3,251,084 303,717 125,329 (125) (64,581) 364,340 1,553,751 1,321,289 (9,164) (693,408) 2,172,468 1,062,063 862,375 (61,253) (391,682) 1,471,503 4,801,374 4,801,374 1,832,632 599,436 1,233,196 6,587,594 3,336,510 3,251,084 859,082 494,742 364,340 6,773,276 4,600,808 2,172,468 2,305,545 23,159,503 834,042 9,865,538 1,471,503 13,293,965 10 10 Year ended December 31, 2019 Opening net book value Additions Transfer from other assets Net book value of disposals Depreciation charge Net book value as at December 31, 2019 11,583,962 3,461,278 83,215 (70,563) (1,763,927) 13,293,965 Year ended December 31, 2019 Cost Accumulated depreciation Net book value as at December 31, 2019 Rate of depreciation (percentage) - 5 10,20 and 33 20 2018 Leasehold Furniture Leasehold Buildings on leasehold improvements and fixtures Land land Rupees in ‘000 At January 1, 2018 Cost Accumulated depreciation Net book value Electrical, office and computer equipments Vehicles Total 4,306,133 4,306,133 1,363,692 441,612 922,080 5,649,484 2,295,990 3,353,494 687,405 372,335 315,070 4,673,479 3,357,906 1,315,573 1,296,397 17,976,590 573,883 7,041,726 722,514 10,934,864 Opening net book value Additions Net book value of disposals Depreciation charge Net book value as at December 31, 2018 4,306,133 271,880 4,578,013 922,080 151,180 (73,840) 999,420 3,353,494 254,184 (1,062) (519,618) 3,086,998 315,070 51,484 (282) (62,555) 303,717 1,315,573 861,881 (3,108) (620,595) 1,553,751 722,514 684,114 (58,202) (286,363) 1,062,063 Year ended December 31, 2018 Cost / Revalued amount Accumulated depreciation 4,578,013 - 1,514,872 515,452 5,893,257 2,806,259 735,418 431,701 5,475,767 3,922,016 1,722,479 19,919,806 660,416 8,335,844 Net book value as at December 31, 2018 4,578,013 999,420 3,086,998 303,717 1,553,751 1,062,063 11,583,962 Year ended December 31, 2018 Rate of depreciation (percentage) - 5 10 10 10, 20 and 33 10,934,864 2,274,723 (62,654) (1,562,971) 11,583,962 20 12.2.1 Included in cost of property and equipment are fully depreciated items still in use aggregating Rs 4,276 million (2018: Rs 3,266 million). 12.2.2 The Group has not carried out any revaluation of property and equipment at the recent date as the Group uses cost model for measurement of its property and equipment. ANNUAL REPORT 2019 323
325. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 12.2.3 Details of disposal of fixed assets to related parties or other persons having net book value of Rs 500,000 or above are as follows : Description Cost Vehicles Honda Civic Honda Civic Toyota Corolla Toyota Corolla Honda City Honda City Honda City Honda City Honda City Honda City Honda City Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Honda City Suzuki Cultus Accumulated Net book Sale depreciation value proceeds Rupees in ‘000 2,533 2,425 1,753 1,753 1,678 1,664 1,648 1,547 1,545 1,534 1,524 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,245 1,245 1,243 1,129 1,129 1,129 1,104 1,104 1,104 1,104 1,104 1,104 1,104 1,104 1,104 1,104 1,104 1,099 1,074 1,074 1,074 1,074 1,017 2,154 2,035 1,864 1,789 1,900 1,245 66,267 1,351 1,617 1,198 1,081 1,035 999 1,071 387 515 690 838 375 521 562 396 417 375 437 500 436 332 290 546 395 527 460 570 405 534 497 570 497 405 405 405 570 476 573 573 555 573 407 359 475 590 835 253 124 28,002 1,182 808 555 672 643 665 577 1,160 1,030 844 686 875 729 688 854 833 875 813 750 809 913 953 583 734 602 644 534 699 570 607 534 607 699 699 699 534 623 501 501 519 501 610 1,795 1,560 1,274 954 1,647 1,121 38,265 1,579 1,528 931 1,016 1,022 965 955 1,486 1,725 2,025 1,790 1,300 1,360 1,325 1,259 1,225 1,272 1,450 942 1,480 1,216 1,325 1,006 979 1,000 947 953 912 931 1,040 973 958 931 921 922 1,007 1,040 893 875 962 924 942 2,229 2,054 1,678 1,678 1,713 1,264 58,908 213,041 190,053 22,988 104,493 23,779 14,615 9,164 7,644 1,665 1,540 125 395 42 21 21 63 304,794 234,231 70,563 171,503 Other disposals Vehicles Electrical, office and computer equipments Furniture and Fixtures Leasehold improvements 324 MEEZAN BANK LIMITED Mode of disposal Particulars of purchaser MBL Staff Policy MBL Staff Policy MBL Staff Policy MBL Staff Policy MBL Staff Policy MBL Staff Policy MBL Staff Policy Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Mr Faisal Iqbal (Executive, Employee) Mr Khalid Zaman Khan (Executive, Employee) Mr Kashif Zaidi (Executive, Employee) Mr Asif Abdul Aziz (Executive, Employee) Syed Muhammad Uzair (Executive, Ex-employee) Mr Muhammad Zahid (Executive, Employee) Mr Javaid Ahmed Kashif (Executive, Employee) Mr Wasim Mirza M/s Carfirst M/s Augmentech Business Solution M/s Augmentech Business Solution M/s Augmentech Business Solution M/s Augmentech Business Solution M/s Augmentech Business Solution Mr Sajjad Rahman Paracha M/s Augmentech Business Solution M/s Augmentech Business Solution M/s Augmentech Business Solution Mr Rizwan Mazhar M/s Augmentech Business Solution Mr Tanveer Afzal Mr Urhan Anwer M/s Augmentech Business Solution Mr Adnan Naseer Ahmed M/s Carfirst Mr Waqar Ahmed Khan M/s Augmentech Business Solution Mr Waqar Ahmed Khan Mr Saleem Akhter M/s Augmentech Business Solution M/s Augmentech Business Solution M/s Augmentech Business Solution Mr Saeed Ahmed Mr Wasim Mirza Mr Waqar Ahmed Khan M/s Augmentech Business Solution M/s Augmentech Business Solution Mr Saleem Ahmed Siddiqui Mr Mumtaz Ali Mr Khurram Imtiaz Mr Khurram Imtiaz Mr Rizwan Mazhar M/s EFU General Insurance Limited M/s EFU General Insurance Limited M/s EFU General Insurance Limited M/s EFU General Insurance Limited M/s EFU General Insurance Limited M/s EFU General Insurance Limited
326. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 2019 Cost 12.3 Right-of-use assets At January 1, Recognized upon initial adoption of IFRS 16 Additions during the year Depreciation Charge Derecognition during the year At December 31, Net Book Value Accumulated Depreciation Rupees in ‘000 8,226,423 1,151,403 (211,059) 9,166,767 (2,193,511) 211,059 (1,982,452) Useful life 8,226,423 1,151,403 (2,193,511) 7,184,315 1 - 7 years 2019 2018 Rupees in ‘000 13 INTANGIBLE ASSETS Computer Software Advance against computer software 13.1 At January 1, Cost Accumulated amortisation Net book value Year ended December 31, Opening net book value Additions - directly purchased Amortisation charge Closing net book value Year ended December 31, Cost Accumulated amortisation Net book value Rate of amortisation (percentage) Useful life 13.1.1 572,552 72,404 644,956 1,728,898 1,156,346 572,552 1,423,012 926,177 496,835 572,552 329,464 (267,293) 634,723 496,835 305,885 (230,168) 572,552 2,058,362 1,423,639 634,723 1,728,898 1,156,346 572,552 10-20 5 - 10 years 10-20 5 - 10 years Included in cost of intangible assets are fully amortised items still in use aggregating Rs 1,029 million (2018: Rs 575 million). Note Profit / return accrued in local currency - net of provisions Profit / return accrued in foreign currencies - net of provisions Acceptances Advances, deposits, advance rent and other prepayments Non-banking assets acquired in satisfaction of claims Unrealised gain on forward foreign exchange contracts - net Dividends receivable Stamps Security deposits Advance for Investments Other 2019 2018 Rupees in ‘000 14 OTHER ASSETS 14.1 14.2 20.4 Provision against other assets 14.3.1 Other Assets (Net of Provision) Surplus on revaluation of non-banking assets acquired in satisfaction of claims 23 Other Assets - total 14.1 634,723 165,809 800,532 34,765,016 76,791 9,033,110 2,069,103 145,503 12,963 180,564 55,542 786,595 47,125,187 (234,914) 46,890,273 20,184 46,910,457 13,851,168 63,744 10,634,901 2,327,894 240,607 1,335,392 262 13,037 126,823 819,595 29,413,423 (231,530) 29,181,893 34,080 29,215,973 This includes prepaid takaful aggregating Rs 971 million (2018: Rs 959 million) which is being amortized over a period of one year. ANNUAL REPORT 2019 325
327. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 2019 2018 Rupees in ‘000 14.2 Market value of Non-banking assets acquired in satisfaction of claims 155,687 264,687 Market value of the non-banking assets acquired in satisfaction of claims has been carried out by an independent valuer, M/s Joseph Lobo (Private) Limited based on prevailing market values determined through independent market inquiries from local active realtors and adjusted for the physical condition of the property as more detailed in note 41.3. 14.2.1 Non-banking assets acquired in satisfaction of claims Note 2018 Rupees in ‘000 Opening Balance Depreciation Transfer to fixed assets Disposal Closing Balance 14.3 2019 240,607 (471) (83,215) (11,418) 145,503 246,201 (5,594) 240,607 10,000 41,132 183,782 234,914 10,000 35,451 186,079 231,530 231,530 49,999 (4,174) (42,441) 234,914 256,462 9,755 (27,349) (7,338) 231,530 Provision held against other assets Non-banking assets acquired in satisfaction of claims Acceptances Others 14.3.1 Provision against other assets Opening balance Charge for the year Reversals during the year Amount adjusted / written off during the year Closing balance 15 BILLS PAYABLE In Pakistan Outside Pakistan 17,186,807 17,186,807 23,750,543 23,750,543 42,047,390 42,047,390 36,407,811 36,407,811 16.1.1 33,861,385 22,737,094 16.1.2 16.1.3 7,268,122 909,114 433,990 627,075 8,769 42,047,390 409,652 12,200,000 36,407,811 16 DUE TO FINANCIAL INSTITUTIONS In Pakistan Outside Pakistan 16.1 Details of due to financial institutions secured / unsecured Secured Musharakah from the State Bank of Pakistan under Islamic Export Refinance Scheme Investment from the State Bank of Pakistan under Islamic Long Term Financing Facility Other financial institution Unsecured Overdrawn nostro accounts Other Musharakah 326 16.1.1 These Musharakah are on a profit and loss sharing basis maturing between January 2020 to June 2020 and are secured against demand promissory notes executed in favor of SBP. A limit of Rs 38,473 million (2018: Rs 33,422 million) has been allocated to the Holding company by SBP under Islamic Export Refinance Scheme. 16.1.2 These Investment are on Profit Loss sharing basis which has been invested in general pool of the Holding company. MEEZAN BANK LIMITED
328. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 16.1.3 These Musharakah are on Profit Loss sharing basis. A limit of USD 10 million has been allocated to the Holding company under the agreement with Karandaaz. 2019 16.2 Particulars of due to financial institutions with respect to currencies 2018 Rupees in ‘000 In local currency In foreign currencies 42,038,621 8,769 42,047,390 35,998,159 409,652 36,407,811 35,104,360 6,943,030 42,047,390 35,346,747 1,061,064 36,407,811 16.3 Particulars of due to financial institutions Short - term Long - term 17 DEPOSITS AND OTHER ACCOUNTS 2019 In Local Currency 2018 In Foreign currencies Total - Current accounts - non-remunerative 312,409,384 - Savings deposits 318,577,677 - Fixed deposits 228,503,227 - Margin 4,949,165 864,439,453 Financial institutions 20,464,919 26,796,248 13,342,660 8,692 60,612,519 332,874,303 345,373,925 241,845,887 4,957,857 925,051,972 267,855,629 255,706,358 197,008,707 5,335,289 725,905,983 15,590,028 23,494,221 10,109,048 41,896 49,235,193 283,445,657 279,200,579 207,117,755 5,377,185 775,141,176 - Current accounts - non-remunerative - Savings deposits - Fixed deposits 60,612,519 1,208,228 3,789,484 2,519,081 7,516,793 932,568,765 597,730 4,574,956 5,130,730 10,303,416 736,209,399 49,235,193 597,730 4,574,956 5,130,730 10,303,416 785,444,592 Customers 1,208,228 3,789,484 2,519,081 7,516,793 871,956,246 In Local Currency Rupees in ‘000 In Foreign currencies Total 2019 17.1 Composition of deposits - Individuals - Government (Federal and Provincial) - Public Sector Entities - Banking Companies - Non-Banking Financial Institutions - Private Sector 2018 Rupees in ‘000 628,758,131 20,376,156 14,838,591 34,475 7,482,318 261,079,094 932,568,765 521,789,397 14,958,796 15,385,523 67,656 10,235,759 223,007,461 785,444,592 556,551,071 315,405,175 871,956,246 466,163,917 270,045,482 736,209,399 40,138,908 20,473,611 60,612,519 932,568,765 33,603,269 15,631,924 49,235,193 785,444,592 17.2 Particulars of deposits and other accounts in Pakistan - In local currency Mudaraba based deposits Qard based deposits - In foreign currencies Mudaraba based deposits Qard based deposits 17.3 Eligible deposits covered under deposit protection scheme (including call deposit receipts disclosed under bills payable) amount to Rs 758,498 million (2018: Rs 628,119 million). ANNUAL REPORT 2019 327
329. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 Note 2019 2018 Rupees in ‘000 18 SUB-ORDINATED SUKUK Additional Tier I Sukuk Tier II Sukuk 18.1 18.2 7,000,000 7,000,000 14,000,000 7,000,000 7,000,000 14,000,000 18.1 In August 2018, the Holding company issued regulatory Shariah compliant unsecured, sub-ordinated privately placed Additional Tier I Sukuk based on Mudaraba of Rs 7,000 million as instrument of redeemable capital under section 66 of the Companies Act, 2017. The brief description of Addtional Tier I sukuk is as follows: Credit Rating AA- (Double A minus) by VIS Credit Rating Company Limited Issue Date August 01, 2018 Tenor Perpetual Profit payment frequency Monthly in arrears Redemption Expected Periodic Profit Amount (Mudaraba Profit Amount) Perpetual The Mudaraba Profit is computed under General Pool on the basis of profit sharing ratio and monthly weightages announced by the Holding company under the SBP guidelines of pool management. Last announced profit rate on the Sukuk is 15.29% per annum. Call Option The Holding company may call Additional Tier I Sukuk with prior approval of SBP on or after five years from the date of issue. Loss Absorbency The Additional Tier I Sukuk, at the option of the SBP, will be fully and permanently converted into common shares upon the occurrence of a point of non-viability trigger event as determined by SBP or for any other reason as may be directed by SBP. Lock-in-Clause Profit and/or redemption amount can be held back in respect of the Additional Tier I Sukuk, if such payment will result in a shortfall in the Holding companies’ minimum capital or capital adequacy ratio requirement. 18.2 In September 2016, the Holding company issued regulatory Shariah compliant unsecured, sub-ordinated privately placed Tier II Sukuk based on Mudaraba of Rs 7,000 million as instrument of redeemable capital under section 66 of the Companies Act, 2017. The brief description of Tier II sukuk is as follows: 328 Credit Rating AA (Double A) by VIS Credit Rating Company Limited Issue Date September 22, 2016 Tenor 10 years from the issue date Profit payment frequency Semi-annually in arrears Redemption Bullet payment at the end of the tenth year Expected Periodic Profit Amount (Mudaraba Profit Amount) The Mudaraba Profit is computed under General Pool on the basis of profit sharing ratio and monthly weightages announced by the Bank under the SBP guidelines of pool management. Last announced profit rate on the Sukuk is 14.57% per annum. Call Option The Holding company may call Tier II Sukuk with prior approval of SBP on or after five years from the date of issue. Loss Absorbency The Tier II Sukuk, at the option of the SBP, will be fully and permanently converted into common shares upon the occurrence of a point of non-viability trigger event as determined by SBP or for any other reason as may be directed by SBP. Lock-in-Clause Profit and/or redemption amount can be held back in respect of the Tier II Sukuk, if such payment will result in a shortfall in the Holding companies’ minimum capital or capital adequacy ratio requirement. MEEZAN BANK LIMITED
330. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 19 DEFERRED TAX LIABILITIES / (ASSETS) 2019 At January 1 Taxable temporary differences due to: Excess of accounting book values over tax written down values of owned assets Surplus on revaluation of available for sale investments Surplus on revaluation of Non-banking assets acquired in satisfaction of claims Tax on accumulated profit of associates Deductible temporary differences due to: Provision for diminution / impairment in value of investments Income not accrued due to non-culmination of financing Provision against non-performing Islamic financing and related assets Provision against non-banking assets acquired in satisfaction of claims Provision against Workers Welfare Fund Others Recognised Recognised At in Profit & December 31 in OCI Loss Rupees in ‘000 406,196 (36,632) 11,928 232,303 613,795 (18,495) (1,439) 29,483 9,549 5,091,557 (3,425) 5,088,132 387,701 5,054,925 7,064 261,786 5,711,476 (517,662) (812,904) (86,718) (26,324) (38,211) (1,481,819) (868,024) (399,281) (623,029) (109,358) (84,053) (5,485) (1,221,206) (1,211,657) 5,088,132 (916,943) (1,435,933) (109,358) (170,771) (31,809) (38,211) (2,703,025) 3,008,451 2018 At January 1 Taxable temporary differences due to: Excess of accounting book values over tax written down values of owned assets Surplus on revaluation of Non-banking assets acquired in satisfaction of claims Tax on accumulated profit of associates Deductible temporary differences due to: Provision for diminution / impairment in value of investments Deficit on revaluation of available for sale investments Income not accrued due to non-culmination of financing Provision against non-banking assets acquired in satisfaction of claims Provision against Workers Welfare Fund Others Recognised Recognised At in Profit & December 31 in OCI Loss Rupees in ‘000 495,002 288,914 783,916 (88,806) (106,513) (195,319) 11,928 49,902 61,830 406,196 11,928 232,303 650,427 (351,664) 419,953 (495,668) (89,855) (21,061) (14,834) (553,129) 230,787 (165,998) (22,043) (317,236) 3,137 (5,263) (23,377) (530,780) (726,099) (434,542) (434,542) (372,712) (517,662) (36,632) (812,904) (86,718) (26,324) (38,211) (1,518,451) (868,024) ANNUAL REPORT 2019 329
331. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 20 OTHER LIABILITIES Return on deposits and other dues - payable in local currency - payable in foreign currencies Unearned income Accrued expenses Current taxation (provision less payments) Acceptances Unclaimed dividends Payable to defined benefit plan Charity payable Provision against off-balance sheet obligations Security deposits against Ijarah Payable on account of credit murabaha / ijarah Security deposits against lockers Retention Money Unrealised loss on forward foreign exchange contracts - net Advance against future Diminishing Musharakah Withholding taxes payable Lease liability against right-of-use assets Workers Welfare Fund payable Others Note 2019 2018 Rupees in ‘000 20.1 38.3 & 38.15 20.3 20.2 20.4 20.5 6,434,891 112,161 56,738 6,850,647 6,049,222 9,033,110 16,214 570,234 995 79,568 14,206,800 60,307 117,792 70,687 368,207 67,227 155,278 7,305,460 2,007,124 959,942 54,522,604 3,388,288 75,272 32,521 3,721,186 3,173,027 10,634,901 17,030 645,340 942 85,249 13,623,020 75,439 100,532 60,688 123,762 1,378,687 1,435,638 38,571,522 20.1 This includes Rs 158 million (2018: Rs 121 million) in respect of return accrued on borrowings from SBP under the Islamic Export Refinance Scheme and Rs 25.0 million (2018: Rs 2.9 million) in respect of return accrued on borrowings from SBP under the Islamic Long Term Financing Facility. Note 20.2 2019 Provision against off-balance sheet obligations Opening balance (Reversal) / charge for the year Closing balance 2018 Rupees in ‘000 20.2.1 85,249 (5,681) 79,568 83,429 1,820 85,249 20.2.1 This represents provision recognized against guarantees of non-performing customers. Note 2019 2018 Rupees in ‘000 20.3 Reconciliation of charity payable Balance as at January 1 Additions during the year Less: Transferred to charity savings account (included in deposits and other accounts) Balance as at December 31 20.3.1 330 20.3.1 942 64,226 139 36,922 (64,173) 995 (36,119) 942 Charity paid through saving account during the year is Rs 49.9 million (2018: Rs 38.4 million). Charity of Rs 100,000 or higher was paid to the following organizations: MEEZAN BANK LIMITED
332. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 2019 2018 Rupees in ‘000 Ihsan Trust - Related Party Institute of Business Administration - Centre for Excellence in Islamic Finance Lahore Businessmen Association For Rehabilitation of the Disabled Learning Is For Everyone (L.I.F.E.) School Rashid Memorial Walfare Organization Preventation of Blindness Trust Health Promotion Foundation World Memon Organization Chhipa Welfare Association Medical Aid Foundation (Rahat Kada) Family Educational Services Foundation Fatima Kidney Care Hospital Burhani Medical Welfare Association The Garage School Frontier Foundation Welfare Hospital And Blood Transfusion Service Pakistan Eye Bank Parents Voice Association Zubaida Machiyara Trust Cancer Care Hospital and Research Centre Memon Health and Education Foundation Lady Dufferin Hospital Manzil Education Organization Centre For Development of Social Services Khwendo Kor Muslim Welfare Centre Patients Aid Foundation - Jinnah Hospital Al- Mustafa Trust Rawalpindi Care Foundation Child Aid Association Mercy Pak Noor e Ali Trust (JS Academy of Deaf) The Kidney Centre, Karachi Welfare Society for Patient Care Eye Donor Organization - Taxila Pakistan Association of Blind Health Oriented Preventive Education Jinnah Foundation Poor Patient Aid Society - Civil Hospital Aiwan-e-Sannat O Tijarat Hospital Okara Patients Welfare Association Bait Ul Sukoon Bunyad Foundation Lahore / Bunyad Literacy Community Council Rising Sun Education and Welfare Society Markaz e Umeed Nigheban Trust Pakistan Association of Deaf Saylani Welfare SOS Children Village, Islamabad SOS Children Village, Multan SOS Children Village, Karachi Patients' Behbud Society for the Aga Khan University Hospital The Indus Hospital Pakistan Disabled Foundation Idara - Al Khair Omair Sana Foundation Helping Hands Foundation Afzaal Memorial Thalassemia Foundation Behbud Association, Karachi Bin Qutub Foundation, Chakwal Health and Nutrition Development Society Kiran Foundation Muhammadi Blood Bank Sargodhian Spirit Trust Patients Welfare Association Health Education and Livelihood Promoter Jamal Noor Hospital Karigar Training Institute Marie Adeliade Leprosy Centre SINA Health, Education and Welfare Trust Health Oriented and Preventative Education Trust Jamiat Taleem Ul Quran Women Islamic Lawyer's Forum 29,400 4,000 3,500 2,500 1,000 500 500 500 500 500 500 300 300 300 300 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 200 150 150 150 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 49,850 28,000 1,000 200 250 200 300 300 100 200 200 200 200 100 100 100 100 100 150 300 100 100 100 100 100 100 100 1,000 1,000 400 300 300 250 200 200 200 200 200 200 200 150 100 100 100 100 100 100 100 100 38,400 ANNUAL REPORT 2019 331
333. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 21 20.3.2 The balance in Charity's savings account is Rs 14.705 million (2018: Rs 0.144 million). 20.3.3 Charity was not paid to any organization in which a director or his spouse had any interest at any time during the year. 20.4 This is net off gain on forward foreign exchange contracts of Rs 2,169 million (2018: loss on forward foreign exchange contracts of Rs 1,132 million). 20.5 The Group has made full provision for Workers Welfare Fund based on profit for the respective years (2008-2019). In 2016, the Supreme Court of Pakistan vide its order dated November 10, 2016 has held that the amendments made in the law introduced by the Federal Government for the levy of Workers Welfare Fund were not lawful. The Federal Board of Revenue filed review petitions against this order which are currently pending. Legal advice obtained on the matter indicates that consequent to filing of these review petitions the judgment may not be treated as conclusive. Accordingly, the Group continues to maintain the provision in respect of WWF. SHARE CAPITAL 21.1 Authorised capital 2019 2019 2018 (Number of Shares) 2,572,180,000 2,338,380,000 Ordinary shares of Rs 10 each 21.2 516,517,908 652,674,492 1,169,192,400 Ordinary shares Fully paid in cash Issued as bonus shares 23,383,800 2019 2018 Rupees in ‘000 5,165,179 7,695,937 12,861,116 Name of Shareholders Noor Financial Investment Company, Kuwait Pakistan Kuwait Investment Company (Private) Limited Islamic Development Bank, Jeddah CDC - Trustee Meezan Islamic Fund CDC - Trustee Al Meezan Mutual Fund CDC - Trustee Meezan Balanced Fund CDC - Trustee KSE Meezan Index Fund CDC - Trustee Meezan Asset Allocation Fund CDC - Trustee Meezan Dedicated Equity Fund RESERVES Share Premium Statutory reserve Non Distributable Capital Reserve - Gain on Bargain Purchase General reserve 332 5,165,179 6,526,745 11,691,924 Shareholding held by associated companies are as follows: 2019 22 2018 25,721,800 2019 2018 (Number of Shares) 516,517,908 769,593,714 1,286,111,622 Rupees in ‘000 MEEZAN BANK LIMITED 2018 Number of shares held Percentage of Shareholding Number of shares held 453,337,898 385,833,481 119,916,248 9,119,097 1,364,050 1,064,885 675,000 553,446 536,005 35.25% 30.00% 9.32% 0.71% 0.11% 0.08% 0.05% 0.04% 0.04% 446,432,362 350,757,710 109,014,771 6,950,134 1,331,500 889,350 488,951 430,550 Note Percentage of Shareholding 38.18% 30.00% 9.32% 0.59% 0.11% 0.08% 0.00% 0.04% 0.03% 2019 2018 Rupees in ‘000 22.1 2,406,571 12,616,780 3,117,547 91,082 18,231,980 2,406,571 9,570,365 3,117,547 91,082 15,185,565
334. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 22.1 Under section 21 of the Banking Companies Ordinance, 1962, an amount not less than 20% of the profit is to be transferred to create a reserve fund till such time the reserve fund and the share premium account equal the amount of the paid up capital. 23 SURPLUS / (DEFICIT) ON REVALUATION OF ASSETS - NET OF TAX Note 2019 2018 Rupees in ‘000 Available for sale securities - Listed shares / units of mutual fund - Sukuk Non-banking assets acquired in satisfaction of claims 23.1 Less: Deferred tax asset / (liability) on - Available for sale securities - Non-banking assets acquired in satisfaction of claims 23.1 1,674,958 12,767,682 14,442,640 277,249 (381,916) (104,667) 20,184 34,080 14,462,824 (70,587) (5,054,925) (7,064) (5,061,989) 9,400,835 36,632 (11,928) 24,704 (45,883) 23.1 Surplus on revaluation of non-banking assets acquired in satisfaction of claims 22,152 Surplus on revaluation as at January 1 - net of deferred tax Recognised during the year net of deferred tax of Rs 1.750 million (2018: Rs 11.928 million) 3,250 Adjusted upon transfer to fixed assets during the year net of deferred tax of Rs 5.175 million (2018: Nil) (9,610) - Transferred to unappropriated profit in respect of disposal during the year - net of deferred tax of Rs 1.397 million (2018: Nil) (2,593) - (79) - Transferred to unappropriated profit in respect of incremental depreciation charged during the year - net of deferred tax of Rs 0.042 million (2018: Nil) Surplus on revaluation as at December 31 - net of deferred tax 24 22,152 13,120 22,152 1,006,434 195,198 3,181 (35,000) 1,169,813 1,007,975 176,149 (2,690) (175,000) 1,006,434 NON-CONTROLLING INTEREST Opening balance Share of profit for the year Remeasurements of defined benefit plan - net of tax (directly recognised in OCI) Dividend payout by Subsidiary Closing balance Percentage of holding Assets Liabilities Profit after taxation Rupees in ‘000 Total comprehensive income Market Value 2019 24.1 Subsidiary (unlisted) Al Meezan Investment Management Limited Revenue 65% 4,290,160 947,839 1,559,030 557,709 557,709 N/A 504,222 504,222 N/A 2018 Al Meezan Investment Management Limited 65% 3,525,273 649,746 1,474,704 ANNUAL REPORT 2019 333
335. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 25 CONTINGENCIES AND COMMITMENTS Note Guarantees Commitments Other contingent liabilities 25.1 25.2 25.3 25.1 Guarantees: Financial guarantees Performance guarantees Other guarantees 25.2 Commitments: Documentary letters of credit Commitments in respect of: - forward foreign exchange contracts 2018 Rupees in ‘000 25.2.1 Commitments for acquisition of: - fixed assets - intangible assets Other commitments 2019 25.2.2 38,843,277 711,444,851 1,802,000 752,090,128 31,724,600 432,428,900 1,802,000 465,955,500 8,598,348 16,037,636 14,207,293 38,843,277 7,561,791 12,533,871 11,628,938 31,724,600 98,437,653 92,343,175 267,088,452 118,865,324 514,594 257,790 313,580 87,475 345,146,362 711,444,851 220,819,346 432,428,900 2019 2018 25.2.1 Commitments in respect of forward foreign exchange contracts Rupees in ‘000 Purchase Sale 151,033,720 116,054,732 267,088,452 74,321,214 44,544,110 118,865,324 345,146,362 220,819,346 25.2.2 Other Commitments Commitments in respect of financing 25.2.2.1 25.3 25.2.2.1 The Group makes commitments to extend credit (including to related parties) in the normal course of business but these being revocable commitments do not attract any significant penalty or the expense if the facility is unilaterally withdrawn, other than commitments in respect of syndicated / long term financing amounting to Rs 88,634 million (2018: Rs 26,732 million). Other contingencies The Income Tax Department has amended the deemed assessment orders of the Holding company for prior years including the tax year 2018. The additions / disallowances were mainly due to allocation of expenses relating to dividends and capital gain, allowability of provision against loans and advances, provision against investments and provision against other assets. In the amended order for tax year 2015, additional issues with respect to the taxability of gain on bargain purchase and non-adjustment of loss pertaining to HSBC Bank Middle East – Pakistan Branches have also been raised. The Holding company has obtained stay order from the High Court of Sindh against the demands raised through the amended order for the tax year 2015. Both the Holding company and the department have filed appeals with the Appellate Authorities in respect of the aforementioned matters. The management of the Holding company, in consultation with its tax advisors, is confident that the decision in respect of the above matters would be in Holding company’s favour and accordingly no provision has been made in these consolidated financial statements with respect thereto. The additional tax liability in respect of gain on bargain purchase and non-adjustment of loss pertaining to HSBC Bank Middle East – Pakistan Branches is Rs 1,096 million and Rs 706 million respectively. 334 MEEZAN BANK LIMITED
336. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 26 PROFIT / RETURN EARNED ON FINANCING, INVESTMENTS AND PLACEMENTS On financings Note 26.1 On deposits / placements with financial institutions 22,052,445 154,084 5,330,663 1,573,470 17,334,608 94,278,810 11,521,565 48,629,139 2019 2018 Rupees in ‘000 27.1 27.2 43,739,906 1,793,554 1,228,565 984,034 47,746,059 18,190,697 849,039 1,413,623 20,453,359 27.1 This includes conversion cost of Rs 2,172 million (2018: Rs 638 million) against foreign currency deposits. 27.2 This includes Rs 592 million (2018: Rs 445 million) paid / payable to SBP under Islamic Export Refinance Scheme and Rs 86.7 million (2018: Rs 2.9 million) paid / payable to SBP under the Islamic Long Term Financing Facility. FEE AND COMMISSION INCOME Note 2019 2018 Rupees in ‘000 Trade related fees and commissions Management fees in respect of Mutual Funds Commission on guarantees Branch banking customer fees Credit processing related fees Debit card related fees Investment banking related fees Cash management fees Home remittance related fees Others 29 30,203,441 PROFIT ON DEPOSITS AND OTHER DUES EXPENSED Deposits and other accounts Sub-ordinated Sukuk Other Musharakahs / Modarabas Ammortisation of lease liability against right-of-use assets 28 54,737,673 The income on Ijarah under IFAS 2 is net off takaful of Rs 1,787 million (2018: Rs 1,359 million) recovered from customers. Note 27 2018 Rupees in ‘000 On investments in - Available for sale securities - Held to maturity securities 26.1 2019 2,487,031 1,187,354 110,334 1,472,109 108,098 1,398,843 232,988 65,076 157,245 208,396 1,821,762 1,565,565 90,830 1,482,742 122,941 1,127,899 228,653 44,625 151,133 186,585 7,427,474 6,822,735 (428,782) (39,376) (380,704) (77,759) 40,864 (11,183) - 23,921 (18,195) (44,551) (551) (428,782) (39,376) LOSS ON SECURITIES - NET Realised 29.1 Realised (loss) / gain on: Listed Shares Federal Government Securities Non Government Debt Securities Associates Other Securities 29.1 ANNUAL REPORT 2019 335
337. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 30 OTHER INCOME Note 2018 Rupees in ‘000 Gain on termination of - Ijarah financing - Diminishing Musharakah financing Gain on sale of fixed assets 380,404 43,153 100,940 198,793 21,388 85,781 Others 2,449 535,615 1,535 313,486 13,400,938 10,608,215 Loss on disposal of non-banking assets Rental income 31 2019 (2,529) 11,198 OPERATING EXPENSES Total compensation expense 31.1 Property expense Depreciation on right-of-use assets 2,193,511 Rent and taxes Utilities cost (including electricity and diesel) Security (including guards) Repair and maintenance (including janitorial charges) Depreciation Information technology expenses Software maintenance Hardware maintenance Depreciation Amortisation Network charges - 174,415 891,749 628,569 2,086,351 723,796 526,788 52,325 5,059,030 55,401 4,399,331 427,118 296,132 325,402 267,293 220,383 203,423 190,466 311,061 230,168 181,381 504,205 614,256 Others 413,537 593,458 1,536,328 1,116,499 Other operating expenses Communication (including courier) Local transportation and car running 506,946 535,695 333,315 408,425 Legal and professional charges NIFT and other clearing charges Travelling and conveyance Training and Development 123,651 125,654 143,023 86,356 83,511 148,890 98,624 84,286 Depreciation on vehicles, equipments, etc. 824,269 Stationery and printing (including debit card related cost) 924,134 Marketing, advertisement and publicity Fees, subscription and other charges Office supplies Entertainment Takaful expense Security charges - cash transportation Auditors' Remuneration Repairs and maintenance Brokerage and bank charges Shariah Board's fees and allowances Non-executive Directors' fee Donation Others Reimbursement of expenses from associated funds to the subsidiary 604,876 276,235 278,552 31.2 40 40 31.3 92,947 101,098 370,823 11,789 332,259 177,843 27,133 57,418 202,500 26,308 (371,800) 5,457,709 25,454,005 336 5,989 MEEZAN BANK LIMITED 658,452 499,113 364,136 190,988 228,614 76,910 119,620 256,322 17,998 167,361 175,475 23,082 48,542 7,920 19,825 (348,232) 3,663,177 19,787,222
338. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 31.1 Total compensation expense Note Sindh sales tax on services Out of pocket expenses 31.3.1 32 31.3.1 4,817 1,010 4,121 9,948 4,279 982 9,696 14,957 851 990 11,789 1,150 1,891 17,998 200,000 2,500 - 202,500 7,920 7,920 The Holding company is in the process of establishing Meezan Bank Foundation (the Foundation) with an initial contribution of Rs 200 million to promote development and advance the welfare and well-being of the people of Pakistan. Certain key management personnel of the Holding company would be appointed to manage the affairs of the Foundation. Total cost for the year relating to outsourced activities is Rs 1,958 million (2018: Rs 1,593 million) entirely relating to companies incorporated in Pakistan and mainly on account of security guards, janitorial staff and courier services. OTHER CHARGES Note Penalties imposed by the State Bank of Pakistan 33 7,034,329 2,524,530 359,607 286,118 38,095 365,536 10,608,215 Donation Meezan Bank Foundation Learning Is For Everyone (L.I.F.E.) School The Supreme Court of Pakistan and the Prime Minister of Pakistan Diamer – Bhasha and Mohmand Dams Fund 31.4 8,357,135 3,851,727 396,854 332,266 90,996 371,960 13,400,938 Auditors’ remuneration Audit fee Fee for interim review Special certifications / review 31.3 2018 Rupees in ‘000 Managerial Remuneration i) Fixed ii) Cash Bonus / Awards etc. Charge for defined benefit plan Contribution to defined contribution plan Compensated Absences Others including EOBI, SESSI, uniform, sports etc. Total compensation expense 31.2 2019 2019 2018 Rupees in ‘000 82,275 16,419 PROVISIONS AND WRITE OFFS - NET Provision against non-performing islamic financings and related assets - net Provision against diminution in the value of investments Other provision / (reversals) Bad debts written off directly (Reversals) / provision against off-balance sheet obligations Recovery against written off financings 11.10 10.3 33.1 20.2 33.2 3,072,771 1,089,539 45,825 (5,681) (16,024) 4,186,430 33.1 This mainly represents provision on account of operational losses incurred by the Group in the current year. 33.2 This includes recoveries against financing written off by HSBC ME prior to its acquisition by the Group. 894,866 307,401 (17,594) 464 1,820 (18,906) 1,168,051 ANNUAL REPORT 2019 337
339. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 34 TAXATION Current - for the year - for prior years Note 34.2 2018 Rupees in ‘000 34.1 Deferred - for the year 34.1 2019 11,939,734 470,030 12,409,764 6,772,179 6,772,179 (1,211,657) 11,198,107 (726,099) 6,046,080 The Finance Supplementary (Second Amendment) Act, 2019 has reversed the phase-wise reduction in rate of Super Tax for banking companies from 4% to 3% and further levied an additional Super Tax charge at 4% for Tax Year 2018 (Accounting Year 2017), which was previously not chargeable resulting in additional Super Tax charge of Rs 470 million in the current year. The aggregate Super Tax charge for the year ended December 31, 2019 is Rs 1,670 million. Relationship between tax expense and accounting profit Note 2019 2018 Rupees in ‘000 35 Profit before taxation 26,977,746 15,179,990 Effects of: -Tax calculated at the applicable rate of 35% - Super tax @ 4% - Prior year Super Tax - Income subject to reduced rate of tax - Permanent differences - Others Tax charge for the year 9,442,212 1,199,643 470,030 (32,686) 49,614 69,294 11,198,107 5,312,997 660,333 47,669 3,494 21,587 6,046,080 2019 2018 BASIC AND DILUTED EARNINGS PER SHARE Rupees in ‘000 Profit for the year 15,584,441 8,957,761 (Number) Weighted average number of ordinary shares 1,286,111,622 1,286,111,622 (Rupees) Basic and diluted earnings per share 35.1 35.1 The Holding company has issued bonus shares during the year and accordingly the earnings per share for the comparative year has been restated. Note 36 MEEZAN BANK LIMITED 2019 2018 Rupees in ‘000 CASH AND CASH EQUIVALENTS Cash and balances with treasury banks Balances with other banks 338 Restated 6.96 12.12 7 8 92,193,877 15,414,833 107,608,710 65,022,412 8,277,146 73,299,558
340. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 37 STAFF STRENGTH Note 2019 Permanent Contractual basis Group's own staff strength at the end of the year Outsourced Total Staff Strength 2018 Number of Staff 37.1 9,291 1,436 10,727 7,834 1,345 9,179 1,623 12,350 1,474 10,653 37.1 This excludes outsourced security guards and janitorial staff. 38 DEFINED BENEFIT PLAN 38.1 Gratuity Funded Scheme of MBL The activities of the Gratuity Funded Scheme are governed by Meezan Bank Limited Staff Gratuity Fund established in 2000 under the provisions of a Trust Deed. Plan assets held in trust are governed by the Trust Deed as is the nature of the relationship between the Bank and the trustees and their composition. Responsibility for governance of the plan including the investment decisions lies with the Trustees. The Board of Trustees comprise of representatives of the Bank and scheme participants in accordance with the Fund's trust deed. 38.2 Number of Employees under the Gratuity Funded Scheme 2019 Number of Employees eligible under the Gratuity Funded Scheme 2018 (Number) 8,788 7,464 2019 2018 Rupees in ‘000 38.3 Reconciliation of amount payable to defined benefit plan Present value of defined benefit obligations Fair value of plan assets 1,735,808 1,386,260 (1,491,746) (1,063,037) 244,062 323,223 38.4 Plan assets consist of the following: 2019 Rupees in '000 Meezan Aamdan Certificates Al Meezan Mutual Fund Meezan Asset Allocation Plan Fatima Fertilizer Company Limited - Sukuk Bank Islami Pakistan Limited - Additional Tier 1 Sukuk Fixed deposit with Dubai Islamic Bank Limited Savings account with Meezan Bank Limited 1,005,447 56,629 63,881 5,886 5,000 350,000 4,903 1,491,746 % 67.40 3.80 4.28 0.39 0.34 23.46 0.33 100.00 2018 Rupees in '000 918,936 56,293 59,694 8,829 19,285 1,063,037 % 86.44 5.30 5.62 0.83 1.81 100.00 ANNUAL REPORT 2019 339
341. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 38.5 The movement in the defined benefit obligation over the year is as follows: 2019 Present value of obligation Fair value of plan assets Total Rupees in ‘000 At January 1 1,386,260 (1,063,037) - 323,223 Current service cost 308,887 308,887 Return expense / (income) 182,129 (163,407) 18,722 1,877,276 (1,226,444) 650,832 (14,540) (14,540) Remeasurements: -Return on plan assets, excluding amounts included in return expense / (income) shown as above -Experience gains Contribution Benefit payments At December 31 (69,007) - (69,007) (69,007) (14,540) (83,547) 1,808,269 (1,240,984) 567,285 (323,223) (323,223) (72,461) 72,461 1,735,808 (1,491,746) 244,062 2018 Present value of obligation Fair value of plan assets Total Rupees in ‘000 At January 1 1,297,029 (855,904) - 441,125 Current service cost 291,330 291,330 Return expense / (income) 115,726 (96,168) 19,558 1,704,085 (952,072) 752,013 201,822 201,822 Remeasurements: - Return on plan assets, excluding amounts included in return expense / (income) shown as above - Experience gains Contribution Benefit payments At December 31 340 MEEZAN BANK LIMITED (189,487) - (189,487) (189,487) 201,822 12,335 1,514,598 (750,250) 764,348 (441,125) (441,125) (128,338) 128,338 1,386,260 (1,063,037) 323,223
342. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 38.6 Charge for defined benefit plan (in respect of the Gratuity Funded Scheme) 38.6.1 Cost recognised in consolidated profit and loss Current service cost Net return cost 38.6.2 Re-measurements recognised in Consolidated OCI during the year Loss on obligation - experience adjustment Return on plan assets over expected return Total re-measurements recognised in consolidated OCI 2019 Rupees in ‘000 2018 308,887 18,722 327,609 291,330 19,558 310,888 (69,007) (14,540) (83,547) (189,487) 201,822 12,335 Total expense recognized in Consolidated Profit and Loss Account amounted to Rs 384.532 million (2018: Rs 351.317 million) of which Rs 327.609 million (2018: Rs 310.888 million) pertains to approved Gratuity Funded Scheme and Rs 56.923 million (2018: Rs 40.429 million) pertains to End of Service unfunded Defined Benefit scheme. Total credit recognized in Consolidated Other Comprehensive Income amounted to Rs 124.144 million (2018: credit of Rs 1.998 million) of which credit of Rs 83.547 million (2018: charge of Rs 12.335 million) pertains to approved defined Benefit Gratuity Funded Scheme and credit of Rs 40.597 million (2018: credit of Rs 14.333 million) pertains to End of Service unfunded Defined Benefit Scheme. 38.7 The plan assets and defined benefit obligations (in respect of the Gratuity Funded Scheme) are based in Pakistan. 38.8 Principal actuarial assumptions 2019 Discount rate Expected rate of increase in salaries Expected rate of return on investments Normal retirement age 13.00% p.a 12.00% p.a 13.00% p.a 60 years 2018 13.75% p.a 12.75% p.a 13.75% p.a 60 years 38.9 Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in Pakistan. The rates assumed are based on the adjusted SLIC 2001 - 2005 mortality tables. 38.10 The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is: Impact on defined benefit obligation - Increase / (Decrease) Change in assumption Discount rate Salary growth rate Withdrawal rate 1% 1% 10% Increase in Decrease in assumption assumption Rupees in ‘000 (179,969) 221,547 4,013 212,867 (189,896) (4,183) The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the gratuity liability recognised within the Consolidated Statement of Financial Position. 38.11 The weighted average duration of the defined benefit obligation is 10.92 years. ANNUAL REPORT 2019 341
343. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 38.12 Expected maturity analysis of undiscounted defined benefit obligation for the gratuity funded scheme is as follows: At December 31, 2019 Less than a year Between 1-2 years Between 2-5 years Over 5 years Total 12,749,713 13,240,676 Rupees in ‘000 Gratuity 109,607 104,800 276,556 38.13 Funding levels are monitored on an annual basis and are based on actuarial recommendations. Contribution for the next year works out to Rs 321.943 million as per the actuarial valuation report of the Bank as of December 31, 2019. 38.14 Through its Gratuity Funded Scheme, the Fund is exposed to a number of risks, the most significant of which are detailed below: 38.15 Asset volatility The plan liabilities are calculated using a discount rate set with reference to corporate sukuk yields; if plan assets underperform to the yield, this will create a deficit. The Fund believes that due to long-term nature of the plan liabilities and the strength of the Bank's support, the current investment strategy manages this risk adequately. Changes in Sukuk yields A decrease in corporate sukuk yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans' sukuk holdings. Inflation risk The majority of the plans' benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities. However plan assets are variable rate instruments and are re-priced at regular intervals to off set inflationary impacts. Life expectancy / Withdrawal rate The majority of the plans' obligations are to provide benefits on severance with the Bank on achieving retirement. Any change in life expectancy / withdrawal rate would impact plan liabilities. End of Service Unfunded Defined Benefit Scheme The Holding company also operates an End of Service unfunded Defined Benefit Scheme for the founding President and Chief Executive Officer. The charge in respect of current service cost is recognised based on expected period of future service. The net charge for the year of this benefit amounted to Rs 16.326 million. The charge of Rs 56.923 million has been recognized in the Consolidated Profit and Loss Account and the credit / reversal of Rs 40.597 million has been recognized in Consolidated Other Comprehensive Income. The present value of defined benefit obligation recognised in respect of this benefit amounts to Rs 317.180 million. The principal actuarial assumptions comprise of discount rate of 13 percent and salary increase rate of 12 percent. The retirement age used by the actuary is 66 years. The sensitivity of the defined benefit obligation due to a one percent change in discount rate would be Rs 1.394 million (in case the discount rate is increased) and Rs 1.413 million (in case the discount rate is decreased). The sensitivity of the defined benefit obligation due to change in withdrawal rates would be higher by Rs 0.03 million (in case of ten percent increase in assumption) and lower by Rs 0.03 million (in case of ten percent decrease in assumption). These sensitivities are calculated using the same methodology as explained in note 38.10. 38.16 39 The disclosure made in notes 38.1 to 38.15 are based on the information included in the actuarial valuation report of the Holding company as of December 31, 2019. DEFINED CONTRIBUTION PLAN The Group also operates a recognized contributory provident fund for all permanent employees. Equal monthly contributions are made, both by the Group and the employees, to the fund at a rate of 10% of basic salary. 2019 2018 Rupees in ‘000 Contribution from the Group Contribution from the employees 342 MEEZAN BANK LIMITED 332,266 332,266 664,532 286,118 286,118 572,236
344. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 40 COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL 2019 Directors Chairman Executives (other than CEO) NonExecutives Members Shariah Board President / CEO Key Management Personnel Other Material Risk Takers/ Controllers Rupees in ‘000 Fees and allowances 12,219 - 45,199 27,133 - - - Managerial remuneration i) Fixed - - - - 70,506 391,609 316,399 ii) Cash Bonus - - - - 126,911 294,065 250,000 - - - - 16,326 16,794 14,429 - - - - 20,084 17,116 - - - - Charge for gratuity fund / EOSB Contribution to defined contribution plan Others 1,333 72,054 - 12,219 - 45,199 27,133 215,076 794,606 597,944 1 - 10 4 1 52 57 Number of persons 2018 Chairman Directors Executives (other than CEO) NonExecutives Members Shariah Board President / CEO Key Management Personnel Other Material Risk Takers/ Controllers Rupees in ‘000 Fees and allowances Managerial remuneration i) Fixed ii) Cash Bonus Charge for gratuity fund / EOSB Contribution to defined contribution plan Others Number of persons 10,011 - 38,531 23,082 - - - - - - - - - - - - - 10,011 1 - - - - - 38,531 8 329,960 299,736 26,096 14,002 13,268 - - 23,082 4 - 70,506 105,759 - - - 1,297 203,658 1 302,428 175,718 16,828 15,590 714,894 504,312 51,676 42 - 57 40.1 The Chief Executive, the key management personnel and certain material risk takers / controllers have been provided with free use of the Group's cars. 40.2 The amount of cash bonus to the key management personnel and other material risk takers / controllers, is based on the management's best estimate. ANNUAL REPORT 2019 343
345. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 40.3 Remuneration to Directors for participation in Board and Committee Meetings 2019 Meeting Fees and Allowances For Board Committees Sr. No. Name of Director For Board Meetings Risk Board Audit Management Committee Committee Information Technology Committee Human Resources and Remuneration Committee Total Amount 1,222 909 1,217 624 596 4,568 12,219 8,771 5,186 4,999 2,500 4,764 1,711 7,289 3,895 2,807 3,277 57,418 Human Resources and Remuneration Committee Total Amount 1,001 1,001 1,001 3,003 10,011 7,257 3,504 4,504 4,502 5,503 5,503 3,253 4,505 48,542 Rupees in ‘000 1 2 3 4 5 6 7 8 9 10 11 Mr Riyadh S.A.A. Edrees (Chairman) Mr Faisal A.A.A. Al-Nassar (Vice Chairman) Mr Bader H.A.M.A. Al Rabiah Mr Alaa A. Al-Sarawi Mr Mohamed Guermazi Mr Saad Fazil Abbasi Mr Mubashar Maqbool Mr Noorur Rahman Abid Ms Nausheen Ahmad Mr Atif Azim Mr Mansur Khan 10,997 6,752 4,277 3,181 2,190 3,705 1,089 4,261 3,271 2,183 2,085 43,991 939 909 909 1,217 3,974 1,080 310 1,059 311 2,760 311 594 624 596 2,125 2018 Meeting Fees and Allowances For Board Committees Sr. No. Name of Director For Board Meetings Risk Board Audit Management Committee Committee Information Technology Committee Rupees in ‘000 1 2 3 4 5 6 7 8 9 40.4 Mr Riyadh S.A.A. Edrees (Chairman) Mr Faisal A.A.A. Al-Nassar (Vice Chairman) Mr Bader H.A.M.A. Al Rabiah Mr Alaa A. Al-Sarawi Mr Mansur Khan Mr Noorur Rahman Abid Mr Mohammad Abdul Aleem Mr Muhammad Zarrug Rajab Mr Talal S.A. Al-Shehab 9,010 6,256 3,504 3,503 3,501 3,501 3,501 2,530 3,504 38,810 Remuneration to Members Shariah Board Fee and allowances - Total number of persons 1 MEEZAN BANK LIMITED 1,001 1,001 1,001 1,001 2,002 2019 Chairman 344 1,001 1,001 1,001 723 3,726 2018 Resident Member Non Resident Members 2,912 24,221 1 2 Chairman Rupees in ‘000 1 Resident Member Non Resident Members 1,780 21,302 1 2
346. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 41 FAIR VALUE OF FINANCIAL INSTRUMENTS 41.1 The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: (a) Financial instruments in level 1 Financial instruments included in level 1 comprise of investments in listed ordinary shares, listed sukuk, units of open end mutual fund and global sukuk bonds classified as available for sale. (b) Financial instruments in level 2 Financial instruments included in level 2 comprise of GoP Ijarah sukuk classified as available for sale. (c) Financial instruments in level 3 Currently, no financial instruments are classified in level 3. The Group’s policy is to recognise transfers into and out of the different fair value hierarchy levels at the date the event or change in circumstances that caused the transfer occurred. There were no transfers between levels 1 and 2 during the year. Valuation techniques used in determination of fair values Item Valuation approach and input used GoP Sukuk The fair value of GoP Ijarah Sukuk quoted are derived using PKISRV rates. The PKISRV rates are announced by FMA (Financial Market Association) through Reuters. The rates announced are simple average of quotes received from eight different pre-defined/ approved dealers / brokers. Forward foreign exchange contracts The valuation has been determined by interpolating the mid rates announced by SBP. Global Sukuk Bonds The valuation has been determined through closing rates of Bloomberg. Listed Securities The valuation has been determined through closing rates of Pakistan Stock Exchange. Mutual Funds The valuation has been determined based on Net asset values declared by respective funds. Fair value of Islamic financing and related assets, other assets, other liabilities and fixed term deposits and other accounts cannot be calculated with sufficient reliability due to absence of current and active market for such assets and liabilities and reliable data regarding market rates for similar instruments. The provision for impairment of Islamic financing and related assets has been calculated in accordance with the Bank’s accounting policy as stated in note 6.3.2. 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 assets and liabilities are short term in nature or in the case of financings and deposits are frequently repriced. 41.2 The table below analyses financial and non-financial assets carried at fair value, by valuation method. The different levels have been defined as follows: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). - Inputs for the assets or liabilities that are not based on observable market data (i.e. unobservable inputs e.g. estimated future cash flows) (Level 3). ANNUAL REPORT 2019 345
347. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 2019 Recurring Fair Value Measurements Level 1 Level 2 Level 3 Rupees in ‘000 Total ON BALANCE SHEET FINANCIAL INSTRUMENTS Investments - Net Financial Assets Available for sale securities Ordinary shares - listed Pakistan Energy Sukuk - listed GoP Sukuk Global Sukuk Bonds 5,544,826 97,362,650 8,083,166 12,792,286 - - 5,544,826 97,362,650 12,792,286 8,083,166 154,054,304 118,014,717 - 154,054,304 118,014,717 OFF BALANCE SHEET FINANCIAL INSTRUMENTS Forward purchase of foreign exchange contracts Forward sale of foreign exchange contracts - 2018 Recurring Fair Value Measurements Level 1 Level 2 Rupees in ‘000 Level 3 Total ON BALANCE SHEET FINANCIAL INSTRUMENTS Investments - Net Financial Assets Available for sale securities Ordinary shares - listed Units of open end fund GoP Sukuk PIA Sukuk Global Sukuk Bonds 4,347,184 51,483 7,455,428 18,715,223 1,500,000 - - 4,347,184 51,483 18,715,223 1,500,000 7,455,428 74,597,244 44,659,254 - 74,597,244 44,659,254 OFF BALANCE SHEET FINANCIAL INSTRUMENTS Forward purchase of foreign exchange contracts Forward sale of foreign exchange contracts - Investment in associates (listed - mutual funds) have market value of Rs 4,869 million (2018: Rs 4,196 million) as disclosed in note 10.7 to these consolidated financial statements which is being valued under level 1. 41.3 Fair value of non-financial assets Non-banking assets acquired in satisfaction of claims have been carried at revalued amounts determined by professional valuers (level 3 measurement) based on their assessment of the market values as disclosed in note 14. The valuations are conducted by the valuation experts appointed by the Group which are also on the panel of State Bank of Pakistan. The valuation experts used a market based approach to arrive at the fair value of the Group’s properties. The market approach used prices and other relevant information generated by market transactions involving identical or comparable or similar properties. These values are adjusted to reflect the current condition of the properties. The effect of changes in the unobservable inputs used in the valuations cannot be determined with certainty, accordingly a qualitative disclosure of sensitivity has not been presented in these consolidated financial statements. 346 MEEZAN BANK LIMITED
348. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 41.4 Financial assets not measured at fair value 2019 Carrying Value 2018 Rupees in ‘000 Cash and balances with treasury banks Balances with other banks Due from financial institutions - net Investments - net Islamic financings and related assets - net Other assets - net 42 92,193,877 15,414,833 223,689,325 101,015,130 493,775,346 40,162,500 65,022,412 8,277,146 184,814,600 95,046,058 512,564,522 25,121,364 SEGMENT ANALYSIS 42.1 Segment Details with respect to Business Activities: 2019 Corporate and Commercial banking Retail banking Trading and sales 51,893,574 51,893,574 3,276,695 41,590,952 44,867,647 1,418,899 5,607,028 9,320,828 75,722,753 85,043,581 68,229,024 68,229,024 1,670,240 15,144,317 39,875,952 39,875,952 842,189 34,329,578 35,171,767 1,097,291 3,606,894 1,649,017 1,649,017 759,375 759,375 889,642 2,335,602 197,777 2,533,379 803,514 803,514 1,729,865 (75,920,530) (75,920,530) (75,920,530) (75,920,530) - 105,074,973 105,074,973 73,910,797 73,910,797 4,186,430 26,977,746 Statement of Financial Position Cash & Bank balances Due from financial institutions - net Investments - net Net inter segment lending Islamic financings and related assets - net Others Total Assets 16,564,479 407,789,877 18,646,459 443,000,815 100,667,273 792,814,927 85,985,469 28,202,430 1,007,670,099 6,898,321 223,689,325 209,081,683 23,732,938 463,402,267 43,116 4,020,910 792,683 4,856,709 529,069 529,069 (793,343,996) (793,343,996) 107,608,710 223,689,325 229,667,072 493,775,346 71,374,510 1,126,114,963 Due to financial institutions Deposits & other accounts Subordinated Sukuk Net inter segment borrowing Others Total liabilities Equity Total Equity & liabilities 41,129,507 14,000,000 354,997,417 10,310,734 420,437,658 22,563,157 443,000,815 909,114 932,568,765 62,333,839 995,811,718 11,858,381 1,007,670,099 8,769 438,346,579 453,045 438,808,393 24,593,874 463,402,267 1,091,175 1,091,175 3,765,534 4,856,709 529,069 529,069 529,069 (793,343,996) (793,343,996) (793,343,996) 42,047,390 932,568,765 14,000,000 74,717,862 1,063,334,017 62,780,946 1,126,114,963 Contingencies & Commitments 411,637,486 73,364,190 267,088,452 Profit and Loss Account External Revenue Inter segment revenue - net Total Income Segment direct expenses Inter segment expense allocation Total expenses Provisions and write offs - net Profit before tax Asset Management Rupees in ‘000 - Others Inter-segment Eliminations - - Total 752,090,128 ANNUAL REPORT 2019 347
349. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 2018 43 Corporate and Commercial banking Retail banking Trading and sales Asset Management Rupees in ‘000 Profit and Loss Account External Revenue Inter segment revenue - net Total Income 28,610,386 28,610,386 5,880,628 39,985,198 45,865,826 19,086,444 19,086,444 1,323,975 1,323,975 2,087,409 92,553 2,179,962 (40,077,751) (40,077,751) 56,988,842 56,988,842 Segment direct expenses Inter segment expense allocation Total expenses Provisions and write offs - net Profit before tax 1,802,047 23,370,533 25,172,580 826,756 2,611,050 36,412,638 36,412,638 22,847 9,430,341 1,262,603 16,707,218 17,969,821 318,448 798,175 614,980 614,980 708,995 548,533 548,533 1,631,429 (40,077,751) (40,077,751) - 40,640,801 40,640,801 1,168,051 15,179,990 Statement of Financial Position Cash & Bank balances Due from financial institutions - net Investments - net Net inter segment lending Islamic financings and related assets - net Others Total Assets 21,076,097 431,967,241 16,888,683 469,932,021 70,880,687 671,148,377 80,597,281 20,233,304 842,859,649 2,396,541 184,814,600 102,666,770 6,394,201 296,272,112 22,330 3,372,509 441,163 3,836,002 297,553 297,553 (671,445,930) (671,445,930) 73,299,558 184,814,600 127,115,376 512,564,522 43,957,351 941,751,407 Due to financial institutions Deposits & other accounts Subordinated Sukuk Net inter segment borrowing Others Total liabilities Equity Total Equity & liabilities 23,171,084 14,000,000 400,580,898 11,971,613 449,723,595 20,208,426 469,932,021 627,074 785,444,592 49,403,905 835,475,571 7,384,078 842,859,649 12,609,653 270,865,032 56,876 283,531,561 12,740,551 296,272,112 592,118 592,118 3,243,884 3,836,002 297,553 297,553 297,553 (671,445,930) (671,445,930) (671,445,930) 36,407,811 785,444,592 14,000,000 62,322,065 898,174,468 43,576,939 941,751,407 Contingencies & Commitments 301,374,997 45,715,180 118,865,323 - Others Inter-segment Eliminations - - Total 465,955,500 TRUST ACTIVITIES The Holding company provides trustee services in respect of Islamic Financing transactions. The services primarily includes holding of assets as security trustee on behalf of investors. 44 348 RELATED PARTY TRANSACTIONS 44.1 Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions and includes major shareholders, associated companies, retirement benefit funds, directors, key management personnel and their close family members. 44.2 Transacitons with related paties are entered in the ordinary course of business and on substantially the same terms as for comparable transactions with person of similar standing. Contributions to and accruals in respect of staff retirement benefits and other benefit plans are made in accordance with the actuarial valuations / terms of the contribution plan. Remuneration to the key management personnel is determined in accordance with the terms of their appointment. MEEZAN BANK LIMITED
350. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 44.3 Key management personnel - President and Chief Executive Officer - Holding Company - Deputy Chief Executive Officer - Holding Company 44.4 Details of transactions with related parties and balances with them (other than those disclosed in respective notes) as at the year-end as are follows: Total 2019 Associates 2018 2019 Directors 2018 2019 2018 Key Management Personnel Other Related Parties 2019 2019 2018 2018 Rupees in ‘000 Islamic financing and related assets At January 1, Addition during the year Deletion during the year At December 31 437,528 676,504 3,458,959 3,732,561 (3,327,239) (3,971,537) 569,248 437,528 437,528 676,504 3,458,959 3,732,561 (3,327,239) (3,971,537) 569,248 437,528 - - - - - - At January 1, Addition during the year Deletion during the year At December 31 4,196,013 5,779,700 2,027,279 524,448 (1,354,278) (2,108,135) 4,869,014 4,196,013 4,196,013 5,779,700 2,027,279 524,448 (1,354,278) (2,108,135) 4,869,014 4,196,013 - - - - - - Due from financial institutions At January 1, Addition during the year Deletion during the year At December 31 24,985,377 24,985,377 24,985,377 24,985,377 - - - - - - Investments - - Balances pertaining to parties that were related at the beginning of the year but ceased to be related during any part of the current year are not reflected as part of the closing balance. However, new related parties have been added during the year. The same are accounted for through the movement presented above. ANNUAL REPORT 2019 349
351. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 Total 2019 Deposits At December 31 2018 2019 Directors 2018 5,154,210 5,222,976 1,171,564 1,125,645 Other Assets Profit receivable on financing / investments / placements Fee and other receivable 710,269 12,820 710,269 12,820 Key Management Personnel 2019 2018 Rupees in ‘000 2019 95,662 107,304 171,382 - - 2018 Other Related Parties 2019 - - - 1,603 4,554 1,603 1,054 - - - - - 618,000 568,000 618,000 - - - - - Payable to defined benefit plan 570,234 645,340 Accrued Expenses 200,000 Other Liabilities Contingencies and Commitments Letters of credit (unfunded) Transactions, income and expenses Profit earned on financing / investments / placements Fees and other income earned - 317,180 2018 523,483 3,715,602 3,466,544 568,000 Sub-ordinated Sukuk (Tier II) - - - - 300,854 - - - - - - - - - - 253,054 200,000 - 3,500 344,486 - 26,076 27,572 26,076 27,572 - 735,170 46,657 735,170 46,657 - - - - - - 1,335,996 1,633,955 1,335,996 1,633,955 - - - - - - Dividend income earned 106,424 17,669 106,424 17,669 - - - - - - Capital loss - net (11,183) (44,551) (11,183) (44,551) - - - - - - Return on deposits / borrowing expensed 703,272 249,679 270,336 43,468 Recovery of expenses 2,616 - 1,166 1,463 27,991 12,303 403,779 - - - - - - 2,616 192,445 - Charge for defined benefit plan 263,625 368,587 - - - - - - 263,625 368,587 Contribution to defined contribution plan 332,266 286,118 - - - - - - 332,266 286,118 20,000 20,000 - - - - - - 20,000 20,000 - - - - - - 200,000 - - 29,400 Contribution to staff benevolent fund Donation 200,000 Charity Paid Remuneration to key management personnel Fee to non-executive directors (note 40) 45 Associates - 29,400 28,000 - - - - 352,828 325,879 - - - - 57,418 48,542 - - 57,418 352,828 48,542 - 325,879 - 28,000 - - - - CAPITAL ASSESSMENT AND ADEQUACY BASEL SPECIFIC Capital structure The State Bank of Pakistan (SBP) introduced updated guidelines with respect to disclosure of capital adequacy related information in the financial statements of banks vide its communication dated November 5, 2014. These guidelines are based on the requirements of Basel III which were introduced earlier by the SBP in August 2013 for implementation by banks in Pakistan. The SBP had specified a transitional period for implementing new standards which came to its end on December 31, 2019. The disclosures below have been prepared on the basis of these new guidelines. The comparative information is as per requirements which were applicable last year. 45.1 Capital structure Under Basel III framework, the Group’s regulatory capital has been analysed into two tiers as follows: - Tier 1 capital (going concern capital) which is sub divided into: a) Common Equity Tier 1 (CET1), which includes fully paid up capital, balance in share premium account, reserve for bonus issue, general reserves and unappropriated profits (net of losses), after regulatory deductions for investment in own shares, and book value of intangibles. b) Additional Tier 1 capital (AT1), which includes perpetual, unsecured, sub-ordinated, non-cumulative and contingent convertible Sukuk instrument issued by the Group. - 350 Tier II capital, which includes sub-ordinated sukuk, general provisions for loan losses (upto a maximum of 1.25% of credit risk weighted assets), reserves on revaluation of available for sale investments after deduction of indirect holding of own capital. MEEZAN BANK LIMITED
352. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 Banking operations are categorised in either the trading book or the banking book and risk weighted assets are determined according to the specified requirements that seek to reflect the varying levels of risk attached to assets and off balance sheet exposures. The required capital adequacy ratio is achieved by the Group through: (a) (b) (c) (d) 45.2 Adequate level of paid up capital; Adequate risk profile of asset mix; Ensuring better recovery management; and Maintaining acceptable profit margins. Capital adequacy ratio The main objective of the capital management is to improve the financial position and strengthen the statement of financial position of the Group to support the growth in business, provide protection to depositors and enhance shareholders' value. The Holding company’s Board and the management is committed to maintaining a sound balance between depositors' liability and shareholders' funds so that optimal capital / debt ratio is maintained. The optimal capital / debt ratio will provide reasonable assurance to depositor's about safety and security of their funds and at the same time provide impetus to the management to invest their depositors’ funds into profitable ventures without compromising the risk profile of the Holding company. The capital requirement of the Holding company has been determined based on the projected growth plan to be achieved in the next 3 years in all areas of business operations. Further, it also takes into account a road map for capital enhancement as directed by the SBP vide its various circulars issued from time to time. The Holding company prepares Annual Budget and Three Year Plan for purpose of the growth map and future direction. Bottom up approach is used to prepare annual budget and detailed deliberations are held while preparing Three Year Plan. The growth prospects takes into consideration prevailing economic and political factors in Pakistan and abroad. In implementing current capital requirements the SBP requires banks to maintain minimum Capital Adequacy Ratio (CAR) of 12.50% as of December 31, 2019 whereas CAR stood at 17.17% at the year ended December 31, 2019. The Group calculates capital adequacy ratio for credit risk, market risk and operational risk based upon requirements under Basel Accord as per guidelines issued by the SBP from time to time in this regard. Sensitivity and stress testing of the Group under different risk factors namely yield rate, forced sale value of collateral, non-performing financings and foreign exchange rate depicts that the Bank’s capital adequacy ratio is above the regulatory requirements. The Group has taken into account credit risk, market risk and operational risk when planning its assets. ANNUAL REPORT 2019 351
353. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 46 CAPITAL ADEQUACY AND LEVERAGE RATIOS 2019 2018 Rupees in ‘000 Minimum Capital Requirement Paid-up capital (net of losses) 12,861,116 11,691,924 Capital Adequacy Ratio Eligible Common Equity Tier 1 Capital Eligible Additional Tier 1 Capital Total Eligible Tier 1 Capital Eligible Tier 2 Capital Total Eligible Capital (Tier 1 + Tier 2) 51,558,453 6,992,866 58,551,319 16,905,639 75,456,958 42,034,961 7,027,818 49,062,779 9,989,706 59,052,485 342,898,741 19,624,994 76,873,048 439,396,783 323,222,054 16,845,781 56,780,995 396,848,830 11.73% 13.33% 17.17% 10.59% 12.36% 14.88% 58,551,319 1,363,702,150 4.29% 49,062,779 1,109,745,157 4.42% Risk Weighted Assets Credit Risk Market Risk Operational Risk Total Common Equity Tier 1 Capital Adequacy ratio Tier 1 Capital Adequacy Ratio Total Capital Adequacy Ratio Leverage Ratio Tier-1 Capital Total Exposures Leverage Ratio 46.1 47 Full disclosure on Capital Adequacy & Leverage Ratio prepared as per SBP instructions is available at http:// www.meezanbank.com RISK MANAGEMENT The wide variety of the Group’s business activities require the Group to identify, assess, measure, aggregate and manage risks effectively which are constantly evolving as the business activities expand in response to the Group's strategy and growth. The Group manages the risk through a framework of risk management encompassing policies and procedures, organisational structures, risk measurement and monitoring processes and techniques that are closely aligned with business activities of the Group. Risk management principles 352 - The Board of Directors (the Board) provides overall risk management supervision. The Board Risk Management Committee regularly reviews the Holding company’s risk profile. - The Group has set up objectives and policies to manage the risks that arise in connection with the Group’s activities. The risk management framework and policies of the Group are guided by specific objectives to ensure that comprehensive and adequate risk management tools and techniques are established to mitigate the salient risk elements in the operations of the Group. - The establishment of the overall financial risk management objectives is consistent and in tandem with the strategy to create and enhance shareholders’ value, whilst guided by a prudent risk management framework. - The structure of risk management function is closely aligned with the organisational structure of the Group. - The risk management function is independent of the Group’s operations. MEEZAN BANK LIMITED
354. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 Risk management organisation The Board Risk Management Committee comprises of four non-executive directors.  One of the non-executive directors of the Holding company chairs the Risk Management Committee. Specialized Committees comprising of Senior Management team members perform their functions in line with the strategic direction set by the Board of the Holding company while ensuring that there is optimal balance between risk reward trade-off. The Committees include: Name of the sub-committee Credit Risk Management Committee (CRMC) Asset and Liability Management Committee (ALCO) Compliance & Operational Risk Management Committee (CORMC) Chaired by President & CEO of the Holding company President & CEO of the Holding company President & CEO of the Holding company CRMC is responsible to oversee credit risk activities on Group wide basis while ensuring compliance with regulatory requirements & internal policies. Its responsibilities also include to provide support and guide front lines in managing their businesses, perform finance portfolio review, establish financing standards and benchmarks, maintain adequate industry diversification and decide upon provisioning. It is also required to delegate financing approving powers & prudential limits on large financing exposures. Credit Committee, a sub-committee of CRMC is the highest level body for approval of financing transactions. ALCO is responsible for reviewing the Asset and Liability structure of the MBL, monitoring the liquidity situation and overall changing market scenario. Market and Liquidity risks are examined based on stress testing exercises and gap analysis. ALCO is also responsible for monitoring policy rate movements and taking necessary steps across various products to ensure that the overall profitability of the MBL is maximized without compromising on risk appetite. ALCO also ensures that the MBL overall operations are fully compliant with regulatory framework for the business as provided by the SBP. The CORMC is responsible for overseeing compliance risk by reviewing the adequacy of controls in place to meet regulatory requirements. The Committee is responsibe for promoting compliance culture in MBL, facilitate in implementation of Compliance Program and oversee Money Laundering and Financing Terrorism risk. In addition, the Committee also oversees Operational Risk Framework by ensuring that policies and procedures are in place in all Key risk areas and by reviewing Key Risk Indicators. The Committee also monitors level of compliance of major unresolved and recurring issues pointed out in the Internal Audit, Shariah Audit and SBP Inspection Report. The Group’s risk management, compliance, internal audit and legal departments support the risk management function. The role of the risk management department is to assess, measure, identify risks and established risk mitigants through a detailed policy and monitoring framework. The compliance department ensures that all the directives and guidelines issued by the SBP are being complied with in order to mitigate the compliance risk. The internal audit and BRR department reviews the compliance of internal control procedures with internal and regulatory standards. 47.1 Credit Risk Credit risk arises from the potential that an obligor is either unwilling to perform on an obligation or its ability to perform such obligations is impaired resulting in economic loss to the Group. This credit risk arises mainly from both direct financing activities as well as contingent liabilities. Credit risk management and structure The Group manages credit risk by effective credit appraisal mechanism, approving and reviewing authorities, limit structures, internal credit risk rating system, collateral management and post disbursement monitoring so as to ensure prudent financing activities and sound financing portfolio under the umbrella of a comprehensive Financing Policy approved by the Board of Directors of the Holding company. A comprehensive financing procedural manual approved by the senior management is also in place. The Group also ensures diversification of its portfolio into different business segments, products and sectors. Further, to avoid risk concentration; counterparty limits, counterparty group limits and industry concentration limits are also established, monitored and assessed in the light of changing counterparty and market conditions. Watchlist procedure is also functioning which identifies financings with early warning indicators in respect of clients having the potential to become non performing. The risk management function also monitors the non-performing financing portfolio of the MBL and reports all significant matters to the Board Risk Management Committee. The Group takes into account the risk mitigating effect of the eligible collaterals for the calculation of capital requirement for credit risk. Use of Credit Risk Mitigation (CRM) resulted in the total credit risk weighted amount of Rs 342,898.741 million (2018: Rs 323,222.054 million). Thus, use of CRM resulted in capital adequacy ratio of the Group of 17.17%. ANNUAL REPORT 2019 353
355. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 47.1.1 Segmental information 47.1.1.1 Due from financial institutions Credit risk by public / private sector Gross amount due from financial institution 2019 2018 Non-performing amount due from financial institution 2019 2018 Provision held 2019 2018 Rupees in ‘000 Public/ Government Private 47.1.1.2 163,347,061 60,383,830 223,730,891 75,782,901 109,073,265 184,856,166 41,566 41,566 41,566 41,566 41,566 41,566 41,566 41,566 Investment in debt securities Credit risk by industry sector Gross investments 2019 2018 Non-performing investments 2019 2018 Provision held 2019 2018 Rupees in ‘000 Automobile and transportation equipment Cement Chemical and Pharmaceuticals Construction and allied industries Federal Government Securities Fertilizer Financial Foreign Government Securities Oil and Gas Power (electricity) Textile Transport, Storage and Communication 776,919 500,000 45,896 400,000 96,658,346 49,707 2,986,023 4,666,473 4,350,000 95,199,348 269,287 205,901,999 697,495 500,000 53,648 400,000 89,420,405 249,307 2,773,756 4,788,337 5,800,000 11,074,050 119,287 2,433,333 118,309,618 Credit risk by public / private sector Gross investments 2019 2018 45,896 119,287 165,183 53,648 119,287 172,935 Non-performing investments 2019 2018 45,896 119,287 165,183 53,648 119,287 172,935 Provision held 2019 2018 Rupees in ‘000 Public/ Government Private 354 MEEZAN BANK LIMITED 198,315,800 7,586,199 205,901,999 110,137,212 8,172,406 118,309,618 165,183 165,183 172,935 172,935 165,183 165,183 172,935 172,935
356. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 47.1.1.3 Islamic financing and related assets Credit risk by industry sector Gross amount 2019 2018 Non-performing amount 2019 2018 Provision held 2019 2018 Rupees in ‘000 Agriculture, Feed Mills, Poultry, Dairy, Forestry and Fishing Automobile and transportation equipment Cement Chemical and Pharmaceuticals Construction and allied industries Electronics and electrical appliances Exports/Imports Fertilizer Financial Food Footwear and Leather garments Individuals Insurance Mining and Quarrying Oil and Gas Paper, board and packaging Power (electricity) Services Sugar Textile Transport, Storage and Communication Wholesale and Retail Trade Others 6,532,725 17,428,237 14,735,150 14,159,334 21,959,860 5,556,206 2,424,536 6,254,098 778,364 106,554,649 3,641,150 49,641,378 247,572 6,284,400 22,022,980 9,808,539 80,339,579 7,979,122 6,511,846 85,320,362 23,973,248 10,940,491 3,418,750 506,512,576 6,375,526 10,788,382 13,151,742 13,500,193 26,154,132 5,382,465 2,953,481 9,758,803 1,359,991 118,998,351 3,028,701 50,039,790 211,676 2,727,796 35,817,044 10,221,330 71,885,424 4,754,839 11,456,405 82,653,750 23,466,606 12,699,242 4,878,094 522,263,763 54,637 642,232 75,137 462,354 155,324 38,833 999,984 201,201 383,905 285,327 846,119 24,220 108,718 4,323,075 92,884 153,068 148,701 8,995,719 631,912 88,671 36,443 37,800 154,767 38,833 439,156 230,006 334,438 99,905 19,616 108,718 4,336,655 53,791 279,220 95,311 6,985,242 53,338 642,232 75,137 139,135 155,324 38,833 972,992 201,201 241,345 190,601 846,119 21,909 108,718 4,278,286 41,417 140,868 137,064 8,284,519 628,164 81,421 36,443 37,800 154,767 38,833 435,968 230,006 228,583 97,890 19,616 108,718 4,272,687 30,534 275,010 95,090 6,771,530 Credit risk by public / private sector Gross amount 2019 2018 Non-performing amount 2019 2018 Provision held 2019 2018 Rupees in ‘000 Public / Government Private 121,590,108 384,922,468 506,512,576 138,584,630 383,679,133 522,263,763 8,995,719 8,995,719 6,985,242 6,985,242 8,284,519 8,284,519 6,771,530 6,771,530 ANNUAL REPORT 2019 355
357. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 47.1.1.4 Contingencies and Commitments Credit risk by industry sector 2019 2018 Rupees in ‘000 Agriculture, Feed Mills, Poultry, Dairy, Forestry and Fishing Automobile and transportation equipment Cement Chemical and Pharmaceuticals Construction and allied industries Electronics and electrical appliances Exports/Imports Fertilizer Financial Food Footwear and Leather garments Individuals Insurance Mining and Quarrying Oil and Gas Paper, board and packaging Power (electricity) Services Sugar Textile Transport, Storage and Communication Wholesale and Retail Trade Others 3,888,017 10,379,265 2,205,610 16,519,610 20,041,620 5,637,909 1,114,977 10,264,420 202,504,092 48,788,281 5,025,428 20,880,737 146,942 2,778,730 32,763,650 11,008,615 72,679,466 43,451,226 20,553,186 183,142,496 12,157,381 18,985,405 7,173,065 752,090,128 10,427,720 7,746,560 7,054,100 15,021,157 24,290,006 5,390,375 899,538 19,817,808 110,082,698 38,801,583 5,036,464 26,649,477 2,272,204 9,840,327 7,973,098 31,795,720 25,106,116 17,893,407 83,632,808 1,859,337 7,973,811 6,391,186 465,955,500 92,505,223 659,584,905 752,090,128 37,375,897 428,579,603 465,955,500 Credit risk by public / private sector Public/ Government Private 47.1.1.5 Concentration of Top 10 exposures Top 10 exposures on the basis of total funded and non-funded expsoures aggregated to Rs 264,457 million (2018: Rs 180,712 million) as follows: 2019 Funded Exposure Non Funded Exposure Total Exposure Rupees in ‘000 213,395,745 51,061,637 264,457,382 2018 145,056,016 35,655,566 180,711,582 The sanctioned limits against these top 10 exposures aggregated to Rs 326,544 million (2018: Rs 205,451 million). None of the exposure against these top 10 customers is in classified stage. 356 MEEZAN BANK LIMITED
358. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 47 .1.1.6 Islamic Financing and related assets - Province / Region-wise Disbursement & Utilization 2019 Disbursements Utilization Rupees in ‘000 Province / Region Punjab Sindh KPK including Balochistan FATA Islamabad AJK including Gilgit-Baltistan Punjab Sindh KPK including FATA Balochistan Islamabad AJK including Gilgit-Baltistan 263,517,532 256,420,540 1,248,056 772,392 38,469,256 616,957 263,517,532 3,280,581 251,802,543 - 627,755 1,248,056 - 671,012 772,392 - 38,469,256 - 38,649 616,957 Total 561,044,733 266,798,113 251,802,543 1,875,811 1,443,404 38,469,256 655,606 2018 Utilization Disbursements Province / Region Punjab Sindh KPK including FATA Balochistan Islamabad AJK including Gilgit-Baltistan Total Punjab 299,569,251 297,780,172 2,476,320 347,823 111,318,054 747,443 712,239,063 Sindh 299,569,251 28,501,991 252,632,490 328,071,242 252,632,490 Rupees in ‘000 KPK including Balochistan FATA 4,084,133 2,476,320 6,560,453 11,487,367 347,823 11,835,190 Islamabad 1,073,801 111,318,054 112,391,855 AJK including Gilgit-Baltistan 390 747,443 747,833 47.1.2 Credit Risk - General Disclosures The Group has adopted Standardised Approach of Basel Accord for calculation of capital charge against credit risk. Therefore, risk weights for the credit risk related assets (on-balance sheet and off-balance sheet - market and non market related exposures) are assigned on basis of standardised approach. The Group is committed to further strengthen its risk management framework which will enable the Group to move ahead for adopting Foundation Internal Ratings Based (IRB) approach of Basel II. Meanwhile, none of the Group's asset class is subject to the Foundation IRB or advanced IRB approaches. 47.1.2.1 Credit Risk: Disclosures for portfolio subject to the Standardised Approach Under standardised approach the capital requirement is based on the credit rating assigned to the counterparties by the External Credit Assessment Institutions (ECAIs) duly recognised by the SBP for capital adequacy purposes. In this connection, the Group utilises the credit ratings assigned by ECAIs and has recognised agencies such as PACRA (Pakistan Credit Rating Agency) and VIS Credit Rating Company which are also recognised by the SBP. In case of foreign currency exposures against banks, ratings assigned by S&P, Fitch and Moody’s have been applied. In case of exposure against banks, some banks have multiple ratings but those ratings do not result in mapping with different risk weights. Types of Exposure and ECAI’s used 2019 Exposures VIS PACRA Standard & Poors (S&P) Fitch Moody’s Corporate √ √ √ √ √ Banks √ √ √ √ √ Public Sector Entities √ √ - - - ANNUAL REPORT 2019 357
359. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 Use of ECAI Ratings The Group prefers solicited ratings over unsolicited ratings at all times, owing to the greater degree of accuracy (in general) associated with solicited ratings. Unsolicited ratings may only be used in cases where a solicited rating is not available. Mapping to SBP Rating Grades The alignment of the Alphanumerical scale of each agency used with risk buckets is as per instructions laid down by SBP under Basel III requirements. 47.1.2.2 Credit exposures subject to standardised approach 2019 On-balance Sheet Exposures Amount Outstanding Deduction Credit Risk Management 2018 Net amount Amount Outstanding Deduction Credit Risk Management Net amount Rupees in ‘000 Banks 20% 50% 100% 150% Unrated 213,182,550 2,947,550 665,142 57,283 11,872,860 172,015,972 - 41,166,578 2,947,550 665,142 57,283 11,872,860 194,042,282 985,696 83,328 451,096 143,659,107 - 50,383,175 985,696 83,328 451,096 Sovereigns 0% 20% 50% 100% 216,586,461 2,813,316 213,088 31,286,757 - 185,299,704 2,813,316 213,088 173,195,662 276,755 2,051,928 151,309 30,719,089 - 142,476,573 276,755 2,051,928 151,309 Public Sector entities 20% Unrated (50%) 28,487,673 172,718,924 18,750,845 178,650,321 9,736,828 - 32,314,645 91,677,679 13,052,617 91,947,049 19,262,028 - Corporate 20% 50% 100% 150% Unrated 1 (100%) Unrated 2 (125%) 94,382,029 75,285,341 11,258,273 71,775,088 62,331,059 1,557,502 40,000 5,959,663 10,532,509 92,824,527 75,245,341 11,258,273 65,815,425 51,798,550 93,937,224 55,606,232 3,258,718 1,019,233 92,818,644 57,987,218 1,784,000 2,329,667 4,798,516 2,624,655 92,153,224 53,276,565 3,258,718 1,019,233 88,020,128 55,362,563 Retails 75% 58,377,604 11,778,165 46,599,439 60,304,873 10,700,598 49,604,275 102,828 613,339 33,417 32,248 22,146 15,515 70,580 591,193 17,902 54,913 246,140 17,790 27,743 10,386 10,242 27,170 235,754 7,548 1,023,703,825 430,641,643 598,993,579 860,481,365 301,663,669 559,087,066 Past Due 50% 100% 150% Total 47.1.2.3 Credit Risk: Disclosures with respect to Credit risk mitigation for Standardised approach and IRB The Group obtains capital relief for both its on-balance and off-balance sheet non-market related exposures by using simple approach for credit risk mitigation (CRM). Off-balance sheet items under the simplified standardised approach are converted into credit exposure equivalents through the use of credit conversion factors. Under the standardised approach the Group has taken advantage of the cash collaterals available with the Group in the form of security deposits, cash margins, certificates of islamic investment, monthly mudaraba certificate, saving accounts, guarantees, shares and Government securities. Valuation and management of eligible collaterals for CRM is being done in accordance with the conditions laid down by the State Bank of Pakistan. Eligible collaterals for CRM purposes do not expose the Group to price risk as they are in the form of cash/cash equivalent collaterals. Since eligible collaterals for CRM purposes are all in the form of cash/cash equivalent collaterals, they generally do not pose risk to the Group in terms of change in their valuation due to changes in the market condition. The credit equivalent amount of an off-balance sheet market related foreign exchange contracts are determined by using the current exposure (mark to market) method. 358 MEEZAN BANK LIMITED
360. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 The total benefit of Rs 430,641.643 million was availed through CRM against total on-balance sheet exposure of Rs 1,119,353.298 million.Under off-balance sheet, non-market related exposures; total benefit of Rs 13,602.003 million was availed by the Bank through CRM against total off-balance sheet, non-market related exposure of Rs 485,001.676 million. In the year 2019, total CRM benefit was Rs 444,243.646 million as against amount of Rs 319,304.216 million in year 2018. 47.1.2.4 Credit concentration risk Credit concentration risk arises mainly due to concentration of exposures under various categories viz., industry, geography, and single / group borrower obligor. Within credit portfolio, as a prudential measure aimed at better risk management and avoidance of concentration of risks, the SBP has prescribed regulatory limits on banks’ maximum exposure to single and group obligors. Within the SBP limits, the Group has further defined limits to avoid excessive concentration of portfolio. 47.2 Market risk Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk reflects yield rate risk, currency risk and other price risks. Banks could be adversely affected by movements in market rates or prices such as benchmark rates, deposit rates, foreign exchange rates, equity prices and market conditions resulting in a loss to earnings and capital. 47.2.1 Equity position in the banking and trading book The Group classifies and values its investment portfolio in accordance with the directives of SBP as stated in note 6.4 to these consolidated financial statements. Trading book Held for trading and available for sale securities with trading intent; - They are marked to market daily; and - Any valuation difference is charged / credited to the profit and loss account in case of held for trading securities and to surplus on revaluation of investments - net of tax under equity in case of available for sale securities. Banking book Assets outside trading book are part of the banking book. These may include assets classified as available for sale and held to maturity investments. 47.2.2 Balance sheet split by trading and banking books 2019 Banking Book Trading Book 2018 Banking Book Total Trading Book Total Rupees in ‘000 Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments - net Islamic financing and related assets - net Fixed assets Intangible assets Deferred tax assets Other assets - net 92,193,877 15,414,833 223,689,325 219,253,232 493,775,346 23,663,521 800,532 46,910,457 1,115,701,123 10,413,840 10,413,840 92,193,877 15,414,833 223,689,325 229,667,072 65,022,412 8,277,146 184,814,600 121,881,948 493,775,346 23,663,521 800,532 46,910,457 512,564,522 13,228,398 644,956 868,024 29,215,973 1,126,114,963 936,517,979 5,233,428 5,233,428 65,022,412 8,277,146 184,814,600 127,115,376 512,564,522 13,228,398 644,956 868,024 29,215,973 941,751,407 ANNUAL REPORT 2019 359
361. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 The Group uses a number of methods to monitor and control market risk exposures. One of the major tools used by the Group to monitor and limit market risk is Value at Risk (VaR). VaR is defined as the estimated loss that will arise on a position or a portfolio over a particular (holding) period of time from an adverse market movement with a specific probability (confidence level). The VaR model used by the Group takes 99% confidence level and assumes a 1 to 10 days holding period whilst using the historical simulation taking the data of the last three years. Daily VaR figures are circulated to the senior management and regular summaries are reported in ALCO meetings. The VaR reports are complemented by various other position and sensitivity limit structures, including stress, sensitivity, gap and scenario analysis. The capital charge for market risk has been calculated by using Standardized Approach. 47.2.3 Foreign exchange risk The foreign exchange risk is defined as the current or prospective risk to earnings and capital arising from adverse movements in currency exchange rates. It refers to the impact of adverse movement in currency exchange rates on the value of open foreign currency position. The objectives of the foreign exchange risk management is to minimise the adverse impact of foreign exchange rate movements on the assets and liabilities mismatch (tenor and position) and maximise their earnings. Whenever a commercial bank deals in foreign currency, it is exposed to risk of exchange rate. The Group's assets and liabilities in foreign currencies give rise to foreign exchange risk which has to be managed by the Group; this risk is mitigated by using different hedging techniques. Hedging is a way used by a Group to eliminate or minimize its risk exposures. Hedging can be done using different ways like gap analysis, hedging (forwards), assigning limits in terms of amount, tenor, currency, product, countries, counterparties etc. The Group limits its currency exposure to the extent of statutory net open position prescribed by the SBP except in the cases where exemption is provided by the SBP. Foreign exchange open and mismatch positions are controlled through close monitoring and are marked to market on a daily basis. The analysis below represents the concentration of the Group's foreign currency risk for on and off balance sheet financial instruments: Assets Liabilities 2019 Off-balance sheet items Rupees in ‘000 Pakistan Rupees United States Dollars Great Britain Pounds Japanese Yen Euro Singapore Dollars Australian Dollars Canadian Dollars United Arab Emirates Dirham Swiss Francs Saudi Riyal Swedish Krona Malaysian Ringgit Hongkong Dollar Thailand Bhat Norwegian Krone Danish Krone Chinese Offshore Spot Chinese Yuan Total foreign currency exposure Total currency exposure 360 MEEZAN BANK LIMITED Net foreign currency exposure 1,085,948,332 988,341,824 (34,978,988) 62,627,520 37,480,391 706,604 48,430 1,177,207 123,245 21,101 46,414 106,543 19,479 3,244 1,643 1,323 1,177 4,086 36,194 2,488 387,062 40,166,631 66,756,731 4,516,282 4,449 3,234,587 6,491 1,976 1,470 100,172 35 370,000 74,992,193 29,327,718 3,838,766 (49,893) 2,089,398 11,504 (141,022) (11,513) (42,157) (1,599) (30,204) (12,010) 34,978,988 51,378 29,088 (5,912) 32,018 5,013 (19,753) 8,118 4,257 4,772 19,479 3,244 1,643 1,288 1,177 4,086 5,990 2,488 5,052 153,426 1,126,114,963 1,063,334,017 - 62,780,946
362. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 Assets Liabilities 2018 Off-balance sheet items Rupees in ‘000 Pakistan Rupees United States Dollars Great Britain Pounds Japanese Yen Euro Singapore Dollars Australian Dollars Canadian Dollars United Arab Emirates Dirham Swiss Francs Saudi Riyal Swedish Krona Malaysian Ringgit Hongkong Dollar Thailand Bhat Norwegian Krone Danish Krone Chinese Offshore Spot Chinese Yuan Total foreign currency exposure Total currency exposure Net foreign currency exposure 908,238,899 834,865,732 (29,777,104) 43,596,063 30,482,064 677,715 34,146 1,715,095 5,162 68,746 165,561 62,398 4,867 18,551 436 1,247 993 1,086 1,428 1,046 2,019 269,948 33,512,508 55,168,119 3,995,066 45 3,876,456 4 3,077 1,387 34 264,548 63,308,736 24,656,496 3,330,962 (28,994) 2,119,253 (101,482) (163,246) (30,244) (5,641) 29,777,104 (29,559) 13,611 5,107 (42,108) 5,158 (35,813) 928 32,154 (774) 18,551 436 1,247 959 1,086 1,428 1,046 2,019 5,400 (19,124) 941,751,407 898,174,468 - 43,576,939 2019 Banking book 2018 Trading book Banking book Trading book Rupees in ‘000 Impact of 1% change in foreign exchange rates - Consolidated Profit and Loss Account - Consolidated Other Comprehensive Income - 1,992 - - 992 - 47.2.4 Equity position risk Equity position risk is defined as the risk to earnings or capital arising from adverse changes in value of equity portfolios of Group. The limits assigned to various individual scrips and total portfolio investments are fixed as per the guidelines issued by the SBP. The Group invests in only Shariah compliant equities as advised by the Resident Shariah Board Member. 2019 Banking book 2018 Trading book Banking book Trading book Rupees in ‘000 Impact of 5% change in equity prices - Consolidated Profit and Loss Account - Consolidated Other Comprehensive Income - 236,574 - 205,492 ANNUAL REPORT 2019 361
363. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 47.2.5 Yield / profit rate risk Yield risk occurs when there is a mismatch between positions, which are subject to profit rate alterations within a particular time period. The Group’s financing, placement and investment activities give rise to profit rate risk. The effect of changes in profit rate is on the Group’s income, and resultant impact is on the Group’s net worth. Profit rate risk is primarily managed by monitoring the rate sensitive gaps and by having the pre-approved limits for repricing buckets. ALCO is the supervising body for adherence with these, complemented by the monitoring of sensitivity of the Group’s financial assets and liabilities to various scenarios. The Group estimates changes in the market value of equity due to changes in the yield rates on on-balance sheet positions and their impact on capital adequacy ratio by conducting stress tests. It also assesses risk on earnings of the Group by various shocks. 2019 Banking book 2018 Trading book Banking book Trading book Rupees in ‘000 Impact of 1% change in discount rates - Consolidated Profit and Loss Account - Consolidated Other Comprehensive Income 959,913 - - 854,290 - - 47.2.6 Mismatch of yield rate sensitive assets and liabilities 2019 Exposed to yield risk Effective yield rate % Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years Above 10 Years Non-yield bearing financial instruments Rupees in ‘000 On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Other assets 0.80 11.31 11.17 12.36 - 92,193,877 15,414,833 223,689,325 229,667,072 493,775,346 44,902,056 1,099,642,509 5,771,943 53,211,438 901,250 166,792,950 226,677,581 67,361,553 100,397,792 72,353,643 240,112,988 31,204,048 25,682,538 50,157,224 107,043,810 71,912,286 773,340 13,757,900 86,443,526 42,433,712 7,517,591 49,951,303 42,147,026 10,606,330 52,753,356 4,189,364 16,840,760 21,030,124 1,873,040 3,401,060 5,274,100 - 92,193,877 9,642,890 11,269,010 152,347,888 44,902,056 310,355,721 3.27 5.44 12.81 - 17,186,807 42,047,390 932,568,765 14,000,000 40,162,500 1,045,965,462 53,677,047 41,701,568 584,512,636 14,000,000 640,214,204 (413,536,623) 188,330 10,217,343 10,405,673 229,707,315 46,934 1,460,000 1,506,934 105,536,876 268 500,000 500,268 85,943,258 21,279 21,279 49,930,024 13,918 13,918 52,739,438 66,324 66,324 20,963,800 5,274,100 - 17,186,807 8,769 335,878,786 40,162,500 393,236,862 (82,881,141) - 151,033,720 116,054,732 34,978,988 - (47,902,153) Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Other liabilities On-balance sheet gap Non financial assets - Fixed assets - Intangible assets - Deferred tax assets - Other assets Non financial liabilities - Other liabilities - Deferred tax liabilities Total net assets Off-balance sheet financial instruments Forward purchase of foreign exchange contracts Forward sale of foreign exchange contracts Off-balance sheet gap 362 23,663,521 800,532 2,008,401 26,472,454 14,360,104 3,008,451 17,368,555 62,780,946 151,033,720 116,054,732 34,978,988 - - - - - - - - Total yield risk rate sensitivity gap (413,536,623) 229,707,315 105,536,876 85,943,258 49,930,024 52,739,438 20,963,800 5,274,100 Cumulative yield risk rate sensitivity gap (413,536,623) (183,829,308) (78,292,432) 7,650,826 57,580,850 110,320,288 131,284,088 136,558,188 MEEZAN BANK LIMITED 136,558,188 88,656,035
364. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 2018 Exposed to yield risk Effective yield rate % Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years Non-yield Above 10 bearing instruments Years financial Rupees in ‘000 On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Other assets 0.31 6.28 5.65 7.90 - 65,022,412 8,277,146 184,814,600 127,115,376 512,564,522 25,121,364 922,915,420 310,375 112,255,476 2,304,228 179,575,584 294,445,663 63,354,736 34,162,300 92,482,198 189,999,234 9,204,388 13,928,470 69,817,791 92,950,649 2,233,979 11,757,760 13,991,739 16,478,405 6,274,079 22,752,484 42,433,712 9,389,053 51,822,765 4,195,450 15,009,074 19,204,524 1,667,139 2,074,916 3,742,055 276,777 276,777 65,022,412 7,966,771 9,434,916 126,184,067 25,121,364 233,729,530 4.01 2.57 8.55 - 23,750,543 36,407,811 785,444,592 14,000,000 24,831,103 884,434,049 38,481,371 35,371,084 470,707,108 7,000,000 513,078,192 (218,632,529) 24,158,618 7,000,000 31,158,618 158,840,616 4,228,460 4,228,460 88,722,189 673,000 673,000 13,318,739 22,752,484 51,822,765 19,204,524 3,742,055 276,777 23,750,543 1,036,727 285,677,406 24,831,103 335,295,779 (101,566,249) Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Other liabilities On-balance sheet gap Non financial assets - Fixed assets - Intangible assets - Deferred tax assets - Other assets Non financial liabilities - Other liabilities - Deferred tax liabilities 13,228,398 644,956 868,024 4,094,609 18,835,987 Total net assets 13,740,419 13,740,419 43,576,939 Off-balance sheet financial instruments Forward purchase of foreign exchange contracts Forward sale of foreign exchange contracts Off-balance sheet gap 74,321,214 44,544,110 29,777,104 - - - - - - - - - 74,321,214 44,544,110 29,777,104 Total yield risk rate sensitivity gap (218,632,529) 158,840,616 88,722,189 13,318,739 22,752,484 51,822,765 19,204,524 3,742,055 276,777 (71,789,145) Cumulative yield risk rate sensitivity gap (218,632,529) (59,791,913) 28,930,276 42,249,015 65,001,499 116,824,264 136,028,788 139,770,843 140,047,620 68,258,475 The Group takes on exposure to the effects of fluctuations in the prevailing levels of market profit rates on both its fair value and cash flow risks. Profit margins may increase as a result of such changes but may reduce to losses in the event that unexpected movement arise. 47.3 Liquidity risk Liquidity risk is the potential for loss to the Group arising from either its inability to meet its obligations or to fund increases in assets as they fall due without incurring an unacceptable cost. The Holding company’s Board of Directors sets the policy for managing liquidity risk and entrusts accountability for supervision of the implementation of this strategy to senior management. Senior Management exercises its responsibilities for managing market & liquidity risk through various committees including the Asset & Liability Management Committee (ALCO). Treasury department manages the Holding company’s liquidity position on a daily basis. The Holding company’s main approach of managing the liquidity risk is to make certain that it will always have adequate liquidity to meet its liabilities when they are due in normal and stressed scenarios without incurring any untoward expenditure or risking reputational harm. ALCO monitors the maintenance of liquidity ratios, depositor's concentration both in terms of the overall funding mix and avoidance of undue reliance on large individual deposits. Regular liquidity stress testing is conducted under a variety of scenarios covering both normal and more severe market conditions. ANNUAL REPORT 2019 363
365. 47 .3.1 364 MEEZAN BANK LIMITED Share capital Reserves Unappropriated profit Surplus on revaluation of assets - net Non-controlling interest Net assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Deferred tax liabilities Other liabilities Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Fixed assets Intangible assets Deferred tax assets Other assets Assets 12,861,116 18,231,980 21,117,202 9,400,835 1,169,813 62,780,946 17,186,807 42,047,390 932,568,765 14,000,000 3,008,451 54,522,604 1,063,334,017 62,780,946 92,193,877 15,414,833 223,689,325 229,667,072 493,775,346 23,663,521 800,532 46,910,457 1,126,114,963 Total 5,671,646 232,531 688,755,659 8,357 259,223 694,927,416 (523,318,789) 30,423,979 6,207,417 716,367 134,023,901 15,336 445 221,182 171,608,627 Upto 1 Day 3,837,814 230,832 18,571,404 50,141 1,858,246 24,548,437 32,835,377 20,589,966 6,207,416 16,576,749 1,896,535 10,432,916 92,017 2,668 1,585,547 57,383,814 Upto 7 Days 3,837,814 163,416 18,614,941 58,499 2,257,127 24,931,797 16,690,687 20,589,966 11,713,028 2,212,624 5,070,508 107,353 3,113 1,925,892 41,622,484 Upto 14 Days Maturities of assets and liabilities based on contractual maturities 3,839,533 586,610 33,059,099 133,707 4,107,132 41,726,081 30,216,720 20,589,966 3,000,000 24,921,661 5,057,426 14,227,764 245,379 7,116 3,893,489 71,942,801 Upto 1 month 13,848,089 16,546,999 250,705 7,698,024 38,343,817 55,278,876 46,811,741 39,593,919 635,357 13,342 6,568,334 93,622,693 Upto 2 months Over 3 to 6 months 8,063,415 15,599,382 250,705 6,195,644 30,109,146 17,981,195 20,549,812 142,232 21,639,592 458,934 13,342 5,286,429 48,090,341 11,765,032 20,955,042 752,113 14,334,179 47,806,366 71,876,197 31,204,048 13,209,287 61,633,801 1,364,771 40,028 12,230,628 119,682,563 Rupees in ‘000 Upto 3 months 2019 214,435 29,581,392 1,504,224 11,515,559 42,815,610 63,769,359 71,912,286 1,958,724 20,126,208 2,682,055 80,053 9,825,643 106,584,969 Over 6 months to 1 Years 646,184 54,734,432 2,925,533 58,306,149 27,847,414 44,326,455 33,964,982 5,205,811 160,106 2,496,209 86,153,563 Over 1 to 2 Years 872,916 7,518,851 2,852,084 11,243,851 84,939,316 46,560,745 42,039,856 4,988,921 160,106 2,433,539 96,183,167 Over 2 to 3 years 2,532,447 11,633,489 509,542 14,675,478 58,046,009 8,866,106 61,107,183 1,993,218 320,213 434,767 72,721,487 Over 3 to 5years 2,891,483 16,998,075 7,000,000 10,311 26,899,869 107,221,812 101,048,351 32,294,942 769,590 8,798 134,121,681 Over 5 to 10 years 7,000,000 7,000,000 19,396,773 3,672,220 17,619,774 5,104,779 26,396,773 Above 10 years Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2019
366. 11 ,691,924 15,185,565 15,738,899 (45,883) 1,006,434 43,576,939 23,750,543 36,407,811 785,444,592 14,000,000 38,571,522 898,174,468 43,576,939 65,022,412 8,277,146 184,814,600 127,115,376 512,564,522 13,228,398 644,956 868,024 29,215,973 941,751,407 8,075,185 496,366 573,359,841 127,736 582,059,128 (411,516,711) 21,457,396 4,138,573 908,933 143,920,374 53,058 703 2,412 60,968 170,542,417 Upto 1 Day 5,225,119 12,470,460 32,577,225 1,355,971 51,628,775 (3,756,114) 14,521,672 4,138,573 19,205,698 866,310 7,842,269 318,350 4,217 14,473 961,099 47,872,661 Upto 7 Days 5,225,119 110,411 17,472,856 1,413,642 24,222,028 50,750,791 14,521,672 53,240,917 1,098,195 4,767,501 371,409 4,920 16,885 951,320 74,972,819 Upto 14 Days 5,225,120 404,595 29,542,966 3,715,092 38,887,773 46,682,121 14,521,672 39,808,862 2,704,893 24,972,247 848,934 11,246 38,595 2,663,445 85,569,894 Upto 1 month 12,871,833 29,421,284 6,102,573 48,395,690 31,857,277 43,516,511 3,006,392 28,834,181 261,616 30,988 72,366 4,530,913 80,252,967 Upto 2 months Over 3 to 6 months 4,496,541 20,294,930 3,994,583 28,786,054 46,761,041 19,838,225 28,341,656 24,703,611 115,691 30,988 72,366 2,444,558 75,547,095 4,496,541 20,572,571 10,462,514 35,531,626 52,231,665 9,204,387 1,159,534 71,147,499 357,132 61,186 217,099 5,616,454 87,763,291 Rupees in ‘000 Upto 3 months 27,133,880 9,404,967 36,538,847 (411,827) 4,320,420 21,102,254 695,914 90,172 433,828 9,484,432 36,127,020 Over 6 months to 1 Years 5,496,273 575,195 6,071,468 34,449,851 18,128,237 20,258,507 1,277,800 154,673 702,102 40,521,319 Over 1 to 2 Years Current and Savings deposits have been classified under maturity upto one day as these do not have any contractual maturity. Share capital Reserves Unappropriated profit Deficit on revaluation of investments Non-Controlling Interest Net assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Deferred Tax liabilities Other liabilities Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Fixed assets Intangible assets Deferred tax assets Other assets Assets Total 2018 627,074 6,421,521 564,506 7,613,101 65,112,011 49,530,621 21,295,023 1,082,355 125,688 691,425 72,725,112 Over 2 to 3 years 107,610 11,814,447 850,936 12,772,993 58,516,930 7,787,206 60,784,958 1,493,090 119,582 1,105,087 71,289,923 Over 3 to 5years 326,380 11,336,798 7,000,000 18,663,178 56,872,153 7,770,924 66,268,129 1,485,685 10,593 75,535,331 Over 5 to 10 years 7,000,000 3,807 7,003,807 16,027,751 1,492,055 16,667,969 4,867,364 4,170 23,031,558 Above 10 years Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2019 ANNUAL REPORT 2019 365
367. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 47.3.2 Maturities of assets and liabilities based on expected maturities 2019 Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years Above 10 Years Rupees in ‘000 Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Operating fixed assets Intangible assets Deferred tax assets Other assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Deferred tax liabilities Other liabilities 92,193,877 15,414,833 223,689,325 229,667,072 493,775,346 23,663,521 800,532 46,910,457 1,126,114,963 92,193,877 15,414,833 53,211,438 9,882,951 71,410,519 460,086 13,345 5,541,348 248,128,397 67,361,553 142,233 91,038,670 1,094,290 26,684 11,743,352 171,406,782 31,204,048 13,209,287 89,358,276 1,364,771 40,026 11,332,940 146,509,348 71,912,286 1,958,724 54,941,144 2,682,055 80,054 16,371,033 147,945,296 44,326,455 33,964,982 5,205,811 160,106 719,468 84,376,822 46,560,745 42,039,856 4,988,921 160,106 647,574 94,397,202 8,866,106 61,107,183 1,993,218 320,211 544,649 72,831,367 101,048,351 32,294,942 769,590 10,093 134,122,976 3,672,220 17,619,774 5,104,779 26,396,773 17,186,807 42,047,390 932,568,765 14,000,000 3,008,451 54,522,604 17,186,807 1,213,389 119,374,865 250,704 8,481,728 21,911,504 68,589,546 501,410 13,893,668 11,765,032 54,872,846 752,113 14,334,178 214,435 77,557,953 1,504,224 11,515,559 646,184 122,536,448 2,925,534 872,916 59,556,140 2,852,084 2,532,447 94,176,651 509,542 2,891,483 168,674,435 7,000,000 10,311 167,229,881 7,000,000 - 1,063,334,017 146,507,493 104,896,128 81,724,169 90,792,171 126,108,166 63,281,140 97,218,640 178,576,229 174,229,881 Net assets 62,780,946 101,620,904 66,510,654 64,785,179 57,153,125 (41,731,344) 31,116,062 (24,387,273) (44,453,253) (147,833,108) Share capital Reserves Unappropriated profit Surplus on revaluation of assets - net Non-controlling interest 12,861,116 18,231,980 21,117,202 9,400,835 1,169,813 62,780,946 Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years 2018 Total Over 5 to 10 Years Above 10 Years Rupees in ‘000 Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Fixed assets Intangible assets Deferred tax assets Other assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated Sukuk Deferred Tax liabilities Other liabilities 65,022,412 8,277,146 184,814,600 127,115,376 512,564,522 13,228,398 644,956 868,024 29,215,973 941,751,407 65,022,412 8,277,146 112,255,476 5,578,332 81,961,222 1,591,752 21,086 71,995 4,636,831 279,416,252 63,354,736 31,348,049 87,847,815 377,307 61,976 144,733 6,975,470 190,110,086 9,204,388 1,159,534 103,062,351 357,132 61,186 217,098 5,616,453 119,678,142 4,320,420 54,418,548 695,914 90,172 434,198 9,484,433 69,443,685 18,128,237 20,258,507 1,277,800 154,673 702,102 40,521,319 49,530,621 21,295,023 1,082,355 125,688 691,425 72,725,112 7,787,206 60,784,958 1,493,090 119,582 1,105,087 71,289,923 7,770,924 66,268,129 1,485,685 10,593 75,535,331 1,492,053 16,667,969 4,867,363 4,172 23,031,557 23,750,543 36,407,811 785,444,592 14,000,000 38,571,522 898,174,468 23,750,543 13,481,832 125,678,932 6,652,805 169,564,112 17,368,374 86,607,369 10,056,792 114,032,535 4,496,541 54,888,366 10,462,515 69,847,422 75,663,743 9,404,967 85,068,710 74,127,863 575,195 74,703,058 627,074 59,084,393 564,506 60,275,973 107,610 95,325,715 850,936 96,284,261 326,380 214,068,211 7,000,000 221,394,591 7,000,000 3,806 7,003,806 Net assets 43,576,939 Share capital Reserves Unappropriated profit Deficit on revaluation of investments Non-controlling interest 11,691,924 15,185,565 15,738,899 (45,883) 1,006,434 43,576,939 109,852,140 76,077,551 49,830,720 (15,625,025) (34,181,739) 12,449,139 (24,994,338) (145,859,260) 16,027,751 Regarding behaviour of non-maturity deposits (non-contractual deposits), the Holding company has carried out a behavioural study using the Value at Risk (VaR) methodology based on 5 years data. On the basis of its findings, 28.7% of current accounts and 19.3% of saving accounts are bucketed into 'Upto 1-Year maturity' whereas, 71.3% of current accounts and 80.7% of savings accounts are bucketed into maturities of above 1-Year. 366 MEEZAN BANK LIMITED
368. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 47.4 Operational risk The Group uses Basic Indicator Approach (BIA) for assessing the capital charge for operational risk. Under BIA the capital charge is calculated by multiplying average positive annual gross income of the Holding company over past three years with 15% as per guidelines issued by SBP under Basel II. To reduce losses arising from operational risk, the Holding company has strengthened its risk management framework by developing polices, strategies, guidelines and manuals. It also includes set up of functions like operational risk management, prevention of fraud and forgery and information security function, defining responsibilities of individuals, implementing four eye principle, enhancing security measures, improving efficiency and effectiveness of operations, outsourcing and improving quality of human resources through trainings and development. 48 PROFIT / (LOSS) DISTRIBUTION TO DEPOSITORS' POOLS AND SPECIFIC POOLS 48.1 The Holding company managed following general and specific pools during the year: 2019 General Remunerative (Savings and Fixed) Depositors' Pools Profit Rate and weightage announcement period Profit rate return earned Average Profit Sharing Ratio of Mudarib Mudarib Fee Profit rate return Percentage of distributed to Mudarib remunerative Share deposits transferred (Savings and through Hiba Fixed) - Average Rupees in ‘000 PKR Pool USD Pool GBP Pool EUR Pool Monthly Monthly Monthly Monthly 11.62% 4.63% 2.21% 1.06% 50% 75% 90% 90% 25,610,675 1,238,082 44,400 11,967 Amount of Mudarib Share transferred through Hiba to remunerative deposits Rupees in ‘000 7.88% 1.16% 0.22% 0.11% 35% - 8,987,680 - 2018 General Remunerative (Savings and Fixed) Depositors' Pools Profit Rate and weightage announcement period Profit rate return earned Average Profit Sharing Ratio of Mudarib Mudarib Fee Profit rate return Percentage of distributed to Mudarib remunerative Share deposits transferred (Savings and through Hiba Fixed) - Average Rupees in ‘000 PKR Pool USD Pool GBP Pool EUR Pool Monthly Monthly Monthly Monthly 7.06% 3.81% 1.18% 0.17% 50% 75% 90% 90% 13,314,826 720,723 20,169 1,637 Amount of Mudarib Share transferred through Hiba to remunerative deposits Rupees in ‘000 3.91% 0.95% 0.12% 0.02% 10% - 1,388,628 - 2019 Percentage of Mudarib Investment Profit rate return Share ratio distributed transferred through Hiba Amount of Mudarib Share transferred through Hiba to remunerative deposits Profit Rate and weightage announcement period Profit rate return earned Profit Sharing Ratio Monthly 7.74% -* -* 2.06% N/A N/A Inter Bank Musharaka / Mudaraba borrowing Pool As required 14.88% - 5.24% -* -* 13.75% - 4.50% N/A N/A Special Sharikah Certificate Musharaka / Mudaraba borrowing Pool As required 16.85% - 5.24% -* -* 14.85% - 4.00% N/A N/A Specific Pools Islamic Export Refinance (IERS) Musharaka Pool * The profit sharing ratio and the investment ratio varies on case to case basis. ANNUAL REPORT 2019 367
369. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 2018 Percentage of Mudarib Investment Profit rate return Share ratio distributed transferred through Hiba Amount of Mudarib Share transferred through Hiba to remunerative deposits Profit Rate and weightage announcement period Profit rate return earned Profit Sharing Ratio Monthly 5.16% -* -* 2.19% N/A N/A Inter Bank Musharaka / Mudaraba borrowing Pool As required 11.46% - 5.24% -* -* 10.70% - 5.60% N/A N/A Special Sharikah Certificate Musharaka / Mudaraba borrowing Pool As required 15.55% - 5.24% -* -* 10.80% - 3.50% N/A N/A Specific Pools Islamic Export Refinance (IERS) Musharaka Pool * The profit sharing ratio and the investment ratio varies on case to case basis. 48.2 Following weightages have been assigned to different major products under the General pools during the year: Percentage to Total Mudaraba based Deposits 48.3 Maximum Weightage Minimum Weightage Maximum Weightage Minimum Weightage 2019 2019 2018 2018 2019 2018 PKR Pool Saving Accounts Meezan Bachat Account Karobari Munafa Account Certificate of Islamic Investment Meezan Aamdan Certificate 21.83% 17.63% 9.29% 16.23% 7.15% 24.05% 18.69% 10.11% 3.07% 7.80% 0.65 0.78 1.00 1.27 1.34 0.39 0.39 0.39 0.45 0.70 0.67 0.88 1.36 1.72 1.72 0.57 0.57 0.57 0.70 1.19 USD Pool Saving Accounts Certificate of Islamic Investment 4.12% 2.37% 4.64% 2.33% 0.45 1.35 0.45 0.77 0.45 1.35 0.45 1.35 GBP Pool Saving Accounts 0.41% 0.49% 0.27 0.27 0.27 0.27 EUR Pool Saving Accounts 0.21% 0.27% 0.27 0.27 0.27 0.27 Allocation of Income and Expenses to Depositors' Pools Following are material items of revenues, expenses, gains and losses 2019 2018 Rupees in ‘000 Profit / return earned on islamic financing and related assets, investments and placements Other Income (including other charges and interpool income) Directly related costs attributable to pool 368 MEEZAN BANK LIMITED 88,429,444 5,267,122 (1,844,037) 46,724,070 2,717,152 (1,431,931)
370. Notes to and forming part of the Consolidated Financial Statements For the year ended December 31 , 2019 49 GENERAL Comparative information has been re-classified, re-arranged or additionally incorporated in these consolidated financial statements, wherever necessary to facilitate comparison and better presentation. 50 NON-ADJUSTING EVENT 50.1 The Board of Directors of the Holding company in their meeting held on February 12, 2020 has announced final cash dividend of Rs 2 per share (20%). The consolidated financial statements for the year ended December 31, 2019, do not include the effect of this appropriation which will be accounted for in the consolidated financial statements for the year ending December 31, 2020. 50.2 On January 09, 2020, the Holding company has issued further Tier II capital of Rs 4 billion, in form of privately placed, unsecured and sub-ordinated Sukuk. The Sukuk carry an expected profit rate of 6 month KIBOR plus 0.9% payable on semi-annual basis. The Sukuk has a maturity of 10 years and the Sukuk is fully redeemable at the maturity. The sukuk has been rated AA (Double AA) by VIS Credit Rating Company Limited. 51 DATE OF AUTHORISATION These consolidated financial statements were authorised for issue on February 12, 2020 by the Board of Directors of the Holding company. Riyadh S. A. A. Edrees Chairman Irfan Siddiqui President & CEO Faisal A. A. A. Al-Nassar Director Noorur Rahman Abid Director Shabbir Hamza Khandwala Chief Financial Officer ANNUAL REPORT 2019 369
371. Consolidated Statement Showing Written-off Financing or any Other Financial Relief Of Rupees 500 ,000 or Above (Annexure 1) During the year ended December 31, 2019 Rupees in ‘000 Consolidated Statement showing written-off financing or any other financial relief of rupees 500,000 and above during the year ended December 31, 2019. S. Name and No. address of the borrower 1 2 Outstanding liabilities as at January 1, 2019 CNIC No. Father’s / Husband’s Name Principal Profit Others 3 4 5 6 7 1. Mian Muhammad 35202-3392038-3 Aslam Total (5+6+7) 8 Principal written-off Profit written-off 9 10 Other Financial Relief 11 Total (9+10+11) 12 Mian Feroz ud din 705 5,988 230 6,923 - 5,671 230 5,901 34101-0264801-5 Muhammad Hassan 6,803 7,048 430 14,281 - 7,283 430 7,713 Babar Ali Bhatti 35202-2848882-3 Muhammad Shafi 2,538 4,231 214 6,983 - 4,426 214 4,640 Shabir Ahmed Desai 42301-2624689-9 Dawood Moosa Desai 42301-1697255-1 Muhammad Sadique Desai 42301-2624784-9 Shahid Mahmood Desai 42301-2625734-9 Muhammad Amin Desi 42301-8645590-1 Haji Moosa Desai 54,034 4,127 - 58,161 34,782 4,127 - 38,909 Shabir Ahmed Desai 42301-2624689-9 Dawood Moosa Desai 42301-1697255-1 Muhammad Sadique Desai 42301-2624784-9 Shahid Mahmood Desai 42301-2625734-9 Muhammad Amin Desi 42301-8645590-1 Haji Moosa Desai 33,253 2,717 - 35,970 - 2,717 - 2,717 House # 149, Block G, State Enterprise Officers Co-operative Housing Scheme, Margzar Colony, Lahore 2. Muhammad Ramzan House # 326 Block J-1, Johar Town, Lahore 3. House # 176, Block E, Punjab Small Industries Employees Co-operative Housing Society, Lahore 4. D.S.I. Corporation (Private) Limited Plot No. 50, Sector 7-A, Korangi Industrial Area, Karachi 5. D.S.I. Pakistan (Private) Limited Plot No. 50, Sector 7-A, Korangi Industrial Area, Karachi 370 MEEZAN BANK LIMITED
372. Consolidated Statement Showing Written-off Financing or any Other Financial Relief Of Rupees 500 ,000 or Above (Annexure 1) During the year ended December 31, 2019 Rupees in ‘000 S. Name and No. address of the borrower 1 2 Outstanding liabilities as at January 1, 2019 CNIC No. Father’s / Husband’s Name Principal Profit Others 3 4 5 6 7 Total (5+6+7) 8 Fayyaz Ahmed Shaikh 130,000 808 - 227,333 24,919 874 6. Prima Marine Oil & Faisal Fayyaz Lubricants Shaikh (Private) Limited 42301-0942295-7 Shehla Faisal Khayban-e-Ittehad 42301-0896563-2 Road, Phase VI, Muslim Commercial Area, Defence Housing Authority, Karachi Principal written-off Profit written-off Other Financial Relief 11 Total (9+10+11) 9 10 130,808 - 1,717 - 1,717 253,126 34,782 25,941 874 61,597 12 Faisal Fayyaz Shaikh ANNUAL REPORT 2019 371
374. ADDITIONAL INFORMATION ADDITIONAL 01 Pattern of Shareholding 01 Category of Shareholders 01 Notice of Annual General Meeting (AGM) 374 Pattern of Shareholding 376 Categories of Shareholders 01 Correspondent Banking Network 377 Correspondent Banking Network 01 Branch Network 383 Branch Network 01 Glossary 400 Glossary 01 Dividend Mandate Form 409 Notice of Annual General Meeting (AGM) 01 Proxy Form 415 Dividend Mandate Form 01 Proxy Form (Urdu) 417 Proxy Form 01 Jama Punji Advertisement INFORMATION
375. Pattern of Shareholding As at December 31 , 2019 No. of Shareholders 539 349 254 592 194 102 62 46 36 28 20 15 15 16 8 11 7 4 8 8 10 7 5 7 2 2 5 7 4 2 4 3 4 3 1 3 4 1 1 1 2 4 1 1 3 2 1 4 1 3 1 1 1 1 3 2 2 1 1 2 1 1 2 1 1 2 1 2 1 1 2 1 1 1 1 1 2 1 374 MEEZAN BANK LIMITED 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 190001 195001 205001 215001 220001 230001 235001 240001 250001 255001 260001 270001 280001 285001 290001 295001 310001 315001 320001 325001 340001 345001 355001 385001 390001 400001 420001 460001 485001 500001 510001 530001 535001 545001 550001 555001 640001 655001 No. of Shares To 100 500 1000 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 75000 80000 85000 90000 95000 100000 105000 110000 115000 120000 125000 130000 135000 140000 145000 150000 155000 160000 165000 170000 175000 180000 185000 195000 200000 210000 220000 225000 235000 240000 245000 255000 260000 265000 275000 285000 290000 295000 300000 315000 320000 325000 330000 345000 350000 360000 390000 395000 405000 425000 465000 490000 505000 515000 535000 540000 550000 555000 560000 645000 660000 ‘Shares held’ Percentage 10,034 104,421 193,949 1,501,956 1,410,332 1,280,560 1,115,233 1,053,654 979,071 919,794 756,335 636,549 716,530 844,115 461,351 690,086 479,079 293,085 624,010 663,250 882,972 650,659 489,680 716,017 214,340 228,181 587,853 854,690 508,459 267,000 550,516 424,570 592,200 458,960 159,275 488,445 664,991 175,000 178,000 180,440 386,210 792,426 206,873 217,675 669,500 468,400 236,414 972,149 253,216 774,125 263,000 272,500 283,360 285,300 878,498 599,236 624,552 315,906 323,500 654,000 344,500 350,000 715,000 388,467 391,050 807,366 420,682 928,060 486,306 500,786 1,022,890 532,739 536,005 549,714 553,446 556,784 1,286,767 657,737 0.0008% 0.0081% 0.0151% 0.1168% 0.1097% 0.0996% 0.0867% 0.0819% 0.0761% 0.0715% 0.0588% 0.0495% 0.0557% 0.0656% 0.0359% 0.0537% 0.0372% 0.0228% 0.0485% 0.0516% 0.0687% 0.0506% 0.0381% 0.0557% 0.0167% 0.0177% 0.0457% 0.0665% 0.0395% 0.0208% 0.0428% 0.0330% 0.0460% 0.0357% 0.0124% 0.0380% 0.0517% 0.0136% 0.0138% 0.0140% 0.0300% 0.0616% 0.0161% 0.0169% 0.0521% 0.0364% 0.0184% 0.0756% 0.0197% 0.0602% 0.0204% 0.0212% 0.0220% 0.0222% 0.0683% 0.0466% 0.0486% 0.0246% 0.0252% 0.0509% 0.0268% 0.0272% 0.0556% 0.0302% 0.0304% 0.0628% 0.0327% 0.0722% 0.0378% 0.0389% 0.0795% 0.0414% 0.0417% 0.0427% 0.0430% 0.0433% 0.1001% 0.0511%
376. No . of Shareholders 1 1 1 1 1 1 1 1 1 1 2 2 1 1 1 1 2 1 1 1 2 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 2,534 From 665001 670001 710001 740001 750001 805001 850001 880001 895001 900001 910001 935001 960001 975001 1005001 1010001 1035001 1050001 1060001 1085001 1095001 1160001 1165001 1205001 1215001 1230001 1255001 1290001 1320001 1360001 1450001 1460001 1465001 1495001 1560001 1595001 1650001 1775001 1825001 1845001 1940001 1995001 2015001 2115001 2300001 2350001 2685001 2725001 2795001 2810001 2870001 2910001 3845001 4020001 4065001 4125001 4465001 4560001 5155001 5205001 5495001 5990001 6055001 7945001 9115001 10195001 10555001 10595001 10950001 11425001 14125001 16695001 30155001 119915001 385830001 453335001 No. of Shares To 670000 675000 715000 745000 755000 810000 855000 885000 900000 905000 915000 940000 965000 980000 1010000 1015000 1040000 1055000 1065000 1090000 1100000 1165000 1170000 1210000 1220000 1235000 1260000 1295000 1325000 1365000 1455000 1465000 1470000 1500000 1565000 1600000 1655000 1780000 1830000 1850000 1945000 2000000 2020000 2120000 2305000 2355000 2690000 2730000 2800000 2815000 2875000 2915000 3850000 4025000 4070000 4130000 4470000 4565000 5160000 5210000 5500000 5995000 6060000 7950000 9120000 10200000 10560000 10600000 10955000 11430000 14130000 16700000 30160000 119920000 385835000 453340000 ‘Shares held’ Percentage 666,317 675,000 710,726 744,779 752,472 808,000 850,889 882,988 899,971 903,591 1,825,508 1,872,621 962,512 975,419 1,006,512 1,011,500 2,074,809 1,054,082 1,064,885 1,088,701 2,200,000 1,162,810 1,168,227 2,416,000 1,215,358 1,231,500 1,259,900 1,293,090 1,323,000 1,364,050 1,453,955 1,461,846 1,466,520 1,500,000 1,560,772 1,600,000 1,654,505 1,776,064 3,652,242 1,850,000 1,944,000 2,000,000 2,017,191 2,117,500 2,304,052 2,350,150 2,689,843 2,729,394 2,800,000 2,813,135 2,871,088 2,914,067 3,848,083 4,023,930 4,068,120 8,254,689 4,467,650 4,562,900 5,157,601 5,205,500 5,500,000 5,994,100 6,056,282 7,946,899 9,119,097 10,196,620 10,560,000 21,191,732 10,953,697 11,429,097 14,127,821 16,698,855 30,159,000 119,916,248 385,833,481 453,337,898 0.0518% 0.0525% 0.0553% 0.0579% 0.0585% 0.0628% 0.0662% 0.0687% 0.0700% 0.0703% 0.1419% 0.1456% 0.0748% 0.0758% 0.0783% 0.0786% 0.1613% 0.0820% 0.0828% 0.0847% 0.1711% 0.0904% 0.0908% 0.1879% 0.0945% 0.0958% 0.0980% 0.1005% 0.1029% 0.1061% 0.1130% 0.1137% 0.1140% 0.1166% 0.1214% 0.1244% 0.1286% 0.1381% 0.2840% 0.1438% 0.1512% 0.1555% 0.1568% 0.1646% 0.1791% 0.1827% 0.2091% 0.2122% 0.2177% 0.2187% 0.2232% 0.2266% 0.2992% 0.3129% 0.3163% 0.6418% 0.3474% 0.3548% 0.4010% 0.4047% 0.4276% 0.4661% 0.4709% 0.6179% 0.7090% 0.7928% 0.8211% 1.6477% 0.8517% 0.8887% 1.0985% 1.2984% 2.3450% 9.3239% 30.000% 35.2487% 1,286,111,622 100.0000 ANNUAL REPORT 2019 375
377. Categories of Shareholders For the year ended December 31 , 2019 Particulars Number of Shareholders Shares held Percentage Number of Shareholders 2019 Shares held Percentage 2018 Directors, Chief Executive, their spouse and minor children 8 14,094,533 1.10% 4 9,179,415 0.79% Associated Companies, undertakings and related parties 9 972,400,110 75.61% 8 916,295,328 78.37% 12 3,081,696 0.24% 5 1,099,497 0.09% 8 27,609,509 2.15% 10 30,928,748 2.65% 56 36,914,564 2.87% 52 39,269,329 3.36% 2,054 153 49,948,238 8,173,497 3.88% 0.64% 1,833 104 40,807,331 3,261,324 3.49% 0.28% 234 173,889,475 13.52% 136 128,351,412 10.98% 2,534 1,286,111,622 100.000% 2,152 1,169,192,384 100.000% Banks, Development Financial Institutions and Non Banking Finance Companies Insurance Companies Mudarabah and Mutual Funds General Public a.Local b.Foreign Others Total Additional Information as at December 31, 2019 Particulars Number of Shareholders Shares held Percentage Number of Shareholders 2019 Associated Companies & Shareholders with more than 10% shareholding Noor Financial Investment Co, Kuwait Pakistan Kuwait Investment Co. (Pvt.) Ltd. Islamic Development Bank, Jeddah CDC Trustee Meezan Islamic Fund CDC Trustee Meezan Balanced Fund CDC Trustee Meezan Dadicated Equity Fund CDC Trustee Meezan Asset Allocation Fund CDC Trustee Al Meezan Mutual Fund CDC Trustee KSE Meezan Index Fund Shares held Percentage 2018 1 1 1 1 1 1 1 1 1 453,337,898 385,833,481 119,916,248 9,119,097 1,064,885 536,005 553,446 1,364,050 675,000 35.25% 30.00% 9.32% 0.71% 0.08% 0.04% 0.04% 0.11% 0.05% - 1 1 1 1 1 1 1 1 446,432,362 350,757,710 109,014,771 6,950,134 889,350 430,550 488,951 1,331,500 - 38.18% 30.00% 9.32% 0.59% 0.08% 0.03% 0.04% 0.11% - Mr. Noorur Rahman Abid Ms. Nausheen Ahmad Mr. Atif Azim Mr. Irfan Siddiqui *Mr. Ariful Islam **Ms.Laila M.S.A.S.A.S. Abbas 1 1 1 1 - 3,665,262 550 500 4,127,490 - 0.28% 0.00% 0.00% 0.32% - 1 1 1 1 3,332,057 3,752,264 2,094,593 501 0.28% 0.00% 0.00% 0.32% 0.18% 0.00% Executives 23 3,273,187 0.25% 21 910,329 0.08% 310 241,495,244 18.78% 203 199,648,986 17.08% 2,188 2,534 61,149,279 1,286,111,622 4.75% 100.00% 1,916 2,152 43,158,326 1,169,192,384 3.69% 100.00% Directors, Chief Executive, their spouse and minor children Public Sector Companies, Corporations, Banks, DFI's, NBFC's, Insurance Companies, Mudarabah, Mutual Funds and other Organizations General Public *Mr. Ariful Islam DCEO, has resigned from directorship on March 1, 2019 **Ms.Laila M.S.A.S.A.S. Abbas resigned from directorship on February 19, 2019 376 MEEZAN BANK LIMITED
378. Correspondent Banking Network Bank Country AFGHAN UNITED BANK AFGHANISTAN BANK ALFALAH LIMITED (AFGHANISTAN - KABUL BRANCH) AFGHANISTAN ISLAMIC BANK OF AFGHANISTAN (FORMERLY BAKHTAR BANK) AFGHANISTAN BANK OF AMERICA, N.A. SYDNEY AUSTRALIA JPMORGAN CHASE BANK, N.A., SYDNEY BRANCH AUSTRALIA HSBC BANK AUSTRALIA LIMITED AUSTRALIA INDUSTRIAL AND COMMERCIAL BANK OF CHINA SYDNEY BRANCH AUSTRALIA BANK OF SYDNEY LTD AUSTRALIA NATIONAL AUSTRALIA BANK LIMITED AUSTRALIA ALLGEMEINE SPARKASSE OBEROESTERREICH BANK AKTIENGESELLSCHAFT AUSTRIA UNICREDIT BANK AUSTRIA AG AUSTRIA COMMERZBANK AG, NIEDERLASSUNG WIEN WIEN AUSTRIA DEUTSCHE BANK AKTIENGESELLSCHAFT FILIALE WIEN (VIENNA BRANCH) AUSTRIA ERSTE GROUP BANK AG AUSTRIA HYPO VORARLBERG BANK AG AUSTRIA OBERBANK AG AUSTRIA RAIFFEISEN BANK INTERNATIONAL AG AUSTRIA RAIFFEISENLANDESBANK OBEROESTERREICH AKTIENGESELLSCHAFT AUSTRIA AL BARAKA ISLAMIC BANK B.S.C CLOSED BAHRAIN BANK AL HABIB LIMITED BAHRAIN BMI BANK BSC (C) BAHRAIN ITHMAAR BANK B.S.C. (C) BAHRAIN GULF INTERNATIONAL BANK, B.S.C. BAHRAIN WOORI BANK, MANAMA BAHRAIN TURKIYE IS BANKASI A.S. BAHRAIN BRANCH BAHRAIN JS BANK LIMITED BAHRAIN KHALEEJI COMMERCIAL BANK B.S.C. (C) BAHRAIN STANDARD CHARTERED BANK BAHRAIN UNITED BANK LIMITED BAHRAIN BANK ALFALAH LIMITED (BANGLADESH - DHAKA BRANCH) BANGLADESH SONALI BANK LIMITED BANGLADESH CITIBANK N.A. BANGLADESH EASTERN BANK LTD. BANGLADESH EXPORT IMPORT BANK OF BANGL ADESH LTD BANGLADESH THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED BANGLADESH WOORI BANK, DHAKA BANGLADESH ISLAMI BANK BANGLADESH LTD BANGLADESH INTERNATIONAL FINANCE INVESTMENT AND COMMERCE BANK LTD. BANGLADESH MERCANTILE BANK LIMITED BANGLADESH NATIONAL BANK LIMITED BANGLADESH Bank Country STANDARD CHARTERED BANK BANGLADESH SHAHJALAL ISLAMI BANK LIMITED BANGLADESH SOCIAL ISLAMI BANK LIMITED BANGLADESH UNION BANK LIMITED BANGLADESH BELARUSBANK BELARUS MINSK TRANSIT BANK BELARUS BANK OF AMERICA MERRILL LYNCH INTERNATIONAL DESIGNATED ACTIVITY COMPANY, BRUSSELS BRANCH BELGIUM BYBLOS BANK EUROPE S.A. BELGIUM COMMERZBANK AG,THE,BRUSSELS BRANCH BELGIUM DEUTSCHE BANK A.G. BELGIUM BELFIUS BANK SA/NV BELGIUM HABIB BANK LTD. BELGIUM KBC BANK NV BELGIUM FIRST NATIONAL BANK OF BOTSWANA LIMITED BOTSWANA BANCO BRADESCO S.A. BRAZIL BANCO BRADESCO SA (FORMERLY KIRTON BANK S.A. BANCO MULTIPLO) BRAZIL ITAU UNIBANCO S/A (SUCCESSOR OF BANCO ITAU BBA S.A.) BRAZIL DEUTSCHE BANK S.A. - BANCO ALEMAO BRAZIL EUROBANK BULGARIA AD BULGARIA UNITED BULGARIAN BANK AD BULGARIA UNICREDIT BULBANK AD BULGARIA BANK OF AMERICA, NATIONAL ASSOCIATION, CANADA BRANCH CANADA BANK OF MONTREAL, THE CANADA JPMORGAN CHASE BANK, TORONTO BRANCH CANADA CANADIAN IMPERIAL BANK OF COMMERCE CANADA HABIB CANADIAN BANK CANADA HSBC BANK CANADA CANADA ROYAL BANK OF CANADA CANADA TORONTO-DOMINION BANK, THE CANADA ITAU CORPBANCA (FORMERLY BANCO ITAU CHILE) CHILE AGRICULTURAL BANK OF CHINA, THE CHINA BANK OF BEIJING CHINA BANK OF CHINA CHINA BANK OF GANZHOU CO.,LTD. CHINA BANK OF JINING CO.LTD CHINA BANK OF JIANGSU CO LTD CHINA JPMORGAN CHASE BANK (CHINA) COMPANY LIMITED CHINA CHINA CITIC BANK CHINA CITIBANK (CHINA) CO., LTD. CHINA COMMERZBANK AG CHINA BANK OF COMMUNICATIONS CHINA ZHEJIANG CHOUZHOU COMMERCIAL BANK CO.,LTD CHINA DEUTSCHE BANK (CHINA) CO. LTD. CHINA SKANDINAVISKA ENSKILDA BANKEN AB (PUBL), SHANGHAI BRANCH CHINA CHINA EVERBRIGHT BANK CHINA INDUSTRIAL BANK CO.,LTD. CHINA JIANGSU HAIAN RURAL COMMERCIAL BANK CO.,LTD CHINA HSBC BANK (CHINA) COMPANY LIMITED CHINA ANNUAL REPORT 2019 377
379. Bank Country HUA XIA BANK CHINA INDUSTRIAL BANK OF KOREA (CHINA) LIMITED CHINA INDUSTRIAL AND COMMERCIAL BANK OF CHINA CHINA KOREA DEVELOPMENT BANK, THE CHINA LAISHANG BANK CO., LTD (FORMERLY LAIWU CITY COMMERCIAL BANK CO., LTD) CHINA MIZUHO BANK (CHINA),LTD. CHINA JINAN RURAL COMMERCIAL BANK CO.,LTD(FORMERLY SHANDONG JINAN RUNFENG RURAL COOPERATIVE BANK) CHINA STANDARD CHARTERED BANK (CHINA) LIMITED CHINA SHENGJING BANK CO.,LTD CHINA WEIFANG RURAL COMMERCIAL BANK CO., LTD CHINA BANK OF WENZHOU (FORMERLY WENZHOU CITY COMMERCIAL BANK) CHINA YANTAI BANK CO., LTD. CHINA QISHANG BANK CHINA ZHEJIANG MINTAI COMMERCIAL BANK CHINA BANK OF CYPRUS PUBLIC COMPANY LIMITED CYPRUS HELLENIC BANK PUBLIC COMPANY LTD. CYPRUS UNICREDIT BANK CZECH REPUBLIC AND SLOVAKIA, A.S. CZECHIA CESKOSLOVENSKA OBCHODNI BANKA, A.S. CZECHIA CITIBANK EUROPE PLC, ORGANIZACNI SLOZKA CZECHIA COMMERZBANK AG CZECHIA KOMERCNI BANKA A.S. CZECHIA HSBC FRANCE, POBOCKA PRAHA CZECHIA DANSKE BANK A/S DENMARK NORDEA DANMARK, FILIAL AF NORDEA BANK ABP, FINLAND DENMARK RINGKJOEBING LANDBOBANK A/S (FORMER NORDJYSKE BANK) DENMARK RINGKJOBING LANDBOBANK A/S DENMARK SKJERN BANK DENMARK SYDBANK A/S DENMARK BANK OF ALEXANDRIA S A E EGYPT CITIBANK CAIRO EGYPT HSBC BANK EGYPT S.A.E EGYPT EMIRATES NATIONAL BANK OF DUBAI SAE (FORMERLY BNP PARIBAS SAE,EGYPT) EGYPT MASHREQ BANK EGYPT AWASH INTERNATIONAL BANK S.C. ETHIOPIA COMMERCIAL BANK OF ETHIOPIA ETHIOPIA DASHEN BANK S.C. ETHIOPIA DANSKE BANK A/S, FINLAND BRANCH FINLAND SKANDINAVISKA ENSKILDA BANKEN FINLAND NORDEA BANK ABP FINLAND OP CORPORATE BANK PLC FINLAND BMCE BANK INTERNATIONAL PLC SUCCURSALE EN FRANCE FRANCE BNP-PARIBAS SA (FORMERLY BANQUE NATIONALE DE PARIS S.A.) FRANCE BYBLOS BANK EUROPE S.A. (PARIS BRANCH) FRANCE HSBC FRANCE (FORMERLY HSBC CCF) FRANCE CREDIT MUTUEL - CIC BANQUES FRANCE COMMERZBANK AG FRANCE DEUTSCHE BANK AG FRANCE NATIONAL BANK OF PAKISTAN FRANCE 378 MEEZAN BANK LIMITED Bank Country CREDIT DU NORD FRANCE SUMITOMO MITSUI BANKING CORPORATION EUROPE LIMITED FRANCE SOCIETE GENERALE FRANCE UNION DE BANQUES ARABES ET FRANCAISES FRANCE COMMERZBANK AG GERMANY SPARKASSE KOELNBONN (FORMER STADTSPARKASSE KOELN) GERMANY DEUTSCHE BANK AG GERMANY SPARKASSE DORTMUND GERMANY SEB AB (PUBL.) FRANKFURT BRANCH GERMANY DZ BANK AG DEUTSCHE ZENTRALGENOSSENSCHAFTSBANK GERMANY LANDESBANK HESSENTHUERINGEN GIROZENTRALE GERMANY HAMBURG COMMERCIAL BANK AG GERMANY UNICREDIT BANK AG (HYPOVEREINSBANK) GERMANY BANKHAUS LAMPE KG GERMANY MAINZER VOLKSBANK E.G. GERMANY NATIONAL BANK OF PAKISTAN, FRANKFURT GERMANY NORDEA BANK ABP FRANKFURT BRANCH GERMANY VTB BANK (EUROPE) SE GERMANY SPARKASSE BREMEN AG, DIE GERMANY STANDARD CHARTERED BANK AG GERMANY LANDESBANK BADENWUERTTEMBERG GERMANY HSBC TRINKAUS UND BURKHARDT AG GERMANY VOLKSBANK BIELEFELD-GUETERSLOH EG GERMANY SPARKASSE WESTMUENSTERLAND GERMANY ABN AMRO BANK N.V. HONG KONG BRANCH HONG KONG AXIS BANK LIMITED HONG KONG INTESA SANPAOLO SPA HONG KONG HONG KONG BANK OF AMERICA, N.A. HONG KONG HONG KONG JPMORGAN CHASE BANK, N.A., HONG KONG BRANCH HONG KONG CITIBANK N.A. HONG KONG COMMERZBANK AG HONG KONG DEUTSCHE BANK AG HONG KONG DBS BANK (HONG KONG) LIMITED HONG KONG SKANDINAVISKA ENSKILDA BANKEN AB HONG KONG HABIB BANK ZURICH (HONG KONG) LIMITED HONG KONG HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, THE HONG KONG WOORI BANK, HONG KONG HONG KONG THE BANK OF NEW YORK MELLON, HONG KONG BRANCH HONG KONG KOOKMIN BANK, HONG KONG BRANCH HONG KONG KBC BANK NV, HONG KONG HONG KONG MASHREQBANK PSC., HONG KONG BRANCH HONG KONG NATIONAL BANK OF PAKISTAN HONG KONG HONG KONG WELLS FARGO BANK, N.A., HONG KONG BRANCH HONG KONG STANDARD CHARTERED BANK (HONG KONG) LIMITED HONG KONG SUMITOMO MITSUI BANKING CORPORATION HONG KONG INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LIMITED HONG KONG UNICREDIT BANK HUNGARY ZRT. HUNGARY CIB BANK LTD. (FORMERLY CENTRALEUROPEAN INT.BANK LTD.) HUNGARY COMMERZBANK (BUDAPEST) RT. HUNGARY K AND H BANK ZRT.(FORMERLY KERESKEDELMI ES HITELBANK RT) HUNGARY RAIFFEISEN BANK ZRT. HUNGARY AXIS BANK LIMITED INDIA BANK OF BARODA INDIA
380. Correspondent Banking Network Bank BANK OF CEYLON BANK OF AMERICA , N.A. MUMBAI JPMORGAN CHASE BANK, N.A., MUMBAI BRANCH CITIBANK N.A. DEUTSCHE BANK AG EMIRATES NBD BANK (P.J.S.C) HDFC BANK LIMITED JAMMU AND KASHMIR BANK LTD MASHREQ BANK PUNJAB NATIONAL BANK STATE BANK OF INDIA STANDARD CHARTERED BANK BANK MANDIRI (PERSERO), PT PT. BANK CIMB NIAGA, TBK. MUFG BANK, LTD. JAKARTA BRANCH PT BANK SYARIAH MANDIRI BANK CENTRAL ASIA JPMORGAN CHASE BANK, N.A., JAKARTA BRANCH DEUTSCHE BANK AG PT BANK HSBC INDONESIA PT.BANK WOORI SAUDARA INDONESIA 1906 TBK PT. BANK SBI INDONESIA STANDARD CHARTERED BANK RASHEED BANK AIB BANK INTESA SANPAOLO BANK IRELAND PLC BANK OF AMERICA MERRILL LYNCH INTERNATIONAL DESIGNATED ACTIVITY COMPANY BANK OF IRELAND CITIBANK EUROPE PLC DANSKE BANK A/S CREDITO EMILIANO S.P.A. UNIPOL BANCA SPA BANCO BPM SPA BANCA DI PISA E FORNACETTE CREDITO COOPERATIVO SOC.COOP.P.A. INTESA SANPAOLO SPA UBI BANCA S.P.A. BANK OF AMERICA MERRILL LYNCH INTERNATIONAL DESIGNATED ACTIVITY COMPANY, MILAN BRANCH CREDITO VALTELLINESE BPER BANCA S.P.A. COMMERZBANK AG BANCA DI CREDITO COOPERATIVO DI CARATE BRIANZA S.C.A.R.L. CREDIT AGRICOLE ITALIA S.P.A. DEUTSCHE BANK S.P.A. ICCREA BANCA - ISTITUTO CENTRALE DEL CREDITO COOPERATIVO HSBC FRANCE, MILAN BRANCH BANCA MONTE DEI PASCHI DI SIENA S.P.A. BANCA POPOLARE DI SONDRIO BANCA UBAE SPA UNICREDIT S.P.A. MUFG BANK, LTD. JPMORGAN CHASE BANK, N.A., TOKYO BRANCH CITIBANK N.A., TOKYO BRANCH COMMERZBANK AG TOKYO DEUTSCHE BANK AG Country INDIA INDIA INDIA INDIA INDIA INDIA INDIA INDIA INDIA INDIA INDIA INDIA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA INDONESIA IRAQ IRELAND IRELAND IRELAND IRELAND IRELAND IRELAND ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY JAPAN JAPAN JAPAN JAPAN JAPAN Bank WOORI BANK, TOKYO MIZUHO BANK, LTD. NATIONAL BANK OF PAKISTAN WELLS FARGO BANK, N.A., TOKYO BRANCH STANDARD CHARTERED BANK SUMITOMO MITSUI BANKING CORPORATION U.B.A.F. - UNION DE BANQUES ARABES ET FRANCAISES TOKYO BRANCH HOUSING BANK FOR TRADE AND FINANCE, THE JORDAN ISLAMIC BANK SB SBERBANK JSC GULF AFRICAN BANK LTD HABIB BANK AG ZURICH KCB BANK KENYA LIMITED JPMORGAN CHASE BANK, N.A., SEOUL BRANCH KOOKMIN BANK DAEGU BANK, LTD.,THE DEUTSCHE BANK AG, SEOUL BRANCH THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, SEOUL BRANCH WOORI BANK, SEOUL INDUSTRIAL BANK OF KOREA KEB HANA BANK KYONGNAM BANK NONGHYUP BANK (FORMERLY KNOWN AS NATIONAL AGRICULTURAL COOPERATIVE FEDERATION) NATIONAL BANK OF PAKISTAN, SEOUL BRANCH KOREA WELLS FARGO BANK, N.A., SEOUL BRANCH BUSAN BANK STANDARD CHARTERED BANK KOREA LIMITED SHINHAN BANK SUMITOMO MITSUI BANKING CORPORATION U.B.A.F.-UNION DE BANQUES ARABES ET FRANCAISES BOUBYAN BANK (K.S.C) BURGAN BANK K.P.S.C COMMERCIAL BANK OF KUWAIT KPSC,THE KUWAIT FINANCE HOUSE (K.S.C.) NATIONAL BANK OF KUWAIT S.A.K.P. LUMINOR BANK AS LATVIAN BRANCH BANK OF BEIRUT S.A.L. BYBLOS BANK S.A.L. LEBANON AND GULF BANK SAL SOCIETE GENERALE BANK AND TRUST S.A. THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED AMBANK (M) BERHAD BANK MUAMALAT MALAYSIA BERHAD (6175-W) BANK OF AMERICA, MALAYSIA BERHAD MUFG BANK (MALAYSIA) BERHAD J.P.MORGAN CHASE BANK BERHAD CIMB BANK BERHAD CITIBANK BERHAD CIMB ISLAMIC BANK BERHAD DEUTSCHE BANK (MALAYSIA) BERHAD HSBC BANK MALAYSIA BERHAD INDUSTRIAL AND COMMERCIAL BANK OF CHINA (MALAYSIA) BERHAD. Country JAPAN JAPAN JAPAN JAPAN JAPAN JAPAN JAPAN JORDAN JORDAN KAZAKHSTAN KENYA KENYA KENYA KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KOREA, REPUBLIC OF KUWAIT KUWAIT KUWAIT KUWAIT KUWAIT LATVIA LEBANON LEBANON LEBANON LUXEMBOURG MACAO MALAYSIA MALAYSIA MALAYSIA MALAYSIA MALAYSIA MALAYSIA MALAYSIA MALAYSIA MALAYSIA MALAYSIA MALAYSIA ANNUAL REPORT 2019 379
381. 380 Bank Country Bank Country MALAYAN BANKING BERHAD (MAYBANK) RHB BANK BERHAD AL RAJHI BANKING AND INVESTMENT CORPORATION (MALAYSIA) BHD STANDARD CHARTERED BANK MALAYSIA BERHAD CREDIT EUROPE BANK N.V. MALTA BRANCH HSBC BANK MALTA P.L.C. BANQUE ISLAMIQUE DE MAURITANIE AFRASIA BANK LIMITED HONGKONG AND SHANGHAI BANKING CORPORATION LTD., THE MAUBANK LTD BANCO DEL BAJIO, S.A. BANCO NACIONAL DE MEXICO S.A. BANK OF AMERICA, MEXICO S.A. TRADE AND DEVELOPMENT BANK OF MONGOLIA ATTIJARIWAFA BANK (FORMERLY BANQUE COMMERCIALE DU MAROC) BANQUE MAROCAINE DU COMMERCE EXTERIEUR SOCIETE GENERALE MAROCAINE DE BANQUES KANBAWZA BANK LTD BANK OF KATHMANDU LIMITED HIMALAYAN BANK LTD. NABIL BANK LIMITED NIC ASIA BANK LIMITED ABN AMRO BANK N.V. BANK OF AMERICA MERRILL LYNCH INTERNATIONAL DESIGNATED ACTIVITY COMPANY, AMSTERDAM BRANCH COMMERZBANK AG KANTOOR AMSTERDAM DEUTSCHE BANK AG HSBC FRANCE, AMSTERDAM BRANCH RABOBANK BANK OF NEW ZEALAND HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, THE NLB BANKA AD SKOPJE DANSKE BANK A/S DNB BANK ASA SKANDINAVISKA ENSKILDA BANKEN NORDEA BANK ABP, FILIAL I NORGE HSBC BANK OMAN S.A.O.G BANK DHOFAR (S.A.O.G.) BANK MUSCAT SAOG BANK NIZWA SOHAR INTERNATIONAL BANK S.A.O.G HABIB BANK OMAN ALLIED BANK LIMITED ALBARAKA BANK (PAKISTAN) LIMITED BANK ALFALAH LIMITED ASKARI BANK LIMITED BANK AL HABIB LIMITED BANKISLAMI PAKISTAN LIMITED THE BANK OF PUNJAB CITIBANK N.A. DEUTSCHE BANK AG, KARACHI BRANCH DUBAI ISLAMIC BANK PAKISTAN LIMITED FAYSAL BANK LIMITED FIRST WOMEN BANK LIMITED HABIB BANK LIMITED INDUSTRIAL AND COMMERCIAL BANK OF CHINA, KARACHI BRANCH JS BANK LIMITED BANK OF KHYBER, THE MCB ISLAMIC BANK LIMITED MALAYSIA MALAYSIA HABIB METROPOLITAN BANK LIMITED MCB BANK LIMITED NATIONAL BANK OF PAKISTAN SAMBA BANK LIMITED SILKBANK LIMITED STANDARD CHARTERED BANK (PAKISTAN) LIMITED SINDH BANK LIMITED SONERI BANK LIMITED SUMMIT BANK LTD UNITED BANK LIMITED BANK OF PALESTINE PLC ASIAN DEVELOPMENT BANK THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD - PHILIPPINE BRANCH ALIOR BANK SPOLKA AKCYJNA BANK BPH SA MBANK S.A. (FORMERLY BRE BANK S.A.) DEUTSCHE BANK POLSKA S.A. HSBC FRANCE (SPOLKA AKCYJNA) ODDZIAL W POLSCE BANK POLSKA KASA OPIEKI SA - BANK PEKAO SA SOCIETE GENERALE SPOLKA AKCYJNA ODDZIAL W POLSCE NOVO BANCO, SA CAIXA ECONOMICA MONTEPIO GERAL, CAIXA ECONOMICA BANCARIA, SA BARWA BANK THE COMMERCIAL BANK (Q.S.C) DOHA BANK MASHREQ BANK QATAR INTERNATIONAL ISLAMIC BANK QATAR NATIONAL BANK UNITED BANK LIMITED, DOHA UNICREDIT BANK SA CITIBANK EUROPE PLC, DUBLINSUCURSALA ROMANIA ALEF-BANK ASIAN-PACIFIC BANK VEB.RF HSBC BANK (RR) OOO BANK OF AMERICA, N.A. (MOSCOW) UNICREDIT BANK AO BANK OTKRITIE FINANCIAL CORPORATION (PUBLIC JOINTSTOCK COMPANY) CREDIT BANK OF MOSCOW (PUBLIC JOINT STOCK COMPANY) VTB BANK (PJSC) ALAWWAL BANK BANK AL BILAD BANK AL-JAZIRA BANQUE SAUDI FRANSI JPMORGAN CHASE BANK, N.A. RIYADH DEUTSCHE BANK AG, RIYADH BRANCH EMIRATES NBD PJSC GULF INTERNATIONAL BANK B.S.C., RIYADH AL INMA BANK ISLAMIC DEVELOPMENT BANK INTERNATIONAL ISLAMIC TRADE FINANCE CORPORATION (MEMBER ISLAMIC DEVELOPMENT BANK GROUP) NATIONAL BANK OF PAKISTAN NATIONAL COMMERCIAL BANK, THE RIYAD BANK AL RAJHI BANK SAUDI BRITISH BANK, THE ABN AMRO BANK N.V. SINGAPORE BRANCH PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PALESTINE, STATE OF PHILIPPINES MEEZAN BANK LIMITED MALAYSIA MALAYSIA MALTA MALTA MAURITANIA MAURITIUS MAURITIUS MAURITIUS MEXICO MEXICO MEXICO MONGOLIA MOROCCO MOROCCO MOROCCO MYANMAR NEPAL NEPAL NEPAL NEPAL NETHERLANDS NETHERLANDS NETHERLANDS NETHERLANDS NETHERLANDS NETHERLANDS NEW ZEALAND NEW ZEALAND NORTH MACEDONIA NORWAY NORWAY NORWAY NORWAY OMAN OMAN OMAN OMAN OMAN OMAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PAKISTAN PHILIPPINES POLAND POLAND POLAND POLAND POLAND POLAND POLAND PORTUGAL PORTUGAL QATAR QATAR QATAR QATAR QATAR QATAR QATAR ROMANIA ROMANIA RUSSIAN FEDERATION RUSSIAN FEDERATION RUSSIAN FEDERATION RUSSIAN FEDERATION RUSSIAN FEDERATION RUSSIAN FEDERATION RUSSIAN FEDERATION RUSSIAN FEDERATION RUSSIAN FEDERATION SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SAUDI ARABIA SINGAPORE
382. Correspondent Banking Network Bank Country Bank AXIS BANK LIMITED INTESA SANPAOLO S .P.A. BANK MANDIRI (PERSERO)TBK. PT BANK OF AMERICA, N.A. SINGAPORE MUFG BANK, LTD. UNICREDIT BANK AG SINGAPORE BRANCH (HYPOVEREINSBANK AG SINGAPORE BRANCH) JPMORGAN CHASE BANK, N.A. CITIBANK,N.A. COMMERZBANK AG, SINGAPORE BRANCH DBS BANK LTD. DEUTSCHE BANK AG EMIRATES NBD BANK PJSC (ENBD) SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) FIRST ABU DHABI BANK PJSC (FORMERLY NATIONAL BANK OF ABU DHABI) HABIB BANK LIMITED THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED WOORI BANK, SINGAPORE KBC BANK N.V. MIZUHO BANK, LTD. NORDEA BANK ABP OVERSEA-CHINESE BANKING CORPORATION LIMITED WELLS FARGO BANK, NA QATAR NATIONAL BANK (Q.P.S.C) RABOBANK SINGAPORE STANDARD CHARTERED BANK SHINHAN BANK, SINGAPORE BRANCH SUMITOMO MITSUI BANKING CORPORATION TORONTO DOMINION BANK U.B.A.F. - UNION DE BANQUES ARABES ET FRANCAISES CESKOSLOVENSKA OBCHODNA BANKA, A.S. COMMERZBANK AG UNICREDIT BANKA SLOVENIJA D.D. CITIBANK SOUTH AFRICA FIRSTRAND BANK LIMITED HBZ BANK LIMITED HABIB OVERSEAS BANK LIMITED STANDARD CHARTERED BANK ARESBANK, S.A. KUTXABANK, S.A. BANCO BILBAO VIZCAYA ARGENTARIA S.A. BANK OF AMERICA MERRILL LYNCH INTERNATIONAL DESIGNATED ACTIVITY COMPANY, MADRID BRANCH BANCO DE SABADELL, S.A. ABANCA CORPORACION BANCARIA, S.A. BANKIA S.A. CAIXABANK, S.A. COMMERZBANK AG HSBC FRANCE, SUCURSAL EN ESPANA AMANA BANK PLC AXIS BANK LTD. BANK OF CEYLON SAMPATH BANK PLC HABIB BANK LTD. SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE HATTON NATIONAL BANK PLC SRI LANKA HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, THE SRI LANKA MCB BANK LTD. SRI LANKA NATIONS TRUST BANK PLC SRI LANKA PUBLIC BANK BERHAD SRI LANKA PEOPLE'S BANK,HEAD OFFICE SRI LANKA STANDARD CHARTERED BANK SRI LANKA DANSKE BANK SWEDEN SKANDINAVISKA ENSKILDA BANKEN SWEDEN SVENSKA HANDELSBANKEN AB SWEDEN NORDEA BANK ABP, FILIAL I SVERIGE SWEDEN ARAB BANK (SWITZERLAND) LTD SWITZERLAND BANK JULIUS BAER AND CO.LTD., ZURICH SWITZERLAND BARCLAYS BANK (SUISSE) S.A. SWITZERLAND BANQUE CANTONALE DE GENEVE SWITZERLAND BANQUE CANTONALE VAUDOISE SWITZERLAND BANQUE DE COMMERCE ET DE PLACEMENTS S.A. SWITZERLAND COMMERZBANK AG SWITZERLAND DEUTSCHE BANK AG ZURICH BRANCH SWITZERLAND CREDIT EUROPE BANK (SUISSE) S.A. SWITZERLAND HABIB BANK AG ZURICH SWITZERLAND HSBC BANK PLC SWITZERLAND BANCA POPOLARE DI SONDRIO (SUISSE) SWITZERLAND UBL (SWITZERLAND) AG SWITZERLAND ZUERCHER KANTONALBANK SWITZERLAND BANK OF AMERICA, N.A. TAIWAN JPMORGAN CHASE BANK, N.A., TAIWAN CITIBANK TAIWAN LIMITED TAIWAN DEUTSCHE BANK AG, TAIWAN MEGA INTERNATIONAL COMMERCIAL BANK CO., LTD. TAIWAN THE BANK OF NEW YORK MELLON, TAIWAN STANDARD CHARTERED BANK (TAIWAN) LIMITED TAIWAN SUMITOMO MITSUI BANKING CORPORATION TAIPEI BRANCH TAIWAN TAIWAN COOPERATIVE BANK LTD TAIWAN KING'S TOWN BANK TAIWAN UNION BANK OF TAIWAN TAIWAN AMANA BANK LIMITED TANZANIA, UNITED REPUBLIC OF HABIB AFRICAN BANK TANZANIA, UNITED REPUBLIC OF BANGKOK BANK PUBLIC COMPANY LIMITED THAILAND BANK OF AMERICA, N.A. BANGKOK THAILAND CITIBANK N.A. THAILAND DEUTSCHE BANK AG, BANGKOK BRANCH THAILAND KRUNG THAI BANK PUBLIC COMPANY LIMITED THAILAND MIZUHO BANK, LTD., BANGKOK BRANCH THAILAND STANDARD CHARTERED BANK (THAI) PCL THAILAND SIAM COMMERCIAL BANK PCL., THE THAILAND SUMITOMO MITSUI BANKING CORPORATION THAILAND ARAB TUNISIAN BANK TUNISIA CITIBANK N.A. TUNISIA SOCIETE TUNISIENNE DE BANQUE TUNISIA TURKIYE FINANS KATILIM BANKASI A.S. TURKEY ALBARAKA TURK PARTICIPATION BANK TURKEY AKTIF YATIRIM BANKASI A.S. TURKEY CITIBANK A.S. TURKEY DENIZBANK A.S. TURKEY HABIB BANK LTD. TURKEY HSBC BANK A.S. TURKEY SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SINGAPORE SLOVAKIA SLOVAKIA SLOVENIA SOUTH AFRICA SOUTH AFRICA SOUTH AFRICA SOUTH AFRICA SOUTH AFRICA SPAIN SPAIN SPAIN SPAIN SPAIN SPAIN SPAIN SPAIN SPAIN SPAIN SRI LANKA SRI LANKA SRI LANKA SRI LANKA SRI LANKA Country ANNUAL REPORT 2019 381
383. Bank Country TURKIYE IS BANKASI A .S. KUVEYT TURK KATILIM BANKASI A.S. ODEABANK A.S. SEKERBANK T.A.S. TURKLAND BANK A.S. (T-BANK) TURKIYE CUMHURIYETI ZIRAAT BANKASI A.S. TURKIYE GARANTI BANKASI A.S. TURKIYE HALK BANKASI A.S. (HEAD OFFICE) TURKIYE VAKIFLAR BANKASI T.A.O. YAPI VE KREDI BANKASI A.S. ZIRAAT KATILIM BANKASI A.S. JSC 'BANK CREDIT DNEPR' JSC THE STATE EXPORT-IMPORT BANK OF UKRAINE PSC PROMINVESTBANK ABU DHABI ISLAMIC BANK ABU DHABI COMMERCIAL BANK AJMAN BANK PJSC AXIS BANK LIMITED, DIFC BRANCH (REGULATED BY DFSA) HSBC BANK MIDDLE EAST LIMITED MASHREQBANK PSC. BANQUE DE COMMERCE ET DE PLACEMENTS SA-DIFC BRANCH COMMERCIAL BANK OF DUBAI CITIBANK N.A. DEUTSCHE BANK AG DUBAI ISLAMIC BANK EMIRATES NBD BANK PJSC FIRST ABU DHABI BANK PJSC HABIB BANK LIMITED HABIB BANK AG ZURICH KEB HANA BANK ABUDHABI BRANCH EMIRATES ISLAMIC BANK MCB BANK LIMITED FIRST ABU DHABI BANK PJSC NATIONAL BANK OF FUJAIRAH NATIONAL BANK OF KUWAIT (S.A.K.). NOOR BANK P.J.S.C. NATIONAL BANK OF RAS AL-KHAIMAH, THE STANDARD CHARTERED BANK UNITED ARAB BANK UNION NATIONAL BANK UNICREDIT S.P.A. UNITED BANK LTD. ALLIED IRISH BANK (GB) (AIB GROUP (UK) PLC T/A) BRITISH ARAB COMMERCIAL BANK PLC INTESA SANPAOLO SPA LONDON BRANCH BANK OF CHINA BANK MANDIRI (EUROPE) LIMITED BANK OF AMERICA, N.A. LONDON BYBLOS BANK EUROPE S.A. (LONDON BRANCH) JPMORGAN CHASE BANK, N.A. CITIBANK N.A. COMMERZBANK AG NORTHERN BANK LIMITED (TRADING AS DANSKE BANK) DEUTSCHE BANK AG EMIRATES NBD BANK (P.J.S.C) SKANDINAVISKA ENSKILDA BANKEN LONDON GULF INTERNATIONAL BANK B.S.C. HBL BANK UK LIMITED HSBC UK BANK PLC HABIB BANK ZURICH PLC WOORI BANK, LONDON KEB HANA BANK MIZUHO BANK, LTD. LONDON BRANCH 382 MEEZAN BANK LIMITED TURKEY TURKEY TURKEY TURKEY TURKEY TURKEY TURKEY TURKEY TURKEY TURKEY TURKEY UKRAINE UKRAINE UKRAINE UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED ARAB EMIRATES UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM Bank HSBC BANK PLC MASHREQ BANK PSC UNITED NATIONAL BANK NORDEA BANK ABP LONDON BRANCH NATIONAL WESTMINSTER BANK PLC STANDARD CHARTERED BANK NEW YORK COMMUNITY BANK AMERICAN FIRST NATIONAL BANK ABACUS FEDERAL SAVINGS BANK INTESA SANPAOLO SPA NEW YORK BRANCH BANGKOK BANK PUBLIC COMPANY LIMITED, NEW YORK DEUTSCHE BANK TRUST COMPANY AMERICAS BNP PARIBAS U.S.A - NEW YORK BRANCH BANK OF AMERICA, N.A. MUFG BANK LTD. BANCO DO BRASIL S.A BRANCH BANKING AND TRUST COMPANY CATHAY BANK JPMORGAN CHASE BANK, N.A. CITIBANK N.A. FIRST TENNESSEE BANK N.A. GULF INTERNATIONAL BANK HABIB BANK LIMITED HANMI BANK HABIB AMERICAN BANK WOORI BANK UNICREDIT BANK AG (HYPOVEREINSBANK) ISRAEL DISCOUNT BANK OF NEW YORK INTERNATIONAL FINANCE CORPORATION THE BANK OF NEW YORK MELLON KEYBANK NATIONAL ASSOCIATION MALAYAN BANKING BERHAD MIZUHO BANK, LTD. NEW YORK BRANCH HSBC BANK USA, N.A. MASHREQBANK PSC., NEW YORK BRANCH NONGHYUP BANK, NEW YORK BRANCH NATIONAL BANK OF PAKISTAN NORDEA BANK ABP, NEW YORK BRANCH WELLS FARGO BANK, N.A. PNC BANK, N.A. STATE BANK OF INDIA (CALIFORNIA) STANDARD CHARTERED BANK SUMITOMO MITSUI BANKING CORPORATION SUNTRUST BANK SOCIETE GENERALE UNITIBANK REGIONS BANK U.S. BANK N.A. WELLS FARGO BANK, N.A. BANCO ITAU CITIBANK N.A. DEUTSCHE BANK AG, HO CHI MINH CITY BRANCH WOORI BANK VIETNAM LIMITED SOUTHEAST ASIA COMMERCIAL JOINT STOCK BANK VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT VIETNAM PUBLIC JOINT STOCK COMMERCIAL BANK (PVCOMBANK) SABA ISLAMIC BANK SHAMIL BANK OF YEMEN AND BAHRAIN UNITED BANK LIMITED Country UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED KINGDOM UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA UNITED STATES OF AMERICA URUGUAY VIET NAM VIET NAM VIET NAM VIET NAM VIET NAM VIET NAM YEMEN YEMEN YEMEN
384. Branch Network Alhamdulillah , Meezan Bank has established 760 branches in 223 cities across Pakistan. This is a milestone that is not only the success story of Meezan Bank but also the continuing success story of Islamic banking in Pakistan. With this extensive network, our existing and potential customers are now closer than ever in attaining Islamic banking at their doorstep. All branches provide real time online banking facilities to customers. As the first and largest dedicated Islamic bank in Pakistan, Meezan Bank's team continues to build on its Vision of establishing ‘Islamic banking as banking of first choice’. One of the key objectives of the Bank is to have its footprint strategically placed throughout the country enabling public to avail the benefits of Shariah-compliant banking in their neighbourhood. The Bank presently operates in the following cities of Pakistan: Abbottabad Abdul Hakeem Ahmedpur East Alipur Alipur Chatha Arifwala Athara Hazari Attock Badin Bahawalnagar Bahawalpur Balakot Bannu Batagram Bhakkar Bhalwal Burewala Chak Jhumra Chakwal Chamman Charsadda Chichawatni Chillas Chiniot Chishtian Chitral Choa Saidan Shah Chowk Sarwar Shaheed Chung Chunian Dadu Dadyal Daharki Dahranwala Dalowali Daska Daultala Daur Depalpur Dera Ghazi Khan Dera Ismail Khan Digri Dijkot Dina Dinga Dukki Dunyapur Ellahabad Faisalabad Farooqabad Fatehpur Fazilpur Fort Abbas Gaggo Mandi Garha Morh Gawadar Ghakhar Mandi Ghotki Gilgit Gojra Gujar Khan Gujranwala Gujrat Hafizabad Hala Harappa Haripur Haroonabad Hasilpur Hassanabdal Haveli Lakha Havelian Hazro Hub (Lasbela) Hyderabad Islamabad Jacobabad Jahanian Jalalpur Jattan Jampur Jand Jaranwala Jauharabad Jehangira Jhang Jhelum Kabirwala Kahror Pakka Kahuta Kamalia Kamar Mashani Kamoki Karachi Karak Kasur Khairpur Khairpur Tamewali Khanbela Khanewal Khanpur Khar Kharian Khipro Khushab Khuzdar Kohat Kot Addu Kot Chutta Kot Ghulam Muhammad Kot Radha Kishan Kotla Arab Ali Khan Kotli Kunri Lahore Lalamusa Lalian Larkana Layyah Liaquatpur Lodhran Loralai Mailsi Malakwal Mamukanjan Manawala Mandi Bahauddin Manga Mandi Mansehra Mardan Matli Matta Mehar Mehrabpur Mian Channu Mianwali Minchinabad Mirpur Azad Kashmir Mirpurkhas Moro Multan Muridkay Muslim Bagh Muzaffarabad Muzaffargarh Nankana Sahib Narowal Naushahro Feroz Nawabshah Nowshera Oghi Okara Pabbi Pakpattan Panjgoor Pano Akil Pasni Pasrur Pattoki Peshawar Phalia Pind Dadan Khan Pindi Gheb Pirmahal Pishin Qalanderabad Qazi Ahmed Qila Saifullah Quaidabad Quetta Rahim Yar Khan Raiwind Rajanpur Rashidabad Rawalakot Rawalpindi Rawat Renala Khurd Sadiqabad Sahiwal Sakrand Sambrial Samundri Sanawan Sanghar Sara-e-Alamgir Sargodha Shahdadkot Shahdadpur Shahkot Shakargarh Sharaqpur Sharif Sheikhupura Shikarpur Shinkiari Shorkot Shujabad Sialkot Sillanwali Skardu Sukkur Swabi Swari Swat Talagang Tando Adam Tando Allahyar Tando Mohammad Khan Tank Tarlai Taunsa Taxila Thatta Timergara Toba Tek Singh Turbat Umerkot Vehari Wah Cantt Wazirabad Yazman Zafarwal Zahir Pir Zhob For 2020, Meezan Bank has planned to expand its Branch Network by 110 branches countrywide. Meezan Bank's mission is to provide its customers dedicated and pure Islamic banking facilities with the greatest of convenience and personalized services. It remains the Bank's endeavour to establish solid foundations of Islamic banking in Pakistan. ANNUAL REPORT 2019 383
385. Abbottabad Abbottabad Branch Plot No . 843-846, Mansehra Road, Abbottabad Tel: (92-992) 344701-3 Ayub Medical Complex Branch Ayub Medical Complex MirPur Branch Abbottabad Satellite Town Branch Plot No. 20/D, Street No.30, One Unit Chowk, Satellite Town, Bahawalpur Tel: (92-62) 2285303-04, 2285306-07 City Abbottabad Branch Jamal Building , Eidgah Road, Abbottabad Tel: (92-992) 341990-03 Shahi Bazar Branch Property No. 3 BIV-400 Zanana Hospital Chowk Shahi Bazar, Bahawalpur. Tel: (92-62) 2730042-43 Nawan Shehr Branch Mandi Ali Khan Baba, Murree Road Nawan Shehr Abbottabad Balakot Abdul Hakeem Abdul Hakeem Branch Khewat No.59/56, Khatooni No.200-210, Kacha Khuh Road, Abdul Hakeem Tel: (92-065) 2441151-3 Ahmedpur East Ahmedpur East Branch Property No. 338, Block-IV, Kutchery Road, Ahmedpur East Tel: (92-62) 2273261-2 Alipur Alipur Branch Khata No.230, Khasra No.13714, Ward No.18, Near College Chowk, Multan Road, Alipur Tel: (92-066) 2700731-34 Alipur Chatha Balakot Branch Khasra No. 3727/1882 Opposite Police station, Naran Road,Balakot Bannu Bannu Branch Property No. 322-D, 322-D/A, Outside Qasayban Gate Hospital Road, Bannu Tel: (92-928) 620841-3 Bannu II Branch Khata No.332, Khasra No.2093, Moza Fatima Khell, Salami Chowk, Dera Ismail Khan Road Bannu Tel: (92-928) 610341-3 Batagram Batagram Branch Khasra No. 3359/971 & 3360/971, Kahata No. 880/1351 & 881/1351, Sultan Market, Ajmeera, Batagram Tel: (92-997) 310850-51 Alipur Chatha Branch Khewat No.743, Khatoni No.1129, Khasra No.3577/1694, Alipur Chatha Tel: (92-055) 6333405-6 Batkhela Arifwala Besham Branch Main Bazar Besham Arifwala Branch Shop No.68-69-A, Main City road, Timber Market, Arifwala Tel: (0457) 834502-3 Athara Hazari Dargahi Shah Branch Khatooni No.493, 505, Khewat No.121, Layyah Road, Adjacent Siraj Sugar Mills, Dargahi Shah, Tehsil Athara Hazari, District Jhang Attock Attock Branch G-4, Block G, Siddiqui Road, Attock City. Tel: (92-57) 2700811-12 Badin Badin Branch Survey No.206, Ward No.4, Agro Dal Area Civil Hospital Road, Badin Bahawalnagar Bahawalnagar Branch Shop No. 12, Grain Market, Minchanabad Road, Bahawalnagar Tel: (92-63) 2271611-2 Batkhela Branch Near Old Dir Adda Main Bazar Batkhela Besham Burewala Burewala Branch Multan Road, Opp. College Road, Burewala Tel: (92-67) 3773751-4 Vehari Bazar Branch Property 44 Block-F, Vehari Bazar, Burewala. Tel: (92-67) 3351112-13 Bhalwal Bhalwal Branch Property No. 941/935/20, Khewat No.770, Khatooni No.791, Block-04, Main Liaqat Shaheed Road, Bhalwal Tel: (92-48) 6642383-4 Bhakkar Bhakkar Branch Plot No.203, Shops No.203/1, 203/2, 203/3, Jhang Road, Chisti Chowk, Bhakkar Chakwal Bahawalnagar II Branch Khewat No. 2276, Khatooni No. 2423, Baldia Road, Bahawalnagar. Chakwal Branch B-VI/4-A, Bab-e-Chakwal, Talagang Road, Chakwal Tel: (92-543) 543381-4 Bahawalpur Chak 77 Airport Road Branch Shop Nos.12-14, Airport Road, Bahawalpur Tel: (92-62) 2740635-7 Circular Road Branch Circular Road, Near Milad chowk, Bahawalpur Tel: (92-62) 2732145-47 384 Dubai Chowk Branch Property No. 209-CB, Ahmedpur East Road, Near Dubai Chowk, Bahawalpur Tel: (92-62) 2889417-18 MEEZAN BANK LIMITED Chak77 Branch Khewat No.178, Khatooni No.3502, Chak No.77 , Satyana Road, Faisalabad Chak Jhumra Chak Jhumra Branch Plot No. 12/2, 13, 14/2, Ghalla Mandi, Chak Jhumra, Faisalabad Tel: (92-41) 8761173-4 Chamman Chamman Branch Khasra # 579-580 Jogi Ram Road, Trunch Bazar, Chamman Tel: (92 826) 618355 Charsadda Mardan Road Charsadda Branch Shop No. 286-287, Khata No.486, Sultan Building, Main Mardan Road Charsadda Tel: (92-91) 9220171-73 Shabqadar Branch Khasra No.3976/339-340-401, Khata No.656/1780, 663/1789, Shabqadar Chichawatni Chichawatni Branch Property No. 278-279, Adjacent National Saving Centre, G.T. Road, Chichawatni Tel: (92-405) 487601-03 Chiniot Sharah-e-Quaid-e-Azam Chiniot Branch P-468, AI-469 II, Shahrah-e-Quaid-e-Azam, Chiniot Tel: (92-47) 6331103-4 Chishtian Chishtian Branch Plot No. 109, B- Block, Opposite Ghalla Mandi Gate, Chishtian Tel: (92-63) 2509301-2 Chitral Chitral Branch Ataleeq Bazar, Main By-Pass Road Chitral Chilas Chilas Branch Abu Bakar Siddique Chowk, Main Bazar Chilas Tel: (92-05812) 450673-74 Choa Saidan Shah Choa Saidan Shah Branch Khasra No.3125,5440/3124, Khewat No.438/1295, 189/363, Chakwal Road, Choa Saidan Shah Tel: (92-543) 579108-9 Chowk Sarwar Shaheed Chowk Sarwar Shaheed Branch Khata No.18,Multan Road, Chowk Sarwar Shaheed, Tehsil Kot Addu District Muzaffargarh Tel: (92-066) 2210117-19 Chunian Chunian Branch Khewat No.522, Khatooni No.4874, Khasra No.6298/3284 & 6299/3284 Opposite Total Petrol Pump, Main Changa Manga Road, Chunian Tel: (92-049) 4530292-94 Chung Chung Multan Road Branch Main Stop Chung, Main Multan Road, Chung, Lahore Tel: (92-42) 35404761- 63 Dadu Dadu Branch Ground Floor, Nareja Shopping Centre, Kutchery Chowk, Near College Road, Dadu Tel: (92-245) 710816-8 Dadyal Dadyal Branch Plot No. 313, Hussain Shopping Centre, Main Bazar Dadyal, Mirpur Azad Kashmir Tel: (92-5827) 465881-3
386. Daharki Daharki Branch Survey No .446, Deh Daharki, Tappo Daharki, Taluka Daharki Tel: (92-723) 641385-7 Dahranwala Main Highway Road Branch Khata No. 59/56, Khatooni No. 201, Main Highway Road, Dahranwala Tel: (92-063) 2440390 Dalowali Dalowali Branch Khewat No.34, Khatooni No.77-83, Dalowali Jammu Road Sialkot Tel: (92-052) 3206033-5 Dargai Main Bazar Branch Adjacent Shell Filling Station, Main Bazar, Dargai, District Malakand Darya Khan Darya Khan Branch Mizail Chowk Tehsil Darya Khan District Bhakkar Daska Circular Road Daska Branch Circular Road Daska Tel: (92-52) 6612046-8 Dinga Dinga Branch Khewat No.1246, Khatooni No.2599, Khasara # 4165 Fowara Chowk Kharian Road Dinga Tel: (053) 7401692-94 Hajiabad Branch Plot No. P-409, Main Sheikhupura Road Hajiabad Faisalabad Tel: (92-41) 8846181-83 Dukki Jail Road Branch Plot No.17-B, Jail Road, Faisalabad Tel: (92-41) 111 852 852 Dunyapur Jaranwala Road Branch Property No.P-1, Near Hassan Park, Corner Farid Road, Main Jaranwala Road, Faisalabad Tel: (92-41) 2428241-43 Ellahabad Jhang Road Branch Plot No. S-29-30, Near Ayub Colony, Opposite Motor Market, Jhang Road, Faisalabad Tel: (92-41) 2650854-6 Dukki Branch Plot No.329, Nana Sahab, Ziarat Road, Dukki Tel: (92-824) 666013 Dunyapur Branch Khewat No. 189, 225 Khatooni No. 516, 517 Dokota Road Dunyapur Tel: (92-60) 8304118-19 Ellahabad Branch Khewat No.443, Khatooni No.707-740, Main Depalpur Road, Ellahabad, Tehsil Chunian, District Kasur Tel: (92-49) 4751371-73 Faisalabad Bilal Gunj Market Branch P-1154, Islam Nagar, Bilal Gunj Market, Sargodha Road, Faisalabad Tel: (92-41) 8784051-53 Kotwali Road Branch P-66, Kotwali Road Faisalabad Tel: (92-41) 2602586-8 Liaqat Abad Branch Plot-8/75, Khatooni No.15009, Khewat No.12469, Main ABC Road Liaqat Abad, Faisalabad Tel: (92-41) 2551561-3 Bhowana Bazar Branch 150-D. Main Bhowana Bazar, Faisalabad Tel: (92-41) 2633042-4 Madina Town Susan Road Branch Plot No. 98/23, Madina Town, Susan Road, Faisalabad Tel: (92-41) 8557141-3 Daultala Canal Road Branch P-404, 405, Amin Town, Near Kashmir Bridge, West Canal Road, Faisalabad Tel: (92-41) 8505438-40 Mansoorabad Branch Plot No. P-1224 Corner Dipu Bazar, Main Jhumra Road, Mansoorabad, Faisalabad Tel: (92-41) 8734400-02 Daur Circular Road Branch Shop # 6,7,8, Jinnah Market, Circular Road, Faisalabad. Tel: (92-41) 2628261-63 Millat Chowk Branch B-165, Gulistan colony #2, Millat Chowk Faisalabad Tel: (92-41) 8784346-47 Depalpur Civil Lines Branch Plot No. 17/K, Civil Lines, Bilal Road, Faisalabad Tel: (92-41) 2603471-473 Peoples Colony Branch Plot No 144-C/3, Peoples Colony no 1, Main Jaranwala Road, Faisalabad Tel: (92-41) 8555002-4 Clock Tower Branch P-175, Clock Tower, Karkhana Bazar, Faisalabad Tel: (92-41) 2606085-7 PMC Branch Branch P-1, Allied Moor, Opposite Punjab Medical College, Jail Road, Faisalabad. Tel: (92-41) 8781381-83 D-Type Colony Branch P-755-756, Bukhari Chowk, D-Type Colony, Faisalabad  Tel: (92-41) 2668806-07 Sadhar Branch Khasra No.20/5/1, Chak No.67-JB, Main Sadhar, Jhang Road, Faisalabad Tel: (92-41) 2519120-22 Dijkot Road Branch Shop # 85, Dijkot Road, Adjacent to Grain Market, Faisalabad Tel: (92-41) 2416141-3 Saleemi Chowk Branch Property No. 907-B2 / 907-B3, Block B, Peoples Colony No. 1, Saleemi Chowk Faisalabad Tel: (92-41) 8711961-63 Daska Branch Rest House Chowk, Gujranwala Road, Daska Tel: (92-52) 6612837-41 Daultala Branch Khatooni No.3044,3416-3418, Main Road, Daultala Daur Branch Plot No. 41, Ali Abad Daur Tel: (92 44) 325064-325066 Depalpur Branch Khewat No. 2100/2053, Khatooni No. 3159, Kutchery Road Depalpur Tel: (92 44) 4544550-51 Dera Ghazi Khan Dera Ghazi Khan Branch Jampur Road, Dera Ghazi Khan Tel: (92-64) 2474255-7 Dera Ghazi Khan III Branch Kalma Chowk Azmat Road Dera Ghazi Khan Sangham Chowk D.G Khan Branch Khata No 711, Khasra No 91/12/3, Mauza Gadai Shumali, Sangham Chowk, Dera Ghazi Khan Tel: (92-64) 2460613-15 Dera Ismail Khan Dera Ismail Khan Branch Plot No.04. Shops No. 168-170. Circular Road Bazar Area cantt Dera Ismail Khan. Tel: (92-966) 717257-8 Digri Digri Branch Survey No. 413, Ward No.B, Tando Ghulam Ali Road, Digri Tel: (92-233) 870213-16 Dijkot Samundri Road Dijkot Branch Killa No.3/8/1, Chack No.263 Main Samundri Road, Dijkot Dina Dina Branch Al-Bilal Shopping Centre, Main Chowk, G.T. Road, Dina, Distt. Jhelum Tel: (92-544) 636119-21 Eden Square Branch Property Unit No. P-50, opposite Hassan Villas, Chak 208 Road, Eden Square Faisalabad Fawara Chowk Faisalabad Branch 301-A, Nalka Stop, Main Road, Peoples Colony No. 2, Fawara Chowk Faisalabad Tel: (92-41) 8710523-24 Ghulam Muhammad Abad Branch P-317, Alaf Sani Chowk, Main Saddar Bazar, Ghulam Muhammad Abad, Faisalabad Tel: (92-41) 2694381- 83 Gole Cloth Katchery Bazar Branch P-54 Gole Cloth, Katchery Bazar, Faisalabad Tel: (92-41) 2610373-4 Gulberg Branch P-307-A, Gulberg Colony, Main Bazar, Faisalabad Tel: (92-41) 2541611-13 Samanabad Branch Plot No. P-178/1 A, Main Road, Samanabad, Faisalabad Tel: (92-41) 2663840-2 Sargodha Road Branch Plot No. 654-656, Near Hafeez Plaza, Ali Town Sargodha Road, Faisalabad Tel: (92-41) 8785151-3 Satyana Road Branch 718-I, Batala Colony Main Satyana Road Faisalabad Tel: (92-41) 8500719-20 Serena Hotel Branch Serena Hotel, Club Road, Faisalabad Tel: (92-41) 2602595-7 Tata Market Branch Chak No. 212-RB Main Road, Factory Area, Opposite Madina Centre, Tata Market, Faisalabad Tel: (92-41) 2417555-7 ANNUAL REPORT 2019 385
387. Yarn Market Branch P-180 , Yarn Market, Montgomery Bazar, Faisalabad Tel: (92-41) 2541501-03 Dal Bazar Branch Property No. BII-19S-31, Near Chowk Chashma, Dal Bazar, Gujranwala Tel: (92-55) 4227592-6 Fatehpur D.C Colony Branch Shops No.UG-08 - UG-11, Commercial Centre, Ravi Block, PGECHS, D.C Colony, Gujranwala Tel: (92-55) 3782805-07 Fazilpur D.C Road Branch Khewat No.391, Khatooni No.407, Khasra No.970, D.C Road, Gujranwala Tel: (92-55) 3848019-21 Farooqabad Fareed Town Branch Khewat No.768, Khatooni No.932, Khasra No.2400/1191, Chacheryali, Near Petrolium Chowki, Fareed Town, Gujranwala Tel: (92-55) 3826523-25 Fatehpur Branch Khewat No.14, Karor Lal Eisan Road, Fatehpur Tel: (92-0606) 841135-37 Fazilpur Branch Khata No.18, Mauza 571/TDA, Rajanpur Road, Fazilpur, Tehsil & District Rajanpur Farooqabad Branch Plot No. B1-S3-16, Chowk Mirza Abdul Ghafoor, Farooqabad. Tel: (92-056) 3875821 Fort Abbas Fort Abbas Branch Khewat No.347/348, Khatooni No.347, Qasba Mandi, Zia-ul-Haq Shaheed Road Fort Abbas Tel: (92-063) 2510584-85 Gaggo Mandi Gaggo Mandi Branch Khasra No.59/3, Khewat No. 56/52, Khatooni No. 218, Opposite Grain Market, Sheikh Fazal Road, Gaggo Mandi Tel: (92-067) 3500574-75 Garha Morh Garha Morh Branch Khata No.35/37, Khatooni No.146-147, Multan Road Adda Garha Morh, District Vehari Tel: (92-067) 3690212-3 Gwadar Airport Road Gwadar Branch Khasra No.575,593-596, Khewat No.202, Airport Road Gawadar. Tel: (92-86) 4210124-25 Ghakhar Mandi Gondlanwala Road Gujranwala Branch Khewat No.76, Khatooni No.79, Khasra No.7818, Gondlanwala Road Gujranwala Tel: (92-55) 3842303-05 G.T Road Gujranwala Branch Khasra No.2503, Khewat No.2925, Khatooni No.3341, G.T Road, Gujranwala Tel: (92-55) 4242717 G.T Road Rahwali Branch Khewat No.637, Khatooni No.1023, Mohallah Shareef Pura, G.T Road Rahwali, Gujranwala Cantt Tel: (92-55) 3828543-44 Hafizabad Road Branch Khewat # 2116, Khatooni # 2352, Khasra # 20, Mohallah Baghbanpura, Hafizabad Road Gujranwala Tel: (92-55) 4442104-06 Ghakhar Mandi Branch Khewat No.1959, Khatooni No.2726, G. T Road Ghakhar Mandi Tel: (92-055) 3832743-744 Kashmir Plaza Branch Kashmir Plaza, Near Ghalla Mandi G.T Road, Gujranwala Tel: (92-55) 3847205-8 Ghotki Master City Branch Plot No.159 / COM, Block C, Sector Azka, Master City, Gujranwala Ghotki Branch Survey No.10, Deh Odharwali Tappo Ghotki Tel: (92-0723) 600134-36 Gilgit Gilgit Branch Shop No. 433/102, Northern Light Infantry, Welfare Complex Gilgit Baltistan Tel: (92-0581) 458039-41 Gojra Gojra Branch Al Khalid Shopping Centre, Opposite Surayya Hospital, Tehsil Office Road, Gojra Tel: (92-46) 3516272-3 Gujar Khan Gujar Khan Branch B-III, 215-E, G.T. Road, Gujar Khan Tel: (92-51) 3515679-83 Model Town Gujranwala Branch Property No.BXIV-18AS-18/A, Waqia Plot No.1-L/B, Model Town Gujranwala Tel: (92-55) 3857314-16 Sialkot Road Branch Khewat No. 517, Khatooni No. 632, Khasra No. 227, Wania More, Sialkot Road Gujranwala Tel: (92-55) 3200102-04 Wapda Town Gujranwala Branch Block No.13, Wapda Town, Gujranwala Tel: (92-55) 4283902-5 Gujrat Chowk Pakistan Branch Property No. B-II 849-850, Chowk Pakistan, Circular Road, Gujrat Tel: (92-53) 3522352-4 Gujrat Branch Amin Fan Building, G.T Road, Gujrat Tel: (92-53) 3538104-7 Kutchery Chowk Branch B-1/92, Opposite Bar Room, Kutchery Chowk, Gujrat Tel: (92-53) 3600751-753 Gulyana Gulyana Branch Khewat No.51, Khatooni No.117-135, Mohal Tibbi Zinda Gulyana, Tehsil Kharian, District Gujrat Tel: (92-53) 7578112 - 114 Hafizabad Hafizabad Branch Sagar Road Branch, Hafizabad Tel: (92-54) 7540811-2 Hala Hala Branch Survey No.1406/29, Ward B, National Highway Hala, District Matiari Tel: (92-022) 3331375 Hangu Hangu Branch Khatooni No.5872-5873, Mouza Hangu, Tehsil & District Hangu Harappa Harappa Branch Khewat No.139/137, Khatooni No.319, Nai Wala Road, Harappa Tel: (92-40) 4504306-07 Haripur Peoples Colony Branch 13-Y/ 7-SITE-1, Peoples Colony Gujranwala Tel: (92-55) 4240571-3 Khalabat Township Branch Plot No.250, Commitie Chowk Sector-4 Near Main Chowk, Khalabat Township Outside Khiali Gate Branch Khasra No.7854-58/2211, Outside Khiali Gate, Gujranwala Awan Chowk Branch Pindi Bypass Road, Awan Chowk, Gujranwala Tel: (92-55) 3412251-53 Citi Housing Society Gujranwala Branch Plot No.31, Block PH-1-C, Phase-1, Citi Housing Society, Gujranwala Tel: (92-55) 4287480-1 Shaheenabad Branch Near Gulshan-e-Iqbal Park, GT Road, Gujranwala Tel: (92-55) 3252041-43 MEEZAN BANK LIMITED Satellite Town Gujranwala Branch Plot No.40-A, Nursery Chowk, Satellite Town, Gujranwala Tel: (92-55) 3847191-3 More Eminabad Branch Khasra No.1282, Khatooni No.8-17, G.T Road, More Eminabad, Gujranwala Tel: (92-55) 3261180-82 Qila Didar Singh Branch Khasra No.4215 / 184 , Khatooni No.1736, Khewat No.1394, Mohallah Qasurian, Moza Qila Didar Singh, Tehsil & District Gujranwala Tel: (92-55) 4711103-5 Gujranwala 386 Garden Town Gujranwala Branch Plot No.17G/C, Phase-II, Garden Town Gujranwala Tel: (92-55) 3894493-5 Sheikhupura Road Branch Khewat No. 42, Khatoni No. 43, Khasra No. 182, Mian Sansi, Sheikhupura Road Gujranwala Tel: (92-55) 4233981-83 Haripur Branch Gul & Sons Plaza G T Road Haripur Tel: (92-995) 627250-3 Main Bazar Branch Circular Road Opp Choki Police Haripur. Tel: (92-995) 615103, 615322, 615323 Haroonabad Haroonabad Branch 14-C, Grain Market, Haroonabad Tel: (92-63) 2251751-2 Hazro Hazro Branch Khasra No.562, 564, Moza Pirdad, Zia ul Haq Shaheed Road, Hazro Tel: (92-057) 2310645
388. Hassanabdal Hassanabdal Branch Khewat No .1756, Khatooni No.2201, Khasra No.1956 Near Bus Stand Main G.T Road Hassanabdal Tel: (92-057) 2520708-711 Hasilpur Hasilpur Branch 68/B, Baldia Road, Hasilpur Tel: (92-62) 2443300-1 Havelian Havelian Branch Near Old TMA Office, Main Bazar Havelian, Distt. Abbottabad Tel: (92-992) 811501-3 Haveli Lakha Haveli Lakha Branch Khewat No. 697/695, Khatooni No. 1065, Pakpattan Road, Near Grain Market, Haveli Lakha. Hub (Lasbela) Hub Chowki Branch Hub City, District Lasbela, Balochistan Tel: (92-853) 310252-3 Hyderabad Auto Bhan Branch Shop No 6 & 7, Boulevard Enclave Auto Bhan Road Latifabad No. 3, Hyderabad Tel: (92-22) 3821291-8 Citizen Colony Branch Shop No.1-4, Citizen Plaza, Citizen Colony, Jamshoro Road, Hyderabad Tel: (92-22)2100904-8 Cloth Market Branch C/916/918, Guru Nagar, Hyderabad Tel: (92-22) 2621341-2 Defence Branch Shop No. 07, 08 ,09, Block A, Defence Plaza, Thandi Sarak, Hyderabad Gari Khata Branch City Survey No. F/1054, Ward - F, Gari Khata, Hyderabad Tel: (92-22) 2725671-2 Hyderabad Branch Saddar Bazar Cantonment, Hyderabad Tel: (92-22) 2782772 Latifabad Branch 3/D Commercial Area, Latifabad No. 7, Hyderabad Tel: (92-22) 3866964-5 Latifabad-II Branch Plot No. A/53 Block-B, Unit No. 05, Shah Latifabad, Hyderabad Tel: (92-22) 3864281-84 Market Road Branch Market Road Hyderabad, Survey No. 2669, 2669/1, Ward-A, Market Road, Hyderabad Tel: (92-22) 2638362-6 Qasimabad Branch Plot No. QEA/R-6/03-4,11-12, Housing Scheme No. 1, Main Road Qasimabad, Hyderabad Tel: (92-22) 2670511-5 SITE Hyderabad Branch Plot No. A/3, Fateh Chowk, SITE Area, Hyderabad Tel: (92-22) 3880202-03 Station Road Branch Shop No.F-438/2, F-438/3, Ward “F”, Station Road, Hyderabad Tel: (92-22) 2729791-94 Islamabad Aabpara Branch Plot No. Ramna 6/1-4, Aabpara Market, Sector G-6, Islamabad Tel: (92-51) 2603061-4 Bahria Enclave Branch Plot No. 10 – A , Al-Sultan Arcade Main Enclave Avenue, Bahria Enclave Islamabad Tel: (92-51) 5191801-2 Bani Gala Branch Khasra No. 631-632, Khewat No. 504, Sadaat Market, Main Bazar Bani Gala Islamabad Tel: (92-51) 2612790-92 Barakahu Branch Fazal ul Haq Plaza, Main Murree Road, Baharakahu, Islamabad Tel: (92-51) 2232881-2 B-17 Islambad Branch Mumtaz Plaza Plot No. 43 Commercial Area Sector B-17 Block B, Multi Gardens, Main G.T Road Islamabad Tel: (92-51) 5203240-3 DHA Phase II Branch Plot No. 7, Sector A, Near Gate No-3, Kalsum Plaza, DHA Phase-II, Islamabad Tel: (92-51) 5161562-4 D-12 Markaz Islamabad Branch Plot No. 10, Shop No. 21-25, AIMS Arcade, D-12 Markaz, Islamabad Tel: (92-51) 2706682-4 D-17 Islamabad Branch Plot No.A-1, Shop Nos.G 01-04, 06, 24, Prime Arcade Main Markaz Margalla View Housing Society, D-17/2 Islamabad Tel: (92-51) 2229996-98 E-11 Markaz Branch Plot No. 02, 03, 04, Square Eleven Plaza, Islamabad Garden Phase II, Sector E-11/1 Islamabad. Tel: (92-51) 2305691-92 F-6 Markaz Branch Ground & First Floor, Sethi Plaza, Super Market, F-6 Markaz, Islamabad Tel: (92-51) 2601791-5 F-7 Jinnah Super Market Branch Unit No. 14, Plot No. 12-B, F-7 Markaz, Jinnah Super Market, Islamabad Tel: (92-51) 2655001-4 F-8 Branch Panther Plaza, F-8 Markaz, Islamabad Tel: (92-51) 2817403-5 F-10 Markaz Branch Plot No. 2-F, F-10 Markaz, Islamabad Tel: (92-51) 2112762-3 F-11 Branch Shops No. 2, 3, 9, 10,11 & 12, Ground Floor, Sardar Arcade, F-11 Markaz, Islamabad Tel: (92-51) 2228384-5, 2228388-9 G-8 Branch Plot No. 40-A , I & T Centre, Jhelum Road , G – 8/1 , Islamabad. Tel:(92-51) 2261040 - 41 G-9 Markaz Branch 21-B, G-9 Markaz, Islamabad Tel: (92-51) 2285849-51 G-10 Markaz Islamabad Branch Plot No.20-E, G-10 Markaz, Islamabad Tel: (92-51) 2351953-4 G-11 Branch Plot No.15, Penorama Arcade, G-11 Markaz, Islamabad Tel: (92-51) 2830513-6 G-13 Branch Plot No 2-A , Qaiser Wasim Plaza, G-13 Markaz, Islamabad Tel:(92-51)2285849 – 50 G-15 Markaz Branch Plot No. 18 , Family Plaza, Jammu & Kashmir Housing Society, G-15 Markaz Islamabad Tel: (92-51)2328317-8 Ghouri Town Branch Plot No. 11-12 Sadiq Center Phase V-A Ghouri Town Islamabad Tel: (92-51) 2157680-83 G.T Road Humak Branch Khasra No.3102, Chaudhry Plaza , Adjacent Amazon Mall, G.T Road Humak, Islamabad Tel: (92-51) 5560237-38 Jinnah Garden Branch Plot No.15-16, Twin Tower, Jinnah Commercial Centre-1 , Naval Anchorage Road, Main Gate Jinnah Garden, Islamabad Tel: (92-51) 5959977-78 Islamabad Stock Exchange Branch Room No. 218, 2nd Floor, 55-B, Islamabad Stock Exchange Towers, Jinnah Avenue, Islamabad Tel: (92-51) 2894671-4 Jinnah Super Branch Plot # Q-13, College Road F-7 Jinnah Super Market Islamabad Tel: (92-51) 2656501-5 I-8 Branch Plot No. 25, VIP Square, I-8 Markaz, Islamabad Tel: (92-51) 4861389-92 I-9 Branch Plot No. 2/A, Industrial Area, I-9, Islamabad Tel: (92-51) 4859644-7 I-10 Branch Shop No. 7-10, Ahmadal Plaza, Plot No. 3-I, Sector I-10 Markaz, Islamabad Tel: (92-51) 4432711-3 I-11 Sabzi Mandi Branch Plot No.189/A, Sabzi Mandi, I-11, Islamabad Tel: (92-51) 4100637-40 Jinnah Avenue Branch Plot No. 37-B, Tahir Plaza, Jinnah Avenue, Blue Area, Islamabad Tel: (92-51) 2276712-5, 2801112-5 Naval Complex E-8 Branch Naval Shopping Centre, Naval Complex, E-8, Islamabad Tel: (92-51) 2261192-93 PWD Branch Plot No. 786-G, Block-C, Pakistan PWD Employees Co-operative Housing Society, Lohi Bher, Islamabad Tel: (92-51) 5170756-8 Soan Garden Branch Plot No. SC-17, Iftikhar Shopping Mall, Main Double Road, Soan Garden Islamabad Tel: (92-51) 5739501 - 2 74-E Blue Area Branch Unit No. 03-04 , Plot No.74-East Ajaib Plaza, Blue Area Islamabad Tel: (92-51) 2605693-97 ANNUAL REPORT 2019 387
389. Jand Jand Branch Khewat # 122, Khata 142, Khasra # 15989/11409, Tehsil Jand, District Attock Jand Tel: (92-057) 2621405-7 G.T Road Kamoki Branch Main G.T Road, Kamoki Tel: (92-55) 6810351-3 Kamar Mashani Jacobabad Branch Survey No.764/1, Old College Road Ward No.02, Jacobabad Tel: (92-0722) 650276-78 Kamar Mashani Branch Khewat No. 936/915, Khatooni Nos. 1974-1976, Mohalla Sodhri, Kamar Mashani, Tehsil Esa Khel, District Mianwali Tel: (92-045) 9397081-2 Jahanian Kameer Jehangira Kandhkot Jalalpur Jattan Kandiaro Jacobabad Main Bazar Jahanian Branch Khewat No. 71, Khatooni No. 73, Khasra No. 139, Main Bazar Jahanian Jehangira Branch Khata No.121/126 Khasra No.896/629/2 Moza Dheri Khattak , G.T Road Jehangira Circular Road Branch Khewat No.1729/1730 Khatooni No. 2355-2358 2359-2362, Circular Road, Jalalpur Jattan Tel: (92 53) 3430313-5 Jampur Jampur Branch Indus Highway, Dera Road, Opposite Nadra Office, Jampur Tel: (92-604) 569446-8 Jaranwala Jaranwala Branch P-92, Main Hassan Road, Jaranwala City Tel: (92-041) 4312084-85-86 Jauharabad Jauharabad Branch Plot No.191, Khewat No.681, Khatooni No.1101, Block No.14, Main Bazar Jauharabad Tel: (0454) 720683-84 Jhang Rail Bazar Chowk Branch P-864, Block-9, Circular Road, Rail Bazar Chowk, Jhang Tel: (92-47) 7652203-4 Yousaf Shah Road Branch Khata # 709 Civil Station Near Katachery Chowk Yousaf Shah Road Tehsil and District Jhang Tel: (92-47) 7652101-104 Jhelum G.T Road Jada Branch Khatooni No.996, Main G.T Road Jada, Jhelum Tel: (92-054) 4273427-8 Jhelum Branch B-VI-24-S-II, Mehar Plaza, Civil Lines, Jhelum Tel: (92-544) 611751-5 Kabirwala Adda 8 Kasi Branch Khewat No.62/61, Khatooni No.223, Adda 8 Kasi Multan Road, Tehsil Kabirwala, District Khanewal Kabirwala Branch Property No. 162, Khanewal Road, Opposite PSO Petrol Pump, Kabirwala Tel: (92-65) 2400721-3 Kahror Pakka Kahror Pakka Branch Plot No.107/C/4, Khewat No.27, Dunya Pur Road, Kahror Pakka, District Lodhran Tel: (92-608) 341016-17 388 Kamoki MEEZAN BANK LIMITED Adda Kameer Branch Khewat No.80/78, Khatooni No.409, 120/9L, Adda Kameer Kandhkot City Branch Survey No.168/01-24, Main Shikarpur Road Near Ghanta Ghar Chowk, Taluka Kandhkot District Kashmore Kandiaro Branch Survey No. 701 situated at Hospital road Kandiaro, Deh Kandiaro District Naushahro Feroz Karachi 4K Chowrangi Plot No.SA- 7 Sector No. 5-H, 4K Chowrangi North Karachi Tel: (92-21) 36836876-9 26 Street DHA Karachi Branch Plot # 15-C, Badar Commercial Street No. 1, D.H.A Phase V, Karachi, Tel: (92-21) 35161361-65 Abdullah Haroon Road Branch S/1, Plot No. P.R 2/31/5, Preedy Quarters, Abdullah Haroon Road, Karachi Tel: (92-21) 32700143-5 Abul Hasan Isphani Road Branch Plot No. 25-A, Main Abul Hasan Isphani Road, Azeem Khan Goth, Gulshan-e-Iqbal, Block 4-A, Karachi Tel: (92-21) 34810729-32 Alaska Residency Branch Shop Number 11-13 Plot No.A, K.D.A Scheme No.33 Safora Goth Scheme-33, Gulistan-e-Johar Karachi Al-Hilal Society Branch Nafees Arcade, Plot No. SC-14, Chandni Chowk, KDA Scheme No.7, Main University Road, Karachi Tel: (92-21) 34124111-5 Al-Tijarah Centre Branch S-8, Ground Floor, Al-Tijarah Centre, Block-6, PECHS, Shahrah-e-Faisal, Karachi Tel: (92-21) 34169030-4 Azizabad Branch Shop Nos. S-3, S-4, S-5, S-6, Plot No.CS-54, Azizabad, Block 7, Federal B Area, KDA Scheme No.16, Karachi Tel: (92-21) 36376211-15 Babar Market Landhi Branch 2-A/167,168 & 169, Babar Market, Landhi Township, Karachi Tel: (92-21) 35011071-5 Bahria Town Branch Shop No. 07, Plot Old Customer support centre, Bahria Town Karachi, Main super highway Karachi, Pakistan. Cell: 0304 1927363 - 64 0304-0920612 Bahadurabad Branch Plot No.28, Adam Arcade, Bihar Muslim co-operative Housing Society, Bahadurabad Karachi Tel: (92-21) 34145018-21 Baitul Mukkaram Masjid Branch Shop No. S-3, S-4,Yasir Apartments,FL-6,Block No. 16, Gulshan-e-Iqbal, Karachi Tel: (92-21) 34839021-3 Baitus Salam Branch Plot # 22-C, Commercial Street No.03, Baitus Salam DHA Phase-IV, Karachi Tel: (92-21) 35805181-85 Baldia Town No.9 Branch Plot No.ST-21, Saeedabad, Baldia Town No.9, Karachi Tel: (92-21) 32819106-10 Banaras Branch Plot No.3, Bacha Khan Chowk Karachi Tel: (92-21) 36414571-4 Baradari North Karachi Branch Plot No A-45,Sector 11-B, North Karachi Township, Karachi Tel: (92-21) 36900930-34 Barkat-e-Hyderi Branch D-10, Block-H, Scheme No 2, North Nazimabad, Karachi Tel: (92-21) 36705073-159 162-146-194-215 Beaumont Plaza Branch Plot No.4, Shop No.7 & 8, Beaumont Road, Civil Lines Quarters, Karachi Tel: (92-21) 35642370-74 Belle View Towers Branch Shop No.2, Ground Floor, Belle View Towers, Nishter Road Garden East Quarters, Karachi Tel: (92-21) 32244578-79-80-81-82-83 Bhittai Colony Korangi Branch Plot No.395, Block “A”, Bhittai Colony, Korangi, Karachi Tel: (92-21) 3515-1741-45 Alamgir Road Branch Plot No. Z-484, Block No-3, Bhadur Yar Jang Co-operative Housing Society, Alamgir Road, Karachi Tel: (92-21) 34140968 Bilawal Chowk Branch Plot No. Commercial 7/1, Green Belt Residency, Shop No 4 & 5, Block 2 , Scheme 5, Clifton Karachi Tel: (92-21) 35830628,729,1448, 2083 Allama Iqbal Road Branch Plot No. 830-C, Central Commercial Area, Block 2, PECHS, Allama Iqbal Road, Karachi Tel: (92-21) 34373263 Bin Qasim National Highway Branch Survey # 435, Deh Landhi,Taluka Bin Qasim town,Karachi Tel: (92-21) 35012365, 35012376 Azam Town Branch Old Plot No. 2209/A, New No R-2889/A Street No. 8 Azam Town, Karachi Azeem Pura Branch CB-11/18 ,CB11/19, Survey No.330, Main Azeem pura Road, Shah Faisal Colony Karachi Tel: (92-21) 34683811-4 Block-4 Clifton Branch Plot No. COM-2/A, Block 4, Scheme No. 5, Kehkashan, Clifton, Karachi Tel: (92-21) 35879531-35 Block-A North Nazimabad Branch Plot No. SD-1, Block A, KDA Scheme No. 2, North Nazimabad, Karachi Tel: (92-21) 36722430-4
390. Block-E North Nazimabad Branch Plot No .ST-4, Shop # A/D-66 & 67, Block "E" Hyderi, North Nazimabad, Karachi Tel: (92-21) 36724294-96 Block-F North Nazimabad Branch Shop # 9,10,11 & 12 Sub-Plot # SC14-3 Plot No SC-14,Block -F, KDA Scheme No. 2 ,Samar Residency North Nazimabad Karachi Tel: (92-21) 36723549-554 Block L North Nazimabad Branch Showroom No.G-3 & G-4, Plot No.B-74, Block – L, North Nazimabad, Karachi Tel: (92-21) 36620080-084 Block-18, Gulistan-e-Jauhar Branch Rufi Lacks Drive, Unit No. 34 & 35, Perfume Chowk, Block-18, Gulistan-e-Jauhar, Karachi Tel: (92-21) 34198130-134 Block-3 A Gulistan-e-Jauhar Branch Palm Residency, Unit # 01, Block- 3A, Kamran Chowrangi, KDA Scheme-36, Gulistan-e-Jauhar Tel: (92-21) 34161921-25 Boat Basin Branch Shop No. 40-43, Commercial Sub Plot No. FL-7/C/4 of Plot No. 7, Block No. 5, Clifton, Karachi Tel: (92-21) 35870697-8 Bohrapir Branch Ranchore Quarter, Prince Street, Bohrapir, Karachi Tel: (92-21) 32712915-8, 32712909 Boulton Market Branch Plot No. 8-9/D-I, Serai Quarters, Boulton Market, M.A. Jinnah Road, Karachi Tel: (92-21) 32467811-5 Bombay Bazar Branch Shop No G-2, survey No 7, Sheet No. B.R.03 (Old No.A-15/10, Bunder Quarters, Karachi) Tel: (92-21) 32468701-05 Buffer Zone Branch R-914, Sector-15-A/1, Buffer Zone, North Karachi, Karachi Tel: (92-21) 36965851-5 Cattle Colony Landhi Branch Plot No. 45/B, Cattle Colony Landhi, Karachi Tel: (92-21) 35135-181- 85 Cause Way Branch Plot No.H-3/A, Sector 5, Cause Way, Korangi Industrial Area Karachi Tel: 0305-2236983, 0305-2236698 Chakiwara Branch Survey No.24, Sheet No.LY 45 Opposite Saify Park, Lyari Quarters, Chakiwara, Karachi Tel: (92-21) 32530941 Commercial Avenue Phase VII DHA Branch Plot No.33-D, Khy-e-Sehar Lane 4, Commercial Avenue, Phase VII, D.H.A, Karachi Tel: (92-21) 35171201-05 Coral Towers Emaar Branch Coral Towers, Crescent Bay, Abdul Sattar Edhi Avenue, DHA Phase VIII, Karachi Chawla Market Nazimabad No.1 Branch Shop No.1-4, Bukshi Residency, Plot No.3, Sub-Block-K, Chawla Market Nazimabad No.1, Karachi Clifton Branch Shop # 5, 6, Ground Floor, Al-Karam Centre, BC1, Block-7, Main Clifton Road,Clifton, Karachi, Add Space Shop # 4, Plot # BC 2, Block 7 Clifton, Kararachi Tel: (92-21) 35372060-64 Cloth Market Branch Shop # 14, Ground Floor, Atique Market, Survey No.1-2, Survey Sheet B.R.2, Bunder Quarters, Karachi Tel: (92-21) 32418137-39 Darakhshan Society Malir Branch Plot No. A-16/1, Darakhshan Society, Malir Township, Karachi Tel: (92-21) 34492788, 34493005 Denso Hall Branch Plot No. 21 Ward No. W-07, Denso Hall M.A. Jinnah Rood Karachi Tel: (92-21) 32776731-5 Gharibabad Branch Plot Number.73, Survey No.538 Deh Gujro Tapo Songal Near Gharibabad, Liaquatabad Karachi Tel: (92-21) 34853041-5 Gizri Branch Plot No. K-7/9 Gizri, Chaudhry Khalique-uz-Zaman Colony, Bakhshan Village, Bazar Area, Clifton, Karachi Tel: (92-21) 35865670-4 Godhra Camp Branch Plot No.C-340 Sector 11-E Ali Muhammad Goth, Godhra Camp Karachi Gole Market Nazimabad Branch Plot No. 2-E/3, Gole Market Nazimabad, Karachi Tel: (92-21) 3641 8011-15 DHA Phase II Extension Branch C-69 & C-71, 12th Commercial Street, Phase-II (Extension), DHA, Karachi Tel: (92-21) 35311953-8 Gulbahar Branch Shop No. G-8, G-9, G-10 and G-11, Sub Plot No.20/3, Sana Towers, Firdous Co-operative Housing Society, Golimar Chowrangi, Nazimabad, Karachi Tel: (92-21) 36701155-9 DHA Phase I Branch Ground Floor, Plot No. 119, DHA Phase I, Korangi Road, Karachi Tel: (92-21) 35396854-8 Gulbai SITE Area Branch Plot No. C-25, Gulbai, SITE Area, Karachi Tel: (92-21) 32594711-5 DHA IV Branch Plot No 78, 10th, Commercial Street, Phase IV, DHA, Karachi Tel: (92-21) 35314861-4 Gulberg Branch Plot No. B-1, Block 18, Gulberg, F.B. Area, Karachi Tel: (92-21) 36829112-5 Dhorajee Branch Plot # 355, C.P & Berar Co-operative Housing Society Block-7/8, Karachi Tel: (92-21) 34860861-4 Gulshan-e-Iqbal Branch Shop No. 1, 2, 3 & 4, Plot No.B-41, Block 13-A, Gulshan-e-Iqbal, Karachi Tel: (021) 4811901-905 Drigh Road Branch Plot No.26/183 Drigh Road Cantt Bazar Faisal Base, Karachi Tel: (92-21) 34687172-76 Gulshan-e-Iqbal Block-5 Branch Plot No. 9/ FL-3 KDA Scheme No. 24, Gulshan-e-Iqbal Block-5, Main Rashid Minhas Road, Karachi. Do Talwar Clifton Branch The Plaza Plot No.G-7, Showroom No. 24, 25, 26,27, KDA Scheme 5, Clifton Do Talwar Block-9, Karachi Tel: (92-21) 3530-8762-3 Gulshan-e-Hadeed Branch Plot No.C-27, Sub Sector 8-C/I, Phase I, Gulshan-e-Hadeed, Steel Town, Karachi Tel: (92-21) 34712151-155 Enquiry Office, Nazimabad No.2 Branch Plot No.1, Sub Block-D, Block No.II, Nazimabad No.2, Karachi Tel: (92-21) 36700451-455 F.B Area Branch C-12, Block-10, F.B. Area, Karachi Tel: (92-21) 36805370 F.B Area Block 6 Branch C-31 Block 6 F.B Area near Karimabad, Karachi Tel: (92-21) 36830450-1 Federal B Industrial Area Branch Plot No. ST-7, Block – 22, Federal B Industrial Area, Karachi Tel: (92-21) 36834625-29 Phase VII Ext DHA Plot No. 3-C, Corner of 5th Tariq Commercial Street, DHA Phase VII Ext, Karachi Gulistan-e-Jauhar Block-1 Branch Shops No. 1, 2, 3, 7, Ground Floor, Samrah Arcade, Plot No. SB-04, Block 1, KDA Scheme No. 36, Gulistan-e-Jauhar, Karachi Tel: (92-21) 34013922-6 Gulshan Block 2 Branch Plot No. SB 08, Gulshan-e-Iqbal Block 2, Near Rab Medical Centre, Karachi Tel: (92-21) 34971232 Gulshan Chowrangi Branch Gulistan-e-Erum, Sub-Plot # 5-A/1-10, Plot No.FL-5, Block-3, Scheme 24 Gulshan-e-Iqbal, Karachi Tel: (92-21) 34811849-56, 34810762 Gulshan-e-Iqbal Block 6 Branch Plot No. FL-6 /1/A-4, Al-Shams Plaza, Block-6, KDA Scheme No. 24, Rashid Minhas Road, Gulshan-e-Iqbal, Karachi Tel: (92-21) 3481-3521-25 Queens Road Branch Plot No. 1-A, Sheet QR-9, Queens Quarters, Queens Road, Karachi Gulistan-e-Jauhar Branch Plot No ST-19,Block 15, Scheme 36,Gulistan-e-Jauhar, Karachi Tel: (92-21) 34030251-55 FTC Branch Ground Floor, Block-B, Finance & Trade Centre, Shahrah-e-Faisal, Karachi Tel: (92-21) 35650771-5 Gulshan-e-Maymar Branch Flat No. A-102 & shop no. 1 & 2, Sub Plot no. SB-1 / X / IV,Gulshan-e-Maymar Karachi Tel: (92-21) 36350513-4-5 Garden West Branch Shop No. 9,10,11 & 12 , Plot Survey no.130/1 Sheet No. G-R.2, Garden West, Karachi Tel: (92-21) 32241383-87 ANNUAL REPORT 2019 389
391. Gulzar-e-Hijri Branch Plot No .B-14, Al-Memon Welfare Cooperative Housing Society, Unit No.1-3, Sector 13-A, Scheme-33 Gulzar-e-Hijri, Karachi Tel: (92-21) 3465-5860-64 Hadi Market Branch Nazimabad No. 4 Shop No.1-4, Commercial Plot No.7, Sub-Block-C, Block-IV, Nazimabad, KDA Scheme 2, Hadi Market Karachi Hub River Road Branch Building No. 06 Commercial Sector No. 04, Haroon Bahria Coperative Housing Society, Hub River Road, Karachi Tel: (92-21) 32364236-9 Hussainabad Branch Plot # 1109 & 1110,Block # 3, Ground Floor,Pakistan Memon Education & Welfare Society Hussainabad Karachi Tel: (92-21) 36320461 I.I.Chundrigar Branch Shop No. 9 & 10,Gul Tower, I.I.Chundigar Road Karachi Tel: (92-21) 32423676 Indus Mehran Cooperative Housing Society Branch Plot No.14-A , Naclass No.55, Indus Mehran Co-operative Housing Society Malir, Karachi Tel: (92-21) 3449640-44 KDLB Branch 2nd Floor, KDLB Building, West Wharf Road, Karachi Tel: (92-21) -32314103-07 Keamari Branch Plot No. 29/1, Opposite Jungle Shah College, Keamari Town, Karachi Tel: (92-21) 32863170-4 Khadda Market Branch (Khayaban-e-Shamsheer) Branch Plot No.4-C, Khadda Market, Khayaban-e-Shamsheer, DHA Phase V, Karachi Tel: (92-21) 35240811-5 Khadija Market, Block I North Nazimabad Branch Plot No. SC-4, Shop Nos. 2, 2-A, 3, 4,5 Khadija Market, Block I North Nazimabad Karachi Tel: (92-21) 3672-2790 - 94 Khalid Bin Waleed Branch Plot No. 89/N, Muhammadi Terrace, Block-2, Khalid Bin Waleed Road, P.E.C.H.S, Karachi Tel: (92-21) 34383914-16 Korangi Industrial Area II Branch Plot No.27 & 28, Sector - 16, Korangi Industrial Area, Karachi Tel: (92-21) 3514-4341-45 Korangi Darul Uloom Branch Sector 28, Darul Uloom, Main Korangi Industrial Road, Karachi Tel: (92-21) 35123134-35, 35123138-40 Lasbella Branch Plot No.460, G-2, Garden East Lasbella, Karachi Tel: (92-21) 32244290-294 Lea Market Branch Plot No. 3/20, Khajoor Bazar, Lea Market, Karachi Tel: (92-21) 32521650-4 Liaquatabad Branch No.18, Plot No. 1/19, S.M.Taufiq Road, Liaquatabad, Karachi Tel: (92-21) 34125673 Liaquat Market Malir Branch Plot No. LS-38, ST-32 Block-04, Malir Township Liaquat Market Malir, Karachi Tel: (92-21) 34502880-84 Light House Branch Plot No. 57, Jahangir Mansion, Shop No.14, Thatia Compound Street, Wadhumal Odharam Quarters, Light House, M.A Jinnah Road, Karachi Tel: (92-21) 32742775-6 Jama-e-Millia Malir Branch Plot No.S-25, Survey No.282, Gulzar-e-Ibrahim, Jama-e-Millia Malir, Karachi Tel: (92-21) 3416-2270-74 Kharadar Branch Shop No.1, Ground Floor, Al-Fatima Plaza, Paria Street, Ghulam Hussain Kassam Quarters, Kharadar, Karachi Tel: (92-21) 32316510-4 Jamshed Road Branch Plot No. 713/6, Shaheen Tower, Jamshed Quarters, M.A Jinnah Road, Karachi Tel: (92-21) 34923281-5 Khayaban-e-Bokhari Branch Plot No 22-C, Khayaban-e-Bokhari, Ph-VI, DHA Karachi Tel: (92-21) 35243561-5 Machi Miani Branch Plot No.98/1, Sheet No.GK-6 Ghulam Hussain Kassim Quarters Kharadar, Machi Miani, Karachi Tel: (92-21) 32331201-05 Khayaban-e-Rahat Branch Plot No. 32 /C, Shop No.1-5, Khayaban-e-Rahat Phase VI, DHA Karachi Tel: (92-21) 3585-7531-35 Marriott Hotel Branch Marriott Hotel, Abdullah Haroon Road, Karachi Tel: (92-21) 35683491 Javed Bahria Cooperative Housing Society Branch Plot No.34, Javed Bahria Cooperative Housing Socieity, Hawksbay Road, Karachi Tel: (92-21) 32351201-04 Jodia Bazar Branch MR5/115-114 Darya Lal Street, Jodia Bazar, Karachi Tel: (92-21) 32473326-28 Joffa Towers Branch SB-23 & 24,Office No. G2, 102-104, Joffa Towers, Main University Road, Block-13-C, Gulshan-e-Iqbal, Karachi Tel: (92-21) 34830141-5 Jubilee Market Branch Plot No.64, Ghulam Hussain Hidayatullah Colony, Jubilee Market Karachi Tel: (92-21) 32720454-58 Kaghzi Bazar Branch Shop No. 7,G-1 & S-1 Old Town, Main Kaghzi Bazar Karachi Katchi Gali No.2 Branch No. G-1, situated at Katchi Gali No. 2, Marriot Road, Karachi Tel: (92-21) 32443526-7 K.A.E.C.H.S Branch Plot No. SA / 49 (Commercial) Block No. 4, Karachi Administrative Employees Co-operative Housing Society LTD. Karachi Tel: (92-21) 34302920 390 Karachi Cantt Branch Shop No.1, Salalah Apartment, Civil Lines Quarters, Dr. Dawood Pota Road, Near Cantt. Station, Karachi Tel: (92-21) 3562-0180-84 MEEZAN BANK LIMITED Khayaban-e-Sehar Branch 9-C, Shahbaz Commercial. Lane 1, Khayaban-e-Sehar, Phase VI, DHA, Karachi Tel: (92-21) 35349307-13 Khayaban-e-Shamsheer Branch 23-C, Main Khayaban-e-Shamsheer, Phase V (Ext) DHA, Karachi Tel: (92-21) 35247600-04 Khayaban-e-Ittehad Branch Plot No.124-N, Khayaban-e-Ittehad DHA Phase VI Karachi Tel: (92-21) 3515-5911-15 Korangi Branch Plot No. LS-3, ST-3/1, Sector No.15,Korangi Industrial Area, Karachi Tel: (92-21) 35114324-5 Korangi Township Branch Plot No.LS 03, ST 37/4, Korangi 3 ½ , Sector 35 – C, Korangi , Karachi Kokan Colony Baldia Town Branch Plot No. 328 Deh Moach Kokan Colony Baldia Town Karachi. Tel: (92-21) 32591300-04 Korangi II Branch Q 37, Sector 33-A, Main Road Korangi, Karachi Tel: (92-21) 35059215-16 M.A. Jinnah Road Branch M.R2/52, Sheba Centre, M.A Jinnah Road Karachi Tel: (92-21) 32467032-7036 Malir Cantt Branch Army Shopping Complex, Malir Cantt, Karachi Tel: (92-21) 34196121-25 Malir Cantt II Branch Army Defence Centre, New Chowk Road, Near Check Post No.06, Malir Cantonment Karachi Tel: (92-21) 34900543-47 Malir City Branch Salman Tower & Shopping Mall, Malir, Main National Highway, Karachi Tel: (92-21) 34493103-7 Maskan Chowrangi Branch Plot No. FL-12/B-41, Allah Noor Apartment, Block 7, KDA Scheme No. 24, Maskan Chowrangi, Gulshan-e-Iqbal Karachi Tel: (92-21) 34835100-04 Mausamyat Scheme 33 Branch Shop No.28-31, Shumail Complex, Mausamyat, KDA Scheme 33, beside Dow Hospital Ojha, Karachi Maymar Avenue Branch Shop No.2,16, Com-2 Sector 15-A Scheme 33, Maymar Avenue Karachi Mehmoodabad Branch Plot No. 178 -179, Survey No. 250- 251 Sheet No. MAC-II Mehmoodabad Tel: (92-21) 35319051 - 055
392. Metroville SITE Branch Plot No .E-11, E-12 Block-1 Metroville, SITE Karachi Tel: (92-21) 36752601-5 Model Colony Branch Plot No.6, Survey No.N-55, Tina Square Housing Project,Deh Mehran,Tappo, Malir Karachi Tel: (92-21) 34492445-7 Muhammad Ali Society Branch Plot No 5/F, Muhammad Ali Memorial Co-Operative Housing Society, Karachi Tel: (92-21) 34301864-67 Nanakwara Branch Plot No. WO-1/13, Muhammadi Manzil, Syedna Tahir Saifuddin Road, Paan Mandi, Nanakwara, Karachi Tel: (92-21) 327141014-105 Nursery Branch Plot No.13-A, Survey Sheet No. 35-P/1, Amber Pride show room No.1, Ground Floor, Block-06 P.E.C.H.S, Nursery, Karachi Tel: (92-21) 34396510-14 Saddar Branch Survey No.70/2, Survey Sheet No.SB-6, Javeria Gems & Jewels centre, Raja Ghazanfar Ali Khan Road, Saddar Bazar Quarters Karachi Tel: (92-21) 35224601-05 Orangi Town Branch Plot No. LS-15, Sector 6-E, Orangi Town, Karachi Tel: (92-21) 36694370-4 Saeedabad Baldia Town Branch Plot No.604 & 609/1-A, Sector 5-J, Saeedabad Baldia Town, Karachi Tel: (92-21) 32817511-5 Orangi Town Sector 10 Branch Plot No.LS-06-07, Sector No.10, Orangi Town Karachi Safora Chowk Branch Shop No. 3, 4, 5 & 6, Ground Floor, Prime Tower, Plot No. SB-20, Block 7, KDA Scheme No. 36, Safora Chowk, Gulistan-e-Jauhar, Karachi Tel: (92-21) 34660661-5 Orangi Town No.15 Branch Plot No.LS-3,LS-35 Sector 14-A, Orangi Town No.15, Karachi Tel: (92-21) 36690231-40 Nadir House Branch Nadir House Branch, I.I. Chundrigarh Road Karachi Tel: (92-21) 32410085-88 Panorama Center Branch Survey # 248 , Shop # 6 & 6-A Panorama Centre, Staff Line, Fatima Jinnah Road, Saddar, Karachi Tel: (92-21) 335642587-91 Sharafabad Branch Plot No.525, Block-3, Shop No. 1-3, Ground Floor, Karachi Memon Cooperative Housing Society, Sharafabad, Karachi Tel: (92-21) 3494-2941-45 Nayabad Branch Plot No. No. 113/A, Shop No.1-6, 18-29, Shah Waliullah Road Nayabad Lyari, Karachi Tel: (92-21) 32385631-5 P & O Plaza Branch Ground Floor, P & O Plaza, Opposite Muhammadi House, I.I Chundrigar Road, Karachi Tel: (92-21) 32467901-5 Shaheen Complex Branch Shaheen Commercial Complex, M.R. Kayani Road, GPO Box 121, Karachi Tel: (92-21) 111 852 852 Nazimabad No. 3 Branch 3-A-1/13 Nazimabad No. 3, Karachi Tel: (92-21) 36707431-4 Pakistan Chowk Branch Ground Floor, Plot No. 08, Survey Sheet No. RB-5, Pakistan Chowk Arambagh, Road, Karachi Tel: (92-21) 32219651-6 New Challi Branch Fakhri Trade Centre, Plot No. SR – 6/10, Shahra-e-Liaquat, New Challi, Karachi. Tel: (92-21) 32602121-126 New Town Branch Plot No.371 Kutiana Centre, Shop No.10-13, Jamshed Quarters, Karachi Tel: (92-21) 34943581-5 New Truck Stand Hawksbay Branch Plot No.F-1/4 to F-1/9, K-28 Phase-I Trans Lyari, Hakwsbay Road, Karachi Tel: (92-21) 32373204-13 New Fruit & Vegetable Market Super Highway Branch Block No. C-X, New Fruit & Vegetable Market, Super Highway, Karachi Tel: (92-21) 3687-0190-94 NHS Karsaz Branch NHS Phase I Main Gate, Dalmia Road, Karsaz Karachi Nishtar Road Branch Property No.26A, S4/B, S-5A,S-5/5B/6, Plot # 31/1/15, SHEET NO L.R.9, Lawrence Quarters, Nishtar Road, Karachi Nishat Commercial Branch Plot No. 1-C/I, Nishat Lane No. 6, Phase VI, DHA, Karachi North Karachi Branch Plot # SA-6 (ST-8),11-C-1 North Karachi Tel: (92-21) 36965051-55 North Karachi Industrial Area Branch Plot # 1-A, Sector # 12-C,North Karachi Town ship Karachi Tel: (92-21) 36963117-121 North Napier Branch Shop No. 12,Poona wala, Trade Tower,W.O 1/55, Opposite City Court Chabba Gali,Main North Napier Road Karachi Tel: (92-21) 32713530-34 North Nazimabad Block-M Branch Plot No. SB-2, Block-M, North Nazimabad, Karachi Tel: (92-21) 36627054-5 Paposh Nagar Branch Plot No.18, Row No.1, Block-E, Block No-V, Paposh Nagar Nazimabad, Karachi Tel: (92-21) 36700640-44 PIB Colony Branch Plot No 390-391, PIB Colony Main Road, Karachi Tel: (92-21) 34191201-205 Plaza Quarters Branch Plaza Square Karachi, Bombay Building, City Survey No. 37/22, Off M.A. Jinnah Road, Karachi Tel: (92-21) 32751560, 32751124 PNSC (Lalazar) Branch 37-A, Lalazar Area, Off Moulvi Tamizuddin Khan Road, Karachi Tel: (92-21) 35636240 Port Qasim Branch Plot No. W2/1-3, North Western Industrial Zone, Port Qasim, Authority Karachi Tel: (92-21) 34154304 - 9 Power House Branch Plot No. R-17, Sector 5-C/4, North Karachi Tel: (92-21) 36902608-12 Rashid Minhas Road Branch Ground Floor, Aqsa Tower, Block-C, Rashid Minhas Road, KDA Scheme No.33, Karachi Tel: (92-21) 34978062, 34978064 Razi Road Branch Plot No 44-A, Nice Trade Orbit, Block 6, Razi Road, PECHS, Karachi Tel: (92-21) 34370151-155 Regal Chowk Branch Shop No. 1-B, Survey No. 273/2, Sheet A.M (Part -2), Rahman Mansion, Artillery Maidan Quarter, Frere Road, Saddar, Karachi Tel: (92-21) 32701151-5 Shahrah-e-Faisal Branch Showroom No.4-7, Ibrahim Trade Tower, Plot No.1, Survey Sheet No.35-P/I, Block-7-8, Maqbool Co-Operative Housing Society, Shahrah-e-Faisal, Karachi Tel: (92-21) 34322183-9 Shahrah-e-Quaideen Branch Plot # 19/A, Block 2, PECHS, Main Shahrah-e-Quaideen Road, Karachi Tel: (92-21) 3418 8601-05 Shahrah-e-Orangi Branch Plot No. CI-59, Sector 11, Orangi Township, Orangi, Karachi Tel: (92-21) 36699621-25 Shadman Karachi Branch Plot No. ST 21/2A Sec.No 14-B, Shadman, North Karachi Tel: (92-21) 36940650-54 Shaheed-e-Millat Road Branch Plot No. 7-A/228, Block-3, Dehli Mercentile Muslim Cooperative Housing Society Ltd, Shaheed-e-Millat Road, Karachi Tel: (92-21) 34140151-155 Saba Avenue Branch Plot # 22-C-C, Saba Avenue, DHA Phase VI, Karachi Tel: (92-21) 35155901-905 South Asia Pakistan Terminal Branch Plot No.1, South Asia Pakistan Terminal Building, Container Port Road Keamari, Karachi Shah Faisal Colony Branch CB-33, Al Falah Society, Shah Faisal Colony, Karachi Tel: (92-21) 34686271-3 Shamsi Society Malir Halt Branch Plot No. CM 44 & 45, Ground Floor Shamsi cooperative Housing Society Ltd., Malir Halt, Karachi Tel: (92-21) 34682405-07 Shahrah Darul Uloom Branch Plot No.3, Sector 27, Korangi Industrial Area, Shahrah Darul uloom Karachi Karachi Shershah Branch Plot No. D.283/15 & 16, Quality Godown Shershah Road, SITE Karachi Tel: (92-21) 32562411-15 ANNUAL REPORT 2019 391
393. Sidco Centre Branch Shop No .13, Sidco Centre Din Muhammad Wafai Road Karachi Tel: (92-21) 35224850-54 UP Auto Market Branch Plot No.LS-54 & 49 ST-10 Sector 11- I North Karachi Tel: (92-21) 6900681-87 Khuzdar Shireen Jinnah Colony Branch Plot No. 4-B,Block No. 1, Clifton Karachi Tel: (92-21) 35833025, 35836758, 35836780 Water Pump Branch Plot No. BS-13,Block No.14, Federal B.Area Karachi. Tel: (92-21) 36332443, 36332523 Khipro Sir Syed Road Branch Plot No. 152-S, Ground Floor, Sir Syed Road, Block 2, PECHS, Karachi Tel: (92-21) 35143500-4 West Wharf Road Branch Plot No.14, A & K Chambers West Wharf Road, Karachi Tel: (92-21) 32203445-9 SITE Branch Plot No. B/9-C, Site Area, Karachi Tel: (92-21) 32550328-31 Karak SITE-II, Super Highway Branch Showroom # 1 & 2, Plot # D/41-A, SITESuper Highway Phase-II, Karachi Tel: (92-21) 36880342-349 Soldier Bazar Branch G-2, Ground Floor, Plot No. SOL.B-2/16, VII-E/100/1, Soldier Bazar Quarters, Karachi Tel: (92-21) 32290320-24 Steel Market Branch Plot No.5, Shop No12, Al-Hamd Centre, Ranchore Quarter Steel Market, Baba-e-Urdu Road Karachi Stock Exchange Branch Office # 41, 42 & 43 Ist Floor Stock Exchange Building, I.I Chundrigar Road Karachi Tel: (92-21) 32470920-8 Super Highway Branch Highway Trade Centre, Shop # 11-12-13 &14 Block-2, Sector1-A, Super Highway, Karachi Tel: (92-21) 36830076-78, 36830045 & 36830107 Tahir Villa Chowrangi Branch Plot No. 74/1, Block 5, Tahir Villa Chowrangi, F.B.Area, Karachi Tel: (92-21) 36364452-54 Tariq Road Branch Plot No. 138-A, Block No. 02, PECHS, Tariq Road, Karachi Tel: (92-21) 34300180-84 Textile Avenue Branch Plot No. H-6, SITE Survey Sheet No. 21, Near Site Police Station SITE, Karachi Tel: (92-21) 32584850-59 Timber Market Branch Plot No. 03, Main Timber Market, Siddique Wahab Road, Karachi Tel: (92-21) 32740060 - 64 Times Square Branch Shop No.1-4, Sub Plot No.FL 11/3/1/A-1/2, Plot No.11/3, Times Square KDA Scheme 24, Gulshan-e- Iqbal Block 06 Karachi Tel: (92-21) 34826051-5 Tipu Sultan Road Branch Plot No.104-105, Sheet No.35-P/1, Block-7-8, Banglore cooperative Housing Society, Tipu Sultan Road Karachi Urdu Bazar Branch Shops No. 11 & 12, Anfal Centre, Plot No. RB-9/1, Rambagh Quarters, Urdu Bazar, Karachi Tel: (92-21) 32603031-5 University Road Branch Plot No. SB-25, S-1, S-2 & S-3, Block-1 Gulistan-e-Jauhar, Main University Road, Karachi. Tel: (92-21) 34170471-5 392 MEEZAN BANK LIMITED Karak Branch Khasra Nos.615-616-243-236-233-235, Tehsil Road, Karak Tel: (092) 7211032-34 Karoor Lal Eesan Karoor Lal Eesan Branch Ward No.5, Karoor Lal Eesan District Layyah Kahuta Kahuta Branch Khewat # 15-16 Khatooni # 17-20, Gul Siraj Plaza Rawalpindi Road Kahuta Tel: (92-051) 3313015-16 Kamalia Kamalia Branch Khasra No. 4169-4191, Muhallah Mitianwala, Railwary Road, Kamalia Tel: (92-046) 3413590-94 Kasur Kasur Branch 216-9, R-IV, Railway Road, Kasur Tel: (92-492) 2764999 Khairpur Khairpur Branch Shop No.1,2,3 Ground Floor Civic Centre, Mall Road, Khairpur Tel: (92-243) 715772-73 Khuzdar Branch Khasra No. 3042/1569, Sultan Ibrahim Road, Khuzdar Khipro Branch Survey 896-CS No.4449-4453 and 4455-4458, Mirpur Khas Road Khipro Tel: (92-0233) 879012 - 879016 Kohat Kohat Branch 1st Floor, Jinnah Municipal Plaza, TMA, Near King Gate, Bannu Road, Kohat Tel: (92-922) 523037-40 Kot Addu Kot Addu Branch Khewat No. 264/241,Ward No. 2, Mauza Pirhar Sharqi, G.T.Road, Kot Addu. Tel: (92-66) 2240333-37 Kot Chutta Kot Chutta Branch Khata No.31, Mauza No.03 Indus Highway Kot Chutta Tel: (92-64) 2843193-4-5 Kot Ghulam Muhammad Kot Ghulam Muhammad Branch Survey No.699, Main Station Road Kot Ghulam Muhmmad Tel: (92-023) 3866114-8 Kot Radha Kishan Kot Radha Kishan Branch Shop No. 9, Grand City Center, Main Raiwind Pattoki Road, Kot Radha Kishan Tel: (92-049) 2382011 Kotli AJ&K Kotli AJ&K Branch Mouza Pang Piran, Pindi Road, Kotli AJK Tel: (92-05826) 444673-4-5 Kotla Arab Ali Khan Khairpur Tamewali Branch Khairpur Adda, Hasilpur Road, Khairpur Tamewali Kotla Arab Ali Khan Branch Khewat No.123/119, Khatooni No.571,573, Kotla Arab Ali Khan, Tehsil Kharian, District Gujrat Tel: (92-053) 7575703-704 Khanewal Kunri Khairpur Tamewali Civil Club Road Branch Khewat No.13, Khatooni No.13, Civil Club Road, Khanewal Khanewal Branch Plot No. 624-625, Block No. 8, Sir Syed Road, Khanewal Tel: (92-65) 2556625-7 Kunri Branch Plot No. 12, Survey No. 263, Station Road, Deh Gorraho, Kunri, District Umerkot Tel: (92-238) 558412-15 Lahore Khanpur Akbar Chowk Branch Plot No.46, Block-10 Sector B-1 Township Lahore Pabx: (92-042) 35201425-26 Khan Bela Akbari Mandi Branch Outside Akbari Mandi, Circular Road, Lahore Tel: (92-42) 37660969-70 Khar Bajour Askari-IX Branch Commercial Area, Shop No.17-20, 25-27-28, Askari-IX Lahore Tel: (92-42) 36611363-5 Khanpur Branch Kutchery Road, Khanpur Tel: (92-68) 5577127-8 Khan Bela Branch Main K.L.P Road, Khan Bela Tel: (92-068) 5580100-101 Khar Bajour Branch Madina Market, Main Munda Road, Opposite Tanki Market, Khar Bazzar, District Bajour Kharian G.T Road Kharian Branch Ground Floor, Barakat Plaza, Main G.T Road, Kharian Tel: (92-537) 533497-8 Khushab Katha Chowk Khushab Branch P-4106-27-1, Sargodha Road, Katha Chowk, Khushab Tel: (92-454) 711683-4 Askari X Lahore Cantt Branch Sector F, Shop No 6-7, 14-15 Commercial Area, Askari X Lahore Cantt Tel: 0309-7772562-64 Askari XI Lahore Cantt Branch Outside Gate No.1, Commercial Area, Main Entrance, Askari XI Lahore Cantt Tel: 0309-7772581-3 Al-Saeed Chowk Branch Al-Saeed Chowk, near Phool Mandi, Saggian By pass, Jaranwala Road, Tehsil Ferozwala, District Sheikhupura, Lahore Tel: (92-42) 37163873-5
394. Allama Iqbal Town Branch 06 Asif Block Main Boulevard Allama Iqbal Town Lahore Tel : (92-42) 37806882 - 37806887 Avian Chowk Branch H # 44, Nadeem Shaheed Road, Avian Chowk, Near Pakki Thatti, Samanabad, Lahore Tel: (92-42) 37563352-54 Canal View Housing Society Branch Plot No.16, Commercial Area, Canal View Housing Society, Lahore Tel: 0304-1927540, 0304-1927541, 0304-1927542 Cavalry Ground Branch 72-Commercial Area, Cavalry Ground, Lahore Cantt Tel: (92-42) 36619780-3 Azam Cloth Market Branch 19-Bismillah Block, Azam Cloth Market, Lahore Tel: (92-42) 37642011-3 Chowk Baba Attar Ichra Branch Plot # SXVIII-44-S-110/A, Ichra II, Chowk Baba Attar, Lahore Tel: (92-42) 37534152-54 Badami Bagh Branch 35-Peco Road, Badami Bagh, Lahore Tel: (92-42) 37369610-3 Chungi Amar Sadhu, Branch Khasra # 1050, DAR Plaza, Chungi Amar Sadhu , Main Ferozpur Road, Lahore Tel: (92-42) 35922114-17 Bahria Town Branch Plot No.68/69-B, Sector-C, Bahria Town Lahore Tel: (92-42) 35976270-72 K-Block, Model Town Branch Plot No. 8 & 9, Commercial Market, K-Block, Model Town, Lahore. Tel: (92-42) 35915601 Badami Bagh Auto Market Branch Property No. 355,357 Circular Road, Outside Kashmiri Gate, Badami Bagh Auto Market, Lahore Tel: (92-42) 37104010-13 Circular Road Branch 133-Circular Road Near PTCL Exchange Lahore Tel: (92-42) 37642001-05 Civic Centre Johar Town Branch Property No. 20, Civic Centre, Johar Town, Lahore Tel: (92-42) 35189531-3 Cloth Market Branch F-2332, Rrara Tailian, Near Kashmir Block, Azam Cloth Market, Lahore Tel: (92-42) 7380461-65 Bahria Orchard Branch Plot No.16, Phase-1 Central Block Bahria Orchard, Lahore Tel: (92-42) 35475712-16 CMA Society Branch Plot No. 29, Block-A, Military Accounts Co-operative Housing Society, Lahore Tel: (92-42) 35460863-66 Bedian Road Branch Khasra No. 3799, Mauza Lidhar, Main Bedian Road, Lahore Tel: (92-42) 35749607-10 College Road Branch House # 15, Block 2, Sector C-1, Township College Road Lahore Tel: (92-42) 35157181-85 Bedon Road Branch Plot No.15 Bedon Road, Lahore Tel: (92-42) 36290273-76 Davis Road Branch Property No.SE-16-R-17, Near to Jang Press Office, Davis Road Lahore Begum Kot Branch Plot # 4/A Geya Musa, Begum Kot Shahdrah, Lahore Tel: (92-42) 37929103-05 DHA Phase I Branch 167- G, DHA Phase I, Lahore Tel: (92-42) 35742891-2 Bilal Gunj Lahore Branch Khewat No.1611 Khatooni No.2842 Khasra No.3807, Bilal Gunj Sheesh Mahal Road, Lahore Tel: (92-42) 3716657- 58 Bhubtian Branch Khasra No.4202/711, Bhubtian Chowk, Raiwind Road Lahore Tel: (92-42) 35320413-15 Brandrath Road Branch 46 Brandrath Road, Lahore Tel: (92-42) 37676388-92 Burki Road Branch Khasra No.159, Khatooni No.30, Khewat No.20, Main Burki Road, Adjacent Paragon City, Lahore Tel: (92-42) 37167203-4 Bund Road Branch Property No. SW XI 1-S-1/B/6, Main Bund, Road, Lahore Tel: (92-42) 37482671-3 Carol Ghatti Branch Carol Ghatti Chowk, Near Ring Road Junction Lahore Canal Bank Road Branch Mughalpura Lahore Branch PlotNo. 125, StNo. 33, Naya Pul, Punj Pir Road, Canal Bank Road, Mughalpura, Lahore Tel: (92-42) 365543-44 DHA Phase III Branch Plot No. 97-Y, DHA Phase III Commercial, Opposite Sheba Park, Lahore Tel: (92-42) 35742582-3 DHA Phase IV Branch 210-CCA, Phase-IV DHA, Lahore Tel: (92-42) 35747761-2 DHA Phase V Branch Plot No.6 - CCA Phase V, DHA Lahore Tel: (92-42) 37182334-5 DHA Phase VI Branch Plot No. 101, Main Boulevard Phase VI (Commercial), DHA Lahore Tel: (92-42) 35006026, 042-35006028-9 DHA Phase VIII Branch Plot No.C-3, Commercial Broadway, Phase VIII, DHA Lahore Tel: (92-42) 38107774-75 Dholanwal Branch Plot No. 37-A, Dholanwal Near Shezan Factory Bund Road, Lahore Tel: (92-42) 37467113-4 Doctors Hospital - Johar Town Branch Plot No.3-A, G-Block, Doctors Hospital, Johar Town, Lahore Tel: (92-42) 35453153-55 Eden City Branch Plot No 19, Block A, Eden City Lahore Cantt Tel: (92-42) 37185438-39, 37185443 EME Housing Society Branch Plot No. 1 & 37, Block-D Commercial, EME Sector, DHA, Lahore Tel: (92-42) 37498956-8 Faisal Town Branch Plot # 16, Block B, Faisal Town, Lahore Tel: (92-42) 35202116 - 8 Falcon Complex Gulberg III Branch Emporium No. 3, Upper Ground Floor, PAF Falcon Complex, Gulberg III Lahore Tel: (92-42) 35925093-94, 35925288 Ferozpur Road Branch Opposite DESCON Head Quarters, 18-KM Main Ferozpur Road, Lahore Tel: (92-42) 35401873-6 Garhi Shahu Branch Property No.84, Allama Iqbal Road, Garhi Shahu, Lahore Tel: (92-42) 36294191-92 Ghalib Market Branch 64 A-II, Gulberg III, Ghalib Market, Lahore Tel: (92-42) 35772147-9 G.T Road Daroghawala Branch Plot No. 329-F, Main G.T Road, Daroghawala, Lahore Tel: (92-42) 36550501-3 Green Town Branch 72-3-C-1 Quaid-e-Azam Town, Green Town, Lahore Tel: (92-42) 35116706-042-35116709 Gulberg Branch 60-Main Boulevard Gulberg, Lahore Tel: (92-42) 35879870-2 Gulshan-e-Ravi Branch Plot No. 9, Block F, Gulshan-e-Ravi, Lahore Tel: (92-42) 37404822-5 Haider Road Township Branch 434, A-1, Haider Road Township, Lahore Tel: (92-42) 35157101-3 Hall Road Branch S-50-R-19, Hall Road, Lahore Tel: (92-42) 37211806-8 Harbanspura Branch Property No. 116, Saeed Block, Canal Bank, Salamat Pura, Harbanspura, Lahore Tel: (92-42) 36520121-22, 36520129 Ichra Branch 156-Main Ferozepur Road, Ichra, Lahore Tel: (92-42) 37522989-1 Islampura Branch Property No. 61, Main Bazar, Islampura, Lahore Tel: (92-42) 37117463-4 J-III Johar Town Branch Plot No. 12, Block- J-III, Opposite Expo Centre Johar Town, Lahore Tel: (92-42) 35311862 - 864 Johar Town Branch 63/R-1, M.A Johar Town Branch, Lahore Tel: (92-42) 35314631-4 Karim Block Branch Baig Plaza, 21 Commercial Zone, Karim Block, Allama Iqbal Town, Lahore Tel: (92-42) 35296701-5 Kahna Nau Ferozpur Road Branch Khasra # 1508, Hakeem Colony, Mouza Gujjumatta Tehsil Cantt, Kahna Nau, Ferozpur Road, Lahore Tel: (92-42) 35270205-7 ANNUAL REPORT 2019 393
395. Kot Abdul Malik Branch Mouza Sharqpur Khurd , Kot Abdul Malik Main Sheikhpura Road, Lahore Tel: (92-42) 37340743-5 Multan Road Branch S-94, R-334, Multan Road, Near Social Security Hospital, Multan Chungi, Lahore Tel: (92-42) 37492383-85 Saddar Bazar Branch Property No. 1184, Dubai Chowk, Main Tufail Road, Saddar Bazar, Lahore Tel: (92-42)-36622824-6 Khayaban-e-Jinnah Road Branch Plot No. 630/325 Air line Housing Society, Block B, Phase I, Iqbal Avenue Cooperative Housing Society, Khayaban-e-Jinnah Road, Lahore Tel: (92-42) 35955461-63 Naseerabad Ferozpur Road Branch Plot No.405 Naseerabad Gulberg III, Main Ferozpur Road, Lahore Tel: (92-42) 35441601-3 Samanabad Branch Plot No. 210, Main Poonch Road, Samanabad, Lahore Tel: (92-42) 37587213-5 New Anarkali Bazar Branch Property No.S-64-R-132-134/2 New Anarkali Bazar Lahore Tel: (92-42) 37360590-91, 37311977-83 Shad Bagh Branch 13-A, Tajpura Chowk, Near PTCL exchange, Shad Bagh, Lahore Tel: (92-42) 37600667-9 New Fruit Market Branch Property No.116-117 New Fruit Market Ravi Road Lahore Tel: (92-42) 37729213-17 Shadman Colony Branch 91 Shadman Colony - 1, Shadman, Lahore Tel: (92-42) 37522976-9 New Garden Town Branch Flat No. A, Block-V, Awami Flats 1-4, Usman Block, New Garden Town, Lahore Tel: (92-42) 35941474-7 Shahdra Branch 113 G.T. Road, Lahore Tel: (92-42) 37921266-7 Khayaban-e-Iqbal Branch Plot No.34-A, Khayaban-e-Iqbal, Sector-XX, Phase III-C,DHA, Lahore Tel: (92-42) 356948833-34-35-38 Liberty Market Branch Shop # 14-17, Liberty Shopping Centre, Gulberg III, Lahore Tel: (92-42) 35760813, 35760814 Liberty Roundabout Branch 131-E/1 Gulberg III, Liberty Roundabout Lahore Tel: (92-42) 35871223-5 L.D.A Scheme Tajpura Branch Plot No.425 A, L.D.A Scheme Tajpura Lahore Tel: (92-42) 36631463-5 Main Boulevard Branch E-44-1-4-COM, Iqbal Park Commercial, Main Boulevard DHA, Lahore Tel: (92-42) 36621482-4 Nishat Colony Branch Khasra No 296 Nishat Colony Lahore Cantt Tel: (92-42) 35896011-13 Main G.T Road UET Branch Opposite To Sabzi Mandi , Singhpura Stop Main Gt Road, Near UET, Lahore Peco Road Branch 34-S/246 Moza Kot Lakhpat Peco Road, Lahore Tel: (92-42) 35862902-5 Maulana Shaukat Ali Road Branch Plot No. 4-E Jauhar Town, Adjacent BOR, Main Maulana Shaukat Ali Road Lahore Tel: (92-42) 35202067-69 Punjab Cooperative Housing Society Branch 66-F, Phase I, Punjab Co-operative Housing Society, Ghazi Road, Lahore Cantt Tel: (92-42) 35924683-4 McLeod Road Branch SE-10-R-2/12, Nihal Chand Building, Mc'leod Road, Lahore Tel: (92-42) 36284501-4 Mini Market College Road Gulberg II Branch Plot No.25-L, College Road, Gulberg II Lahore Tel:(92-42)35246614-16 Model Town C-Block Lahore Branch Shop Nos.16-17-18, Central Commercial Market, C-Block Model Town Lahore Model Town Link Road Branch Plot No. 13, Model Town Link Road, Lahore Tel: (92-42) 35942355-8 Moon Market Allama Iqbal Town Lahore Branch Plot No. 10, Kashmir Block, Main Boulevard, Allama Iqbal Town Lahore Tel: (92-42) 35427936-40 Moti Bazar Branch Property No. F-2627, Ali Arcade Chowk Choona Mandi, Moti Bazar Lahore Tel: (92-42) 37338870-75 Mozang Road Branch Plot No 15-A, Farid Kot House, Mozang Road Lahore Tel: (92-42) 37110403-6 Mustafa Abad Branch Property No. SE-6-R-148, Allama Iqbal Road, Mustafa Abad, Lahore Tel: (92-42) 36886051-3 Mustafa Town Branch Property # 15, Mamdot Block, Mustafa Town Scheme, Lahore Tel: (92-42) 35418031-33 394 New Muslim Town Branch Plot # 15-B New Muslim Town, Ayubia Market, Lahore Tel: (92-42) 35926800-02 MEEZAN BANK LIMITED Q-Block DHA Phase II Branch 295-Q Commercial Area, Phase II DHA, Lahore Tel: (92-42) 35708324-7 Qainchi Amar Sidhu Branch Khewat No. 1831, Khatooni No. 2125, Shop No. S-86R-376/ B, Qainchi Amar Sidhu, Ferozepur Road, Lahore Qartaba Chowk Branch Qartaba Chowk, Temple Road, Rehman Chamber, Lahore Tel: (92-42) 37112406-10 Quaid-e-Azam Industrial Estate Branch 169 - S, Quaid-e-Azam Industrial Estate, Kot Lakhpat, Lahore Tel: (92-42) 35215765 Rachna Town Branch Plot No.209, Khewat No.597, Khatouni No.1635, Near Moria Bridge Rachna Town Lahore Tel: (92-42) 37920171-2 Raja Market, New Garden Town, Branch 81-Ahmad Block, Raja Market, New Garden Town, Lahore Tel: (92-42) 35913345-7 Ravi Road Branch 33, Main Ravi Road, Opposite Bilal Masjid, Lahore Tel: (92-42) 37706835-7 Riwaz Garden Branch Plot No.317, Riwaz Garden, Near Chuhburji Lahore Tel: (92-42) 37242381-84 Sabzazar Branch Plot No.325, Block – B, Main Boulevard, Sabzazar, Lahore Tel: (92-42) 35962280-82 Shahdra Town Branch Property No.N-130-R-32/26/1, Jahangir Park, Shahdra Town Lahore Shahalam Market Branch D-2050, Fawara Chowk, Inside Shahalam Market, Lahore Tel: (92-42) 37377340-3 Shahkam Chowk, Canal Road Branch Plot 47-48, Block B, Mohlanwal Scheme, Shahkam Chowk Canal Road, Lahore Tel: (92-42) 35966778 Shah Jamal Branch Property No.158, Shah Jamal Road, Lahore Tel: (92-42) 35912954-56 Shalimar Garden Branch Chowk Shalimar Bagh, G.T Road, Baghban Pura, Lahore Tel: (92-42) 36846584-8 Shalimar Link Road Branch Khata No. 222, Khatooni No.397, Khasra No.2240, Near Shalimar Hospital Shalimar Link Road Lahore Tel: (92-42) 36810102-06 State Life Society Branch Plot No.1011, Sector F, State Life Society, Lahore Tel: (92-42) 35474180-81-82 Sultan Pura Branch Property No. 16, Hide Market Sultan Pura Lahore Tel: (92-42) 36862452-58 Sunder Industrial Estate Branch Khewat No.331, Khatooni No.338, Near Sunder Industrial Estate Gate-1,Sunder -Raiwind Road ,Tehsil Raiwind, Lahore Tel: 0304-1927540, 0304-1927541, 0304-1927542 T Block Phase II Branch Plot No. 07, 2-C, CCA-T Block Phase –II Lalik Jan Chowk DHA Lahore Tel: (92-42) 5707383-86 Thokar Niaz Baig Branch 171-A, Ali Town Raiwind Road, Lahore Tel: (92-42) 7516128-30 Tufail Road Branch Shop No.06, 10-11, 33-34 Cantt Shopping Plaza, Tufail Road Lahore Cantt Tel: (92-42) 36602701-703 Urdu Bazar Branch 4-Kabeer Street, Urdu Bazar, Lahore Tel: (92-42) 37116684-7
396. Valancia Town Branch Plot No .1-D, Valencia Society Lahore Tel: (92-42) 35225894-98 Walton Road Branch E-28/E, Street # 1, Shaheen Colony, Walton Road Lahore Tel: (92-42) 36626602-603, 36626606 WAPDA Town Chowk Branch Plot No. 429, Block-E, Main Boulevard, P.I.A Employees Co-operative Housing Society, Wapda Town Chowk, Lahore Tel: (92-42) 35211591-4 Wahdat Road Branch Plot No.16-A, Wahdat Road Branch, Lahore. Tel: (92-42) 35912954-56 West Wood Colony Branch Plot No 24, West Wood Colony, Canal Road, Lahore Tel: (92-42) 37498592-93 Zafar Ali Road Branch Plot No.03, Zafar Ali Road, Gulberg V, Lahore Tel: (92-42) 35775758-59 Zahoor Elahi Road Branch Building No.3-A, Block A, Gulberg II, Zahoor Elahi Road, Lahore Tel: (92-42) 111 852 852 Zarrar Shaheed Road Branch Khasra No. 3939/3296, Block-B, Al-Faisal Town, Zarrar Shaheed Road, Lahore Cantt Tel: (92-42) 36674862 Lalamusa Lalamusa Branch Col. Plaza, Plot No. 9, Camping Ground, G.T. Road, Lalamusa Tel: (92-53) 513022, 7513032 Main Bazar Lalamusa Branch Property No.B-9/18/R.H & B-9/26/Shop & B-9/27/Shop,Main Bazar Lalamusa Tel: (92-53) 7511803-04 Mailsi Mehar Mamukanjan Mehrabpur Mailsi Branch Khewat No.75/73, Khatooni No.99, Colony Road, Mailsi Tel: (92-67) 3750704- 05 Mamukanjan Branch Khewat No.106, Khatooni No.330-376, Lakar Mandi Bazar, Iron Market, Luqman Chowk, Mamukanjan, Tehsil Tandlianwala, District Faisalabad Tel: (92-041) 3435165-6 Manawala Manawala Branch Khatooni No. 1931-1933, Main Bazar, near Union Council Office, Old Nankana Road, Manawala Manawala II, Faisalabad Branch Plot No.5/1/Khasra No.2/1/1/10,Khatoni No7003, Khewat No. 6703, Sheikhupura Road,Manawala ,Faisalabad Manga Mandi Manga Mandi Branch Kasra No.11809, Khewat No.49 Manga Mandi bypass Main Multan Road Mandi Bahauddin Mandi Bahauddin Branch Plot No. 5/181 Ward No. 5, Outside Ghallah Mandi, Near Tawakli Masjid, Mandi Bahauddin Tel: (92-546) 520931-3 Liaquatpur Liaquatpur Branch Plot No.150, Rest House Road, Liaquatpur Tel: (92-068) 5693263-264 Lodhran Lodhran Branch Plot No. 493-A, A-1, A-2/5H, Ghosia Chowk, Multan Bahawalpur Road, Lodhran Tel: (92-608) 364797-8 Malakwal Branch Khewat No.448, Khatooni No.779-789, Badshah Pur Road, Malakwal Tel: (92-546) 581591-2 Lari Adda Branch Near Madni Masjid, Lari Adda, Karakuram Highway, Mansehra Tel: (92-997) 307640-2 Mansehra Branch Meezan Plaza, Near Markazi Jamia Masjid, Abbottabad Road, Mansehra Tel: (92-997) 308315-8 Mardan Bank Road Mardan Branch Khewat No.1643, Khatooni No.2393, Khasra No. 2126-2128, Bicket Gunj, Bank Road Mardan. Tel: (92-937) 9230561-3 Par Hoti Branch Khata No 367 neher chowk Main Bazar Par Hoti Mardan Tel: (92-937) 560013-14 Matli Lora Branch Main Bazar Lora Matli Branch Survey No. 245, Plot No. 29, Notkani Chowk, Matli Tel: (92-0297) 840163-4-5 Loralai Matta Swat Lora Loralai Branch Plot No. 1060, Zhob Road, Loralai, Balochistan Tel: (92-824) 4660103 Mianwali Mianwali Branch Property No. D-3-4/A, Ballo Khel Road, Mianwali Tel: (92-459) 233305-9 Minchinabad Circular Road Minchinabad Branch Khata No. 152, Khatooni No. 152, Circular Road, Minchinabad Tel: (92-063) 2750383-84 Mirpur Azad Kashmir Mirpur Branch Plot No. 123, Sector F/1, Sultan Plaza, Kotli Road, Mirpur Azad Kashmir Tel: (92-5827) 438891-3 Mirpurkhas Malakwal Mansehra Layyah Branch Property No. B-II-174, 175, 176, Chobara Road, Layyah Tel: (92-606) 412975-7 Mian Channu Branch 17-B, Ghazi More, G.T. Road, Mian Channu Tel: (92-65) 2662001-3 Satellite Town Branch Survey No.14/4 - 15/12, Satellite Town, Near Chandni Chowk Mirpurkhas Tel: (92-233) 861764-5 Mandi Faizabad Branch Main Lahore - Jaranwala Road, Mandi Faizabad Larkana Layyah Mian Channu Mandi Faizabad Lalian Branch Sargodha Road, Lalian District Chiniot Larkana Branch Property No.1796, Ward No. A, Bank Square, Bunder Road, Larkana Tel: (92-74) 4055923-5 Mehrabpur Branch Land Bearing No.12/111-A, Thari Road Mehrabpur, Taluka Kandyaro, District Nowsheroferoz Mirpurkhas Branch Plot No. 15, Ward No. A, Adam Mohallah Town, Umerkot Road, Mirpurkhas Tel: (92-233) 876103-8 Katchery Road Branch Khewat No. 1047-1048, Khatooni No.1055-1056 Katchery Road, Mandi Bahauddin Tel: (92-546) 500693-4 Lalian Mehar Branch Plot No. 151, Khairpur Nathan Shah Road, Mehar Tel: (92-25)4730913-4 Matta Branch Khasra No.2879, Main Bazar, Baghderai Road, Matta, District Swat Moro Moro Branch Property No. 60, Ward 13, Main Road National Highway, Moro Tel: (92-242) 411008-14 Multan Adda Laar Branch Khewat No.220 Murabba No. 86 Adda Laar, N-5 National Highway Road, Multan Tel: (92-61) 4377501-2 Bahawalpur Bypass Chowk Branch Khewat No. 537/530, Khatooni No.796. Shaukat Commercial Center Bahawalpur Road Near Bahawalpur Bypass Chowk, Multan Tel: (92-61) 4482702-706 Bosan Road Branch Chungi No. 9, Lawyers Colony, Bosan Road, Multan Tel: (92-61) 6210090-2 Chowk Fawara Branch Khewat No.140, Property No. 1925/26/27/28, Mouza Taraf Ismail, Near Chowk Fawara, Abdali Road Multan Tel: (92-61) 4570334-38 Chowk Shaheedan Branch Property No. 3493, Chowk Shaheedan, Multan Tel: (92-61) 4502906-9 Chungi No.1 Branch Chungi No. 01, Near Pull Wasil Chowk, Multan Tel: (92-61) 4544501-6 ANNUAL REPORT 2019 395
397. Chungi No .14 Branch Ground Floor, Al Makkah Centre Chungi No.14, Multan Tel: (92-61) 4577572-4 Gulgasht Branch 437/C Gulgashat Colony, Multan Tel: (92-61) 6511931-2 Hussain Agahi Branch Property No. 2560, Ward No. 10, Hussain Agahi Road, Multan Tel: (92-61) 4512206-7 MDA Chowk Branch Khewat No.289-B, 286-R Khatooni No. 359-360, Babar Colony, Police Line Road, MDA Chowk Multan Tel: (92-61) 4510423-25 Model Town Branch Property No.110/A-111/A, Model Town, Multan Tel: (92-61) 6522183-185 Nawan Shaher Branch Plot No.92,93,94, LMQ Road, Chowk Nawan Shaher, Multan Tel: (92-61) 4785604-07 Old Shujabad Road Multan Branch Khewat No.332, Mouza Qutabpur , Old Shujabad Road, Multan Tel: (92-61) 6303731-34 Qadafi Chowk Branch Khatooni No. 1261 , Qadafi Chowk Masoom Shah Road, Multan Tel: (92-61) 6780853-54 Rasheed Abad Branch Khatooni No.1101, Shop No.1, 2, 3 Anees Plaza, Chowk Rasheedabad, Khanewal Road, Multan Tel: (92-61) 6305714-6 Sameejabad Multan Branch Khasra No.10/7/1, Khewat No.04, Peeran Ghaib Road, Sameejabad Multan. Shah Rukn-e-Alam Branch Shop No. 26-27, Block F, Main Market, T-Chowk, Shah Rukn-e-Alam Colony, Multan Tel: (92-61) 6784324-5 Sher Shah Road Branch Property No. 50/A, Opposite Garden Town, Sher Shah Road, Multan Tel: (92-61) 6536752-5 University Road Branch Khewat No.856/833, Khatooni No.1309, Shalimar Colony Chowk, University Road, Multan Tel :(92-61) 6224974-5 Vehari Chowk Branch Shop Nos. 82,83,84,112, Madni Commercial Center, Near Vehari Chowk, Multan Tel: (92-61) 6241201-3 Vehari Road Branch Al Hamd Centre Plot No. 2228/10 Vehari Road Grain Market Multan Tel: (92-61) 6244153-5 Willayatabad Branch Building No.728, Near Willayatabad Gate # 01, Willayatabad Colony, Vehari Road, Multan Muridkay Muridkay Branch Khewat No. 1061, Khatooni No. 2615, G.T Road Muridkay District Sheikhupura Tel: (92-42) 37980131-133 Muslim Bagh Pano Akil Muzaffarabad Panjgoor Muslim Bagh Branch Shop No 40 - 41, School Road, Muslim Bagh Tel: (92-823) 669592-3 Madina Market Muzaffarabad Branch Mohallah Madina Market, Muzaffarabad, AJ&K Tel: (92-5822) 920457-9, 920458-60 Muzaffarabad Branch Secretariat Road, Sathra Muzaffarabad, Azad Jammu & Kashmir Tel: (92-5822) 920458-60 Muzaffargarh Muzaffargarh Branch Property No. 470, Block No. IV, Hakeem Plaza, Multan Road, Muzaffargarh Tel: (92-662) 428708-10 Nankana Sahib MEEZAN BANK LIMITED Panjgoor Branch Chitkan Bazar, Panjgoor Pasni Pasni Branch Khewat No.41 Near Gull Rang Market Fish Harbor Road, Pasni Pasrur Timber Market Pasrur Branch Property No. 369-BI-327/GODOWN , Timber Market Pasrur, Tehsil Pasrur District Sialkot Tel: (92-052) 6441934-6 Pattoki Nankana Sahib Branch P-66, Guru Bazar Ghalla mandi Nankana Sahib Tel: (92-56) 2877023-24 Pattoki Branch Shop No. 09-11, Abdullah Centre, Opposite Ghalla Mandi, Shahrah-e-Quaid-e-Azam, Pattoki Tel: (92-49) 4421025-8 Narowal Peshawar Kutchary Road Narowal Branch Building No.B-IV/ 4B/ 7, Kutchary Road Narowal Tel: (92-054) 2411703-6 Naushahro Feroz Naushahro Feroz Branch Plot No.1 , Survey No.331, National Highway Naushahro Feroz Nawabshah Nawabshah Branch Plot No. 573, Ground Floor, Ward-B, Katcheri Road, Nawabshah Tel: (92-244) 330902-6 Sanghar Road Branch Plot No A-17 Survey No. 166/1,166/2, 166/3, Ali Raza Shah Colony, Deh 86, Nasrat, Sanghar Road Nawabshah Tel: (92-244) 4361924-25 Nowshera Nowshera Branch Ground Floor, Taj Building Main G.T Road Nowshera Cantt-Pakistan Tel: (92-923) 613174-5 Oghi Oghi Branch Khata No 324/730, Main Bazar Oghi Tel: (92-099) 7320038-40 Okara Charsadda Road Branch Property No. 190, Opposite Al Hajj Market, Mirch Mandi, Charsadda Road, Peshawar Tel: (92-91) 5270543-5 Chowk Yadgar Branch Mohmand Plaza, Naz Cinema Road, Peshawar City, Peshawar Tel: (92-91) 9213950-2 Dalazak Road Branch Khata No 46/57, Khasra No 424/398/191, Malik Plaza, Opposite Muslim College of Commerce, Iqbal Colony, Main Dalazak Road, Peshawar Tel: (92-91) 2245901-3 G.T. Road Branch Taxation # 3845,3846, Main G.T Road Kirashan Pura, Mouza, Tukrah # 1, Peshawar Tel: (92-91) 2612020-3 Gulbahar Branch Plot No. 45, New Nanak Pura Gulbahar, Peshawar Tel: (92-91) 2603091-3 Hayatabad Township Branch Plot No. 08, Bilal Market, Sector D-1, Phase 1, Hayatabad, Peshawar Tel: (92-91) 5816163-5 Okara II Branch Khatooni No. 448, Depalpur Chowk, G.T Road, Okara Tel: (92-44) 2701106-07 Karkhano Market Branch Al Haj Shopping Centre, Karkhano Market, Jamrul Road, Peshawar Tel: (92-91) 5893471-4 Okara III Branch Khewat No.522, Khatoni No.533 Block C, College Road, Opposite Muncipal Corporation, Okara Tel: (92-44) 2510784-8 Khyber Bazar Branch Property No.417/D, Rehman Baba Colony, Mohallah Akara Mufti Abdul Latif Khan, Outside Bajori Gate, Khyber Bazar Peshawar Tel: (92-91) 2564019-20 Okara Branch MA Jinnah Road, Okara Tel: (92-44) 2521935-7 Okara Cantt Branch Plot No. 111-D, Okara Cantt Tel: (92-44) 2880335-36-37 Pabbi Pabbi Branch Khasra No.2080, Main G.T Road, Pabbi Tel: (92-923) 528401-403 Pakpattan Pakpattan Branch College Road, Pakpattan Tel: (92-457) 352711-13 396 Pano Akil Branch City Survey No.07 & 8/1, Situated At Deh Pano Akil Tapo Taluka Pano Akil District Sukkur Kohat Road Branch Khasra No.1493 & 1953, Mauza Achar Hadbast No.254, Opposite Small Industrial Estate, Kohat Road Peshawar Tel: (92-91) 2320676-576 New Fruit Market Branch Khata No.91, Khatooni No.189, Khasra No.275, Mouza Kala, New Fruit Market Peshawar
398. New Sabzi Mandi Peshawar Branch Khata & Khatooni No. 168/722-724, Mouza Phundu, Had Bast No.137 Inqalab Road, New Sabzi Mandi Peshawar Tel: (92-91) 5509601 Ring Road Peshawar Branch Khasra No.4628/3253, Khata No. 186/549, Near Pashtakhara Chowk, Ring Road, Peshawar Tel: (92-91) 5230581-3 Saddar Road Branch 6 Saddar Road, Peshawar Cantt. Peshawar Tel: (92-91) 9213471-5 University Road Branch Khattak Plaza, University Road, Peshawar Tel: (92-91) 5703400-2 Warsak Road Branch Azam Market. Opp. Peshawar Public School & College, Warsak Road, Peshawar. Tel: (92-91) 5201307- 9 Phalia Phalia Branch Khewat # 174, Khatooni # 436, Khasra # 106 Helan Road, Phalia Tel: (92-0546) 586273-5 Pir Mahal Pir Mahal Branch Plot No. P-10-11, Kousar Abad, Chak Abadi 779-GB, Qasba Pir Mahal Tel: (92-46) 3367601-7 Pind Dadan Khan Dadan Khan Branch Property No.659-660, Khatooni No.746-747, Mohal Barati, Tehsil Pind Dadan Khan, District Jehlum Pind Tel: (92-054) 4212067-8 Pindi Gheb Pindi Gheb Branch Khasra No. 5208/1, Kuchery Road Pindi Gheb Tel: (92-057) 2350195-8 Pishin Pishin Branch Khasra No.649-653, Block-1, Bund Road Pishin Tel: (92-826) 421015-17 Qalanderabad Qalanderabad Branch Khata No.206, Khatoni No.290, Khasra No.329/2, Shahrah-e-Resham Road, Qalanderabad Tel: (0992) 370600-02 Qazi Ahmed Qazi Ahmed Branch Survey No.1335, Deh Saindal Kamal, National Highway Qazi Ahmed Tel: (92-244) 321086) Qilla Saifullah Qilla Saifullah Branch Khasra No.27, Intiqal No.59, Jahangir Market Quetta Road, Qilla Saifullah Tel: (92-0823) 610206-207, 0823-610234-235 Alamo Chowk Branch Shop No.17-19, Al-Emirate City Plaza, Alamo Chowk, Air Port Road, Quetta Tel: (92-81) 2820158-9 Choharmal Road Branch Shop No: 1-5, Agha Super Complex Choharmal Road Quetta Pabx: (92-81) 2845593-94 Double Road Branch Khasra No.2, Qithas, Zarghoon Road Quetta Tel: (92-81) 2440885-86 Hazar Ganji Branch Plot No. 715-716 A, Truck Stand, Hazar Ganji, Quetta Tel: (92-81) 2472143, 081-2472167 Kawari Road Branch Kawari Road, Near Children Hospital, Quetta Liaquat Bazar Branch Shop No. 1,2 Alazmat Plaza, Masjid Rd. London Street, Quetta Tel: (92-81) 2840195-6 Mannan Chowk Branch Mannan Chowk, Jinnah Road, Quetta Tel: (92-81) 2829470-2 Mission Road Branch Shop No 1-30/51 & 1-30/52, Mission Road, Opposite Palace Bakery, Quetta Tel: (92-81) 2832851-5 Sirki Road Branch Shop No. 1 & 2, Kasi Complex, Sirki Road, Quetta Tel: (92-81) 2454222-3 Quetta Cantt Branch Jinnah Welfare Shopping Complex, Jinnah Road Quetta Cantt Tel: (92-81) 2820889 Suraj Ganj Bazar Branch Khasra No.292, NRB Plaza, Thana Road, Suraj Ganj Bazar, Quetta Tel: (92-81) 2831021, 0812-2831022 Rahim Yar Khan Factory Area Branch Plot No.21, 22, Shahbaz Pur Road, Factory Area Rahim Yar khan Tel: (92-68) 5888603-04 New Grain Market, Rahim Yar Khan Branch Khata No.16/16, Khatooni No.135/137 New Grain Market, By Pass Road, Rahim Yar Khan Tel: (92-68) 5708103-04 Rahim Yar Khan Branch 23 - Model Town, Rahim Yar Khan Tel: (92-68) 5887603-4 Rawalakot Rawalakot Branch Plot No. D-269, D-113, Housing Scheme, Rawalpindi Road, Rawalakot Azad Jammu Kashmir Tel: (92-5824) 442240-41 Rawalpindi Adyala Road Branch Ground Floor, Daulat Plaza, Near Dhaman Morh, Main Adyala Road, Rawalpindi Tel: (92-51) 5574880-2 Afshan Colony Branch Khasra No.294, Afshan Colony, Range Road Rawalpindi Cantt Tel: (92-51) 5142109-11 Bahria Town Branch Shop No 10, 11 & 12, Bahria Heights - I, Phase - I, Bahria Town, Rawalpindi Tel: (92-51) 5730171-3 Bahria Town Phase-7 Branch Plot No.36, Sikandar Arcade, Service Road Spring North, Bahria Town Phase-7 Rawalpindi Tel: (92-51) 5400373 -75 Bank Road Branch No. 47/62, Bank Road Saddar, Rawalpindi Tel: (92-51) 9273404-6 Banni Chowk Branch Shop Nos. O-383/A, O-383/A-2, O-383/A-3, Kohati Bazar Banni Chowk Rawalpindi Tel: (92-51) 5556301-2 Bohar Bazar Branch D-327, Hakim Muhammad Amjal Khan Road, Bohar Bazar, Rawalpindi Tel: (92-51) 5778875, 5778834 Committee Chowk Branch Plot No.1, Regent Hotel, Sherpao Colony, Committee Chowk, Chaklala Road, Rawalpindi Chah Sultan Chowk Branch Plot No. NE-4286 - NE-4287 Chah Sultan Chowk, Rawalpindi Tel: (92-51) 5702491-2 Chaklala Scheme III Branch Plot No. 38, Bazar Area, Chaklala Housing Scheme No. III, Rawalpindi Cantt Tel: (92-51) 5766435-8 Chakra Branch Khasra No. 198-199, Chakra Road, Rawalpindi Tel: (92-51) 5189873-75 Chakri Road Fahad Awan Building, Kota Khurd, Khasra No.663/17, Main Chakri Road, Rawalpindi Tel: (92-51) 5560507-12 Rajanpur Chandni Chowk Branch Umer Farooq Plaza, Block C, Satellite Town, Chandni Chowk, Murree Road, Rawalpindi Tel: (92-51) 4851046-9 Raiwind Branch Khasra No. 5024 & 5031, Main Bazar, Opposite Railway Phattak, Raiwind Tel: (92-42) 35394620-2 Quaidabad Quetta Rashidabad Branch Survey No. 510-511, Deh Daro, Main Hyderabad Mirpurkhas Road, Rashidabad Tel: (92-22) 2732153-55 Alamdar Road Branch Khasra # 11690/5518, Alamdar Road, Quetta Tel: (92-81) 2662502-503 Renala Khurd Branch Plot No. 26-27, 58-60 Khewat No.3, Khatooni No.4, Khasra No.34/26/2/26, Welcome Road, Renala Khurd Tel: (92-044) 2622336-37 Raiwind Rajanpur Branch Khata No.1270, Khasra No.617/1, Jinnah Road, Rajanpur Tel: (92-604) 688071-72 Quaidabad Branch Khewat No. 1054, Khatooni No.1433, Khasra No. 13/2, 14/2 Main Sargodha Mianwali Road, Quaidabad Renala Khurd Rashidabad Rawat Rawat Branch Khokhar Mall Plaza, Main G.T Road, Rawat, Islamabad Tel: (92-51) 4612346-47 Commercial Market Branch Plot No. 847-B, Commercial Market, Satellite Town Rawalpindi Tel: (92-51) 4944203-04 DHA Phase I Branch DHA Avenue Mall, Main Boulevard DHA Phase-I, Rawalpindi Tel: (92-51) 5788316-17 Fateh Jhang Road Branch Faisal Town Fateh Jhang Road Rawalpindi Tel: (92-51) 4342707-8 ANNUAL REPORT 2019 397
399. G .T Road Morgah Branch Khasra No. 1663, Riaz Plaza, G.T Road Morgah More, Rawalpindi. Tel: (92-51) 5450010-11 G.T Road Tarnol Branch Khan Malook, Wazir Plaza, G.T. Road, Turnol, Rawalpindi Tel: (92-51) 2226406 Gulrez Rawalpindi Branch Plot No. 471 Asghar Mall Plaza Gulrez Housing Scheme Phase II, Rawalpindi. Tel: (92-51) 5595895 - 897 Gulzar-e-Quaid Branch Mangral Plaza, Mauza Gangal, Main Airport Road, Gulzar-e-Quaid, Rawalpindi Tel: (92-51) 5191802-3 Hamilton Road Branch Shop No. AA-710 - 713, Hamilton Road, Raja Bazar, Rawalpindi Tel: (92-51) 5777192 - 194 Jinnah Road Branch Property No. 167, Commercial Area, Mohan Pura, Jinnah Road - City Saddar Road, Rawalpindi City Tel: (92-51) 5778511-2 Kallar Syedan Branch Khewat No.105, Khatooni No.211, Choa Road, Mouza & Tehsil Kallar Syedan, District Rawalpindi Tel: (92-51) 3572261-263 Kalma Chowk Branch Ground Floor, Rajco Plaza, Kalma Chowk, Kamal Abad, Rawalpindi Tel: (92-51) 5684491-2 Sadiqabad FFC Chowk Branch Rehmat Center, FFC Chowk, K.L.P Road, Sadiqabad Tel: (92-68) 5786209-10 Sadiqabad Branch 31-D, Main Bazar, Sadiqabad Tel: (92-68) 5701207-8 Sahiwal Farid Town Branch Khewat No. 7126, Khatooni No. 7198, Plot No.357, Block-H, Farid Town Sahiwal G.T. Road Sahiwal Branch Property No. IV-343/334, 343/335, Ghalla Mandi G.T Road, Sahiwal Tel: (92-40) 4224911-2 Gole Chowk Branch Plot No.123-25, Block No. 10, Gole Chowk, Sargodha Tel: (92-48) 3700943-45 Muslim Bazar Branch 12-Block Chowk, Muslim Bazar, Sargodha Tel: (92 48) 3741609-13 New Satellite Town Branch Property No.01, Khasra No.14380, Khatooni No.371/392, Block Z, New Satellite Town Sargodha Queens Chowk, Sargodha Cantt Branch Property No 193/1, 194/2, Mansoorabad, Queens Chowk Cantonment Area Sargodha Tel: (92-48) 3722904-6 Sargodha Branch 91 Civil Lines, University Road, Sargodha Tel: (92-48) 3741608-10 Satellite Town Branch Plot No. 34 Block-C, Main Chowk, Satellite Town, Sargodha Tel: (92-48) 3223731-5 High Street Branch Khewat # 146, Khatooni # 146, Mission Chowk, High Street Sahiwal Tel: (92-40) 4222661-62 Shahdadpur Old KLP Road Branch Khewat No.38/38, Khatooni No.41-44, Old KLP Road, Sadiqabad Tel: (92-40) 5700313-14 Shahdadkot Pakpattan Road Branch Khewat No.115, Khatoni No.386, 97/9L, Pakpattan Road, Besides Engro Foods, Sahiwal Shahdadpur Branch Property No. 293/1, Ward-C, Station Road, Shahdadpur Tel: (92-235) 842952-3 Shahdadkot Branch Survey No.1357/1, Ward-B Kotoo Motoo Chowk Shahdadkot Tel: (92-074) 4012895-7 Shakargarh Kamran Market Branch Plot No.454-A Bakery Road, Saddar Bazar , Kamran Market, Rawalpindi Tel: (92-51) 5176515-16 Sahiwal Branch 276-B-I, Alpha Tower, High Street, Sahiwal Tel: (92-40) 4465009, 4466592 Shakargarh Branch B-IV-942/RH-SH, Railway Road Shakargarh Tel: (92-54) 2452180-2 Khana Pul Branch Khewat No.1674, Khatooni No.2185, Khasra No.833, Mouza Khana Dak, Tehsil & District Rawalpindi Tel: (92-51) 4473781-84 Sakrand Sakrand Branch Deh.18, Taluka City Sakrand, District, Nawabshah Tel: (92-244) 322054-57 Shinkiari Khayaban-e-Sir Syed Branch Plot # 164-A/1, Sector-I, Area Development Scheme Khayaban-e-Sir Syed Rawalpindi Tel: (92-51) 4832926-27 Liaquat Road Rawalpindi Branch Plot No.B-541-542, Liaquat Road Rawalpindi Tel: (92-51) 5559121-23 Muslim Town Branch B-IV, 628-629, Chirah Road, Muslim Town, Rawalpindi Tel: (92-51) 4476013 Peshawar Road Branch Khasra No. 2573 Peshawar Road Rawalpindi. Tel: (92-51) 5167368-70 Saidpur Road Branch Plot No. CA-294/A, Chistiabad, Shabbir Plaza, Near Siddiqui Chowk, Saidpur Road Rawalpindi Tel: (92-51) 4416215-17 Shamsabad Branch Khewat # 79,80,89,107/1, Khatooni # 97,100,124,132/1, Khasra # 101,102,103,107,106,104,110 Shamsabad Murree Road Rawalpindi Tel: (92-51) 4854471-4 Tench Bhatta Branch Property No. CB-185/185-1-11 Tench Bhatta Rawalpindi Cantt Tel: (92-51) 5562716-18 Tulsa Road Lalazar Branch Property No.9-A Main Tulsa Road Lalazar Rawalpindi Cantt Tel: (92-51) 5178189-191 398 Westridge Branch Al Farooq Plaza Khasra No.1704-1705, Khewat No.601,606, Khatooni No. 863-868, Moza Chur Harpal Allabad Westridge-III Rawalpindi Tel: (92-51) 5490250-252 MEEZAN BANK LIMITED Sambrial Sambrial Branch Property No. B-II-382, street No 4, Wazirabad Road, Tehsil Sambrial District Sialkot Tel: (92-052) 6524061-3 Samundri Samundri Branch Plot No 1, Commercial Area Development Scheme, Gojra Road, Samundri Tel: (92-041) 3420181-85 Sanghar Sanghar Branch Property No.124 / A-1, Housing Society Town, Sanghar Tel: (92-235) 543662-3 Sangla Hill Sangla Hill Branch Serial No. 50, Block B, Circular Road, Sangla Hill, District Nankana Sahib Tel: (92-056) 3548506-07 Sanawan Sanawan Branch G.T Road, Sanawan, District Muzaffargarh Sara-e-Alamgir Sara-e-Alamgir Branch Khewat No.92-93, Khatooni No.106-107, Near Mirpur Bus Stand G.T Road, Sara-e-Alamgir Tel: (92-544) 286103-5 Sargodha 47 Adda Branch Khewat No.167, Khatooni No.195, Main Canal View Chowk 47 Adda Sargodha Tel: (92-48) 3212648-9 Bhatta Chowk Sargodha Branch Khewat No. 355/107, Khatooni No. 434, Chuk No. 39 Shamali, Bhatta Chowk Sargodha Tel: (92-48) 3760083-4 Shinkiari Branch Bajna Road,Main Bazar Shinkiari Shorkot Shorkot Branch Sabir Chowk, Jhang Road, Shorkot District Jhang Skardu Skardu Branch Khewat No.62/189/63, Main Bazar Skardu Tel: (05-815) 456457 to 459 Sharaqpur Sharaqpur Sharif Branch Khewat No.542, Khatooni No. 1696-1697, Khasra No.63/243, Main Circular Road Sharaqpur Sharif Tehsil & District Sheikhupura Sharif Tel: (92-56) 2591524-5 Sheikhupura Sheikhupura Branch Civic Center, Sargodha Road, Sheikhupura Tel: (92-56) 3813360-2 Sheikhupura II Branch Khata No 465, Khatoni No.903, Property No.BIX-7-5, Chowk Pir Bahar Shah, Batti Chowk, Lahore Road Sheikhupura Sialkot Aadha, Daska Road Branch Khewat No. 11, Khatooni No. 29, Near Aadha Stop, Daska Road Sialkot Sialkot Tel: (92-52) 3311155-8 Aziz Shaheed Road Branch Qayyum Trade Center, Aziz Shaheed Road, Sialkot Cantt Tel: (92-52) 111 852 852 Circular Road Sialkot Property No. XXlll - 4S- 17 / RH Circular Road Sialkot Tel: (92-52) 4586601-03 Chenab Rangers Oora Khewat No. 32 Khatooni No. 89-116,Chenab Rangers Road Oora, Sialkot Tel: (92-52) 4571594-96
400. Gohad Pur Branch Building No . BI - 25 S-304, Airport Road Gohad Pur Sialkot Tel: (92-52) 4296054-6 Haji Pura Road Sialkot Branch Khatooni No.322-324, Khewat No.106, Haji Pura Road Sialkot Tel: (92-52) 3574763-65 Kashmir Road Branch Address: Pakka Garha, Kashmir Road Sialkot Tel: (92-52)-4295301-02 Kutchery Road Branch Kutchery Road, Sialkot Tel: (92-52) 4263461 Pasrur Road Branch Plot No.BXIV-II-S-I/B/RH, Pul Aik, Pasrur Road Sialkot Tel: (92-52) 3521701-04 Shahabpura Road Branch Plot No 31-A, Shahabpura Road, Adjacent to Grays of Cambridge Ltd. Sialkot Tel: (92-52) 3242941-43 Sibi Sibi Branch 3-6/15, M.A Jinnah Road, Sibi Sillanwali Sillanwali Branch Khewat # 210, Khatooni # 460, 46 Adda Road, Near Iqbal Colony, Tehsil Sillanwali, Dist. Sargodha Tel: (92-48) 6531402-3 Shahkot Shahkot Branch Property No. 518, Jaranwala Bazar, Corner Circular Road, Sultan Baho Chowk, Shahkot Shujabad Shujabad Branch Property No.323-A, Ward No.06, Jalalpur Road, Shujabad Tel: (92-61) 4425574-76 Shikarpur Shikarpur Branch Plot Survey No.5/142, 5/143, 5/144 & 5/158 Circular Road Staurt Gunj, Shikarpur Tel: (0726) 540341-43 Sukkur Military Road Branch Plot No.E-717, Military Road Sukkur. Tel: (92-71) 5630631- 33 March Bazar Branch C-45, Station Road, Sukkur Tel: (92-71) 5620771-3 Sukkur Branch 3-45, Ward-C, Station Road, Sukkur Tel: (92-71) 5617192-4 Swabi Swabi Branch Amjad Mughalbaz Khan Plaza, Near TMA Office Mardan Road, Swabi Tel: (92-938) 222704-6 Swari Tando Adam Vehari Tando Allahyar Wah Cantt Tando Adam Branch Muhammad Chowk, Tando Adam, District Sanghar Tel: (92-235) 576565-66 Tando Allahyar Branch Survey No. 1610/07, Opposite General Bus Stand, Tando Allahyar Tel: (92-22) 3892021, 3891242 Tando Jam Tando Jam Branch City Survey No.04, Main Hyderabad Road Tando Mohammad Khan Tando Mohammad Khan Branch Shop # 25,26 & 27, Deh Pataar main Hyderabad-Badin Road Tando Mohammad Khan Tel: (92-22) 3341584-5 Tank Tank Branch Wasiqa Nos.05/07/08, Bahi No.01, Jild No.171, Main Bazar, Tank City Tel: (92-096) 3511003-4 Tarlai Tarlai Branch Khewat No.88, Khatooni No.168, Khasra No.411/2, Near Tramdi Chowk, Lehtrar Road Tarlai Kalan, Tehsil & District Islamabad. Tel: (92-51) 2243700 - 701 Taunsa Taunsa Branch Property ETO No.347, 348, 349, 350-III, Wahuwa Road, Taunsa Tel: (92-64) 2601301-03, 2601201-02 Taxila Taxila Branch Khewat 17, Khatooni 29, Khasra 403, Nabi Plaza, Chowk Sara-e-Kala, Taxila Tel: (92-51) 4544119, 4547116 Yazman Branch Khatooni No.166-177 Bahawalpur Road, Yazman Wazirabad Wazirabad Branch Plot No. I-14S-37, Sialkot Road, Wazirabad Tel: (92-55) 6600313-4 Zafarwal Zafarwal Branch Khata No.250,262, Khatooni No.501,551, Khasra No.2473,2474, Narowal Road Zafarwal Tel: (92-054) 2538384-6 Zahir Pir Old KLP Road Zahir Pir Branch Khata No.158/157, Khatooni No.374, Old KLP Road, Zahir Pir Tel: (92-068) 5562307-8 Zhob Zhob Branch Patta No. I-46, Market Road, Zhob Tel: (92-822) 413803 Permanent Booth Hala Road Isara University Hyderabad Tel: 0345-8220610 Timergara Timergara Branch Al-Imran Hotel G.T Road, Timergara Bazar, Timergara Tel: (92-945) 825271-3 Toba Tek Singh Toba Tek Singh Branch P-103, Farooq Road, Toba Tek Singh Tel: (92-46) 2513765-6 Topi Topi Branch Main Bazar Topi Tulamba Tulamba Branch Khewat No.9/9, Khatooni No.23, Adda No. 2, Tulamba Swat Umerkot Branch Survey No.699,115, Shops No.15-17, Gulshan-e-Akber Housing Project Phase II, Mirpurkhas Road, Umerkot Tel: (92-238) 570409-411 Talagang Yazman Thatta Branch Memon Shopping Center, Main National Highway, Opp Sarwari Hala Hanicrafts, Thatta Tel: (92-298) 550366 Turbat Mingora Branch Makanbagh Chowk, Mingora Swat Tel: (92-946) 714316-8 Wah Cantt Branch Ground Floor, Mall View Plaza, Mall Road, Wah Cantt Tel: (92-51) 4530584-6 Thatta Swari Branch Khata No.579, Khatoni No.715, Khasra No.2964, Moza Swari, Tehsil Gagra, District Buner Tel: (92-93) 9555204-5 Green Chowk Branch Abasin Tower, Green Chowk, Madyan Road, Mingora Swat Tel: (92-946) 711581-83 Karkhana Bazar Vehari Road Branch Plot No. 23, Block-A, Karkhana Bazar, Vehari Tel: (92-67) 3366031-3 Main Road Turbat Branch Khasra No. 32, Khewat No. 32, Main Road Branch Turbat UmerKot Usta Muhammad Usta Muhammad Branch Shop No.355/1, 355/2, 355/3, 355/4, Jinnah Road, Usta Muhammad Talagang Branch Khasra No.529, Khewat No.909 Traffic Chowk, Old Rawalpindi Road Talagang Tel: (0543) 410460-61 ANNUAL REPORT 2019 399
401. Glossary AAOIFI Accounting and Auditing Organization for Islamic Financial Institutions . The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is an Islamic international autonomous non-for-profit corporate body that prepares accounting, auditing, governance, ethics and Shariah standards for Islamic financial institutions and the industry. Acceptances Promise to pay created when the drawee of a time draft stamps or writes the words “accepted” above his signature and a designated payment date. Accrued Profit Profit earned but not received from the customer. Acquirer Acquirers are banks and financial institutions that collaborate with businesses to accept credit/debit card payments. Additional Unit Purchase Purchase of units in excess of initially agreed schedule in Diminishing Musharakah to reduce bank's share in the asset. Advance Booking Booking of vehicle with the manufacturer through advance payment. Advance Rental Payment of rent after lease agreement before utilization of usufruct. Agreement Stamping Charges Charges paid by the customer for stamping of financing agreement. Al-‘Aqd Legal contract implying an enforceable act involving a bilateral declaration, namely, the offer (’Ejab) and the acceptance (qabul). Al-Bai A contract of sale. Tech: Sale of definite goods or property with the free consent of parties for a definite price. It involves offer (Ejab) and acceptance (qabul). It has many types. Al-Bai‘ Al-Batil An agreement of sale which is unlawful in respect of its substance and description. Al-Bai‘ Al-Mu’ajjal A financing technique adopted by Islamic banks. It is a contract in which the seller allows the buyer to pay the price of a commodity at a future date in lump sum or in instalments. Al-Gharar Gharar is a state of uncertainty that exists when the process of concluding a transaction involves an unknown aspect. Al-’Ijma‘ Consensus of the Islamic jurists (mujtahidwn) on a certain Shariah issue after the demise of the Holy Prophet (P.B.U.H.) Al-’Ijtihad Endeavour of an Islamic jurist to derive or formulate a rule of law pertaining due to a matter not explicitly mentioned in the Shariah sources on the basis of evidence found in the Shariah sources. Al-Kafalah A contract of surety in which a person adds to his responsibility or liability on behalf of another person in respect of a demand for a loan or debt. Al-Mudarabah Al-Muqayyadah A contract of Mudarabah in which certain conditions like place, season, commodities, credit and techniques of trade are stipulated by the provider of the capital (rabb al-mal). Al-Mudarabah Al-Mutlaqah A contact of Mudarabah that does not bind the entrepreneur about the place, time, season, commodities, credit or techniques of trade. These matters are left to the option of the entrepreneur. The Mudarabah contract defines merely the profit-sharing ratio. 400 MEEZAN BANK LIMITED Al-Musha‘ Mixing up of the proprietary rights of more than one person in a thing, such as in joint ownership where each co-owner has a right until the entire property is distributed. Al-Qard Al-Hasan A loan with the stipulation to return the principal sum in the future without any increase. Al-Qimar An agreement in which ownership of a property is contingent upon the happening of an uncertain event. By implication it applies to those commutative agreements in which gain of one party is linked with the loss of other party. Al-Qiyas Derivation of the law on the analogy of another law if the basis (‘illah) of the two is the same. It is one of the primary sources of Islamic law including Islamic economics. Al-Rahn To pledge or lodge a real or corporeal property of material value, in accordance with the law, as security for a debt or financial obligation, so as to make it possible for the creditor to regain the debt or some portion of the goods or property. Al-Tabarru‘ It means the right of complete and unfettered disposition over joint property. This right has not been conceded by the jurists to any partner. However, one has the right of tabarru‘ with personal property. Amortization Schedule Information of Equal Monthly Installments (EMI) with breakup of unit price & rental along with balance outstanding. Annual Fee / Renewal Fee An annual fee typically charged to customers with debt cards. Applicable rate Profit rate applied on the facility. Application form A form to be filled in and signed as per the Bank’s requirements to avail Banking facilities. Requirement of details to be filled in will vary for each facility. Applications may also require certain specified documents also to be attached. Appraisal Agency Agency used for assessing market value of an Asset. ATM An automated teller machine or any card-operated machine or device whether belonging to the Bank or other participating banks or financial institutions or concerns or to the Visa Card or MasterCard global ATM Network, or the affiliated networks thereof, as the case may be, which accepts the Card. Bai‘ Al-’Amanah A sale whereby both parties express trust in each other. Examples: bai‘ al-wafa, bai‘ al-talji’ah, bai‘ al-wadWyah, Murabaha, etc. Bai‘ Al-Dain Sale of debt. Bai‘ Al-‘Inah It refers to the process of purchasing the commodity to a deferred price, and selling it for a lower spot price to the same party from whom the commodity was purchased. Bai‘ Al-’Istijrar A form of sale whereby the buyer keeps on taking the goods from the seller as and when needed with or without settling the price and then settles the account later on. Bai‘ Al-Kali Bil Kali A sale in which both the delivery of the object of the sale and the payment of its price are delayed.
402. Bai ‘ Al-Khiyar A sale contract that provides an option to conclude or rescind the deal. Bai‘ Al-Muqayadah Selling a commodity for another commodity/Barter sale. Bai‘ Al-Murabahah Sale of goods with an agreed price with profit on the cost. Bai‘ Al-Musawamah Sale of goods at a price on which the buyer and seller agree after haggling without mentioning the cost to the seller. Bai Al-Salam This term refers to advance payment for specifically defined goods which are to be delivered later. Bai‘ Al-Tawliyah A contract of sale in which the seller agrees to sell a product at his cost. Bai‘ Al-Wad‘Iyah A sales contract in which a seller informs the buyer his actual cost and then gives a further discount on it. Balloon Payment Payment by customer in addition/additional/excess to the installment amount to reduce the number of outstanding units. Bank Investment Ratio (BIR) Ratio of bank's investment in an asset against the value of that asset. Banker's lien Bank's charge on the asset. Basel II Basel II is the second of the Basel Committee on Bank Supervision's recommendations, and unlike the first accord, Basel I, where focus was mainly on credit risk, the purpose of Basel II was to create standards and regulations on how much capital financial institutions must put aside. Banks need to put aside capital to reduce the risks associated with their investing and lending practices. Base rate Benchmark rate for driving the pricing of product/service. Billing cycle Date of a month when bill/statement is generated. Bills for Collection A bill of exchange drawn by the exporter usually at a term, on an importer overseas and brought by the exporter to this bank with a request to collect the proceeds. BOQ Bill of quantity - Break up of amount in construction cases. Breakup Value per share The total worth (equity) of the business per share, calculated as shareholders’ equity or Net Assets excluding the impact of revaluation on fixed assets, divided by the total number of share outstanding at year end. BRP (Bankers Ratio of Profit-Sharing) Percentage share of profit due to financier in the profit of an enterprise financed on the basis of Mudarabah or Musharakah. Capital Contributions Relating to an Islamic Fund, they are additional funds collected from investors in the fund to finance needs that may arise in the future as the fund manager considers appropriate. New shares/units are not issued in exchange of these capital contributions. Capital Transactions With reference to an Islamic Fund, they include the sale of units/shares, and the number of units/shares issued on reinvestment of distributions/dividends less the value of units/shares returned. Card The applicable Visa Card, MasterCard and / or any other card including but not limited to co-branded cards, e-card, debit card the second card as issued by the Bank, from time to time, to the Card member and shall include Supplementary and subsequently issued, renewal or replacement Cards. Card Account Visa/Master Card account or any account pertaining to the Card(s) issued by the Bank from time to time, as the case may be, opened by the Bank for the purpose of entering debits / charges incurred by or for the account of, and credits received by or for the Card member and Supplementary Card member. Card Issuer A bank, financial institution, credit union, or agency that issues a card to public or its members is called a card issuer. Card member A person to whom the Card is issued by the Bank and shall also include every Supplementary Card member. Card Replacement Fee Fees to be charged by the bank for replacement of lost/stolen or damage card. Card Transaction Any payment made or any amount to be debited from the Card Account or any amount charged by the Bank or any Merchant for any goods, services and other benefits by or through the use of the Card. Cash Equivalents Short–term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash Reserve Ratio (CRR) Cash Reserve Ratio is the amount of funds that the banks have to keep with the State Bank of Pakistan. CAGR An abbreviation for Compound Annual Growth Rate. CDs (Central Deposits) One of the proposed monetary policy tools for the Islamic economy. The central bank may open investment accounts in member banks in which it deposits whatever money it creates and from which it withdraws whatever money it retires. Member banks may invest these deposits in the real sector in accordance with the investment policy of each bank. Profits earned on such deposits may be used to cover the cost of central bank operations. Business Person Individual having his own business. Certificate of Musharakah An Islamic financial instrument approved by the Corporate Law Authority of Pakistan in April 1995. Buy-Back A non-permissible transaction where Bank purchases goods, equipment or property form the client with the agreement that the client would buy it back from the bank at a higher price, to be paid later by the client. Charges The amount payable by the customer to the Bank under the Terms and Conditions, including but not limited to any transactions, Annual Membership , Services Fee, Charity and other fees / charges. Capital Adequacy Ratio (CAR) The relationship between capital and risk weighted assets as defined in the framework developed by the State Bank of Pakistan. Charity Means monetarily helping those in need. In IBIs in order to mitigate the risk of delayed payment customer is asked to undertake, that if he/she fails to pay dues on due date, he/she will pay certain amount to a charity, which will be administered through the Islamic Bank. Such amount is not the income of IB. ANNUAL REPORT 2019 401
403. Clean Limit Financing Limit which has been granted by the bank without any collateral /liquid/non-liquid securities. Clear Title When the property in question is free from any doubt is not disputed and is not having any encumbrances and it is said to have a clear title. Closed-End Funds Mutual funds with a fixed number of shares (or units). Unlike open-end funds, new shares/units in a closed-end fund are not created by managers to meet demand from investors. Instead, the shares can only be purchased (and sold) in the secondary market. Closing Balance The amount payable (or available) as of last working day of the certain period/month. Co-Applicant A co-applicant is a person who signs a finance contract with the primary applicant, pledging to be responsible for paying off financed amount in the event the applicant is unable to pay. Collateral An asset pledged to a financer/creditor to guarantee payment/repayment. Collateral could include savings, Sukuks, takaful policies, jewelry, property or other items that are pledged to pay off financing/rentals/balance outstanding if payments are not made according to the contract. Collector Bank employee responsible for collection/recovery. Commingled Mudarabah Relating to Islamic banks, a form of Mudarabah in which a bank accepts funds for investment and contributes its own funds as well. The profit and loss are shared in agreed proportions and the bank also receives a share of the profit from out of the share of investors for its role as mudarib. Commitment to Extend Credit Credit facilities approved but not yet utilized by the client as at the Balance Sheet date. Commodity Mudarabah A contract of Mudarabah wherein the owner of capital provides capital in the form of stock-in-trade (‘urwd) and not cash. Constant Musharakah It is a Musharakah in which the proportionate shares of partners in the equity remain unchanged within the currency of the agreement. Contingencies A condition or situation existing at Balance Sheet date where the outcome will be confirmed only by occurrence of one or more future events. Contract Price Total amount payable by the Customer to the Bank for the Asset pursuant to the Musawamah / Mudarabah Transaction. Corporate Governance The process by which corporate entities are governed. It is concerned with the way in which power is exercised over the management and direction of an entity, the supervision of executive actions and accountability to owners and others. Cost/Income Ratio Operating expenses as a percentage of total income. Credit History A financial profile of any person based on how he pays his bills, clears his debt and the amount a person owes to various banks and other financial intuitions. Credit Limit It is the maximum amount of money one can draw on his account based on prior sanction or approval from the bank. In other words, drawing limit fixed by a bank for a customer depending on his credit history, paying capacity and relationship with bank. 402 MEEZAN BANK LIMITED Credit Murabahah A sale agreement on the basis of determined profit over the purchase price of the seller with the condition that the buyer will pay the sale price in future. Credit Rating / Score A credit rating is an evaluation of the credit risk of a prospective customer, predicting his ability to pay the financed amount, and an implicit forecast of the likelihood of the customer defaulting. Credit Risk Credit risk involves the risk that a counter-party to a contractual obligation, be it Murabahah, Mudarabah, ’Ijarah, qard hasan, ’Ijarah wa ’iqtina’ or shirkah, would default on the promised date of payment. Cross sell Selling of product to already existing customer. Current Customer making all the payments on time. Customer A person who is availing any facility or products of a bank. Dealership Vehicle is provided through dealership. Debt Ratio/Debt Burden A ratio of amount of money customer owe to banks or credit issuers against total monthly income of a customer. It reflects the percentage of income that goes to paying customer debts every month. Islamic banks calculate Debt Ratio to assess the amount of financing that can be provided. Default/ Delinquency When a customer fails to make any payment(s) due towards the bank as per the terms and conditions agreed or otherwise is termed as default. Furthermore, a breach of contract/terms and conditions may also be categorized as an event of default. Account is classified as delinquent when rentals are not paid according to the contractually agreed upon terms or when due. Deferred Taxation Sum set aside for tax in the Financial Statements that will become payable in a financial year other than the current financial year. Delivery Acceptance Form In the context of auto finance, this is a mandatory document which the customer signs acknowledging acceptance and possession of vehicle from the dealer. Desired Financing Amount Amount required by the customer. Desired Financing Tenure Tenure required by the customer. Diminishing Musharakah Bank and customer participate in joint ownership of a property. The share of the bank is divided into number of units and the units owned by the Bank are rented to the customer. Customer purchases these units from bank at periodic intervals, thereby increasing his/her share in the undivided property until all the units are purchased by the customer. Direct Debit / Auto Debit Facility A facility offered by the bank to customer against which monthly full payment or minimum payment will be debited from his/her account on the due date. Disbursement Payment made in the name of the customer. Discrepancy Incomplete or missing documents, or alternatively incomplete, illegible or contradictory information in the customer's financing application or documentation provided by customer. Dishonored/Returned Cheque A Cheque which is returned by the payer's Bank due any number of possible reasons including but not limited "insufficient funds, amounts' mismatch, illegible signature, overwriting, date-barring etc."
404. Disputed transaction A cardholder posted transaction which is not accepted by him /her and requires clarification. Dividend A sum of money paid by a company to its shareholders out of it profits (or reserves). FED Federal Excise Duty. Financing Agreement Document used for agreement between the customer and the bank. Dividend Payout Ratio Dividends (cash dividend plus bonus shares) paid per share as a fraction of earnings per share (EPS). Financial Losses and Provisions Amount set aside against identified and possible losses on loans, advances and other credit facilities as a result of their becoming partly or wholly un-collectible. Dividend Yield Ratio Dividend per share divided by the market value of share. Fiscal Year A year as reckoned for taxing or accounting purposes. DPD Number of days past the due date after the customer's payment became due as per the contractually agreed upon terms and conditions. Fixed Rate Facilities where the profit rate defined at the time of financing is fixed for the tenure of the facility or until facility is closed. Due Date /Payment Due Date /Installment due date Date specified in the statement of account for monthly payments/ schedule for the payment of the Current Balance or Installment to be made to the Bank for the facility availed by the customer. E-Alerts Electronic Alerts to be sent to customer via email / SMS. E-Banking / Internet Banking Banking transactions which can be conducted on internet after accessing Bank's application with unique password. E-CIB /Credit Bureau Electronic Credit Information Bureau-eCIB has been established by the State Bank of Pakistan which requires all banks and financial institutions to report all financings and advances, to the State Bank. Early Settlement Payment of entire financed amount before the agreed upon maturity of financing as per payment schedule. Early Termination Price If the customer wishes to terminate the Ijarah/Diminishing Musharakah Agreement before the agreed period, the customer has an option to buy the asset on the pre-agreed purchase price. Earnings per Share Profit after taxation divided by the weighted average number of ordinary shares in issue. Effective Tax Rate Provision for taxation excluding deferred tax divided by the profit before taxation. EMI Equal Monthly Installments. Equity The amount of the funds on a company's Balance Sheet contributed by the owners (the stockholders) plus the retained earnings (or minus the losses). Equity/down payment Customer's stake in the vehicle, customer pays a vehicle value's part before financing. Fixed Term This applies to products and services, which have a set lifetime. Floating Rate Profit rate renewable after certain defined period of time. The profit rate is linked with KIBOR plus a fixed percentage of profit margins. Forced Sale Value (FSV) Forced Sale Value means the value which fully reflects the possibility of price fluctuations and can currently be obtained by selling the mortgaged/pledged assets in a forced/distressed sale conditions. FX Conversion Charges Foreign Currency Transactions charges to be borne by customer to convert into Pakistani Rupees. GCAS Global Customer Assistance Service. General Takaful A form of Islamic insurance to cover losses of fire, theft or natural calamities. The scheme or concept follows the principles of mutual insurance. Government Securities Government Securities shall include such types of Pak. Rupee obligations of the Federal Government or a Provincial Government or of a Corporation wholly owned or controlled, directly or indirectly, by the Federal Government or a Provincial Government and guaranteed by the Federal Government as the Federal Government may, by notification in the Official Gazette, declare, to the extent determined from time to time, to be Government Securities. Gross Dividends The portion of profits distributed to the shareholders including the tax withheld. Guarantee A promise given by a person called 'the guarantor' to pay another person's installment/outstanding balance if that person does not pay them. Hiba Gift/Transfer of ownership of an asset without any consideration. Expiry Date The date of expiry specified by the Bank on the Card. Historical Cost Convention Recording transactions at the actual value received or paid. External agencies Agencies providing services to customers which are on Bank's panel. Hypothecation Process of placing a charge / lien on vehicle financed by the Bank. Facility Rate / Pricing Profit rate charged on the product/service. IAS International Accounting Standards. Fatwa A decree by a competent Shariah scholar qualified to issue decrees (mufti) on a matter giving an opinion about the position of a matter in the light of the Shariah rules and principles. IFRIC International Financial Reporting Interpretation Committee. FCY Foreign Currency. IFRS International Financial Reporting Standards. ANNUAL REPORT 2019 403
405. Ijara /Ijarah Letting on lease; technically, sale of a definite usufruct in exchange for a definite reward; commonly used for wages. It also refers to a mode of financing adopted by Islamic banks. It is an arrangement under which an Islamic bank leases equipment, a building or other facility to a client against an agreed rental. Liabilities Any or all amounts payable whatsoever by the customer to the Bank. Ijarah Expense Installment of rent paid for leasing an asset are shown as ’Ijarah expense in the books of the lessee. Litigation charges Charges which will be incurred at the time of filling a suit by the bank against a defaulted customer. Ijarah Revenue Installments of rent received on leased assets by the financial institutions. Liquid Assets The assets which are readily convertible into cash without recourse to a court of law. Impairment allowances A provision held on the balance sheet as a result of the raising of a charge against profit for the incurred loss inherent in the lending book. An impairment allowance may either be identified or unidentified and individual or collective. LOU Letter of understanding between the bank and the customer mentioning some of the important terms & conditions related to the financed product usage. Income Estimation Agency Agency used for assessing customer's income. Income Spread Represents the difference between the average rate of income earned and the average rate of cost paid on funds. Investment Assets With reference to Islamic banks, they are investments in financial instruments using any of the suitable Islamic financial instruments. Investment Risk Reserve With reference to Islamic banks, it is the amount appropriated out of the income of investment account holders, after allocating the mudarib’s share, in order to provide a cushion against future losses for investment account holders. Islamic Banking Banking in consonance with the ethics and value system of Islam as compared to conventional banking that conducts its business of borrowing and lending on the basis of interest. Islamic Credit Card It is an Islamic alternative to the conventional credit card. ISO 27001 ISO/IEC 27001 formally specifies a management system that is intended to bring information security under explicit management control. Being a formal specification means that it mandates specific requirements. Organizations that claim to have adopted ISO/IEC 27001 can therefore be formally audited and certified compliant with the standard. Istisna’a/Istisna This is a kind of sale where a commodity is transacted before it comes into existence. It means: To order a manufacturer to manufacture a specific commodity for the purchaser. If the manufacturer under takes to manufacture the goods for him with material from the manufacturer, the transaction of Istisna comes into existence. But it is necessary for the validity of istisna that the price is fixed with the consent of the parties and that necessary specification of the commodity (intended to be manufactured) is fully settled between them. IVR Interactive voice response (IVR) is a technology that allows a computer to interact with humans through the use of voice and DTMF (Dual Tone Multi Frequency) tones input via keypad. KIBOR Karachi Interbank Offer Rate as directed by SBP on daily basis. Lawyer appraisal agency Agency used to verify and appraise the property document. Leasing Certificate Leasing certificate is an Islamic financial instrument. The certificate is offered by Islamic banks to savers when the latter want to invest their funds in lease operations. Lease Facility A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. 404 MEEZAN BANK LIMITED Linked Account Account opened for making monthly payments/installments. Market Capitalization Number of ordinary shares in issue multiplied by the market value of shares as at the year end. Materiality The relative significance of a transaction or an event the omission or misstatement of which could influence the economic decisions of users of financial statements. Maturity Financing payment completion. Merchant Any person / entity supplying goods and / or services and / or other benefits who accepts the Card as a means of payment. Microfinance The provision of financial services to micro-entrepreneurs and small businesses, which lack access to banking and related services due to the high transaction costs associated with serving these client categories. Month Calendar month. Mortgages Mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payments by the customer. Mudarabah An agreement between two or more persons whereby one or more of them provide finance, while the other provides entrepreneur ship and management to carry on any business venture whether trade, industry or service, with the objective of earning profits. They share the profit in an agreed proportion. The loss is borne only by the financier(s) in proportion to their share in total capital. Mudarabah Certificate A financial instrument devised by Islamic investment companies to mobilize funds for investment. A Mudarabah certificate can be for a specific purpose or for a general purpose. The former is related to financing of specific projects and matures only on the completion of the project. The latter can have a specific or indefinite duration but proceeds can be invested in any halal business. Both the types can be issued in negotiable form and can be either registered or bearer. Mudarabah Shares Normally issued by the state, they are instruments for obtaining funds from the private sector on the basis of Mudarabah. The state issues a share certificate, indicating the price, the period and the terms of the contract. The funds thus collected are invested in some profit-yielding project so that the state can share profit or loss with the public. Mudarib A working partner; the partner who provides entrepreneurship and management in a Mudarabah agreement. Musharakah A partnership contract where all the partners invest funds and are not restricted from working for the partnership.
406. NCCA / Non Checking Account A type of account where a customer can only make deposits but cannot withdraw funds from the account. As such, no instruments (debit card, Cheque book, internet banking etc.) are provided to the customer when opening this type of account. Net Assets Value per Share Shareholders’ funds divided by the number of ordinary shares in issue. Net Dividends Dividends net of withholding tax. NOC No Objection Certificate issued in favor of the customer after financing clearance. cotton from farmers on a Salam basis and, in turn, the buyer in the first Salam contract enters into a new separate Salam contract with textile mills so as to provide them, by means of that new Salam contract, with cotton, the specifications of which are similar to the specifications of the cotton to be acquired under the first Salam contract, without making the execution of the second Salam contract contingent on the execution of the first Salam contract. Payment Facility To pay any amount(s) to any person / party for any purpose settlement of any bills or for any other purpose approved by the Bank from time to time. Payment Period Tenure of the facility. Non-Performing Loans (NPL) A financing where the client is not repaying the financier as agreed. Pension Fund A fund from which pensions are paid, accumulated from contributions from employers, employees, or both. Non-Performing Loan-Substandard Category Where markup/interest or principal is overdue by 90 days or more from the due date. PIN/ ATM PIN The Personal Identification Number issued to a Card member to enable the Card member or a Supplementary Card member or selected by a Card member or a Supplementary Card member and generated through IVR (Interactive Voice Recording) to use the Card at an ATM for a Cash Advance. NOSTRO An accounting term used to distinguish an account held for another entity from an account another entity holds. NPLs to Gross Advances/Loans Represents the infected portfolio of the bank and is calculated by dividing the total non-performing loans by gross advances. Object deferred sale An alternate term for bai‘ al-salam, where money is paid in advance and the goods are delivered later. Pre-Payment/ Early Settlement A one off payment along with FED charges which customer may be asked to make if customer decide to pay off financing facility early before maturity. Pre-Payment Price Price applied on pre-payment of facility. Off Us ATM Transaction conducted on other bank ATM. Price Earnings Ratio (P/E Ratio) Market price of a share divided by earnings per share. On Us ATM Transaction conducted on issuer's bank ATM. Principal The amount of financing by the bank. Open-END Fund A regulated investment company with a pool of assets that regularly sells and redeems its shares. Processing Fee Onetime Fee charged on approved amount only for processing. Operating ’ijarah An operating lease that does not include a promise to transfer the title of the leased asset to the lessee at the end of the lease. Outstanding balance Any unpaid amount with respect to a financing facility. Overdue rentals/ late payments Amount of rentals which has not been paid as of its due date (or maturity) date. All financial arrangements become overdue one business day after their due date. A customer who is past due may be subject to charity. Parallel istisna Another form of Istisna'a, known in modern custom as Parallel Istisna'a 'M-lstisnab at-Mu'wazi", takes effect through two separate contracts. In the first contract, the Islamic Financial Institution acts in the capacity) of a manufacturer, builder or supplier and concludes a contract with the customer. In the second contract, the Institution acts in the capacity of a purchaser and concludes another contract with a manufacturer, builder or supplier in order to fulfill its contractual obligations towards the customer in the first contract. By this process, a profit is realized through the difference in price between the two contracts and, in most cases, one of the two contracts is concluded immediately, (I.e. The Istisna'a contract entered into with the manufacturer, builder or supplier), while the second contract (i.e. The contract entered into with the customer) is concluded later. Parallel Salam If the seller enters into another separate Salam contract with a third party to acquire goods, the specification of which corresponds to that of the commodity specified in the first Salam contract, so that he (the seller) can fulfil his obligation under that contract, then this second contract is called, in contemporary custom, Parallel Salam. The following is an example of such a contract. An Institution on one hand buys a specified quantity of Profit-Sharing Deposits Financial instrument of riba-free economy. Indicates deposits with commercial banks on the basis of profit sharing. Progressive Letter The detailed information/events/picture provided by the cardholder for continuing his/her dispute with the bank against disputed transaction evidences. Provision With reference to Islamic banks, a provision is essentially a contra-asset in the statement of financial position and is constituted by charges made as expenses to the banks’ income statement. Rabb-ul-Maal A person who invests capital in a Mudarabah. Rate revision letter Letter for customer when the applicable rate is revised annually. Ready Delivery Vehicle available at the dealer for delivery after payment. Ready Delivery used Used vehicle available at dealer's end for delivery after payment. Receivables With reference to Islamic banks, receivables are amounts due from clients as a result of sale transactions through the financial instruments of Murabahah, Salam or ’istisna‘. Registration charges Amount required for registering the vehicle with Excise and Taxation Office. Rental Payment Amount paid by a lessee to a lessor for the use of an asset. ANNUAL REPORT 2019 405
407. Reserves A reserve is essentially a component of equity (of either investment account holders and/or shareholders) and is constituted by appropriations out of income. Service Establishment Merchant acquiring bank who authorize it's merchant to accept card transaction as per agreement and able to respond disputes queries. Residual Value Value of the asset after completion of the Ijarah period. Service Fee/ Annualized Percentage Rate (APR) Fee as determined by the Bank and prescribed in the Schedule of Charges and payable by the customer on the outstanding Liabilities and other amounts. Restricted investment account Relating to Islamic banking, refers to an investment account in which the bank has the authority to invest the account holder’s funds on the basis of Mudarabah contract or agency based contract for investment, but has certain restrictions as to where, how and for what purpose the funds are to be invested. Further, the Islamic bank may be restricted from commingling its own funds with the restricted investment account funds for purposes of investment. Return on Assets (ROA) Indicator of profitability of the business relative to the value of its assets, calculated by dividing the net profit (profit after tax) to the average total assets for the period. Return on Average Equity Net profit for the year, less preference share dividends if any, expressed as a percentage of average ordinary shareholders’ equity. Riba Riba literally means increase, addition, expansion or growth. It is, however, not every increase, or growth, which has been prohibited by Islam. In the Shariah, Riba technically refers to the premium that must be paid without any consideration in a Loan contract. Riba Al-Fadl A sale transaction of the ’amwal al-ribawiyah (commodities where the injunction relating to Riba is applicable) in which a commodity is exchanged for the same commodity but unequal in amount and the delivery of at least one commodity is postponed. To avoid riba al-fadl, the exchange of commodities from both sides should be equal and instant. Riba Al-Nasi’ah Increment on the principal of a loan payable by the borrower. It refers to the practice of lending money for any length of time on the understanding that the borrower would return to the lender at the end of this period the amount originally lent together with an increment. Right of Set Off In an event of default or otherwise, bank has the right of set off i.e. bank at its discretion or otherwise and without giving notice to the customer, reserves the right to recover outstanding amount(s) from any of Customer's Account(s) maintained with the bank. Risk Weighted Assets On Balance Sheet, assets and the credit equivalent of off balance sheet assets multiplied by the relevant risk weighting factors. Rupee/PKR Pakistani Rupee Currency. Salaried Individual Person employed on a salaried basis. Sale Order Confirmation document sent to the customers before delivering Vehicle. Schedule of Charges The document prescribing Service Fee(s), charges and other fee(s) applicable to the Card/ BTF, Card Transactions and / or Card Account, issued by the Bank bi-annually to the Card members. Secured Limit Financing Limit which has been granted by bank and is secured against collateral/liquid/non-liquid securities. In an event of default, or otherwise, bank has the right to recover the amount(s) outstanding against the said security. Self-Employed Professional Individual having his own professional business. 406 MEEZAN BANK LIMITED Shareholders’ Funds Total of issued and fully paid share capital and capital and revenue reserves. Shariah Audit Audit of the operations of an Islamic financial institution to assess the extent to which the institution adhered to the requirements of the Shariah. Shariah Supervisory Board Committee of Islamic scholars in Islamic Banks for guidance and supervision and whose decisions are binding upon the bank. Shariah Compliant An act or activity that complies with the requirements of the Shariah, or Islamic law. The term is often used in the Islamic banking industry as a synonym for “Islamic”—for example, Shariah-compliant financing or Shariah-compliant investment. Shirkah A contract between two or more persons who launch a business or financial enterprise with the purpose of making a profit. Shirkah al-‘aqd Two or more persons may continue to carry on business on the condition that capital and profit will be shared among them. This is distinguished from shirkah al-milk, which is partnership in joint property without common commercial intention. Shirkah al-milk A proprietary partnership occurs when two persons inherit or purchase something together without common commercial intention. Neither of them is permitted to dispose off the other’s portion except with the other’s permission. Each of them is considered a stranger in regard to the other’s portion. Shukuk/Sukook/Sukuk Sukuk are certificates of equal value representing undivided shares in ownership of tangible assist, usufruct and services or (in the ownership of) the assets of particular projects or special investment activity. Subsidiary Company A company is a subsidiary of another company if the parent company holds more than 50% of the nominal value of its equity capital or holds some share in it and controls the composition of its Board of Directors. SMS Fee SMS - Short Message Service Charges Statement of Account The Bank's monthly or other periodic statement of account send to its customers showing particulars of the transactions carried out. Suit Legal case filing. Takaful Islamic Insurance. A scheme of mutual support that provides insurance to individuals against hazards of falling into unexpected and dire need. Takaful Contribution The amount payable to a waqf based takaful company in order to become Takaful participant for the coverage of a risk at a pre-determined takaful rate. Takaful Products The products designed to cover the customers’ liability / assets to any unforeseen circumstances which customer may face in future.
408. TAT – Turn Around Time Time required for application processing. Temporary credit A limited period of credit posted by bank into cardholder's card account for disputed transaction. Tenure The length of time for which a term finance/loan has been approved and is typically structured in 12-month multiples. Tijarah Financing Sale & Agency based financing facility for customers who sell finished goods on credit basis. This facility enables customers to sell their finished goods stock, meet their working capital requirements and enjoy the benefits of cash sales. Time barred Transactions A posted transaction which is disputed after 120 days’ time-limit or MasterCard/Visa allowable time-limits by cardholder. Waqif Relating to the law of waqf, refers to the person who establishes or donates his property by way of waqf. Weighted Average Cost of Deposits Percentage of the total cost expensed on average deposits of the bank for the period. Withdrawal Facility To withdraw cash either through the Automated Teller Machines (“ATMs”) or through use of a Debit Card held by the Customer (“Debit Card”). Zakah (zakat) A certain portion of wealth levied on Muslims having wealth above an exemption limit (nisab) at a rate fixed by the Shariah to purify wealth. Zakat is one of the five pillars of Islam. The object is to take away a part of the wealth of the well-to-do and to distribute it among the poor and the needy. Title of the property Documents identifying the owner of the property. Title of vehicle Documents identifying the owner of vehicle such as excise file and registration book in Autos. Top - Up Top Up means line replenishment/enhancement. Total Cash Outlay (TCO) An amount including down payment, takaful, processing fee etc. which is paid after Auto finance approval. Total Monthly Payment (TMP) Equal monthly amount payable including installment (Principal + profit) and takaful contribution amount. Trenches Financing/Loan disbursed in parts are called trenches. Undertaking Unilateral promise/Indemnity provided by the customer. Units Undivided portions in an asset. Unrestricted investment account Relating to Islamic banking, refers to an investment account where the account holder authorizes the Islamic bank to invest the account holder’s funds on the basis of Mudarabah contract in a manner which the Islamic bank deems appropriate without laying down any restrictions as to where, how and for what purpose the funds should be invested. Unsatisfactory Credit History Customer is not making payments against availed cross sell facility/product resultantly bank has right to close either temporary or permanently said product/facility. US Dollar Currency of the United States of America. VaR Value at Risk is an estimate of the potential loss which might arise from market movements under normal market conditions, if the current positions were to be held unchanged for one business day. Wakalah Contract of agency in which a person delegates his rights/authorities/business to another and substitutes the other in his own place. The latter is called the wakil, or agent, and the former is called muwakkil, or principal. Waqf In Arabic language the word Waqf means preventing something from movement. In Shariah terminology, Waqf refers to making a property invulnerable to any disposition that leads to transfer of ownership, and donating the usufruct of that property to beneficiaries. ANNUAL REPORT 2019 407
409. ANNUAL REPORT 2017 113
410. Notice of 24th Annual General Meeting Notice is hereby given that the 24th Annual General Meeting of the Members of Meezan Bank Limited will be held Insha ’Allah on Thursday, March 26, 2020 at 9:30 a.m. at Meezan House C-25, Estate Avenue, SITE, Karachi, Pakistan to transact the following business: ORDINARY BUSINESS 1. To confirm the minutes of the Extraordinary General Meeting held on December 18, 2019. 2. To receive, consider and adopt the Annual Audited Accounts of the Bank, Audited Consolidated Accounts for the year ended December 31, 2019 together with the Auditors’ Report, Directors’ Report and Chairman’s Review Report thereon. 3. To appoint auditors of the Bank for the year ending December 31, 2020 and to fix their remuneration. The present auditors, M/s EY Ford Rhodes., Chartered Accountants, retire and being eligible, offer themselves for reappointment. 4. To consider and, if thought fit, approve as recommended by the Board of Directors, final cash Dividend at the rate of Rs 2 per share i.e. 20% in addition to Rs 3 per share i.e. 30% interim cash Dividend already declared/paid along with 10% Bonus Shares for the year December 31, 2019. SPECIAL BUSINESS 5. To consider and, if thought fit, approve the Directors’ Remuneration Policy of the Bank and to pass the following resolution as an ordinary resolution: “Resolved that the Directors’ Remuneration Policy of the Bank, as presented to the shareholders, be and is hereby approved.” 6. To approve the remuneration paid/payable to the Chairman, Vice-Chairman and Non-Executive Directors of the Bank for the year ended December 31, 2019 for attending Board Meetings and Meetings of the Committees formed by the Board and to pass the following resolution as an ordinary resolution: “Resolved that the remuneration paid / payable to the Chairman, Vice-Chairman and Non-Executive Directors of the Bank for the year ended December 31, 2019 for attending Board Meetings and Meetings of the Committees formed by the Board, as disclosed in note 39 of the Audited Financial Statements of the Bank be and is hereby approved.” 7. To transact any other business with the permission of the Chair. Statements under section 134 (3) of the Companies Act, 2017 pertaining to special business are enclosed. By Order of the Board Karachi February 12, 2020 Muhammad Sohail Khan Company Secretary ANNUAL REPORT 2019 409
411. Notes : i) The Members’ Register will remain closed from March 19, 2020 to March 26, 2020 (both days inclusive) to determine the names of members entitled to receive the 20% cash dividend and attend and vote in the meeting. ii) A member eligible to attend and vote at this meeting may appoint any person as proxy to attend and vote in the meeting. Proxies in order to be effective must be received at the Registered Office not less than forty eight (48) hours before the holding of the meeting. iii) Members are requested to intimate any changes in address immediately to THK Associates (Pvt.) Ltd., 1st Floor, 40-C, Block-6, P.E.C.H.S, Karachi-75400. Phone No. 111-000-322. For Information of the Members: iv) The Government of Pakistan has made certain amendments in Section 150 of the Income Tax Ordinance, 2001 whereby different rates are prescribed for deduction of withholding tax on the amount of dividend paid by the companies/banks. These rates are as per law. To enable the Bank to make tax deduction on the amount of Cash Dividend, all the members whose names are not entered into Federal Board of Revenue (FBR)’s Active Tax-Payers List (ATL), despite the fact that they are tax return filers are advised to make sure that their names are entered into ATL, before the date of book closure for cash dividend, otherwise tax on their cash dividend will be deducted as non-filer. All shareholders who hold shares jointly are requested to provide shareholding proportions of Principal shareholder and Joint-holder(s) in respect of shares held by them to our Shares Registrar, in writing as follows: Principal Shareholder Folio/CDS Total Shares Name and CNIC No. Shareholding Proportion (No. of Shares) Joint Shareholder Name and CNIC No. Shareholding Proportion (No. of Shares) The required information must reach our Shares Registrar by the close of business (5:00 pm) on March 18, 2020; otherwise it will be assumed that the shares are equally held by Principal shareholder and Joint Holder(s) and tax will be deducted according to proportionate holding of each shareholder as clarified by the FBR vide its clarification letter No. I(54) Exp/2014-132872-R dated September 25, 2014. Shareholders claiming tax exemption under clause 47(B) of Part IV of the Second Schedule of Income Tax Ordinance, 2001 are requested to provide valid exemption certificate under section 159 (1) of the Income Tax Ordinance, 2001 latest by March 18, 2020 to our Shares Registrar as required vide FBR clarification letter No. 1(43)DG (WHT) / 2008-Vol.II-66417-R dated May 12, 2015. Payment of Cash Dividend through electronic mode: v) Under section 242 of the Companies Act, 2017, it is mandatory for a listed company to pay cash dividend to shareholders only through electronic mode directly into bank account designated by the entitled shareholders. In order to receive dividend directly into bank account, shareholders are requested to fill in Electronic Credit Mandate Form available on the Bank’s website and send it duly signed alongwith a copy of CNIC to the registrar of the company, THK Associates (Pvt.) Ltd., 1st Floor, 40-C, Block-6, P.E.C.H.S, Karachi-75400 in case of physical shares. In case shares are held in CDC then the Electronic Credit Mandate Form must be submitted directly to shareholder(s)’ broker / participant / CDC account services or shareholders can directly register for e-Dividend Services by visiting CDC Portal: https://eservices.cdcaccess.com.pk/public/index.xhtml Electronic Credit Mandate Form Folio Number / CDC Sub Account Number Name of Shareholder Title of the Bank Account International Bank Account Number Name of Bank Name of Bank Branch / Address Cellular and Landline number CNIC / Passport No. (Attach copy) Signature of Shareholder 410 MEEZAN BANK LIMITED
412. Availability of Annual Accounts vi ) Annual Accounts of the Bank for the financial year ended December 31, 2019 have been provided on the Company’s website-www.meezanbank.com Video Conference Facility for Attending General Meetings vii) If the Bank receives consent from members holding in aggregate 10% or more shareholding residing at a geographical location, to participate in the meeting through video conference at least 07 days prior to 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 a request to be submitted to registered address of the Bank 07 days before holding of the Annual General Meeting. STATEMENTS UNDER SECTION 134(3) OF THE COMPANIES ACT, 2017 These statements set out the material facts concerning the resolutions contained in items (5) and (6) of the notice pertaining to the special business to be transacted at the Annual General Meeting of the Bank to be held on March 26, 2020. Approval of Directors’ Remuneration Policy of the Bank The State Bank of Pakistan (SBP) vide its BPRD Circular No. 3 of 2019 dated August 17, 2019 advised to formulate a comprehensive and transparent remuneration policy and set maximum limits for meeting fee. The policy is required to be approved by the shareholders in Annual General Meeting on pre or post facto basis. Therefore, the Board of Directors of Meezan Bank in its meeting held on February 12, 2020 has recommended the Directors’ Remuneration Policy for the approval of shareholders, which is given below. The non-executive directors are interested in the payment of remuneration and the remaining member of the Board has no interest in the matter. Directors’ Remuneration The remuneration paid / payable to the non-executive directors was approved by the Board of Directors in terms of Article 52 of the Articles of Association of the Bank. The remuneration requires approval (which is permissible on post facto basis) of the shareholders in Annual General Meeting in terms of requirements of the Prudential Regulations for Corporate / Commercial Banking issued by the State Bank of Pakistan. The non-executive directors are interested in the payment of remuneration and the remaining member of the Board has no interest in the matter. Directors’ Remuneration Policy Purpose of Policy The State Bank of Pakistan, as annexure to BPRD Circular No. 1 of 2017 issued “Revised Guidelines on Remuneration Practices” (the “Guidelines”) and BPRD Circular No. 3 of 2019 (the “Circular”). The Guidelines require that the Board of Directors should constitute a Board Human Resource and Remuneration Committee (HR&R) and the Circular requires that the HR&R Committee shall formulate a comprehensive and transparent remuneration policy for the Chairman and other Directors. The Board’s Human Resource and Remuneration Committee (HR&R) , after due deliberation has revised the policy to ensure transparency and fairness as per the said Guidelines of SBP. The purpose of Directors’ Remuneration Policy (hereinafter referred as “the Policy”) is to set out the guidelines for determination of remuneration of the Board of Directors of Meezan Bank Limited (hereinafter referred to as ‘Bank’), for attending Board and its Committees Meetings as per Companies Act 2017, Article of Association of the Bank, State Bank of Pakistan (SBP)’s Prudential Regulations (For Corporate and Commercial Banking) and SBP’s Instructions / Circulars issued from time to time. ANNUAL REPORT 2019 411
413. The Policy applies to all members of the Board , who are entitled to remuneration for attending Board and its committees’ meetings. The remuneration of the directors, including the Chairman, for attending meetings of the Board and its committees, will be determined by the Board of Directors and approved by the shareholders. It is clarified that this Policy does not deal with the remuneration of executive directors, who are to be paid usual TA/DA as per the Bank’s standard rules and regulations. Maintenance & Updation This Policy in its entirety shall be reviewed by the Board HR&R Committee at least once every three (03) years or otherwise as and when required. However, any regulatory requirement (as and when issued) contrary to this Policy shall supersede this Policy and must be complied at all times. Approval and implementation This Policy will be reviewed and approved by the Shareholders in the AGM on a pre or Post-facto basis on the recommendation of the Board of Directors. The Board HR&R Committee will take the policy to the Board for their review and recommendation. All subsequent reviews of the document shall continue to be approved at the same level. Guidelines for Directors’ Remuneration 1. General 1.1. 1.2. 1.3. 1.4. 1.5. Remuneration to Non – Executive Directors (including Chairman) shall be paid in accordance with relevant laws and regulations. Remuneration shall be fixed in Pakistani Rupees (PKR) invariably; nevertheless, payment of the same can be made to foreign Directors in equivalent foreign currency(ies), where necessary, after obtaining the regulatory approvals as may be required from time to time. Income Tax, at applicable rates will be deducted from the payment of Meeting fee. No single member of the Board of Directors shall determine his/her own remuneration. Accountability of the Directors shall be ensured through their periodic performance evaluation. 2. Disclosure Requirements 2.1 2.2 Proper and transparent disclosure of remuneration and other benefits/facilities provided to the Board members shall be made in the annual financial statements of the Bank, as per SBP instructions issued from time to time. All regulatory disclosure requirements regarding Directors’ Remuneration will be complied with. 3. Provisions to deal with remuneration of underperforming Director(s) The performance evaluation of (a) overall Board, (b) the Chairperson and (c) individual directors will be done in accordance with the Performance Evaluation Mechanism as per the Guidelines issued vide SBP’s BPRD circular 11 of 2016 as amended from time to time. A Director whose average score during the Board’s Performance Evaluation exercise is below 60% shall be considered as an ‘underperforming Director’. His/her case will be referred to the Board Human Resource and Remuneration (HR&R) Committee for consideration. The HR & R Committee will decide and recommend the course of action in such cases to the Board for approval. The decision of the Board will be valid till the next Board performance evaluation is conducted. 4. Remuneration of Non-Executive and Independent Directors for attending Board / Committee Meetings Components of Remuneration SBP, vide BPRD circular 03 of 2019, has fixed the maximum limits of Remuneration for attending a Board / Committee Meeting as under: Banks which have above Rs.500 billion Assets size or above Rs. 1 billion after tax profit (as per last audited annual accounts) up to Rs.800,000 and for other banks up to Rs.500,000. SBP has authorized the banks to determine their own maximum remuneration limits for their board members (including Chairman) taking into consideration the level of responsibility and expertise of the concerned directors. The remuneration of Directors shall not exceed the maximum limit specified by the Regulator. Accordingly, the following fee structure has been approved: 412 MEEZAN BANK LIMITED
414. 4 .1. The Fees for attending the Board and its Committee meetings shall be as follows Board meeting Fee Rs per meeting Committee meeting Fee Rs per meeting Chairman 960,000 650,000 Other Non-executive Directors 800,000 650,000 4.2. The Board and Committee meeting fees will be approved by the shareholders in Annual General Meeting on pre or post facto basis on the recommendation of the Board and Board HR&R Committee. The meeting fee, in any case, shall not exceed the limits prescribed by the Regulators. 4.3. The Chairman’s fee for attending a Board meeting is higher than that of other non-executive Directors within the limit prescribed by law i.e. up to 20% of the normal fee limit, as the office of the Chairman requires investment of additional time and effort to ensure the focus and effectiveness of the Board meetings and to ensure that the Board is effective in its task of setting and implementing the Bank’s direction and strategy. 4.4. A Director may be allowed to attend a Board meeting via telephone or video conference for a maximum of one meeting per annum, and even that only under circumstances that make it impossible to attend the meeting physically, e.g. non-availability of travel visa etc. The meeting fee for such participation would be 50% of the normal meeting fee. 4.5. A Director may attend any number of Committee meetings via telephone or video conference. Normal fee for Committee meeting will be paid to every Non-Executive Director for attending a Committee meeting physically or via telephone or video conference. 4.6. All traveling/boarding/lodging expenses of the Directors related to Attendance of Board Meeting(s)/ Committee Meetings will be borne by the Bank at actuals. Expenses such as hotel stay etc. incurred due to personal reason or reason other than performance of Bank’ duties and business will be borne by the concerned Director. 4.7. The Committee meeting fee for the Chairman would be the same as that for other Directors. 4.8. No additional payments or perquisites will be paid to the Non-Executive Directors and Chairman except as mentioned in above clauses. 4.9. 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/she individually and/or in concert with other Directors of the Bank, holds substantial interest. 5. Remuneration of the Executive Directors for attending Board / Committee Meetings 5.1 No remuneration under this policy would be paid to the Executive Directors except travel and boarding costs as per the Bank’s standard rules and regulations and relevant laws. ANNUAL REPORT 2019 413
416. Meezan Bank Limited Dividend Mandate Form According to Section 242 of Companies Act , 2017 and Circular No. 18/2017 dated August 1, 2017 issued by Securities and Exchange Commission of Pakistan (SECP), from November 1, 2017 all listed companies are to pay dividend only through electronic mode directly into the bank accounts designated by the entitled shareholders. In view of above, Shareholder(s) are advised to provide their complete bank account / IBAN detail as per format given below required under clause 7,8 and 9 (ii) of the Companies (Distribution of Dividends) Regulations, 2017 issued under S.R.O.1145 (I) / 2017 dated November 06, 2017 by SECP enabling us to comply with the above Section/Circular. For physical Shareholder(s): THK Associates (Pvt) Limited, 1st Floor, 40-C, Block 6, P.E.C.H.S. Karachi 75400. For CDC Account holder (s) in case of CDC account holder / Sub-account holder, please provide said details to CDC / to respective member Stock Exchange. Dividend Mandate Details Company Secretary It is requested that all my cash Dividend amounts declared by the Bank may be credited into the following bank account: Folio Number / CDC Participants ID A/c No. Name of Shareholder Title of the Bank Account Bank Account Number (Complete) / IBAN Bank’s Name, Branch Name, Code and Address Cell Number Landline Number, if any Email Address CNIC Number/ Passport Number (in case of foreign Shareholder) (attach copy) It is stated that the above mentioned information is correct, that I will intimate the changes in the above mentioned information to the Company and the concerned Share Registrar as soon as these occur. Shareholder’s Signature Meezan Bank Limited, Meezan House C-25, Estate Avenue S.I.T.E., Karachi. PABX: (92-21) 38103500 UAN: 021-111-331-331 & 111-331-332 Website: www.meezanbank.com
418. FORM OF PROXY The Company Secretary Meezan Bank Limited Meezan House C-25 , Estate Avenue S.I.T.E, Karachi, Pakistan. I/We of being a member(s) of Meezan Bank Limited and holder of ordinary shares as per Share Register Folio No. Participant I.D No. and/or CDC Investor Account No. / and Sub Account No. appoint do hereby of as my/our proxy to vote and act for me/us on my/our behalf at the 24th Annual General Meeting of Meezan Bank Ltd. to be held on Thursday, March 26, 2020 at 9:30 a.m. at Meezan House, C-25, Estate Avenue, S.I.T.E., Karachi, Pakistan and at any adjournment thereof. Signed this day of 2020. Please affix Rupees five revenue stamp Witness 1 Witness 2 Signature: Signature: Name: Name: Address: Address: CNIC or Passport No: CNIC or Passport No: NOTES: 1. Proxies in order to be effective must be received by the Company not later than 48 hours before the time of the meeting. 2. A member entitled to attend and vote at the Meeting may appoint another person as his/her proxy to exercise all or any of his rights to attend, speak and vote for him/her. 3. Members are required to timely notify any change in their address to Bank’s Shares Registrar THK Associates (Pvt.) Ltd. 1st Floor, 40-C, Block-6, P.E.C.H.S., Karachi. 4. Shareholders will further have to follow the guidelines as laid down in Circular 1 dated January 26, 2000 issued by the Securities and Exchange Commission of Pakistan. 5. If any member appoints more than one proxy and more than one instruments of proxies for any one meeting are deposited with the Company, all such instruments of proxy shall be rendered invalid. For Attending the Meeting: 1. In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and their registration detail are uploaded as per the regulations, shall authenticate his/her identity by showing his/her original Computerized National Identity Card (CNIC) or original passport at the time of attending the Meeting. Signature of Member(s)/Attorney The Signature should agree with the specimen registered with the Company 2. In case of corporate entity, the Board of Directors’ resolution/power of attorney with specimen signature of the nominee shall be produced (unless it has been provided earlier) at the time of Meeting. For Appointing Proxies: 1. The Proxy form be signed by the appointer or his attorney duly authorized in writing, or if the appointer is a body corporate, be under its seal or be signed by an officer or any attorney duly authorized by it. 2. In case of individuals, the account holder or sub-account holder and /or the person whose securities are in group account and their registration details are uploaded as per the regulations, shall submit the proxy form as per the above requirement. 3. In case of corporate entity, the Board of Directors’ resolution/power of attorney with specimen signature of the nominee shall be submitted along with proxy form to the Company. 4. The proxy form shall be witnessed by two persons whose name, addresses and CNIC numbers shall be mentioned on the form. 5. Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form. 6. The proxy shall produce his/her original CNIC or original passport at the time of the Meeting.
419. Please affix correct postage The Company Secretary Meezan Bank Limited Meezan House , C-25, Estate Avenue, SITE, Karachi, Pakistan.
420. 2 1