National Bank of Pakistan: Financial Statements 2020

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National Bank of Pakistan: Financial Statements 2020

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BUILDING RESILIENCE CREATING OPPORTUNITIES | FINANCIAL STATEMENTS 2020 | National Bank of Pakistan
National Bank of Pakistan Chairman 's Review Dear Shareholders, Rebuilding National Institutions Your Bank has recorded strong and impressive results for 2020 with net income up by 93% to PKR 30.6 bn from PKR 15.8 bn in 2019. This was after creating additional provisions for another PKR 30.9 bn in the year. Operating expenses were also tightly managed and, in fact, showed a decline of about 4%. These are all positive indicators of performance. However, our restructuring program still has some way to go. Safeguarding and rebuilding national institutions is a challenging task. Your Board, appointed almost two years ago, has worked hard to achieve this for NBP. Our efforts and strategy have been focussed upon strengthening the institutions balance sheet, inducting a team of professionals with the required expertise, developing a framework of policies and controls to protect the Bank, and building a corporate culture based on performance and accountability. Material progress has been made in each of these key areas. However, poor governance has adversely affected this institution over many years, and in a demanding environment, allowed it to weaken. Over the last 25 years there has only been an independent Chairman for about 6 years thus compromising effective oversight. Furthermore, in the last 10 years, there have been 6 Presidents and 3 Acting Presidents and such discontinuity undermines leadership. This Board has thus had to focus on a major rebuilding of your Bank. To this end, we have continued to retain earnings and over 2019 and 2020 these retained earnings amount to PKR 46.4 bn. This has, of course, meant no dividend payouts but it has been essential to protect your Bank and thus your investment. Over and above this, after identifying and dimensioning the problems facing your Bank, we have created provisions and contingencies for a total of PKR 54.0 bn over the same period to cover potential portfolio losses, signiﬁcant HR related exposures and operational vulnerabilities. Although some material threats remain, such as those involving our pensions case, our balance sheet has thus been reinforced considerably by about PKR 100 bn. In this Covid 19 dominated period, your Board has worked on looking after the health and wellbeing of staff and customers while steadfastly continuing the process of reform so past problems do not recur. Speciﬁcally, to lead the restructuring process, a strong team of talented seniors have been inducted to head Risk, Compliance, Audit and Operations. These additions supplemented the heads of HR, and Legal who were brought in during the prior year. HR, in particular, which has led the reform process, has not only built up a solid second string, but led the development and upgrading of key policies in Performance Management and Compensation, as well as in addressing some major long standing employee litigation. Additionally, standards have been raised signiﬁcantly relating to Recruitment and Promotions with the objective of emphasising merit. The latter is under implementation now with about 7,000 employees going through written tests or panel interviews stipulated to determine their eligibility. These steps will play a vital role in enhancing the corporate culture of the Bank. However, government support is essential for the repealing of 1973 Staff Service Rules under which many employees have misused the statutory facility of direct access to the High Courts. Currently we face over 6,000 petitioners, many in frivolous cases, brought against the Bank by current and ex-employees. The laws allow the board to issue fresh policies/rules but we await repeal of the old rules in order to take that next step. In the area of managing risk, after many years, credit approval structures have been materially changed driven by attention to expertise and controls. Improved policies, the introduction of independent senior credit ofﬁcers and an enhanced role for independent risk in exposure approvals, should better protect the portfolio of the Bank. The leadership of Audit, Compliance and Operations has been signiﬁcantly strengthened and issues relating to account reconcilements, data cleansing and frauds are receiving greater attention but much work remains to be done here, and technology platforms have to be updated to enable subsequent effective management.
Our International franchise covering 21 jurisdictions needs much attention . It is a small part of the institution’s assets and revenues but has a disproportionate share of issues to address. Legacy problems resulting from a lack of strategy and management assignments that were not merit based, leave us exposed to regulatory risks. Our critical US franchise has thus been managed directly by the President through a qualiﬁed and experienced external hire. Seven other franchises are under various stages of closure and a number of others are under consideration for the same. In the face of these multiple challenges, we have not succeeded in attracting high calibre leadership to cover the full range of these operations that face compliance and portfolio problems. Our aim here is to manage down risks while retaining key franchises. The whole area of technology has also posed material risks including those related to cyber security. The Bank has to be automated and digitised to be able to meet the regulatory, reporting and customer challenges of today. However, outdated infrastructure and software are major hindrances and the inability to on board oversight expertise, whether at the board or committee levels, continues to slow down our progress in this regard in the face of ongoing external investigations of past technology related implementations. The heart of an institution like ours is its domestic network of 1,500 branches. It’s structure of 37 regions means that there are about 40 branches for each region to supervise and support. This is not only inefﬁcient but leaves us open to risks of frauds. Our new Retail Head will look to revamp this network to enhance supervision and customer service. On the balance sheet side our capital discipline has improved our Common Equity Tier 1 capital ratio to 14.99% (2019:12.11%) and Total Capital Adequacy Ratio to 19.78% (2019:15.48%) at the end 2020. This capital position enables the Bank to absorb shocks in the foreseeable future and leverage emerging opportunities to create value for its shareholders. It is pertinent to mention that your Bank is subject to a drag of about PKR 5 bn p.a. due to non-payment of mark up by public sector entities. Our strong results despite this indicate the potential of your Bank. As we work to make the Nation's Bank more resilient, we look forward to continuing support from our key partners, the foremost of which is the Government of Pakistan and the State Bank of Pakistan, our primary regulator. Our legacy of problems will take time to address but we have set our directions and declared our standards. We look to be fair, transparent in our actions and to operate on the basis of merit only. The year 2020 has tested us in many ways, and I am happy to say we have responded very well. I would like to thank our executive management team and the 15,000 plus colleagues for remaining committing to helping the Nation’s Bank through these uncertain times. To my fellow Board members, I express heartfelt thanks for their untiring efforts and patience and their steadfastness in reinforcing the foundations of this institution that undoubtedly has great potential. Thank you for your ongoing support and your patience as we build an institution of which you can be proud. Zubyr Soomro Chairman Date: February 24, 2021 Karachi
National Bank of Pakistan Directors ’ Report to the Shareholders Dear Shareholders, On behalf of the Board of Directors “the Board”, we have pleasure in presenting to you the Annual Report of the Bank together with the Audited Financial Statements for the year ended December 31, 2020 and the Independent Auditors’ Report thereon. The accompanying ﬁnancial statements, prepared by the management of the Bank, fairly present its state of affairs, the result of its operations, cash ﬂows and changes in equity. Macroeconomic Environment The Bank’s performance was greatly inﬂuenced by the economic environment. As covered at length in the CEO’s review, the economic environment in 2020 was challenging as Pakistan economy was hit, ﬁrst by the macro imbalances, and second, by the Covid-19 pandemic. The negative impact was fairly managed as the Government and State Bank of Pakistan introduced an array of stimulus measures. These included, inter alia, a ﬁscal relief package worth PKR 1.2 trillion; 625 bps cut in the policy rate from 13.25% to 7.0%; reduction in the capital conservation buffer for banks by 100 bps, etc. As a result, Pakistan's economy is showing signs of recovery with visible improvements in key macroeconomic indicators e.g. surplus current account balance, higher forex reserves, increased ﬂow of remittances, exports and large scale manufacturing. Following a 0.4% contraction during FY ‘20, the State Bank of Pakistan estimates Pakistan's GDP will grow at around 2% for FY ‘21. Despite pressures on interest margins and reduced business activity in the economy, the banking sector has stood reasonably resilient during these challenging times. Asset quality has emerged a key concern as banking sector NPLs rose to 9.2% of total loans at end 2020. Principal Activities We are one of Pakistan’s leading commercial banks operating predominantly in Pakistan with branches in Europe, North America and Asia. Principal activities of the Bank include general branch banking services, consumer ﬁnance, corporate & investment banking, treasury and capital markets, transaction banking, cash management, digital banking, international trade & remittances, etc. The Bank’s subsidiaries offer banking services, currency exchange, modarba, fund management and securities brokerage services. Our Response to Covid-19 The Covid-19 pandemic outbreak posed health and ﬁnancial risks on our workforce and tested the resilience & strength of the Bank’s operations, its ﬁnancial soundness as well as the ﬁnancial security of our customers and the community. During these challenging times, the Board stood with the management in framing responses to emerging risks related to e.g. (i) Employee Health & Safety; (ii) Customer Welfare; (iii) Operational Resilience; (iv) Financial Soundness of the Bank; and (v) effective AML/CTF/KCY monitoring, etc. As the Covid-19 situation continues to evolve, your Board and the Management are actively monitoring the situation and adapting responses required to build resilience of the Bank, while creating opportunities for the Bank’s customers and the communities it serves. Performance During the Financial Year-2020 Despite a challenging environment, the Bank delivered strong ﬁnancial results for the year 2020. This demonstrates the resilience of our business model, our agility and the efforts of our senior management and workforce. Proﬁtability KPI (PKR ‘Bn) Total income Operating expenses Proﬁt before provisions Provisions Proﬁt before tax Proﬁt after tax 2020 2019 140.2 63.1 77.1 30.9 46.2 30.6 108.1 65.9 42.3 14.3 28.0 15.8 Better/(Worse) Amount % 32.1 29.7% 2.7 4.2% 34.9 82.5% (16.6) (116.8%) 18.2 65.1% 14.7 93.3% The Bank recorded the highest ever after tax proﬁt in its history. For the year under review, gross mark-up/interest income closed 7.7% higher YoY at PKR 257.81 billion “bn” (2019:PKR 239.48 bn); whereas the interest/mark-up expense amounted to PKR 153.66 bn, of which PKR 103.38 bn or 67.3% was paid to depositors. Accordingly, net interest/mark-up income “NII” was PKR 104.16 bn, 44.8% higher YoY. Despite limited economic activity during the year, the Bank succeeded in maintaining its non-mark-up / interest earning “NFI” stream that closed at PKR 36.08 bn (2019:PKR 36.20 bn)., Accordingly, total revenue of the Bank closed 29.7% up YoY at PKR 140.23 bn (2019: PKR 108.11 bn). As operating & other expenses dropped by 4.2% down YoY by closing at PKR 63.11 bn, the cost-to-income ratio improved from 60.9% in 2019 to 45.0% in 2020. Proﬁt before provision was 82.5% up at PKR 77.1 bn (2019:PKR 42.25 bn). However, this increase was signiﬁcantly off-set by a similar trend in provisions that increased 116.8% YoY to PKR 30.90 bn as the Bank experienced a 15.2% increase in the non-performing loans (NPLs) at PKR 171.29 bn (2019:PKR 148.75 bn). Accordingly, proﬁt before tax was 65.1% higher YoY at PKR 46.22 bn (2019: PKR 28.00 bn); and proﬁt after tax stood 93.3% higher YoY by closing at PKR 30.56 bn (2019: PKR 15.81 bn). This translates into Return on Average Assets and Return on Equity of 1.0% (2019:0.5%) and 17.2% (2019:10.2%), respectively.
National Bank of Pakistan Balance Sheet & Capital Strength KPI (PKR ‘Bn) Investments Advances Total Assets Deposits and other accounts Borrowings Net Assets 2020 2019 1,463.4 1,449.6 983.3 1,008.1 3,008.5 3,124.4 Better/(Worse) Amount % 13.8 1.0% (24.9) (2.5%) (115.9) (3.7%) 2,419.0 2,198.0 138.5 471.8 267.6 232.6 220.9 (333.2) 34.9 10.1% (70.6%) 15.0% The Bank’s end of year total assets closed at PKR 3,008.53 bn which is 3.7% down from PKR 3,124.39 bn at end 2019. This drop is mainly driven by a reduction of PKR 333.22 bn in the money market borrowings in line with our prudent funding & liquidity strategy. Capital & reserve closed at PKR 267.6 billion i.e. PKR 34.9 billion or 15.0% up from PKR 232.6 billion on December 31, 2019. The Bank’s ﬁnancial soundness also improved signiﬁcantly during the year 2020. While Common Equity Tier 1 (CET1) Capital ratio improved to 14.99% (2019:12.11%), the Total Capital Ratio also improved at 19.78% (2019:15.48%). Similarly, the Bank’s Leverage ratio was 4.06% at end 2020 (2019:3.36%). The Bank’s liquidity and net stable funding ratios improved to 180% (2019:148%) and 256% (2019:233%), respectively against regulatory requirements of 100%. On a positive note, the Bank’s CASA ratio also improved to 83.8% (2019:81.8%). Detailed coverage of the ﬁnancial performance and other organisational development is also given elsewhere in the Annual Report. Appropriation of Proﬁt The Board is fully aware and conscious of the impact of Covid-19 on our shareholders, many of whom look forward to receiving dividends. We assure you all that our dividend payout decisions purely reﬂect the economic environment, regulatory guidelines and ﬁnancial soundness of the Bank. A stronger balance sheet and capital position mean your Bank is well placed to deliver better and sustainable results over the long-term. As a principle, the Board will not lose sight of the actions to be taken to achieve healthy and sustainable returns for our shareholders. The Board deliberated at length whether or not cash dividend should be recommended. However, given the potential impact of the pension case and other contingencies, despite some positive signals, there remain causes for concern. Accordingly, it is considered prudent to retain the proﬁts. Thus, the Board does not recommend any dividend for the year 2020. For the year 2020, after carryover of accumulated proﬁt of 2019, and proﬁts appropriated to reserves and movement in reserves have been disclosed in the Statement of Changes in Equity. The same is summarised as follows: (PKR ‘Million) Proﬁt after tax for the year ended December 31, 2020 30,558.9 Unappropriated proﬁt brought forward 88,785.9 Other comprehensive income - net of tax (497.9) Transfer from surplus on revaluation of ﬁxed assets 230.4 Proﬁt available for appropriation 119,077.3 Appropriation: Transfer to Statutory Reserve Unappropriated proﬁt carried forward (3,055.9) 116,021.4 Principal Risks & Uncertainties Facing the Bank The Bank is exposed to internal and external principal risks & uncertainties. Principal risks include (i) Credit Risk; (ii) Treasury and Capital Risk; (iii) Market Risk; (iv) Operational Risk and (v) Information Security Risk. The Bank follows a prudent path to risk management through developing/using effective tools to keep the Bank resilient, achieve corporate sustainability and minimize losses within the deﬁned risk tolerance levels. The Board ensures that adequate policies and frameworks are in place to recognize all signiﬁcant/material risks to which the Bank is / may be exposed to and that the required human resource, culture, practices, and systems are adequate to address such risks. The Board and its relevant committee i.e. Board Risk & Compliance Committee and the senior management along with its relevant committees i.e. Enterprise Risk Management Committee, Assets & Liability Committee, etc. are responsible to ensure formulation and implementation of a comprehensive risk management framework through its committees. The Bank is continuously reviewing the portfolio, to identify accounts and industries susceptible to higher risk, resulting from the pandemic outbreak. Further, with respect to information security risk management arising as a result of Covid-19, the Bank took appropriate actions to monitor and respond to these evolving cybersecurity risks due to work from home environment, increase in business volumes on bank’s digital channels and products and adopted a heightened state of cybersecurity. A detailed indication of the principal risks and uncertainties as well as the future prospects is discussed in Note No. 47 to the ﬁnancial statements.
National Bank of Pakistan The Board , Board Committees and Board Meetings Following information is, inter alia, provided in the Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations: - Names of the persons who, at any time during the ﬁnancial year, were Directors of the Bank; and - Detail of the meetings of the Board and its Committees attended by each Director. Explanation in regard to modiﬁcation in the Auditors Report In their report, the external Auditors have included Emphasis of Matter by drawing attention to Note 25.3.3.1 to the ﬁnancial statements which explains the contingency in relation to litigation by retired employees of the Bank for pension beneﬁts. Based on the advice of the legal counsels, the Bank has a reasonably strong legal grounds to convince the Honourable Supreme Court for reviewing its earlier judgement. Therefore, pending the decision on the review petitions, ﬁnancial impact of the subject case has not been included in the ﬁnancial statements for the year ended December 31, 2020. For details, please refer to the said note. Material changes subsequent to the Balance Sheet Date No material event has occurred subsequent to the date of the Balance Sheet that requires adjustments to the enclosed ﬁnancial statements. Closure of foreign Subsidiaries and Branches In line with our revised strategy on international franchises, the Board has approved closure of two (02) overseas subsidiaries being (i) Almaty-Kazakhstan), and (ii) Dushanbe-Tajikistan along with three (03) overseas branches being in (i) Baku-Azerbaijan, (ii) Bishkek-Turkmenistan, and (iii) Ashgabat-Turkmenistan. Further, the Board has also approved the management’s recommendations more towards consolidating the Bank’s operations in Afghanistan and Bangladesh to be limited to branches in the capital city Kabul and Dhaka, respectively. Internal Control & Compliance To our regulators both in Pakistan and around the world, we send the message that the Board is prioritising building best standards of governance across the range of our markets and activities, so they fully meet your expectations. The Bank remains committed to ensure compliance with all the applicable laws, rules, regulations, and codes in the spirit of good governance, and recognises the need to improve its compliance & control capacity within its domestic network. A revamping of the network structure is under implementation to strengthen the supervision of its 1500+ branches. To this end, we have given strategic directions to invest in new technological platforms for effective AML/KYC screening, data accuracy and authenticity, internal controls over the ﬁnancial reporting, data cleansing and generating timely & quality MIS for efﬁcient decision making. Signiﬁcant attention is being given by the Board to improving account reconciliation, data cleansing and building a culture of meritocracy & accountability. Additionally, priority is being accorded to the major task of upgrading the Core Banking Application. At the Board level, there is a need for greater expertise in technology to facilitate effective oversight. This has been highlighted to the government and an appropriate nomination made over six months ago but it remains un-responded. While signiﬁcant talent at senior levels has been attracted into the Bank, outdated Staff Service Rules enable staff to ﬁle whimsical suits directly at the High Court levels and this results in the Bank facing a large number of nuisance suits that distract the management from pursuing necessary reforms. While a performance driven culture is being inculcated, it’s effectiveness is diluted by the same Staff Service Rules prevalence. To help the Bank reach its true potential, the government’s assistance is needed to repeal and update these outdated Service Rules. The international franchise of the Bank is being strategically streamlined to facilitate an enhanced level of compliance. To this end, work is underway to consolidate the Bank’s international footprint and decision on the closure of certain branches is already being implemented. In 2016 the Bank and its New York branch entered into a written agreement with the Federal Reserve Bank of New York and New York State Department of Financial Services (US regulators). This agreement, inter-alia, requires the Bank to address certain compliance and risk management matters relating to anti-money laundering and the US bank secrecy law requirements. This agreement also requires implementation of the requisite systems and controls and the allocation of adequate resources to ensure full compliance with such requirements. The Bank has undertaken signiﬁcant personnel, systems and process changes in its New York operations to address the identiﬁed regulatory weaknesses and ensures senior attention at Board Committee and Board levels, but a historically weak compliance culture will take time to change effectively and meanwhile the Bank remains vulnerable.
National Bank of Pakistan Credit Ratings NBP is rated as ‘AAA’ by both the recognised credit rating agencies in Pakistan. In June 2020, M/s VIS Credit Rating Company re-afﬁrmed the Bank’s standalone credit rating as “AAA”, the highest credit rating awarded by the company for a bank in Pakistan. Similarly, M/s PACRA Credit Rating Company also assigned the Bank long-term entity rating as 'AAA' (Triple-A) and short-term credit rating as 'A1+' (A-one Plus). Appointment of Auditors The existing auditors of the Bank M/s Yousuf Adil Chartered Accountants and M/s Grant Thornton Anjum Rahman Chartered Accountants will be retiring this year. The Board is pleased to endorse the recommendation of the Board Audit Committee for appointment of M/s PwC A. F. Ferguson & Co, Chartered Accountants and reappointment of M/s Yousuf Adil Chartered Accountants as external auditors of the Bank for the year ending December 31, 2021 on existing remuneration subject to approval by shareholders in the 72nd Annual General Meeting to be held on March 29, 2021. Impact of the Bank’s Business on the Environment The Bank is cognizant of the environmental consequences of its operations and its obligation to safeguard against environmental vulnerabilities. While the Bank’s business operations do not have a direct impact on the environment, the Bank has taken measures for implementation of the Green Banking initiatives under the SBP’s Green Banking Guidelines to provide ﬁnance to transform the economy into a resource efﬁcient and climate resilient one. We are putting in place appropriate mechanisms to identify, assess and mitigate environmental risks. In this environment, private-sector lending is expected to grow modestly, by 5%-7% over the year. While policy responses are expected to soften the blow dealt to businesses by the pandemic outbreak, these may not fully offset its effects. Asset risk is projected to show a rising trend as the economic slowdown takes its toll on borrowers’ repayment capabilities. Loan repayment deferral and other support measures will contain the deterioration, but will not eliminate the risks entirely. Your Board is framing the post-crisis strategy on how the Bank will continue to play its systemically important role in the economy and serving its customers, while also maintaining a strong & resilient balance sheet to deliver performance for shareholders. For the year 2021 & beyond, the Bank’s business strategy will continue to focus on ﬁnancing and supporting underserved sectors including SME, Microﬁnance, Agriculture Finance and low cost housing on a priority basis. Given the slow growth of brick & mortar relative to digital channels, our future business strategy will evolve around realigning ourselves with the emerging e-banking dynamics as business growth requires special attention to Digital Banking for offering comprehensive banking solutions. Building a digital banking capability and a technology platform will remain the central part of this strategy as will the inculcation of a performance driven culture within the institution. Acknowledgement & Appreciation We would like to take this opportunity to appreciate and acknowledge the Government of Pakistan, the State Bank of Pakistan, the SECP and other regulatory bodies for their continued support, and shareholders and customers of the Bank for their trust and our employees for their continuous dedication and commitment. Endorsement We look forward to their continued support in enabling the Bank to achieve its true potential to play its role in the socio-economic development of Pakistan as The Nation’s Bank. - Statement of Internal Controls - Pattern of holding of the shares - CSR Report We would also like to thank our present teammates and the retiring teammates Mr. Muhammad Naeem and Mr. Zafar Masud for their contributions on the Board towards making the Bank resilient and capable of creating inclusive growth opportunities for the Nation. The Board of Directors is pleased to endorse following statements included in this Annual Report: Future Outlook After a soft end to 2020 and a difﬁcult start in 2021, the global economic recovery is projected to gain momentum in the coming year supported by the coronavirus vaccine rollout. Economic momentum in Pakistan is also expected to improve but remain below the pre-outbreak levels. Pakistan’s economy is expected to return to modest growth of 1.5% to 2.0% in ﬁscal 2021 after activity picked up at the start of the ﬁscal year in July. For and on behalf of the Board of Directors Arif Usmani President & CEO Karachi Date: February 24, 2021 Zubyr Soomro Chairman
National Bank of Pakistan Statement of Compliance with Listed Companies (Code of Corporate Governance) Regulations, 2019 Name of Company: National Bank of Pakistan (The Bank) Year ending: December 31, 2020 The Bank has complied with the requirements of the regulations in the manner that in case of any conﬂict between Code of Corporate Governance Regulations, 2019 (the Regulations) and Banks (Nationalization) Act, 1974, the provisions of Banks (Nationalization) Act, 1974 has been followed. 1. The total number of directors are 08 as per the following: a. Male: 07 b. Female: 01 2. The composition of Board is as follow: The Board of Directors of the Bank are appointed as per the provisions of the Banks (Nationalization) Act, 1974. The President / CEO is the only Executive Director. The remaining Board consists of two non-executive directors and ﬁve independent directors, including one independent director representing minority shareholders as required by the Code. At year-ended December 31, 2020, the Board comprised of the following directors: Names Category Mr. Zubyr Soomro Chairman / Independent Director Chairman appointed by the Federal Government under Section 11(3)(a) of The Banks (Nationalization) Act, 1974. Mr. Tawﬁq A. Hussain Mr. Imam Bakhsh Baloch Ms. Sadaffe Abid Mr. Muhammad Sohail Rajput Mr. Asif Jooma Independent Director Independent Director Independent Director Non - Executive Director Non - Executive Director Appointed by the Federal Government under Section 11(3)(a) of The Banks (Nationalization) Act, 1974. Mr. Farid Malik Independent Director Director representing Private Shareholders and Minority Interest elected in terms of Section 11(b) of The Banks (Nationalization) Act, 1974. Mr. Arif Usmani President / CEO Appointed by the Federal Government under Section 11(3)(a) of The Banks (Nationalization) Act, 1974. 3. The Federal Government appointed Mr. Asif Jooma in place of Mr. Muhammad Naeem on March 9, 2020 as Director on the Board of the Bank vide GOP, Finance Division, Notiﬁcation No. F-1(11) Bkg-III-2017-362 dated March 9, 2020; 4. During the year Mr. Farid Malik completed his tenure on May 15, 2020 and was re-elected as Director on July 27, 2020 representing Private Shareholders and Minority interest in terms of Section 11 (b) of The Banks (Nationalization) Act, 1974 and in accordance with the Section 159 (1) of the Companies Act, 2017; 5. During the year, Mr. Zafar Masud tendered resignation with immediate effect from the Board of National Bank of Pakistan, as he was in the process of accepting the role of President / CEO of Bank of Punjab; 6. The directors have conﬁrmed that none of them is serving as a director on more than seven listed companies, including this Bank;
National Bank of Pakistan 7 . 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; 8. 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; 9. All 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 as well as these regulations; 10. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this purpose. The Board has complied with the requirements of Companies Act, 2017 and the regulations with respect to frequency, recording and circulating minutes of meeting of the Board; 11. The Board of Directors have a formal policy and transparent procedures for remuneration of Directors in accordance with the SBP BPRD Circular No. 3 dated August 17, 2019, Companies Act, 2017 and the Regulations. 12. Majority of the Directors have already undergone the training. 13. The Board had approved appointment of Chief Financial Ofﬁcer and Company Secretary including their remuneration and terms and conditions of employment and complied with relevant requirements of the Regulations. The Board Audit Committee in its 219th meeting held on December 22, 2020 as required in terms of BPRD Circular No. 02 of 2019 dated April 3, 2019 had approved the appointment of Mr. Hassan Umair Wasti as Chief Internal Auditor; 14. Chief Financial Ofﬁcer and Chief Executive Ofﬁcer duly endorsed the ﬁnancial statements before approval of the Board; 15. The Board has formed committees comprising of members given below: i. Board Audit Committee (BAC) S.No. 1 2 3 Names of Director Mr. Tawﬁq A. Hussain Mr. Muhammad Sohail Rajput Mr. Asif Jooma Status Acting Chairman Member Member ii. Board HR & Remuneration Committee (BHRRC) S.No. 1 2 3 4 Names of Director Mr. Zubyr Soomro Mr. Arif Usmani Mr. Farid Malik Mr. Asif Jooma Status Chairman Member Member Member iii. Board Risk & Compliance Committee (BRCC) S.No. 1 2 3 4 Names of Director Mr. Tawﬁq A. Hussain Mr. Arif Usmani Mr. Farid Malik Mr. Imam Bakhsh Baloch Status Chairman Member Member Member iv. Board Technology & Digitalization Committee (BTDC) S.No. 1 2 3 Names of Director Mr. Farid Malik Mr. Arif Usmani Ms. Sadaffe Abid Status Acting Chairman Member Member
National Bank of Pakistan v . Board International Franchises and Remittance Committee (BIFRC) S.No. 1 2 Names of Director Status Mr. Arif Usmani Mr. Tawﬁq A. Hussain Chairman Member vi. Board Inclusive Development Committee (BIDC) S.No. 1 2 3 4 Names of Director Status Ms. Sadaffe Abid Mr. Arif Usmani Mr. Muhammad Sohail Rajput Mr. Imam Bakhsh Baloch Chairperson Member Member Member vii. NBP – NY Governance Council (Sub-Committee of BIFRC) S.No. 1 2 Names of Director Status Mr. Tawﬁq A. Hussain Mr. Arif Usmani Chairman Member 16. The terms of reference of the aforesaid committees have been formed, documented and advised to the committees for compliance; 17. The frequency of meetings (quarterly/half yearly/yearly) of the committees were as per following: S.No. i ii iii iv v vi vii Name of Committee Board Audit Committee (BAC) Board HR & Remuneration Committee (BHRRC) Board Risk & Compliance Committee (BRCC) Board Technology & Digitalization Committee (BTDC) Board Inclusive Development Committee (BIDC) Board International Franchises and Remittance Committee (BIFRC) NBP – NY Governance Council (Sub-Committee of BIFRC) No. of Meeting held during the year 08 09 07 09 07 05 03 18. The Board has set up an effective internal audit function for both local and overseas operations. With regards to NBP USA, internal audit function of the Bank is outsourced to an independent professional ﬁrm. In addition, certain audit functions in Germany is also outsourced. Both these audit ﬁrms are considered suitably qualiﬁed, experienced and conversant with the policies and procedures of the bank and applicable laws and regulations. 19. 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 directors of the Bank; 20. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the Companies Act, 2017, these regulations or any other regulatory requirement and the auditors have conﬁrmed that they have observed IFAC guidelines in this regard; and 21. We conﬁrm that all requirements of regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the Regulations have been complied with. Arif Usmani President & CEO Dated: February 24, 2021 Place: Karachi Zubyr Soomro Chairman
National Bank of Pakistan Shariah Board ’s Report The Board of Directors (BoD) of National Bank of Pakistan (NBP) have entrusted the Shariah Board (SB) with the task to assess the overall Shariah compliance level and environment within NBP Aitemaad Islamic Banking. The objective of the report is to present a view about the overall Shariah compliance level and environment within NBP Aitemaad Islamic Banking. In the Capacity of Shariah Board, we have reviewed the overall Shariah compliance level and environment within the NBP Aitemaad Islamic Banking as of December 31, 2020. Shariah Board Opinion: While BoD and Executive Management are solely responsible to ensure that the operations of NBP –Aitemaad Islamic Banking are conducted in a manner that comply with Shari’ah principles at all times, we are required to submit a report on the overall Shari’ah compliance environment of NBP – Aitemaad Islamic Banking. To form our opinion as expressed in this report, the Shari’ah Compliance Department (SCD) of the bank carried out reviews, on test check basis, of each class of transactions, the relevant documentation and process flows. Further, we have also reviewed the reports of the internal and external Shari’ah audit. Based on above, we are of the view that: 1. Compliance with Shariah Rules and Principles in the light of Fatawa and Guidelines issued by Shariah Board (SB) Shariah Board is of the opinion that the NBP Aitemaad’s overall environment, products, and agreements comply with the Shariah principles. 2. Compliance with Shariah related directives, regulations, instructions and guidelines issued by State Bank of Pakistan (SBP) in accordance with the rulings of SBP’s Shariah Advisory Committee The management in order to ensure zero tolerance on Shariah non-compliance instances has introduced an exclusive key performance indicating point in the staff appraisal system. 3. Shariah Compliance Mechanism Alhamdulillah, NBP-Aitemaad Islamic Banking already had a comprehensive Shariah Compliance Policy. This year, SCD enhanced the checklist based on their field functionaries’ experiences. Further in order to assess staffs’ basic level of Islamic Banking & Finance understanding, SCD has developed a set of test papers. 4. Mechanism ensuring prohibited Income to Charity Account NBP-Aitemaad Islamic Banking has a well-defined Charity policy approved by NBP Shariah Board and BoD. Shariah Compliance review and Internal Shariah Audit of financing transactions were conducted. In addition, other revenue generating sources including investments and treasury transactions were also reviewed.
National Bank of Pakistan During the Shariah Review of financing portfolio , no non-Shariah compliant transaction was discovered. Therefore, there was no charity declared this year. However, previous year’s charity amounting to PKR 11,000,000/- (Eleven Million Rupees) was disbursed to charitable institutions. During this year, Rupees seven hundred ten thousand five hundred and thirty nine rupees (*PKR 710,539) was collected on account of late payments and deposited in the Charity account. Charity Fund – 2020 Opening Balance Received from customers on account of delayed payment Payments / utilization during the period Closing Balance 5. Rupees in ‘000 10,911 710 11,000 621 Profit and Loss Distribution and Pool Management NBP Aitemaad Islamic Banking has a dedicated Pool Management Wing with apposite human resource in place ensuring adherence to the guidelines provided by SBP and the Shariah Board. Along with the Pool Management Wing, SCD reviews the monthly pool management and profit distribution working. Internal Shariah audit of pool management was also conducted on quarterly basis. All these layers of control has improvised the working and distribution of the Bank. 6. Staff understanding of Islamic Banking and Finance Alhamdulillah, the Bank imparted Islamic Banking & Finance training sessions to abreast the staff with Islamic Banking basic concepts, products and customer services where five hundred and twenty three (523) staff attended 23 sessions during this year. The Bank in co-ordination with SCD, has arranged 5 customer awareness sessions in different regions as part of its Islamic Banking promotion initiatives. Maintaining the commitment toward continuous learning, enhancing the skills and competence required to fulfill the responsibilities, the Bank nominated Head of Shariah Compliance Department for 4 weeks long “Shariah Scholar Capacity Building Course” conducted by National Institute of Banking & Finance. Alhamdulillah, he stood 1st among eighteen (18) other participants from the industry. In addition to this, two Shariah Compliance Officers qualified as ‘Certified Shariah Advisor and Auditor’ (CSAA), a certification of international repute awarded by Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI-Bahrain). The bank has developed a portal “ask Shariah” to address customer and staff queries. This provides a platform for on job training to the staff that supports them on their day-to-day processes and customer management. 7. Provision of adequate resources to Shariah Compliance Department (SCD): SCD is operating with reasonable head counts currently. However, SCD shall anticipate future requirement and inform the management with the same, if any. Other Developments: 1. Shariah Compliance Review (SCR) of Islamic Banking Branches and Departments The Shariah Compliance teams have conducted review of 137 deposit branches during the calendar year. Besides this, the SCD team has also reviewed the entire treasury transactions and financing portfolio during the year. They also reviewed the different marketing campaign and market activities to ensure strict adherence to Shariah guidelines.
National Bank of Pakistan 2 . Branch Expansion Alhamdulillah, NBP Aitemaad Islamic Banking has opened 02 branches in KPK region during the year 2020 in the rural and less served areas of MirAli, North Waziristan and Karak in accordance with SBP’s Branch Licensing Policy objective of enhancing the outreach of banking facilities with specific focus on rural and underserved areas of the country. Now, the branch network of NBP Aitemaad Islamic Banking branch stands at 191. 3. Product Development Alhamdulillah, in 2020, NBP Aitemaad Islamic Banking has launched Digital Banking (Mobile Application), Merchant Account and enhanced Debit Card features through promotional discounts and increased ATM users. In addition, NBP Aitemaad has now a good range of products as it is offering Thirteen (13) Deposit products and Seven (07) financing products for its valued Customers. 4. Asset Review NBP Aitemaad’s overall earning assets have increased by 21.7% amounting to PKR 80.40 billion as compared to PKR 66.09 billion of previous year. Islamic Financing increased by 11.9% to PKR 38.15 billion maintaining AIBG Finance to Deposit Ratio around 51%. Investments including Bai Muajjal stand at PKR 42.25 billion as compared to PKR 32 billion last year. 5. Liability Review Aitemaad total deposits have shown a healthy increase by around 18.9% to PKR 75.27 billion as on 31 December, 2020 as compared to PKR 63.28 billion last year. 6. Summary of Shariah Board Meetings Conducted During 2020 SB had held four (04) meetings during the year. Major approvals are summarized as follows: a. Aitemaad Policies, Procedures & Systems Manuals I. Shariah Compliance Policy - Revised II. Aitemaad Deposit Products Manual - Revised III. Aitemaad Call Deposit Receipt Manual IV. Aitemaad Housing product Manual - Revised V. Mobile Banking Application Product Manual VI. Approval Regarding Automation of Pool Management System VII. Approval of ADAMS system of Treasury VIII. Approval of Naya Pakistan Low Cost Housing Guarantee Structure IX. Approval of Naya Pakistan Low Cost Housing Shariah Structure X. Approval of Roshan Digital Product Program b. Shariah Researches conducted by SCD scholars under the supervision of Shariah Board I. Shariah Ruling on Collective Late Fee payment and the possible alternatives II. Avenues of Charity Fund prevailing in Islamic Banks Recommendations: We recommend the Bank on the following matters: 1. The Bank has automated the Pool Management System with respect to Liability side earlier in first quarter of 2020. However, the asset side still needs to be automated.
National Bank of Pakistan 2 . To implement; a. The Shariah compliant Staff Financing facilities for NBP Staff and make it available to the bank’s staff. It is a matter of satisfaction for the Shariah Board that Bank’s Board of Directors has approved the Shariah Compliant Staff Financing policy earlier this year. b. Inclusion of a comprehensive Islamic banking training policy that must include entry and advance level specialized training courses for all staff across the Bank. We pray to Almighty ALLAH to provide us guidance to adhere to the Shariah principles in day-to-day operations, to absolve our mistakes and for the success of Islamic banking in Pakistan. Mufti Muhammad Imran Resident Shariah Board Member NBP – Aitemaad Dr. Mufti Khalil Ahmad Aazami Member Shariah Board NBP – Aitemaad Mufti Ehsan Waquar Ahmad Chairman Shariah Board NBP – Aitemaad
National Bank of Pakistan Statement of Internal Control Reporting of Internal Control System Evaluation of Internal Controls The Bank ’s management has established and is managing system of internal control which encompasses the policies, procedures, processes and tasks as approved by the Board of Directors that facilitate effective and efﬁcient operations. The internal control system comprises of various inter-related components including the Control Environment, Risk Assessment, Control Activities, Information & Communication and Monitoring. The management and the employees at all levels within the Bank are required to perform as per these approved internal controls system components. The internal control system requires effectiveness and efﬁciency in external and internal reporting, maintenance of proper records and processes, compliance with applicable laws and regulations, and internal policies with respect to conduct of business. Besides the monitoring of the implementation of internal control system at management level, the Bank has an independent Internal Audit function in the name of Audit & Inspection Group with three Regional Area Audit & Inspection Ofﬁces that conduct audit of branches, Regions and Groups at Head Ofﬁce on an on-going basis to evaluate the efﬁciency and effectiveness of internal control system. In addition to that, an independent Compliance Monitoring Wing is set up under Compliance Group to monitor compliance with key regulations at branches as well as Head Ofﬁce functions along with testing of agreed controls related to ICFR. The Bank’s internal control system has been designed to manage rather than eliminate risk of failure to achieve objectives under a changing environment. There are inherent limitations in the effectiveness of any system, including the possibility of human error or system failure, circumvention and overriding of control. Accordingly, even an effective internal control system can provide reasonable but not absolute assurance against any material misstatement. The Bank remains cognizant of its responsibility to continuously improve and with this view continues to strengthen its system of internal control on an on-going basis. SBP vide its BSD Circular No. 7 dated 27 May, 2004 has issued guidelines on the internal control for all Banks / DFIs and in order to ensure consistency in the process of compliance with in the internal control guidelines, SBP vide BSD Circular No.5 dated 24 February, 2009 has provided a roadmap identifying various activities/ stages involved in the internal control program. For the year 2020, the Bank has made its efforts to ensure that an effective internal control system continues to perform. The observations made by the external/ internal auditors and regulators in their respective audits/ inspections are reviewed and measures have been taken by the management (by respective groups and tracking at management Level Forums), Board Sub-Committees and Board of Directors for rectiﬁcation of such observations and their non-recurrence. Based upon the results achieved from reviews and audits conducted during the year, the management considers that the Bank’s existing internal control system needs improvement as this is an ongoing process and management would continuously be evaluating efﬁcacy of its in-built controls to enhance and further strengthen the overall internal control system of the Bank. Based on the above, the Board of Directors has endorsed the management’s evaluation of internal controls including ICFR in the attached Director’s report. In compliance with SBP directives, the Bank has completed the implementation of roadmap regarding internal control Over Financial Reporting (“ICFR”). Long Form report on the assessment of Bank’s ICFR for the year 2019 issued by the statutory auditor has been submitted to SBP in compliance with OSED Circular No.1 of 2014 dated February 07, 2014. Abdul Wahid Sethi Chief Financial Ofﬁcer 000 | National Bank of Pakistan Nauman Riaz Chief Compliance Ofﬁcer Umair Wasti Chief Internal Auditor
NOTICE OF 72nd ANNUAL GENERAL MEETING Notice is hereby given that 72nd Annual General Meeting (“AGM”) of National Bank of Pakistan (the “Bank”) will be held on Monday, March 29, 2021 at 10:30 A.M. (PST) through electronic means (Zoom). The following business will be transacted in the Meeting: Ordinary Business: 1. To confirm minutes of the Extraordinary General Meeting (EOGM) of Shareholders held on July 27, 2020, at Karachi. 2. To receive, consider and adopt the annual audited financial statements of the Bank and consolidated accounts of the Bank and its subsidiaries for the year ended December 31, 2020, together with the Directors’ & Auditors’ Reports thereon. 3. To appoint auditors for the year ending December 31, 2021 and fix their remuneration. The Board of Directors has recommended re-appointment of Messrs. Yousuf Adil, Chartered Accountants and appointment of Messrs. PwC AF Ferguson & Co., Chartered Accountants, in place of retiring auditors Messrs. GT Anjum Rahman Chartered Accountants to be the auditors of the Bank for the year ending December 31, 2021, at the same fee as paid to the retiring auditors. Special Business: 4. To Consider and Approve Closure of Operations of Five Branches / Subsidiaries in Central Asian Republics viz., Ashgabat Branch (Turkmenistan), Baku Branch (Azerbaijan), Bishkek Branch (Kyrgyzstan), Almaty Subsidiary Bank (Kazakhstan) and Dushanbe Subsidiary Bank (Tajikistan) by way of liquidation and to delegate powers to Mr. Arif Usmani, President / CEO, NBP, to sign necessary legal / regulatory documents on behalf of the shareholders of National Bank of Pakistan. 5. To transact any other business with permission of the Chair. By Order of the Board Sd/Karachi Dated: March 08, 2021 S. M. Ali Zamin Secretary (Board) Note: The Share Transfer Books of the Bank shall remain closed from March 22, 2021 to March 29, 2021 (both days inclusive). Transfers received at Messrs. CDC Share Registrar Services Limited,
CDC House 99-B , Block “B”, SMCHS, Main Shahra-e-Faisal, Karachi – 74400, the Bank’s Share Registrar and Transfer Agent, at the close of business on March 19, 2021 will be treated in time for the purpose of attending the meeting. 1. PARTICIPATION IN ANNUAL GENERAL MEETING In wake of the prevalent Covid-related contingency planning in the light of the relevant guidelines issued by Securities Exchange Commission of Pakistan (SECP) vide SECP Circular No. EMD/MISC/82/2012 dated March 03, 2021 the Annual General Meeting (AGM) of the Bank will be held online to protect the wellbeing of shareholders from the current pandemic. The entitled members whose name appear on the Books of the Bank by close of business on March 19, 2021 will be entitled to attend the meeting. In order to attend the AGM through electronic facility, the members are requested to get themselves registered with CDC Share Registrar Services Limited upto March 26, 2021 till 05:00 p.m. at cdcsr@cdcsrsl.com and they are requested to provide the information as per below format: Company Name NBP NBP Folio Number / CDC Account # Name of the Shareholder CNIC # Cell # E-mail Address The details of electronic facility will be sent to the members on the email addresses provided by them. The login facility will be opened at 10:00 A.M. on March 29, 2021 enabling the participants to join the proceedings after identification and verification process before joining the meeting which will start at 10:30 A.M. sharp. The members can also provide their comments/suggestions/approvals for the proposed agenda items of the AGM on WhatsApp number 0321-8200864 and email cdcsr@cdcsrsl.com upto March 26, 2021 till 05:00 p.m. Attending Meeting through Proxies I. All members, entitled to attend and vote at the Annual General Meeting, are entitled to appoint another member in writing as their proxy to attend and vote on their behalf. A legal entity, being a member, may appoint any person, regardless of whether they are a member or not, as proxy. II. The proxy instrument must be complete in all respects and in order to be effective should be deposited at Office of the Registrar or Office of the Secretary Board, 2nd floor, NBP Head Office, I.I Chundrigarh Road, Karachi or e-mailed to cdcsr@cdcsrsl.com not later than 48 hours before the time of holding the meeting.
III . For attending the meeting through electronic means (Zoom), proxy form shall be submitted along with proxy holders’ email address and mobile number. IV. If any member appoints more than one proxy for anyone meeting and more than one instrument, of the proxy are deposited with the Registrar or the Bank, all such instruments of proxy shall be rendered invalid. The shareholders will further have to follow the following guidelines for appointing proxies: i) In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per the regulations shall submit the proxy form as per the requirements mentioned below: a) The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned on the form. b) Attested copy of CNIC or the Passport of the beneficial owners and of the proxy shall be furnished with the proxy form. ii) In case of a legal entity, the original or duly authenticated Board of Directors’ resolution or power of attorney with specimen signatures of the nominee shall be produced (unless it has been provided earlier) along with proxy form to Messrs. CDC Share Registrar Services Limited or to the Office of the Secretary Board, 2nd floor, NBP head Office, I.I Chundrigarh Road, Karachi or e-mailed to cdcsr@cdcsrsl.com. (Proxy Form is available on NBP website www.nbp.com.pk) • Members are requested to timely notify any change in their addresses to their respective Participants (if shares are held electronically) or to the Share Registrar of the Bank (if shares are held in physical form) M/s. CDC Share Registrar Services Limited, CDC House, 99-B, Block-B, S.M.C.H.S., Main Shahrah-e-Faisal, Karachi. DEPOSIT/CONVERSION OF PHYSICAL SHARES INTO CDC ACCOUNTS: As per Section 72 of the Companies Act, 2017 every existing company shall be required to replace its physical shares with book-entry form in a manner as may be specified and from the date notified by the commission, within a period not exceeding four years from the commencement (i.e. May 31, 2017) of this Act, according to which the deadline is May 31, 2021 The shareholders having physical shareholding may open CDC Sub-account with any of the brokers or Investor Account directly with CDC to place their physical share into scrip-less form, this will facilitate them in many ways including safe custody and sale of shares, any time they want, as the trading of physical shares is not permitted as per existing regulations of the Stock Exchange.
TRANSMISSION OF ANNUAL FINANCIAL STATEMENTS THROUGH EMAIL : In pursuance of the directions given by SECP vide SRO 787 (1)/2014 dated September 8, 2014, those shareholders who desire to receive Annual Financial Statements in future through email instead of receiving the same by post are advised to give their formal consent along with their valid email addresses on a standard request form which is available at the Bank's website i.e. www.nbp.com.pk and send the said form duly filled in and signed along with copy of his / her CNIC / Passport to the Bank's Share Registrar. Please note that giving email address for receiving of Annual Financial Statements instead of receiving the same by post is optional. In case you do not wish to avail this facility please ignore this notice and, in such case, Annual Financial Statements will be sent at your registered address on CD as approved in 68th Annual General Meeting held on March 30, 2017. STATEMENT OF MATERIAL FACTS This statement sets out material facts concerning the special business given in agenda item No. 04 of the Notice, to be transacted in the 72nd AGM of NBP’s Shareholders to be held on March 29, 2021. Item No. 4 TO CONSIDER AND APPROVE CLOSURE OF OPERATIONS OF FIVE BRANCHES / SUBSIDIARIES IN CENTRAL ASIAN REPUBLICS VIZ., ASHGABAT BRANCH (TURKMENISTAN), BAKU BRANCH (AZERBAIJAN), BISHKEK BRANCH (KYRGYZSTAN), ALMATY SUBSIDIARY BANK (KAZAKHSTAN) AND DUSHANBE SUBSIDIARY BANK (TAJIKISTAN) BY WAY OF LIQUIDATION AND TO DELEGATE POWERS TO MR. ARIF USMANI, PRESIDENT / CEO, NBP, TO SIGN NECESSARY LEGAL / REGULATORY DOCUMENTS ON BEHALF OF THE SHAREHOLDERS OF NATIONAL BANK OF PAKISTAN. As per SBP Governance Framework for Banks’ Overseas Operations, the Bank was required to formulate jurisdiction-wise Board approved strategy plan. Thus, to meet SBP requirement, the management of NBP has reviewed the overseas operations and noticed that growth of business in the certain jurisdictions is still insignificant to the franchise. Further due to frequent devaluation of the currency of host countries, the injected capital has been eroded significantly. Based on the rationale relating to consistent declining trend of profitability, lack of sustainability and especially considering the international strict compliance regime / enhanced risk appetite, it has been decided to close certain unviable branches and subsidiaries including the five (05) branches / subsidiaries of Central Asian Republics viz: Ashgabat Branch, Turkmenistan, Baku Branch, Azerbaijan, Bishkek Branch, Kyrgyzstan, Almaty Subsidiary Bank, Kazakhstan and Dushanbe Subsidiary Bank, Tajikistan. The SBP and MOF have already acceded to the decision of the Board for closure of international branches / subsidiaries. The Regulators of the host countries have also issued NoCs in this respect but require shareholders’ approval.
As per local regulatory requirements of Central Asian Republics , permission for closure of operations falls under the purview of Shareholders. Thus to meet regulatory requirement for timely closure of operations in Central Asian Republics, the Shareholders of National Bank of Pakistan are requested to approve closure of above mentioned NBP branches / subsidiaries and to delegate the powers to Mr. Arif Usmani, President / CEO, NBP to sign the necessary legal / regulatory documents on behalf of the Shareholders as required for closure of operation at the above jurisdictions. The Board has recommended the following resolutions to the Shareholders for approval: “RESOLVED THAT as recommended by the Board in its 317th meeting held on February 24, 2021 for closure of branches / subsidiaries in Central Asian Republics viz., Ashgabat Branch (Turkmenistan), Baku Branch (Azerbaijan), Bishkek Branch (Kyrgyzstan), Almaty Subsidiary Bank (Kazakhstan) and Dushanbe Subsidiary Bank (Tajikistan), be and is hereby approved.” "FURTHER RESOLVED THAT Mr. Arif Usmani, President / CEO, National Bank of Pakistan, be and is hereby authorized to sign all the necessary legal / regulatory documents on behalf of Shareholders of National Bank of Pakistan in order to complete the necessary formalities for closure of operations in overseas branches / subsidiaries.”
Yousuf Adil Chartered Accountants Cavish Court , KCHSU Shahrah-e-Faisal Karachi, Pakistan Grant Thornton Anjum Rahman Chartered Accountants 1st & 3rd Floor, Modern Motors House, Beaumont Road, Karachi, Pakistan INDEPENDENT AUDITORS' REPORT To the members of National Bank of Pakistan Report on the Audit of the Unconsolidated Financial Statements Opinion We have audited the annexed unconsolidated financial statements of National Bank of Pakistan (the Bank), which comprise the unconsolidated statement of financial position as at December 31, 2020, and the unconsolidated profit and loss account, the unconsolidated statement of comprehensive income, the unconsolidated statement of changes in equity and the unconsolidated cash flow statement for the year then ended, along with unaudited certified returns received from the branches except for 80 branches which have been audited by us and 9 branches audited by auditors abroad, and notes to the unconsolidated financial statements, including a summary of significant accounting policies and other explanatory information and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of the audit. In our opinion and to the best of our information and according to the explanations given to us, the unconsolidated statement of financial position, the unconsolidated statement of profit and loss account, the unconsolidated statement of comprehensive income, the unconsolidated statement of changes in equity and the unconsolidated cash flow statement together with the notes forming part thereof conform with the accounting and reporting standards as applicable in Pakistan, and, give the information required by the Banking Companies Ordinance, 1962 and the Companies Act, 2017(XIX of 2017), in the manner so required and respectively give a true and fair view of the state of the Bank's affairs as at December 31, 2020 and of the profit, the comprehensive income, the changes in equity and its cash flows for the year then ended. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the unconsolidated Financial Statements section of our report. We are independent of the Bank in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (the Code) as adopted by the Institute of Chartered Accountants of Pakistan and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter We draw attention to note 25.3.3.1 to the unconsolidated financial statements which explains the contingency in relation to the pension obligations of the Bank. Based on the opinion of the legal counsel, the Bank is confident about the favorable outcome of this matter and hence, no provision has been made in these unconsolidated financial statements. Our opinion is not qualified in this respect. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the unconsolidated financial statements of the current year. These matters were addressed in the context of our audit of the unconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. | National Bank of Pakistan
Following are the key audit matters : S. No. 1. Key Audit Matters How the matters were addressed in our audit Provision (impairment) of loans and advances For selected samples, we: As disclosed in note 11 to the unconsolidated ﬁnancial statements, gross loans and advances of the Bank were Rs. 1,160 billion against which non-performing loans and advances (NPLs) were of Rs. 171 billion. As at December 31, 2020, the Bank holds the provision of Rs. 154 billion against NPLs and Rs. 22 billion as general provision against performing loans. The carrying value of loans and advances to customers may be materially misstated, if provision is not appropriately identiﬁed and estimated as the determination of impairment provisions remains subjective and judgmental area in addition to objective criteria for classiﬁcation of loans and advances as per Prudential Regulations. Further, the impact of the COVID-19 pandemic and regulatory relieves measures issued by State Bank of Pakistan (SBP) to dampen the effects of COVID-19 have been incorporated in the Bank’s measurement of loans and advance portfolio. Furthermore, the Bank is required to make provision, if any, identiﬁed by the SBP. We considered this as a key audit matter as the Bank in addition to the following objective criteria also makes signiﬁcant and subjective judgements and makes assumptions, including those related to COVID-19, to determine the provision and the timing of recognition of such provision and their impact could be material to the unconsolidated ﬁnancial statements. | National Bank of Pakistan • Updated our understanding and evaluated design and implementation of relevant controls; • evaluated borrowers through repayment behavior and assessment of ﬁnancial strength based on the available ﬁnancial statements, adequacy of security/collateral, electronic credit information bureau reports, compliance with Prudential Regulations and impact of measures adopted by the Bank in respect of COVID-19; • evaluated the appropriateness of subjective evaluation made by management for performing parties; • ensured that any provision identiﬁed by the SBP was recognized; and • in case of restructured loans, we reviewed the detailed documentation of restructuring including approvals, legal opinions, terms of restructuring, payment records and any other relevant documents to ensure that restructuring was made in accordance with the Prudential Regulations. In addition to the above, on a sample basis, we also reviewed minutes of the meeting of credit and audit committees to identify risky exposures on which we performed the procedures as stated above. We had discussions with management to understand the Bank’s assessment of the impact of COVID-19 on the Bank’s portfolio of loans and advances. We issued instructions to auditors of those overseas branches which were selected for audit, highlighting ‘Provision against advances’ as a signiﬁcant risk. The auditors of those branches performed audit procedures to check compliance with regulatory requirements and reported the results thereof to us.
S . No. 2. Key Audit Matters How the matters were addressed in our audit Valuation of listed equity shares, units of mutual funds and term ﬁnance certiﬁcates classiﬁed as available-for-sale On a sample basis, we have performed the following procedures: As disclosed in note 10.1 to the unconsolidated ﬁnancial statements, the Bank has signiﬁcant investments in equity shares, units of mutual funds and term ﬁnance certiﬁcates (TFCs) classiﬁed as Available for Sale (AFS). As per the Bank’s policy, listed equity shares and units of mutual funds are required to be considered for impairment when there is a signiﬁcant or prolonged decline in the fair value of investments except where SBP relaxation has been obtained. Further, TFCs are required to be assessed for impairment as per the SBP’s Prudential Regulations which involves subjective criteria. Furthermore, to dampen the effect of COVID-19, SBP has allowed Banks to recognize impairment loss, if any, on the valuation of listed equity shares held as AFS in a phased manner equally on quarterly basis. The signiﬁcance of the investment amount, subjectivity involved and assumptions used in impairment, including the guidance issued by SBP due to COVID-19, make it signiﬁcant to the unconsolidated ﬁnancial statements. Therefore, we have considered this as a key audit matter. • each investment’s cost was compared to its market value wherever available to determine decline / surplus in valuation; • checked whether, in case of listed equity shares and units of mutual funds classiﬁed as available for sale, impact of signiﬁcant or prolonged decline was recognized consistently as per the policy of the Bank as disclosed in note 5.24(c), • checked whether, in case of listed equity shares classiﬁed as AFS, calculation of impairment in a phased manner on a quarterly basis as per the guidance of SBP. • For TFCs, checked that listed TFCs which were traded in were valued as per the quoted prices and for unlisted TFCs, we checked that these were valued at cost less provision. Further, on sample bases, TFCs were also evaluated based on evidence of deterioration in the financial health of the investee. Information Other than the Unconsolidated Financial Statements and Auditor's Report Thereon Management is responsible for other information. The other information comprises the information included in the Annual Report, but does not include the unconsolidated financial statements, consolidated financial statements and our auditors’ reports thereon and our review report on Code of Corporate Governance. Our opinion on the unconsolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the unconsolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the unconsolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information we are required to report the fact. We have nothing to report in this regard. Responsibilities of Management and the Board of Directors for the Unconsolidated Financial Statements Management is responsible for the preparation and fair presentation of the unconsolidated financial statements in accordance with accounting and reporting standards as applicable in Pakistan, the requirements of the Banking Companies Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017) and for such internal control as management determines is necessary to enable the preparation of unconsolidated financial statements that are free from material misstatement, whether due to fraud or error. | National Bank of Pakistan
In preparing the unconsolidated financial statements , management is responsible for assessing the Bank's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so. The Board of directors is responsible for overseeing the Bank's financial reporting process. Auditor's Responsibilities for the Audit of the Unconsolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the unconsolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these unconsolidated financial statements. As a part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Ÿ Identify and assess the risks of material misstatement of the unconsolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Ÿ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank's internal control. Ÿ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Ÿ Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to event: or conditions that may cast significant doubt on the Bank's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the unconsolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Bank to cease to continue as a going concern. Ÿ Evaluate the overall presentation, structure and content of the unconsolidated financial statements, including the disclosures, and whether the unconsolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide to the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matter that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the unconsolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. | National Bank of Pakistan
Report on Other Legal and Regulatory Requirements 1 . 2. Based on our audit, we further report that in our opinion: a) proper books of account have been kept by the Bank as required by the Companies Act, 2017 (XIX of 2017) and the returns referred above from the branches have been found adequate for the purpose of our audit; b) the unconsolidated statement of financial position, the unconsolidated statement of profit and loss account, the unconsolidated statement of comprehensive income, the unconsolidated statement of changes in equity and the unconsolidated cash flows statement together with the notes thereon have been drawn up in conformity with the Banking Companies Ordinance, 1962 and the Companies Act, 2017(XIX of 2017) and are in agreement with the books of account and returns; c) investments made, expenditure incurred and guarantees extended during the year were in accordance with the objects and powers of the Bank and the transactions of the Bank which have come to our notice have been within the powers of the Bank; and d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Bank and deposited in the Central Zakat Fund established under section 7 of that Ordinance. We confirm that for the purpose of our audit we have covered more than sixty (60) per cent of the total loans and advances of the Bank. The engagement partners on the audit resulting in this independent auditors’ report are Nadeem Yousuf Adil and Khaliqur-Rahman on behalf of Yousuf Adil and Grant Thornton Anjum Rahman respectively. Yousuf Adil Chartered Accountants Place: Karachi Date: February 25, 2021 | National Bank of Pakistan Grant Thornton Anjum Rahman Chartered Accountants
Unconsolidated Statement of Financial Position As at December 31 , 2020 2019 2020 ----------- (US Dollars in '000) ----------- Note 2020 2019 ------------ (Rupees in '000) ------------ ASSETS 1,830,103 82,716 843,248 9,069,107 6,307,397 339,749 2,346 45,180 1,027,817 1,559,487 89,013 793,350 9,155,714 6,151,708 340,437 1,901 41,729 689,437 19,547,663 18,822,776 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Fixed assets Intangible assets Right of use assets Other assets 7 8 9 10 11 12 13 14 15 249,259,590 14,227,355 126,804,675 1,463,398,076 983,254,527 54,413,493 303,813 6,669,684 110,195,768 292,513,379 13,220,807 134,780,010 1,449,555,297 1,008,139,084 54,303,565 374,950 7,221,266 164,280,512 3,008,526,981 3,124,388,870 16,795,186 138,539,005 2,418,966,479 7,533,691 2,978,364 156,155,514 19,867,424 471,757,352 2,198,049,281 7,640,188 10,915,802 183,544,990 2,740,968,239 2,891,775,037 267,558,742 232,613,833 21,275,131 56,562,933 73,699,344 116,021,334 21,275,131 52,308,742 70,244,060 88,785,900 267,558,742 232,613,833 LIABILITIES 124,300 2,951,538 13,752,041 47,801 68,294 1,148,345 105,079 866,766 15,134,204 47,134 18,634 976,983 18,092,319 17,148,800 1,455,344 1,673,976 Bills payable Borrowings Deposits and other accounts Lease liability against right of use assets Deferred tax liabilities Other liabilities 16 17 18 19 20 21 NET ASSETS REPRESENTED BY 133,107 327,268 439,480 555,489 133,107 353,885 461,098 725,886 1,455,344 1,673,976 Share capital Reserves Surplus on revaluation of assets Unappropriated profit CONTINGENCIES AND COMMITMENTS 22 23 24 25 The annexed notes 1 to 51 and annexures I and II form an integral part of these unconsolidated financial statements. Zubyr Soomro Chairman Arif Usmani President & CEO | National Bank of Pakistan Abdul Wahid Sethi Chief Financial Officer Imam Bakhsh Baloch Director Asif Jooma Director
Unconsolidated Profit and Loss Account For the year ended December 31 , 2020 2019 2020 --------- (US Dollars in '000) --------- 1,498,284 1,048,398 449,886 1,612,988 961,344 651,644 2020 2019 Note ------------ (Rupees in ‘000) ------------ Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / return / interest income 26 27 257,811,015 153,655,908 104,155,107 239,477,316 167,570,039 71,907,277 28 18,253,547 1,901,168 4,073,396 7,885,503 3,963,294 36,076,908 19,124,546 3,150,298 6,045,229 2,111,612 5,767,800 140,232,015 108,106,762 62,796,623 315,307 63,111,930 65,705,029 148,091 77,120,085 30,895,938 42,253,642 14,250,275 46,224,147 28,003,367 15,665,228 12,193,556 30,558,919 15,809,811 NON MARK-UP / INTEREST INCOME 119,652 19,710 37,822 13,211 36,086 226,481 114,203 11,895 25,485 49,335 24,796 225,714 Fee and commission income Dividend income Foreign exchange income Gain on securities - net Other income Total non-mark-up / interest income 676,367 877,358 Total income 29 30 36,199,485 NON MARK-UP / INTEREST EXPENSES 411,082 927 412,009 392,886 1,973 394,859 Operating expenses Workers welfare fund Other charges Total non-markup / interest expenses 264,358 89,156 482,499 193,300 Profit before provisions Provisions and write offs - net 175,202 289,199 PROFIT BEFORE TAXATION 76,289 98,009 98,913 191,190 31 32 33 34 Taxation PROFIT AFTER TAXATION ------------- (US Dollars) --------------- 65,853,120 ----------------- (Rupees) ------------------ 0.05 0.09 Basic earnings per share 35 14.36 7.43 0.05 0.09 Diluted earnings per share 36 14.36 7.43 The annexed notes 1 to 51 and annexures I and II form an integral part of these unconsolidated financial statements. Zubyr Soomro Chairman Arif Usmani President & CEO | National Bank of Pakistan Abdul Wahid Sethi Chief Financial Officer Imam Bakhsh Baloch Director Asif Jooma Director
Unconsolidated Statement of Comprehensive Income For the year ended December 31 , 2020 2019 2020 ------- (US Dollars in '000) ------- 98,914 191,190 2020 2019 ------- (Rupees in ‘000) -------- Profit after taxation for the year 30,558,919 15,809,811 1,198,299 2,842,019 1,453,359 9,383,632 4,040,318 10,836,991 Other comprehensive income Items that may be reclassified to profit and loss account in subsequent periods: 9,093 58,708 7,497 17,781 67,801 25,278 Exchange gain on translation of net assets of foreign branches Movement in surplus on revaluation of investments - net of tax Items that will not be reclassified to profit and loss account in subsequent periods: (12,609) 3,897 3,072 (3,116) 3,938 1,340 (5,640) 2,162 161,075 218,630 Remeasurement loss on defined benefit obligations - net of tax Movement in surplus on revaluation of operating fixed assets - net of tax Movement in surplus on revaluation of non-banking assets - net of tax (497,972) 629,407 214,238 345,673 Total comprehensive income 34,944,910 (2,015,359) 622,871 490,984 (901,504) 25,745,298 The annexed notes 1 to 51 and annexures I and II form an integral part of these unconsolidated financial statements. Zubyr Soomro Chairman Arif Usmani President & CEO | National Bank of Pakistan Abdul Wahid Sethi Chief Financial Officer Imam Bakhsh Baloch Director Asif Jooma Director
| National Bank of Pakistan Statutory reserve Merger reserve 21,275,131 - - - 21,275,131 - - - 21,275,131 11,570,091 - - 1,198,299 - 10,371,792 - - 1,453,359 - 8,918,433 36,127,702 - - 3,055,892 33,071,810 - - 1,580,981 - 31,490,829 Zubyr Soomro Chairman Arif Usmani President & CEO The annexed notes 1 to 51 and annexures I and II form an integral part of these unconsolidated financial statements. Balance as at December 31, 2020 Cash dividend paid (Rs. Nil per share) Transactions with owners, recorded directly in equity Profit after taxation for the year ended December 31, 2020 Other comprehensive income - net of tax Transfer to statutory reserve Transfer from surplus on revaluation of assets to unappropriated profit - net of tax Balance as at December 31, 2019 Cash dividend paid (Rs. Nil per share) Transactions with owners, recorded directly in equity Profit after taxation for the year ended December 31, 2019 Other comprehensive income - net of tax Transfer to statutory reserve Transfer from loan loss reserve to unappropriated profit Transfer from surplus on revaluation of assets to unappropriated profit - net of tax Balances as at December 31, 2018 Exchange translation General loan Revenue loss reserve general reserve Total Investments Fixed / nonbanking assets Total Surplus on revaluation of assets Unappropriated profit Total 8,000,000 - - - 8,000,000 - - (4,000,000) 12,000,000 521,338 - - - 521,338 - - - 521,338 Abdul Wahid Sethi Chief Financial Officer 343,802 - - - 343,802 - - - 343,802 56,562,933 - - 1,198,299 3,055,892 52,308,742 - - 1,453,359 1,580,981 (4,000,000) 53,274,402 45,198,074 - (230,379) 843,645 - 44,584,808 - (239,552) 1,113,855 - 43,710,505 Imam Bakhsh Baloch Director 28,501,270 - - 2,842,018 - 25,659,252 - - 9,383,632 - 16,275,620 73,699,344 - (230,379) 3,685,663 - 70,244,060 - (239,552) 10,497,487 - 59,986,125 267,558,742 - - 30,558,919 4,385,990 - 232,613,833 - - 15,809,811 9,935,487 - 206,868,535 Asif Jooma Director 116,021,334 - 230,379 30,558,919 (497,972) (3,055,892) 88,785,900 - 239,552 15,809,811 (2,015,359) (1,580,981) 4,000,000 72,332,877 ----------------------------------------------------------------------------------------------------------------------------------- (Ru pees in '000) -------------------------------------------------------------------------------------------------------------------------------- Share capital Reserve Unconsolidated Statement of Changes in Equity For the year ended December 31, 2020
Unconsolidated Cash Flow Statement For the year ended December 31 , 2020 2019 2020 -------- (US Dollars in '000) ------- 2020 2019 Note ---------- (Rupees in ‘000) ---------CASH FLOW FROM OPERATING ACTIVITIES 175,202 (19,710) 155,492 289,200 (11,895) 277,305 Profit before taxation Less: Dividend income 46,224,147 (1,901,168) 44,322,979 28,003,367 (3,150,298) 24,853,069 4,350,604 210,961 30,895,938 (10,775) 785,032 (2,074) 7,392,388 43,622,074 87,945,053 4,371,552 456,532 14,250,275 (29,569) 745,083 10,996 7,495,742 27,300,611 52,153,680 9,475,335 (60,563,416) (5,919,170) 49,654,870 (7,352,381) (45,448,677) 116,126,609 (94,389,067) (1,300,855) (25,011,990) (3,072,238) (293,981,639) 220,917,198 (32,513,646) (108,650,325) (785,032) 15.6 (21,209,420) (1,817,492) (51,869,597) 9,923,246 76,705,422 186,664,080 6,682,377 279,975,125 (745,083) (11,754,887) (1,617,201) 292,999,644 (79,428,088) 130,647,453 1,901,168 (1,967,003) 48,771 1,198,299 52,400,600 (111,185,087) (146,291,431) 3,150,298 (2,133,961) 54,929 1,453,359 (254,951,893) (2,040,384) (1,152) (2,044,189) (2,200) Net cash flow used in financing activities (2,041,536) (2,046,389) (Decrease) / increase in cash and cash equivalents (1,510,533) 36,001,362 263,754,250 262,243,717 227,752,888 263,754,250 Adjustments: 27,351 2,856 89,156 (185) 4,662 69 46,897 170,806 326,298 27,219 1,320 193,300 (67) 4,912 (13) 46,250 272,921 550,226 Depreciation Amortization Provision and write-offs 33 Gain on sale of fixed assets Finance charges on leased assets Unrealized (gain) / loss on revaluation of investments classified as held-for-trading Charge for defined benefit plans - net (Increase) / decrease in operating assets (284,349) 726,543 (590,543) (8,139) (156,488) 59,282 (378,914) (37,033) 310,664 (46,001) Lendings to financial institutions Held-for-trading securities Advances Other assets (excluding advance taxation) Increase / (decrease) in operating liabilities 62,085 479,906 1,167,859 41,808 1,751,658 (4,662) (73,544) (10,118) 1,833,144 (19,221) (1,839,289) 1,382,163 (203,421) (679,768) (4,912) (132,696) (11,371) (324,522) Bills payable Borrowings Deposits and other accounts Other liabilities Financial charges paid Income tax adjusted / paid Benefits paid Net cash flow (used in) / generated from operating activities CASH FLOW FROM INVESTING ACTIVITIES (695,627) (915,269) 19,710 (13,351) 344 9,093 (1,595,100) (496,940) 817,393 11,895 (12,307) 305 7,497 327,843 Net investments in available-for-sale securities Net investments in held-to-maturity securities Dividends received Investments in operating fixed assets Proceeds from sale of operating fixed assets Effect of translation of net investment in foreign branches Net cash flow generated from / (used in) investing activities CASH FLOW FROM FINANCING ACTIVITIES (12,789) (14) (12,803) (12,766) (7) (12,773) 225,241 (9,452) 1,424,930 1,650,171 1,650,172 1,640,720 Payments of lease obligations Dividend paid Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 37.1 37 The annexed notes 1 to 51 and annexures I and II form an integral part of these unconsolidated financial statements. Zubyr Soomro Chairman Arif Usmani President & CEO | National Bank of Pakistan Abdul Wahid Sethi Chief Financial Officer Imam Bakhsh Baloch Director Asif Jooma Director
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 1. STATUS AND NATURE OF BUSINESS National Bank of Pakistan (the Bank) was incorporated in Pakistan under the National Bank of Pakistan Ordinance, 1949 and is listed on Pakistan Stock Exchange (PSX). It's registered and head office is situated at I.I. Chundrigar Road, Karachi. The Bank is engaged in providing commercial banking and related services in Pakistan and overseas. The Bank also handles treasury transactions for the Government of Pakistan (GoP) as an agent to the State Bank of Pakistan (SBP). The Bank operates 1,514 (2019: 1,509) branches in Pakistan and 21 (2019: 21) overseas branches (including the Export Processing Zone branch, Karachi). The Bank also provides services in respect of Endowment Fund for student loans scheme. 1.1 Impact of COVID-19 The global outbreak of novel coronavirus (COVID 19) during early 2020 caused disruptions in normal lives and businesses in many ways. Global economy and banking systems have also been impacted significantly, both from business as well as accounting and reporting perspective. State Bank of Pakistan (SBP) responded to the crisis by cutting the Policy Rate by 625 basis points to 7.00% during the period from March 2020 to December 2020. Further, SBP relief measures included reduction in the capital conservation buffer, deferment of borrowers’ principal loans payment by one year, increasing the regulatory limit on extension of credit to SMEs liquidity support as well as relaxing regulatory criteria for restructured / rescheduled loans for borrowers who require relief of principal repayment exceeding one year and / or mark-up. In line with regulatory measures the Bank has aligned its policies / procedures and issued instructions. The Bank is continuously reviewing the portfolio, to identify accounts and industries susceptible to higher risk, resulting from the COVID-19 outbreak. Further, with respect to information security risk management arising as a result of COVID-19, the Bank took appropriate actions to monitor and respond to these evolving cybersecurity risks due to work from home environment and adopted a heightened state of cybersecurity. For detailed risk assessment of the Bank, refer note 47 to these unconsolidated financial statements. 2. BASIS OF PRESENTATION 2.1 In accordance with the directives of the Federal Government of Pakistan regarding shifting of banking system to Islamic modes, the SBP has issued various circulars from time to time. Permissible form of trade related mode of financing includes purchase of goods by the Bank from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these unconsolidated financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. Key financial figures of the Islamic banking branches of the Bank have been disclosed in annexure II of these unconsolidated financial statements. 2.2 These are unconsolidated financial statements of the Bank in which the investments in subsidiaries, associates and joint ventures are stated at cost and have not been accounted for on the basis of reported results and net assets of the investees which is done in the consolidated financial statements. 2.3 The US Dollar amounts shown on the statement of financial position, profit and loss account, statement of comprehensive income and cash flow statement are stated as additional information solely for the convenience of readers. For the purpose of conversion to US Dollars, the rate of Rs. 159.8344 to 1 US Dollar has been used for 2020 and 2019 as it was the prevalent rate as on December 31, 2020. 3. STATEMENT OF COMPLIANCE 3.1 These unconsolidated financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of: - International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017; - Islamic Financial Accounting Standards (IFAS), issued by Institute of Chartered Accountants of Pakistan as notified under the Companies Act, 2017; - Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017; and - Directive issued by the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP). Where the requirements of the Banking Companies Ordinance, 1962, the Companies Acts, 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. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 3.2 SBP has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments: Recognition and Measurement' and IAS 40, 'Investment Property' for Banking Companies through BSD Circular Letter No. 10 dated August 26, 2002. Further, according to the notification of SECP dated April 28, 2008, the IFRS - 7 "Financial Instruments: Disclosures" has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these unconsolidated financial statements. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP. 3.3 The SECP, through SRO 229(I)/2019 dated February 14, 2019, has notified that IFRS 9, Financial Instruments, is applicable for accounting periods ending on or after June 30, 2019. However, based on the guidance received from the SBP, the requirements of IFRS 9 have not been considered for Pakistan operations of the Bank in preparation of these unconsolidated financial statements. However, bank is required to submit their pro-forma financial statements based on IFRS-9 to SBP. 3.4 The SECP vide 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. 3.5 Application of new and revised International Financial Reporting Standards (IFRSs) 3.5.1 New accounting standards, amendments and IFRS interpretations that are effective for the year ended December 31, 2020 The following standards, amendments and interpretations are effective for the year ended December 31, 2020. These standards, interpretations and amendments are either not relevant to the Bank's operations or are not expected to have significant impact on the Bank's unconsolidated financial statements other than certain additional disclosures: - Amendments to the conceptual framework for financial reporting, including amendments to references to the conceptual framework in IFRS. Effective from accounting period beginning on or after January 01, 2020. - Amendments to IFRS 3 'Business Combinations' - Definition of a business. Effective from accounting period beginning on or after January 01, 2020. - Amendments to IAS 1 'Presentation of Financial Statements' and IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' - Definition of material. Effective from accounting period beginning on or after January 01, 2020. - Amendments to IFRS 9 'Financial Instruments', IAS 39 'Financial Instruments: Recognition and Measurement' and IFRS 7 'Financial Instruments: Disclosures' - Interest rate benchmark reform. Effective from accounting period beginning on or after January 01, 2020. Certain annual improvements have also been made to a number of IFRSs. 3.5.2 New accounting standards, amendments and IFRS interpretations that are not yet effective The following standards, amendments and interpretations are only effective for accounting periods, beginning on or after the date mentioned against each of them. These standards, interpretations and amendments are either not relevant to the Bank's operations or are not expected to have significant impact on the Bank's unconsolidated financial statements other than certain additional disclosures: Effective from accounting period beginning on or after Amendment to IFRS 16 'Leases' - Covid-19 related rent concessions June 01, 2020 Amendments to IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' - Onerous Contracts — cost of fulfilling a contract January 01, 2020 Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) January 01, 2021 Amendments to IAS 16 'Property, Plant and Equipment' - Proceeds before intended use January 01, 2022 Amendments to IFRS 3 Business Combinations‘ Amendment in the definition of business‘ January 01, 2022 Amendments to IAS 1 'Presentation of Financial Statements' Classification of liabilities as current or non-current January 01, 2023 | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 There are certain new and amended standards and interpretations that are mandatory for the Bank's accounting periods beginning on or after January 1, 2020 but are considered not to be relevant or do not have any significant effect on the Bank's operations and are therefore not detailed in these unconsolidated financial statements. 3.5.3 Other than the aforesaid standards, interpretations and amendments, the International Accounting Standards Board (IASB) has also issued the following standards which have not been adopted locally by the Securities and Exchange Commission of Pakistan: - IFRS 1 – First Time Adoption of International Financial Reporting Standards - IFRS 17 – Insurance Contracts 3.5.4 "The management anticipates that these new standards, interpretations and amendments will be adopted in the Bank’s unconsolidated financial statements as and when they are applicable and adoption of these new standards, interpretations and amendments, may have no material impact on the unconsolidated financial statements of the Bank in the period of initial application. 4. BASIS OF MEASUREMENT These unconsolidated financial statements have been prepared under the historical cost convention except for revaluation of land and buildings and non-banking assets acquired in satisfaction of claims which are stated at revalued amount and certain investments and derivative financial instruments that are carried at fair value. In addition, obligations in respect of defined benefit plan are carried at present value. 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policy adopted in preparation of these unconsolidated financial statements are consistent with those of the previous financial year. 5.1 Cash and cash equivalents Cash and cash equivalents include cash and balances with treasury banks and balances with other banks and call money lendings, less call borrowings and overdrawn nostro accounts. 5.2 Investments 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. All regular way purchases / sales of investments are recognised on the trade date, i.e., the date the Bank commits to purchase / sell the investments. Regular way purchases or sales of investments require delivery of securities within the time frame generally established by regulation or convention in the market place. The Bank has classified its investment portfolio, except for investments in subsidiaries, associates and joint ventures, into ‘held-fortrading’, ‘held-to-maturity’ and ‘available-for-sale’ as follows: - Held-for-trading – These are securities which are acquired with the intention to trade by taking advantage of short-term market / interest rate movements and are to be sold within ninety (90) days. These are carried at market value, with the related unrealized gain / (loss) on revaluation being taken to profit and loss account. - Held-to-maturity – These are securities with fixed or determinable payments and fixed maturity that are held with the intention and ability to hold to maturity. These are carried at amortised cost. - Available-for-sale – These are investments that do not fall under the held-for-trading or held-to-maturity categories. These are carried at market value except in case of unquoted securities where market value is not available, which are carried at cost less provision for diminution in value, if any. Surplus / (deficit) on revaluation is taken to ‘surplus / (deficit) on revaluation of assets’ account shown in equity. Provision for diminution in value of investments in respect of unquoted shares is calculated with reference to break-up value of the same. On derecognition or impairment in quoted available-for-sale investments, the cumulative gain or loss previously reported as 'surplus / (deficit) on revaluation of assets' in equity is included in the profit and loss account for the year. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 - Provision for diminution in value of investments in unquoted debt securities is calculated as per the SBP's Prudential Regulations. Held-for-trading and quoted available-for-sale securities are marked to market with reference to ready quotes on Reuters page or MUFAP (PKRV/ PKISRV) or the Stock Exchanges, as the case may be. Investments in subsidiaries, associates and joint venture companies are stated at cost. Provision is made for impairment in value, if any. 5.3 Repurchase and resale agreements Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue to be recognised in the statement of financial position and are measured in accordance with accounting policies for investment securities. The counterparty liability for amounts received under these agreements is included in borrowings. The difference between sale and repurchase price is treated as mark-up / return / interest expense and accrued over the life of the repo agreement using effective yield method. Securities purchased with a corresponding commitment to resell at a specified future date (reverse repos) are not recognised in the statement of financial position, as the Bank does not obtain control over the securities. Amounts paid under these agreements are included in lendings to financial institutions. The difference between purchase and resale price is treated as mark-up / return / interest income and accrued over the life of the reverse repo agreement using effective yield method. 5.4 Derivative financial instruments Derivative financial instruments are initially recognised at fair value on the dates on which the derivative contracts are entered into and are subsequently re-measured at fair value using appropriate valuation techniques. All derivative financial instruments are carried as assets when fair value is positive and liabilities when fair value is negative. Any change in the fair value of derivative instruments is taken to the profit and loss account. 5.5 Financial instruments All financial assets and financial liabilities are recognized at the time when the Bank becomes a party to the contractual provisions of the instrument. A financial asset is derecognised where (a) the rights to receive cash flows from the asset have expired; or (b) the Bank has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (i) the Bank has transferred substantially all the risks and rewards of the asset, or (ii) the Bank has neither transferred nor retained substantially all the risk and rewards of the asset, but has transferred control of the asset. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Any gain or loss on derecognition of the financial assets and financial liabilities is taken to profit and loss account. 5.6 Advances Advances are stated net of specific and general provisions. Provisions are made in accordance with the requirements of Prudential Regulations issued by the SBP and charged to the profit and loss account. These regulations prescribe an age based criteria (as supplemented by subjective evaluation of advances by the banks) for classification of non-performing loans and advances and computing provision there against. Such regulations also require the Bank to maintain general provision against consumer and SME advances at specified percentage of such portfolio. General provision for loan losses of overseas branches is made as per the requirements of the respective central banks. Advances are written off where there are no realistic prospects of recovery. 5.6.1 Islamic financing and related assets Under Murabaha financing, funds disbursed for the purchase of goods are recorded as advance against Murabaha finance and the financing is recorded at the deferred sale price. Goods purchased but remaining unsold at the statement of financial position date are recorded as inventories. Assets given on Ijarah are stated at cost less accumulated depreciation. Ijarah assets are depreciated on a reducing balance basis over the term of the Ijarah after taking into account the estimated residual value. Impairment of Ijarah assets is recognized in line with the Prudential Regulations or upon the occurrence of an impairment event which indicates that the carrying value of the Ijarah asset may exceed its recoverable amount. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 In Running Musharakah, the Bank and the customer enter a Musharakah agreement where the Bank agrees to finance the operating activities of the customer's business and share in the profit or loss in proportion to an agreed ratio at an agreed frequency. Under Diminishing Musharakah financing, the Bank creates joint ownership with the customer over the tangible assets to fulfill capital expenditure / project requirements. The Bank receives periodic payments from the customer against the gradual transfer of its share of ownership to the customer. In Istisna transactions, the Bank finances the cost of goods manufactured by the customer. Once the goods are manufactured, these are sold by the customer as an agent of the Bank to recover the cost plus the agreed profit. Under Tijarah, the Bank purchases the finished goods from the customer against payment, takes possession and appoint customer as an agent to sell these goods to ultimate buyer on deferred payment basis. Profit is recognized on accrual basis over the period of transaction. Wakalah is an agency contract in which Bank provides funds to the customer who invests it in a Shariah compliant manner. 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. 5.7 Fixed assets and depreciation 5.7.1 Property and equipment 5.7.1.1 Owned assets Property and equipment except land and buildings are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Land is stated at revalued amount. Buildings are stated at revalued amount less accumulated depreciation and impairment, if any. Cost of fixed assets of foreign branches include exchange differences arising on translation at year-end rates. Depreciation is charged to profit and loss account applying the straight line method except buildings, which are depreciated on diminishing balance method at the rates stated in note 12.2. Depreciation is charged from the month in which the assets are brought into use and no depreciation is charged for the month the assets are disposed. Subsequent costs are included in the asset’s carrying amount 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. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit and loss account during the period in which they are incurred. Assets are derecognised when disposed off or when no future economic benefits are expected from its use or disposal. Gains and losses on disposal of property and equipment are included in profit and loss account. The assets' residual values and useful lives are reviewed annually, and adjusted if appropriate, at statement of financial position date. Land and buildings' valuations are carried out by professionally qualified valuers with sufficient regularity to ensure that their carrying amounts do not differ materially from their fair value. - Any revaluation increase arising on the revaluation of such assets is recognised in statement of comprehensive income and accumulated in equity, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit and loss account, in which case the increase is credited to profit and loss account to the extent of the decrease previously expensed. A decrease in the carrying amount arising on the revaluation of such assets is recognised in profit and loss account to the extent that it exceeds the balance, if any, held in the fixed assets revaluation reserve relating to a previous revaluation of that asset. - Depreciation on assets which are revalued is determined with reference to the value assigned to such assets on revaluation and depreciation charge for the year is taken to the profit and loss account. - An amount equal to incremental depreciation for the year net of deferred taxation is transferred from “Surplus on Revaluation of Fixed Assets account” to unappropriated profit through statement of changes in equity to record realization of surplus to the extent of the incremental depreciation charge for the year; and, | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 - 5.7.2 On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus remaining in the revaluation reserve is transferred directly to unappropriated profit. Capital work-in-progress Capital work-in-progress is stated at cost less impairment. These are transferred to specific assets as and when assets are available for use. 5.7.3 Impairment The carrying values of fixed assets are reviewed for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amounts, fixed assets are written down to their recoverable amounts. The resulting impairment loss is taken to profit and loss account except for impairment loss on revalued assets which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of assets. Where impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised recoverable amount but limited to the extent of the amount which would have been determined had there been no impairment. Reversal of impairment loss is recognized as income in profit and loss account. 5.8 Lease liability and right-of-use assets Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: - fixed payments (including in-substance fixed payments), less any lease incentives receivable - variable lease payment that are based on an index or a rate - amounts expected to be payable by the lessee under residual value guarantees, if any. - the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and - payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease payments are to be discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the Bank would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Right-of-use assets are measured at cost comprising the following: - the amount of the initial measurement of lease liability - any lease payments made at or before the commencement date less any lease incentives received - any initial direct costs, and - restoration costs The Bank leases various offices / branches for the purpose of its operational activities. Rental contracts are typically made for fixed periods of 3 to 10 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. 5.9 Intangible assets Intangible assets are stated at cost less accumulated amortization and impairment losses, if any. Amortization is charged to profit and loss account applying the straight-line method at the rates stated in note 13. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 5.10 Non-banking assets acquired in satisfaction of claims In accordance with the requirements of the 'Regulations for Debt Property Swap' (the regulations) issued by SBP vide its BPRD Circular No. 1 of 2016, dated January 1, 2016, the non-banking assets are carried at revalued amounts less accumulated depreciation. These assets are revalued by professionally qualified valuers with sufficient regularity to ensure that their net carrying value does not differ materially from their fair value. A surplus arising on revaluation is credited to the 'surplus on revaluation of assets' account and any deficit arising on revaluation is taken to the profit and loss account directly. Legal fees, transfer costs and direct costs of acquiring title to property is charged to profit and loss account and not capitalized. 5.11 Deposits and their cost Deposits are recorded at the fair value of proceeds received. Deposit costs are recognised as an expense in the period in which these are incurred using effective yield method. 5.12 Taxation 5.12.1 Current Provision of current taxation is based on taxable income for the year determined in accordance with the prevailing laws of taxation on income earned for local as well as foreign operations, as applicable to the respective jurisdictions. The charge for the current tax also includes adjustments wherever considered necessary relating to prior years, arising from assessments framed during the year. 5.12.2 Deferred Deferred tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, to the extent that it is probable that taxable profits will be available against which the deductible temporary differences and unused tax losses can be utilized. Deferred tax is not recognised on differences relating to investment in subsidiaries and branches to the extent the deductible temporary difference probably will not reverse in the foreseeable future. The carrying amount of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit or deductible temporary differences will be available to allow all or part of the deferred income tax asset to be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to gain / loss recognized on surplus on revaluation of assets is charged / credited to such account. 5.13 Employee benefits 5.13.1 Defined benefit plans The Bank operates an approved funded pension scheme, an un-funded post retirement medical benefits scheme and an un-funded benevolent scheme for its eligible employees. The Bank also operates an un-funded gratuity scheme for its eligible contractual employees. An actuarial valuation of all defined benefit schemes is conducted every year. The valuation uses the Projected Unit Credit method. Remeasurements of the net defined benefit liability / assets which comprise actuarial gains and losses, return on plan assets (excluding interest) and the effect of asset ceiling (if any, excluding interest) are recognized immediately in other comprehensive income. Past-service costs are recognized immediately in profit and loss account when the plan amendment occurs. 5.13.2 Other employee benefits Employees' compensated absences The Bank also makes provision in the financial statements for its liability towards compensated absences. This liability is estimated on the basis of actuarial advice under the Projected Unit Credit method. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 5.14 Revenue recognition Income on loans and advances and debt security investments are recognized on a time proportion basis that takes into account effective yield on the asset. In case of advances and investments classified under the Prudential Regulations, interest / mark-up is recognized on receipt basis. Interest / mark-up on rescheduled / restructured advances and investments is recognized in accordance with the Prudential Regulations issued by SBP. Fee, brokerage and commission income other than commission on letter of credit and guarantees is recognized upon performance of services. Commission on letters of credit and guarantees is recognized on time proportion basis. Dividend income on equity investments and mutual funds is recognized when right to receive is established. Premium or discount on debt securities classified as held-for-trading, available-for-sale and held-to-maturity securities is amortized using the effective interest method and taken to profit and loss account. Gains and losses on disposal of investments and fixed assets are dealt with through the profit and loss account in the year in which they arise. Income from lease financing is accounted for using the financing method. Under this method, the unearned lease income (defined as the sum of total lease rentals and estimated residual value less the cost of the leased assets) is deferred and taken to income over the term of the lease so as to produce a constant periodic rate of return on the outstanding net investment in the lease. Gains or losses on termination of lease contracts are recognized through the profit and loss account when these are realized. Unrealized lease income and other fees on classified leases are recognized on a receipt basis. 5.15 Net investment in finance lease Leases where the bank transfers substantially all the risk and rewards incidental to ownership of the assets to the lessee are classified as finance leases. Net investment in finance lease is recognised at an amount equal to the aggregate of minimum lease payment including any guaranteed residual value and excluding unearned finance income, write-offs and provision for doubtful lease finances, if any. 5.16 Foreign currencies translation The Bank's financial statements are presented in Pak Rupees (Rs.) which is the Bank's functional and presentation currency. Foreign currency transactions are converted into Rupees applying the exchange rate at the date of the respective transactions. Monetary assets and liabilities in foreign currencies and assets / liabilities of foreign branches are translated into Rupees at the rates of exchange prevailing at the statement of financial position date. Forward foreign exchange contracts are valued at the rates applicable to their respective maturities. All gains or losses on dealing in foreign currencies are taken to profit and loss account. Profit and loss account balances of foreign branches are translated at average exchange rate prevailing during the year. Gains and losses on translation are included in the profit and loss account except gains / losses arising on translation of net assets of foreign branches, which is credited to statement of comprehensive income. Statement of financial position balances of foreign branches are translated at exchange rate prevailing at balance sheet date. Gains and losses on translation are included in the profit and loss account except gains / losses arising on translation of net assets of foreign branches, which is credited to statement of comprehensive income. Commitments for outstanding forward foreign exchange contracts are disclosed in these unconsolidated financial statements at committed amounts. Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in Rupee terms at the rates of exchange prevailing at the statement of financial position date. 5.17 Provision for off balance sheet obligations Provision for guarantees, claims and other off balance sheet obligations is made when the Bank has legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of amount can be made. Charge to profit and loss account is stated net of expected recoveries. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 5.18 Off setting Financial assets and financial liabilities are only set off and the net amount is reported in the unconsolidated financial statements when there is a legally enforceable right to set off and the Bank intends either to settle on a net basis, or to realize the assets and to settle the liabilities simultaneously. 5.19 Fiduciary assets Assets held in a fiduciary capacity are not treated as assets of the Bank in the statement of financial position. 5.20 Dividend and other appropriations Dividend and other appropriation to reserves, except appropriations which are required by the law, are recognised in the Bank's unconsolidated financial statements in the year in which these are approved. 5.21 Earnings per share The Bank presents basic and diluted earnings per share (EPS) for its shareholders. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, if any. There were no dilutive potential ordinary shares in issue at December 31, 2020. 5.22 Bai Muajjal Bai Muajjal transactions represent sales of Sukuks on a deferred payment basis and are shown in lendings to financial institutions except for transactions undertaken directly with the Government of Pakistan which are disclosed as investments. The difference between the deferred payment amount receivable and the carrying value at the time of sale is accrued and recorded as income over the life of the transaction. 5.23 Segment reporting A segment is a distinguishable component of the Bank that is subject to risks and rewards that are different from those of other segments. A business segment is one that is engaged either in providing certain products or services, where as a geographical segment is one engaged in providing certain products or services within a particular economic environment. Segment information is presented as per the Bank’s functional and management reporting structure. During the year the Bank changes its organizational structure in a manner that causes the composition of its reportable segments to change, and accordingly the prior year disclosure is restated to reflect the current reportable segments in note 43. Business segments The Bank primary segment reporting is based on following business segments: I. Retail Banking Group includes retail lending and deposits, banking services, cards and branchless banking. II. Inclusive Development Group consists of loans to individuals, agriculture, SME, commodity and commercial customers. III. Corporate and Investment Banking; this segment offers a wide range of financial services to medium and large sized public and private sector entities. These services include, providing and arranging tenured financing, corporate advisory, underwriting, cash management, trade products, corporate finance products and customer services. IV. Treasury includes fixed income, equity, foreign exchange, credit, funding, own position securities, lendings and borrowings and derivatives for hedging and market making. V. International Financial Institution and Remittance segment includes the results of all international branches, correspondent banking business and global remittances. This represents Groups operations in 11 countries including one branch in export processing zones in Karachi. VI. Aitemaad and Islamic Banking provides shariah compliant services to customers including loans, deposits and other transactions | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 VII. Head Office / Others includes the head office related activities and other functions which cannot be classified in any of the above segments. Geographical segments The Bank is operating following geographic lines for monitoring and reporting purpose: 5.24 I. Pakistan II. Asia Pacific (including South Asia) III. Europe IV. United States of America V. Middle East Accounting estimates and judgments The preparation of unconsolidated financial statements in conformity with the approved accounting and reporting standards as applicable in Pakistan requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Bank’s accounting polices. The estimates, judgments and associated assumptions used in the preparation of the unconsolidated financial statements are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The key areas of estimates and judgments in relation to these unconsolidated financial statements are as follows: a) Provision against non-performing loans and advances The Bank reviews its loan portfolio to assess amount of non-performing loans and determine provision required there against on a quarterly basis. While assessing this requirement various factors including the past dues, delinquency in the account, financial position and future business / financial plan of the borrower, value of collateral held and requirements of Prudential Regulations are considered. The Bank also considers the effect of Forced Sale Value (FSV) of collaterals in determining the amount of provision, however, no benefit of FSV of collateral is taken during the year in determining provisioning amount. General provision for loan losses of overseas branches is made as per the requirements of the respective central banks. The amount of general provision against domestic consumer and SME advances is determined in accordance with the relevant Prudential Regulations and SBP directives. In addition, the Bank has also made general provision in respect of its corporate portfolio on prudent basis. This general provision is in addition to the requirements of Prudential Regulations. b) Fair value of derivatives The fair values of derivatives which are not quoted in active markets are determined by using valuation techniques. The valuation techniques take into account the relevant interest and exchange rates over the term of the contract. c) Impairment of available-for-sale investments The Bank considers that available-for-sale equity investments and mutual funds are impaired when there has been a significant or prolonged decline in the fair value below its cost except for investments where relaxation has been allowed by SBP. This determination of what is significant or prolonged requires judgment. In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance. Further the Bank has developed internal criteria according to which a decline of 30% in the market value of any scrip below its cost shall constitute as a significant decline and where market value remains below the cost for a period of one year shall constitute as a prolonged decline. d) Held-to-maturity investments The Bank follows the guidance provided in the SBP circulars on classifying non-derivative financial assets with fixed or | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 determinable payments and fixed maturity as held-to-maturity. In making this judgment, the Bank evaluates its intention and ability to hold such investments till maturity. e) Income taxes In making the estimates for current and deferred taxes, the management looks at the income tax law and the decisions of appellate authorities on certain issues in the past. There are certain matters where the Bank’s view differs with the view taken by the income tax department and such amounts are shown as contingent liability. f) Fixed asset and intangible assets, revaluation, depreciation and amortization In making estimates of the depreciation / amortization method, the management uses method which reflects the pattern in which economic benefits are expected to be consumed by the Bank. The method applied is reviewed at each financial year end and if there is a change in the expected pattern of consumption of the future economic benefits embodied in the assets, the method would be changed to reflect the change in pattern. The Bank also revalues its properties on a periodic basis. Such revaluations are carried out by independent valuer and involves estimates / assumptions and various market factors and conditions. g) Employees' benefit plans The liabilities for employees' benefits plans are determined using actuarial valuations. The actuarial valuations involve assumptions about discount rates, expected rates of return on assets, future salary increases, future inflation rates and future pension increases as disclosed in note 39. Due to the long term nature of these plans, such estimates are subject to significant uncertainty. h) Provision against contingencies Provision against contingencies is determined based on the management judgement regarding the probability of future outflows of resources embodying economic benefits to settle an obligation arising from past events. 6. CLOSURE OF FOREIGN SUBSIDIARIES AND OPERATIONS The Board of Directors (BoD) of the Bank, in their meeting held on January 20 and 21, 2020, have decided for closure of their two overseas Subsidiaries in Almaty (Kazakhstan) and Dushanbe (Tajikistan) along with three overseas branches in Baku (Azerbaijan), Bishkek (Kyrgyzstan) and Asghabat (Turkmenistan) so their carrying amount will be recovered principally through continuing use. With regards to regulatory approval, the Bank applied to ministry of finance and State Bank of Pakistan for their endorsements and accordingly received their approval, with respect to the BoD decision, on April 07, 2020 and April 24, 2020 respectively. Further, it has been decided by BoD to restrict their country operations in Afghanistan (Jalalabad) and Bangladesh (Sylhet, Chittagong and Gulshan) to one branch in each country located in Kabul and Dhaka respectively. Particulars CJSC Subsidiary Bank of NBP in Kazakhstan (Almaty) CJSC Subsidiary Bank of NBP in Tajikistan (Dushanbe) Baku (Azerbaijan) Bishkek (Kyrgyzstan) Ashgabat (Turkmenistan) Total ------------(Subsidiaries) ------------ -------------------- (Branches) ------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------Cost of investment - net of impairment 1,003,778 453,632 - - - 1,457,410 Total Assets - - 1,133,887 2,137,273 2,127,420 5,398,580 Total Liabilities - - 274,831 - - 519,126 72,612 1,881,502 3,034 2,675,459 Profit / (Loss) for the year | National Bank of Pakistan (20,109) 55,537
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Note 7. 2020 2019 ------------ (Rupees in '000) ------------ CASH AND BALANCES WITH TREASURY BANKS In hand: Local currency Foreign currency 48,290,809 6,425,017 54,715,826 48,571,567 4,565,061 53,136,628 7.1 7.2 7.2 125,017,240 10,209,399 21,022,297 1,618,084 157,867,020 168,326,804 9,116,381 27,850,977 1,473,861 206,768,023 7.3 7.3 29,581,326 4,789,170 34,370,496 25,994,672 4,865,977 30,860,649 2,306,248 1,748,079 249,259,590 292,513,379 With State Bank of Pakistan in: Local currency current accounts Foreign currency current accounts Foreign currency deposit accounts Foreign currency collection accounts With other central banks in: Foreign currency current accounts Foreign currency deposit accounts Prize bonds 7.1 This includes statutory liquidity reserves maintained with the SBP under Section 22 of the Banking Companies Ordinance, 1962. 7.2 These represent mandatory reserves maintained in respect of foreign currency deposits under FE-25 scheme, as prescribed by the SBP. 7.3 These balances pertain to the foreign branches and are held with central banks of respective countries. These include balances to meet the statutory and regulatory requirements in respect of liquidity and capital requirements of respective countries. The deposit accounts carry interest at the rate of 0 to 3.5% per annum (2019: 0% to 2.17% per annum). 8. BALANCES WITH OTHER BANKS Note 2020 2019 ------------ (Rupees in '000) ------------ In Pakistan: In current account In deposit accounts 8.1 11,948 11,948 5,841 5,841 8.2 8,336,597 5,878,810 14,215,407 6,476,086 6,738,880 13,214,966 14,227,355 13,220,807 Outside Pakistan: In current accounts In deposit accounts 8.1 These include various deposits with banks and carry interest at rates ranging from 2% to 8% per annum (2019: 2.5% to 11.25% per annum). 8.2 These include various deposits with correspondent banks outside Pakistan and carry interest at rates ranging from 0% to 2.5% per annum (2019: 0% to 2.17% per annum). | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------- (Rupees in '000) ------------- Note 9. LENDINGS TO FINANCIAL INSTITUTIONS Call / clean money lendings Repurchase agreement lendings (reverse repo) Bai Muajjal receivable with State Bank of Pakistan Letters of placement 9.1 9.2 & 9.7 9.3 9.4 9.5 Less: provision held against lendings to financial institutions 9.6 & 9.8 2,040,800 124,763,875 176,150 126,980,825 540,800 132,180,048 2,059,162 176,150 134,956,160 (176,150) Lendings to financial institutions - net of provision 126,804,675 (176,150) 134,780,010 9.1 This includes zero rate lending to a financial institution amounting to Rs. 40.8 million (2019: Rs. 40.8 million) which is guaranteed by the SBP. 9.2 These carry mark-up at rates ranging from 6% to 7.29% per annum (2019: 13.0% to 13.58% per annum) with maturities ranging from January 4, 2021 to January 26, 2021. 9.3 This represents Bai Muajjal agreement entered into with SBP and carries profit rate of Nil (2019: 10.39%) per annum. 9.4 These are overdue placements and full provision has been made against these placements as at December 31, 2020. 2020 2019 ------------- (Rupees in '000) ------------9.5 Particulars of lending 126,980,825 - 134,956,160 - 126,980,825 134,956,160 Opening balance Charge for the year 176,150 - 176,150 - Closing balance 176,150 176,150 In local currency In foreign currencies 9.6 Movement in provision held against lendings is as follows: 9.7 Securities held as collateral against lendings to financial institutions 2020 Held by Bank 2019 Further given as collateral Total Held by Bank Further given as collateral Total ------------------------------------------------------- (Rupees in '000) ------------------------------------------------------Market Treasury Bills Pakistan Investment Bonds Total 91,230,121 33,533,754 - 91,230,121 33,533,754 124,080,048 8,100,000 - 124,080,048 8,100,000 124,763,875 - 124,763,875 132,180,048 - 132,180,048 9.7.1 Market value of the securities under repurchase agreement lendings amounts to Rs. 125,094 million (2019: Rs. 132,453 million). 9.8 Category of classification 2020 Domestic 2019 Classified Provision Classified Provision held lending lending held ---------------------------------- (Rupees in '000) ---------------------------------- Loss 176,150 176,150 176,150 176,150 Total 176,150 176,150 176,150 176,150 | National Bank of Pakistan
10 .1 10. | National Bank of Pakistan Pakistan investment bonds Market treasury bills Debentures, bonds, sukuks, participation term certificates and term finance certificates Bai muajjal with Government of Pakistan GoP foreign currency bonds Foreign Government securities Foreign currency debt securities Held-to-maturity securities Pakistan investment bonds Market treasury bills Ijarah sukuks Ordinary shares of listed companies Ordinary shares of unlisted companies Preference shares Investments in mutual funds Ordinary shares of a bank outside Pakistan Term finance certificates / Musharika and Sukuk bonds GoP foreign currency bonds Foreign Government securities Foreign currency debt securities Available-for-sale securities Market treasury bills Pakistan investment bonds Ordinary shares of listed companies Held-for-trading securities Investments by type: INVESTMENTS 10.6 10.12/10.13 Note Surplus / (deficit) Carrying value Cost / amortised cost Provision for diminution 2019 Surplus / (deficit) Carrying value (407,134) (407,134) 414,972 11,641,133 32,328,738 618 212,808,442 (11,756,410) 1,116,668,951 - (5,196,406) - 60,199,753 10,429,632 2,795,017 79,438 168,422,981 - (5,568,236) (410,893) (539,708) (41,167) - - 96,654,111 470,136,168 529,397,138 6,000,000 33,237,574 1,865,982 1,445,308 619,646 463,295 - 96,157,306 496,805 - 55,860,007 10,840,875 2,847,176 80,640 472,912,732 530,087,954 6,015,600 47,907,782 1,455,089 1,099,850 2,000,170 17,652,778 96,656,185 96,160,835 495,350 - - - 7,838 11,641,133 32,328,738 618 212,401,308 168,422,981 - 43,848,111 1,148,760,653 856,659 411,243 52,159 1,202 - 2,776,564 690,816 15,600 20,238,444 194,250 1,421,691 17,189,483 2,074 3,529 (1,455) - 416,707 10,395,235 4,087,591 29,600,343 596 343,455,895 184,864,103 114,091,320 1,037,240,863 60,253,886 21,138,771 3,474,324 1,408,492 322,248,605 593,936,881 2,000,000 29,025,568 2,101,182 570,214 619,646 463,294 36,103,765 26,911,821 9,116,239 75,705 (407,134) (407,134) - (11,705,235) (4,942,505) - (5,723,164) (507,573) (490,826) (41,167) - - - - - 39,475,771 941,278 1,337,759 17,527 13,779 (1,961,853) 967,544 (21,200) 18,487,730 1,324,745 18,368,462 (10,996) (24,649) 15,695 (2,042) 9,573 10,395,235 4,087,591 29,600,343 596 343,048,761 184,864,103 114,091,320 1,065,011,399 56,252,659 22,476,530 3,491,851 1,422,271 320,286,752 594,904,425 1,978,800 41,790,134 1,593,609 79,388 1,903,224 18,831,756 36,092,769 26,887,172 9,131,934 73,663 ----------------------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------------------------ Cost / Provision for amortised cost diminution 2020 Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
10 .2 | National Bank of Pakistan Surplus / (deficit) Carrying value Cost / amortised cost Provision for diminution 2019 Surplus / (deficit) Carrying value 10,429,632 35,123,755 80,056 45,633,443 1,445,308 Preference shares 25,822,479 34,792,246 60,614,725 33,237,574 1,865,982 35,103,556 625,554,444 639,055,954 11,641,133 6,000,000 1,282,251,531 - 1,437,371,550 3,906,750 2,362,433 4,970,863 (539,708) - (1,031,475) (4,572,066) (5,603,541) (5,568,236) (410,893) (5,979,129) - - (17,823,660) (1,838,263) - (3,821,854) 2,068,487 2,362,433 1,149,009 194,250 411,243 52,159 1,202 464,604 279,518 577,141 856,659 20,238,444 20,238,444 1,099,850 10,840,875 35,175,914 81,258 46,098,047 25,070,522 30,797,321 55,867,843 47,907,782 1,455,089 49,362,871 694,345 626,248,789 2,775,109 641,831,063 11,641,133 15,600 6,015,600 3,485,054 1,285,736,585 43,850,185 1,463,398,076 - - - 570,214 25,226,362 33,074,667 1,409,088 59,710,117 22,471,459 38,199,134 60,670,593 29,101,273 2,101,182 31,202,455 734,940,022 516,228,947 10,395,235 2,000,000 1,263,564,204 1,428,040,569 3,906,750 2,362,433 4,970,863 (490,826) - (971,908) (4,377,731) (5,349,639) (5,723,164) (507,573) (6,230,737) - (17,950,047) (1,838,262) - (3,999,416) - 1,337,759 17,527 13,779 1,369,065 405,860 535,418 941,278 18,485,688 18,485,688 942,895 (1,946,158) (21,200) (1,024,463) 39,464,775 - - - 79,388 26,564,121 33,092,194 1,422,867 61,079,182 21,905,411 34,356,821 56,262,232 41,863,797 1,593,609 43,457,406 735,882,917 514,282,789 10,395,235 1,978,800 1,262,539,741 1,449,555,297 2,068,488 2,362,433 971,447 ----------------------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------------------------ GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities Foreign Securities Listed Unlisted Non Government Debt Securities Term Finance Certificates / Musharika / Bonds / Debentures and Sukuk Bonds Listed Companies Unlisted Companies Shares Market Treasury Bills Pakistan Investment Bonds Bai Muajjal Government of Pakistan Ijarah Sukuks Federal Government Securities Investments by segments: Total investments 10.12 / 10.13 10.11 Joint Venture Subsidiaries 10.8 / 10.9 Associates Note Cost / Provision for amortised cost diminution 2020 Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan Total investments CJSC Subsidiary Bank of NBP in Kazakhstan CJSC Subsidiary Bank of NBP in Tajikistan NBP Exchange Company Limited NBP Modaraba Management Company Limited Taurus Securities Limited Cast-N-Link Products Limited NBP Funds Management Limited Subsidiaries United National Bank Limited Joint Venture Pakistan Emerging Venture Limited National Fructose Company Limited National Assets Insurance Company Limited Dadabhoy Energy Supply Company Limited Pakistan Mercantile Exchange Limited - Unlisted First Credit and Investment Bank Limited Land Mark Spinning Mills Limited S.G. Allied Business Limited Nina Industries Limited NBP Stock Fund Agritech Limited - Listed 10.11 10.10 10.7 10.8 - 1,437,371,550 2,185,644 953,783 300,000 105,000 24,725 1,245 336,353 3,906,751 2,362,433 240,524 4,970,863 50,563 6,500 44,817 32,105 106,539 157,429 39,710 218,535 49,060 600,000 3,665,605 4,730,339 463,295 Ordinary shares of a bank outside Pakistan Associates 619,646 10.6 Surplus / (deficit) Carrying value Cost / amortised cost Provision for diminution 2019 Surplus / (deficit) Carrying value - (17,823,660) (1,181,866) (500,151) (105,000) (1,245) (50,000) (1,838,262) - (240,524) (3,821,854) (50,563) (6,500) (44,817) (32,105) (106,539) (28,829) (39,710) (218,535) (49,060) (121,326) (3,123,870) (3,581,330) - (41,167) 1,003,778 453,632 300,000 24,725 286,353 2,068,488 2,362,433 1,149,009 - 128,600 478,674 541,735 1,149,009 17,652,778 2,000,170 - - 43,850,185 1,463,398,076 - - - - - 17,189,483 1,421,691 (0) 1,428,040,569 2,185,644 953,783 300,000 105,000 24,725 1,245 336,353 3,906,750 2,362,433 240,524 4,970,863 50,563 6,500 44,817 32,105 106,539 157,429 39,710 218,535 49,060 600,000 3,665,605 4,730,339 463,294 619,646 - (17,950,047) (1,181,866) (500,151) (105,000) (1,245) (50,000) (1,838,262) - (212,334) (3,999,416) (50,563) (6,500) (16,627) (32,105) (106,539) (106,430) (39,710) (218,535) (49,060) (156,183) (3,217,164) (3,787,082) - (41,167) - 39,464,775 - - - - - 18,368,462 1,324,745 - 1,449,555,297 1,003,778 453,632 300,000 24,725 286,353 2,068,488 2,362,433 28,190 971,447 28,190 - 50,999 443,817 448,441 943,257 18,831,756 1,903,224 ----------------------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------------------------ Investments in mutual funds Note Cost / Provision for amortised cost diminution 2020 Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 10.2.2 10.2.1 * “ - ” Not available Pakistan Emerging Venture Limited National Fructose Company Limited Venture Capital Fund Management Kamal Enterprises Limited Mehran Industries Limited National Assets Insurance Company Limited Tharparkar Sugar Mills Limited Youth Investment Promotion Society Dadabhoy Energy Supply Company Limited K-Agricole Limited New Pak Limited Unlisted National Fibres Limited Land Mark Spinning Mills Limited SG Allied Businesses Limited Nina Industries Limited Agritech Limited NBP Stock Fund First Credit and Investment Bank Limited Listed Associates Pakistan Investment Bonds Market Treasury Bills Investments given as collateral 20.19 Pakistan 32.79 25.03 20.27 27.01 2.64 17,030,231 3,970,859 3,754,900 4,906,000 106,014,565 31,347,444 - 33.33 Pakistan 20.37 Pakistan 32.05 Pakistan 8.96 Pakistan 21.52 Pakistan 25.00 Pakistan 23.11 Pakistan 20.00 Pakistan 20.00 Pakistan 33,333 11,000 37,500 4,481,500 2,500,000 644,508 9,900,000 5,000 200,000 - 39.50 Pakistan 1,300,000 December 31, 2019 - - - 33.33 Pakistan June 30, 2019 June 30, 2020 June 30, 2020 December 31, 2019 June 30, 2020 - June 30, 2020 Based on the financial statements as at 12,500,000 Pakistan Pakistan Pakistan Pakistan Pakistan 30.77 Pakistan Percentage of Country of holding incorporation 20,000,000 Number of shares Liabilities Revenue Profit / (loss) after taxation Total comprehensive income 364,150,000 5,300,000 - - - 668,041 - - - 1,194 174,448 1,148,303 69,135,919 13,985,018 - 1,667,186 - - - 8,392 - - - 345 252,160 600,882 58,399,826 283,399 - 928,395 - - - 75,275 - - - 96 5,245 12,174,419 72,309 - 154,763 - - - 29,439 - - - (175) (16,925) (2,170) (652,777) (384,270) - 28,703 - - - 29,680 - - - (175) (16,925) 414,712 15,624,634 (384,270) - 46,801 ------------------------------------------------ (Rupees in '000) --------------------------------------------------- Assets 4,150,000 360,000,000 2,300,000 3,000,000 2020 2019 -------------- (Rupees in '000) -------------- Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 10.3.1 10.3 10.2.4 10.2.3 100.00 58.32 76.51 54.00 10,500,000 7,875,002 1,245,000 13,499,996 Liabilities Revenue Profit / (loss) after taxation Total comprehensive income Doubtful Loss Total Domestic Category of classification Particulars of provision against debt securities Closing balance 2019 Provision 17,950,047 5,671,871 5,671,871 5,603,540 5,603,540 426,170 5,145,314 5,571,484 213,086 5,136,554 5,349,640 ------------------------------------- (Rupees in '000) ------------------------------------ NPI 17,823,660 3,041,682 14,908,363 (126,387) Provision (11,412) (3,208) 182,079 (62,552) 27,275 110,751 1,614,231 31,832 - 2020 2019 ------------ (Rupees in '000) -------------- (11,412) 596 185,112 (234,132) 1,749 110,751 (146,159) 31,832 - 3,425,825 (384,143) 2020 91,035 1,075,476 - 263,016 6,556,209 294,723 1,062,408 317,150 - 1,164,846 (1,291,233) NPI 96,016 321,846 1,314,609 639,516 79,364 59,129 88,500,998 2,821,581 - Charge / reversals Charge for the year Reversals for the year 112,870 618,688 2,410,170 4,839,487 133,181 1,176,712 104,391,593 2,862,573 - ------------------------------------------------ (Rupees in '000) --------------------------------------------------- Assets 17,950,047 December 31, 2019 December 31, 2019 June 30, 2020 December 31, 2019 December 31, 2019 December 31, 2019 December 31, 2019 June 30, 2020 - Based on the financial statements as at Opening balance Pakistan Pakistan Pakistan Pakistan 100.00 Kazakhstan 100.00 Tajikistan 100.00 Pakistan 45.00 United Kingdom 33.98 Pakistan 20.00 Pakistan Percentage of Country of holding incorporation 8,650 10,000 85,758,750 20,250,000 10,653,860 150,000 Provision for diminution in value of investments * “ - ” Not available CJSC Subsidiary Bank of NBP in Kazakhstan CJSC Subsidiary Bank of NBP in Tajikistan NBP Exchange Company Limited NBP Modaraba Management Company Limited Taurus Securities Limited Cast-N-Link Products Limited NBP Fund Management Limited Subsidiaries United National Bank Limited Joint Venture Pakistan Mercantile Exchange Limited Prudential Fund Management Limited Number of shares Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------ (Rupees in '000) -----------10.4 Quality of available for sale securities Details regarding quality of available for sale securities are as follows: Federal government securities - government guaranteed Market treasury bills Pakistan investment bonds Ijarah sukuks Cost 529,397,138 470,136,168 6,000,000 593,936,881 322,248,605 2,000,000 1,005,533,306 918,185,486 536,303 843,923 211,166 1,882,741 753,684 3,896,815 855,646 2,457,103 1,393,503 203,855 1,713,756 508,688 21,890 189,470 120 2,408,733 5,954,784 402,039 512,974 2,988,617 586,526 900,998 288,528 91,980 960,033 1,890,534 638,440 25,854 32,385 86,486 212,858 757,309 249,604 2,876,794 261,598 2,874,502 670,867 1,539,023 1,359,655 73,016 980,165 341,624 21,891 189,470 120 2,357,129 5,799,864 172,695 361,833 2,778,748 586,526 1,253,494 288,527 91,980 993,620 1,242,681 485,713 25,854 32,385 58,890 647 86,486 33,237,574 29,025,568 Shares Listed companies sector - wise Automobile Assembler Automobile Parts and Accessories Cable and Electrical Goods Cement Chemical Commercial Banks Engineering Fertilizer Food and Personal Care Glass and Ceramics Insurance Investment Banks / Investment companies / Securities companies Leasing Companies Leather and Tanneries Modarabas Oil and Gas Exploration Companies Oil and Gas Marketing Companies Paper and Board Pharmaceuticals Power Generation and Distribution Real Estate Investment Trust Refinery Sugar and Allied Industries Synthetic and Rayon Technology and Communication Textile Composite Textile Spinning Textile Weaving Transport Vanaspati and Allied Industries Woollen Miscellaneous | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 2020 Unlisted companies Cost 2019 Breakup value Cost Breakup value ------------------------------------ (Rupees in '000) -------------------------------Digri Sugar Mills Limited 4,063 135,585 4,063 135,585 JDM Textile Mills Limited 4,784 324,651 4,784 324,651 Gelcaps Pakistan Limited 4,665 8,842 4,665 9,801 Pakistan Agriculture Storage Service Corporation 5,500 1,623 5,500 109,831 Al Ameen Textile Al Zamin Modarba Management (Private) Limited AMZ Venture Limited Class A Arabian Sea Country Club Atlas Power Limited Attock Textile Mills Limited Bunny's Limited Pakistan Mortgage Refinance Company Limited F.T.C. Management Company Private Limited 327 N/A 327 N/A* 1,000 2,134 1,000 2,134 121 6,500 N/A (6,640) 121 N/A 6,500 N/A 375,000 1,328,000 375,000 1,130,503 200 N/A 200 N/A 235,200 140,743 600,000 608,951 - - 600,000 770,195 250 46,998 250 36,908 Fauji Akbar Portia Marines Terminal Limited 321,076 570,680 321,076 515,937 Fauji Oil Terminals and Distribution Limited 10,886 99,059 10,886 69,747 First Women Bank Limited 21,100 71,946 21,100 71,946 Fortune Securities Limited 5,000 7,574 5,000 7,408 500 272 500 272 Frontier Textile Mills Limited Gulistan Power Generation Limited 2,200 8,096 2,200 8,096 Hazara Woolen Mills Limited 200 N/A 200 N/A Industrial Development Bank of Pakistan 107 N/A 107 N/A Inter Asia Leasing Company Limited 500 N/A 500 N/A 30,346 46,890 30,346 43,979 327 N/A 327 N/A Kaisar Arts and Krafts Limited 8,395 N/A 8,395 N/A Kaytex Mills Limited 3,778 N/A 3,778 N/A ISE Towers REIT Management Company Limited Junaid Cotton Mills Limited Mian Mohammad Sugar Mills Limited 15 N/A 15 N/A Muslim Ghee Mills Limited 1,810 N/A 1,810 N/A Myfip Video Industries Limited 5,373 N/A 5,373 N/A 14 N/A 14 N/A 250 597 250 597 1,526 74,484 1,526 71,187 National Investment Trust Limited 100 830,782 100 832,931 National Woolen Mills Limited 183 N/A 183 N/A Natover Lease and Refinance 2,602 N/A 2,602 N/A 41 N/A 41 N/A 11,529 1,152 11,529 1,152 373 N/A 373 N/A National Asset Leasing Corporation Limited National Construction Limited National Institution of Facilitation Technology (Private) Limited Nowshehra Engineering Works Limited Pakistan Export Finance Guarantee Agency Limited Pakistan Paper Corporation Limited Pakistan Telephone Cables Pakistan Textile City | National Bank of Pakistan 143 N/A 143 N/A 100,000 12,410 100,000 12,410
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Unlisted companies Cost 2020 Breakup value 2019 Breakup value Cost ------------------------------------ (Rupees in '000) -------------------------------Pakistan Tourism Development Corporation 100 82 100 24,983 People Steel Mills Limited 3,276 N/A 3,276 * N/A Qadri Textile Mills Limited 500 N/A 500 N/A 16,958 107,895 16,958 107,895 4,589 N/A 4,589 N/A 132,888 1,322,458 132,888 1,269,793 750 N/A 750 N/A 21 N/A 21 N/A 272 544 272 544 Rehman Cotton Mills Limited Rishabh Metals and Chemicals Private Limited Rousch Power Pakistan Limited Ruby Rice and General Mills Limited Sahrish Textile Mills Shoaib Capital SME Bank Limited 26,950 (318) 26,950 (318) South Asia Regional Fund 287 N/A 287 N/A Star Salica Industries Limited 267 N/A 267 N/A 2 N/A 2 N/A Syed Match Industries Union Insurance Company of Pakistan 4 N/A 4 N/A 28 N/A 28 N/A Zafar Textiles Mills Limited 257 N/A 257 N/A Zulsham Engineering Works Limited 330 N/A 330 N/A Unity Modaraba Information System Associates Limited 1 Link (Guarantee) Limited Pakistan Corporate Restructuring Company Limited 1,719 N/A 1,719 N/A 50,000 139,362 50,000 147,332 96,000 N/A 96,000 N/A 1,865,982 2,101,182 * Not available 2020 2019 -------------- (Rupees in '000) -----------Debt Securities Listed - AAA - AA+, AA, AA- A+, A, A- BBB+, BBB, BBB- Unrated 1,547,210 13,709,811 700,000 299,820 9,537,168 1,547,830 7,739,909 299,880 12,855,892 Cost 25,794,009 22,443,511 - AAA - AA+, AA, AA- A+, A, A- Unrated 19,792,680 1,236,000 1,866,667 11,510,397 23,554,109 801,000 500,000 12,955,266 Cost 34,405,744 37,810,375 Unlisted | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Foreign Securities Government Securities USA 2020 Cost Rating (Rupees in '000) 2,795,017 - AA+ 2019 Cost (Rupees in '000) 3,474,324 Rating AA+ Non Government Debt Securities - Cost 2020 2019 -------------- (Rupees in '000) ------------ Listed - A+ 10.5 79,438 1,408,492 168,422,981 11,641,133 114,091,320 184,864,103 10,395,235 180,064,114 309,350,658 27,948 27,948 387,025 388,759 387,025 388,759 Particulars relating to Held to Maturity securities are as follows: Federal Government Securities - Government guaranteed Market Treasury Bills Pakistan Investment Bonds Bai muajjal with Government of Pakistan Debt Securities Listed - AA+, AA, AAUnlisted - Unrated Foreign Securities 2020 Cost 2019 Rating (Rupees in '000) Cost Rating (Rupees in '000) Government Securities Azerbaijan Bangladesh Kyrgyzstan Kingdom of Saudi Arabia Korea 646,649 27,277,984 1,118,290 2,551,243 734,572 32,328,738 BB+ Ba3 B2 A AA 484,683 24,741,528 1,400,585 2,302,368 671,179 BB+ BBB2 A+ AA 29,600,343 0 2020 2019 -------------- (Rupees in '000) -----------Non Government Debt Securities Listed - Unrated - Cost 618 (0) | National Bank of Pakistan 596
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 10.5.1 The market value of securities classified as held-to-maturity as at December 31, 2020 amounted to Rs. 218,678 million (2019: Rs. 328,496 million). 10.6 Investment in shares of a bank incorporated outside Pakistan - Bank Al-Jazira The Bank holds 30,333,333 (2019: 30,333,333) shares in Bank Al-Jazira (BAJ) incorporated in the Kingdom of Saudi Arabia, representing 3.7% (2019: 3.7%) holding in total equity of BAJ. The investment has been marked to market using closing price as quoted on the Saudi Stock Exchange in accordance with SBP concurrence vide letter No. BSD/SU-13/331/685/2006 dated February 17, 2006. BAJ’s Viability Rating is BB+ with short term and long term IDR at BBB+ by Fitch Rating Agency. 10.7 The 94,273,510 (2019: 94,273,510) shares of Agritech Limited were acquired from Azgard Nine Limited as part of multiple agreements including the Master Restructuring Agreement (MRA). These shares were acquired at an agreed price of Rs. 35 per share. The market value of these shares at December 31, 2020 amounted to Rs. 5.11 per share resulting in an impairment of Rs. 3,124 million (2019: Rs. 3,217 million) which has been fully recorded in these unconsolidated financial statements. There is a put option available to Azgard Nine Limited, under which Azgard Nine Limited has the right to sell 58.29 million preference shares of Agritech Limited to the Bank at a price of Rs. 5.25 per share subject to the occurrence of certain events under the agreement. 10.8 Aggregate market value of investment in associates (quoted) on the basis of quoted prices amounts to Rs. 1,456 million (2019: Rs. 1,014 million). 10.9 Associates with zero carrying amount, represent the investments acquired from former National Development Finance Corporation (NDFC) which have negative equity or whose operations were closed at the time of amalgamation. 10.10 The details of break-up value based on latest available financial statements of unlisted investments in associates are as follows: Year / Period ended Break-up value Rupees in '000 National Assets Insurance Limited December 31, 2019 Pakistan Emerging Venture Limited June 30, 2019 283 Pakistan Mercantile Exchange Limited June 30, 2020 13,928 10.11 Investments in joint venture United National Bank Limited (UNBL) (Incorporated in United Kingdom) Note 10.1 / 10.2 / 10.11.1 59,124 2019 2020 -------------- (Rupees in '000) ------------ 2,362,433 2,362,433 10.11.1 Under a joint venture agreement, the Bank holds 20.25 million ordinary shares (45%) and United Bank Limited (UBL) holds 23.25 million ordinary shares (55%) in UNBL. In addition to ordinary shares, four preference shares categories as "A", "B", "C" and "D" have been issued and allotted. The "B" and "D" category shares are held by the Bank and category "A" and "C" are held by UBL. Dividends payable on "A" and "B" shares are related to the ability of the venture to utilize tax losses that have been surrendered to it on transfer of business from the Bank or UBL as appropriate. Dividends payable on "C" and "D" shares are related to loans transferred to the venture by the Bank or UBL that have been written-off or provided for at the point of transfer and the ability of the venture to realize in excess of such loan value. 10.12 The investments in shares include shares of Pakistan State Oil Company Limited, Sui Northern Gas Pipeline Limited and Pakistan Engineering Company with cost of Rs. 4,603 million (2019: Rs. 4,603 million) that have been frozen by the Government of Pakistan for sale in the equity market due to their proposed privatization. 10.13 The investments also include shares acquired under tri-partite consent agreement dated June 29, 2011. These strategic investments comprise of the shares of Pakistan State Oil (38,055,247 shares), shares of Sui Northern Gas Pipeline Limited (18,805,318 shares) and Pakistan Engineering Company (135,242). The cost of these shares amounts to Rs. 4,603 million and market value as at December 31, 2020 amounts to Rs. 9,065 million. These shares can not be sold without concurrence of privatization commission. | National Bank of Pakistan
| National Bank of Pakistan 11.2 11.1 11. 2019 2020 2019 Non Performing 2020 Total 2019 - 983,254,527 154,145,472 22,473,748 176,619,220 - Total 1,008,139,084 134,170,016 9,005,950 143,175,966 1,077,935,659 34,084,045 71,576 39,223,770 1,151,315,050 1,339 56,900 (0) 32 556 815 1,371 546 10,911 46,535 57,446 - - - 58,239 578 11,467 47,350 58,817 52,318 4,982 11,634 45,666 57,300 19,258 793 10,434 9,617 20,051 - - 71,576 5,775 22,068 55,283 77,351 ----------------------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------------------------ Later than one and less than Over five years five years Not later than one year 14,581,701 134,170,016 134,170,016 Later than one and less than Over five years five years Total 17,148,661 154,145,472 154,145,472 141,787,259 1,092,021,597 203,934 38,149,776 58,239 6,760,524 29,644,135 148,751,717 1,159,873,747 2019 993,557,383 9,005,950 9,005,950 160,045,212 602,913 10,646,008 171,294,133 2020 966,105,866 22,473,748 22,473,748 931,976,385 936,148,400 37,546,863 33,880,111 58,239 71,576 18,998,127 32,463,246 988,579,614 1,002,563,333 ------------------------------------------------------------- (Rupees in '000) --------------------------------------------------- Not later than one year 11.4 11.2 11.1 Note 2020 Performing In local currency In foreign currencies Particulars of advances (Gross) 1,052,019,665 99,295,385 1,151,315,050 1,071,844,946 88,028,801 1,159,873,747 2020 2019 ---------------- (Rupees in '000) ---------------- The leases executed are for a term of 1 to 5 years. Security deposit is generally obtained upto 10% of the cost of leased assets at the time of disbursement. The Bank requires the lessee to insure the leased assets in favor of the Bank. Additional surcharge is charged on delayed rentals. The average return implicit ranges from 10.19% to 17.30% (2019: 10.19% to 19.46%) per annum. Financial charges for future periods Present value of minimum lease payments Lease rentals receivable Residual value Minimum lease payments Net investment in finance lease Advances - net of provision Provision against advances - Speciﬁc - General Loans, cash credits, running ﬁnances, etc. Islamic ﬁnancing and related assets Net investment in ﬁnance lease Bills discounted and purchased Advances - gross ADVANCES Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 11.3 Advances includes Rs. 171,294 million (2019: Rs.148,752 million) which have been placed under non-performing status as detailed below. 2020 Non Performing Loans Category of Classiﬁcation 2019 Provision Non Performing Loans Provision -------------------------------- (Rupees in '000) -----------------------------------Domestic Other Assets Especially Mentioned 1,617,988 45,392 1,290,081 78,430 Substandard 5,418,693 1,336,002 10,292,449 2,550,709 Doubtful Loss 15,767,573 7,881,223 6,439,788 3,207,031 106,144,785 103,816,435 89,680,047 88,523,275 128,949,039 113,079,052 107,702,365 94,359,445 42,345,094 41,066,420 41,049,352 39,810,571 42,345,094 41,066,420 41,049,352 39,810,571 171,294,133 154,145,472 148,751,717 134,170,016 Overseas Not past due but impaired Overdue by: >365 days Total 11.4 Particulars of provision against advances 2020 Specific Note Opening balance Exchange adjustments Charge for the year Reversals Amounts written off Amounts charged off agriculture financing Transfer from other Assets Amount Charged off international branches Other movement 11.5.1 11.4.1.3 Closing balance 2019 General Total Specific General Total ------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------134,170,016 1,468,169 18,982,569 (3,047,958) 9,005,950 15,535 13,707,207 (321,795) 143,175,966 1,483,704 32,689,776 (3,369,753) 15,934,611 13,385,412 29,320,023 (89,494) (193,807) 2,855,977 66,851 154,145,472 11.4.1 Particulars of provision against advances 0 6,654,339 8,424,453 - (33,004) (193,807) 2,922,828 (232,480) - (232,480) - (1,776,734) (511,946) - (1,776,734) (511,946) 176,619,220 - General 1,770,114 133,473,143 3,832,534 13,354,047 (4,929,594) (33,004) 134,170,016 9,005,950 143,175,966 - 2020 Specific 7,207,104 28,732 2,018,117 (248,003) (89,494) 22,473,748 126,266,039 3,803,802 11,335,930 (4,681,591) 2019 Total Specific General Total ------------------------------------------------------------ (Rupees in '000) ----------------------------------------------------------In local currency In foreign currencies | National Bank of Pakistan 113,079,052 41,066,420 22,274,089 199,659 135,353,141 41,266,079 94,359,445 39,810,571 8,550,135 455,815 102,909,580 40,266,386 154,145,472 22,473,748 176,619,220 134,170,016 9,005,950 143,175,966
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 11.4.1.1 The Bank maintains general reserve in accordance with the applicable requirements of the Prudential Regulations for Consumer Financing and Prudential Regulations for Small and Medium Enterprise Financing issued by the SBP. The Bank has also maintained general provision of Rs. 17,078 million (2019: Rs. 3,850 million) in respect of its underperforming portfolio on prudent basis. 11.4.1.2 The SBP has allowed specific relaxation to the Bank for non-classification of overdue loans of certain Public Sector Entities (PSEs) which are guaranteed by Government of Pakistan as non-performing loans up till December 31, 2021. 11.4.1.3 These represent non-performing advances for agriculture finance which have been classified as loss and fully provided for more than 3 years. These non-performing advances have been charged off by extinguishing them against the provision held in accordance with Prudential Regulations for Agriculture Financing issued by the SBP. This charge off does not, in any way, prejudice the Bank's right of recovery from these customers. 11.4.1.4 State Bank of Pakistan (‘SBP’), vide its BPRD circular letter No. 13 of 2020, has provided regulatory relief to dampen the effects of Covid-19 and allowed banks to offer deferral of principal component of installments to its borrowers for one year, provided that the borrower will continue to service the mark-up amount as per agreed terms & conditions. During the year ended December 31, 2020, 77 borrowers having aggregate outstanding exposure of Rs. 27,395 million have availed regulatory relief extended by SBP. 2020 2019 ------------ (Rupees in '000) ------------ 11.5 Particulars of write-offs Note 11.5.1 Against provisions 11.5.2 89,494 33,004 11.5.2 Write-offs of Rs. 500,000 and above - Domestic Write-offs of below Rs. 500,000 11.6 40,260 49,234 5,957 27,047 89,494 33,004 11.6 Details of loan write-off of Rs. 500,000/- and above In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the Statement in respect of written-off loans or any other financial relief of rupees five hundred thousand or above allowed to a person(s) during the year ended is given in Annexure-I (except where such disclosure is restricted by overseas regulatory authorities). 2020 2019 Note ------------ (Rupees in '000) ------------ 12. FIXED ASSETS Capital work-in-progress Property and equipment 12.1 12.1 12.2 2,154,184 52,259,309 2,114,172 52,189,393 54,413,493 54,303,565 2,040,456 10,825 58,733 44,170 1,999,863 15,446 58,372 40,491 - 2,154,184 2,114,172 Capital work-in-progress Civil works Equipment Advances to suppliers and contractors License and implementation fee for core banking software Software implementation in progress | National Bank of Pakistan
12 .2 | National Bank of Pakistan 20,108,881 - 20,108,881 Net book value 20,370,445 Closing net book value Nil 20,370,445 Net book value Rate of depreciation (percentage) 20,370,445 - Cost / revalued amount Accumulated depreciation At December 31, 2020 20,108,881 261,564 - Opening net book value Additions Movement in surplus on assets revalued Disposals Depreciation charge Depreciation adjustment - disposal Exchange rate adjustments Other adjustments / transfers Year ended December 2020 Leasehold land Building on freehold land Building on leasehold land Furniture and fixture Computer and Electrical, peripheral office equipment equipment 2020 Vehicles Assets held under finance lease vehicles Total Nil 19,673,159 19,673,159 - 19,673,159 19,362,870 310,289 - 19,362,870 19,362,870 - 3,464,391 4,367,094 (902,703) 3,464,391 3,580,712 45,369 59,671 (172,973) (38,834) (9,554) 3,580,712 4,310,442 (729,730) 5% on book 5% on book value value 5,256,144 6,498,047 (1,241,903) 5,256,144 5,517,140 3,622 28,757 (293,375) - 5,517,140 6,465,668 (948,528) 20% on cost 1,881,624 6,505,280 (4,623,656) 1,881,624 1,737,260 798,720 (14,393) (660,371) 11,618 (764) 9,554 1,737,260 5,712,163 (3,974,903) 33.33% on cost 189,144 4,403,125 (4,213,981) 189,144 124,498 272,507 (1,354) (247,409) 1,354 39,548 - 124,498 4,092,424 (3,967,926) 20% on cost 1,052,277 6,230,222 (5,177,945) 1,052,277 1,189,192 516,285 (1,796) (631,469) 1,726 (21,661) - 1,189,192 5,737,394 (4,548,202) 20% on cost 372,124 1,247,328 (875,204) 372,124 568,839 195,700 (185,097) (360,513) 149,946 3,249 - 568,839 1,233,476 (664,637) 20% on cost 52,259,309 1 52,259,309 52,189,393 1,832,203 660,281 (202,640) (2,366,110) 164,644 (18,462) - 69,459,953 (17,200,644) 1 1 52,189,393 67,188,571 (14,999,178) 165,253 (165,252) - 1 165,253 (165,252) -------------------------------------------------------------------------------------------(Rupees in '000) ------------------------------------------------------------------------------------------ Freehold land Cost / revalued amount Accumulated depreciation At January 1, 2020 Property and equipment Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 20,108,881 Net book value 20,108,881 Closing net book value Computer and peripheral equipment Electrical, office equipment Vehicles Assets held under finance lease vehicles Total Nil 19,362,870 19,362,870 - 19,362,870 18,684,751 566,789 111,330 18,684,751 18,684,751 - 3,580,712 5% on book value 5% on book value 4,310,442 (729,730) (1) 3,580,712 3,398,549 50,606 86,281 (173,871) 12,204 206,943 3,398,549 3,954,408 (555,859) 5,517,140 6,465,668 (948,528) 5,517,140 5,803,650 (286,510) - 5,803,650 6,465,668 (662,018) 20% on cost 1,737,260 5,712,163 (3,974,903) 1,737,260 1,700,368 686,788 (15,440) (667,117) 12,942 19,719 - 1,700,368 5,021,096 (3,320,728) 33.33% on cost 124,498 4,092,424 (3,967,926) - 124,498 297,781 86,550 (2,283) (283,627) 2,064 24,013 - 297,781 3,984,144 (3,686,363) 20% on cost 1,189,192 5,737,394 (4,548,202) 1,189,192 1,144,354 595,897 (4,998) (571,077) 3,839 21,177 - 1,144,354 5,125,318 (3,980,964) 20% on cost 568,839 1,233,476 (664,637) 568,839 786,943 127,606 (115,378) (325,670) 93,894 1,444 - 786,943 1,219,804 (432,861) 1 1 20% on cost 1 165,253 (165,252) - 1 165,253 (165,252) 52,189,393 67,188,571 (14,999,178) 52,189,393 51,925,278 1,547,447 653,070 (138,099) (2,307,872) 112,739 78,557 318,273 51,925,278 64,729,323 (12,804,045) During the year ended December 31, 2020, land and building were revalued. The basis of revaluations were desktop valuations and were carried by RBS associates Private Limited (PBA registered valuer) independant of the bank, resulting in surplus of Rs.660 million. For the purpose of the value assessment, factors like commercial value, location, utilization, nature of title etc. were kept in mind. Nil 20,108,881 Net book value Rate of depreciation (percentage) 20,108,881 - Cost / Revalued amount Accumulated depreciation At December 31, 2019 20,108,881 - Opening net book value Additions Movement in surplus on assets revalued Disposals Depreciation charge Depreciation adjustment - disposal Exchange rate adjustments Other adjustments / transfers Year ended December 2019 20,108,881 - Cost / Revalued amount Accumulated depreciation At January 1, 2019 Building on Building on Furniture and freehold land lease hold land fixture ------------------------------------------------------------------------------------------(Rupees in '000) ------------------------------------------------------------------------------------------ Freehold land Lease hold land 2019 Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 12.3 Details of disposals of ﬁxed assets to related parties The particulars of disposal of ﬁxed assets to related parties are given below: Particulars of property and equipment Original cost Book Value Sale Gain / (loss) Mode of disposal Proceed on disposal Particulars of purchaser Purchaser name ------------------------- (Rupees in '000) ----------------------- Ofﬁce Equipment & Electrical Installations 50 10 10 - As per entitlement Ex-Employee Muhammad Saleem Qasim Ofﬁce Equipment & Electrical Installations 50 13 13 - As per entitlement Ex-Employee Amjad Pervaiz Ofﬁce Equipment & Electrical Installations 49 33 33 - As per entitlement Ex-Employee Zia Ur Rashid Ibrahim Ofﬁce Equipment & Electrical Installations 155 - - - As per entitlement Ex-Employee Nasir Hussain Ofﬁce Equipment & Electrical Installations 50 - - - As per entitlement Employee Muhammad Naeem Ansari Ofﬁce Equipment & . Electrical Installations 464 - - - As per entitlement Ex-Employee Aamir Sattar Ofﬁce Equipment & Electrical Installations 800 - - - As per entitlement Ex-Employee Aamir Sattar Ofﬁce Equipment & Electrical Installations 35 15 15 - As per entitlement Ex-Employee Ofﬁce Equipment & Electrical Installations 30 - - - As per entitlement Ex-Employee Khadija Adnan Ofﬁce Equipment & Electrical Installations 50 - - - As per entitlement Employee Muhammad Naeem Ansari 1,733 71 71 - Computer Equipment 93 - 9 9 As per entitlement Employee Amber Memon Computer Equipment 59 - 6 6 As per entitlement Employee Prem Kumar Computer Equipment 87 - 9 9 As per entitlement Ex-Employee Faraz Haider Computer Equipment 64 - 6 6 As per entitlement Employee Shahid Ali Khan Computer Equipment 101 - 10 10 As per entitlement Employee Abdul Wajid Computer Equipment 90 - 9 9 As per entitlement Ex-Employee Saleem Computer Equipment 140 - 14 14 As per entitlement Employee Asad Saleem Computer Equipment 99 - 10 10 As per entitlement Ex-Employee Syed Tariq Hasan Computer Equipment 99 - 10 10 As per entitlement Employee Umar Azim Daudpota Computer Equipment 183 - - - As per entitlement Ex-Employee Nasir Hussain Computer Equipment 110 - - - As per entitlement Ex-Employee Amjad Pervaiz Computer Equipment 140 - 14 14 As per entitlement Employee Muhammad Naeem Ansari 1,265 - 97 97 | National Bank of Pakistan Muhammad Najmuddin
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Particulars of property and equipment Original cost Book Value Sale Gain / (loss) Mode of disposal Proceed on disposal Particulars of purchaser Purchaser name ------------------------- (Rupees in '000) ----------------------- Furniture & Fixtures 125 71 71 - As per entitlement Ex-Employee Muhammad Akhtar Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Maqsood Ahmed Furniture & Fixtures 150 31 31 - As per entitlement Ex-Employee Farhat Anjum Shaikh Furniture & Fixtures 150 35 35 - As per entitlement Ex-Employee Niaz Ahmed Chatha Furniture & Fixtures 125 25 25 - As per entitlement Ex-Employee Muhammad Adnan Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Bilqees Talat Furniture & Fixtures 125 39 39 - As per entitlement Ex-Employee Sharaf Ahmed Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Ashraf Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Akram Furniture & Fixtures 125 67 67 - As per entitlement Ex-Employee Naveed Akhtar Furniture & Fixtures 125 60 60 - As per entitlement Ex-Employee Muhammad Aslam Lalani Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Shaheen Aijaz Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Late Mehboob Ali Abro Furniture & Fixtures 125 17 17 - As per entitlement Ex-Employee Muhammad Ilyas Bashir Furniture & Fixtures 150 45 45 - As per entitlement Ex-Employee Haji Anwar Baloch Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Tariq Mehmood Bukhari Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Muhammad Raﬁque Furniture & Fixtures 125 31 31 - As per entitlement Ex-Employee Ghulam Akbar Chandio Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Nasir Ehsan Furniture & Fixtures 150 78 78 - As per entitlement Ex-Employee Muhammad Ejaz Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Late Mehboob Ellahi Furniture & Fixtures 125 41 41 - As per entitlement Ex-Employee Muhammad Fayyaz Qureshi Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Farooq Furniture & Fixtures 125 1 1 - As per entitlement Ex-Employee Shaheen Haider Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Akhtar Hussain Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Mureed Hussain Shaikh Furniture & Fixtures 125 63 63 - As per entitlement Ex-Employee Manzoor Hussain Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Muhammad Hayat Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Syed Iftikhar Hussain Furniture & Fixtures 175 - - - As per entitlement Ex-Employee Masood Iqbal Furniture & Fixtures 175 70 70 - As per entitlement Ex-Employee Zia Ur Rashid Ibrahim Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Shahid Iqbal Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Ismail Furniture & Fixtures 125 15 15 - As per entitlement Ex-Employee Sajida Ishaq Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Javed Iqbal Furniture & Fixtures 125 68 68 - As per entitlement Ex-Employee Muhammad Javed Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Shahid Javid Furniture & Fixtures 150 35 35 - As per entitlement Ex-Employee Dilpazir Khan Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Bashir Ahmed Khan Furniture & Fixtures 125 58 58 - As per entitlement Ex-Employee Muhammad Rasheed Furniture & Fixtures 300 - - - As per entitlement Ex-Employee Shaﬁq Ahmed Khan Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Jamil Khan | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Particulars of property and equipment Original cost Book Value Sale Gain / (loss) Mode of disposal Proceed on disposal Particulars of purchaser Purchaser name ------------------------- (Rupees in '000) ----------------------- Furniture & Fixtures 150 50 50 - As per entitlement Ex-Employee Muhammad Asghar Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Farooq Khan Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Ali Khan Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Late Abdul Sami Furniture & Fixtures 150 70 70 - As per entitlement Ex-Employee Khalid Mehmood Furniture & Fixtures 150 69 69 - As per entitlement Ex-Employee Hassan Ali Memon Furniture & Fixtures 150 82 82 - As per entitlement Ex-Employee Tariq Mehmood Furniture & Fixtures 190 44 44 - As per entitlement Ex-Employee Wasi Murtaza Furniture & Fixtures 125 29 29 - As per entitlement Ex-Employee Raja Sultan Mehmood Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Tariq Mahmood Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Nazia Ghulam Muhammad Furniture & Fixtures 150 - - - As per entitlement Ex-Employee S.M Rashid Nabi Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Khurshud Agned Nishat Furniture & Fixtures 150 16 16 - As per entitlement Ex-Employee Muhammad Najamuddin Furniture & Fixtures 175 19 19 - As per entitlement Ex-Employee Amjad Pervez Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Agha Fazalullah Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Abdul Rahim Qureshi Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Ramzan Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Abdul Rauf Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Mian Shaﬁq Ur Rehman Furniture & Fixtures 175 55 55 - As per entitlement Ex-Employee Muhammad Salim Qasim Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Ch.Muhammad Shaﬁ Furniture & Fixtures 125 53 53 - As per entitlement Ex-Employee Muhammad Shaﬁ Furniture & Fixtures 125 43 43 - As per entitlement Ex-Employee Muhammad Sabir Furniture & Fixtures 125 75 75 - As per entitlement Ex-Employee Muhammad Saleem Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Muhammad Sohail Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Shahzad Saleem Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Abdul Razzak Shaikh Furniture & Fixtures 150 69 69 - As per entitlement Ex-Employee Muhammad Shahid Furniture & Fixtures 125 - - - As per entitlement Ex-Employee M. Shamim Shakir Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Abdul Latif Solongi Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Fazeel Tahir Muhammad Usman Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Furniture & Fixtures 150 21 21 - As per entitlement Ex-Employee Ghulam Qadir Jam Furniture & Fixtures 190 82 82 - As per entitlement Ex-Employee Syed Ajmal Habib Furniture & Fixtures 190 63 63 - As per entitlement Ex-Employee Muhammad Saleem Adil Furniture & Fixtures 150 34 34 - As per entitlement Ex-Employee Abdul Qayum Zia Furniture & Fixtures 175 83 83 - As per entitlement Ex-Employee Arif Raza Abdy Furniture & Fixtures 150 20 20 - As per entitlement Ex-Employee Arshad Mahmood Furniture & Fixtures 175 7 7 - As per entitlement Employee Muhammad Naeem Ansari Furniture & Fixtures 500 319 319 - As per entitlement Ex-Employee Tariq Jamali Furniture & Fixtures 150 34 34 - As per entitlement Ex-Employee Abid Ali Siddiqi | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Particulars of property and equipment Original cost Book Value Sale Gain / (loss) Mode of disposal Proceed on disposal Particulars of purchaser Purchaser name ------------------------- (Rupees in '000) ----------------------- Furniture & Fixtures 160 63 63 - As per entitlement Ex-Employee Furniture & Fixtures 150 64 64 - As per entitlement Ex-Employee Muhammad Younas Furniture & Fixtures 300 95 95 - As per entitlement Employee Imdad Hussain Furniture & Fixtures 175 33 33 - As per entitlement Ex-Employee Khadija Adnan Furniture & Fixtures 335 131 131 - As per entitlement Employee Azra Naila Uzair Furniture & Fixtures 175 41 41 - As per entitlement Ex-Employee Haﬁz Muhammad Fayyaz Furniture & Fixtures 175 22 22 - As per entitlement Ex-Employee Abdul Aziz Nadeem Furniture & Fixtures 150 5 5 - As per entitlement Ex-Employee Hamid Rasool Qadri Furniture & Fixtures 200 82 82 - As per entitlement Ex-Employee Mumtaz Raﬁ Furniture & Fixtures 125 57 57 - As per entitlement Ex-Employee Raja Ejaz Ahmed 14,190 2,780 2,780 - Motor Vehicles 1,658 332 332 - As per entitlement Employee Asad Saleem Motor Vehicles 1,658 304 332 28 As per entitlement Employee Farooq Ahmed Soomro Motor Vehicles 1,658 304 332 28 As per entitlement Employee Mashkoor Ahmed Khan Motor Vehicles 1,658 304 332 28 As per entitlement Employee Ahmed Naseem Motor Vehicles 1,658 332 332 - As per entitlement Employee Salman Talat Motor Vehicles 1,873 468 468 - As per entitlement Employee Shaukat Mahmood Motor Vehicles 1,658 332 332 - As per entitlement Employee Abid Kithclew Motor Vehicles 1,658 304 332 28 As per entitlement Employee M.Mubashir Ahmad Motor Vehicles 1,658 304 332 28 As per entitlement Employee Tariq Zafar Iqbal Motor Vehicles 1,658 304 332 28 As per entitlement Employee Hidayat Ali Shar Motor Vehicles 1,658 332 332 - As per entitlement Employee Abdul Majeed Arshad Motor Vehicles 1,658 332 332 - As per entitlement Employee Syed Naveed Asghar Motor Vehicles 1,658 332 332 - As per entitlement Employee Muhammad Akram Khan Motor Vehicles 1,658 332 332 - As per entitlement Employee Aziz Ur Rehman Motor Vehicles 1,658 304 332 28 As per entitlement Employee M.Ehsan Tabassum Motor Vehicles 1,658 332 332 - As per entitlement Employee Abdul Jamal Tariq Motor Vehicles 1,658 304 332 28 As per entitlement Employee M.Zaman Khan Motor Vehicles 1,858 372 372 - As per entitlement Employee Ovais Asad Khan Motor Vehicles 1,658 332 332 - As per entitlement Employee Hamid Raza Motor Vehicles 1,658 332 332 - As per entitlement Employee Kamran Masud Khan Motor Vehicles 1,658 332 332 - As per entitlement Employee Rashid Mirza Motor Vehicles 1,658 304 332 28 As per entitlement Ex-Employee Abdul Qadir Motor Vehicles 1,658 304 332 28 As per entitlement Ex-Employee Saeed Habib Motor Vehicles 1,658 304 332 28 As per entitlement Employee Manzur Ahmad Motor Vehicles 1,858 341 372 31 As per entitlement Employee Muhammad Ismail Usuf Motor Vehicles 1,858 372 372 - As per entitlement Employee M.Atlas Khan Motor Vehicles 1,658 332 332 - As per entitlement Employee Syed Waseem Akhtar Motor Vehicles 1,858 372 372 - As per entitlement Employee S.H.Irtiza Kazmi Motor Vehicles 1,858 341 372 31 As per entitlement Employee Karim Akram Khan Motor Vehicles 1,658 332 332 - As per entitlement Employee Muhammad Farrukh Ghouri | National Bank of Pakistan Bilqis Sikandar
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Particulars of property and equipment Original cost Book Value Sale Gain / (loss) Mode of disposal Proceed on disposal Particulars of purchaser Purchaser name ------------------------- (Rupees in '000) ----------------------- Motor Vehicles 1,658 332 332 - As per entitlement Employee Sarfaraz Ahmed Motor Vehicles 1,658 304 332 28 As per entitlement Employee Shaikh Tariq Abdullah Motor Vehicles 1,658 332 332 - As per entitlement Employee Wajahat Malik Motor Vehicles 1,658 304 332 28 As per entitlement Employee Ahmad Sohail Warraich Motor Vehicles 1,858 372 372 - As per entitlement Employee Khadim Hussain Motor Vehicles 1,658 332 332 - As per entitlement Employee Tarannum Sarwar Motor Vehicles 1,658 332 332 - As per entitlement Employee Farooq Hasan Motor Vehicles 1,658 332 332 - As per entitlement Employee M.Iqbal Malik Motor Vehicles 1,873 343 375 32 As per entitlement Employee Shahid Iqbal Choudry Motor Vehicles 1,658 304 332 28 As per entitlement Employee Ahmer Liaquat Motor Vehicles 1,658 221 332 111 As per entitlement Ex-Employee Aziz Ur Rehman Motor Vehicles 1,673 446 446 - As per entitlement Ex-Employee Masood Iqbal Motor Vehicles 1,567 313 313 - As per entitlement Employee Mahmood Akhtar Nadeem Motor Vehicles 1,658 332 332 - As per entitlement Employee M.Ahsan Aslam Motor Vehicles 1,658 276 332 56 As per entitlement Ex-Employee M.Khursheed Khan Motor Vehicles 1,658 332 332 - As per entitlement Employee Amjad Pervaiz Motor Vehicles 1,673 446 446 - As per entitlement Ex-Employee Muhammad Salim Qasim Motor Vehicles 1,664 610 610 - As per entitlement Ex-Employee Talat Khurshid Motor Vehicles 1,789 745 745 - As per entitlement Ex-Employee Shaﬁq Ahmed Khan Motor Vehicles 1,673 335 335 - As per entitlement Employee Saleem Saleemi Motor Vehicles 1,658 635 635 - As per entitlement Ex-Employee M.Saleem Baig Motor Vehicles 5,106 766 766 - As per entitlement Ex-Employee Kausar Iqbal Malik Motor Vehicles 1,643 438 438 - As per entitlement Ex-Employee Syed Tariq Hasan Motor Vehicles 1,858 186 186 - As per entitlement Ex-Employee Nasir Hussain Motor Vehicles 1,714 996 996 - As per entitlement Ex-Employee Syed Hasan Mustafa Naqvi Motor Vehicles 1,673 335 335 - As per entitlement Employee Dawood Jan Khan Motor Vehicles 1,673 335 335 - As per entitlement Employee Masood Yasin Motor Vehicles 1,673 307 335 28 As per entitlement Employee Muhammad Amjad Motor Vehicles 1,673 335 335 - As per entitlement Employee Muhammad Saqib Motor Vehicles 1,673 279 335 56 As per entitlement Employee Raﬁque Ahmed Bhurgri Motor Vehicles 1,673 307 335 28 As per entitlement Employee Farhan Javaid Durrani Motor Vehicles 1,673 335 335 - As per entitlement Employee Ghulam Rasool Motor Vehicles 1,673 307 335 28 As per entitlement Employee Mansoor Hussain Qureshi Motor Vehicles 1,673 335 335 - As per entitlement Employee Aqeel Muslim Motor Vehicles 1,673 335 335 - As per entitlement Employee Nasir Khan Motor Vehicles 1,673 307 335 28 As per entitlement Employee Hananeel Azhar Joseph Motor Vehicles 1,673 307 335 28 As per entitlement Employee Muhammad Mumtaz Ahmed Farooq Motor Vehicles 1,673 307 335 28 As per entitlement Employee Nadeem Khan Motor Vehicles 1,893 725 725 - As per entitlement Ex-Employee Khawar Saeed Motor Vehicles 1,673 335 335 - As per entitlement Employee Qaiser Rasheed Motor Vehicles 1,673 335 335 - As per entitlement Employee Irshad Ahmed Motor Vehicles 1,673 307 335 28 As per entitlement Employee Akhtar Munir Motor Vehicles 1,673 279 335 56 As per entitlement Employee Syed Rehan Mobin Motor Vehicles 1,673 279 335 56 As per entitlement Employee Abdul Hadi Palekar Motor Vehicles 1,673 251 335 84 As per entitlement Employee Rashid Ata | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Particulars of property and equipment Original cost Book Value Sale Gain / (loss) Mode of disposal Proceed on disposal Particulars of purchaser Purchaser name ------------------------- (Rupees in '000) ----------------------- Motor Vehicles 1,673 335 335 - As per entitlement Employee Motor Vehicles Motor Vehicles 1,743 349 1,673 307 Motor Vehicles 1,673 Motor Vehicles 5,136 Motor Vehicles Motor Vehicles Motor Vehicles Motor Vehicles 349 - As per entitlement Employee Shahzad Karimi 335 28 As per entitlement Employee Muhammad Akram 307 335 28 As per entitlement Employee Shahid Iqbal Khan 978 1,027 49 As per entitlement Employee Syed Jamal Baquar 1,673 335 335 - As per entitlement Employee Hakim Ali Laghari 1,673 307 335 28 As per entitlement Ex-Employee Akhter Hussain Khan 1,673 335 335 - As per entitlement Employee Rana Mujahid Ali 1,673 307 335 28 As per entitlement Employee Aamir Shabbir Motor Vehicles 1,673 335 335 - As per entitlement Employee Ashfaq Ahmed Qadir Motor Vehicles 1,658 - 166 166 As per entitlement Employee Umar Azim Daudpota Motor Vehicles 1,673 223 335 112 As per entitlement Employee Ahmar Qadeer Motor Vehicles 1,673 307 335 28 As per entitlement Employee Muhammad Zulﬁqar Ali Motor Vehicles 1,673 279 335 56 As per entitlement Employee Pir Baksh Motor Vehicles 1,743 335 335 - As per entitlement Employee Zahida Hamid Motor Vehicles 1,664 555 1,054 499 As per entitlement Ex-Employee Ansar Raza Goraha Motor Vehicles 1,658 83 332 249 As per entitlement Ex-Employee Arif Raza Abdy Motor Vehicles 1,708 370 370 - As per entitlement Employee Muhammad Naeem Ansari Motor Vehicles 5,106 - 511 511 As per entitlement Ex-Employee Tariq Jamali Motor Vehicles 1,673 390 390 - As per entitlement Ex-Employee Khadija Adnan Motor Vehicles 1,673 223 223 - As per entitlement Ex-Employee Tanvir Yaqub Motor Vehicles 1,538 308 527 219 As per entitlement Ex-Employee Haﬁz Muhammad Fayyaz Motor Vehicles 1,824 942 942 - As per entitlement Ex-Employee Abdul Aziz Nadeem Motor Vehicles 1,673 335 335 - As per entitlement Employee Noor Ul Islam 177,480 35,177 38,279 3,102 194,668 38,028 41,227 3,199 | National Bank of Pakistan Shakeel Ahmed
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Core Banking Application 13. INTANGIBLE ASSETS Computer software Total ------------------------- (Rupees in 000) ------------------------- At January 1, 2020 Cost Accumulated amortisation and Net book value 2,913,952 (2,913,952) 1,000,731 (625,781) 3,914,683 (3,539,733) - 374,950 374,950 - 374,950 374,950 - 94,788 45,756 (210,961) (720) 303,813 94,788 45,756 (210,961) (720) 303,813 1,140,555 (836,742) 4,054,507 (3,750,694) Year ended December 2020 Opening net book value Additions: - developed internally Adjustments - addition Amortisation charge Exchange rate adjustments Closing net book value At December 31, 2020 Cost Accumulated amortisation and Net book value Rate of amortisation (percentage) Useful life 2,913,952 (2,913,952) - 303,813 33.33 % on cost 33.33 % on cost 3 years 3 years 303,813 At January 1, 2019 Cost Accumulated amortisation and Net book value 2,913,952 (2,800,926) 414,907 (282,275) 3,328,859 (3,083,201) 113,026 132,632 245,658 113,026 132,632 245,658 406,947 406,947 (113,026) - (204,842) 178,877 (138,664) 374,950 (317,868) 178,877 (138,664) 374,950 2,913,952 (2,913,952) - 1,000,731 (625,781) 374,950 3,914,683 (3,539,733) 374,950 Year ended December 2019 Opening net book value Additions: - through acquisitions / purchased Amortisation charge Adjustments - additions Adjustments - depreciation Closing net book value - At December 31, 2019 Cost Accumulated amortisation and impairment Net book value Rate of amortisation (percentage) Useful life There is no such intangible asset having indefinite useful life. | National Bank of Pakistan 33.33 % on cost 33.33 % on cost 3 years 3 years
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------ (Rupees in '000) -----------14. RIGHT OF USE ASSETS The recognized right of use assets relate to the following types of assets: Balance as at January 01, Additions during the period Depreciation charged for the period 7,221,266 1,331,535 1,883,117 7,908,684 1,185,554 1,872,972 Balance as at December 31, 6,669,684 7,221,266 1 The right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. There were no onerous lease contracts that would have required an adjustment to the right of use assets at the date of initial application. 2020 2019 Note ------------ (Rupees in '000) -----------OTHER ASSETS 15. Income / return / mark-up accrued in local currency - net of provision Income / return / mark-up accrued in foreign currency - net of provision Advances, deposits, advance rent and other prepayments Advance taxation (payments less provisions) Income tax refunds receivable Compensation for delayed tax refunds Non-banking assets acquired in satisfaction of claims Assets acquired from Corporate and Industrial Restructuring Corporation (CIRC) Commission receivable on Government. treasury transactions Stationery and stamps on hand Barter trade balances Receivable on account of Government transactions Receivable from Government under VHS scheme Receivable against sale of shares Acceptances Others Less: Provision held against other assets Other assets (net of provision) Surplus on revaluation of non-banking assets acquired in satisfaction of claims Other assets - total 15.1 15.6 15.6 15.4 15.2 15.3 15.5 39,642,348 2,274,912 2,918,231 2,904,317 24,278,882 17,556,551 3,750,925 208,423 4,612,174 499,511 195,399 323,172 418,834 88,996 15,741,754 6,437,628 52,625,336 2,551,275 7,816,695 9,155,744 42,667,383 13,722,128 3,284,853 208,423 4,065,704 435,733 195,399 323,172 418,834 310,374 26,934,779 9,941,052 121,852,057 174,656,884 11,873,693 10,853,587 109,978,364 163,803,297 217,404 477,215 110,195,768 164,280,512 15.1 This includes Rs. 800 million (2019: Rs. 5,808 million) advance against Pre-IPO placement of Term Finance5.3% Certificates. 15.2 This represents amount receivable from GoP on account of encashment of various instruments handled by the Bank for GoP as an agent of the SBP. Due to uncertainty about its recoverability, full amount has been provided for. 15.3 This represents payments made under the Voluntary Handshake Scheme (VHS), recoverable from GoP. Due to uncertainty about its recoverability, full amount has been provided for. 2020 2019 ------------ (Rupees in '000) ------------ 15.4 Market value of Non-banking assets acquired in satisfaction of claims 3,968,329 5.7% 3,762,068 An independent valuation of the Bank’s non-banking assets were performed by an independent professional valuer to determine the fair value of the assets as at December 31, 2020. The valuation was carried out by an independent valuer Imtech (private) Limited, registered at SBP panel of valuers. The valuation conforms to International Valuation Standards. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------ (Rupees in '000) -----------15.4.1 Non-banking assets acquired in satisfaction of claims Opening balance Revaluation Depreciation Adjustment Transfer to operating fixed Assets Closing balance 15.5 3,762,068 217,404 (15,784) 4,641 3,968,329 3,594,660 477,215 (29,577) 38,043 (318,273) 3,762,068 152,607 837,949 96,542 195,399 323,172 418,834 4,092,280 770,398 208,423 4,778,089 11,873,693 152,607 837,949 96,542 195,399 323,172 418,834 2,555,322 1,734,591 770,398 208,423 3,560,350 10,853,587 10,853,587 10,853,587 1,517,709 (484,393) (13,210) 11,873,693 8,884,661 1,589,466 457,739 (78,279) 10,853,587 Provision held against other assets Income / mark-up accrued in local currency Advances, deposits, advance rent and other prepayments Stationery and stamps on hand Barter trade balances Receivable on account of Government transactions Receivable from Government under VHS scheme Protested bills Provision against FE-25 loans Ex-MBL / NDFC Assets acquired from corporate and industrial restructuring corporation asset (CIRC) Others 15.5.1 Movement in provision held against other assets Opening balance Charge for the year Transfer in / (out) Adjustment against provision Closing balance 15.6 16. During the year, the Bank has adjusted its advance tax liability and demand of previous tax year against income tax refunds receivables. 2020 2019 ------------ (Rupees in '000) -----------BILLS PAYABLE In Pakistan Outside Pakistan 17. 16,718,064 77,122 16,795,186 19,648,708 218,716 19,867,424 2,451,874 28,686,149 481,261 177,976 256,184 16,380,117 1,167,527 537,912 61,448 50,200,448 1,908,291 20,687,441 236,175 45,000 284,012 8,923,286 32,084,205 5,266,007 79,788,522 135,254,977 332,053,770 59,069,167 423,207,142 2,047,588 1,236,440 3,284,028 39,052,969 3,467,767 6,029,474 48,550,210 138,539,005 471,757,352 BORROWINGS Secured Borrowings from State Bank of Pakistan Under Export Refinance Scheme Under Export Refinance Scheme (New Scheme) Financing Scheme for Renewable Energy Refinance Facility for Modernization of SMEs Financing Facility for storage of Agriculture Produce (FFSAP) Under Long-Term Financing Facility (LTFF) Refinance Scheme for Payment of Wages and Salaries Temporary Economic Refinance Facility Refinance Facility for Combating Covid-19 Repurchase agreement borrowings Bai Muajjal Total secured Unsecured Call borrowings Overdrawn nostro accounts Bai Muajjal Total unsecured | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 17.1 2020 2019 ------------ (Rupees in '000) ------------ Particulars of borrowings with respect to currencies In local currency In foreign currencies 17.2 136,491,430 2,047,575 432,843,644 38,913,708 138,539,005 471,757,352 Mark-up / interest rates and other terms are as follows: - The Bank has entered into agreements with the SBP for extending export refinance to customers. As per the terms of the agreement, the Bank has granted SBP the right to recover the outstanding amount from the Bank at the date of maturity of finances by directly debiting the current account maintained by the Bank with the SBP. These borrowings carry mark-up 3% (2019: 3%). - Repurchase agreement borrowings carry mark-up ranging from 7% to 7.05% per annum (2019: 13.2% to 13.32% per annum) having maturity on January 8, 2021. - Call borrowings carry interest ranging from 0% to 2% per annum (2019: 1.75% to 4.0% per annum). 17.3 Borrowings from the SBP under export oriented projects refinance schemes of the SBP are secured by the Bank's cash and security balances held by the SBP. 17.4 Pakistan Investment Bond and Market Treasury Bill having maturity of 5 years and 6 months respectively, are pledged as security under borrowing having carrying amount of Rs. 5,266 million (2019: Rs. 332,054 million). 18. DEPOSITS AND OTHER ACCOUNTS In Local currency Customers Current deposits remunerative Current deposits non- remunerative Savings deposits Term deposits Others 2020 In Foreign currencies Total 2019 In Foreign currencies In Local currency Total ------------------------------------------------------------ (Rupees in '000) ------------------------------------------------------------- 405,738,851 - 405,738,851 320,884,110 - 320,884,110 433,284,063 637,694,450 276,454,916 4,683,735 115,191,412 66,126,336 81,153,488 316,040 548,475,475 703,820,786 357,608,404 4,999,775 387,100,580 533,399,568 285,062,513 4,970,352 138,036,876 52,363,840 75,428,176 3,924 525,137,456 585,763,408 360,490,689 4,974,276 1,757,856,015 262,787,276 2,020,643,291 1,531,417,123 265,832,816 1,797,249,939 360,581,882 4,253,051 12,613,687 7,109,902 1,634,466 3,246,855 8,883,345 - 362,216,348 7,499,906 21,497,032 7,109,902 357,600,795 4,405,416 21,888,152 6,549,217 1,225,295 2,911,091 5,932,636 286,740 358,826,090 7,316,507 27,820,788 6,835,957 384,558,522 13,764,666 398,323,188 390,443,580 10,355,762 400,799,342 2,142,414,537 276,551,942 2,418,966,479 1,921,860,703 276,188,578 2,198,049,281 Financial Institutions Current deposits Savings deposits Term deposits Others 18.1 Composition of deposits Individuals Government (Federal and Provincial) Public Sector Entities Banking companies Non-Banking Financial Institutions Private sector 2020 2019 ------------ (Rupees in '000) ------------ 847,611,816 674,985,259 257,331,543 368,855,014 29,468,173 240,714,674 700,462,343 602,779,800 237,284,226 380,226,047 20,573,295 256,723,570 2,418,966,479 2,198,049,281 - | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 18.2 Foreign currencies deposits includes deposit of foreign branches amounting to Rs. 73,145 million (2019: Rs. 85,488 million). 18.3 This includes deposits eligible to be covered under insurance arrangements amounting to Rs. 981,942 million (2019: Rs. 859,148 million) including islamic branches. 2020 2019 ------------ (Rupees in '000) -----------19. LEASE LIABILITY AGAINST RIGHT OF USE ASSETS Lease liabilities included in the statement of financial position As at December 31 7,533,691 7,640,188 Of which are: Current lease liability Non-current lease liability 1,367,840 6,165,851 1,237,717 6,402,471 7,533,691 7,640,188 2,315,989 5,869,956 5,839,515 1,948,040 6,610,167 6,652,960 14,025,460 15,211,167 Maturity analysis - contractual undiscounted cash flows Less than one year One to five years More than five years Total undiscounted lease liabilities as at December 31 20. DEFERRED TAX At January 01, 2020 Recognised in Recognised in other At December 31, profit and loss comprehensive 2020 account income ----------------------------------------- (Rupees in '000) ---------------------------------------- Deductible temporary differences on - Tax losses carried forward - Post retirement employee benefits - Provision for diminution in the value of investments - Provision against loans and advances - Provision against off-balance sheet obligations - Other provisions 10,705 3,852,716 236,751 2,625,495 115,222 105,416 6,946,305 6,459,106 6,459,106 268,139 10,705 4,120,855 - 236,751 9,084,601 - 115,222 105,416 268,139 13,673,550 Taxable temporary differences on - Surplus on revaluation of fixed assets - Surplus on revaluation of investments - Surplus on revaluation of non-banking assets - Other (1,689,317) (13,816,519) 459,830 - (30,874) (1,530,321) (1,260,361) (15,346,840) (41,439) (2,314,832) (17,862,107) 2,314,832 2,774,662 (3,274) (1,564,469) (44,713) (16,651,914) (10,915,802) 9,233,769 (1,296,330) (2,978,364) 0 | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 At January 01, 2019 Recognised in profit or loss account Recognised in Other comprehensive income At December 31, 2019 ----------------------------------------- (Rupees in '000) ---------------------------------------- Deductible Temporary Differences on - Tax losses carried forward - Post retirement employee benefits 10,705 - 2,767,522 - - Provision for diminution in the value of investments - Provision against loan and advances 236,751 - Provision against off-balance sheet obligations - Other provisions 115,222 105,416 622,390 3,858,006 1,085,194 - 10,705 3,852,716 - 236,751 - 2,625,495 - - 115,222 - - 105,416 2,003,105 2,003,105 1,085,194 6,946,305 Taxable Temporary Differences on - Surplus on revaluation of fixed assets (1,805,306) (30,199) (1,689,317) - Surplus on revaluation of investments (6,667,702) - (7,148,817) (13,816,519) - Surplus on revaluation of non-banking assets - Other (55,208) (2,314,832) - 13,769 - (41,439) (2,314,832) 146,188 (10,843,048) 146,188 (7,165,247) (17,862,107) (6,985,042) 2,149,293 (6,080,053) (10,915,802) Note 21. 2020 2019 ------------ (Rupees in '000) ------------ OTHER LIABILITIES Mark-up / Return / Interest payable in local currency Mark-up / Return / Interest payable in foreign currency Unearned commission and income on bills discounted Accrued expenses Advance payments Unclaimed dividends Unrealized loss on forward foreign exchange contracts Unrealized loss on put option Branch adjustment account Employee benefits: Pension fund Post retirement medical benefits Benevolent scheme Gratuity scheme Compensated absences Staff welfare fund Liabilities relating to Barter trade agreements Provision against off-balance sheet obligations Provision against contingencies Payable to brokers PIBs shortselling Acceptances Others | National Bank of Pakistan 21.1 37,808,884 844,452 1,574,563 18,183,815 362,466 185,516 2,918,017 306,339 917,487 57,027,903 439,959 3,045,278 19,000,508 397,099 186,668 4,358,883 306,339 926,311 15,704,077 22,282,747 2,054,218 2,711,914 9,251,755 371,257 2,142,033 627,494 4,180,071 65,137 3,237,676 15,741,754 14,683,842 14,785,647 18,333,947 1,749,006 2,206,599 8,344,182 371,257 5,539,436 627,494 4,629,645 38,667 256,284 26,934,779 14,039,099 156,155,514 183,544,990
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 21.1 Note Provision against contingencies Opening balance Charge during the year Transfer out Other movement Closing balance 21.1.1 2020 2019 ------------ (Rupees in '000) -----------4,629,645 381,090 (830,664) - 3,734,889 1,152,495 (457,739) 200,000 4,180,071 4,629,645 21.1.1 This represents provision made on account of regulatory violations and reported instances of financial improprieties for which investigations are in progress. 22. SHARE CAPITAL 22.1 Authorized capital 2019 2020 ------ (Number of shares) -----2,500,000,000 22.2 2,500,000,000 2020 2019 ------------ (Rupees in '000) -----------Ordinary shares of Rs. 10 each 25,000,000 25,000,000 Fully paid in cash Issued as bonus shares 1,403,880 19,871,251 1,403,880 19,871,251 21,275,131 21,275,131 Issued, subscribed and paid up 2019 2020 ------ (Number of shares) -----140,388,000 1,987,125,026 140,388,000 1,987,125,026 2,127,513,026 2,127,513,026 The Federal Government and the SBP held 75.60% (2019: 75.60%) shares of the Bank. 22.3 Shares of the Bank held by subsidiary and associate 2020 2019 ----------- (Number of shares) ----------- Following shares were held by the associate of the Bank as of year end: First Credit & Investment Bank Limited NBP Stock Funds 23. RESERVES 23.1 Exchange translation reserve 70,000 70,000 - 330,000 70,000 400,000 This comprises all foreign currency differences arising from the translation of the financial statements of foreign operations. 23.2 Statutory reserve Every bank incorporated in Pakistan is required to transfer 20% of their profits to a statutory reserve until the reserve equals share capital, thereafter 10% of the profits of the Bank are to be transferred to this reserve. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 23.3 Merger reserve As per the Scheme of Amalgamation, all the assets, liabilities and obligations of NBP Leasing Limited were merged with, transferred to, vested in and assumed by the Bank as at the Effective Date July 31, 2017. The reserve represents the excess of net assets transferred to the Bank over its investment in NBP Leasing Limited. 23.4 General loan loss reserve The Bank is cognizant of the fact that a part of its credit or loan portfolio (funded and non-funded) which is not currently impaired as per the applicable Prudential Regulations is underperforming and therefore the potential for risk of credit losses on this part of portfolio is higher than the usual risk. Therefore, as a matter of abundant caution and in order to protect the equity base of the Bank from future contingencies in respect of the credit portfolio, the Board of Directors in their meeting held on April 29, 2015 decided to transfer an aggregate amount of Rs. 12 billion from the unappropriated profits to a "General loan loss reserve". This appropriation was made on the basis of the management's best estimates and judgement regarding the inherent portfolio risks. Subsequently, Board of directors in their meeting held on 11 & 12 July, 2019 decided to transfer Rs. 4 billion from general loss reserve to unappropriated profit based on revised estimates. Note 24. 24.1 2020 2019 ------------ (Rupees in '000) ------------ SURPLUS ON REVALUATION OF ASSETS Surplus on revaluation of: - Available for sale securities - Fixed assets - Non-banking assets accquired in satisfaction of claims 10.1 24.1 24.2 Deferred tax on surplus on revaluation of: - Available for sale securities - Fixed assets - Non-banking assets accquired in satisfaction of claims 24.1 24.2 43,848,111 44,882,399 2,757,207 91,487,717 39,475,771 44,576,547 2,539,695 86,592,013 (15,346,840) (2,396,819) (44,713) (17,788,373) (13,816,519) (2,489,995) (41,439) (16,347,953) 73,699,344 70,244,060 44,576,547 660,281 44,292,018 653,070 Surplus on revaluation of fixed assets Surplus on revaluation of fixed assets as at January 1 Recognised during the year Transferred to unappropriated profit in respect of incremental depreciation charged during the year - net of deferred tax Related deferred tax liability on incremental depreciation charged during the year Surplus on revaluation of fixed assets as at December 31 (230,379) (239,552) (124,050) 44,882,399 (128,989) 44,576,547 (2,489,995) (30,874) 124,050 (2,396,819) (2,588,785) (30,199) 128,989 (2,489,995) 42,485,580 (2) 42,086,552 Less: related deferred tax liability on: - revaluation as at January 1 - revaluation recognised during the year - incremental depreciation charged during the year | National Bank of Pakistan
1 .00 Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020 Note 24.2 Surplus on revaluation of non-banking assets accquired in satisfaction of claims Surplus on revaluation as at January 1 Recognised during the year 2,539,695 217,512 2,062,480 477,215 Surplus on revaluation as at December 31 2,757,207 2,539,695 Less: related deferred tax liability on: - revaluation as at January 1 - revaluation recognised during the year 25. 25.1 25.2 25.3 (55,208) 13,769 (44,713) (41,439) 2,712,494 2,498,256 206,831,672 1,433,601,765 34,820,672 161,579,745 1,761,652,119 30,664,297 1,675,254,109 1,953,896,161 137,366,954 69,464,718 101,841,274 59,738,471 206,831,672 161,579,745 986,016,071 937,616,635 419,327,735 27,625,340 801,290,548 22,164,581 632,619 566,855 Guarantees Financial guarantees Performance guarantees 25.2 (41,439) (3,274) CONTINGENCIES AND COMMITMENTS Guarantees Commitments Other contingent liabilities 25.1 2020 2019 ------------ (Rupees in '000) ------------ Commitments Documentary credits and short-term trade-related transactions - letters of credit Commitments in respect of: - forward foreign exchange contracts - forward government securities transactions 25.2.1 25.2.2 Commitments for acquisition of: - operating fixed assets Other commitments 25.2.3 - 13,500 1,433,601,765 1,761,652,119 272,245,550 147,082,185 478,842,756 322,447,792 419,327,735 801,290,548 25.2.1 Commitments in respect of forward foreign exchange contracts Purchase Sale | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Commitments for outstanding forward foreign exchange contracts are disclosed in these unconsolidated financial statements at contracted rates. Commitments denominated in foreign currencies are expressed in rupee terms at the rates of exchange prevailing at the statement of financial position date. 2020 2019 ------------ (Rupees in '000) ------------ 25.2.2 Commitments in respect of forward government securities transactions Purchase Sale 496,331 27,129,009 256,814 21,907,767 27,625,340 22,164,581 Commitments for outstanding forward government securities transactions are disclosed in these unconsolidated financial statements at contracted rates. 2020 2019 ------------ (Rupees in '000) ------------ 25.2.3 Professional services to be received 25.3 - 13,500 Other contingent liabilities 25.3.1 Claim against the Bank not acknowledged as debt 34,820,672 30,664,297 Claims against the Bank not acknowledged as debts includes claims relating to former Mehran Bank Limited amounting to Rs.1,597 million (2019: Rs. 1,597 million). 25.3.2 Taxation Tax returns of the Bank have been filed up to tax year 2020 and amended by tax authorities up to tax year 2018. Tax year 2019 has been selected for tax audit under section 177 of the Income Tax Ordinance, 2001 in July 2020 which is on-going. For Azad Kashmir and Gilgit Baltistan branches no amendment to returns filed under section 120 of the Ordinance has been made, hence returns filed are deemed assessments for all the years till tax year 2020. a) During the year the Taxation Officer issued show-cause notices under section 221 of the Income Tax Ordinance, 2001 to the Bank to withdraw compensation on delayed refunds already given to the Bank, and questioned issuance of refund orders already issued to the Bank in the past several years which had become past and closed transactions and thus legally fall outside the scope of rectification. The amount involved is Rs. 14.8 billion and Rs. 21.25 billion respectively. These notices being totally illegal were challenged by the Bank before the Honourable Sindh High Court (SHC) which instructed the taxation officer not to take adverse action. The Honourable SHC has stayed the recovery of tax demands. The Bank as a matter of abundant caution, have also filed appeal befor CIR(A), the hearing may take place after the Honourable SHC decides the outcome of petitions filed in favor of the Bank. b) Sindh High Court had quashed the show-cause notices issued in previous round in 2013 for passing orders for tax years 2006 and 2007 under section 161 of the Ordinance on the grounds that these were time-barred in terms of section 174(3) of the Ordinance. Supreme Court on Department’s appeal has subsequently allowed taxation officer to initiate proceedings through fresh notices, subject to certain directions. Orders are recently passed by taxation officer for tax years 2006 and 2007 on June 30, 2020, treating the Bank as taxpayer-in-default and raising tax demands of Rs. 1,032 million and Rs. 1,395 million respectively. Bank has filed appeals before CIR(A) primarily on the grounds that Supreme Court’s instructions have been blatantly ignored as cogent reasons for late proceedings were not given and neither amount of tax default nor names of parties were disclosed in the show-cause notices or the orders. The orders are also assailed for being passed in quite arbitrary manner and various legal and factual mistakes are made therein. c) The Additional Commissioner, PRA has passed an order creating the Punjab sales tax liability on the non-withholding of Punjab Sales Tax on the insurance services received by the Bank for the tax periods January 2016-December 2016 and January 2017-December 2017 amounting to Rs. 254.734 million and Rs. 281.774 million respectively. The rectification application has been submitted under section 79 of the Punjab Sales Tax on Services Act, 2012 for the apparent mistake of | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 facts. After the rectification, the net principal exposure would be Rs. 56.621 million and Rs. 50.685 million. Based on the legal and factual position, the Tax Advisor is confident that the ultimate outcome of the proceeding will be decided in the Bank’s favor. d) The other matters under tax contingencies include interest credited to suspense account, allocation of common expenditure between taxable income and exempt / low tax rate income, reversal of bad debts expense, reversal of provisions of nonperforming loans, provisions for diminution in value of investment. Surplus on revaluation of Available for Sale Securities disclosed in the Statement of Comprehensive Income has been taxed in respect of tax year 2013. Miscellaneous Application before CIR(A) as well as appeal before Appellate Tribunal have been filed by Bank. The aggregate effect of these contingencies as on December 31, 2020, including amount of Rs. 645.97 million (December 31, 2019: Rs. 183.455 million) in respect of indirect tax issues, amounts to Rs. 21.163 billion (December 31, 2019: Rs. 18.166 billion). No provision has been made against these contingencies, based on the opinion of tax consultants of the Bank, who expect favorable outcome upon decisions of pending appeals. 25.3.3 Contingencies in respect of employees benefits and related matters The following are the details of the contingencies arising out of the various legal cases pending adjudication in respect of employees’ benefits and related matters. The Bank considers that except for Pensionary benefits note 25.3.3.1, the financial impact of other matters is impracticable to determine with sufficient reliability. 25.3.3.1 Pensionary benefits to retired employees In 1977 the Federal Govt. vide letter No. 17 (9) 17 XI / 77 dated November 30, 1977, addressed to the Pakistan Banking Council, directed that all executives / officers of all the nationalized banks would be paid pension as calculated @ 70% of average emoluments upon completion of 30 years of qualifying service of employees and where qualifying service was less than 30 years but not less than 10 years, proportionate reduction in percentage was to be made. This pension scheme was made applicable with effect from May 01, 1977. In the year 1997, the Banks Nationalization Act, 1974 (“BNA, 1974”) was substantially amended whereby the Pakistan Banking Council was abolished and the Board of Directors of the nationalized banks were empowered / mandated respectively to determine personnel policies with the President of the Bank deciding the remuneration and benefits of the employees in accordance with policies determined by the Board. In the year 1999, by virtue of the said amendments in BNA, the Board of Directors of the Bank approved the Revised Pay Structure for the officers / executives of the Bank with effect from January 01, 1999 vide Circular No.37/1999, whereby the basic salary was increased by 110 % to 140% and besides giving multifarious benefits to its employees, formula for monthly gross pension was revised. However, the amount of gross pension on the basis of existing Basic Pay and existing formula was protected. A number of Bank's employees, after attaining the age of superannuation filed Writ Petitions before the Lahore High Court and the Peshawar High Court, praying for re-calculation of their pensionary benefits and increases in accordance with the Bank circular No. 228 (C) dated December 26, 1977 and furthermore, for allowing the increases in their pension as per the increases allowed by the Federal Government to its employees. This litigation started in the year 2010 and 2011. The Peshawar High Court, in terms of judgment dated June 03, 2014, dismissed the petition while observing that the petition was hit by laches and that the Petitioners could not claim the benefits granted to the similarly placed employees of other institutions who were governed through different Statutes and Service Rules. The Lahore High Court, Lahore, vide its judgement dated January 15, 2016, allowed the Writ Petitions on the same matter and the Bank was directed to release the pensionary benefits of the Petitioners. The said order was assailed by the Bank by filing Intra Court Appeals in January 2016 which were dismissed by the Lahore High Court, Lahore, through its judgement dated January 16, 2017. The Bank assailed the said judgement by filing appeals in the Supreme Court of Pakistan. The Honorable Supreme Court of Pakistan after hearing the arguments of both Parties, vide its judgement dated September 25, 2017 upheld the decision of the Division Bench of the Lahore High Court on the contention of increase in Bank’s employees’ pension, thereby instructing the Bank to give pension benefits to its employees in the light of Head Office Instruction Circular No. 228 (c) of 1977. Under this Circular, the pension of employees was to be calculated @ 70% of average emoluments upon completion of minimum qualifying service requirement, besides requiring the Bank to follow subsequent revisions in pension scheme and rates granted by the Federal Government to civil servants from time to time as well. The Bank as well as Federal Government filed Review petitions against the aforesaid judgment of the Honorable Supreme Court of Pakistan and also made an application for constitution of larger bench of the Supreme Court to hear the Review petition, which was reportedly accepted by the Chief Justice. However on March 18, 2019, the matter came up for hearing before a three member Bench instead of a larger bench. As advised by our legal counsels, the Bank considers that due to conflicting decision of the other bench of the Supreme Court in a case which, in all material facts and circumstances, is identical to the Bank’s case and various other legal infirmities in the judgement as highlighted by the Bank in its Review Petition, the Bank has a reasonably strong case on | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 legal grounds to convince the Supreme Court for review of its decision. The Review Petition is ongoing and is expected to be listed for hearing soon. In case this matter is decided unfavorably, the Bank estimates based on the actuarial advice that the financial impact arising from the additional liability would be approximately Rs. 68.2 billion excluding any penal interest / profit payment (if any) due to delayed payment. Pension expense for the current year and onward will also increase by Rs.6.8 billion due to this decision. Based on the opinion of legal counsel. No provision has been made in these unconsolidated financial statements for the above-mentioned amount as the Bank is confident about the favorable outcome of the matter. 25.3.3.2 Regularizing the temporary hires / workers deployed by service provider companies under outsourcing arrangements The Bank outsourced certain noncore jobs to various service provider companies after entering into contracts with them. The resources deployed by the service provider companies were their employees and the said companies have had sole administrative control over these resources. Some of these resources filed writ petitions before the High Courts and NIRC seeking to be absorbed by the Bank in its regular service based on grounds that they were in fact employees of the Bank. Presently, there are 6 cases on appeal pending at the Supreme Court where these have been clubbed to be heard as one. The Chief Justice of Pakistan has constituted a larger bench comprising of five Judges being headed by himself for adjudication. The case is ongoing and is presently adjourned for a date to be fixed. A favorable outcome of this case is expected. 25.3.3.3 Litigation related to management trainee program Treatment of Non-MTOs (regular employees) at Par with the MTOs (also appointed in regular cadres) - Litigation arising out of order dated September 21,2016 passed by the Supreme Court in our CA No.1644/2013 out of our CPLA No. 805/2013 filed against order dated March 13, 2013 of the Division Bench of Sindh High Court, Sukkar in CP No. D-417/2010. Mr. Ashfaq Ali and three (3) others filed a CP No. D-417/2010 before the Sindh High Court, Bench at Sukkur while praying to treat them equally in respect of remunerations with other employees (MTOs) having same grade, nature of job and qualification. The Honorable Division Bench at Sukkur, vide order dated March 13, 2013, directed the Bank to ensure equal treatment to the petitioners with similarly placed employees without any discrimination. The aforementioned order of the Sindh High Court was assailed by the Bank before the Apex Court through CP No. 805/2013. The Civil Appeal was dismissed vide order September 21, 2016 in terms of which the Order of the Sindh High Court was upheld to pay arrears. Review Petition filed by the Bank was also dismissed vide order dated April 14, 2017. Moreover, a number of Bank employees, after their representations were declined by the Bank, filed Writ Petitions before Various Benches of the Sindh High Court, Lahore High Court and Islamabad High Court. The Petitions filed before the Sindh High Court were disposed off with directions to the Bank to constitute a Committee for examining the cases of not only the Petitioners but all employees of the NBP with regard to their entitlement of the benefits as available to the similarly placed staff members keeping in view the judgement given by the honorable Supreme Court of Pakistan in Civil appeal number 1644/2013 dated September 21, 2016. Subsequently, the Karachi Bench of Sindh High Court modified their earlier judgment and restricted the same to the extent of Petitioners only. The Bank formed a Committee and cases of the petitioners / employees, claiming to be similarly placed with the MTOs, were reviewed by the Bank on the touch stone of intelligible differentia. One of those Writ Petitions filed by Mr. Muhammad Naeem in the year 2013 was allowed by the Peshawar High Court, Peshawar, vide order dated May 30, 2018, in the light of the aforesaid judgment of the Supreme Court. The Bank assailed the said order before the Apex court however the same was dismissed vide order dated October 2, 2019 which has now attained finality. During the year, the Bank has entered an out of court settlements which has successfully been executed with many Non-MTO employees ('petitioners‘) and accordingly compromise agreements ('the agreement‘), offering waiver of loans, increase in basic salaries and provision of other allowances, were signed with those petitioners who have withdrawn their cases against the Bank. Further, the Bank has carried out an assessment to ascertain the financial implications of the case with respect to non-petitioners and accordingly, they were also encouraged to enter into a similar agreement with Bank. The management is in the process of negotiation and is confident to undertake the agreement with remaining petitioners and non-petitioners. Furthermore, with respect to ongoing litigation, the management has reflected any potential impact it may have in an appropriate manner in these unconsolidated financial statements 25.4 Compliance and risk matters relating to anti-money laundering The Bank and its New York Branch have entered into a Written Agreement with the Federal Reserve Bank of New York and New York State Department of Financial Services (US regulators) in 2016 which inter-alia requires the Bank to address certain compliance and risk management matters relating to anti-money laundering and the US bank secrecy law requirements and the implementation of the requisite systems and controls and allocation of adequate resources to ensure full compliance with such requirements. Management continues to address the matters highlighted in the Written Agreement and in the subsequent inspections and gets them independently validated. The Bank has made considerable progress and seeks to comply with all possible laws and regulations. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Note 26. MARK-UP / RETURN / INTEREST EARNED Loans and advances Investments On securities purchased under resale agreements Balances with other banks 27. 99,780,695 154,040,914 2,373,880 1,615,526 109,645,808 122,337,007 5,366,881 2,127,620 257,811,015 239,477,316 103,380,273 6,929,625 9,175,328 754,180 33,416,502 110,075,180 6,981,845 9,157,133 719,136 40,636,745 153,655,908 167,570,039 1,234,426 773,004 1,054,031 181,504 670,458 2,723,962 477,271 14,149 1,038,763 278,406 9,652,545 155,028 1,450,895 810,367 657,077 237,625 616,320 3,359,376 440,867 22,656 912,379 392,746 9,958,006 266,232 18,253,547 19,124,546 MARK-UP / RETURN / INTEREST EXPENSED Deposits Borrowings Cost of foreign currency swaps against foreign currency deposits / borrowings Finance charge on lease liability against right of use assets Securities sold under repurchase agreements 28. 2020 2019 ------------ (Rupees in '000) ------------ FEE AND COMMISSION INCOME Branch banking customer fees Consumer finance related fees Card related fees Credit related fees Investment banking fees Commission on trade Commission on guarantees Commission on cash management Commission on remittances including home remittances Commission on bancassurance Commission on government transactions Others 1.4% 29. GAIN / (LOSS) ON SECURITIES - NET Realised Unrealised - held for trading 29.1 29.1 10.1 2,122,608 (10,996) 7,885,503 2,111,612 5,346,600 1,868,517 8 668,304 557,418 1,536,727 28,463 - 7,883,429 2,122,608 36,919 10,775 48,071 3,834,424 33,105 49,969 29,569 44,202 5,639,569 4,491 3,963,294 5,767,800 Realised gain on Federal Government securities Shares Ijarah sukuks Foreign securities 30. 7,883,429 2,074 OTHER INCOME Rent on property Gain on sale of fixed assets - net Postal, SWIFT and other charges recovered Compensation for delayed tax refunds Others | National Bank of Pakistan 30.1
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 30.1 This represents compensation of delayed refunds determined under Section 171 of Income Tax Ordinance 2001. Note 31. 2020 2019 ------------ (Rupees in '000) ------------ OPERATING EXPENSES Total compensation expenses 31.1 40,749,696 45,284,522 411,294 34,734 1,345,619 2,726,215 1,134,368 466,348 15,784 85,593 1,883,117 8,103,072 911,933 34,124 1,192,225 2,530,919 1,055,179 460,382 29,577 161,131 1,872,972 8,248,442 1,366,196 19,802 247,410 210,961 559,235 2,403,604 1,066,582 15,419 283,627 317,868 522,070 2,205,566 36,160 9,290 2,315,145 829,229 653,230 189,866 1,652,352 62,039 213,403 322,654 1,128,834 317,000 85,447 198,063 30,852 252,132 342,554 121,092 369,473 149,421 1,388,248 508,258 365,509 11,540,251 38,613 9,163 851,077 794,629 1,050,731 153,825 1,563,863 112,538 199,800 303,023 1,009,799 299,864 26,868 197,756 25,947 276,128 436,517 110,284 415,779 145,957 1,244,433 387,878 312,027 9,966,499 62,796,623 65,705,029 Property expenses Rent and taxes Insurance Utilities cost Security (including guards) Repair and maintenance (including janitorial charges) Depreciation Depreciation on non banking assets Depreciation on Ijarah assets Depreciation on ROUA 31.2 Information technology expenses Software maintenance Hardware maintenance Depreciation Amortisation Network charges Other operating expenses Directors' fees and allowances Fees and allowances to Shariah Board Legal and professional charges Outsourced services costs Travelling and conveyance NIFT clearing charges Depreciation Training and development Postage and courier charges Communication Stationery and printing Marketing, advertisement and publicity Contributions for other corporate and social responsibility Auditors' remuneration Financial charges on leased assets Entertainment Clearing charges, verification and licence fee Brokerage Insurance general Vehicle expenses Deposit premium expense Repairs and maintenance general Others | National Bank of Pakistan 31.3 31.4 31.5
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------ (Rupees in '000) -----------31.1 Total compensation expense Managerial Remuneration i) Fixed ii) Variable of which; a) Cash bonus / awards etc. Charge for defined benefit plan Rent & house maintenance Utilities Medical Conveyance Club Membership & Subscription Education Allowance Insurance Honorarium to Staff and Staff Welfare Overtime Special Duty Allowance Washing Allowance Key Allowance Unattractive Area Allowance Leave Encashment Teaching Allowance Incentive on CASA deposits mobilization Meal Allowance Liveries Hill, Late Sitting & Saturday allowance etc. Grand Total 13,157,852 17,727,960 4,413,504 7,392,388 4,591,965 1,712,734 3,141,830 3,192,648 80,796 1,463,449 440,776 206,662 25,196 477 15,971 72,208 57,929 9,246 9,199 6,790 126,585 1,086 630,405 4,187,847 7,495,742 4,471,577 1,661,707 3,101,904 3,289,910 42,519 1,570,297 292,665 262,111 53,628 1,143 16,707 78,886 48,282 80,128 7,962 26,063 126,561 490 740,433 40,749,696 45,284,522 40,749,696 45,284,522 - 31.2 This includes Rs. 3.550 million (2019: Rs. 3.201 million) insurance premium against directors' liability insurance. 31.3 Total cost for the year included in other operating expenses relating to outsourced activities is Rs. 829 million (2019: Rs. 795 million). Out of this cost, Rs. 821 million (2019: Rs. 787 million) pertains to the payment to companies incorporated in Pakistan and Rs. 8 million (2019: Rs. 8 million) pertains to payment to companies incorporated outside Pakistan. Total Cost of outsourced activities for the year given to related parties is Rs Nil (Prior Year: Rs Nil). Outsourcing shall have the same meaning as specified in Annexure-I of BPRD Circular No. 06 of 2017. The material outsourcing arrangements along with their nature of services are as follows: Name of Company ICON Consultant (Private) Limited Nature of Services IT support Services, sales services, collection, reconciliation and engineering services etc. HTECH Solutions (Private) Limited Call center management Virtual World (Private) Limited Call center management | National Bank of Pakistan 2020 2019 -------------- (Rupees in '000) -------------270,438 265,011 97,407 5,497 60,994 373,342 326,005
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 31.4 Contributions for Corporate & Social Responsibilities include following amounts exceeding Rs. 500,000: 2020 2019 ------------ (Rupees in '000) -----------Description Karachi Relief Trust (KRT) Rural Community Development Program National Rural Support Program SAFCO Support Program Thardeep Mirco Finance Foundation Agha Khan Rural Support Program Namal College-Mianwali DHQ Hospital Gawadar Syed Abad Botanical Garden University of Chitral Earthquake Effectees of Mirpur AJ&K. Aman Foundation 20,000 20,000 25,000 5,000 5,000 5,000 5,200 - 5,198 3,750 525 7,500 2,000 Total 85,200 18,973 31.4.1 None of the Directors, Sponsor shareholders and Key Management Personnel or their spouse have an interest in the Donee. Yousuf Adil Grant Thornton Anjum Rahman Total 2020 Total 2019 --------------------------------------- (Rupees in '000) --------------------------------------31.5 Auditors' remuneration Audit fee Review of interim financial statements Fee for audit of domestic branches Fee for other statutory certifications Special certifications and sundry advisory services Tax services Sales Tax Out-of-pocket expenses Fee for audit of overseas branches including advisory services and out-of-pocket expenses 6,226 2,178 5,060 1,136 1,168 4,500 20,268 6,226 2,178 5,060 2,500 1,968 20,000 3,035 4,500 45,467 20,268 45,467 Note 32. 12,452 4,356 10,120 3,500 8,472 20,000 4,712 9,000 72,612 132,328 125,144 198,063 (0) 197,756 2020 2019 ------------ (Rupees in '000) ------------ OTHER CHARGES Penalties imposed by State Bank of Pakistan Penalties imposed by other regulatory bodies (Central bank of international branches) 33. 12,452 4,356 10,120 2,500 3,104 20,000 4,203 9,000 65,735 310,588 4,719 141,015 7,076 315,307 148,091 PROVISIONS AND WRITE OFFS - NET Provisions for diminution in value of investments Provisions against loans and advances Provision against other assets and other liabilities | National Bank of Pakistan 10.3 11.4 (126,387) 29,320,023 1,702,302 3,041,682 8,424,453 2,784,140 30,895,938 14,250,275
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Note 34. 2020 2019 ------------ (Rupees in '000) ------------ TAXATION Current Prior years Deferred 24,898,997 (9,233,769) 13,286,008 1,056,841 (2,149,293) 15,665,228 12,193,556 Accounting profit before tax 46,224,147 28,003,367 Income tax at statutory rate @ 35% (2019: 35%) Super tax at statutory rate @ 4% (2019: 4%) Inadmissible items Prior year tax effects Impact of tax order Others 16,178,451 1,848,966 122,970 (2,314,832) (170,327) 9,804,386 1,120,501 57,755 1,056,841 154,073 Tax charge for current and prior years 15,665,228 12,193,556 34.1 Current taxation includes Rs. Nil (2019: Rs. 319 million) of overseas branches. 34.2 Relationship between tax expense and accounting profit 34.1 - - 2020 35. BASIC EARNINGS PER SHARE Profit for the year (Rupees in 000's) Weighted average number of ordinary shares (Number in 000's) Basic earnings per share (Rupees) 36. 30,558,919 15,809,811 2,127,513 2,127,513 14.36 7.43 30,558,919 15,809,811 2,127,513 2,127,513 14.36 7.43 DILUTED EARNINGS PER SHARE Profit for the year (Rupees in 000's) Weighted average number of ordinary shares (adjusted for the effects of all dilutive potential ordinary shares) (Number in 000's) Diluted earnings per share (Rupees) Note 37. 2019 2020 2019 ------------ (Rupees in '000) ------------ CASH AND CASH EQUIVALENTS Cash and balances with treasury banks Balances with other banks Call / clean money lendings Call borrowings Overdrawn nostro accounts | National Bank of Pakistan 7 8 9 17 17 249,259,590 14,227,355 2,040,800 (2,047,588) (1,236,440) 292,513,379 13,220,807 540,800 (39,052,969) (3,467,767) 262,243,717 263,754,250
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 37.1 Reconciliation of movements of liabilities to cash flows arising from financing activities 2020 Lease Unclaimed Obligation Dividend -------------- (Rupees in '000) -------------Balance as at January 1, 2020 Changes from financing cashflows Payment of lease obligation / dividend Total charges from financing activities Other charges Renewed lease during the period Interest unwinding Foreign exchange loss Total other charges Balance as at December 31, 2020 7,640,188 186,668 (2,040,384) (2,040,384) (1,152) (1,152) 1,237,488 754,180 (57,781) 1,933,887 - 7,533,691 185,516 2019 Lease Unclaimed Obligation Dividend -------------- (Rupees in '000) -------------Balance as at January 1, 2019 Changes from financing cashflows Payment of lease obligation / dividend Total charges from financing activities Other charges Renewed lease during the period Interest unwinding Foreign exchange gain Total other charges Balance as at December 31, 2019 38. STAFF STRENGTH 7,656,551 188,868 (2,044,189) (2,044,189) (2,200) (2,200) 1,183,911 719,136 124,779 2,027,826 - 7,640,188 186,668 2020 2019 -------------------- (Numbers) -------------------- Permanent On Bank contract 10,751 4,358 11,096 4,092 Bank's own staff strength at the end of the year 15,109 15,188 38.1 In addition to the above, 1,838 (2019: 2,102) employees of outsourcing services companies were assigned to the Bank as at the end of the year to perform services other than guarding and janitorial services. Further, 1,825 employees are working domestically (2019: 2,096) and abroad 13 (2019: 6) respectively. 39. DEFINED BENEFIT PLAN 39.1 General description General description of the type of defined benefit plan and accounting policy for remeasurements of the net defined liability / asset is disclosed in note 5.13 to the unconsolidated financial statements. 39.2 Number of employees under the scheme The number of employees covered under the following defined benefit schemes are: 2019 2020 -------------------- (Numbers) -------------------Pension fund Gratuity scheme Benevolent scheme | National Bank of Pakistan 10,751 3,985 10,751 11,430 3,776 11,430
| National Bank of Pakistan 39.7.2 Cost recognised in profit and loss 39.7.1 Loss / (gain) on obligation - Experience adjustment Total re-measurements recognised in OCI Re-measurements recognised in OCI during the year Current service cost Actuarial loss recognized - Profit and Loss Net interest on defined benefit asset / liability Charge for defined benefit plans Benefits paid by the Bank Opening balance Charge / (reversal) for the year Adjustment against contigency Reserve Contribution by the bank - net Re-measurement loss / (gain) recognized in OCI during the year Movement in (receivable) / payable under defind benefits scheme Fair value at the beginning of the year Interest income on plan assets Contribution by the Bank - net Benefits paid Benefits paid on behalf of fund Actuarial gain / (loss) on Assets Fair value at the end of the year Movement in fair value of plan assets Obligations at the beginning of the year Current service cost Adjustment against contigency Reserve Interest cost Benefits paid by the Bank Re-measurement loss / (gain) - Profit and loss Re-measurement loss / (gain) - OCI Obligations at the end of the year Movement in defined benefit obligations Present value of obligations Fair value of plan assets Payable 2020 Gratuity fund Compensated absences Total Pension fund 2019 Post retirement medical schemeBenevolent scheme Gratuity fund 9.75% 9.75% 9.75% 14.00% 9.75% Compensated absences Total 11.25% 11.25% 11.25% 6.75% 11.25% 2019 2020 ------------------ (Per annum) ------------------ 22,282,747 - 15,704,077 - (1,605,674) (1,605,674) 2,084,667 2,084,667 554,295 1,996,008 2,550,303 2,084,667 (1,183,316) (1,605,674) (1,783,479) 1,517,934 1,598,807 3,116,741 18,333,947 2,550,303 497,146 - - 18,333,947 554,295 497,146 1,996,008 (1,183,316) 2,084,667 22,282,747 22,282,747 22,282,747 - 14,785,647 3,116,741 2,338,905 (1,148,063) 51,687,819 5,686,646 1,148,063 (3,427,771) 1,783,479 159,817 57,038,053 66,473,466 1,517,934 2,338,905 7,285,453 (3,427,771) (1,445,857) 72,742,130 72,742,130 (57,038,053) 15,704,077 - 270,965 270,965 61,059 183,757 244,816 2,054,218 - 270,965 (231,219) 1,749,006 244,816 20,650 - - 1,749,006 61,059 20,650 183,757 (231,219) 270,965 2,054,218 2,054,218 2,054,218 - 16,153 16,153 311,438 244,487 555,925 2,711,914 - 16,153 (66,763) 2,206,599 555,925 - - 2,206,599 311,438 244,487 (66,763) 16,153 2,711,914 2,711,914 2,711,914 - 133,178 (128,385) 919,810 924,603 9,251,755 - (336,194) 8,344,182 924,603 319,164 - - 8,344,182 133,178 319,164 919,810 (336,194) (128,385) 9,251,755 9,251,755 9,251,755 - 766,111 766,111 - 2,577,904 (128,385) 4,942,869 7,392,388 - 52,004,711 766,111 (3,600,971) 45,419,381 7,392,388 3,175,865 (1,148,063) 51,687,819 5,686,646 1,148,063 (3,427,771) 1,783,479 159,817 57,038,053 97,107,200 2,577,904 3,175,865 10,629,515 (5,245,263) (128,385) 925,928 109,042,764 109,042,764 (57,038,053) 52,004,711 1,521,023 1,521,023 1,391,114 1,391,114 524,008 1,975,232 2,499,240 18,333,947 14,785,647 1,422,746 1,649,189 3,071,935 1,391,114 (927,632) 15,371,225 2,499,240 - - 15,371,225 524,008 1,975,232 (927,632) 1,391,114 18,333,947 18,333,947 18,333,947 1,521,023 (1,631,059) 13,069,665 3,071,935 (1,245,917) 48,015,260 6,220,036 1,245,917 (3,389,098) 1,631,059 (2,035,355) 51,687,819 61,084,925 1,422,746 7,869,225 (3,389,098) (514,332) 66,473,466 66,473,466 (51,687,819) 14,785,647 147,644 147,644 51,215 196,021 247,236 1,749,006 147,644 (250,563) 1,604,689 247,236 - - 1,604,689 51,215 196,021 (250,563) 147,644 1,749,006 1,749,006 1,749,006 40,772 40,772 252,641 226,381 479,022 2,206,599 40,772 (43,460) 1,730,265 479,022 - - 1,730,265 252,641 226,381 (43,460) 40,772 2,206,599 2,206,599 2,206,599 - 181,761 43,515 973,033 1,198,309 8,344,182 (395,546) 7,541,419 1,198,309 - - 7,541,419 181,761 973,033 (395,546) 43,515 8,344,182 8,344,182 8,344,182 3,100,553 3,100,553 2,432,371 43,515 5,019,856 7,495,742 39,317,263 7,495,742 (1,245,917) 3,100,553 (3,248,260) 45,419,381 48,015,260 6,220,036 1,245,917 (3,389,098) 1,631,059 (2,035,355) 51,687,819 87,332,523 2,432,371 11,239,892 (5,006,299) 43,515 1,065,198 97,107,200 97,107,200 (51,687,819) 45,419,381 --------------------------------------------------------------------------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------------------------------------------------------------------------- Post retirement Benevolent Pension fund medical scheme scheme Reconciliation of (receivable from) / payable to defined benefit plans Discount rate Expected rate of return on plan assets Expected rate of salary increase Expected rate of increase in pension Expected rate of increase in medical benefit The actuarial valuations were carried out as at December 31, 2020 using the following significant assumptions: Principal actuarial assumptions 39.7 39.6 39.5 39.4 39.3 Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 . 2020 2019 ------------ (Rupees in '000) -----------Components of plan assets 39.8 Pakistan investment bonds Treasury bills Term finance certificates Mutual funds / shares Shares Defence saving certificates Special saving certificates Cash at bank 39.9 22,127,729 1,655,750 104,000 6,427,374 7,179,354 8,479,970 9,635,360 1,428,516 57,038,053 22,127,729 104,000 5,870,329 6,288,248 7,538,348 8,523,972 1,235,194 51,687,819 Sensitivity analysis The increase / (decrease) in the present value of defined benefit obligations as a result of change in each assumption should be summarised as below: 2020 Post retirement Benevolent Compensated Pension medical Gratuity Total scheme absences fund fund scheme ----------------------------------------------------- (Rupees in 000') ---------------------------------------------------1% increase in discount rate 1% decrease in discount rate 1 % increase in expected rate of salary increase 1 % decrease in expected rate of salary increase 1% increase in expected rate of pension increase 1% decrease in expected rate of pension increase 1% increase in expected rate of medical benefit increase 1% decrease in expected rate of medical benefit increase 65,308,485 81,782,213 76,592,777 69,280,964 77,360,353 68,785,097 - 19,266,575 26,081,439 23,499,623 21,191,648 24,019,702 20,793,333 23,097,183 21,601,836 1,915,735 2,211,838 2,081,710 2,027,093 - 2,396,364 3,088,758 3,098,775 2,383,069 - 8,538,577 10,070,396 10,107,352 8,494,357 - 97,425,736 123,234,644 115,380,237 103,377,131 101,380,055 89,578,430 23,097,183 21,601,836 39.10 Expected contributions to be paid to the funds in the next financial year 1,478,863 39.11 Expected charge for the next financial year 7,034,716 39.12 Maturity profile The weighted average duration of the obligation Years Pension fund Post retirement medical fund Benevolent fund Gratuity fund Compensated absences 39.13 11.32 15.29 7.21 12.77 8.28 Funding Policy Pension Fund - Bank's current assets and its percentage is given below; Current Assets Cash and cash equivalents - net Government securities Shares Non-Government debt securities Mutual funds Amount Rupees in '000 Percentage 1,428,516 41,898,809 7,179,354 104,000 6,427,374 2.5% 73.5% 12.6% 0.2% 11.3% 57,038,053 100% Bank will continue to invest with the same percentage in the asset categories mentioned but increase the assets gradually so that there is no deficit in the pension fund. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 39.14 Significant risks associated with the staff retirement benefit schemes are as follows: 40. Asset volatility The risk arises when the future earnings are lower than expectation. This risk is measured at a plan level over the obligation period of the current population. The company assets are either invested in fixed securities or cash. Changes in bond yields The risk arises when the actual return on plan assets is lower than expectation. Inflation risk The most common type of retirement benefit is one where the benefit is linked with last drawn salary. The risk arises when the actual increases are higher than expectation and impacts the liability accordingly. Life expectancy / Withdrawal rate The risk arises when the actual lifetime of retirees is longer than expectation. This risk is measured at the plan level over the entire retiree population. The risk of actual withdrawals varying with the actuarial assumptions can impose a risk to the benefit obligation. The movement of the liability can go either way. Investment Risk The risk arises when the actual performance of the investments is lower than expectation and thus creating a shortfall in the funding objectives. DEFINED CONTRIBUTION PLAN A defined contribution (DC) plan is a type of retirement plan in which the employer, employee or both make contributions on a regular basis. Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts (through employee contributions and, if applicable, employer contributions) plus any investment earnings on the money in the account. In defined contribution plans, future benefits fluctuate on the basis of investment earnings. Bank currently does not have any defined contribution plan. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 41. COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL 41.1 Total Compensation Expense 2020 Directors Items Members Non-Executives Shariah Board Chairman President / CEO Key Other material Management risk takers / Personnel controllers ------------------------------------------------` (Rupees in '000) --------------------------------------------------Fees and Allowances etc. Managerial Remuneration i) Fixed ii) Total Variable of which a) Cash Bonus / Awards Charge for defined benefit plan Rent & house maintenance Utilities Medical Conveyance Others 3,450 30,150 - - - 7,362 Total 4,109 Number of Persons 659 1,900 1 - - 54,000 - 206,031 405,064 549 683 211 155 330 - 4,500 3,511 64,745 40,979 89,343 27,615 24,633 17,234 13,709 175,480 104,283 193,085 60,211 63,510 50,435 61,611 32,050 9,290 62,011 484,289 1,113,679 8 3 1 34 99 (0) The President and certain executives are also provided with free use of Bank's cars, household equipment, mobile phones and free membership of clubs. 41.1.1 SBP has issued guidelines and disclosure on governance and remuneration practices through BPRD Circular No. 01 of 2017 dated January 25, 2017 effective from January 01, 2019. No bonus payout has yet been made under the said circular and deferral as per Human Resources Policy will be made at the time of payment. Performance bonus is accounted for on payment basis. 2019 Directors Items Members Shariah Board NonExecutives Chairman Key Management Personnel President / CEO ------------------------------------------------- (Rupees in '000) --------------------------------------------------Fees and Allowances etc. Managerial Remuneration i) Fixed ii) Total Variable of which a) Cash Bonus / Awards Charge for defined benefit plan Rent & house maintenance Utilities Medical Conveyance Others 2,550 1,654 Total Number of Persons | National Bank of Pakistan - - 7,359 49,557 146,697 5,759 402 681 211 155 330 25 4,500 790 310 396 2,784 54,435 38,739 80,897 24,939 23,531 16,825 14,857 4,204 34,409 58,337 400,920 1 10 9,163 #REF! 3 1 29 - 28,650 - -
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 41.2 Remuneration paid to Directors for participation in Board and Committee Meetings S.No. 1 2 3 4 5 6 7 8 9 2020 Meeting Fees and Allowances Paid For Board Committees Board Board Board Name of Director For Board Board Board Risk & Board HR & Technology International Inclusive Total Meetings Audit Compliance Remuneration & Franchises & Development Amount Paid Committee Committee Committee Digitalization Remittance Committee Committee Committee -------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------2,759 1,350 4,109 Mr. Zubyr Soomro 554 414 150 1,118 Mr. Muhammad Naeem 2,309 1,056 1,050 4,415 Mr. Muhammad Sohail Rajput 1,721 1,350 1,050 4,121 Ms. Sadaffe Abid Mr. Tawfiq Asghar Hussain 2,100 1,200 1,050 1,200 5,550 900 600 450 300 2,250 Mr. Zafar Masud 2,456 1,139 1,567 1,634 6,797 Mr. Farid Malik Mr. Imam Bukhsh Baloch 2,100 1,050 1,050 4,200 1,650 900 1,050 3,600 Mr. Asif Jooma Total Amount Paid 16,549 3,570 3,389 4,567 3,434 3,150 1,500 36,160 (0) 2019 Meeting Fees and Allowances Paid For Board Committees S.No. 1 2 3 4 5 6 7 8 9 10 11 Board International Total Amount Franchises & Paid Remittance Committee ------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------2,854 1,350 4,204 Mr. Zubyr Soomro 2,545 1,722 766 1,434 323 6,790 Mr. Muhammad Naeem 1,333 1,104 904 3,341 Mr. Muhammad Sohail Rajput 1,127 1,050 750 2,927 Ms. Sadaffe Abid 1,050 1,050 600 300 3,000 Mr. Tawfiq Asghar Hussain 1,200 1,350 1,200 300 4,050 Mr. Zafar Masud 3,066 826 721 2,237 6,850 Mr. Farid Malik Mr. Imam Bukhsh Baloch 1,200 450 750 2,400 1,050 498 583 2,131 Mr. A. Akbar Sharifzada 1,144 426 1,570 Mr. Asad Munir 750 450 150 1,350 Mr. Muhammad Imran Malik Total Amount Paid 17,319 4,824 2,792 5,864 4,810 2,404 600 38,613 #VALUE! Name of Director For Board Meetings Board Audit Committee Board Risk & Compliance Committee Board HR & Remuneration Committee Board Technology & Digitalization Committee Board Inclusive Development Committee 41.2.1 In last year, Rs. 578,000 was inadvertently disclosed as amount paid to Mr. Zubyr Soomro for attending Board Risk & Compliance Committee. In current year, said amount has been reclassified to Board meeting fees & allowances. Further, Nil figure was (1,349,635) (12,718) erroneously disclosed in Board Inclusive Development Committee last year which is corrected in current year. 41.3 Remuneration paid to Shariah Board Members 2020 Items Chairman Resident Member 2019 Non-Resident Member(s) Total Resident Member Chairman Non-Resident Member(s) Total -------------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------------------Retainer Fee & Fixed Remuneration 3,240 3,170 2,880 9,290 3,240 3,043 2,880 9,163 Total Amount Paid 3,240 3,170 2,880 9,290 3,240 3,043 2,880 9,163 1 1 1 3 1 1 1 3 Total Number of Persons 42. FAIR VALUE MEASUREMENTS The fair value of quoted securities other than those classified as held to maturity, is based on quoted market price. Quoted instruments classified as held to maturity are carried at cost. The fair value of unquoted debt securities, fixed-term loans, other assets, other liabilities, fixed-term deposits and borrowings cannot be calculated with sufficient reliability due to the absence of a current and active market for these assets and liabilities and reliable data regarding market rates for similar instruments. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 42.1 Fair value of financial assets The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Fair value measurements using input for the asset or liability that are not based on observable market data (i.e. unobservable inputs). The table below analysis financial instruments measured at the end of the reporting period by the level in the fair value hierarchy into which the fair value measurement is categorised: 2020 Carrying Value Total Level 1 Level 2 Level 3 On balance sheet financial instruments ------------------------------------------------------- (Rupeesin '000) ------------------------------------------------------- Financial assets - measured at fair value Investments Market Treasury Bills Pakistan Investment Bonds Ijarah Sukuks Ordinary shares of listed companies Preference shares Investments in mutual funds Term Finance Certificates / Musharika and Sukuk Bonds GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities Ordinary shares of a bank outside Pakistan 626,248,789 473,408,082 6,015,600 47,907,782 1,099,850 2,000,170 47,907,782 1,099,850 2,000,170 626,248,789 473,408,082 6,015,600 - - 626,248,789 473,408,082 6,015,600 47,907,782 1,099,850 2,000,170 55,860,007 10,840,875 2,847,176 80,640 4,280,000 - 51,580,007 10,840,875 2,847,176 80,640 - 55,860,007 10,840,875 2,847,176 80,640 17,652,778 17,652,778 - 17,652,778 1,243,961,749 72,940,580 - 1,243,961,749 1,171,021,169 Financial assets - disclosed but not measured at fair value Cash and balances with treasury banks Balances with other banks 249,259,590 - - - - 14,227,355 - - - - Lending to financial institution 126,804,675 - - - - Pakistan Investment Bonds GoP Foreign Currency Bonds Ordinary shares of unlisted companies Market Treasury Bills Foreign Government Securities Foreign Currency Debt Securities Debentures, Bonds, Sukuks, Participation Term Certificates and Term Finance Certificates Bai muajjal with Government of Pakistan 168,422,981 1,455,089 32,328,738 618 - - - - - - - - 7,838 11,641,133 - - - - - - - - Advances 983,254,527 - - - - 110,195,768 1,697,598,312 - - - - Investments Other assets 2,941,560,061 72,940,580 1,171,021,169 - 1,243,961,749 Off-balance sheet financial instruments - measured at fair value Foreign exchange contracts purchase and sale Forward government securities transactions | National Bank of Pakistan 419,327,735 - 27,625,340 - (2,918,017) 52,885 - (2,918,017) 52,885
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 2019 Carrying Value Level 1 Level 2 Total Level 3 ------------------------------------------------------- (Rupeesin '000) ------------------------------------------------------- On balance sheet financial instruments Financial assets - measured at fair value Investments Market Treasury Bills Pakistan Investment Bonds Ijarah Sukuks Ordinary shares of listed companies Preference shares Investments in mutual funds Term Finance Certificates / Musharika and Sukuk Bonds GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities Ordinary shares of a bank outside Pakistan 621,791,597 329,418,686 1,978,800 41,863,797 79,388 1,903,224 41,863,797 35,956 1,903,224 621,791,597 329,418,686 1,978,800 - 43,432 - 621,791,597 329,418,686 1,978,800 41,863,797 79,388 1,903,224 56,252,659 22,476,530 3,491,851 1,422,271 18,831,756 1,099,510,559 9,204,193 18,831,756 71,838,926 47,048,466 22,476,530 3,491,851 1,422,271 1,027,628,201 43,432 56,252,659 22,476,530 3,491,851 1,422,271 18,831,756 1,099,510,559 Financial assets - disclosed but not measured at fair value Cash and balances with treasury banks 292,513,379 Balances with other banks Lending to financial instruments Investments Market Treasury Bills Pakistan Investment Bonds GoP Foreign Currency Bonds Ordinary shares of unlisted companies Foreign Government Securities Foreign Currency Debt Securities Debentures, Bonds, Sukuks, Participation Term Certificates and Term Finance Certificates 13,220,807 134,780,010 114,091,320 184,864,103 4,087,591 1,593,609 29,600,343 596 9,573 Bai muajjal with Government of Pakistan Advances Other assets - - - - - - - - - - - - - - - 10,395,235 1,008,139,084 164,280,512 1,957,576,162 3,057,086,721 71,838,926 1,027,628,201 43,432 1,099,510,559 Off-balance sheet financial instruments - measured at fair value Foreign exchange contracts purchase and sale Forward government securities transactions 801,290,548 - (4,358,883) - (4,358,883) 22,164,581 - 107,348 - 107,348 Valuation techniques used in determination of fair valuation of financial instruments within level 2 and level 3 Item Valuation approach and input used Market Treasury Bills Pakistan Investment Bonds Ijarah Sukuks Ordinary shares of unlisted companies Term Finance Certificates / Musharika and Sukuk Bonds GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities PKRV (MUFAP) PKRV (MUFAP) MUFAP Breakup value as per latest available audited financial statements MUFAP Reuter page Reuter page Reuter page | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 42.2 Fair value of non-financial assets Information about the fair value hierarchy of Bank‘s non-financial assets as at the end of the reporting period are as follows: 2020 Total Level 1 Level 2 Level 3 ------------------------------------------ (Rupees in '000) ------------------------------------------Carrying Value Land & building (property and equipment) 48,764,139 - 48,764,139 - 48,764,139 Non-banking assets acquired in satisfaction of claims 3,750,925 52,515,064 - 3,750,925 52,515,064 - 3,750,925 52,515,064 2019 Carrying Value Total Level 1 Level 2 Level 3 ------------------------------------------ (Rupees in '000) ------------------------------------------Land & building (property and equipment) 48,569,603 - 48,569,603 - 48,569,603 Non-banking assets acquired in satisfaction of claims 3,284,853 51,854,456 - 3,284,853 51,854,456 - 3,284,853 51,854,456 43. SEGMENT INFORMATION 43.1 Segment Details with respect to Business Activities During the year the Bank changed its internal organisation structure in a manner that changed the composition of its reportable segments, and accordingly the prior year disclosure is restated to reflect the current reportable segments. Branch banking has been bifurcated in to Retail Banking Group and Inclusive Development Group. | National Bank of Pakistan
| National Bank of Pakistan 28,602,759 - 28,602,759 670,506 35,117,612 Segment direct expenses Inter segment expense allocation Total expenses Provisions charge / (Reversal) Proﬁt / (loss) before tax Contingencies and commitments 573,019,328 2,070,445,603 47,703,958 2,118,149,561 2,118,149,561 Borrowings Deposits and other accounts Net inter segment borrowing Others Total liabilities Equity Total equity and liabilities 24,462,197 2,118,149,561 Total assets Others Cash and bank balances Investments Net inter segment lending Lendings to ﬁnancial institutions Advances - performing Advances - non-performing (PSE) Provision against advances Advances - net 150,000,222 1,716,041,623 232,021,162 4,007,870 (8,383,514) 227,645,519 64,390,877 Total income Statement of ﬁnancial position (76,417,139) 127,171,107 13,636,909 Net mark-up / return / proﬁt Inter segment revenue - net Non mark-up / return / interest income Proﬁt and loss account Inclusive Development Group Corporate and Investment Banking Treasury International, Financial Aitemaad and Institution and Islamic Banking Remittance Head Ofﬁce / Others Sub total Eliminations Total - 3,511,852 136,108,152 3,115,875 142,735,878 142,735,878 142,735,878 1,626,569 9,809,667 128,340,996 22,497,098 (19,538,451) 131,299,642 (1,380,048) 2,177,142 3,818,845 2,177,142 - 4,615,938 15,658,237 (12,345,431) 1,303,132 1,046,103,666 46,688,596 200,011,969 323,788,034 17,857,441 588,346,040 212,690 588,558,730 588,558,730 22,588,501 281,210 31,393,587 538,861,528 47,548,441 (52,114,538) 534,295,432 (19,122,981) 906,172 26,216,211 906,172 - 7,999,402 43,113,972 (38,048,674) 2,934,104 - 86,290,983 1,377,549,547 12,387,953 1,476,228,483 43,487,200 1,519,715,683 1,519,715,683 366,297 49,710,033 1,342,837,328 126,802,025 - 39,367,172 366,426 (202,726) 366,426 - 39,530,872 113,674,589 (86,111,719) 11,968,002 20,577,429 2,047,575 73,225,543 63,868,561 3,138,352 142,280,030 464,603 142,744,633 142,744,633 3,972,925 47,960,766 46,098,046 43,633,881 42,345,094 (41,266,079) 44,712,896 (975,444) 6,337,022 (484,011) 6,337,022 - 4,877,568 2,944,549 1,933,019 - 75,268,262 9,799,226 2,333,570 87,401,058 659,569 88,060,626 88,060,626 4,959,963 5,724,957 39,828,843 37,546,863 602,913 (602,913) 37,546,863 2,108,916 2,542,000 398,979 2,542,000 - 5,049,895 5,033,803 (409,849) 425,941 35,553,685 15,102 96,925,606 96,940,708 222,734,682 319,675,390 319,675,390 113,606,305 89 3,240,273 195,071,897 2,650 8,175,184 54,292,716 (54,713,725) 7,754,175 (8,891,080) 22,180,409 478,134 405,695 21,774,714 13,767,463 147,095 9,744,567 3,875,801 - - - - - 1,675,254,109 138,539,005 2,418,966,479 1,911,113,520 183,462,755 4,652,081,759 267,558,742 4,919,640,502 4,919,640,502 171,582,758 - (1,911,113,520) (1,911,113,520) (1,911,113,520) (1,911,113,520) - 263,486,945 1,463,398,076 1,911,113,520 (1,911,113,520) 126,804,675 988,579,614 171,294,133 (176,619,220) 983,254,527 - 46,224,147 63,111,930 30,895,938 140,232,015 41,337,217 21,774,714 104,155,107 36,076,908 1,675,254,109 138,539,005 2,418,966,479 183,462,755 2,740,968,239 267,558,742 3,008,526,981 3,008,526,981 171,582,758 263,486,945 1,463,398,076 126,804,675 988,579,614 171,294,133 (176,619,220) 983,254,527 46,224,147 63,111,930 30,895,938 140,232,015 41,337,217 21,774,714 104,155,107 36,076,908 ---------------------------------------------------------------------------------------------- Rupees in '000 --------------------------------------------------------------------------------------------- Retail Banking Group 2020 Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 48,218,965 Proﬁt / (loss) before tax 2,038,772,064 Total liabilities Contingencies and commitments Total equity and liabilities 833,218,160 2,038,772,064 - 1,695,414 1,972,722,005 64,354,645 Borrowings Subordinated debt Deposits and other accounts Net inter segment borrowing Others Equity 2,038,772,064 25,307,037 Others Total assets 218,542,947 Advances - net 163,574,415 1,631,347,664 221,997,792 3,166,450 (6,621,295) 1,881,924 Provisions charge / (reversal) - - 161,574,432 - 161,574,432 156,839,607 4,734,825 161,574,432 1,853,736 147,675,456 12,045,241 144,537,546 17,309,704 (14,171,794) (1,310,983) 922,825 2,350,847 236,880,686 - 623,292,803 144,380 623,148,424 30,388,706 76,371,345 484,593,419 31,794,954 623,292,803 40,745,805 543,506,831 238,501 38,801,666 538,385,369 32,196,797 (27,075,335) (5,495,811) 8,030,099 801,063 801,063 - 823,455,129 - 1,536,206,318 37,186,627 1,499,019,691 400,759,524 1,081,180,371 17,079,796 1,536,206,318 3,971,387 - 82,716,513 1,316,800,220 132,718,198 - 388,260 1,899,416 310,208 310,208 - 2,597,884 28,997,140 - 164,007,844 1,369,066 162,638,778 38,913,708 85,487,723 36,248,475 1,988,871 164,007,844 4,014,363 56,165,850 42,748,449 61,079,182 55,382,884 41,049,352 (40,266,386) 802,901 (104,320) 4,276,639 4,276,639 - 4,975,220 3,143,738 1,831,482 - - 75,052,426 775,697 74,276,729 63,285,897 7,115,268 3,875,565 75,052,426 4,890,661 33,880,111 4,410,976 29,811,516 2,059,162 33,880,111 203,934 (203,934) 2,038,488 (75,061) 2,601,428 2,601,428 - 4,564,855 4,396,685 (375,722) 543,892 31,345,046 - 291,460,123 193,138,064 98,322,059 182,311 98,139,748 291,460,123 145,397,304 8,367,889 91 3,062,714 134,629,475 2,650 8,379,630 54,825,480 (54,837,221) (16,638,453) 1,695,392 26,989,335 441,720 26,547,615 12,046,274 808,876 5,650,967 5,586,430 - 28,003,367 14,250,275 65,853,120 39,305,505 26,547,615 108,106,762 71,907,277 36,199,485 - - - - - - 1,953,896,161 - 4,890,366,010 232,613,833 - (1,765,977,140) - (1,765,977,140) (1,765,977,140) - 471,757,352 2,198,049,281 1,765,977,140 221,968,404 4,657,752,177 (1,765,977,140) - 4,890,366,010 226,180,293 1,008,139,084 Cash and bank balances Investments Net inter segment lending Lendings to ﬁnancial institutions Advances - performing Advances - non-performing Provision against Advances 28,523,599 Total expenses 2,350,847 - 3,335,351 76,654,512 (83,724,892) 9,668,264 305,734,186 1,449,555,297 1,765,977,140 (1,765,977,140) 134,780,010 1,002,563,333 148,751,717 (143,175,966) - 28,523,599 - Segment direct expenses Inter segment expense allocation 1,962,689 54,921,742 (54,445,167) 2,858,776 - 78,624,488 Total income 15,619,259 (15,451,546) 1,794,976 Statement of ﬁnancial position (83,637,534) 148,346,359 13,915,664 Net mark-up / return / proﬁt Inter segment revenue - net Non mark-up / return / interest income Proﬁt and loss account 1,953,896,161 3,124,388,870 232,613,833 2,891,775,037 471,757,352 2,198,049,281 221,968,404 3,124,388,870 226,180,293 1,008,139,084 305,734,186 1,449,555,297 134,780,010 1,002,563,333 148,751,717 (143,175,966) - 28,003,367 14,250,275 65,853,120 39,305,505 26,547,615 108,106,762 71,907,277 36,199,485 2019 (Restated) Inclusive Corporate and International, Aitemaad and Head Ofﬁce / Development Investment Treasury Sub total Eliminations Total Financial Institution Islamic Banking Others and Remittance Group Banking ------------------------------------------------------------------------------------------------------------ (Rupees in '000) ------------------------------------------------------------------------------------------------------------ Retail Banking Group Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
43 .2 | National Bank of Pakistan 47,199,589 Proﬁt / (loss) before tax 101,210,557 34,143,889 135,354,446 35,000,194 21,774,714 56,774,908 31,379,949 215,526,179 1,417,300,030 63,868,561 126,804,675 944,945,732 128,949,039 (135,353,141) 938,541,630 167,609,833 2,929,650,909 136,491,430 2,345,740,936 180,324,403 2,662,556,770 267,094,139 2,929,650,909 1,654,676,680 Cash and bank balances Investments Net inter segment lendings Lendings to ﬁnancial institutions Advances - performing Advances - non-performing Provision against advances Advances - net Others Total assets Borrowings Deposits and other accounts Net inter segment borrowing Others Total liabilities Equity Total equity and liabilities Contingencies and commitments Statement of ﬁnancial position Asia Paciﬁc (including South Asia) Europe United States of America 2020 Middle East Total 3,380,468 51,771,898 51,771,897 - 1,240,487 35,384,936 14,344,870 801,605 51,771,898 17,402,929 29,778,074 1,891,261 35,574,078 (35,648,345) 1,816,994 2,773,901 (245,552) 1,598,976 1,598,976 (308,070) 535,456 509,898 1,045,354 3,105,342 11,113,697 11,113,697 - 7,278,305 3,643,594 191,798 11,113,698 10,399,385 574,741 1,205,975 (1,205,975) 574,741 139,572 (300,616) 793,919 793,919 (117,586) 59,526 316,191 375,717 7,173,633 23,866,218 23,812,857 53,361 9,204,947 13,051,137 1,556,773 23,866,218 19,076,487 2,927,816 1,680,370 (2,306) 1,678,064 183,851 (1,971,063) 3,173,426 3,173,426 (32,798) 421,629 747,936 1,169,565 6,917,986 55,992,820 55,581,578 411,242 807,088 21,357,355 32,828,959 588,176 55,992,820 1,081,965 13,392,156 39,487,510 5,565,041 (4,409,453) 40,643,098 875,601 1,541,789 770,701 770,701 (25,557) 1,927,939 358,994 2,286,933 1,675,254,109 3,072,395,542 2,804,836,799 267,558,743 138,539,005 2,418,966,479 63,868,561 183,462,755 3,072,395,542 263,486,945 1,463,398,076 63,868,561 126,804,675 988,579,614 171,294,133 (176,619,220) 983,254,527 171,582,758 46,224,147 41,337,216 21,774,714 63,111,930 30,895,938 104,155,107 36,076,908 140,232,015 ----------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------- Segment direct expenses Inter segment expense allocation Total expenses Provisions Net mark-up / return / proﬁt Inter segment revenue - net Non mark-up / return / interest income Total income Proﬁt and loss account Pakistan Segment details with respect to geographical locations Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 27,200,464 Profit / (loss) before tax (1) 4,703,237 (0) 1,924,899,021 Contingencies and commitments United States of America Middle East Total 3,479,436 10,678,196 - 10,678,196 6,812,172 3,679,631 186,393 10,678,196 120,810 121,839 10,435,547 120,810 1,168,349 (1,168,349) (330,180) 720,501 (5,771) 720,501 - 384,550 81,192 303,358 0 6,359,387 30,917,116 384,889 30,532,227 2,322,714 12,396,062 15,332,672 480,780 30,917,116 14,672,401 373,587 5,119,150 10,751,978 14,706,409 (34,009) 250,533 1,328,813 28,281 1,328,813 - 1,607,627 1,028,536 579,091 0 14,455,079 63,102,176 863,850 62,238,326 34,765,066 27,045,193 428,067 63,102,176 34,114,731 788,196 2,961,430 17,130,186 8,107,633 33,002,530 5,409,187 (4,296,985) 2,057,296 649,769 38,409 649,769 - 2,745,475 2,169,958 575,517 (2) 1,953,896,161 3,168,744,977 232,613,833 2,936,131,144 471,757,352 2,198,049,281 44,356,106 221,968,405 3,168,744,976 1,008,139,084 226,180,293 305,734,186 1,449,555,297 44,356,106 134,780,010 1,002,563,332 148,751,718 (143,175,966) 28,003,366 65,853,120 14,250,275 39,127,802 26,725,318 108,106,761 71,907,277 36,199,484 The amount of the Endowment Funds in investments stands at Rs. 785 million as at December 31, 2020 (2019: Rs. 758 million). The Committee in its meeting held on August 7, 2001 approved creation of Endowment Fund initially at an amount of Rs.500 million, Rs.396 million were transferred from the old Qarz-e-Hasna (Defunct) Fund, Rs.50 million contributed by Government of Pakistan and Rs.54 million were contributed by participating banks (HBL, NBP and UBL 25% each, MCB 17.5% and ABL 7.5%). The Scheme is being administered by a high powered committee headed by the Deputy Governor, State Bank of Pakistan and the Presidents of National Bank of Pakistan, Habib Bank Limited, United Bank Limited, Muslim Commercial Bank, Allied Bank Limited and the Deputy Secretary, Ministry of Finance as member and Senior Director of SMEFD (Infra Structure Housing and SME Finance Department) as a secretary of the Committee. The State Bank of Pakistan has assigned National Bank of Pakistan to operate the scheme. Students Loan Scheme was launched by Government of Pakistan in collaboration with the major commercial banks with a view to extend financial help by way of mark-up free loan to the meritorious students without sufficient resources for pursuing scientific technical and professional education within Pakistan. Endowment Fund 67,418,030 2,996,629,460 Total equity and liabilities 44.1 120,327 231,244,767 TRUST ACTIVITIES 67,297,702 2,765,384,693 44. 1,825,928 39,234,297 25,343,803 893,674 432,843,644 2,112,561,558 219,979,492 Borrowings Deposits and other accounts Net inter segment borrowing Others Total liabilities Equity 67,418,029 7,257,908 2,730,741 951,973,234 222,165,930 2,996,629,460 24,232,322 33,197,057 7,553,135 34,471,816 (34,767,043) 262,985,737 1,388,476,075 36,248,474 134,780,010 947,180,448 107,702,366 (102,909,580) Total assets Cash and bank balances Investments Net inter segment lendings Lendings to financial institutions Advances - performing Advances - non-performing Provision against Advances Advances - net Others (1,174,748) 1,577,553 (165,238) 61,576,484 14,354,594 237,567 103,131,542 1,577,553 - (135,949) 373,516 68,763,540 34,368,002 34,851,166 26,725,318 Statement of financial position Europe 2019 (Restated) ------------------------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------------------------------- Segment direct expenses Inter segment expense allocation Total expenses Provisions Net mark-up / return / profit Inter segment revenue - net Non mark-up / return / interest income Total Income Profit and loss account Pakistan Asia Pacific (including South Asia) Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
45 . RELATED PARTY TRANSACTIONS | National Bank of Pakistan Subsidiaries Associates Joint venture 2020 Pension Fund (Current) Pension Fund (Fixed Deposit) Pension Fund (N.I.D.A A/c) Provident Fund Other related parties - - - - - 177,236 1,320 - 94,715 713,917 (620,573) (10,823) - - 3,835 8,672 (11,228) 41 - - - - - - - - - 233,267 - - 228,805 64,850 (31,840) (28,548) - - - - - - 4,308 4,308 1,553,709 1,522,792 261,901 (230,984) - - - - 233,641 233,641 - 284,565 359,565 414,565 (55,000) - - - - - - - - - - - 1,720,157 1,720,157 - 2,837,287 2,981,029 3,046,662 (65,633) - - - - - - - 9,111 279,814 (270,703) - - - - - - 2,951 2,951 - - - 58,871 73 47,037,983 (46,979,185) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,369,644 1,235,120 3,054,527 (2,920,003) - - - - - - - - - - - - - - 13,282,016 13,296,883 1,941,908 (1,956,775) - - - - - - - - - - - Directors Key management personnel Subsidiaries Associates Joint venture 2019 Pension Fund (Current) Pension Fund (Fixed Deposit) Pension Fund (N.I.D.A A/c) Provident Fund Other related parties - - - - - 204,446 40,416,083 708,790 (630,132) (40,290,295) - - - - - 305,117 - - - - - 3,835 - - - - - - - - 228,805 - - - - - - - 7,396 7,396 94,715 1,522,792 - - - - - - - - 283,425 1,725,222 204,443 1,725,222 78,982 - 284,565 2,827,375 414,565 3,046,662 222,967 528,198 3,115,819 74,615 1,299,367 (22,888) (1,413,000) (69,157) (45,889) - - - 10,732 80,688 1,120,160 23,314 625,431 403,078 (22,146) (591,564) (446) (8,065) (19,840) - - - - - - - - - - - - - - - - 279,814 38,248 241,566 - - - - - - - 1,159 1,159 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 23,386,325 217,063 11,246,254 (14,896,873) 26,819,881 - - - - - 73 - - - - - - - - - - 1,235,120 13,296,883 1,463,085 - - 40,416,083 1,085 11,100,000 458,328 12,465,939 45,832,581 - 11,785,192 2,246,185 273,669,395 (45,833,593) (11,100,000)(11,008,400) (1,415,241) (278,409,470) 45,156,158 - - - - - - - - - - upees in '000) ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 23,386,325 115,824,347 (115,673,058) (23,232,497) --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (R Key management personnel * Transfer in / (out) - net due to retirement / appointment of directors and changes in key management executives. Contingencies and Commitments Other payables to subsidiaries Other Liabilities Opening balance Received during the year Withdrawn during the year * Transfer in / (out) - net Closing balance Deposits and other accounts Opening balance Borrowings during the year Settled during the year Closing balance Borrowings Provision against other assets Interest / mark-up accrued Other receivable Other Assets Provision held against advances Opening balance Addition during the year Repaid during the year Transfer in / (out) - net Closing balance Advances In current accounts Balances with other banks Directors Details of transactions with related parties during the year, other than those which have been disclosed elsewhere in these unconsolidated financial statements are as follows: The Banks 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 executives / officers is determined in accordance with the terms of their appointment. The Bank has related party transactions with its parent, subsidiaries, associates, joint ventures, employee benefit plans and its directors and Key Management Personnel. The details of investment in subsidiary companies, joint venture and associated undertaking and their provisions are stated in note 10 of the financial statement of the bank. Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 45.1 683 - - - - 4,661 - 546,300 - 33,124 29,963 - - - 77,368 - - - 20,827 - Pension Fund Provident Fund Funds / Others Key managePension ment Subsidiaries Associates Joint venture Fund personnel 2019 Provident Fund Funds / Others - - - - - 4,637 - - - - - - - - 303 - - - - 9 - - - - 108,346 - - - - - - - - - 1,441,640 - - - - - 2,087 - - 10,712 4,012 19,447 - - 15,755 - - 459,257 - - - - - - - 2,878 - 29,672 36,563 51,300 2,131 - - 13,672 - - - - - - 4,637 6,000 - - - - - - - 780 - - - - 112 - - - - 204,666 - - - - - - - - - 1,690,456 - - - - - 2,087 - - 6,096 4,345,823 15,558 - - 1,860,682 - The Bank also earned commission on handling treasury transactions on behalf of the Government of Pakistan amounting to Rs. 9,653 million (2019: 9,958 million) for the year ended December 31, 2020. As at the statement of financial position date the loans and advances, deposits and contingencies relating to Government–related entities amounted to Rs. 337,572 million (2019: 377,158 million), Rs. 932,317 million (2019: 840,064 million) and Rs. 948,335 million (2019: 876,232 million) respectively and income earned on advances and investment and profit paid on deposits amounted to Rs. 40,908 million (2019: 30,498 million) and Rs. 64,149 million (2019: 50,926 million) respectively. The Bank in the ordinary course of business enters into transaction with Government–related entities. Such transactions include lending to, deposits from and provision of other banking service to Government–related entities. The Federal Government through State Bank of Pakistan holds controlling interest (75.60% shareholding) in the Bank and therefore entities which are owned and / or controlled by the Federal Government, or where the Federal Government may exercise significant influence, are related parties of the Bank. Transactions with Government-related entities Post Retirement Benefit paid to Director cum Ex-employee Remuneration to key management executives including charge for defined benefit plan Expenses paid to company in which Director of the bank is interested as CEO Commission paid to subsidiaries Mark-up / return / interest paid Expense Rent income / Lighting & Power and Bank charges Dividend income Mark-up / return / interest earned Debts due by Companies in which Directors of the Bank is interested as Directors Fee and commission income Income Joint venture 2020 ------------------------------------------------------------------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------------------------------------------------------- Key manageSubsidiaries Associates ment personnel Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 46. CAPITAL ADEQUACY, LEVERAGE RATIO & LIQUIDITY REQUIREMENTS The Bank's objectives when managing capital, which is a broader concept than the 'equity' on the face of the statement of financial position, are: - to comply with the capital requirements set by the regulators of the banking markets where the Bank operates; - to safeguard the Bank's ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and - to maintain a strong capital base to support the development of its business. The SBP has issued instructions for Basel-III Implementation vide BPRD Circular No. 06 of 2013 dated August 15, 2013. These instructions are effective from December 31, 2013 in a phased manner with full implementation intended by December 31, 2019. Basel-III instructions comprises of the following three capital standards: i. Minimum Capital Requirement (MCR): The MCR standard sets the nominal amount of capital banks / DFIs are required to hold. Currently, the MCR for banks and DFIs is Rs. 10 billion as prescribed by SBP. ii. Capital Adequacy Ratio: The Capital Adequacy Ratio (CAR) assesses the capital requirement based on the risks faced by the banks / DFIs. The banks / DFIs are required to comply with the minimum requirements as specified by the SBP on standalone as well as consolidated basis. Currently, the required CAR for banks is 11.50% (plus 2.0% for NBP as D-SIB requirement). iii. Leverage Ratio: Tier-1 Leverage Ratio of 3% is introduced in response to Basel III Accord as the third capital standard. Bank level disclosure of the leverage ratio and its components has started from December 31, 2015. The Bank has a leverage ratio of 4.06% in the year December 31, 2020 (2019 : 3.36%) and Tier-1 capital of Rs. 172,896 million (2019: Rs. 142,716 million). The SBP's regulatory capital as managed by the Bank is analysed into following tiers: 1. Tier 1 Capital (going-concern capital) • Common Equity Tier 1 • Additional Tier 1 - Tier I capital, which comprises highest quality capital element and include fully paid up capital, balance in share premium account, reserve for issue of bonus shares, general reserves and un-appropriate profits (net of accumulated losses, if any). 2. Tier 2 Capital (gone-concern capital) - Tier II capital, which includes general reserve for loan losses, revaluation reserve, exchange translation reserve and subordinated debt. Basel III capital rules requires bank to make certain deductions from the capital before arriving at the Capital Adequacy Ratio (CAR). Risk weighted assets are measured according to the nature and reflect an estimate of credit, market and other risks associated with each asset and counterparty, taking into account any eligible collateral or guarantees. A similar treatment is adopted for offbalance sheet exposures, with some adjustments to reflect more contingent nature of potential losses. The Bank's policy is to maintain strong capital base so as to maintain, investor, creditor and market confidence, and to sustain future development of the business. The adequacy of the Bank's capital is monitored using, among other measures, the rules and ratios established by the SBP. The ratios compare the amount of eligible capital with the total of risk-weighted assets. The Bank monitors and reports its capital ratio under the SBP rules, which ultimately determines the regulatory capital, required to be maintained by Banks and DFIs. The paid-up capital of the Bank for the year ended December 31, 2020 stood at Rs. 21,275 billion (2019: Rs. 21,275 billion) and is in compliance with the SBP requirement for the said year. In addition the Bank has maintained minimum Capital Adequacy Ratio (CAR) of 19.78% (2019: 15.48%). There have been no material changes in the Bank's management of capital during the year. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------ (Rupees in '000) ------------ Minimum Capital Requirement Paid-up capital 193,859,398 162,369,773 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) 172,896,361 172,896,361 55,224,098 228,120,459 142,716,150 142,716,150 39,816,053 182,532,203 Risk Weighted Assets Credit Risk Market Risk Operational Risk 858,263,350 87,765,828 207,071,580 913,568,310 91,752,716 173,619,541 1,153,100,759 1,178,940,567 Common Equity Tier 1 Capital Adequacy ratio 14.99% 12.11% Tier 1 Capital Adequacy Ratio 14.99% 12.11% Total Capital Adequacy Ratio 19.78% 15.48% Tier-1 Capital Total Exposures 172,896,361 4,256,253,296 142,716,150 4,252,343,911 Leverage Ratio 4.06% 3.36% Capital Adequacy Ratio Total Leverage Ratio Liquidity Coverage Ratio Total High Quality Liquid Assets Total Net Cash Outflow Liquidity Coverage Ratio 1,200,257,790 666,722,922 890,965,256 603,741,462 180% 148% 2,309,310,465 901,126,786 2,040,913,906 875,207,068 256% 233% Net Stable Funding Ratio Total Available Stable Funding Total Required Stable Funding Net Stable Funding Ratio 46.1 The full disclsoures on the Capital Adequacy Leverage Ratio and Liquidity Requirements as per SBP instructions issued from time to time, is available on NBP's websites. The link to the full disclosure is available at https://www.nbp.com.pk/blsd/ | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 47. RISK MANAGEMENT Risk management is about understanding and managing the potential for volatility of earnings, loss of access to reliable deposits and funding and depletion of capital arising from the business activities, whilst pursuing its strategic objectives. The Bank has in place a well-defined risk management strategy / policy with clear objectives and deliverables through multi-pronged risk management processes. The Bank applies the Basel framework as a cornerstone of the NBP’s risk management framework and capital strategy. The Bank maintains a strong capital, funding and liquidity position in line with its on-going commitment to maintain balance sheet strength. The strength of risk profile management of the Bank stands at the following pillars: - Identification and assessment of significant material risks. - Overseeing and managing the risk profile of the Bank within the context of the risk appetite. - Optimize risk/return decisions by aligning them to business objective of achieving sustainable optimum growth. In order to support Risk Managment Group (RMG’s) activities, the strong data management mechanism is also in place to collect and consolidate exposure wise information various risk related analysis and reviews. The mechanism also helps in identification of e-CIB related information, performing periodic review, generates reports and highlights inconsistencies and errors, and issuing instructions to the relevant data entry points for rectification. In addition, Information Security Division (ISD) became an integral part of Risk Management Group to confronting the emerging risks arises due to the introduction and use of IT based systems. Fraud risk management has also been made a part of RMG under the umbrella of Operational and Fraud Risk Management Division. 47.1 Risk Governance Structure Risk Management Group (RMG) operates as an independent group under the supervision of Chief Risk Officer. RMG's scope and coverage has been enhanced to cater enterprise-wide risk management, credit approvals, and asset rehabilitation. CRO reports directly to the President with a dotted line reporting to the Board Risk & Compliance Committee (BRCC). The group is responsible to perform the functions pertaining to development and oversight of the risk framework, methodologies and other functions assigned from time to time in line with local / international best practices and under the supervision of SBP’s regulations / guidelines. The Bank’s Board is responsible to ensure active oversight over implementation of policies and frameworks so as to prevent any significant financial loss or reductions in shareholders' value that may be suffered by the Bank. Therefore, it is the responsibility of the Board to ensure that policies and frameworks are in place to recognize all significant/ material risks to which the Bank is / may be exposed and that the required human resource, culture, practices and systems are adequate to address such risks. The Board and its relevant committee, i.e. BRCC and the senior management along with its relevant committees i.e. Management Credit Committee (MCC), Enterprise Risk Committee (ERC), ALCO etc. are responsible to ensure implementation of risk management framework. 47.2 Risk Management Framework The Bank’s risk management policies are established to identify and analyze the risks faced by the Bank, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect the changes in market conditions, products and services offered. The Bank implements risk management framework through a ‘Three Lines of Defence’ model which defines clear responsibilities and accountabilities for various offices and ensures effective and independent oversight and also that the activities take place as intended. RMG together with Compliance Group acts as second line of defence and performs integrated function of oversight and independently challenges the effectiveness of risk management actions taken by business groups, who are the first line of defence. The risk management is further strengthened by the third line of defence, where Board Audit and Compliance Committee and Audit and Inspection Group add value through independent and objective assurance in improving risk management functions of the Bank. Following paragraphs introduce Bank’s exposures to material risks associated with its business activities and explain overall strategies and processes to manage those risks: | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 47.2.1 Credit Risk Credit risk is the risk of loss resulting from the decline in credit quality or possibility that a obligor or counterparty may not honor on its contractual obligations to the Bank in accordance with agreed terms. NBP’s lending activities account for most of the Bank’s credit risk. Credit risk is continuously evolving in various financial activities including loans and advances, commitments to lend, contingent liabilities such as letter of credit and guarantees, and other types of both on and off-balance sheet transactions. The Bank has a dedicated setup lead by Chief Risk Officer that ensures the effectiveness of the frameworks for assessment / measurement, review and reporting of credit risk under supervision of Board Risk and Compliance Committee. The Bank has in place Risk Apetite Framework and Credit Risk Concentration Management Framework to ascertain the levels of credit risk it undertakes by placing limits on exposures in relation to existing or potential obligors, economic groups and to various industry segments. Due to COVID-19, it is expected that credit off-take to remain restricted in the coming months as supply chains adjust to the economic impacts. The Risk Management function of the Bank is regularly conducting assessments, on perpetual basis, of the credit portfolio to identify borrowers and sectors most likely to get affected due to changes in the business and economic environment locally as well as globally. The Bank ensures that credit exposures are adequately collateralized and comprehensive risk palliating measures are taken to regulate overall credit risk exposure in accordance with Bank’s tolerance limits. Credit review and approval process of the Bank is well-defined and is managed under strict supervision of senior management. For analysis of counterparties within various asset classes / constitutions / economic group, the Bank also has an Internal Ratings System / Model based on multiple risk factors. The model coupled with Cash Flow Analysis Memorandum provides an understanding of obligors’ current and future financial health. This creates an integral contribution in decision making by senior management of the Bank. Concentration of exposure / risk in any of counterparty, economic group, or industry is assessed frequently and accordingly limit setting is tailored. Standardized Approach is used to calculate capital charge for credit risk as per Basel regulatory framework, with simple approach for credit risk mitigation. Additionally, stress testing for credit risk is completed on regular basis to evaluate the conceivable effects of scenarios provided by the regulator. Particulars of the bank's significant on-balance sheet and off-balance sheet credit risk in various sectors are analysed as follows: 47.2.1.1 Lendings to financial institutions Credit risk by public / private sector Gross lendings 2020 Non-performing lendings 2019 2020 2019 Provision held 2020 2019 --------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------------- Public / Government Private | National Bank of Pakistan 126,980,825 126,980,825 2,059,162 132,896,998 134,956,160 176,150 176,150 176,150 176,150 176,150 176,150 176,150 176,150
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 47.2.1.2 Investment in debt securities Credit risk by industry sector Gross investments 2020 Non-performing investments 2019 2020 2019 Provision held 2020 2019 ----------------------------------------------- (Rupees in '000) ----------------------------------------Cement Chemical Construction Engineering Fertilizer Sugar Textile Transport Financial Electronics and electrical appliances Glass and Ceramics Leather and Tenneries Food and Personal Care Products Pharmaceuticals Technology and Communication Vanaspati and Allied Industries Oil and Gas Marketing Cable and Electrical Goods Automobile Parts and Accessories Power (electricity), Gas, Water, Sanitary Tobacco Paper and Board Jute Metal Products Services Miscelleneous 470,168 2,073,812 3,885,490 4,842 1,040,960 766,719 1,151,054 9,658,543 1,308,738 11,361 5,288 11,184 2,413 11,072 4,238 687 4,509 1,185 37,903,094 144 10,794 7,081 500,000 890,258 891,092 19,453 2,073,812 3,885,489 4,842 1,425,089 785,469 1,151,768 2,803,718 9,344,916 1,308,738 11,361 5,287 11,184 2,413 11,072 4,238 95,986 4,509 1,185 35,464,521 144 10,794 7,081 500,000 950,000 787,524 20,168 323,812 1,633,738 4,842 656,831 766,719 651,054 210,020 1,308,738 11,361 5,288 11,184 2,413 11,072 4,238 687 4,509 1,185 144 10,794 7,081 25,992 19,453 323,812 1,633,738 4,842 656,831 785,469 651,768 90,887 1,308,738 11,361 5,288 11,184 2,413 11,072 4,238 686 4,509 1,185 144 10,794 7,081 25,992 20,168 323,812 1,633,738 4,842 656,831 766,719 651,054 141,691 1,308,738 11,361 5,288 11,184 2,413 11,072 4,238 687 4,509 1,185 144 10,794 7,081 25,991 19,453 323,812 1,633,738 4,842 656,831 572,385 651,768 82,127 1,308,738 11,361 5,288 11,184 2,413 11,072 4,238 686 4,509 1,185 144 10,794 7,081 25,992 60,614,725 60,670,593 5,671,871 5,571,484 5,603,540 5,349,640 (0) Credit risk by public / private sector Gross investments - Non-performing investments Provision held 2020 2019 2020 2019 2020 2019 ----------------------------------------------- (Rupees in '000) ----------------------------------------Public / Government Private | National Bank of Pakistan 31,810,714 28,804,011 32,463,359 28,207,234 7,620 5,664,251 7,620 5,563,864 7,620 5,595,920 7,620 5,342,020 60,614,725 60,670,593 5,671,871 5,571,484 5,603,540 5,349,640
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 47.2.1.3 Advances Credit risk by industry sector Gross advances Non-performing advances Provision held 2020 2019 2020 2019 2020 2019 ----------------------------------------------- (Rupees in '000) ----------------------------------------Agriculture, Forestry, Hunting and Fishing Mining and Quarrying Textile Chemical and Pharmaceuticals Cement Sugar Footwear and Leather garments Automobile and Transportation Equipment Electronics and Electrical Appliances Construction Power (electricity), Gas, Water, Sanitary Wholesale and Retail Trade Exports / Imports Transport, Storage and Communication Financial Services Individuals Fertilizer Metal Products Telecommunication Public Sector Commodity Operations Rice processing and Trading Food and Tobacco Glass and Ceramics Paper and Board Engineering Plastic Products Media Flour Mills Sports Goods Surgical equipments Others 63,054,331 282,368 132,701,566 4,033,024 33,124,120 35,237,473 2,461,054 6,607,421 10,036,223 12,258,203 283,229,240 36,564,735 1,687,703 55,176,592 6,093,650 32,839,062 184,020,751 15,733,123 67,313,392 17,064,247 62,413,440 30,685,877 13,995,035 6,859,290 1,601,970 33,444,437 2,627,648 2,189,495 2,713,759 978,994 827,764 2,017,760 59,016,306 2,079,833 130,556,474 3,698,135 28,285,797 34,366,817 2,095,757 8,711,039 7,204,298 12,242,713 289,464,374 36,169,269 1,486,667 56,126,165 40,693,010 14,100,214 170,824,005 20,813,179 67,474,262 16,307,814 66,638,547 26,950,629 11,927,347 5,043,655 1,820,422 24,966,577 2,737,171 2,222,899 3,357,250 727,511 802,049 2,404,864 1,159,873,747 1,151,315,050 Credit risk by public / private sector Gross advances 6,204,022 117,449 37,427,234 2,645,492 6,311,377 15,335,077 840,449 971,267 2,232,278 4,484,629 13,202,534 13,444,060 11,249,115 308,375 4,452,760 5,900,196 2,947,639 25,111,134 1,159,350 74,198 4,665,312 5,224,085 396,911 1,187,897 1,416,959 651,199 718,124 638,998 93,818 64,674 1,817,521 5,565,495 870,598 35,115,055 2,789,583 4,177,487 14,392,989 847,135 959,014 2,234,231 5,323,770 5,434,940 10,710,483 68,583 10,091,004 294,380 1,958,137 6,086,261 2,885,878 23,353,861 1,135,662 73,785 4,575,187 3,862,399 423,641 953,829 1,423,696 666,403 151,457 597,580 93,818 1,635,376 171,294,133 148,751,717 (0.43) Non-performing advances 4,514,299 117,449 35,611,823 2,634,249 4,093,767 14,335,087 840,114 966,887 2,223,278 4,481,950 11,271,966 12,012,696 9,169,761 308,375 2,606,881 4,088,882 2,888,738 24,557,341 1,159,350 74,198 4,537,360 5,200,684 396,911 1,187,897 1,410,274 648,950 293,124 624,012 93,818 64,674 1,730,678 4,133,877 465,220 33,826,039 2,781,935 2,466,565 12,666,718 846,235 959,014 2,222,981 5,304,434 4,448,807 10,437,288 68,583 7,925,250 294,380 1,516,649 4,181,677 2,860,734 22,345,884 1,135,662 73,785 4,494,866 3,336,685 423,641 655,672 1,421,196 488,349 151,457 551,860 87,818 1,596,755 154,145,473 134,170,016 1.4 Provision held 2020 2019 2020 2019 2020 2019 ----------------------------------------------- (Rupees in '000) ----------------------------------------Public / Government Private | National Bank of Pakistan 337,572,330 822,301,417 377,158,182 774,156,868 2,672,432 2,522,432 168,621,701 146,229,285 2,522,432 2,522,432 151,623,041 131,647,584 1,159,873,747 1,151,315,050 - 171,294,133 148,751,717 154,145,473 134,170,016
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------ (Rupees in '000) ------------ 47.2.1.4 Contingencies and Commitments Credit risk by industry sector Agriculture, Forestry, Hunting and Fishing Mining and Quarrying Textile Chemical and Pharmaceuticals Cement Sugar Footwear and Leather garments Automobile and Transportation Equipment Electronics and Electrical Appliances Construction Power (electricity), Gas, Water, Sanitary Wholesale and Retail Trade Exports / Imports Transport, Storage and Communication Financial Services Individuals Fertilizer Metal Products Telecommunication Public Sector Commodity Operations Rice processing and Trading Food and Tobacco Glass and Ceramics Paper and Board Engineering Plastic Products Flour Mills Surgical equipments Others 170,777 2,504,361 15,458,896 9,627,728 4,233,715 303,809 102 8,508,034 2,959,697 9,036,263 112,020,726 1,625,599 317,066 24,687,098 611,642,230 785,767,094 394,092 1,395,322 9,763,519 15,036,956 12,565,661 39,174 404,142 1,007,344 551,970 42,650,308 268,729 5,993 750 2,306,954 235,536 3,000 9,792,996 14,507,473 10,121,549 742,270 10,928 1,979,186 2,154,502 9,697,086 159,559,087 1,555,095 27,996 17,513,951 901,993,463 746,058,170 264,219 3,853,225 2,365,866 15,745,882 1,095,352 44,951 687,387 1,553,100 551,120 48,284,197 142,657 19,352 750 3,335,815 1,675,254,109 1,953,896,161 * Contingent liabilities for the purpose of this note are presented at cost and includes direct credit substitutes, transaction related contingent liabilities and trade related contingent liabilities. Credit risk by public / private sector Public / Government Private 948,334,918 726,919,191 876,232,352 1,077,663,809 1,675,254,109 1,953,896,161 47.2.1.5 Concentration of Advances The bank top ten (10) exposures on the basis of total (funded and non-funded expsoures) aggregated to Rs. 1,093,518 million (2019: Rs.1,036,638 million) are as follows: 2020 2019 ------------ (Rupees in '000) -----------Funded Non Funded Total Exposure 250,314,704 843,203,477 238,481,635 798,156,427 1,093,518,181 1,036,638,062 The sanctioned limits against these top 10 expsoures aggregated to Rs. 1,280,786 million (2019: Rs. 1,073,636 million) Total funded classified therein 2020 2019 Amount Provision held Amount Provision held ------------------------------------------ (Rupees in '000) ------------------------------------------ Loss 2,522,432 2,522,432 2,522,432 2,522,432 Total 2,522,432 2,522,432 2,522,432 2,522,432 | National Bank of Pakistan
| National Bank of Pakistan 650,421,972 Total 221,489,660 391,350,985 1,625,942 377,454,014 12,271,029 - 2019 7,889,517 6,176,977 1,712,540 3,332,924 3,332,924 35,653,696 8,500,000 27,153,696 3,909,754 587,934 523,000 2,798,820 250,874,242 228,147,162 10,707,703 12,015,495 3,882 273,188,684 303,200 262,168,186 10,717,298 12,806,503 549,899 9,492,232 2,764,372 27,487,282 27,482,303 4,979 - 80,847,808 125,043 63,721,751 17,001,014 - 5,217,455 299,671 4,917,784 In addition to the regulatory requirements, Bank has devised proprietary market risk stress testing scenarios which are performed on periodic basis to assess the impact on capital of the Bank for Internal Capital Adequacy and Assessment Process (ICAAP). Limits / zones and Management Action Triggers and Management Action Plans corresponding to Liquidity Ratio, Balance Sheet Duration Gap, Government Securities PVBP and Duration have also been developed. These triggers are used for proposing / recommending actions to ALCO for deliberation and necessary action. Standardized Approach is used to calculate capital charge for market risk as per Basel regulatory framework. Whereas, stress testing for interest rate, equity prices, and exchange rates risks activities is carried out regularly to estimate the impact on the capital of the Bank. The Bank’s market risk is managed through Market Risk Management (MRM) Framework approved by the Board which is comprised of related policies / procedures with the objective to mitigate market risk through the engagement of various strategies in relation with prices, rates, earning assets, liabilities and trading activities. Bank has also worked on devising improved criteria for various market risk limits. Under the developed Value-at-Risk (VaR) models and policy framework, VaR limits are being monitored through pilot run with an objective to be used for capital charge calculation under IMA approach in future. Market Risk is the potential for losses to arise from trading activities undertaken by the Bank as a result of movements in market rates or prices such as interest rates, foreign exchange rates, and equity prices. 47.2.2 Market Risk 228,866,286 364,638,630 9,492,232 4,979 42,498,179 4,921,666 Disbursements Punjab Sindh KPK including FATA Balochistan Islamabad AJK including Gilgit-Baltistan Province / Region 663,626,536 Total 207,931,532 4,704,206 8,853,922 - Utilization KPK including AJK including Punjab Sindh Balochistan Islamabad FATA Gilgit-Baltistan ------------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------------------- 210,145,408 390,658,220 6,176,977 3,855,924 49,991,187 2,798,820 Punjab Sindh KPK including FATA Balochistan Islamabad AJK including Gilgit - Baltistan Province / Region 2020 Utilization KPK including AJK including Punjab Sindh Balochistan Islamabad FATA Gilgit-Baltistan ------------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------------------- Disbursements 47.2.1.6 Advances - Province / Region-wise Disbursement & Utilization Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
96 ,656,185 96,656,185 1,366,741,891 1,366,741,891 1,463,398,076 1,463,398,076 1,413,462,528 1,413,462,528 36,092,769 36,092,769 1,449,555,297 1,449,555,297 | National Bank of Pakistan 20,499,909 286,578,235 240,024,036 10,043,967 249,296,809 5,613,790 1,123,760 65,494,170 8,364,855 157,851,413 4,236,309 4,077,289 Off-balance sheet items 2020 Net foreign currency exposure Foreign Currency Assets Foreign Currency Liabilities Off-balance sheet items 2019 Net foreign currency exposure 125,163,365 2,996,887 3,462,911 115,299,103 3,235,840 168,624 78,609,166 47,991,148 1,783,798 23,853,707 1,858,360 3,122,153 325,868,358 27,220,404 9,416,285 281,623,669 6,303,626 1,304,374 156,394,965 4,171,279 6,608,767 141,330,602 6,257,773 (1,973,457) 76,998,042 50,944,344 5,648,567 14,221,896 4,323,949 1,859,286 - 2,917 5,612 - 2019 2020 Banking book Trading book Banking book Trading book ------------------------------- (Rupees in '000) ----------------------------------- 246,471,436 73,993,469 8,456,085 154,514,963 4,369,802 5,137,117 Impact of 5% change in equity prices - Profit and loss account - Other comprehensive income 3,065,915 - 2,560,070 2,816 - 2019 2020 Banking book Trading book Banking book Trading book ------------------------------- (Rupees in '000) ----------------------------------- The trading activities also raise risk which occurs resulting in negative fluctuations of daily stock prices specifically in those stocks which are held by the Bank, hence, deplete capital. The Bank’s equity position is managed through limits imposed by regulator for both, overall investment and exposure in single scrip. Moreover, internal limits are set to possibly manage overall earnings in the form of placing of stop loss limits and/ or through diversification within the structure of overall equity position portfolio. 47.2.2.3 Equity position Risk Impact of 1% change in foreign exchange rates - Profit and loss account - Other comprehensive income Other currencies Euro United States Dollar Great Britain Pound Japanese Yen Foreign Currency Liabilities -------------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------------- Foreign Currency Assets In order to manage currency risk exposure the Bank enters into ready, spot, forward and swaps transactions with the SBP and in the interBank market, financial institutions and corporate. The Bank’s foreign exchange exposure comprises forward contracts, purchases of foreign bills, foreign currencies cash in hand, balances with Banks abroad, foreign placements with the SBP and foreign currencies assets and liabilities. Foreign Exchange exposure is managed within the statutory limits, as fixed by the SBP. Appropriate segregation of duties exists between the front, middle and back office functions. Foreign exchange and translation risk arises from the impact of currency movements on the value of the Bank’s cash flows, profits and losses, and assets and liabilities as a result of participation in global financial markets and international operations. 47.2.2.2 Foreign Exchange Risk Investments 47.2.2.1 Statement of Financial position split by trading and banking books 2020 2019 Banking book Trading book Total Banking book Trading book Total -------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------- Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
Basis risk ; arising from differences between the actual and expected interest margins on Banking book items over the implied cost of funds of those items. - | National Bank of Pakistan (752,565,940) (752,565,940) 4,705,745 414,641 - 632,619 - 1,085,179,376 30,923,782 (26,632,678) - 125,163,364 (26,632,678) 986,016,071 (757,271,684) 1,306,329,637 2,735,753,256 160,221,210 10,688,517 1,295,641,079 41 - 23,854,603 4,379,959 126,804,675 165,436,764 228,581,952 549,057,953 16,795,186 138,539,005 2,418,966,479 7,533,691 153,918,895 249,259,590 14,227,355 126,804,675 1,463,398,076 983,254,527 59,030,243 2,895,974,466 Cumulative Yield/Interest Risk Sensitivity Gap 0.0% 6.6% 5.2% 10.0% 0.0% 0.0% 8.3% 6.6% 11.3% 9.0% 0.0% Over 1 to 3 Over 3 to 6 Trading book Banking book 2019 Trading book 2020 Exposed to Yield/ Interest risk Over 6 Over 1 Over 2 Months to 1 to 2 to 3 12,965,285 Over 3 to 5 131,186 - Over 5 to 10 Above 14,259,122 Non-interest bearing financial instruments 175,771 - ---------------------------------------------(Rupees in '000) --------------------------------------------- 2020 57,069,044 809,634,984 86,635,910 92,492 - 86,543,418 - - 722,999,074 99,066,607 10,993,747 88,051,369 21,491 - 364,979 466,849,351 354,851,351 822,065,681 160,664,692 103,595,647 6,130,312 32,492 - 6,097,820 - - 97,465,335 89,200,121 56,908,784 32,233,664 57,673 - 455,390 45,910,296 140,299,770 186,665,456 241,304,390 80,639,698 1,691,338 92,994 - 1,598,344 - - 78,948,361 95,425,464 42,516,430 52,812,308 96,726 - 3,574,948 690,430 104,002,599 66,105,848 174,373,825 336,347,291 95,042,901 - - - - 95,042,901 15,248,148 2,392,766 12,050,442 804,940 - 93,381,635 16,909,414 110,291,049 516,443,364 180,096,073 - - - - 180,096,073 8,086,094 3,509,557 3,913,846 662,691 - 139,693,515 48,488,652 188,182,167 691,791,611 175,348,247 - - - - 175,348,247 21,223,291 6,420,414 13,040,142 1,762,735 - 124,152,454 72,419,084 196,571,538 950,061,381 258,269,770 - - - - 258,269,770 8,599,553 5,108,790 652,508 2,838,255 - 237,876,474 28,992,849 266,869,323 984,563,036 34,501,655 - - - - 34,501,655 1,289,139 1,289,139 - 10,399,389 25,391,405 35,790,794 1,245,400,586 260,837,549 986,016,071 - - 986,016,071 (725,178,522) 1,091,285,202 16,795,186 920,571,121 153,918,895 221,830,039 8,336,597 75,695,599 1,214,202 59,030,243 366,106,680 Total Year Years Years Years Years 10 Years Month Months Months ------------------------------------------------------------------------------------------------------------------------------------------------------ (Rupees in '000) ----------------------------------------------------------------------------------------------------------------------------------------------- Upto 1 Total Yield/Interest Risk Sensitivity Gap Off-balance sheet gap Commitments in respect of: - Forward foreign exchange contracts - Forward government securities transactions Commitments for acquisition of: - fixed assets - other commitments Documentary credits and short-term trade-related transactions Off-balance sheet financial instruments On-balance sheet gap Other liabilities Liabilities Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Balances with other banks Lendings to financial institutions Investments Advances Other assets Assets Cash and balances with treasury banks On-balance sheet financial instruments Effective Yield/ Interest rate 47.2.2.5 Mismatch of Interest Rate Sensitive Assets and Liabilities - Profit and loss account - Other comprehensive income Impact of 1% change in interest rates Banking book The above mentioned risks are not only measured, monitored, and managed from the regulatory purpose, but from the perspective of internal management. Re-pricing risk; arising from changes to the overall level of interest rates and inherent mismatches in the re-pricing term of banking book items. Yield curve risk; arising from a change in the relative level of interest rates for different tenors and changes in the slope or shape of the yield curve. - - Interest rate risk specifically arises due to adverse movements in yield curve of underlying asset which is being monitored by ALCO with an objective to possibly limiting the potential impact over the profitability of the Bank which may result in instability of market based interest rates and mismatching or gaps in the amount of financial assets and financial liabilities in different maturity time bands. Bank assumes that the sources of IRR are based on following sub-risks. 47.2.2.4 Yield / Interest Rate Risk in the Banking Book (IRRBB)-Basel II Specific Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
47 .2.2.6 0.0% 12.2% 13.2% 10.9% 10.3% 0.0% | National Bank of Pakistan (1,056,087,719) 419,325,795 202,118,096 - - - - 202,118,096 863,588 7,002,425 355,554 8,221,567 185,955,357 24,384,306 210,339,663 526,930,130 107,604,335 - - - - 107,604,335 2,927,955 5,387,496 764,897 9,080,348 85,224,162 31,460,521 116,684,683 674,810,860 147,880,730 - - - - 147,880,730 2,908,254 10,129,767 1,692,291 14,730,312 97,554,750 65,056,292 162,611,042 914,800,434 29,284,470 2,895,974,466 2,735,753,256 Total Financial Liabilities as per note 46.2.2.5 2,740,968,238 2,236,619 5,214,983 Other Liabilities Total liabilities as per statement of financial position 2,978,364 Deferred Tax Liabilities Add: Non-Financial Liabilities 3,008,526,981 51,165,525 112,552,515 Total assets as per statement of financial position Other Assets - - - - 29,284,470 1,276,252 1,276,252 13,494,958 17,065,764 30,560,722 2019 1,178,055,353 263,254,920 937,616,635 - - 937,616,635 (674,361,715) 19,867,424 894,365,790 180,137,239 1,094,370,453 258,322,564 6,476,086 69,676,183 1,176,645 84,357,259 420,008,737 2,891,775,037 3,407,751 14,323,553 10,915,802 2,877,451,484 3,124,388,871 79,923,253 141,823,034 7,221,266 54,303,565 374,950 2,982,565,837 ----------------- (Rupees in '000) ---------------- 2020 885,515,964 210,705,104 - - - - 210,705,104 2,111,350 180,000 3,424,044 5,715,394 186,426,924 29,993,575 216,420,498 6,669,684 217,207,698 733,271,430 10,697,107 3,848 6,750 10,686,509 - - 722,574,323 23,324,881 41,282,402 73,210 64,680,493 569,701 662,730 737,298,216 48,724,169 787,254,816 Right of Use Assets (516,063,731) 172,727,766 29,004,137 - 29,004,137 - - 143,723,629 22,070,344 28,086,714 39,013 50,196,071 796,971 435,643 14,695,312 177,991,773 193,919,699 54,413,493 303,813 (688,791,497) 367,296,222 66,875,808 8,228 6,750 66,860,830 - - 300,420,415 37,713,498 72,567,558 14,849 110,295,905 599,716 1,202,496 2,099,962 53,401,368 353,412,778 410,716,320 Add: Non-Financial Assets Fixed Assets Intangible Assets Total Financial Assets as per note 46.2.2.5 Reconciliation of Financial Assets & Liabilities with Total Assets & Liabilities (1,056,087,719) Cumulative Yield / Interest Risk Sensitivity Gap 28,747,315 554,779 - 566,855 13,500 1,072,941,001 49,843,489 (21,650,953) - (1,084,835,034) 379,837,482 1,139,047,129 78 1,518,884,687 32,224,427 4,443,852 132,680,048 5,828,067 258,873,260 434,049,653 156,394,964 (21,650,953) 937,616,635 105,114,351 19,867,424 471,757,352 2,198,049,280 7,640,188 180,137,240 2,877,451,484 292,513,379 13,220,807 134,780,010 1,449,555,297 1,008,139,084 84,357,259 2,982,565,836 2019 (Restated) Exposed to Yield/ Interest risk Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Non-interest bearing to 6 Months to 1 to 2 to 3 to 5 to 10 Above Upto 1 to 3 financial instruments Total Year Years Years Years Years 10 Years Month Months Months ------------------------------------------------------------------------------------------------------------------------------------------------------ (Rupees in '000) ----------------------------------------------------------------------------------------------------------------------------------------------- Total Yield / Interest Risk Sensitivity Gap Off-balance sheet gap Commitments in respect of: - forward foreign exchange contracts - forward government securities transactions Commitments for acquisition of: - fixed assets - other commitments Documentary credits and short-term trade-related transactions Off-balance sheet financial instruments On-balance sheet gap Liabilities 0.0% Bills payable 13.3% Borrowings 6.3% Deposits and other accounts Liabilities against assets subject to finance lease 10.0% 0.0% Other liabilities Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Other assets On-balance sheet financial instruments Effective Yield/ Interest rate Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 47.2.3 Operational Risk The Bank may suffer losses due to its exposure to Operational Risk. To mitigate, a comprehensive Operational Risk Management (ORM) Framework has been developed to align the Bank’s operations with sound practices of operational risk by Basel framework. ORM Framework provides guidance for setting the operational risk strategy of the Bank, selection and adoption of risk and loss measurement tools, reporting, and establishment of operational risk management processes. Operational risks are a core component of doing business arising from the day-to-day operational activities of the Bank including launching of new products and services by the bank. Bank realizes that operational risks cannot be fully mitigated, it therefore determines an appropriate balance between accepting potential losses and incurring costs of mitigation. Further, the Bank has adopted a comprehensive Operational Risk Management Strategy and Operational Risk Tolerance limits approved by the Board in-line with Basel framework. Furthermore, the Bank has rolled-out Operational Loss Data Collection Mechanism whereby field functionaries are responsible to report operational losses under their jurisdictions on a certain frequency. Operational loss events are reviewed and appropriate corrective measures are taken on an ongoing basis. The Bank has also conducted analysis of major Operational Risk Incidents covering key control lapses and accordingly suggested recommendations & mitigations. As per regulatory framework, the Bank calculates capital charge for its operational risk using Basic Indicator Approach. Moreover, the Bank closely monitored the situation and undertaken required actions to ensure the safety and security of Bank staff and maintenance of service to its customers. The Senior Management of the Bank including the Covid Crises Management Team closely monitored the situation, and took timely decisions to resolve any concerns. The Bank implemented a Business Continuity Plan (BCP). The Bank communicated the plan with its customers on how they can connect with the Bank through its digital and online channels. The Bank continued to take measures to ensure the maintainence of their service levels, customer complaints were resolved, in order for the Bank to meet the expectations of its stakeholders. The Bank's operations stayed highly resilient, almost more than 95% branches remained open to facilitate its customers. Further, the Bank deployed all necessary measures for the health and safety of its employees to prevent them from the pandemic situation. 47.2.4 Information Security Risk We rank cyber security as one of our top priority risks. Our extensive customer base and increasing focus on information technology growth, mean that our data is protected and our systems are safe. Further, due to COVID - 19, the Bank has taken appropriate actions to monitor and respond to ever evolving cybersecurity risks and adopted a heightened state of cybersecurity. We are living in the highly technology dependent environment, where most of the business functions are performed with information technology for storing, processing and sharing information; the information “assets” that are being used to store, process and transmit the information, face various types of threats. If threats get materialized and are able to exploit the vulnerabilities (weaknesses) present in these information assets, the confidentiality, integrity and availability of information get compromised. In order to mitigate the risks, certain controls and countermeasures need to be assessed and implemented. We have governance mechanisms in place to develop, deploy and monitor information security policies, internal controls and cyber security framework across our businesses. Our staff is first line of defense against any cyber attacks therefore we regularly assess the information security controls and undertake employees’ awareness and trainings. We work with our key technology partners to ensure that potential vulnerable systems are identified and appropriate controls, updates and patches are implemented to secure the systems. The Bank is actively communicating with its customers on interacting with the Bank in a secure manner through its full suite of channels including online and digital banking. 47.2.5 Enterprise-wide Risk In addition to the above mentioned risks, the Bank has a structure to identify residual material risks through generation of various MIS reports on periodic basis. The source of these reports includes, but not limited to, the Board approved Internal Capital Adequacy and Assessment Process (ICAAP), which commensurate risks over and above those which directly occurs as a result of daily business and operations of the Bank. These risks include Concentration Risk, Interest Rate Risk in Banking Book (IRRBB), Increase in NPL Categories, Reputational Risk, Strategic Risk, etc. Moreover, all those brewing risks that are material and arise within the Bank or due to inherent behavior of country’s market and economic conditions, whether in isolation or in combinations are covered under the Bank-wide Recovery Plan. These risks are | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 monitored on certain frequency and corrective actions are taken as and when deemed necessary. The Bank has also prepared various scenarios and accordingly quantified losses against different types of risks based on sophisticated statistical models, such as, macro-stress testing - a regression based methodology. This is developed and implemented by the Bank assuming deterioration in macro-economic factors that measures any negative impact on the capital of the Bank. 47.2.6 Liquidity Risk Liquidity risk is the risk that the Bank may be unable to meet short term financial demands. This usually occurs due to the inability to convert a security or hard asset to cash without a loss of capital and/or income in the process.Banks are often evaluated on their liquidity, or their ability to meet cash and collateral obligations without incurring substantial losses. To mitigate this risk, bank has arranged diversified funding sources, manages specific assets with liquidity in mind and monitors liquidity on daily basis. In addition, the Bank maintains statutory deposits with central Banks inside and outside Pakistan.The purpose of liquidity management is to ensure that there are sufficient cash flows to meet all of the Bank's liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking sustained damage to the Bank's reputation, as well as to capitalize on opportunities for business expansion and profitability. This includes the Bank's ability to meet deposit withdrawals either on demand or at contractual maturity, to repay borrowings as they mature and to make new loans and investments as opportunities arise. Asset and Liability Committee (ALCO) is responsible for ensuring that the Bank has adequate liquidity and monitors liquidity gaps, to execute this responsibility. Regulatory stress as well as proprietary stress testing and ratio based liquidity assessments are performed to proactively identify and manage liquidity position, needs /requirements. Bank has various limits / ratios, triggers and management actions in place to monitor and mitigate liquidity risk. The Bank calculates and monitors, on regular basis, Basel-III Liquidity standards (includes LCR, NSFR and LMTs), liquidity ratios as per SBP parameters [(LA/ D&B), Gross ADR (net of refinancing from SBP)] besides other internal liquidity measures like total approved securities to deposit, etc. Moreover the recent fall in interest rate has resulted in substantial MTM gain in Government Securities portfolio, which can be realized in case of any adverse liquidity situation. | National Bank of Pakistan
| National Bank of Pakistan Over 1 to 7 days 611,049,597 3,008,526,981 21,275,131 56,562,933 116,021,334 73,699,344 267,558,742 Share capital Reserves Unappropriated profit Surplus/(Deficit) on revaluation of assets 21,275,131 52,308,742 88,785,900 70,244,060 Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of assets 232,613,833 1,938,462,574 (1,298,891,352) 232,613,833 19,867,424 3,468,570 1,836,033,658 79,092,922 639,571,222 3,124,388,870 19,867,424 471,757,352 2,198,049,281 7,640,188 10,915,802 183,544,990 290,465,424 6,476,086 3,330,495 314,292,542 20 25,006,655 292,513,379 13,220,807 134,780,010 1,449,555,297 1,008,139,084 54,303,565 374,950 7,221,266 164,280,512 2,891,775,037 Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to right of use assets Deferred tax liabilities Other liabilities Liabilities Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Fixed assets Intangible assets Right of Use Assets Other assets Assets Over 7 to 14 days 2020 117,383,795 5,266,007 11,128,935 280,904 16,675,846 134,059,641 2,300,000 128,305,403 3,454,238 - (40,574,293) 3,455,970 103,011,653 41 420,804 106,888,468 66,314,175 489,997 1,643,639 1,700,000 30,179,598 32,300,740 201 - 242,867,467 4,727,114 51,070,288 15,141 9,300,464 65,113,007 307,980,474 205,127 230,232,181 59,593,625 14,649 17,934,892 (20,910,870) 56,908,784 66,056,859 57,673 15,226,657 138,249,973 117,339,103 455,390 45,910,297 60,035,942 50,071 10,887,402 2019 (Restated) 226,662,077 6,266,632 13,467,529 6,349 24,852,920 44,593,430 271,255,507 159,852 236,617,171 16,337,194 5,276 18,136,013 81,382,460 41,474,224 20,877,326 25,319 1,210,882 63,587,751 144,970,211 308,490 113,118,951 30,309,223 29,405 1,204,142 54,527,544 1,042,206 18,483,104 71,406 1,141,620 20,738,336 75,265,880 3,574,949 381,940 39,082,357 30,130,411 724,254 101,271 66,557 1,204,142 149,334,681 2,392,766 12,454,175 804,940 15,947,785 31,599,666 180,934,347 97,645,814 41,668,685 2,878,438 101,271 625,524 38,014,615 222,397,626 3,509,557 8,477,921 662,691 5,339,632 17,989,801 240,387,427 157,346,293 78,281,159 724,254 101,271 583,369 3,351,081 245,315,458 6,420,414 21,086,963 1,762,736 2,978,364 10,377,940 42,626,417 287,941,875 125,301,464 157,289,258 1,322,411 1,528,327 2,500,415 422,185,325 5,108,791 1,471,174 4,127,395 10,076,617 20,783,977 442,969,302 252,706,784 137,732,079 48,764,136 3,766,303 - (195,490,536) 331,753,663 314,697,849 16,492,044 563,769 136,263,126 81,567 1,423,017 131,180,048 3,578,494 - (10,627,267) 15,687,822 5,715,707 9,565,683 406,431 5,060,554 2,152,912 1,302,749 1,604,893 - (118,215,910) 169,879,667 55,955,355 113,315,385 78 608,849 51,663,757 867,922 1,500,000 1,318,622 47,977,155 57 - (662,782) 85,185,690 13,787,296 56,249,692 13,695 15,135,008 84,522,908 599,716 464,864 2,099,962 5,524,167 47,520,373 12,813 28,301,015 45,008,032 66,092,778 23,926,202 12,464,141 1,155 29,701,280 111,100,810 737,633 47,877,201 33,973,951 1,094 28,510,932 30,514,889 75,665,225 22,070,344 37,582,592 39,013 15,973,276 106,180,114 796,971 435,643 14,695,312 76,253,146 39,062 13,959,979 524,708,011 59,628,994 22,981,161 35,570,618 20,309 1,056,906 584,337,006 281,610 523,958,573 58,168,112 18,712 1,909,998 257,419,986 29,071,735 343,720 27,718,421 52,901 956,692 286,491,721 569,701 381,120 255,081,682 27,633,786 740,557 124,983 49,893 1,909,998 251,874,927 31,208,171 863,588 11,749,879 355,554 18,239,151 283,083,097 189,531,577 36,951,889 2,854,729 124,983 333,520 53,286,398 146,095,358 22,380,061 2,927,955 14,177,962 764,897 4,509,248 168,475,419 104,055,918 53,627,035 740,557 124,984 691,665 9,235,259 236,175,360 45,345,559 2,908,254 25,542,734 1,692,291 6,428,962 8,773,318 281,520,919 98,526,197 177,824,629 1,398,116 1,611,699 2,160,277 364,705,118 21,413,100 2,111,350 1,586,472 4,700,296 4,486,840 8,528,141 386,118,218 204,352,804 128,733,080 48,569,604 4,462,730 - Over 14 days to 1 Over 9 months to 1 Total Upto 1 Day Over 1 to 7 days Over 7 to 14 days Over 1 to 2 Months Over 2 to 3 Months Over 3 to 6 Months Over 6 to 9 Months Over 1 to 2 years Over 2 to 3 years Over 3 to 5 Years Over 5 Years Month year ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 104,480,290 267,558,742 (1,537,492,818) Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to right of use assets Deferred tax liabilities Other liabilities Net assets 128,059,442 724,224 1,998,152 122,804,675 602,861 1,929,530 - 23,189,505 389,647 23,579,152 16,795,186 138,539,005 2,418,966,479 7,533,691 2,978,364 156,155,514 2,740,968,239 244,470,420 9,074,765 6,348,903 334,192,443 16,963,066 249,259,590 14,227,355 126,804,675 1,463,398,076 983,254,527 54,413,493 303,813 6,669,684 110,195,768 16,795,186 1,966,540 2,068,191,047 61,589,642 2,148,542,415 Liabilities Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Fixed assets Intangible assets Right of Use Assets Other assets Assets Upto 1 Day Over 14 days to 1 Over 9 months to 1 Over 1 to 2 Months Over 2 to 3 Months Over 3 to 6 Months Over 6 to 9 Months Over 1 to 2 years Over 2 to 3 years Over 3 to 5 Years Over 5 Years Month year ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total 47.2.6.1 Maturities of Assets and Liabilities - based on contractual maturity of the assets and liabilities of the Bank Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 21,275,131 56,562,933 116,021,334 73,699,344 Share capital Reserves Unappropriated profit Surplus/(Deficit) on revaluation of assets Share capital Reserves Unappropriated profit Surplus/(Deficit) on revaluation of assets Net assets Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to right of use assets Deferred tax liabilities Other liabilities Liabilities Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Fixed assets Intangible assets Right of Use Assets Other assets Assets 2020 Over 1 to 3 Months 467,478,744 168,366,457 499,727 10,993,746 118,540,644 21,491 38,310,849 1,763,659 364,979 466,849,352 149,304,778 19,924 17,542,509 635,845,201 Over 3 to 6 Months (259,843,398) 417,041,640 6,439,082 56,908,784 338,032,867 57,673 15,603,234 45,629,218 455,390 45,910,297 55,843,636 50,071 9,309,630 157,198,242 2019 (Restated) (117,956,281) 382,582,965 194,485 42,516,430 336,495,938 96,726 3,279,386 49,204,166 690,430 152,201,308 59,201,007 724,254 101,271 95,963 2,408,285 264,626,684 (145,656,595) 329,387,196 877,012 2,392,767 309,364,692 804,940 15,947,785 2,796,254 97,645,814 41,668,685 2,878,438 101,271 625,524 38,014,615 183,730,601 (74,512,891) 314,900,318 3,509,557 305,388,438 662,691 5,339,632 157,346,293 78,281,159 724,254 101,271 583,369 3,351,081 240,387,427 (51,595,862) 339,536,934 6,420,414 317,997,480 1,762,736 2,978,364 10,377,940 125,301,464 157,288,456 1,322,411 1,528,327 2,500,414 287,941,072 312,055,254 14,456,526 5,108,790 1,471,173 2,838,255 5,038,308 237,876,475 86,006,957 2,628,348 326,511,780 110,130,080 6,327,446 1,289,138 5,038,308 14,830,309 51,725,124 48,764,136 1,137,957 116,457,526 232,613,833 21,275,131 52,308,742 88,785,900 70,244,060 (457,314,635) 1,123,806,227 2,891,775,037 232,613,833 9,433,021 379,837,482 666,496,270 78 68,039,376 666,491,591 3,124,388,870 19,867,424 471,757,352 2,198,049,281 7,640,188 10,915,802 183,544,990 164,896,209 10,919,938 132,680,048 5,951,866 301,060,066 77 50,983,387 292,513,379 13,220,807 134,780,010 1,449,555,298 1,008,139,084 54,303,565 374,950 7,221,266 164,280,512 Total 58,039,149 201,855,971 570,011 37,713,498 109,958,653 14,849 53,598,960 259,895,120 3,238,348 1,202,496 2,099,962 53,401,368 167,009,328 13,907 32,929,712 (167,072,598) 311,356,273 204,891 22,070,344 270,008,867 39,013 19,033,157 144,283,675 58,620,388 435,643 14,695,312 58,627,787 39,062 11,865,483 571,077,598 356,179,088 8,241,485 23,324,881 321,715,872 73,210 2,823,639 927,256,686 58,393,118 662,730 779,040,255 84,406,442 740,557 124,983 68,605 3,819,995 (1,215,297) 291,563,711 1,418,016 863,588 270,687,403 355,554 18,239,151 290,348,414 7,365,317 189,531,577 36,851,889 2,854,729 124,983 333,520 53,286,398 (112,842,466) 281,317,586 2,927,955 273,115,486 764,897 4,509,248 168,475,119 104,055,918 53,626,735 740,557 124,984 691,665 9,235,259 (22,762,164) 304,283,083 2,908,254 284,480,259 1,692,291 6,428,962 8,773,318 281,520,919 98,526,197 177,824,629 1,398,116 1,611,699 2,160,277 260,994,677 15,872,776 2,111,350 1,586,471 3,424,044 4,486,840 4,264,070 276,867,453 186,426,924 87,170,265 3,270,264 - 103,709,569 5,540,323 1,276,252 4,264,070 109,249,892 17,925,879 41,561,943 48,569,604 1,192,466 - Over 6 Months to 1 Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years Above 10 Years Year ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Upto 1 Month 27,459,692 267,558,742 Net assets 267,558,742 768,368,757 Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to right of use assets Deferred tax liabilities Other liabilities 2,740,968,239 149,866,293 12,716,556 126,804,675 165,436,765 303,934,725 201 37,069,234 795,828,449 8,784,880 10,688,517 691,675,247 41 57,220,072 249,259,590 14,227,355 126,804,675 1,463,398,076 983,254,527 54,413,493 303,813 6,669,684 110,195,768 3,008,526,981 16,795,186 138,539,005 2,418,966,479 7,533,691 2,978,364 156,155,514 Liabilities Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Fixed assets Intangible assets Right of Use Assets Other assets Assets Upto 1 Month Over 1 to 3 Over 3 to 6 Over 6 Months to Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years Above 10 Years Months Months 1 Year ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total 47.2.6.2 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Bank Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 47.2.7 Derivative Risk A derivative is a contract that derives its value from the performance of an underlying asset which can be an index, interest rate, commodity price, security price, FX rate etc. Derivatives include forwards, futures, foreign currency and interest rate swaps, options etc. In Pakistan, futures and forwards are most commonly traded derivatives. Currently, the Bank is not an active participant in the Pakistan derivatives market as it does not hold an Authorized Derivative Dealer (ADD) licence to perform derivate contracts. Once acquired, the Bank will carry out the transactions which are permitted under the Financial Derivatives Business Regulations issued by the SBP, which may include Interest rate swaps, forward rate agreements, foreign currency options etc. Moreover, the Bank may also offer other derivative products to satisfy customer requirements, specific approval of which will be sought from the SBP on a transaction by transaction basis. 48. EVENTS AFTER THE REPORTING DATE The Board of Directors has proposed a cash dividend of Rs. Nil per share (2019: Rs. Nil per share) amounting to Rs. Nil (2019: Rs. Nil) at its meeting held on February 24, 2021 for approval of the members at the annual general meeting to be held on March 29, 2021. These unconsolidated financial statements do not reflect this appropriation as explained in note 5.20. 49. CORRESPONDING FIGURES Certain corresponding figures have been reclassified wherever necessary to confirm to the presentation adopted in the current year. 50. GENERAL 50.1 Figures have been rounded off to the nearest thousand rupees. 51. DATE OF AUTHORIZATION FOR ISSUE The unconsolidated financial statements were authorized for issue on February 24, 2021 by the Board of Directors of the Bank. Zubyr Soomro Chairman Arif Usmani President & CEO | National Bank of Pakistan Abdul Wahid Sethi Chief Financial Officer Imam Bakhsh Baloch Director Asif Jooma Director
| National Bank of Pakistan Muhammad Akhtar Muhammad Akhtar S/O Muhammad Shafi, Mohallah Saddiq Pura Marowal 34501-2010714-9 Late Hafiz Nazar Ali Latif Colony Rahmatpur Muhalla Dist Larkana Late Deedar Ali S/O Muhammad Khan Village meer Khan P.O Qubo Saeed Khan Dist Kamber Shahdadkot Late Sultan Ahmed S/O Bahram Khan Muhalla Misri Shah P.O Shahdadkot Dist:Kamver Shahdadkot Late Muhammad Akbar S/O Mirza Khan Jagirani Village Haut Dahoot taluka Kamber Dist: Kamber Shahdaddkot Late Qamaruddin S/O Moor Khan Jiho Village Wasand Jeho P.O Khan Waha Wasand Jeho Ratodero Dist Larkana Late Ghulam Hyder S/O Nabi Bux Solangi Shaki Sulman Shah Colony Bhanseedabad Taluka Sehwan Dist Jamshoro Late Shabir Ahmed S/O Mehar Khan Mashori Village Mehrani Taluk Dokri Dist Larkana 4 5 6 Late Ali Akbar Attar Late Ali Akbar Attar Village Muhammad Yousif Aataar Khasa Chandia Dadu 41409-7424261-9 Late Najeebullah S/O Abdul Latif Abro Late Najeebullah Village Agham No.02 Banguldero Taluka Ratodero Dist 43205-0746683-5 Larkana 19 20 18 17 Late Qurban Ali 41201-1761586-7 Late Muhammad Sadique 43201-5697388-9 Late Rehmutullah 43204-6997069-9 Late Muhammad Sadique S/O Nek Muhammad Village Nek Muhammad Khaskheli, Taluka Dokri Late Rehmutullah S/O Khuda Bux Village Abdul Haq Khan Khoso P.O Behram Sistt Kamber Shahdadkot Late Qurban Ali S/O Haji Ali Sher Village Ghulam Panhwar P.O Phulji Station Distt Dadu Late Muhammad Bux 43203-6881404-5 Late Khalid Akber 43203-4663692-5 Late Muhammad Sharif 41203-1684038-7 Late Muhammad Uris 41203-8342097-7 16 15 14 13 Late Muhammad Bux S/O Gul Hassan Shaikh Allah Abad Muhalla Bakrani Road Larkana Late Khalid Akber S/O Ghulam Akber Near Petrol Pump Lahori Muhalla Larkana Late Muhammad Sharif S/O Qurban Ali Qureshi R/O Shahbaz Colony Khairpur Nathan Shah Late Muhammad Uris S/O Ali Bux Khoso Mir Pur Muhalla K.N Shah Late Shabir Ahmed 43201-6119252-1 Late Ghulam Hyder 41206-5183938-7 Late Qamaruddin 43205-4474253-7 Late Muhammad Akbar 43203-9191745-9 Late Sultan Ahmed 43406-0364231-5 Late Deedar Ali 43206-2090547-9 Late Hafiz Nazar Ali 43203-7490491-1 Syed Mutee Ullah Shah 36304-1352078-9 12 11 10 9 8 7 Syed Mutee Ullah Shah Near Railway Phatak Chah Bakhi wala, Mirali wahan, shujaabad 3 Khalid Mehmood 36102-1203646-7 Khalid Mehmood Mohri Pur, P.O, Khas, Kabirwala 2 3 Altaf Hussain 36302-6946741-1 Name of Individuals/Partners/ Directors with NIC No. 2 Altaf Hussain Mohallah Raj Ghaat Suraj Miani Multan Name & Address of the borrower 1 1 Sr. No. Abdul Latif Abro Muhammad Essa Attar Haji Ali Sher Khuda Bux Nek Muhammad Ali Bux Khoso Qurban Ali Qureshi Ghulam Akber Gul Hassan Shaikh Mehar Khan Mashori Nabi Bux Solangi Moor Khan Jiho Mirza Khan Jagirani Bahram Khan Muhammad Khan 905 708 757 650 578 944 649 752 612 600 779 612 701 1,054 1,272 1,600 513 Muhammad Shafi Ali Murad Mastoi 737 593 5 1,154 Principal Ghulam Nabi Shah Malik Khadim Hussain 4 Wahid Bukhsh Fathers/Husband's name. 6 - - - - - - - - - - - - - - - - - - 226 85 Interest/ mark-up 7 - - - - - - - - - - - - - - - - - - - - Others 905 708 757 650 578 944 649 752 612 600 779 612 701 1,054 1,272 1,600 513 737 819 8 1,239 Total Outstanding liabilities at beginning of year 905 709 757 650 578 944 649 752 612 600 779 612 702 1,054 1,273 1,600 513 737 593 9 1,154 Principal written-Off 10 - - - - - - - - - - - - - - - - - - - - 11 - - - - - - - - - - - - - - - - - - - - Other Interest/ financial Mark-up relief/waiver written off. provided. STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF OF RUPEES FIVE HUNDRED THOUSAND OR ABOVE PROVIDED DURING THE YEAR ENDED DECEMBER 31, 2020 12 905 709 757 650 578 944 649 752 612 600 779 612 702 1,054 1,273 1,600 513 737 593 1,154 Total (9+10+11) Rs. in 000 Annexure - I Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
Late Muhammad Ibrahim S /O Muhammad Paryal Dayo Late Muhammad Ibrahim New Doctor Colony Ratoderao 43205-4020282-7 Late Shah Nawaz S/O Ghulam Murtaza Village Fatahpur K.N.Shah Late Mumtaz Ali S/O Wali Muhammad CNIC NO.43404-0370901-3 Village Gul Muhammad Chandio, P.O Miro Khan Late Haji Amir Ali S/O Haji Allah Rakhio Near Hydri Plice Station, Muhalla Chandia Larkana Distt: Larkana Late Saeed Khan S/O Khair Muhammad Jakhar Tharo Dero Bughti Baloch Taluka Larkana Late Maqbool Ahmed S/O Abdul Razak Sejawal Junejo /Village Kot Lal Bux Late Fareed Ahmed S/O Nizamuddin Peoples Colony, Muhalla Lahori Larkana Late Lal Bux S/O Allah Wadhayo Abro Muhall Galib Nagar Larkana Late Shafi Muhammad S/O Gul Hassan Village & P.O Hamayoon Taluka & Dist Shikarpur Late Kala Alyas Wazir Ali S/O Bashir Ahmed Near Qubo Road H. No.2665/82 Drib Muhammad P.O ShahdadkotDist Kamber Shahdadkot Late Ghulam Sarwar S/O Hidayatullah Village Phillri Taluka Sijawal Junejo Distt: Kamber Shahdadkot Late Zahid Hussain S/O Muhammad Roshan Samo R/O Kori Muhalla Khairpur Nathan Shaha Late Allah Dino S/O Mazhar Hussain Solangi Ward No.05 Solangi Muhalla Sita Road Taluka K.N Shah Dist Dadu Late Ahmed Ali S/O Amanullah Joyo CNIC NO.43207-0849012-9 Late Muhammad Fareed S/O Muhammad Mureed CNIC NO.43203-7753014-3 Near Dargah Sharif Makan No.601 Muhalla Rahmatpur Late Ghulam Hyder S/O Mehmood Mirbhar Muhalla Per Jo Goth Taluka Naudero Distt Larkana Late Aga Abdul Sattar Khan Muhalla Khair Muhammad Khan Shikarpur Late Abdul Razaq S/O Bagan Banglani Village Bilawal Banglani Taluka Thull Dist Larkana Late Ramdas S/O Mangha Ram Muhalla Harefan Ratodero Late Muhammad Mako Village Ghulam Qadir Dakhan Ratodero Late Ali Sher S/O Mubarak Chandio Village Din Muhammad Chandio Larkana Late Irshad Ahmed S/O Muhammad Usman Massan Road Muhalla Muhammad Pur Larkana 24 | National Bank of Pakistan 27 28 29 30 35 37 41 43 44 42 40 39 38 36 34 33 32 31 26 25 Late Ali Sher 43203-6704535-7 Late Irshad Ahmed 43203-7737131-9 Late Ramdas 43205-0110482-7 Late Muhammad Mako 43301-4080311-9 Late Ghulam Hyder 43205-4232086-9 Late Aga Abdul Sattar Khan 43304-1870923-5 Late Abdul Razaq 43105-7856760-5 Late Muhammad Fareed 43203-7753014-3 Late Ahmed Ali 43207-0849012-9 Late Allah Dino 41203-7373911-1 Late Zahid Hussain 41203-0458636-1 Late Ghulam Sarwar 43204-1149630-9 Late Lal Bux 43203-0687077-5 Late Shafi Muhammad 43304-8743973-1 Late Kala Alyas Wazir 43406-0357163-7 Late Fareed Ahmed 43203-1354620-3 Late Maqbool Ahmed 43204-9627749-3 Late Saeed Khan 43203-7505426-3 Late Haji Amir Ali 43203-6180269-5 Late Shah Nawaz 41203-7142814-7 Late Mumtaz Ali 43404-0370901-3 Late Wali Muhammad 43105-0611960-5 23 22 Late Abdul Qayoom 43105-9171427-1 Name of Individuals/Partners/ Directors with NIC No. Late Abdul Qayoom S/O Muhammad Bux Khan Village Jan Beg Khan Kanrani Taluka Thull Distt Jacobabad Late Wali Muhammad S/O Shafi Muhammad Soomro Village Mirpur Buriro Taluka Thull Distt Jacobabad Name & Address of the borrower 21 Sr. No. Muhammad Usman Mubarak Chandio Muhammad Hashim Mangha Ram Bagan Banglani Aga Abdul Fatah Mehmood Mirbhar Muhammad Mureed Amanullah Joyo Mazhar Hussain Solangi Muhammad Roshan Samo Hidayatullah Bashir Ahmed Gul Hassan Allah Wadhayo Abro Nizamuddin Abdul Razak Khair Muhammad Jakhar Haji Allah Rakhio Wali Muhammad Ghulam Murtaza Muhammad Paryal Dayo Shafi Muhammad Soomro Muhammad Bux Khan Fathers/Husband's name. 513 581 586 539 601 539 592 522 520 501 516 599 540 913 703 614 751 832 511 805 741 926 777 828 Principal - - - - - - - - - - - - - - - - - - - - - - - - Interest/ mark-up - - - - - - - - - - - - - - - - - - - - - - - - Others 513 581 586 539 601 539 592 522 520 501 516 599 540 913 703 614 751 832 511 805 741 926 777 828 Total Outstanding liabilities at beginning of year 513 581 587 539 601 539 592 522 520 502 516 599 540 913 703 614 752 832 511 805 742 926 777 828 Principal written-Off - - - - - - - - - - - - - - - - - - - - - - - - Interest/ Mark-up written off. - - - - - - - - - - - - - - - - - - - - - - - - Other financial relief/waiver provided. 513 581 587 539 601 539 592 522 520 502 516 599 540 913 703 614 752 832 511 805 742 926 777 828 Total (9+10+11) Rs. in 000 Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
Late Ghulam Akber S /O Ali Nawaz Shaikh Near Mustafa Masjid Muhalla New Shaikh Zed Colony Larkana Manzoor Ahmad, Momin Pura Syedan Chak Ramdas Disttrict Gujranwala Mr.Malik Muhammad Afzal S/o Malik Hussain Bukhsh Basti samja wahgan,P/O zahirpir,tehsil,Khanpur. Syed Sikandar Jalal H.No. 128, Street No. 5 Shiekh Maltoon Town Mardan Raja Muhammad Aslam, Village Cheleyana Jageer, Tehsil Athmuqam, Distt Neelum, AK Syed Zameer Hussain Shah, Village Neelum, P/O Karin, Tehsil Athmuqam, Distt Neelum, AK Kashif Mehmood Awan Near Ara Machine Mohalla Uper Chatter Mzd Muhammad Waris VPO Chanjjana Kotli Sattian, Rawalpindi Mr.Muhammad Akram S/o Muhammad Ashraf Chak Bala Arain, Bahawalpur Mr.Muhammad Siddique S/oDin Muhammad H# 21, muslim town, renala khurd , dist. Okara Muhammad Bashir (Layyah) Sahibzada Wajih ur Rasool Rasool Mohallah Khair Shah, Pind Dadan Khan, T&D, Jhelum M/S Abbas Khakhi & Company situated at Mouza Rajghat Suraj Miani Multan Mr. Dewan Syed Muhammad Taqi, near sunny bakers siddiqia road new gulgasht colony multan. Muhammad Khursheed S/o Muhammad Sharif Bhero Waal, Post Office Khanewal Tehsil and District Khanewal Mst.Suraya Begum House no 493, Mohallah Qazi Jalal, Inside Pak Gate Multan Muhammad Afzal Tahir Jamal Naghar Kotli Junaid Tehsil Mailsi District Vehari M/S Dress Valley Sharif Plaza LMQ Road, Multan Muhammad Iqbal Bhatti Galli No. 6 , Mahallah Haji Noor Pura , Daska Muncipal Town Committee , Tehsil Daska , M/s.Ahmed Brothers Ginners (Pvt.) Ltd. Address Chak # 112 Multan Road Jehanian Distt Khanewal M/s Farmer Cotton Ginners Address Bypass Road Jehanian Distt Khanewal 45 47 49 | National Bank of Pakistan 53 54 55 56 65 64 63 62 61 60 59 58 57 52 51 50 48 46 Name & Address of the borrower Sr. No. Aman Ullah 36101-1235934-5 Fozia Aman 36303-1861958-6 Nasreen Akhtar 36101-6838097-8 Muhammad Iftikhar 36303-0986831-3 Sajid Ali 36302-3438348-9 Samina Sajid 36302-8562640-0 Mr.Muhammad Iqbal Bhatti 34601-9185407-9 Muhammad Afzal Tahir 36602-7023083-3 Kh. Anees ur Rehman 42000-7480710-1 Mst. Suraya Begum 36302-2486354-2 Muhammad Khursheed 36103-6550070-5 Mr. Safdar Abbas Khakhi 36303-0897990-1 Mr. Dewan Syed Muhammad Taqi 36302-8994032-9 Muhammad Bashir 32203-2026317-1 Sahibzada Wajih ur Rasool 37302-1043762-1 Mr.Muhammad Siddique 35303-2100954-9 Mr.Muhammad Akram 31101-8414687-7 Kashif Mehmood Awan 82203-4515133-7 Muhammad Waris 37403-7827627-3 Syed Zameer Hussain Shah 82201-9867009-1 Raja Muhammad Aslam 82201-1887006-7 Mr.Malik Muhammad Afzal 36301-9459345-5 Syed Sikandar Jalal Qasim 16101-5375266-9 Manzoor Ahmad 34102-1894803-3 Late Ghulam Akber 43204-3518049-7 Name of Individuals/Partners/ Directors with NIC No. Sajid Ali Muhammad Ibrahim Rehmat Ali Aman Ullah Muhammad Ayyub Nazeer Hussain Nathay Khan Bhatti Baig Kh. Mujeeb ur Rehman Mian Ahmad Bux Malik Falak Sher Muhammad Sharif Dewan Syed Khurshid Ahmad Malik Bilal Khakhi Sahibzada Maqsood ur Rasool Ahmad Bakhsh Din Muhammad Muhammad Ashraf Qaim Din Muhammad Shaukat Syed Jehangir Shah Hadaytullah Janjuya Syed Muhammad Saleem Malik Hussain Bukhsh Muhammad Abdullah Ali Nawaz Shaikh Fathers/Husband's name. 2,910 - - 405 5,530 470 - - 198 705 866 545 914 519 710 694 720 602 528 741 988 Principal 71 99 2,645 2,413 - 881 3,818 2,108 1,797 2,172 2,103 - - - - - - - - - - Interest/ mark-up 72 50 79 30 30 30 3,569 - - 150 - - - - - - - - - - - Others 5,585 2,443 3,569 1,336 9,427 2,608 1,797 2,172 2,451 777 866 545 914 519 710 694 720 673 528 840 988 Total Outstanding liabilities at beginning of year - - - - - - - - - 705 866 546 914 519 710 694 720 602 528 741 988 Principal written-Off - - - - - - - - - - - - - - - - - Interest/ Mark-up written off. - - - - 1,595 1,981 2,192 577 1,342 993 1,438 1,629 1,362 - - - - - - - - - - - - Other financial relief/waiver provided. 1,595 1,981 2,192 577 1,342 993 1,438 1,629 1,362 705 866 546 914 519 710 694 720 602 528 741 988 Total (9+10+11) Rs. in 000 Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 70 M/S. Shikrani Traders. Main Bazar, Uch Sharif M/s.H.W.Dairies Pvt Ltd. Hujra Chunian Road, Mirajabad, District Okara 69 (2) S/o Mian Muhammad Ilyas Miraj (3) S/o Mian Muhammad Riaz Miraj (3) Mian Waqas Riaz 35202-2562237-9 (1) S/o Mian Miraj Din Khuda Bukhsh (2) Haseeb Ilyas 35202-7459668-5, Mr. Muhammad Asghar Badar, 31202-2785705-7 (1) Muhammad Ilyas Miraj 35202-7301494-9 2. Muhammad Sharif 1. Khuda Bukhsh 3. Khuda Bukhsh. 3. Mr. Muhammad Ajmal Khan 31201-6511835-7 M/S.Shikrani Zari Service . 1. Mr. Muhammad Sharif Near Old Larry Adda Mohallah Shams Colony,Uchsharif 31201-4834670-3 Teh Ahmadpur East Distt Bahawalpur 2. Muhammad Iqbal Khan 31202-3147441-3 2. Khuda Bukhsh 2. Mr. Muhammad Asghar Badar, 31202-2785705-7 68 1. Khuda Bukhsh. M/S.Shikrani Model Industries, Cotton Ginning Pressing and Oil Mills, KLP Road, UchSharif 67 Muhammad Arshad Khan Fathers/Husband's name. 1.Mr. Muhammad Sharif, 31201-4834670-3 Firdous Arshad Firdous Arshad Mouza Rango Khan, tehsil Kehrore Pecca, Distt 36602-4385686-4 Lodhran Name & Address of the borrower 66 Sr. No. Name of Individuals/Partners/ Directors with NIC No. 91,496 34,779 900 1,299 1,868 2,885 Principal 36,884 15,664 - - 1,280 1,522 Interest/ mark-up 4,354 205 32 35 55 17 Others 132,734 50,648 932 1,334 3,203 4,424 Total Outstanding liabilities at beginning of year 40,260 - - - - - Principal written-Off - - - - - 17,243 605 554 776 1,656 543 Other Interest/ financial Mark-up relief/waiver written off. provided. 57,503 605 554 776 1,656 543 Total (9+10+11) Rs. in 000 Notes to the Unconsolidated Financial Statements For the year ended December 31, 2020
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Annexure - II ISLAMIC BANKING BUSINESS The bank is operating 191 (2019: 190) Islamic banking branches and no Islamic banking windows at the year ended December 31, 2020. Note 2020 2019 ------------ (Rupees in '000) ------------ ASSETS Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets - net Fixed assets Right of use assets (ROUA) Other assets Total Assets 5,713,009 11,948 42,109,641 37,546,704 148,884 755,116 2,676,118 88,961,420 4,405,856 5,841 2,059,162 29,811,515 33,880,482 174,862 861,049 4,853,963 76,052,730 339,103 75,268,262 4,124,758 903,196 2,198,144 82,833,463 256,804 63,285,896 2,784,801 943,375 3,767,018 71,037,894 NET ASSETS 6,127,957 5,014,836 REPRESENTED BY Islamic banking fund Surplus on revaluation of assets Unappropriated / unremitted profit 3,360,000 659,569 2,108,388 2,200,000 775,696 2,039,140 6,127,957 5,014,836 1 2 3 LIABILITIES Bills payable Due to financial institutions Deposits and other accounts Due to head office Lease liability against right of use assets Other liabilities 4 6 - - The profit and loss account of the Bank's Islamic banking branches for the year ended December 31, 2020 is as follows: Note Profit / return earned Profit / return expensed Net profit / return Other income Fee and commission income Foreign exchange income Other income Total other income 7 8 2020 2019 ------------ (Rupees in '000) -----------7,994,894 (3,456,533) 4,538,361 7,144,877 (3,284,831) 3,860,046 367,852 56,745 1,344 425,941 436,935 105,951 1,006 543,892 4,964,302 4,403,938 (2,453,894) (2,512) (2,456,406) (2,439,232) (1,280) (2,440,512) Profit before provisions Provisions and write offs - net Profit before taxation Taxation 2,507,896 (399,508) 2,108,388 - 1,963,426 75,714 2,039,140 - Profit after taxation 2,108,388 2,039,140 Total income Other expenses Operating expenses Other charges Total other expenses | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 1 2020 2019 In local In local In foreign In foreign Total Total currency currency currencies currencies ----------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------- Due from Financial Institutions Unsecured Bai Muajjal Receiveable from State Bank of Pakistan - - - 2,059,162 - 2,059,162 - - - 2,059,162 - 2,059,162 This represent Bai Muajjal agreement with State Bank of Pakistan which carries profit rate of Nil (2019: 10.39%) per annum. 2019 2020 2 Investments by segments: Cost / Provision for Amortised cost diminution Surplus / (deficit) Carrying value Cost / Provision for amortised cost diminution Surplus / (deficit) Carrying value ------------------------------------------------------------------------ (Rupees in '000) ----------------------------------------------------------------------Federal Government Securities: - Ijarah Sukuks - Others (Bai Muajjal with GOP @ 13.30%) Non Government Debt Securities - Listed - Unlisted Total Investments 3 6,000,000 11,641,133 17,641,133 - 15,600 15,600 6,015,600 2,000,000 11,641,133 10,395,235 17,656,733 12,395,235 - (21,200) (21,200) 1,978,800 10,395,235 12,374,035 8,400,000 15,539,747 23,939,747 (130,807) (130,807) 311,741 332,228 643,969 8,711,741 4,400,000 15,741,168 12,371,391 24,452,909 16,771,391 (130,807) (130,807) 602,100 194,796 796,896 5,002,100 12,435,380 17,437,480 41,580,879 (130,807) 659,569 42,109,641 29,166,626 (130,807) 775,696 29,811,515 Islamic financing and related assets Ijarah Murabaha Musawama Diminishing Musharaka Istisna Other Islamic Modes (Wakala tul Istismar) Advances against Islamic assets (Ijarah, Murbaha, DM, Istisna) Inventory related to Islamic financing (Istisna) Gross Islamic financing and related assets Note 3.1 3.2 2020 2019 ------------ (Rupees in '000) ------------ 168,788 3,464,401 17,614,309 50,000 8,500,000 8,076,678 275,600 38,149,776 255,639 1,716,542 22,243 15,869,641 8,500,000 7,180,631 539,349 34,084,045 Less: provision against Islamic financings - Specific (602,913) - General (159) (239) (603,072) (203,563) Islamic financing and related assets - net of provision | National Bank of Pakistan 37,546,704 (203,324) 33,880,482
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 3.1 Ijarah 2020 Cost At January 1, 2020 Accumulated Depreciation As at December 31, 2020 Additions / (deletions) Charge/ Adjustment for the year At January 1, 2020 Book Value as at December 31, 2020 As at December 31, 2020 ------------------------------------------------------------------------------- (Rupeesin '000) ----------------------------------------------------------------------------------- Plant & Machinery 255,075 - 249,123 137,966 42,760 (5,952) Vehicles 277,812 - 239,219 139,282 42,832 (38,593) Total 532,887 175,050 74,073 144,504 94,715 319,554 168,788 (5,676) (37,610) - 488,342 277,248 85,592 (44,545) (43,286) 2019 Cost At January 01, 2019 Accumulated depreciation Additions / (deletions) As at December 31, 2019 At January 01, 2019 Charge/ Adjustment for the year Book Value as at December 31, 2019 As at December 31, 2019 ------------------------------------------------------------------------------ (Rupees in '000) ------------------------------------------------------------------------------------ Plant & Machinery 573,290 Vehicles 319,205 - 255,075 350,797 277,812 105,629 (318,215) 28,958 75,826 892,495 28,958 117,109 139,282 138,530 277,248 255,639 (288,657) 85,305 (70,351) Total 137,966 (51,652) 532,887 456,426 (388,566) 161,131 (340,309) Future Ijarah payments receivable 2019 2020 Not later than 1 year Later than 1 year & less than 5 years Over five years Total Not later than 1 year Later than 1 year & less than 5 years Over five years Total ------------------------------------------------------------------------ (Rupees in '000) ---------------------------------------------------------------------------Ijarah rental receivables 85,318 91,290 - 176,608 86,070 217,069 2020 3.2 - 303,139 2019 Murabaha Note ------------------ (Rupees in '000) ------------------ Murabaha financing 3.2.1 Advances for Murabaha | National Bank of Pakistan 3,464,401 1,716,542 1,199,500 2,000,000 4,663,901 3,716,542
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Note 3.2.1 Murabaha receivable - gross 3.2.2 3,629,825 1,835,295 Less: Deferred murabaha income 3.2.4 47,306 71,105 Less: Profit receivable shown in other assets Murabaha financings 3.2.2 Sales during the year 1,835,295 2,112,680 10,600,101 9,329,239 8,805,571 9,606,624 Closing balance 3,629,825 1,835,295 10,600,101 9,329,239 9,901,022 8,842,127 699,079 487,112 Murabaha sale price Deferred murabaha income Opening balance 71,105 25,372 Arising during the year 287,727 487,847 Less: Recognised during the year 311,526 442,114 47,306 71,105 Closing balance 4 47,648 1,716,542 Adjusted during the year Murabaha purchase price 3.2.4 118,118 3,464,401 The movement in Murabaha financing during the year is as follows: Opening balance 3.2.3 2020 2019 ------------ (Rupees in '000) ------------ 2020 Deposits In local currency 2019 In Foreign currencies Total In local currency In foreign currencies Total -------------------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------------------- Customers Current deposits 26,363,269 Savings deposits 33,051,442 Term deposits 10,129,005 69,543,716 26,474,979 20,455,905 94,851 20,550,756 - 33,051,442 22,671,179 - 22,671,179 - 10,129,005 12,720,085 - 12,720,085 69,655,426 55,847,169 94,851 55,942,020 111,710 111,710 Financial Institutions Current deposits 778,039 - 778,039 815,386 - 815,386 Savings deposits 3,633,797 - 3,633,797 3,028,490 - 3,028,490 Term deposits 1,201,000 - 1,201,000 3,500,000 - 3,500,000 5,612,836 - 5,612,836 7,343,876 - 7,343,876 75,268,262 63,191,045 94,851 63,285,896 75,156,552 | National Bank of Pakistan 111,710
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------ (Rupees in '000) -----------4.1 Composition of deposits - Individuals 36,485,509 28,456,381 - Government / Public Sector Entities 23,406,681 17,564,494 - Banking Companies 2,698,853 7,339,558 - Non-Banking Financial Institutions 2,913,983 4,318 - Private Sector 9,763,236 9,921,145 75,268,262 63,285,896 4.2 This includes deposits eligible to be covered under insurance arrangements amounting to Rs. 39,137 million (2019: Rs. 31,851 million). 5 Charity Fund Opening Balance 10,911 1,059 710 11,852 11,621 12,911 1,500 - 9,500 2,000 Additions during the period Received from customers on account of delayed payment Payments / utilization during the period Education Health 11,000 2,000 621 10,911 3,000 1,000 - 1,000 The Prime Minister‘s Covid-19 Pandemic Relief Fund -2020 5,000 - Shaukat Khanum Memorial Trust 1,000 - Institute of Business Administration (IBA) 1,500 2,000 Closing Balance Charity amount exceeding Rs. 0.5 million paid to the following organizations. The Indus Hospital Sindh Institute of Urology and Transplantation (SIUT) 10,500 6 Islamic Banking Business Unappropriated/ Unremitted Profit / (loss) Opening Balance Add: Islamic Banking profit for the year Less: Transferred / remitted to Head Office Closing Balance 7 2,039,140 2,108,388 (2,039,140) 2,108,388 (57,150) 2,039,140 57,150 2,039,140 Financing 3,991,541 3,385,613 Investments 2,714,544 2,325,785 Profit / Return Earned on Financing, Investments and Placement Profit earned on: Placements Others (Bai Muajjal) | National Bank of Pakistan 30,245 206,344 1,258,564 1,227,135 7,994,894 7,144,877
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------ (Rupees in '000) ------------ 8 Profit on Deposits and other Dues Expensed Deposits and other accounts Amortisation of lease liability against - ROUA Others (General Account) 2,956,946 2,817,622 89,738 91,487 409,849 375,722 3,284,831 3,456,533 9 Pool Management NBP-AIBG has managed following pools for profit and loss distribution. a) General depositor pool The General pool consists of all other remunerative deposits. NBP Aitemaad (the Mudarib) accept deposits on the basis of Mudaraba from depositors (Rab ul Maal). The net return on the pool is arrived at after deduction of direct costs from the gross return earned on the pool. The entire net return after paying equity share to Mudarib is considered as distributable profit of the pool. b) Special depositor pools (Total 140 during the year and 43 as at December 31, 2020) Special pool(s) are created where the customers desire to invest in high yield assets. These pool(s) rates are higher than the general pool depending on the assets. In case of loss in special pool, the loss will be borne by the special pool members. The net return on the pool is arrived at after deduction of direct costs from the gross return earned on the pool. From the net return, and after allocation of share of profit to commingled equity, profit is paid to the Mudarib in the ratio of the Mudarib’s equity in the pool to the total pool. The balance represents the distributable profit. c) Equity pool Equity pools include AIBG's fund and current account deposits. The equity pool may have constructive liquidation every month and risk associated with assets of pool includes operational, market, equity, return and Shariah. Key features and risk & reward characteristics Deposits are accepted from customers on the basis of Qard (current accounts) and Mudarabah (Saving and term deposits). No profit or loss is passed on to current account depositors. For deposits accepted on Mudarabah basis from depositors (Rab ul Maal) the Bank acts as Manager (Mudarib) and invests the funds in the Shariah Compliant modes of financings. Rab ul Maal share is distributed among depositors according to weightages declared for a month before start of the 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 investment. For all pools, the Mudarib’s share is deducted from the distributable profit to calculate the profit to be allocated to depositors. The allocation of the profit to various deposit categories is determined by the amount invested in that category relative to the total pool, as well as by the weightage assigned to the various deposit categories. The assets, liabilities, equities, income and expenses are segregated for each of the pool. No pool investment is intermingled with each other. The risk associated with each pool is thus equally distributed among the pools. | National Bank of Pakistan
Notes to the Unconsolidated Financial Statements For the year ended December 31 , 2020 Avenues/sectors of economy/business where Modaraba based deposits have been deployed. Sector Fertilizer Textile Fuel & energy Leasing/Modarbas Sugar Cement Gas Financial Federal Government Real Estate Others Total 2020 2019 ---------------- Percentage ---------------1.54% 3.21% 48.01% 0.21% 6.51% 9.00% 1.58% 2.00% 19.68% 2.20% 6.06% 2.16% 4.94% 41.72% 0.29% 5.88% 10.54% 2.57% 4.87% 17.43% 2.80% 6.81% 100% 100% Parameters for profit allocation and charging expenses Profit of the pools has been distributed between Mudarib and Rab-ul-Mall by using preagreed profit sharing ratios. The share of Rab-ul-Mall's profit has been distributed among different customers using the various weightages assigned to the different categories of the pool. No provision 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. Administrative expense are borne by mudarib and not charged to Mudaraba pool. 31-Dec-20 Mudarib Share (Rupees in '000) Gross Distributable Income 4,871,556 Mudarib (Bank) share of profit before Hiba 1,814,707 Mudarib Share in percentage 37% Hiba from Mudarib Share Mudarib (Bank) share of profit before Hiba Hiba from bank's share to depositors Hiba from bank's share to depositors in percentage 1,814,707 284,690 16% Profit rates During the year the average profit rate earned by NBP Islamic Banking Group is 11.52% and the profit rate distributed to the depositors is 6.69%. | National Bank of Pakistan
National Bank of Pakistan Directors ’ Report to the Shareholders (Consolidated Financial Statements) Dear Shareholders, On behalf of the Board of Directors, we are pleased to present the Directors’ Review together with the Consolidated Financial Statement of the Bank and its subsidiaries for the ﬁnancial year ended December 31, 2020. Consolidated after-tax proﬁt for the year ended December 31, 2020 amounted to PKR 30.59 billion, being 83.73% higher than PKR 16.65 billion earned for the corresponding year ended December 31, 2019. During this period, the Bank’s subsidiaries contributed a net proﬁt of PKR 0.33 billion (Dec ’19: PKR 0.22 billion) towards the Group’s proﬁtability; whereas share of proﬁts from associates amounted to PKR 0.04 billion (Dec ’19: PKR 0.04 billion). A loss of PKR 0.22 billion was however recorded on account of UNBL, a UK based Joint Venture in which NBP has 45% shareholding. Accordingly, consolidated EPS stood at Rs. 14.33 as compared to Rs. 7.79 for the prior year 2019. As of December 31, 2020, consolidated total assets of the Bank stood at PKR 3,017.21 billion being 3.7% lower than December 31, 2019 levels. Appropriation of the consolidated proﬁts is given in the Statement of Changes in Equity and summarized below: After-tax proﬁt for year ended December 31, 2020 Unappropriated proﬁt brought forward Other comprehensive income- net of tax Non-controlling interest Transfer from surplus on revaluation of ﬁxed assets Proﬁt available for appropriations (PKR 'Mn) 30,585.9 93,465.5 (497.9) (96.2) 230.4 123,687.7 Appropriation: Transfer to Statutory Reserve Unappropriated profit carried forward (3,055.9) 120,631.8 Earnings per share Rs. 14.33 For and on behalf of the Board of Directors Arif Usmani President & CEO Karachi Date: February 24, 2021 Zubyr Soomro Chairman
Yousuf Adil Chartered Accountants Cavish Court , KCHSU Shahrah-e-Faisal Karachi, Pakistan Grant Thornton Anjum Rahman Chartered Accountants 1st & 3rd Floor, Modern Motors House, Beaumont Road, Karachi, Pakistan INDEPENDENT AUDITORS' REPORT To the members of National Bank of Pakistan Report on the Audit of the Consolidated Financial Statements Opinion We have audited the annexed consolidated financial statements of National Bank of Pakistan and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at December 31, 2020, 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 for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information. In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at December 31, 2020 and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with the accounting and reporting standards as applicable in Pakistan. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (the Code) as adopted by the Institute of Chartered Accountants of Pakistan and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter We draw attention to note 26.3.3.1 to the consolidated financial statements which explains the contingency in relation to the pension obligations of the Group. Based on the opinion of the legal counsel, the Group is confident about the favorable outcome of this matter and hence, no provision has been made in these consolidated financial statements. Our opinion is not qualified in this respect. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. | National Bank of Pakistan
Following are the key audit matters : S. No. 1. Key Audit Matters How the matters were addressed in our audit Provision (impairment) of loans and advances For selected samples, we: As disclosed in note 11 to the consolidated ﬁnancial statements, gross loans and advances of the Group were Rs. 1,161 billion against which non-performing loans and advances (NPLs) were of Rs. 172 billion. As at December 31, 2020, the Group holds the provision of Rs. 155 billion against NPLs and Rs. 22 billion as general provision against performing loans. The carrying value of loans and advances to customers may be materially misstated, if provision is not appropriately identiﬁed and estimated as the determination of impairment provisions remains subjective and judgmental area in addition to objective criteria for classiﬁcation of loans and advances as per Prudential Regulations. Further, the impact of the COVID-19 pandemic and regulatory relieves measures issued by State Bank of Pakistan (SBP) to dampen the effects of COVID-19 have been incorporated in the Group’s measurement of loans and advance portfolio. Furthermore, the Group is required to make provision, if any, identiﬁed by the SBP. We considered this as a key audit matter as the Group in addition to the following objective criteria also makes signiﬁcant and subjective judgements and makes assumptions, including those related to COVID-19, to determine the provision and the timing of recognition of such provision and their impact could be material to the consolidated ﬁnancial statements. | National Bank of Pakistan • Updated our understanding and evaluated design and implementation of relevant controls; • evaluated borrowers through repayment behavior and assessment of ﬁnancial strength based on the available ﬁnancial statements, adequacy of security/collateral, electronic credit information bureau reports, compliance with Prudential Regulations and impact of measures adopted by the Group in respect of COVID-19; • evaluated the appropriateness of subjective evaluation made by management for performing parties; • ensured that any provision identiﬁed by the SBP was recognized; and • in case of restructured loans, we reviewed the detailed documentation of restructuring including approvals, legal opinions, terms of restructuring, payment records and any other relevant documents to ensure that restructuring was made in accordance with the Prudential Regulations. In addition to the above, on a sample basis, we also reviewed minutes of the meeting of credit and audit committees to identify risky exposures on which we performed the procedures as stated above. We had discussions with management to understand the Group’s assessment of the impact of COVID-19 on the Group’s portfolio of loans and advances. We issued instructions to auditors of those overseas branches which were selected for audit, highlighting ‘Provision against advances’ as a signiﬁcant risk. The auditors of those branches performed audit procedures to check compliance with regulatory requirements and reported the results thereof to us.
S . No. 2. Key Audit Matters How the matters were addressed in our audit Valuation of listed equity shares, units of mutual funds and term ﬁnance certiﬁcates classiﬁed as available-for-sale On a sample basis, we have performed the following procedures: As disclosed in note 10.1 to the consolidated ﬁnancial statements, the Group has signiﬁcant investments in equity shares, units of mutual funds and term ﬁnance certiﬁcates (TFCs) classiﬁed as Available for Sale (AFS). As per the Group’s policy, listed equity shares and units of mutual funds are required to be considered for impairment when there is a signiﬁcant or prolonged decline in the fair value of investments except where SBP relaxation has been obtained. Further, TFCs are required to be assessed for impairment as per the SBP’s Prudential Regulations which involves subjective criteria. Furthermore, to dampen the effect of COVID-19, SBP has allowed Groups to recognize impairment loss, if any, on the valuation of listed equity shares held as AFS in a phased manner equally on quarterly basis. The signiﬁcance of the investment amount, subjectivity involved and assumptions used in impairment, including the guidance issued by SBP due to COVID-19, make it signiﬁcant to the consolidated ﬁnancial statements. Therefore, we have considered this as a key audit matter. • each investment’s cost was compared to its market value wherever available to determine decline / surplus in valuation; • checked whether, in case of listed equity shares and units of mutual funds classiﬁed as available for sale, impact of signiﬁcant or prolonged decline was recognized consistently as per the policy of the Group as disclosed in note 5.26(c), • checked whether, in case of listed equity shares classiﬁed as AFS, calculation of impairment in a phased manner on a quarterly basis as per the guidance of SBP. • For TFCs, checked that listed TFCs which were traded in were valued as per the quoted prices and for unlisted TFCs, we checked that these were valued at cost less provision. Further, on sample bases, TFCs were also evaluated based on evidence of deterioration in the financial health of the investee. Information Other than the Consolidated Financial Statements and Auditor's Reports Thereon Management is responsible for other information. The other information comprises the information included in the Annual Report, but does not include the unconsolidated financial statements, consolidated financial statements and our auditors’ reports thereon and our review report on Code of Corporate Governance. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information we are required to report the fact. We have nothing to report in this regard. Responsibilities of Management and the Board of Directors for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting and reporting standards as applicable in Pakistan, the requirements of the Banking Companies Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017) and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. | National Bank of Pakistan
In preparing the consolidated financial statements , management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The Board of directors is responsible for overseeing the Group's financial reporting process. Auditor's Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As a part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Ÿ Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Ÿ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. Ÿ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Ÿ Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to event: or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern. Ÿ Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Ÿ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide to the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matter that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or | National Bank of Pakistan
when , in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partners on the audit resulting in this independent auditors’ report are Nadeem Yousuf Adil and Khaliqur-Rahman on behalf of Yousuf Adil and Grant Thornton Anjum Rahman respectively. Yousuf Adil Chartered Accountants Place: Karachi Date: February 25, 2021 | National Bank of Pakistan Grant Thornton Anjum Rahman Chartered Accountants
Consolidated Statement of Financial Position As at December 31 , 2020 2019 2020 ------------- (US Dollars in '000) ------------- 2020 2019 Note --------------- (Rupees in '000) -----------ASSETS 1,834,387 85,078 843,248 9,089,402 6,309,021 343,603 6,699 46,595 1,039,503 19,597,536 1,563,928 93,943 793,350 9,174,529 6,155,567 344,649 6,395 43,902 700,835 18,877,098 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Fixed assets Intangible assets Right of use assets Other assets 7 8 9 10 11 12 13 14 15 249,969,566 15,015,366 126,804,675 1,466,405,373 983,871,421 55,086,809 1,022,143 7,017,020 112,017,619 3,017,209,992 293,198,090 13,598,325 134,780,010 1,452,799,192 1,008,398,612 54,919,564 1,070,766 7,447,414 166,148,295 3,132,360,268 16 17 18 19 20 21 22 16,795,186 138,539,005 2,418,928,469 197,224 7,869,355 2,933,124 157,545,347 2,742,807,710 19,867,424 471,757,352 2,197,984,573 194,403 7,831,350 10,869,353 184,633,258 2,893,137,713 274,402,282 239,222,555 21,275,131 57,591,417 73,987,802 120,631,784 273,486,134 916,148 21,275,131 53,260,789 70,358,587 93,465,516 238,360,023 862,532 274,402,282 239,222,555 LIABILITIES 124,300 2,951,538 13,751,637 1,216 48,997 68,004 1,155,153 18,100,845 105,079 866,766 15,133,967 1,234 49,234 18,351 985,679 17,160,310 1,496,691 1,716,788 Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Lease liability against right of use assets Deferred tax liabilities Other liabilities NET ASSETS REPRESENTED BY 133,107 333,225 440,197 584,765 1,491,294 5,397 133,107 360,319 462,903 754,730 1,711,059 5,729 1,496,691 1,716,788 Share capital Reserves Surplus on revaluation of assets Unappropriated profit 23 24 25 Non-controlling interest CONTINGENCIES AND COMMITMENTS 26 The annexed notes 1 to 52 and annexures I and II form an integral part of these consolidated financial statements. Zubyr Soomro Chairman Arif Usmani President & CEO | National Bank of Pakistan Abdul Wahid Sethi Chief Financial Officer Imam Bakhsh Baloch Director Asif Jooma Director
Consolidated Profit and Loss Account For the year ended December 31 , 2020 2019 2020 ---------- (US Dollars in '000) ---------- 1,499,742 1,048,313 1,614,367 961,320 451,429 653,047 2020 2019 Note ------------ (Rupees in ‘000) ------------ Mark-up / return / interest earned Mark-up / return / interest expensed 27 28 Net mark-up / return / interest income 258,031,378 153,651,948 239,710,290 167,556,408 104,379,430 72,153,882 NON MARK-UP / INTEREST INCOME 127,736 19,391 39,544 13,549 (603) 234 36,394 121,879 11,481 27,167 49,506 (1,373) 268 24,810 Fee and commission income Dividend income Foreign exchange income Gain on securities - net Share of loss from joint venture - net of tax Share of profit from associates - net of tax Other income 236,245 233,738 Total non-markup / interest income 687,674 886,785 Total income 29 30 31 19,480,452 1,835,129 4,342,201 7,912,766 (219,389) 42,813 3,965,483 20,416,642 3,099,277 6,320,455 2,165,524 (96,336) 37,331 5,816,974 37,359,455 37,759,867 141,738,885 109,913,749 64,126,064 316,439 67,228,062 150,585 64,442,503 67,378,647 77,296,382 30,911,976 42,535,102 13,557,101 46,384,406 28,978,001 15,798,487 12,330,809 NON MARK-UP / INTEREST EXPENSES 420,611 942 401,203 1,980 Operating expenses Workers welfare fund Other charges 421,553 403,183 Total non-markup / interest expenses 266,121 84,820 483,602 193,400 Profit before provisions Provisions and write offs - net 181,301 290,202 PROFIT BEFORE TAXATION 77,147 98,843 104,154 191,359 PROFIT AFTER TAXATION 30,585,919 16,647,192 103,750 403 190,757 602 Attributable to: Shareholders of the Bank Non-controlling interest 30,489,753 96,166 16,582,705 64,487 104,154 191,359 30,585,919 16,647,192 Taxation 32 33 34 35 ------------- (US Dollars) ------------- --------------- (Rupees) ---------------- 0.05 0.09 Basic earnings per share 36 14.33 7.79 0.05 0.09 Diluted earnings per share 37 14.33 7.79 The annexed notes 1 to 52 and annexures I and II form an integral part of these consolidated financial statements. Zubyr Soomro Chairman Arif Usmani President & CEO | National Bank of Pakistan Abdul Wahid Sethi Chief Financial Officer Imam Bakhsh Baloch Director Asif Jooma Director
Consolidated Statement of Comprehensive Income For the year ended December 31 , 2020 2019 2020 ------ (US Dollars in '000) ------ 104,154 2020 2019 -------- (Rupees in ‘000) --------- Profit after taxation for the year 191,359 30,585,919 16,647,192 1,274,736 2,997,432 2,237,165 10,103,678 4,272,168 12,340,843 Other comprehensive income Items that may be reclassified to profit and loss account in subsequent periods: 13,997 63,213 7,975 18,753 77,210 26,728 Exchange gain on translation of net assets of foreign branches, subsidiaries and joint venture Movement in surplus on revaluation of investments - net of tax Items that will not be reclassified to profit and loss account in subsequent periods: (12,609) 4,638 3,072 (3,116) 4,054 1,340 (4,899) 2,278 176,465 220,365 Remeasurement loss on defined benefit obligations - net of tax Movement in surplus on revaluation of operating fixed assets - net of tax Movement in surplus on revaluation of non-banking assets - net of tax (497,972) 647,924 214,238 364,190 Total comprehensive income (2,015,359) 741,300 490,984 (783,075) 35,222,277 28,204,960 35,126,111 96,166 28,140,473 64,487 35,222,277 28,204,960 Total comprehensive income attributable to: 176,061 403 219,763 602 176,465 220,365 Shareholders of the Bank Non-controlling interest The annexed notes 1 to 52 and annexures I and II form an integral part of these consolidated financial statements. Zubyr Soomro Chairman Arif Usmani President & CEO | National Bank of Pakistan Abdul Wahid Sethi Chief Financial Officer Imam Bakhsh Baloch Director Asif Jooma Director
- - Transfer to statutory reserve Transfer from loan loss reserve to unappropriated profit | National Bank of Pakistan - Transfer to statutory reserve Statutory reserve General loan loss reserve Revenue general reserve 21,275,131 - - 12,845,332 - - - - 1,274,736 - 11,570,596 - - - - - 2,237,165 - 9,333,431 36,224,747 - - - 3,055,892 - 33,168,855 - - - - 1,580,981 - - 31,587,874 8,000,000 - - - - - - 8,000,000 - - - (4,000,000) - - - 12,000,000 521,338 Zubyr Soomro Chairman Arif Usmani President & CEO - - - - - - 521,338 - - - - - - - 521,338 Total 57,591,417 - - - 1,274,736 3,055,892 - 53,260,789 - - - (4,000,000) 1,580,981 2,237,165 - 53,442,643 Abdul Wahid Sethi Chief Financial Officer The annexed notes 1 to 52 and annexures I and II form an integral part of these consolidated financial statements. Balance as at December 31, 2020 by subsidiaries Cash dividend paid / profit distribution Cash dividend (Rs. Nil per share) directly in equity Transactions with owners, recorded assets to unappropriated profit - net of tax - - Transfer from surplus on revaluation of - Other comprehensive income - net of tax 21,275,131 - - Profit after taxation for the year ended December 31, 2020 Balance as at December 31, 2019 by subsidiaries Cash dividend paid / profit distribution Cash dividend (Rs. Nil per share) directly in equity Transactions with owners, recorded assets to unappropriated profit - net of tax - - Transfer from surplus on revaluation of - Other comprehensive income - net of tax 21,275,131 Profit after taxation for the year ended December 31, 2019 Balances as at December 31, 2018 Exchange translation Investments Fixed / nonbanking assets Total Surplus on revaluation of assets Unappropriated profit Sub Total NonControlling Interest Total 28,250,884 - - - - 2,997,432 - 25,253,452 - - - - - 10,103,678 - 15,149,774 73,987,802 - - (230,379) - 3,859,594 - 70,358,587 - - (239,552) - - 11,335,962 - 59,262,177 120,631,784 - - 230,379 (497,972) (3,055,892) 30,489,753 93,465,516 - - 239,552 4,000,000 (1,580,981) (2,015,359) 16,582,705 76,239,599 Imam Bakhsh Baloch Director 45,736,918 - - (230,379) - 862,162 - 45,105,135 - - (239,552) - - 1,232,284 - 44,112,403 273,486,134 - - - - 4,636,358 30,489,753 238,360,023 - - - - - 11,557,768 16,582,705 210,219,550 274,402,282 (42,550) - - - 4,636,358 30,585,919 239,222,555 (43,700) - - - - 11,557,768 16,647,192 211,061,295 Asif Jooma Director 916,148 (42,550) - - - - 96,166 862,532 (43,700) - - - - - 64,487 841,745 -------------------------------------------------------------------------------------------------------------- (Rupeesin '000) ---------------------------------------------------------------------------------------------------------------- Share capital Reserves Consolidated Statement of Changes in Equity For the year ended December 31, 2020
Consolidated Cash Flow Statement For the year ended December 31 , 2020 2019 2020 --------- (US Dollars in '000) --------- 2020 2019 Note ------------- (Rupees in ‘000) -------------CASH FLOW FROM OPERATING ACTIVITIES 181,301 (19,391) 161,910 290,202 (11,481) 278,721 28,508 2,051 84,820 (235) 4,876 (237) 47,268 603 (234) 167,420 329,330 29,121 1,495 193,400 (144) 5,129 (66) 46,594 1,373 (268) 276,634 555,355 (284,349) 725,920 (590,881) (8,286) (157,596) 59,282 (378,553) (38,789) 308,507 (49,553) 62,085 479,906 1,167,908 40,236 1,750,135 (19,221) (1,839,289) 1,382,330 (201,534) (677,714) (4,876) (74,551) (10,118) 1,832,324 (5,129) (133,871) (11,371) (322,283) Profit before taxation Less: Dividend income Adjustments: Depreciation Amortization Provision and write-offs 34 Gain on sale of fixed assets - net Finance charges on leased assets Unrealized gain on revaluation of investments classified as held-for-trading Charge for defined benefit plans - net Share of loss from joint venture - net of tax Share of profit from associates - net of tax (Increase) / decrease in operating assets Lendings to financial institutions Held-for-trading securities Advances Others assets (excluding advance taxation) Increase / (decrease) in operating liabilities Bills payable Borrowings from financial institutions Deposits Other liabilities Financial charges paid Income tax adjusted / paid Benefits paid Net cash flow (used in) / generated from operating activities 15.6 46,384,406 (1,835,129) 44,549,277 28,978,001 (3,099,277) 25,878,724 4,654,608 238,932 30,911,976 (23,053) 819,777 (10,556) 7,447,274 219,389 (42,813) 44,215,534 88,764,811 4,556,537 327,882 13,557,101 (37,487) 779,389 (37,826) 7,555,006 96,336 (37,331) 26,759,607 52,638,331 9,475,335 (60,505,845) (6,199,885) 49,310,051 (7,920,344) (45,448,677) 116,027,034 (94,443,135) (1,324,368) (25,189,146) (3,072,238) (293,981,639) 220,943,896 (32,212,081) (108,322,062) 9,923,246 76,705,422 186,671,948 6,431,150 279,731,766 (819,777) (21,397,144) (1,817,492) (51,512,008) (779,389) (11,915,809) (1,617,201) 292,868,552 (79,392,691) 130,999,035 1,835,129 (2,100,884) 96,316 1,274,736 52,711,641 (111,073,149) (146,770,958) 3,099,277 (2,445,874) 90,430 2,237,165 (254,863,109) (86,992) (2,186,264) (1,152) (2,274,408) (65,294) (2,121,214) (2,200) (2,188,708) (1,074,775) 35,816,735 264,816,479 228,999,744 263,741,704 264,816,479 CASH FLOW FROM INVESTING ACTIVITIES (694,926) (918,269) 19,391 (15,303) 566 13,997 (1,594,544) (496,718) 819,592 11,481 (13,144) 603 7,975 329,789 Net investments in available-for-sale securities Net investments in held-to-maturity securities Dividends received Investments in fixed assets Proceeds from sale of fixed assets Effect of translation of net investment in foreign branches Net cash flow generated from / (used in) investing activities CASH FLOW FROM FINANCING ACTIVITIES (409) (13,271) (14) (13,694) (544) (13,678) (7) (14,229) Payments of finance lease obligations Payments of lease liability against right of use asset Dividend paid Net cash flow used in financing activities 224,086 (6,723) (Decrease) / increase in cash and cash equivalents 1,432,731 1,656,818 Cash and cash equivalents at beginning of the year 1,656,817 1,650,095 Cash and cash equivalents at end of the year 38.1 38 The annexed notes 1 to 52 and annexures I and II form an integral part of these consolidated financial statements. Zubyr Soomro Chairman Arif Usmani President & CEO | National Bank of Pakistan Abdul Wahid Sethi Chief Financial Officer Imam Bakhsh Baloch Director Asif Jooma Director
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 1. THE GROUP AND ITS OPERATIONS 1.1 The "Group" consists of: Holding Company - National Bank of Pakistan (the Bank) Subsidiary Companies - CJSC Subsidiary Bank of NBP in Kazakhstan Percentage Holding 2020 2019 % % 100.00 100.00 - CJSC Subsidiary Bank of NBP in Tajikistan 100.00 100.00 - NBP Exchange Company Limited, Pakistan 100.00 100.00 - National Bank Modaraba Management Company Limited, Pakistan 100.00 100.00 - First National Bank Modaraba, Pakistan 30.00 30.00 - Taurus Securities Limited, Pakistan 58.32 58.32 - NBP Fund Management Limited, Pakistan 54.00 54.00 - Cast-N-Link Products Limited (Note 10.15.1) 76.51 76.51 The subsidiary company of the Group, National Bank Modaraba Management Company Limited, Pakistan exercises control over First National Bank Modaraba, Pakistan as its management company and also has a direct economic interest in it. The Group has consolidated the financial statements of the modaraba as the ultimate holding company. The Group is principally engaged in commercial banking, modaraba management, brokerage, leasing, foreign currency remittances, asset management, exchange transactions and investment advisory asset. Brief profile of the Holding Company and subsidiaries is as follows: National Bank of Pakistan National Bank of Pakistan (the Bank) was incorporated in Pakistan under the National Bank of Pakistan Ordinance, 1949 and is listed on Pakistan Stock Exchange (PSX). It's registered and head office is situated at I.I. Chundrigar Road, Karachi. The Bank is engaged in providing commercial banking and related services in Pakistan and overseas. The Bank also handles treasury transactions for the Government of Pakistan (GoP) as an agent to the State Bank of Pakistan (SBP). The Bank operates 1,514 (2019: 1,509) branches in Pakistan and 21 (2019: 21) overseas branches (including the Export Processing Zone branch, Karachi). The Bank also provides services in respect of Endowment Fund for student loans scheme. CJSC Subsidiary Bank of NBP in Kazakhstan CJSC Subsidiary Bank of NBP in Kazakhstan (JSCK) is a joint-stock bank, which was incorporated in the Republic of Kazakhstan in 2001. CJSC conducts its business under license number 252 dated December 27, 2007 (initial license was dated December 14, 2001) and is engaged in providing commercial banking services. The registered office of JSCK is located at 105, Dostyk Ave, 050051, Almaty. CJSC Subsidiary Bank of NBP in Tajikistan CJSC Subsidiary Bank of NBP in Tajikistan (JSCT) is a joint-stock bank, which was incorporated in the Republic of Tajikistan in 2012. JSCT obtained its license on March 20, 2012 and is engaged in providing commercial banking services. The registered office of JSCT is located at 48 Ayni Street, Dushanbe, Republic of Tajikistan. NBP Exchange Company Limited, Pakistan NBP Exchange Company Limited (NBPECL) is a public unlisted company, incorporated in Pakistan on September 24, 2002 under the repealed Companies Ordinance, 1984 (now Companies Act, 2017). NBPECL obtained license for commencement of operations from State Bank of Pakistan (SBP) on November 25, 2002 and commencement of business certificate on December 26, 2003 from the Securities and Exchange Commission of Pakistan (SECP). The registered office of NBPECL is situated at Shaheen Complex, M.R. Kiryani Road, Karachi. NBPECL is engaged in foreign currency remittances and exchange transactions. NBPECL has 20 branches (2019: 19 branches) and 1 booth (2019: 1). | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 National Bank Modaraba Management Company Limited, Pakistan National Bank Modaraba Management Company Limited (NBMMCL) is a public unlisted company, incorporated in Pakistan on August 6, 1992. The purpose of the NBMMCL is to float and manage modaraba funds. NBMMCL at present is managing First National Bank Modaraba. Its registered office is situated at Ground Floor, National Bank of Pakistan, Regional Headquarters Building, 26-Mc Lagon Road, Lahore. First National Bank Modarba, Pakistan First National Bank Modaraba (the Modaraba) is a multi-purpose, perpetual and multi-dimensional Modaraba formed under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 and Rules framed thereunder. The Modaraba is managed by National Bank Modaraba Management Company Limited (a wholly owned subsidiary of National Bank of Pakistan), incorporated in Pakistan under the repealed Companies Ordinance, 1984 (now Companies Act, 2017) and registered with the Registrar of Modaraba Companies. The registered office of the Modaraba is situated at Ground Floor, National Bank of Pakistan, Regional Headquarters Building, 26-Mc Lagon Road, Lahore. The Modaraba is listed at Pakistan Stock Exchange Limited. It commenced its operations on December 04, 2003 and is currently engaged in various Islamic modes of financing and operations including ijarah, musharaka and murabaha arrangements. Taurus Securities Limited, Pakistan Taurus Securities Limited (TSL) is a public unquoted company, incorporated in Pakistan on June 27, 1993 under the repealed Companies Ordinance, 1984 (now Companies Act, 2017). The registered office of TSL is situated at 6th Floor, Progressive Plaza, Beaumont Road, Civil Lines, Karachi. It is engaged in the business of stock brokerage, investment counselling, and fund placements. TSL holds a Trading Right Entitlement (TRE) Certificate from Pakistan Stock Exchange Limited. NBP Fund Management Limited, Pakistan NBP Fund Management Limited, Pakistan - NBP Funds, was incorporated in Pakistan as public limited company on August 24, 2005 under the repealed Companies Ordinance, 1984 (now Companies Act, 2017) and obtained certificate for commencement of business on December 19, 2005. The main sponsors of NBP Funds are National Bank of Pakistan and Alexandra Fund Management Private Limited (a member of Fullerton Fund Management Group, Singapore). NBP Funds is mainly involved in the business of asset management and investment advisory services. NBP Funds has been issued license by the Securities and Exchange Commission of Pakistan (SECP) to carry out business of asset management services and investment advisory services as a Non-Banking Finance Company (NBFC) of the Companies Act, 2017 and under the Non-Banking Finance Companies and Notified Entities Regulations, 2008. The principal / registered office of the company is situated at 7th Floor, Clifton Diamond Building, Block No. 4, Scheme No. 5, Clifton, Karachi. As at December 31, 2020 NBP Funds is managing the following funds and discretionary portfolio; Type of Fund - NBP Income Opportunity Fund NBP Savings Fund NBP Islamic Savings Fund NBP Islamic Sarmaya Izafa Fund NBP Balanced Fund NBP Stock Fund NBP Financial Sector Income Fund NBP Government Securities Liquid Fund NBP Sarmaya Izafa Fund NBP Mahana Amdani Fund NBP Riba Free Savings Fund NBP Money Market Fund NBP Government Securities Savings Fund NBP Islamic Stock Fund NBP Active Allocation Riba Free Savings Fund NBP Islamic Active Allocation Equity Fund NBP Islamic Energy Fund NBP Islamic Money Market Fund | National Bank of Pakistan Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 1.2 1.3 NBP Financial Sector Fund NBP Islamic Mahana Amdani Fund NBP Islamic Regular Income Fund NAFA Islamic Active Allocation Fund-I NAFA Islamic Active Allocation Fund-II NAFA Islamic Active Allocation Fund-III NBP Government Securities Fund-I NAFA Pension Fund NAFA Islamic Pension Fund NAFA Islamic Principal Protected Fund-II NBP Islamic Daily Dividend Fund NBP Islamic Income Fund NBP Pakistan Growth Exchange Traded Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Open end Fund Basis of Consolidation - The consolidated financial statements include the financial statements of the Bank (Holding Company) and its subsidiary companies together - "the Group". - Subsidiary companies are fully consolidated from the date on which more than 50% of voting rights are transferred to the Group or power to control the company is established and excluded from consolidation from the date of disposal or when the control is lost. - The assets, liabilities, income and expenses of subsidiary companies have been consolidated on a line by line basis. - Income and expenses of subsidiaries acquired during the year are included in the consolidated statement of the comprehensive income from the effective date of acquisition. - Non-Controlling interest / (minority interest) in equity of the subsidiary companies are measured at fair value for all the subsidiaries acquired from period beginning on or after January 1, 2010 whereas minority interest of previously acquired subsidiaries are measured at the proportionate net assets of subsidiary companies attributable to interest which is not owned by holding company. - Material intra-group balances and transactions have been eliminated. Impact of COVID-19 The global outbreak of novel coronavirus (COVID 19) during early 2020 caused disruptions in normal lives and businesses in many ways. Global economy and banking systems have also been impacted significantly, both from business as well as accounting and reporting perspective. State Bank of Pakistan (SBP) responded to the crisis by cutting the Policy Rate by 625 basis points to 7.00% during the period from March 2020 to December 2020. Further, SBP relief measures included reduction in the capital conservation buffer, deferment of borrowers’ principal loans payment by one year, increasing the regulatory limit on extension of credit to SMEs liquidity support as well as relaxing regulatory criteria for restructured / rescheduled loans for borrowers who require relief of principal repayment exceeding one year and / or mark-up. In line with regulatory measures the Group has aligned its policies / procedures and issued instructions. The Group is continuously reviewing the portfolio, to identify accounts and industries susceptible to higher risk, resulting from the COVID-19 outbreak. Further, with respect to information security risk management arising as a result of COVID-19, the Group took appropriate actions to monitor and respond to these evolving cybersecurity risks due to work from home environment and adopted a heightened state of cybersecurity. For detailed risk assessment of the Bank, refer note 48 to these consolidated financial statements. 2. BASIS OF PRESENTATION 2.1 In accordance with the directives of the Federal Government of Pakistan regarding shifting of banking system to Islamic modes, the SBP has issued various circulars from time to time. Permissible form of trade related mode of financing includes purchase of goods by the Bank from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these consolidated financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Key financial figures of the Islamic banking branches of the Bank have been disclosed in note Annexure-II of these consolidated financial statements. 2.2 The US Dollar amounts shown on the statement of financial position, profit and loss account, statement of comprehensive income and cash flow statement are stated as additional information solely for the convenience of readers. For the purpose of conversion to US Dollars, the rate of Rs. 159.8344 to 1 US Dollar has been used for 2020 and 2019 as it was the prevalent rate as on December 31, 2020. 3. STATEMENT OF COMPLIANCE 3.1 These consolidated financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of: - International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017; - Islamic Financial Accounting Standards (IFAS), issued by Institute of Chartered Accountants of Pakistan as notified under the Companies Act, 2017; - Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017; - Directive issued by the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP); Where the requirements of the Banking Companies Ordinance, 1962, the Companies Acts, 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. 3.2 SBP has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments: Recognition and Measurement' and IAS 40, 'Investment Property' for Banking Companies through BSD Circular Letter No. 10 dated August 26, 2002. Further, according to the notification of SECP dated April 28, 2008, the IFRS - 7 "Financial Instruments: Disclosures" has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these consolidated financial statements. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP. 3.3 The SECP, through SRO 229(I)/2019 dated February 14, 2019, has notified that IFRS 9, Financial Instruments, is applicable for accounting periods ending on or after June 30, 2019. However, based on the guidance received from the SBP, the requirements of IFRS 9 have not been considered for Pakistan operations of the Bank in preparation of these unconsolidated financial statements. However, bank is required to submit their pro-forma financial statements based on IFRS-9 to SBP. 3.4 The SECP vide 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. 3.5 Application of new and revised International Financial Reporting Standards (IFRSs) 3.5.1 New accounting standards, amendments and IFRS interpretations that are effective for the year ended December 31, 2020 The following standards, amendments and interpretations are effective for the year ended December 31, 2020. These standards, interpretations and amendments are either not relevant to the Bank's operations or are not expected to have significant impact on the Bank's consolidated financial statements other than certain additional disclosures: - Amendments to the conceptual framework for financial reporting, including amendments to references to the conceptual framework in IFRS. Effective from accounting period beginning on or after January 01, 2020. - Amendments to IFRS 3 'Business Combinations' - Definition of a business. Effective from accounting period beginning on or after January 01, 2020. - Amendments to IAS 1 'Presentation of Financial Statements' and IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' - Definition of material. Effective from accounting period beginning on or after January 01, 2020. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 - Amendments to IFRS 9 'Financial Instruments', IAS 39 'Financial Instruments: Recognition and Measurement' and IFRS 7 'Financial Instruments: Disclosures' - Interest rate benchmark reform. Effective from accounting period beginning on or after January 01, 2020. Certain annual improvements have also been made to a number of IFRSs 3.5.2 New accounting standards, amendments and IFRS interpretations that are not yet effective The following standards, amendments and interpretations are only effective for accounting periods, beginning on or after the date mentioned against each of them. These standards, interpretations and amendments are either not relevant to the Group's operations or are not expected to have significant impact on the Group's consolidated financial statements other than certain additional disclosures: Effective from accounting period beginning on or after Amendment to IFRS 16 'Leases' - Covid-19 related rent concessions June 01, 2020 Amendments to IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' Onerous Contracts — cost of fulfilling a contract January 01, 2020 Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) January 01, 2021 Amendments to IAS 16 'Property, Plant and Equipment' - Proceeds before intended use January 01, 2022 Amendments to IFRS 3 Business Combinations‘ Amendment in the definition of business‘ January 01, 2022 Amendments to IAS 1 'Presentation of Financial Statements' - Classification of liabilities as current or non-current January 01, 2023 There are certain new and amended standards and interpretations that are mandatory for the Group's accounting periods beginning on or after January 1, 2020 but are considered not to be relevant or do not have any significant effect on the Group's operations and are therefore not detailed in these consolidated financial statements. 3.5.3 Other than the aforesaid standards, interpretations and amendments, the International Accounting Standards Board (IASB) has also issued the following standards which have not been adopted locally by the Securities and Exchange Commission of Pakistan: - IFRS 1 – First Time Adoption of International Financial Reporting Standards IFRS 17 – Insurance Contracts 3.5.4 The management anticipates that these new standards, interpretations and amendments will be adopted in the Group’s consolidated financial statements as and when they are applicable and adoption of these new standards, interpretations and amendments, may have no material impact on the consolidated financial statements of the Bank in the period of initial application. 4. BASIS OF MEASUREMENT These consolidated financial statements have been prepared under the historical cost convention except for revaluation of land and buildings and non-banking assets acquired in satisfaction of claims which are stated at revalued amount and certain investments and derivative financial instruments that are carried at fair value. In addition, obligations in respect of defined benefit plan are carried at present value. 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policy adopted in preparation of these consolidated financial statements are consistent with those of the previous financial year. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 5.1 Business Combination Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit and loss account as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisitiondate amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the Group's net assets in the event of liquidation is measured at fair value at the date of the acquisition. When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in profit or loss account. 5.2 Goodwill Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the subsidiary company. For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or entities of cashgenerating units) that is expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit and loss account. An impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. 5.3 Cash and cash equivalents Cash and cash equivalents include cash and balances with treasury banks and balances with other banks in current and deposit accounts and call money lendings, less call money borrowings and overdrawn nostro accounts. 5.4 Investments Investments other than those categorised as held-for-trading are initially recognised at fair value which includes transactions 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. All regular way purchases / sales of investments are recognised on the trade date, i.e., the date the Group commits to purchase / sell the investments. Regular way purchases or sales of investments require delivery of securities within the time frame generally established by regulation or convention in the market place. The Group has classified its investment portfolio, except for investment in subsidiaries, associates and joint venture, into held-fortrading, held-to maturity and available-for-sale as follows: - Held-for-trading – These are securities which are acquired with the intention to trade by taking advantage of short-term market / interest rate movements and are to be sold within ninety (90) days. These are carried at market value, with the related unrealized gain / (loss) on revaluation being taken to profit and loss account. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 - Held-to-maturity – These are securities with fixed or determinable payments and fixed maturity that are held with the intention and ability to hold to maturity. These are carried at amortised cost. - Available-for-sale – These are investments that do not fall under the held-for-trading or held-to-maturity categories. These are carried at market value except in case of unquoted securities where market value is not available, which are carried at cost less provision for diminution in value, if any. Surplus / (deficit) on revaluation is taken to ‘surplus / (deficit) on revaluation of assets’ account shown in equity. Provision for diminution in value of investments in respect of unquoted shares is calculated with reference to break-up value of the same. On derecognition or impairment in quoted available-for-sale investments, the cumulative gain or loss previously reported as 'surplus / (deficit) on revaluation of assets' in equity is included in the profit and loss account for the year. - Provision for diminution in value of investments in unquoted debt securities is calculated as per the SBP's Prudential Regulations. Held-for-trading and quoted available-for-sale securities are marked to market with reference to ready quotes on Reuters page or MUFAP (PKRV / PKISRV) or the Stock Exchanges, as the case may be. Associates – Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for under the equity method of accounting. However, in case where associates are considered as fully impaired and financial statements are not available these investments are stated at cost less provision. Under the equity method, the Group’s share of its associates’ post-acquisition profits or losses is recognized in the consolidated profit and loss account, its share of post-acquisition movements in reserves is recognized in reserves. The cumulative postacquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate. Joint venture - The Group has interests in joint venture which is jointly controlled entity. A joint venture is contractual arrangement whereby two or more parties undertake in economic activity that is subject to a joint control and includes a jointly controlled entity that involves the establishment of separate entity in which each venturer has an interest. The Group accounts for its interest in joint venture using the equity method of accounting. The carrying values of investments are reviewed for impairment when indications exist that the carrying value may exceed the estimated recoverable amount. Provision is made for impairment in value, if any. 5.5 Repurchase and resale agreements Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue to be recognised in the statement of financial position and are measured in accordance with accounting policies for investment securities. The counterparty liability for amounts received under these agreements is included in borrowings. The difference between sale and repurchase price is treated as mark-up / return / interest expense and accrued over the life of the repo agreement using effective yield method. Securities purchased with a corresponding commitment to resell at a specified future date (reverse repos) are not recognised in the statement of financial position, as the Group does not obtain control over the securities. Amounts paid under these agreements are included in lendings to financial institutions. The difference between purchase and resale price is treated as mark-up / return / interest income and accrued over the life of the reverse repo agreement using effective yield method. 5.6 Derivative financial instruments Derivative financial instruments are initially recognised at fair value on the dates on which the derivative contracts are entered into and are subsequently re-measured at fair value using appropriate valuation techniques. All derivative financial instruments are carried as assets when fair value is positive and liabilities when fair value is negative. Any change in the fair value of derivative instruments is taken to the profit and loss account. 5.7 Financial instruments All financial assets and financial liabilities are recognized at the time when the Group becomes a party to the contractual provisions of the instrument. A financial asset is derecognised where (a) the rights to receive cash flows from the asset have expired; or (b) the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 flows in full without material delay to a third party under a 'pass-through' arrangement; and either (i) the Group has transferred substantially all the risks and rewards of the asset, or (ii) the Group has neither transferred nor retained substantially all the risk and rewards of the asset, but has transferred control of the asset. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Any gain or loss on derecognition of the financial assets and financial liabilities is taken to profit and loss account. 5.8 Advances Advances are stated net of specific and general provisions. Provisions are made in accordance with the requirements of Prudential Regulations issued by the SBP and charged to the profit and loss account. These regulations prescribe an age based criteria (as supplemented by subjective evaluation of advances by the Group) for classification of non-performing loans and advances and computing provision / allowance there against. Such regulations also require the Group to maintain general provision / allowance against consumer and SME advances at specified percentage of such portfolio. General provision for loan losses of overseas branches is made as per the requirements of the respective central banks. Advances are written off where there are no realistic prospects of recovery. 5.8.1 Islamic financing and related assets Under Murabaha financing, funds disbursed for the purchase of goods are recorded as advance against Murabaha finance and the financing is recorded at the deferred sale price. Goods purchased but remaining unsold at the statement of financial position date are recorded as inventories. Assets given on Ijarah are stated at cost less accumulated depreciation. Ijarah assets are depreciated on a reducing balance basis over the term of the Ijarah after taking into account the estimated residual value. Impairment of Ijarah assets is recognized in line with the Prudential Regulations or upon the occurrence of an impairment event which indicates that the carrying value of the Ijarah asset may exceed its recoverable amount. In Running Musharakah, the Group and the customer enter a Musharakah agreement where the Group agrees to finance the operating activities of the customer's business and share in the profit or loss in proportion to an agreed ratio at an agreed frequency. Under Diminishing Musharakah financing, the Group creates joint ownership with the customer over the tangible assets to fulfill capital expenditure / project requirements. The Group receives periodic payments from the customer against the gradual transfer of its share of ownership to the customer. In Istisna transactions, the Group finances the cost of goods manufactured by the customer. Once the goods are manufactured, these are sold by the customer as an agent of the Group to recover the cost plus the agreed profit. Under Tijarah, the Group purchases the finished goods from the customer against payment, takes possession and appoint customer as an agent to sell these goods to ultimate buyer on deferred payment basis. Profit is recognized on accrual basis over the period of transaction. Wakalah is an agency contract in which Group provides funds to the customer who invests it in a Shariah compliant manner. 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. 5.9 Fixed assets and depreciation 5.9.1 Property and equipment 5.9.1.1 Owned assets Property and equipment except land and buildings are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Land is stated at revalued amount. Buildings are stated at revalued amount less accumulated depreciation and impairment, if any. Cost of fixed assets of foreign branches include exchange differences arising on translation at year-end rates. Depreciation is charged to profit and loss account applying the straight line method except buildings, which are depreciated on diminishing balance method at the rates stated in note 12.2. Depreciation is charged from the month in which the assets are brought into use and no depreciation is charged for the month the assets are disposed. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Subsequent costs are included in the asset’s carrying amount 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. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit and loss account during the period in which they are incurred. Assets are derecognised when disposed off or when no future economic benefits are expected from its use or disposal. Gains and losses on disposal of property and equipment are included in profit and loss account. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. Land and buildings' valuations are carried out by professionally qualified valuers with sufficient regularity to ensure that their carrying amount does not differ materially from their fair value. - Any revaluation increase arising on the revaluation of such assets is recognised in statement of comprehensive income and accumulated in equity, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit and loss account, in which case the increase is credited to profit and loss account to the extent of the decrease previously expensed. A decrease in the carrying amount arising on the revaluation of such assets is recognised in profit and loss account to the extent that it exceeds the balance, if any, held in the fixed assets revaluation reserve relating to a previous revaluation of that asset; - Depreciation on assets which are revalued is determined with reference to the value assigned to such assets on revaluation and depreciation charge for the year is taken to the profit and loss account; - An amount equal to incremental depreciation for the year net of deferred taxation is transferred from “Surplus on Revaluation of Fixed Assets account” to unappropriated profit through statement of changes in equity to record realization of surplus to the extent of the incremental depreciation charge for the year; and - On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus remaining in the revaluation reserve is transferred directly to unappropriated profit. 5.9.1.2 Leased assets (as lessee) Assets subject to finance lease are accounted for by recording the asset and the related liability. These are recorded at lower of fair value and the present value of minimum lease payments at the inception of lease and subsequently stated net of accumulated depreciation. Depreciation is charged on the basis similar to the owned assets. Financial charges are allocated over the period of lease term so as to provide a constant periodic rate of financial charge on the outstanding liability. 5.9.1.3 Ijarah (as lessor) Assets leased out under 'Ijarah' are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Assets under Ijarah are depreciated over the period of lease term. However, in the event the asset is expected to be available for re-Ijarah, depreciation is charged over the economic life of the asset using straight line basis. Ijarah income is recognised on a straight line basis over the period of Ijarah contract. 5.9.2 Capital work-in-progress Capital work-in-progress is stated at cost. These are transferred to specific assets as and when assets are available for use. 5.9.3 Impairment The carrying values of operating fixed assets are reviewed for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amounts, operating fixed assets are written down to their recoverable amounts. The resulting impairment loss is taken to profit and loss account except for impairment loss on revalued assets which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of assets. Where impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised recoverable amount but limited to the extent of the amount which would have been determined had there been no impairment. Reversal of impairment loss is recognized as income in profit and loss account. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 5.10 Lease liability and right-of-use assets Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: - fixed payments (including in-substance fixed payments), less any lease incentives receivable - variable lease payment that are based on an index or a rate - amounts expected to be payable by the lessee under residual value guarantees, if any. - the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and - payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease payments are to be discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Right-of-use assets are measured at cost comprising the following: - the amount of the initial measurement of lease liability - any lease payments made at or before the commencement date less any lease incentives received - any initial direct costs, and - restoration costs. The Group leases various offices / branches for the purpose of its operational activities. Rental contracts are typically made for fixed periods of 3 to 10 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. 5.11 Intangible assets Intangible assets are stated at cost less accumulated amortization and impairment losses, if any. Amortization is charged to income applying the straight-line method at the rates stated in note 13. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful life are carried at cost less impairment losses, if any. 5.12 Non-banking assets acquired in satisfaction of claims In accordance with the requirements of the 'Regulations for Debt Property Swap' (the regulations) issued by SBP vide its BPRD Circular No. 1 of 2016, dated January 1, 2016, the non-banking assets are carried at revalued amounts less accumulated depreciation. These assets are revalued by professionally qualified valuers with sufficient regularity to ensure that their net carrying value does not differ materially from their fair value. A surplus arising on revaluation is credited to the 'surplus on revaluation of assets' account through statement of comprehensive income and any deficit, if any, arising on revaluation, after adjusting the amount of revaluation surplus outstanding against each asset as at the date of revaluation, is taken to the profit and loss account. Legal fees, transfer costs and direct costs of acquiring title to property is charged to profit and loss account and not capitalised. 5.13 Deposits and their cost Deposits are recorded at the fair value of proceeds received. Deposit costs are recognised as an expense in the period in which these are incurred using effective yield method. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 5.14 Taxation 5.14.1 Current Provision of current taxation is based on taxable income for the year determined in accordance with the prevailing laws of taxation on income earned for local as well as foreign operations, as applicable to the respective jurisdictions. The charge for the current tax also includes adjustments wherever considered necessary relating to prior years, arising from assessments framed during the year. 5.14.2 Deferred Deferred tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, to the extent that it is probable that taxable profits will be available against which the deductible temporary differences and unused tax losses can be utilised. Deferred tax is not recognised on differences relating to investment in subsidiaries, branches and associates and interest in joint arrangements to the extent the deductible temporary difference probably will not reverse in the foreseeable future. The carrying amount of deferred income tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit or deductible temporary differences will be available to allow all or part of the deferred income tax asset to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to gain / loss recognized on surplus on revaluation of assets is charged / credited to such account. 5.15 Employee benefits 5.15.1 Defined benefit plans The Group operates an approved funded pension scheme, an un-funded post retirement medical benefits scheme and an unfunded benevolent scheme for its eligible employees. The Group also operates an un-funded gratuity scheme for its eligible contractual employees. An actuarial valuation of all defined benefit schemes is conducted every year. The valuation uses the Projected Unit Credit method. Remeasurements of the net defined benefit liability / assets which comprise actuarial gains and losses, return on plan assets (excluding interest) and the effect of asset ceiling (if any, excluding interest) are recognized immediately in other comprehensive income. Past-service costs are recognized immediately in profit and loss account when the plan amendment occurs. 5.15.2 Other employee benefits Employees' compensated absences The Group also makes provision in the financial statements for its liability towards compensated absences. This liability is estimated on the basis of actuarial advice under the Projected Unit Credit method. 5.15.3 Retirement and other benefit obligations In respect of CJSC Subsidiary Bank of NBP in Kazakhstan (CJSC) The CJSC withholds amounts of pension contributions from employee salaries and pays them to state pension fund. The requirements of the Kazakhstan’s legislation state pension system provides for the calculation of current payments by the employer as a percentage of current total payments to staff. This expense is charged in the period the related salaries are earned. Upon retirement all retirement benefit payments are made by pension funds selected by employees. 5.16 Revenue recognition Income on loans and advances and debt security investments are recognized on a time proportion basis that takes into account effective yield on the asset. In case of advances and investments classified under the Prudential Regulations, interest / mark-up is recognized on receipt basis. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Interest / mark-up on rescheduled / restructured advances and investments is recognized in accordance with the Prudential Regulations of SBP. Fee, brokerage and commission income other than commission on letter of credit and guarantees and remuneration for trustee services are recognized upon performance of services. Commission on letters of credit and guarantees is recognized on time proportion basis. Dividend income on equity investments and mutual funds is recognized when right to receive is established. Premium or discount on debt securities classified as held-for-trading, available-for-sale and held-to-maturity securities is amortised using the effective interest method and taken to profit and loss account. Gains and losses on disposal of investments and operating fixed assets are dealt with through the profit and loss account in the year in which they arise. Income from lease financing is accounted for using the financing method. Under this method, the unearned lease income (defined as the sum of total lease rentals and estimated residual value less the cost of the leased assets) is deferred and taken to income over the term of the lease so as to produce a constant periodic rate of return on the outstanding net investment in the lease. Gains or losses on termination of lease contracts are recognized through the profit and loss account when these are realized. Unrealized lease income and other fees on classified leases are recognized on a receipt basis. 5.17 Net investment in finance lease Leases where the group transfers substantially all the risk and rewards incidental to ownership of the assets to the lessee are classified as finance leases. Net investment in finance lease is recognised at an amount equal to the aggregate of minimum lease payment including any guaranteed residual value and excluding unearned finance income, write-offs and provision for doubtful lease finances, if any. 5.18 Foreign currencies translation The Group's financial statements are presented in Pak Rupees (Rs.) which is the Group's functional and presentation currency. Foreign currency transactions are converted into Rupees applying the exchange rate at the date of the respective transactions. Monetary assets and liabilities in foreign currencies and assets / liabilities of foreign branches are translated into Rupees at the rates of exchange prevailing at the statement of financial position date. Forward foreign exchange contracts are valued at the rates applicable to their respective maturities. All gains or losses on dealing in foreign currencies are taken to profit and loss account. Profit and loss account balances of foreign branches and subsidiaries are translated at average exchange rate prevailing during the year. Gains and losses on translation are included in the profit and loss account except gains / losses arising on translation of net assets of foreign branches and subsidiaries, which are credited to other comprehensive income. Statement of financial position's balances of foreign branches are translated to Pakistani rupees at exchange rate prevailing at statement of financial position date. Gains and losses on translation are included in the profit and loss account except gains / losses arising on translation of net assets of foreign branches, which is credited to statement of comprehensive income. Commitments for outstanding forward foreign exchange contracts are disclosed in these unconsolidated financial statements at committed amounts. Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in Rupee terms at the rates of exchange prevailing at the statement of financial position date. 5.19 Provision for off balance sheet obligations Provision for guarantees, claims and other off balance sheet obligations is made when the Group has legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of amount can be made. Charge to profit and loss account is stated net of expected recoveries. 5.20 Off setting Financial assets and financial liabilities are only set off and the net amount is reported in the financial statements when there is a legally enforceable right to set off and the Group intends either to settle on a net basis, or to realize the assets and to settle the liabilities simultaneously. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 5.21 Fiduciary assets Assets held in a fiduciary capacity are not treated as assets of the Group in the consolidated statement of financial position. 5.22 Dividend and other appropriations Dividend and other appropriation to reserves, except appropriations which are required by the law, are recognised in the Group's financial statements in the year in which these are approved. 5.23 Earnings per share The Group presents basic and diluted earnings per share (EPS) for its shareholders. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, if any. There were no dilutive potential ordinary shares in issue at December 31, 2020. 5.24 Bai Muajjal Bai Muajjal transactions represent sales of Sukuks on a deferred payment basis and are shown in lendings to financial institutions except for transactions undertaken directly with the Government of Pakistan which are disclosed as investments. The difference between the deferred payment amount receivable and the carrying value at the time of sale is accrued and recorded as income over the life of the transaction. 5.25 Segment reporting A segment is a distinguishable component of the Group that is subject to risks and rewards that are different from those of other segments. A business segment is one that is engaged either in providing certain products or services, where as a geographical segment is one engaged in providing certain products or services within a particular economic environment. Segment information is presented as per the Group’s functional and management reporting structure. During the year the Group changes its organizational structure in a manner that causes the composition of its reportable segments to change, and accordingly the prior year disclosure is restated to reflect the current reportable segments in note 44. Business segments The Groups primary segment reporting is based on following business segments: I. Retail Banking Group includes retail lending and deposits, banking services, cards and branchless banking. II. Inclusive Development Group consists of loans to individuals, agriculture, SME, commodity and commercial customers. III. Corporate and Investment Banking; this segment offers a wide range of financial services to medium and large sized public and private sector entities. These services include, providing and arranging tenured financing, corporate advisory, underwriting, cash management, trade products, corporate finance products and customer services. IV. Treasury includes fixed income, equity, foreign exchange, credit, funding, own position securities, lendings and borrowings and derivatives for hedging and market making. V. International Financial Institution and Remittance segment includes the results of all international branches, correspondent banking business and global remittances. This represents Groups operations in 13 countries including one branch in export processing zones in Karachi. VI. Aitemaad and Islamic Banking provides shariah compliant services to customers including loans, deposits and other transactions VII. Head Office / Others includes the head office related activities and other functions which cannot be classified in any of the above segments. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Geographical segments The Group is operating following geographic lines for monitoring and reporting purpose: I. 5.26 Pakistan II. Asia Pacific (including South Asia) III. Europe IV. United States of America V. Middle East Accounting estimates and judgments The preparation of consolidated financial statements in conformity with Approved Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting polices. The estimates, judgments and associated assumptions used in the preparation of these consolidated financial statements are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The key areas of estimates and judgments in relation to these consolidated financial statements are as follows: a) Provision against non-performing advances The Group reviews its loan portfolio to assess amount of non-performing loans and determine provision required there against on a quarterly basis. While assessing this requirement various factors including the past dues, delinquency in the account, financial position and future business / financial plan of the borrower, value of collateral held and requirements of Prudential Regulations are considered. The Group also considers the effect of Forced Sale Value (FSV) of collaterals in determining the amount of provision, however, no benefit of FSV of collateral is taken during the year in determining provisioning amount. General provision for loan losses of overseas branches is made as per the requirements of the respective central banks. The amount of general provision against domestic consumer and SME advances is determined in accordance with the relevant Prudential Regulations and SBP directives. In addition, the Group has also made general provision in respect of its corporate portfolio on prudent basis. This general provision is in addition to the requirements of Prudential Regulations. b) Fair value of derivatives The fair values of derivatives which are not quoted in active markets are determined by using valuation techniques. The valuation techniques take into account the relevant interest and exchange rates over the term of the contract. c) Impairment of available-for-sale investments The Group considers that available-for-sale equity investments and mutual funds are impaired when there has been a significant or prolonged decline in the fair value below its cost except for investments where relaxation has been allowed by SBP. This determination of what is significant or prolonged requires judgment. In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance. Further the Group has developed internal criteria according to which a decline of 30% in the market value of any scrip below its cost shall constitute as a significant decline and where market value remains below the cost for a period of one year shall constitute as a prolonged decline. d) Held-to-maturity investments The Group follows the guidance provided in the SBP circulars on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity as held-to-maturity. In making this judgment, the Bank evaluates its intention and ability to hold such investments till maturity. e) Income taxes In making the estimates for current and deferred taxes, the management looks at the income tax law and the decisions of appellate authorities on certain issues in the past. There are certain matters where the Group’s view differs with the view taken by the income tax department and such amounts are shown as contingent liability. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 f) Fixed asset and intangible assets, revaluation, depreciation and amortization In making estimates of the depreciation / amortization method, the management uses method which reflects the pattern in which economic benefits are expected to be consumed by the Bank. The method applied is reviewed at each financial year end and if there is a change in the expected pattern of consumption of the future economic benefits embodied in the assets, the method would be changed to reflect the change in pattern. The Group also revalues its properties on a periodic basis. Such revaluations are carried out by independent valuer and involves estimates / assumptions and various market factors and conditions. g) Employees' benefit plans The liabilities for employees' benefits plans are determined using actuarial valuations. The actuarial valuations involve assumptions about discount rates, expected rates of return on assets, future salary increases, future inflation rates and future pension increases as disclosed in note 40. Due to the long term nature of these plans, such estimates are subject to significant uncertainty. h) Provision against contingencies Provision against contingencies is determined based on the management judgement regarding the probability of future outflows of resources emboying economic benefits to settle an obligation arising from past events. I) Determination of control over investees The Group's management applies its judgement to determine whether the control exists over the investee entities. 6. CLOSURE OF FOREIGN SUBSIDIARIES AND OPERATIONS The Board of Directors (BoD) of the Bank, in their meeting held on January 20 and 21, 2020, have decided for closure of their two overseas Subsidiaries in Almaty (Kazakhstan) and Dushanbe (Tajikistan) along with three overseas branches in Baku (Azerbaijan), Bishkek (Kyrgyzstan) and Asghabat (Turkmenistan) so their carrying amount will be recovered principally through continuing use. With regards to regulatory approval, the Bank applied to ministry of finance and State Bank of Pakistan for their endorsements and accordingly received their approval, with respect to the BoD decision, on April 07, 2020 and April 24, 2020 respectively. Further, it has been decided by BoD to restrict their country operations in Afghanistan (Jalalabad) and Bangladesh (Sylhet, Chittagong and Gulshan) to one branch in each country located in Kabul and Dhaka respectively. Particulars CJSC Subsidiary Bank of NBP in Kazakhstan (Almaty) CJSC Subsidiary Bank of NBP in Tajikistan (Dushanbe) Baku (Azerbaijan) Bishkek (Kyrgyzstan) Ashgabat (Turkmenistan) Total -------------------(Subsidiaries) ---------------- ----------------------------- (Branches) ---------------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------1,649,350 2,272,075 1,133,887 2,137,273 2,127,420 9,320,005 Total Liabilities 36,844 1,507,804 274,831 519,126 1,881,502 4,220,107 Profit / (Loss) for the year 17,920 18,145 (20,109) 72,612 3,034 91,601 Total Assets | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 7. CASH AND BALANCES WITH TREASURY BANKS Note 2020 2019 ------------(Rupees in ‘000)----------- In hand Local currency Foreign currency 48,499,942 6,925,688 55,425,630 48,684,542 4,984,290 53,668,832 7.1 7.2 7.2 125,017,412 10,209,399 21,022,297 1,618,084 157,867,192 168,479,311 9,116,381 27,850,977 1,473,861 206,920,530 7.3 7.3 29,581,326 4,789,170 25,994,672 4,865,977 34,370,496 30,860,649 2,306,248 1,748,079 249,969,566 293,198,090 With State Bank of Pakistan in Local currency current accounts Foreign currency current accounts Foreign currency deposit accounts Foreign currency collection accounts With other central banks in Foreign currency current accounts Foreign currency deposit accounts Prize bonds 7.1 This includes statutory liquidity reserves maintained with the SBP under Section 22 of the Banking Companies Ordinance, 1962. 7.2 These represent mandatory reserves maintained in respect of foreign currency deposits under FE-25 scheme, as prescribed by the SBP. 7.3 These balances pertain to the foreign branches and are held with central banks of respective countries. These include balances to meet the statutory and regulatory requirements in respect of liquidity and capital requirements of respective countries. The deposit accounts carry interest at the rate of 0% to 3.5% per annum (2019: 0% to 2.17% per annum). 8. BALANCES WITH OTHER BANKS Note 2020 2019 ------------(Rupees in ‘000)----------- In Pakistan In current accounts In deposit accounts 8.1 33,502 394,071 427,573 10,446 178,710 189,156 Outside Pakistan In current accounts In deposit accounts 8.2 8,708,983 5,878,810 14,587,793 6,670,289 6,738,880 13,409,169 15,015,366 13,598,325 8.1 These include various deposits with banks and carry interest at rates ranging from 2% to 8% per annum (2019: 2.5% to 11.25% per annum). 8.2 These include various deposits with correspondent banks outside Pakistan and carry interest at rates ranging from 0% to 2.5% per annum (2019: 0% to 2.17% per annum). 2020 2019 Note ------------(Rupees in ‘000)----------- 9. LENDINGS TO FINANCIAL INSTITUTIONS Call / clean money lendings Repurchase agreement lendings (Reverse Repo) Bai Muajjal receivable with State Bank of Pakistan Letters of placement 9.1 9.2 9.3 9.4 Less: provision held against lendings to financial institutions 9.5 9.6 Lendings to financial institutions - net of provision | National Bank of Pakistan 2,040,800 124,763,875 176,150 126,980,825 (176,150) 126,804,675 540,800 132,180,048 2,059,162 176,150 134,956,160 (176,150) 134,780,010
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 9.1 This includes zero rate lendings to a financial institution Rs. 40.8 million (2019: Rs. 40.8 million) which is guaranteed by the SBP. 9.2 These carry mark-up at rates ranging from 6.00% to 7.29% per annum (2019: 13.00% to 13.58% per annum) with maturities ranging from January 4, 2021 to January 26, 2021. 9.3 This represents Bai Muajjal agreement entered into with SBP and carries profit rate of Nil (2019: 10.39%) per annum. 9.4 These are overdue placements and full provision has been made against these placements as at December 31, 2020. Note 9.5 2020 2019 ------------(Rupees in ‘000)----------- Particulars of lending In local currency In foreign currencies 9.6 9.7 126,980,825 - 134,956,160 - 126,980,825 134,956,160 Opening balance Charge for the year 176,150 - 176,150 - Closing balance 176,150 176,150 Movement in provision held against lendings is as follows: Securities held as collateral against lending to financial institutions 2020 Held by Group 2019 Further given as collateral Held by Group Total Further given as collateral Total ------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------Market Treasury Bills 91,230,121 - 91,230,121 124,080,048 - 124,080,048 Pakistan Investment Bonds 33,533,754 - 33,533,754 8,100,000 - 8,100,000 124,763,875 - 124,763,875 132,180,048 - 132,180,048 Total 9.7.1 Market value of the securities under repurchase agreement lendings amounts to Rs. 125,094 million (2019: Rs. 132,453 million). 9.8 Category of classification 2020 Classified Lending 2019 Provision held Classified Lending Provision held ------------------------------------ (Rupees in '000) --------------------------------------Domestic Loss 176,150 176,150 176,150 176,150 Total 176,150 176,150 176,150 176,150 | National Bank of Pakistan
Investments by type : 10.1 | National Bank of Pakistan 10.12 10.15 Joint Venture Subsidiaries Total Investments 10.9/10.10 10.7 10.13/10.14 Note Associates Market Treasury Bills Pakistan Investment Bonds Debentures, Bonds, Sukuks, Participation Term Certificates and Term Finance Certificates Bai Muajjal with Government of Pakistan GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities Held-to-maturity securities Market Treasury Bills Pakistan Investment Bonds Ijarah Sukuks Ordinary shares of listed companies Ordinary shares of unlisted companies Preference shares Term Finance Certificates / Musharika and Sukuk Bonds GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities Investments in mutual funds Ordinary shares of a bank outside Pakistan Available-for-sale securities Market Treasury Bills Pakistan Investment Bonds Ijarah Sukuks Ordinary shares of listed companies Investment in mutual funds Foreign Government Securities Held-for-trading securities INVESTMENTS 10. Surplus / (Deficit) Carrying Value Cost / Provision for Amortised cost diminution 2019 Surplus / (Deficit) Carrying Value 1,435,390,437 1,245 6,054,005 (12,862,773) (1,245) - (697,984) (407,134) 213,151,947 1,259,067 (407,134) - 414,972 11,641,133 32,418,809 618 (11,756,410) 1,116,724,644 - (5,196,406) (41,167) - 60,250,294 10,429,632 2,795,017 79,438 619,646 463,295 168,676,415 (5,568,236) (410,893) (539,708) - 98,199,529 529,397,138 470,136,168 6,000,000 33,242,726 1,865,982 1,445,308 - 96,157,306 496,805 157,217 282,361 1,105,840 55,910,547 10,840,875 2,847,176 80,640 2,000,170 17,652,778 530,087,955 472,912,732 6,015,600 47,931,975 1,455,089 1,099,850 98,210,085 96,160,835 495,350 157,217 290,843 1,105,840 - 6,054,005 561,083 212,744,813 7,838 11,641,133 32,418,809 618 168,676,415 43,877,709 1,466,405,373 - - - - - - 43,867,153 1,148,835,387 856,659 411,243 52,159 1,202 1,421,691 17,189,483 690,817 2,776,564 15,600 20,257,485 194,250 10,556 3,529 (1,455) 8,482 - 1,426,201,659 1,245 5,827,985 1,223,080 344,150,982 416,707 10,395,235 4,087,591 30,231,741 596 114,155,009 184,864,103 1,037,331,953 60,253,886 21,138,771 3,474,324 1,408,492 674,078 463,294 593,936,881 322,248,605 2,000,000 29,062,226 2,101,182 570,214 37,666,414 27,007,755 9,116,239 71,299 178,596 138,305 1,154,220 (12,895,866) (1,245) - (782,251) (407,134) (407,134) - - (11,705,235) (4,942,505) (41,167) - (5,723,164) (507,573) (490,826) - - 39,493,398 - - - - - - 39,455,572 941,278 1,337,759 17,527 13,779 1,324,745 18,368,462 967,544 (1,961,853) (21,200) 18,467,531 - 37,826 (24,649) 15,695 (2,042) 48,822 - 1,452,799,192 - 5,827,985 440,829 343,743,848 9,573 10,395,235 4,087,591 30,231,741 596 114,155,009 184,864,103 1,065,082,290 56,252,659 22,476,530 3,491,851 1,422,271 1,957,656 18,831,756 594,904,425 320,286,752 1,978,800 41,806,593 1,593,609 79,388 37,704,240 26,983,106 9,131,934 71,299 176,554 187,127 1,154,220 -------------------------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------------------------------- Cost / Provision for Amortised cost diminution 2020 Notes to the Consolidated Financial Statements For the year ended December 31, 2020
10 .2 | National Bank of Pakistan First Credit and Investment Bank Limited Land Mark Spinning Mills Limited SG Allied Businesses Limited Nina Industries Limited Agritech Limited NBP Stock Fund -Listed Associates Ordinary shares of a bank outside Pakistan Investments in mutual funds Preference shares GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities Foreign Securities Listed Unlisted Non Government Debt Securities Listed Companies Unlisted Companies Shares Market Treasury Bills Pakistan Investment Bonds Bai Muajjal Government of Pakistan Ijarah Sukuks Federal Government Securities: Investments by segments: 10.9 10.8 10.7 10.13/10.14 Note Provision for diminution Surplus / (Deficit) Carrying Value Cost / Amortised cost Provision for diminution 2019 Surplus / (Deficit) Carrying Value 1,018,543 210,505 39,710 218,534 49,060 500,734 463,295 902,007 (457,460) (28,830) (39,710) (218,534) (49,060) (121,326) - (41,167) (539,708) - 46,829,354 1,445,308 - (5,603,540) 60,665,266 10,429,632 36,319,666 80,056 (1,031,475) (4,572,065) (5,979,129) 35,265,925 25,872,498 34,792,768 (5,568,236) (410,893) - 1,282,504,965 33,399,943 1,865,982 - 625,554,444 639,309,388 11,641,133 6,000,000 - - 17,189,483 1,430,173 194,250 464,604 411,243 52,159 1,202 856,659 405,860 450,799 20,257,485 20,257,485 - 3,485,055 694,346 2,775,109 15,600 561,083 181,675 379,408 17,652,778 2,291,013 1,099,850 47,293,958 10,840,875 36,371,825 81,258 55,918,385 25,246,883 30,671,502 49,544,281 48,089,192 1,455,089 1,285,990,020 626,248,790 642,084,497 11,641,133 6,015,600 982,556 208,089 39,710 218,534 49,060 467,163 463,294 812,383 570,214 61,495,735 25,226,362 34,860,285 1,409,088 60,670,593 22,471,459 38,199,134 31,342,004 29,240,822 2,101,182 1,263,795,126 735,099,645 516,228,947 10,395,235 2,071,299 (569,916) (106,429) (39,710) (218,534) (49,060) (156,183) - (41,167) (490,826) - - (5,349,639) (971,908) (4,377,731) (6,230,737) (5,723,164) (507,573) - - - - 18,368,462 1,373,567 - 1,369,065 1,337,759 17,527 13,779 941,278 941,278 18,465,489 18,465,489 - (1,024,463) 942,895 (1,946,158) (21,200) 412,640 101,660 310,980 18,831,756 2,144,783 79,388 62,864,800 26,564,121 34,877,812 1,422,867 56,262,232 21,499,551 34,762,681 43,576,756 41,983,147 1,593,609 1,262,770,663 736,042,540 514,282,789 10,395,235 2,050,099 ------------------------------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------------------------- Cost / Amortised cost 2020 Notes to the Consolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan Carrying Value Cost / Amortised cost Provision for diminution Surplus / (Deficit) Carrying Value 39,493,398 - 1,452,799,192 - 5,827,985 440,829 28,188 28,188 - 4,150,000 2020 2019 -------------- (Rupees in '000) -------------- (12,895,866) (1,245) - - - - 364,150,000 1,426,201,659 1,245 - (782,251) (212,336) (50,565) (6,500) (16,627) (32,105) (106,539) 5,300,000 1,466,405,373 - 5,827,985 1,223,080 240,524 50,565 6,500 44,815 32,105 106,539 360,000,000 43,877,709 - 6,054,005 561,083 - - 3,000,000 (12,862,773) (1,245) - - - - 2,300,000 1,435,390,437 1,245 - (697,984) 1,259,067 6,054,005 (240,524) (50,565) (6,500) (44,815) (32,105) (106,539) 240,524 50,565 6,500 44,815 32,105 106,539 Market Treasury Bills 10.15 10.12 10.11 Surplus / (Deficit) Pakistan Investment Bonds 10.2.1 Investments given as collateral Total Investments Cast-N-Link Products Limited Subsidiaries United National Bank Limited Joint Venture Pakistan Emerging Venture Limited National Fructose Company Limited National Assets Insurance Company Limited Dadabhoy Energy Supply Company Limited Pakistan Mercantile Exchange Limited -Unlisted Provision for diminution 2019 ----------------------------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------------------------------ Cost/ Amortised cost 2020 Notes to the Consolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 31,347,444 NBP Stock Fund * “ - ” Not available Cast-N-Link Products Limited 10.2.4 Subsidiaries United National Bank Limited 1,245,000 20,250,000 2,500,000 644,508 9,900,000 5,000 200,000 10,653,860 150,000 Tharparkar Sugar Mills Limited Youth Investment Promotion Society Dadabhoy Energy Supply Company Limited K-Agricole Limited New Pak Limited Pakistan Mercantile Exchange Limited Prudential Fund Management Limited 10.2.3 Joint Venture 12,500,000 1,300,000 33,333 11,000 37,500 4,481,500 Pakistan Emerging Venture Limited National Fructose Company Limited Venture Capital Fund Management Kamal Enterprises Limited Mehran Industries Limited National Assets Insurance Company Limited Unlisted 20,000,000 17,030,231 3,970,859 3,754,900 4,906,000 106,014,565 First Credit and Investment Bank Limited National Fibres Limited Land Mark Spinning Mills Limited SG Allied Businesses Limited Nina Industries Limited Agritech Limited Listed 10.2.2 Associates Number of shares Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan December 31, 2019 June 30, 2020 - June 30, 2019 June 30, 2020 June 30, 2020 June 30, 2020 December 31, 2019 June 30, 2020 76.51 Pakistan - 45.00 United Kingdom December 31, 2019 21.52 25.00 23.11 20.00 20.00 33.98 20.00 33.33 39.50 33.33 20.37 32.05 8.96 2.64 Pakistan 30.77 20.19 32.79 25.03 20.27 27.01 Based on the Percentage of Country of financial holding Incorporation statements as at Liabilities Revenue Total Profit / (loss) comprehensive after taxation income - 104,391,593 2,862,573 - 1,194 668,041 13,985,018 1,667,186 174,448 1,148,303 69,135,919 - 88,500,998 2,821,581 - 345 8,392 283,399 928,395 252,160 600,882 58,399,826 - 1,062,408 317,150 - 96 75,275 72,309 154,763 5,245 12,174,419 - (146,159) 31,832 - (175) 29,439 (384,270) 28,703 (16,925) (2,170) (652,777) - 1,614,231 29,680 31,832 - (175) - (384,270) 46,801 (16,925) 414,712 15,624,634 --------------------------------------------- (Rupees in '000) -------------------------------------------------- Assets Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------(Rupees in ‘000)----------- 10.3 Provision for diminution in value of investments Opening balance 12,895,866 10,664,680 1,258,140 2,615,328 Charge / reversals Charge for the year Reversals for the year (1,291,233) (33,093) Closing Balance 12,862,773 2020 10.3.1 Particulars of provision against debt securities NPI Category of classification (384,142) 2,231,186 12,895,866 2019 Provision NPI Provision ------------------------------------- (Rupees in '000) ------------------------------------ Domestic Doubtful 426,170 213,086 Loss 5,671,871 5,603,540 5,145,314 5,136,554 Total 5,671,871 5,603,540 5,571,484 5,349,640 | National Bank of Pakistan - -
10 .4 | National Bank of Pakistan First Credit and Investment Bank Limited Land Mark Spinning Mills Limited SG Allied Business Limited Nina Industries Limited Agritech Limited NBP Stock Fund Listed Pakistan Emerging Venture Limited National Fructose Company Limited National Assets Insurance Company Dadabhoy Energy Supply Company Limited Pakistan Mercantile Exchange Limited Unlisted Associates United National Bank Limited Joint Venture Addition Disposal Share of Exchange Dividend profit / (loss) translation paid for the year reserve net of tax 2020 Surplus Surplus (deficit) on (deficit) on revaluation revaluation properties securities Closing balance - - 1,223,080 - - - - - - 208,089 39,710 218,534 49,060 467,163 - - 5,827,985 50,565 6,500 44,815 32,105 106,539 - 5,827,985 - - - - - 42,813 9,242 33,571 - (219,389) (219,389) - - - 303,896 303,896 - - - 18,516 18,516 (6,826) (6,826) - - 122,997 122,997 1,259,067 210,505 39,710 218,534 49,060 500,734 50,565 6,500 44,815 32,105 106,539 6,054,005 6,054,005 ---------------------------------------------------------------------(Rupees in '000) -------------------------------------------------------------------- Opening balance Movement Schedule for Associates and Joint Venture Notes to the Consolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan First Credit and Investment Bank Limited Land Mark Spinning Mills Limited SG Allied Business Limited Nina Industries Limited Agritech Limited NBP Stock Fund Listed Pakistan Emerging Venture Limited National Fructose Company Limited National Assets Insurance Company Dadabhoy Energy Supply Company Limited Pakistan Mercantile Exchange Limited Unlisted Associates United National Bank Limited Joint Venture Addition Disposal Share of profit Exchange Dividend / (loss) for the translation paid year - net of reserve tax Surplus (deficit) on revaluation properties Surplus (deficit) on revaluation securities Closing Balance - 208,760 39,710 218,534 49,060 434,010 1,190,599 - - 4,543,339 50,565 6,500 44,815 32,105 106,539 - 4,543,339 - - - - - (6,000) (6,000) - - - - 37,331 4,178 33,153 - (96,336) (96,336) - - - 537,644 537,644 - - - 118,429 118,429 1,149 1,149 - - 724,909 724,909 1,223,080 208,089 39,710 218,534 49,060 467,163 50,565 6,500 44,815 32,105 106,539 5,827,985 5,827,985 --------------------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------------- Opening Balance 2019 Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 10.5 Quality of available for sale securities Details regarding quality of available for sale securities are as follows: 2020 2019 -------------- (Rupees in '000) -------------Federal government securities - government guaranteed Market Treasury Bills Pakistan Investment Bonds Ijarah Sukuks Cost 529,397,138 470,136,168 6,000,000 593,936,881 322,248,605 2,000,000 1,005,533,306 918,185,486 536,303 843,923 211,166 1,882,741 753,684 3,896,815 855,646 2,457,103 1,393,503 203,855 1,713,756 513,840 21,890 189,470 120 2,408,733 5,954,784 402,039 512,974 2,988,617 586,526 900,998 288,528 91,980 960,033 1,890,534 638,440 25,854 32,385 86,486 212,858 757,309 249,604 2,876,794 261,598 2,874,502 670,867 1,539,023 1,359,655 73,016 980,165 378,282 21,891 189,470 120 2,357,129 5,799,864 172,695 361,833 2,778,748 586,526 1,253,494 288,527 91,980 993,620 1,242,681 485,713 25,854 32,385 58,890 647 86,486 33,242,726 29,062,226 Shares Listed companies sector-wise Automobile Assembler Automobile Parts and Accessories Cable and Electrical Goods Cement Chemical Commercial Banks Engineering Fertilizer Food and Personal Care Glass and Ceramics Insurance Investment Banks / Investment companies / Securities companies Leasing Companies Leather and Tanneries Modarabas Oil and Gas Exploration Companies Oil and Gas Marketing Companies Paper and Board Pharmaceuticals Power Generation and Distribution Real Estate Investment Trust Refinery Sugar and Allied Industries Synthetic and Rayon Technology and Communication Textile Composite Textile Spinning Textile Weaving Transport Vanaspati and Allied Industries Woollen Miscellaneous Unlisted companies Digri Sugar Mills Limited JDM Textile Mills Limited Gelcaps Pakistan Limited Pakistan Agriculture Storage Service Corporation | National Bank of Pakistan 2020 2019 Cost Breakup value Cost Breakup value ------------------------------------- (Rupees in '000) -----------------------------------4,063 4,784 4,665 5,500 135,585 324,651 8,842 1,623 4,063 4,784 4,665 5,500 135,585 324,651 9,801 109,831
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Unlisted companies Cost 2020 Breakup value Cost 2019 Breakup value ------------------------------------- (Rupees in '000) -----------------------------------Al Ameen Textile Al Zamin Modarba Management (Private) Limited AMZ Venture Limited Class A Arabian Sea Country Club Atlas Power Limited Attock Textile Mills Limited Bunny's Limited Pakistan Mortgage Refinance Company Limited F.T.C. Management Company Private Limited Fauji Akbar Portia Marines Terminal Limited Fauji Oil Terminals and Distribution Limited First Women Bank Limited Fortune Securities Limited Frontier Textile Mills Limited Gulistan Power Generation Limited Hazara Woolen Mills Limited Industrial Development Bank of Pakistan Inter Asia Leasing Company Limited ISE Towers REIT Management Company Limited Junaid Cotton Mills Limited Kaisar Arts and Krafts Limited Kaytex Mills Limited Mian Mohammad Sugar Mills Limited Muslim Ghee Mills Limited Myfip Video Industries Limited National Asset Leasing Corporation Limited National Construction Limited National Institution of Facilitation Technology (Private) Limited National Investment Trust Limited National Woolen Mills Limited Natover Lease and Refinance Nowshehra Engineering Works Limited Pakistan Export Finance Guarantee Agency Limited Pakistan Paper Corporation Limited Pakistan Telephone Cables Pakistan Textile City Pakistan Tourism Development Corporation People Steel Mills Limited Qadri Textile Mills Limited Rehman Cotton Mills Limited Rishabh Metals and Chemicals Private Limited Rousch Power Pakistan Limited Ruby Rice and General Mills Limited Sahrish Textile Mills Shoaib Capital SME Bank Limited South Asia Regional Fund Star Salica Industries Limited Syed Match Industries Union Insurance Company of Pakistan Unity Modaraba Zafar Textiles Mills Limited * Not available | National Bank of Pakistan 327 1,000 121 6,500 375,000 200 600,000 250 321,076 10,886 21,100 5,000 500 2,200 200 107 500 30,346 327 8,395 3,778 15 1,810 5,373 14 250 1,526 100 183 2,602 41 11,529 373 143 100,000 100 3,276 500 16,958 4,589 132,888 750 21 272 26,950 287 267 2 4 28 257 N/A* 2,134 N/A (6,640) 1,328,000 N/A 770,195 46,998 570,680 99,059 71,946 7,574 272 8,096 N/A N/A N/A 46,890 N/A N/A N/A N/A N/A N/A N/A 597 74,484 830,782 N/A N/A N/A 1,152 N/A N/A 12,410 82 N/A N/A 107,895 N/A 1,322,458 N/A N/A 544 (318) N/A N/A N/A N/A N/A N/A 327 1,000 121 6,500 375,000 200 235,200 600,000 250 321,076 10,886 21,100 5,000 500 2,200 200 107 500 30,346 327 8,395 3,778 15 1,810 5,373 14 250 1,526 100 183 2,602 41 11,529 373 143 100,000 100 3,276 500 16,958 4,589 132,888 750 21 272 26,950 287 267 2 4 28 257 N/A* 2,134 N/A N/A 1,130,503 N/A 140,743 608,951 36,908 515,937 69,747 71,946 7,408 272 8,096 N/A N/A N/A 43,979 N/A N/A N/A N/A N/A N/A N/A 597 71,187 832,931 N/A N/A N/A 1,152 N/A N/A 12,410 24,983 N/A N/A 107,895 N/A 1,269,793 N/A N/A 544 (318) N/A N/A N/A N/A N/A N/A
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 Unlisted companies Cost 2019 Breakup value Cost Breakup value ------------------------------------- (Rupees in '000) ------------------------------------ Zulsham Engineering Works Limited Information System Associates Limited 1 Link (Guarantee) Limited Pakistan Corporate Restructuring Company Limited 330 1,719 50,000 96,000 N/A* N/A 139,362 N/A 1,865,982 330 1,719 50,000 96,000 N/A* N/A 147,332 N/A 2,101,182 * Not available 2020 2019 -------------- (Rupees in '000) -------------Debt Securities Listed - AAA - AA+, AA, AA- A+, A, A- BBB+, BBB, BBB- Unrated Cost 1,597,751 13,709,811 700,000 299,820 9,537,168 1,547,830 7,739,909 299,880 12,855,892 25,844,550 22,443,511 19,792,680 1,236,000 1,866,667 11,510,397 23,554,109 801,000 500,000 12,955,266 34,405,744 37,810,375 Unlisted - AAA - AA+, AA, AA- A+, A, A- Unrated Cost Foreign Securities 2020 Government Securities Cost 2019 Rating (Rupees in '000) USA 2,795,017 Cost Rating (Rupees in '000) AA+ 3,474,324 AA+ 2020 2019 ------------ (Rupees in '000) -----------Non Government Debt Securities - Cost Listed - A+ | National Bank of Pakistan 79,438 1,408,492
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 10.6 2020 2019 ------------(Rupees in ‘000)----------- Particulars relating to Held to Maturity securities are as follows: Federal Government Securities - Government guaranteed Market Treasury Bills Pakistan Investment Bonds Bai Muajjal with Government of Pakistan 168,676,415 11,641,133 114,155,009 184,864,103 10,395,235 180,317,548 309,414,347 27,948 27,948 387,025 388,759 387,025 388,759 Debt securities Listed - AA+, AA, AAUnlisted - Unrated Foreign Securities 2020 Cost 2019 Rating Cost (Rupees in '000) Rating (Rupees in '000) Government Securities Azerbaijan Bangladesh Kyrgyzstan Kingdom of Saudi Arabia Korea Tajikistan 646,649 27,277,984 1,118,290 2,551,243 734,572 90,071 32,418,809 Non Government Debt Securities BB+ Ba3 B2 A AA Unrated 484,683 24,741,528 1,400,585 2,302,369 671,179 631,397 30,231,741 BB+ BBB2 A+ AA - 2020 2019 ------------(Rupees in ‘000)----------- Listed - Unrated - Cost 618 596 10.6.1 The market value of securities classified as held-to-maturity as at December 31, 2020 amounted to Rs. 218,678 million (2019: Rs. 328,496 million). 10.7 Investment in shares of a bank incorporated outside Pakistan - Bank Al-Jazira The Bank holds 30,333,333 (2019: 30,333,333) shares in Bank Al-Jazira (BAJ) incorporated in the Kingdom of Saudi Arabia, representing 3.7% (2019: 3.7%) holding in total equity of BAJ. The investment has been marked to market using closing price as quoted on the Saudi Stock Exchange in accordance with SBP concurrence vide letter No. BSD/SU-13/331/685/2006 dated February 17, 2006. BAJ’s Viability Rating is BB+ with short term and long term IDR at BBB+ by Fitch Rating Agency. 10.8 The 94,273,510 (2019: 94,273,510) shares of Agritech Limited were acquired from Azgard Nine Limited as part of multiple agreements including the Master Restructuring Agreement (MRA). These shares were acquired at an agreed price of Rs. 35 per share. The market value of these shares at December 31, 2020 amounted to Rs. 5.11 per share resulting in an impairment of Rs. 3,124 million (2019: Rs. 3,217 million) which has been fully recorded in these consolidated financial statements. There is a put option available to Azgard Nine Limited, under which Azgard Nine Limited has the right to sell 58.29 million preference shares of Agritech Limited to the Bank at a price of Rs. 5.25 per share subject to the occurrence of certain events under the agreement. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 10.9 Aggregate market value of investment in associates (quoted) on the basis of quoted prices amounts to Rs. 1,456 million (2019: Rs. 1,014 million). 10.10 Associates with zero carrying amount, represent the investments acquired from former National Development Finance Corporation (NDFC) which have negative equity or whose operations were closed at the time of amalgamation. 10.11 The details of break-up value based on latest available financial statements of unlisted investments in associates are as follows: Year / Period ended Break-up value (Rupees in '000) National Assets Insurance Limited December 31, 2019 59,124 Pakistan Emerging Venture Limited June 30, 2019 283 Pakistan Mercantile Exchange Limited June 30, 2020 13,928 Note 2020 2019 -------------- (Rupees in '000) -------------- 10.12 Investment in joint venture United National Bank Limited (UNBL) (Incorporated in United Kingdom) 10.1 / 10.2 / 10.12.1 6,054,005 5,827,985 10.12.1 Under a joint venture agreement, the Bank holds 20.25 million ordinary shares (45%) and United Bank Limited (UBL) holds 23.25 million ordinary shares (55%) in UNBL. In addition to ordinary shares, four preference shares categories as "A", "B", "C" and "D" have been issued and allotted. The "B" and "D" category shares are held by the Bank and category "A" and "C" are held by UBL. Dividends payable on "A" and "B" shares are related to the ability of the venture to utilize tax losses that have been surrendered to it on transfer of business from the Bank or UBL as appropriate. Dividends payable on "C" and "D" shares are related to loans transferred to the venture by the Bank or UBL that have been written-off or provided for at the point of transfer and the ability of the venture to realize in excess of such loan value. 10.13 The investments in shares include shares of Pakistan State Oil Company Limited, Sui Northern Gas Pipeline Limited and Pakistan Engineering Company with cost of Rs. 4,603 million (2019: Rs. 4,603 million) that have been frozen by the Government of Pakistan for sale in the equity market due to their proposed privatization. 10.14 The investments also include shares acquired under tri-partite consent agreement dated June 29, 2011. These strategic investments comprise of the shares of Pakistan State Oil (38,055,247 shares), shares of Sui Northern Gas Pipeline Limited (18,805,318 shares) and Pakistan Engineering Company (135,242). The cost of these shares amounts to Rs. 4,603 million and market value as at December 31, 2020 amounts to Rs. 9,065 million. These shares can not be sold without concurrence of privatization commission. 2020 2019 ------------(Rupees in ‘000)----------- 10.15 Investments in subsidiaries Cast-N-Link Products Limited Less: provision for diminution in value of investments 1,245 (1,245) 1,245 (1,245) - - 10.15.1 The financial statements of Cast-N-Link Products Limited (CNL) are not available since the year 1997. Accordingly, the management of the Group had applied to the Securities and Exchange Commission of Pakistan (SECP) for the exemption from the requirements of section 228 of the Companies Act, 2017 (the Act) in respect of consolidating its subsidiary CNL. The SECP, vide its letter EMD/233/627/2002-103 dated November 18, 2019, has not acceded the Bank's request from the exemption from consolidation of CNL in its consolidated financial statements for the year ended December 31, 2019 and further directed to comply with the requirement of section 228 of the Act. However the Bank, based on the fact that investment of the Group in CNL is not material and comprise of 0.000041% of the total assets of the Bank and the investment have been fully provided for, has not consolidated the financial statements of CNL. | National Bank of Pakistan
| National Bank of Pakistan Advances - net of provision Provision against advances - Speciﬁc - General Loans, cash credits, running ﬁnances, etc. Islamic ﬁnancing and related assets Net Investment in ﬁnance lease Bills discounted and purchased Advances - gross ADVANCES Non Performing 2019 2020 2020 Total 2019 2020 966,646,578 22,473,748 22,473,748 932,517,097 37,546,863 58,239 18,998,127 989,120,326 993,710,524 9,005,951 9,005,951 936,301,542 33,880,111 71,576 32,463,246 1,002,716,475 Over five years 2019 983,871,421 154,587,769 22,473,748 177,061,517 1,093,051,844 38,149,776 87,183 29,644,135 1,160,932,938 Later than one Not later than and less than one year five years 14,688,088 134,688,966 134,688,966 142,383,652 203,934 28,944 6,760,524 149,377,054 Total 1,008,398,612 134,688,966 9,005,951 143,694,917 1,078,685,194 34,084,045 100,520 39,223,770 1,152,093,529 85,845 Present value of minimum lease payments 1,339 556 815 1,371 32 - 87,183 62,307 49,619 111,926 24,742 81,262 62,474 47,934 110,408 29,146 19,258 10,434 9,617 20,051 793 - - 100,520 72,908 57,551 130,459 29,939 The leases executed are for a term of 1 to 5 years. Security deposit is generally obtained upto 10% of the cost of leased assets at the time disbursement. The Group requires the lessee to insure the leased assets in favour of the group. Additional surcharge is charged on delayed rentals. The average return implicit ranges from 10.19% to 17.30% (2019: 10.19% to 19.46%) per annum. 61,751 48,804 110,555 24,710 -------------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------------- Total 17,224,843 154,587,769 154,587,769 160,534,747 602,913 28,944 10,646,008 171,812,612 ---------------------------------------------------- (Rupees in '000) --------------------------------------------------- Performing 2019 2020 Later than one Not later than and less than Over five years one year five years 11.4 11.2 11.1 Note Lease rentals receivable Residual value Minimum lease payments Financial charges for future periods 11.1 Net Investment in Finance Lease 11. Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 -------------- (Rupees in '000) -------------11.2 Particulars of advances (Gross) In local currency In foreign currencies 11.3 1,071,981,593 88,951,345 1,052,162,269 99,931,260 1,160,932,938 1,152,093,529 Advances include Rs. 171,813 million (2019: Rs. 149,377 million) which have been placed under non-performing status as detailed below: 2020 Category of Classification Non Performing Loans 2019 Provision Non Performing Loans Provision ------------------------------ (Rupees in '000) ----------------------------- Domestic Other Assets Especially Mentioned 1,626,950 45,392 1,299,042 78,430 Substandard 5,418,693 1,336,002 10,292,449 2,550,709 15,816,861 7,881,223 6,489,076 3,207,031 106,261,071 103,917,273 89,852,808 88,647,897 129,123,575 113,179,889 107,933,375 94,484,067 Doubtful Loss Overseas Not past due but impaired Overdue by: Upto 90 days 91 to 180 days 181 to 365 days >365 days Total | National Bank of Pakistan - - - - 11,666 42,677,371 9,183 41,398,697 41,443,678 40,204,898 42,689,037 41,407,880 41,443,678 40,204,898 171,812,612 154,587,769 149,377,054 134,688,966
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 11.4 Particulars of provision against advances Specific Note Opening balance Exchange adjustments Charge for the year Reversals Amounts written off Amounts charged off agriculture financing Specific Total 2019 General Total ------------------------------------------------------- (Rupees in '000) ----------------------------------------------------134,688,966 9,005,951 143,694,917 126,969,680 7,207,106 134,176,786 1,462,567 19,001,917 15,535 13,707,207 1,478,102 32,709,124 3,813,805 11,501,956 28,732 2,018,117 3,842,537 13,520,073 (3,138,355) (321,795) (3,460,150) (4,730,294) (248,004) (4,978,298) 15,863,562 13,385,412 29,248,974 6,771,662 1,770,113 8,541,775 11.5.1 (89,494) - (89,494) (33,004) - (33,004) 11.4.1.3 (193,807) 66,850 (193,807) (232,480) - (232,480) (1,776,734) - (1,776,734) Transfer from other assets Amount charged off international branches 2,855,975 2,922,825 - - - - - Amount charged off international subsidiaries - - - (91,274) - (91,274) Other adjustments Other movement - - - (220,744) (511,946) - (220,744) (511,946) Closing balance 11.4.1 2020 General 154,587,769 22,473,748 177,061,517 134,688,966 Total Specific 9,005,951 143,694,917 Particulars of provision against advances Specific 2020 General 2019 General Total ------------------------------------------------------- (Rupees in '000) ----------------------------------------------------In local currency In foreign currencies 113,179,889 41,407,880 22,274,089 199,659 135,453,978 41,607,539 94,484,067 40,204,898 8,550,136 455,815 103,034,203 40,660,713 154,587,769 22,473,748 177,061,517 134,688,966 9,005,951 143,694,917 11.4.1.1 The Group maintains general reserve in accordance with the applicable requirements of the Prudential Regulations for Consumer Financing and Prudential Regulations for Small and Medium Enterprise Financing issued by the SBP. The Group has also maintained general provision of Rs. 17,078 million (2019: Rs. 3,850 million) in respect of its underperforming portfolio on prudent basis. 11.4.1.2 The SBP had allowed specific relaxation to the Bank for non-classification of overdue loans of certain Public Sector Entities (PSEs) which were guaranteed by the Government of Pakistan as non-performing loans up till December 31, 2021. 11.4.1.3 These represent non-performing advances for agriculture finance which have been classified as loss and fully provided for more than 3 years. These non-performing advances have been charged off by extinguishing them against the provision held in accordance with Prudential Regulations for Agriculture Financing issued by the SBP. This charge off does not, in any way, prejudice the Bank's right of recovery from these customers. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 11.4.1.4 State Bank of Pakistan (‘SBP’), vide its BPRD circular letter No. 13 of 2020, has provided regulatory relief to dampen the effects of Covid-19 and allowed banks to offer deferral of principal component of installments to its borrowers for one year, provided that the borrower will continue to service the mark-up amount as per agreed terms & conditions. During the year ended December 31, 2020, 77 borrowers having aggregate outstanding exposure of Rs. 27,395 million have availed regulatory relief extended by SBP. Note 11.5 Particulars of write-offs 11.5.1 Against provisions 11.5.2 Write Offs of Rs. 500,000 and above - Domestic Write-offs of below Rs. 500,000 11.6 2020 2019 ------------(Rupees in ‘000)----------- 11.5.2 89,494 33,004 11.6 40,260 49,234 5,957 27,047 89,494 33,004 Details of loan write-off of Rs. 500,000/- and above In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the Statement in respect of written-off loans or any other financial relief of rupees five hundred thousand or above allowed to a person(s) during the year ended is given in Annexure-I. (except where such disclosure is restricted by overseas regulatory authorities). Note 12. FIXED ASSETS Capital work-in-progress Property and equipment 12.1 2020 2019 ------------(Rupees in ‘000)----------- 12.1 12.2 2,232,001 52,854,808 2,162,985 52,756,579 55,086,809 54,919,564 2,040,456 10,825 59,000 121,720 2,001,776 15,446 58,372 40,491 46,900 2,232,001 2,162,985 Capital work-in-progress Civil works Equipment Advances to suppliers and contractors License and implementation fee for core banking software Software implementation in progress | National Bank of Pakistan
12 .2 Computer Building on Leasehold Building on Furniture and and Leasehold land Freehold land fixture peripheral land equipment | National Bank of Pakistan 19,362,870 19,362,870 19,362,870 310,289 19,673,159 19,673,159 19,673,159 Nil Year ended December 2020 Opening net book value 20,108,882 Additions Movement in surplus on assets revalued 261,564 Disposals Depreciation charge Depreciation adjustment - disposal Exchange rate adjustments Other adjustments / transfers - cost Other adjustments / transfers - depreciation Closing net book value 20,370,446 20,370,446 20,370,446 Nil At December 31, 2020 Cost / revalued amount Accumulated depreciation Net book value Rate of depreciation (percentage) Electrical, office equipment 2020 Assets held under finance Vehicles lease Vehicles Assets held Assets held Assets held under finance under Ijarah - under Ijarah lease - Office Machinery Vehicle Equipment Total 1,890,264 862,190 (35,996) (683,657) 17,337 (763) 8,902 622 2,058,899 173,017 314,363 (12,072) (278,073) 7,133 39,551 (594) 641 243,966 1,232,840 531,086 (9,320) (638,313) 5,873 (21,661) (873) 705 1,100,337 20% on cost 33.33% on cost 20% on cost 4,381,195 6,793,647 4,587,414 6,320,774 (911,172) (4,734,748) (4,343,448) (5,220,437) 3,470,023 2,058,899 243,966 1,100,337 3,586,258 46,509 59,670 (1,753) (173,990) 1,713 (38,834) (9,555) 5 3,470,023 4,325,158 5,959,314 4,246,166 5,821,542 (738,900) (4,069,050) (4,073,149) (4,588,702) 3,586,258 1,890,264 173,017 1,232,840 5% on book 5% on book value value 6,499,638 (1,242,781) 5,256,857 5,517,933 3,622 28,757 (293,455) 5,256,857 6,467,259 (949,326) 5,517,933 20% on cost 1,316,025 (923,581) 392,444 604,671 196,439 (199,509) (374,030) 161,764 3,249 727 (867) 392,444 1,315,119 (710,448) 604,671 20% on cost 450,232 (244,651) 205,581 189,841 76,083 (14,928) (51,851) 6,506 (1,098) 1,028 205,581 390,175 (200,334) 189,841 96,571 (42,808) 53,763 56,041 (690) (2,274) 686 53,763 97,261 (41,220) 56,041 299,418 70,798,146 (277,297) (17,943,338) 22,121 52,854,808 25,856 52,756,579 2,030,292 660,280 (1,961) (276,229) (3,727) (2,500,333) 1,953 202,965 (18,458) (2,492) 2,204 22,121 52,854,808 301,379 68,404,753 (275,523) (15,648,174) 25,856 52,756,579 20% on book 25% to 33% 20% on value on cost book value 9,627 (2,415) 7,212 8,106 (963) (1) 70 7,212 9,628 (1,522) 8,106 --------------------------------------------------------------------------------------------------------------------------------------------------(Rupees in '000) ------------------------------------------------------------------------------------------------------------------------------------------------- Freehold land 20,108,882 20,108,882 At January 1, 2020 Cost / revalued amount Accumulated depreciation Net book value Property and equipment Notes to the Consolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan Vehicles Total Nil 9,628 (1,522) 8,106 9,165 (950) (1,037) 928 8,106 10,578 (1,413) 9,165 97,261 (41,220) 56,041 59,474 (2,779) (2,979) 2,325 56,041 100,040 (40,566) 59,474 301,379 68,404,753 (275,523) (15,648,174) 25,856 52,756,579 33,743 52,404,072 1,779,484 653,070 (8,338) (219,936) (6,049) (2,425,896) 6,500 166,993 78,557 324,740 (4,506) 25,856 52,756,580 309,717 65,788,836 (275,974) (13,384,765) 33,743 52,404,071 5% on book 5% on book 33.33% on 20% on book 25% to 33% 20% on 20% on cost 20% on cost 20% on cost 20% on cost value value cost value on cost book value 390,175 (200,334) 189,841 120,458 138,620 (36,420) (35,648) 17,040 (32,091) 17,882 189,841 320,066 (199,608) 120,458 During the year ended December 31, 2020, land and building were revalued. The basis of revaluations were desktop valuations and were carried by RBS Associates (Private) Limited (PBA registered valuer) independent of the Bank, resulting in surplus of Rs. 660 million. For the purpose of the value assessment, factors like commercial value, location, utilization, nature of title etc. were kept in mind. Nil 824,705 132,091 (142,479) (341,028) 115,602 1,444 32,344 (18,008) 604,671 6,467,259 4,325,158 5,959,314 4,246,166 5,821,542 1,315,119 (949,326) (738,900) (4,069,050) (4,073,149) (4,588,702) (710,448) 5,517,933 3,586,258 1,890,264 173,016 1,232,840 604,671 20,108,882 19,362,870 20,108,882 19,362,870 334,500 1,179,638 126,613 609,719 (5,439) (7,160) (312,550) (577,403) 4,953 6,001 24,013 21,177 2,197 4,137 (1,270) (3,269) 173,016 1,232,840 6,467,259 3,966,370 5,237,005 4,098,782 5,193,669 1,291,719 (662,736) (564,104) (3,395,037) (3,764,282) (4,014,031) (467,014) 5,804,523 3,402,267 1,841,968 334,500 1,179,638 824,705 At December 31, 2019 Cost / revalued amount Accumulated depreciation Net book value 20,108,882 18,684,751 20,108,882 18,684,751 5,804,523 3,402,267 1,841,968 53,360 719,081 86,281 (16,371) (286,590) (174,792) (687,820) 13,644 12,204 19,719 206,943 (120) (4) 163 5,517,933 3,586,259 1,890,264 Rate of depreciation (percentage) Assets held Assets held Assets held Assets held under finance under finance under Ijarah - under Ijarah lease lease - Office Machinery Vehicle Vehicles Equipment --------------------------------------------------------------------------------------------------------------------------------------------------(Rupees in '000) ------------------------------------------------------------------------------------------------------------------------------------------------- Building on Computer and Electrical, Lease hold Building on Furniture and Lease hold peripheral office land Free hold land fixture land equipment equipment Year ended December 2019 Opening net book value 20,108,882 18,684,751 Additions Movement in surplus on assets revalued 566,789 Disposals Depreciation charge Depreciation adjustment - disposal Exchange rate adjustments Other adjustments / transfers - cost 111,330 Other adjustments / transfers - depreciation Closing net book value 20,108,882 19,362,870 At January 1, 2019 Cost / revalued amount Accumulated depreciation Net book value Free hold land 2019 Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 12.3 Details of disposals of ﬁxed assets to related parties The particulars of disposal of ﬁxed assets to related parties are given below: Particulars of property and equipment Original cost Book Value Sale Gain / (loss) Mode of disposal Proceed on disposal Particulars of purchaser Purchaser name ------------------------- (Rupees in '000) ----------------------- Ofﬁce Equipment & Electrical Installations 50 10 10 - As per entitlement Ex-Employee Muhammad Saleem Qasim Ofﬁce Equipment & Electrical Installations 50 13 13 - As per entitlement Ex-Employee Amjad Pervaiz Ofﬁce Equipment & Electrical Installations 49 33 33 - As per entitlement Ex-Employee Zia Ur Rashid Ibrahim Ofﬁce Equipment & Electrical Installations 155 - - - As per entitlement Ex-Employee Nasir Hussain Ofﬁce Equipment & Electrical Installations 50 - - - As per entitlement Employee Muhammad Naeem Ansari Ofﬁce Equipment & . Electrical Installations 464 - - - As per entitlement Ex-Employee Aamir Sattar Ofﬁce Equipment & Electrical Installations 800 - - - As per entitlement Ex-Employee Aamir Sattar Ofﬁce Equipment & Electrical Installations 35 15 15 - As per entitlement Ex-Employee Ofﬁce Equipment & Electrical Installations 30 - - - As per entitlement Ex-Employee Khadija Adnan Ofﬁce Equipment & Electrical Installations 50 - - - As per entitlement Employee Muhammad Naeem Ansari 1,733 71 71 - Computer Equipment 93 - 9 9 As per entitlement Employee Amber Memon Computer Equipment 59 - 6 6 As per entitlement Employee Prem Kumar Computer Equipment 87 - 9 9 As per entitlement Ex-Employee Faraz Haider Computer Equipment 64 - 6 6 As per entitlement Employee Shahid Ali Khan Computer Equipment 101 - 10 10 As per entitlement Employee Abdul Wajid Computer Equipment 90 - 9 9 As per entitlement Ex-Employee Saleem Computer Equipment 140 - 14 14 As per entitlement Employee Asad Saleem Computer Equipment 99 - 10 10 As per entitlement Ex-Employee Syed Tariq Hasan Computer Equipment 99 - 10 10 As per entitlement Employee Umar Azim Daudpota Computer Equipment 183 - - - As per entitlement Ex-Employee Nasir Hussain Computer Equipment 110 - - - As per entitlement Ex-Employee Amjad Pervaiz Computer Equipment 140 - 14 14 As per entitlement Employee Muhammad Naeem Ansari 1,265 - 97 97 | National Bank of Pakistan Muhammad Najmuddin
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Particulars of property and equipment Original cost Book Value Sale Gain / (loss) Mode of disposal Proceed on disposal Particulars of purchaser Purchaser name ------------------------- (Rupees in '000) ----------------------- Furniture & Fixtures 125 71 71 - As per entitlement Ex-Employee Muhammad Akhtar Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Maqsood Ahmed Furniture & Fixtures 150 31 31 - As per entitlement Ex-Employee Farhat Anjum Shaikh Furniture & Fixtures 150 35 35 - As per entitlement Ex-Employee Niaz Ahmed Chatha Furniture & Fixtures 125 25 25 - As per entitlement Ex-Employee Muhammad Adnan Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Bilqees Talat Furniture & Fixtures 125 39 39 - As per entitlement Ex-Employee Sharaf Ahmed Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Ashraf Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Akram Furniture & Fixtures 125 67 67 - As per entitlement Ex-Employee Naveed Akhtar Furniture & Fixtures 125 60 60 - As per entitlement Ex-Employee Muhammad Aslam Lalani Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Shaheen Aijaz Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Late Mehboob Ali Abro Furniture & Fixtures 125 17 17 - As per entitlement Ex-Employee Muhammad Ilyas Bashir Furniture & Fixtures 150 45 45 - As per entitlement Ex-Employee Haji Anwar Baloch Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Tariq Mehmood Bukhari Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Muhammad Raﬁque Furniture & Fixtures 125 31 31 - As per entitlement Ex-Employee Ghulam Akbar Chandio Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Nasir Ehsan Furniture & Fixtures 150 78 78 - As per entitlement Ex-Employee Muhammad Ejaz Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Late Mehboob Ellahi Furniture & Fixtures 125 41 41 - As per entitlement Ex-Employee Muhammad Fayyaz Qureshi Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Farooq Furniture & Fixtures 125 1 1 - As per entitlement Ex-Employee Shaheen Haider Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Akhtar Hussain Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Mureed Hussain Shaikh Furniture & Fixtures 125 63 63 - As per entitlement Ex-Employee Manzoor Hussain Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Muhammad Hayat Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Syed Iftikhar Hussain Furniture & Fixtures 175 - - - As per entitlement Ex-Employee Masood Iqbal Furniture & Fixtures 175 70 70 - As per entitlement Ex-Employee Zia Ur Rashid Ibrahim Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Shahid Iqbal Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Ismail Furniture & Fixtures 125 15 15 - As per entitlement Ex-Employee Sajida Ishaq Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Javed Iqbal Furniture & Fixtures 125 68 68 - As per entitlement Ex-Employee Muhammad Javed Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Shahid Javid Furniture & Fixtures 150 35 35 - As per entitlement Ex-Employee Dilpazir Khan Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Bashir Ahmed Khan Furniture & Fixtures 125 58 58 - As per entitlement Ex-Employee Muhammad Rasheed Furniture & Fixtures 300 - - - As per entitlement Ex-Employee Shaﬁq Ahmed Khan Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Jamil Khan | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Particulars of property and equipment Original cost Book Value Sale Gain / (loss) Mode of disposal Proceed on disposal Particulars of purchaser Purchaser name ------------------------- (Rupees in '000) ----------------------- Furniture & Fixtures 150 50 50 - As per entitlement Ex-Employee Muhammad Asghar Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Farooq Khan Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Ali Khan Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Late Abdul Sami Furniture & Fixtures 150 70 70 - As per entitlement Ex-Employee Khalid Mehmood Furniture & Fixtures 150 69 69 - As per entitlement Ex-Employee Hassan Ali Memon Furniture & Fixtures 150 82 82 - As per entitlement Ex-Employee Tariq Mehmood Furniture & Fixtures 190 44 44 - As per entitlement Ex-Employee Wasi Murtaza Furniture & Fixtures 125 29 29 - As per entitlement Ex-Employee Raja Sultan Mehmood Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Tariq Mahmood Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Nazia Ghulam Muhammad Furniture & Fixtures 150 - - - As per entitlement Ex-Employee S.M Rashid Nabi Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Khurshud Agned Nishat Furniture & Fixtures 150 16 16 - As per entitlement Ex-Employee Muhammad Najamuddin Furniture & Fixtures 175 19 19 - As per entitlement Ex-Employee Amjad Pervez Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Agha Fazalullah Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Abdul Rahim Qureshi Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Ramzan Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Abdul Rauf Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Mian Shaﬁq Ur Rehman Furniture & Fixtures 175 55 55 - As per entitlement Ex-Employee Muhammad Salim Qasim Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Ch.Muhammad Shaﬁ Furniture & Fixtures 125 53 53 - As per entitlement Ex-Employee Muhammad Shaﬁ Furniture & Fixtures 125 43 43 - As per entitlement Ex-Employee Muhammad Sabir Furniture & Fixtures 125 75 75 - As per entitlement Ex-Employee Muhammad Saleem Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Muhammad Sohail Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Shahzad Saleem Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Abdul Razzak Shaikh Furniture & Fixtures 150 69 69 - As per entitlement Ex-Employee Muhammad Shahid Furniture & Fixtures 125 - - - As per entitlement Ex-Employee M. Shamim Shakir Furniture & Fixtures 150 - - - As per entitlement Ex-Employee Abdul Latif Solongi Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Fazeel Tahir Furniture & Fixtures 125 - - - As per entitlement Ex-Employee Muhammad Usman Furniture & Fixtures 150 21 21 - As per entitlement Ex-Employee Ghulam Qadir Jam Furniture & Fixtures 190 82 82 - As per entitlement Ex-Employee Syed Ajmal Habib Furniture & Fixtures 190 63 63 - As per entitlement Ex-Employee Muhammad Saleem Adil Furniture & Fixtures 150 34 34 - As per entitlement Ex-Employee Abdul Qayum Zia Furniture & Fixtures 175 83 83 - As per entitlement Ex-Employee Arif Raza Abdy Furniture & Fixtures 150 20 20 - As per entitlement Ex-Employee Arshad Mahmood Furniture & Fixtures 175 7 7 - As per entitlement Employee Muhammad Naeem Ansari Furniture & Fixtures 500 319 319 - As per entitlement Ex-Employee Tariq Jamali Furniture & Fixtures 150 34 34 - As per entitlement Ex-Employee Abid Ali Siddiqi | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Particulars of property and equipment Original cost Book Value Sale Gain / (loss) Mode of disposal Proceed on disposal Particulars of purchaser Purchaser name ------------------------- (Rupees in '000) ----------------------- Furniture & Fixtures 160 63 63 - As per entitlement Ex-Employee Furniture & Fixtures 150 64 64 - As per entitlement Ex-Employee Muhammad Younas Furniture & Fixtures 300 95 95 - As per entitlement Employee Imdad Hussain Furniture & Fixtures 175 33 33 - As per entitlement Ex-Employee Khadija Adnan Furniture & Fixtures 335 131 131 - As per entitlement Employee Azra Naila Uzair Furniture & Fixtures 175 41 41 - As per entitlement Ex-Employee Haﬁz Muhammad Fayyaz Furniture & Fixtures 175 22 22 - As per entitlement Ex-Employee Abdul Aziz Nadeem Furniture & Fixtures 150 5 5 - As per entitlement Ex-Employee Hamid Rasool Qadri Furniture & Fixtures 200 82 82 - As per entitlement Ex-Employee Mumtaz Raﬁ Furniture & Fixtures 125 57 57 - As per entitlement Ex-Employee Raja Ejaz Ahmed 14,190 2,780 2,780 - Motor Vehicles 1,658 332 332 - As per entitlement Employee Asad Saleem Motor Vehicles 1,658 304 332 28 As per entitlement Employee Farooq Ahmed Soomro Motor Vehicles 1,658 304 332 28 As per entitlement Employee Mashkoor Ahmed Khan Motor Vehicles 1,658 304 332 28 As per entitlement Employee Ahmed Naseem Motor Vehicles 1,658 332 332 - As per entitlement Employee Salman Talat Motor Vehicles 1,873 468 468 - As per entitlement Employee Shaukat Mahmood Motor Vehicles 1,658 332 332 - As per entitlement Employee Abid Kithclew Motor Vehicles 1,658 304 332 28 As per entitlement Employee M.Mubashir Ahmad Motor Vehicles 1,658 304 332 28 As per entitlement Employee Tariq Zafar Iqbal Motor Vehicles 1,658 304 332 28 As per entitlement Employee Hidayat Ali Shar Motor Vehicles 1,658 332 332 - As per entitlement Employee Abdul Majeed Arshad Motor Vehicles 1,658 332 332 - As per entitlement Employee Syed Naveed Asghar Motor Vehicles 1,658 332 332 - As per entitlement Employee Muhammad Akram Khan Motor Vehicles 1,658 332 332 - As per entitlement Employee Aziz Ur Rehman Motor Vehicles 1,658 304 332 28 As per entitlement Employee M.Ehsan Tabassum Motor Vehicles 1,658 332 332 - As per entitlement Employee Abdul Jamal Tariq Motor Vehicles 1,658 304 332 28 As per entitlement Employee M.Zaman Khan Motor Vehicles 1,858 372 372 - As per entitlement Employee Ovais Asad Khan Motor Vehicles 1,658 332 332 - As per entitlement Employee Hamid Raza Motor Vehicles 1,658 332 332 - As per entitlement Employee Kamran Masud Khan Motor Vehicles 1,658 332 332 - As per entitlement Employee Rashid Mirza Motor Vehicles 1,658 304 332 28 As per entitlement Ex-Employee Abdul Qadir Motor Vehicles 1,658 304 332 28 As per entitlement Ex-Employee Saeed Habib Motor Vehicles 1,658 304 332 28 As per entitlement Employee Manzur Ahmad Motor Vehicles 1,858 341 372 31 As per entitlement Employee Muhammad Ismail Usuf Motor Vehicles 1,858 372 372 - As per entitlement Employee M.Atlas Khan Motor Vehicles 1,658 332 332 - As per entitlement Employee Syed Waseem Akhtar Motor Vehicles 1,858 372 372 - As per entitlement Employee S.H.Irtiza Kazmi Motor Vehicles 1,858 341 372 31 As per entitlement Employee Karim Akram Khan Motor Vehicles 1,658 332 332 - As per entitlement Employee Muhammad Farrukh Ghouri | National Bank of Pakistan Bilqis Sikandar
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Particulars of property and equipment Original cost Book Value Sale Gain / (loss) Mode of disposal Proceed on disposal Particulars of purchaser Purchaser name ------------------------- (Rupees in '000) ----------------------- Motor Vehicles 1,658 332 332 - As per entitlement Employee Sarfaraz Ahmed Motor Vehicles 1,658 304 332 28 As per entitlement Employee Shaikh Tariq Abdullah Motor Vehicles 1,658 332 332 - As per entitlement Employee Wajahat Malik Motor Vehicles 1,658 304 332 28 As per entitlement Employee Ahmad Sohail Warraich Motor Vehicles 1,858 372 372 - As per entitlement Employee Khadim Hussain Motor Vehicles 1,658 332 332 - As per entitlement Employee Tarannum Sarwar Motor Vehicles 1,658 332 332 - As per entitlement Employee Farooq Hasan Motor Vehicles 1,658 332 332 - As per entitlement Employee M.Iqbal Malik Motor Vehicles 1,873 343 375 32 As per entitlement Employee Shahid Iqbal Choudry Motor Vehicles 1,658 304 332 28 As per entitlement Employee Ahmer Liaquat Motor Vehicles 1,658 221 332 111 As per entitlement Ex-Employee Aziz Ur Rehman Motor Vehicles 1,673 446 446 - As per entitlement Ex-Employee Masood Iqbal Motor Vehicles 1,567 313 313 - As per entitlement Employee Mahmood Akhtar Nadeem Motor Vehicles 1,658 332 332 - As per entitlement Employee M.Ahsan Aslam Motor Vehicles 1,658 276 332 56 As per entitlement Ex-Employee M.Khursheed Khan Motor Vehicles 1,658 332 332 - As per entitlement Employee Amjad Pervaiz Motor Vehicles 1,673 446 446 - As per entitlement Ex-Employee Muhammad Salim Qasim Motor Vehicles 1,664 610 610 - As per entitlement Ex-Employee Talat Khurshid Motor Vehicles 1,789 745 745 - As per entitlement Ex-Employee Shaﬁq Ahmed Khan Motor Vehicles 1,673 335 335 - As per entitlement Employee Saleem Saleemi Motor Vehicles 1,658 635 635 - As per entitlement Ex-Employee M.Saleem Baig Motor Vehicles 5,106 766 766 - As per entitlement Ex-Employee Kausar Iqbal Malik Motor Vehicles 1,643 438 438 - As per entitlement Ex-Employee Syed Tariq Hasan Motor Vehicles 1,858 186 186 - As per entitlement Ex-Employee Nasir Hussain Motor Vehicles 1,714 996 996 - As per entitlement Ex-Employee Syed Hasan Mustafa Naqvi Motor Vehicles 1,673 335 335 - As per entitlement Employee Dawood Jan Khan Motor Vehicles 1,673 335 335 - As per entitlement Employee Masood Yasin Motor Vehicles 1,673 307 335 28 As per entitlement Employee Muhammad Amjad Motor Vehicles 1,673 335 335 - As per entitlement Employee Muhammad Saqib Motor Vehicles 1,673 279 335 56 As per entitlement Employee Raﬁque Ahmed Bhurgri Motor Vehicles 1,673 307 335 28 As per entitlement Employee Farhan Javaid Durrani Motor Vehicles 1,673 335 335 - As per entitlement Employee Ghulam Rasool Motor Vehicles 1,673 307 335 28 As per entitlement Employee Mansoor Hussain Qureshi Motor Vehicles 1,673 335 335 - As per entitlement Employee Aqeel Muslim Motor Vehicles 1,673 335 335 - As per entitlement Employee Nasir Khan Motor Vehicles 1,673 307 335 28 As per entitlement Employee Hananeel Azhar Joseph Motor Vehicles 1,673 307 335 28 As per entitlement Employee Muhammad Mumtaz Ahmed Farooq Motor Vehicles 1,673 307 335 28 As per entitlement Employee Nadeem Khan Motor Vehicles 1,893 725 725 - As per entitlement Ex-Employee Khawar Saeed Motor Vehicles 1,673 335 335 - As per entitlement Employee Qaiser Rasheed Motor Vehicles 1,673 335 335 - As per entitlement Employee Irshad Ahmed Motor Vehicles 1,673 307 335 28 As per entitlement Employee Akhtar Munir Motor Vehicles 1,673 279 335 56 As per entitlement Employee Syed Rehan Mobin Motor Vehicles 1,673 279 335 56 As per entitlement Employee Abdul Hadi Palekar Motor Vehicles 1,673 251 335 84 As per entitlement Employee Rashid Ata | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Particulars of property and equipment Original cost Book Value Sale Gain / (loss) Mode of disposal Proceed on disposal Particulars of purchaser Purchaser name ------------------------- (Rupees in '000) ----------------------- Motor Vehicles 1,673 335 335 - As per entitlement Employee Motor Vehicles Motor Vehicles 1,743 349 1,673 307 Motor Vehicles 1,673 Motor Vehicles 5,136 Motor Vehicles Motor Vehicles Motor Vehicles Motor Vehicles 349 - As per entitlement Employee Shahzad Karimi 335 28 As per entitlement Employee Muhammad Akram 307 335 28 As per entitlement Employee Shahid Iqbal Khan 978 1,027 49 As per entitlement Employee Syed Jamal Baquar 1,673 335 335 - As per entitlement Employee Hakim Ali Laghari 1,673 307 335 28 As per entitlement Ex-Employee Akhter Hussain Khan 1,673 335 335 - As per entitlement Employee Rana Mujahid Ali 1,673 307 335 28 As per entitlement Employee Aamir Shabbir Motor Vehicles 1,673 335 335 - As per entitlement Employee Ashfaq Ahmed Qadir Motor Vehicles 1,658 - 166 166 As per entitlement Employee Umar Azim Daudpota Motor Vehicles 1,673 223 335 112 As per entitlement Employee Ahmar Qadeer Motor Vehicles 1,673 307 335 28 As per entitlement Employee Muhammad Zulﬁqar Ali Motor Vehicles 1,673 279 335 56 As per entitlement Employee Pir Baksh Motor Vehicles 1,743 335 335 - As per entitlement Employee Zahida Hamid Motor Vehicles 1,664 555 1,054 499 As per entitlement Ex-Employee Ansar Raza Goraha Motor Vehicles 1,658 83 332 249 As per entitlement Ex-Employee Arif Raza Abdy Motor Vehicles 1,708 370 370 - As per entitlement Employee Muhammad Naeem Ansari Motor Vehicles 5,106 - 511 511 As per entitlement Ex-Employee Tariq Jamali Motor Vehicles 1,673 390 390 - As per entitlement Ex-Employee Khadija Adnan Motor Vehicles 1,673 223 223 - As per entitlement Ex-Employee Tanvir Yaqub Motor Vehicles 1,538 308 527 219 As per entitlement Ex-Employee Haﬁz Muhammad Fayyaz Motor Vehicles 1,824 942 942 - As per entitlement Ex-Employee Abdul Aziz Nadeem Motor Vehicles 1,673 335 335 - As per entitlement Employee Noor Ul Islam 177,480 35,177 38,279 3,102 194,668 38,028 41,227 3,199 | National Bank of Pakistan Shakeel Ahmed
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 13. INTANGIBLE ASSETS 2020 Core Goodwill on Computer Website Others Total Banking NBP Fund software Application Acquisition --------------------------------------------------- (Rupees in '000) --------------------------------------------------At January 1, 2020 Cost Accumulated amortisation and impairment Net book value Year ended December 2020 Opening net book value Additions: - developed internally - directly purchased Adjustments - addition Disposals Amortisation charge Other adjustments - cost Other adjustments - amortisation Closing net book value At December 31, 2020 Cost Accumulated amortisation and impairment Net book value Rate of amortisation (percentage) Useful life 2,913,953 (2,913,953) 1,310,345 (804,164) 1,041 (1,041) 655,146 (92,593) 4,774 (2,742) 4,885,259 (3,814,493) - 506,181 - 562,553 2,032 1,070,766 - 506,181 - 562,553 2,032 1,070,766 - 146,646 1,576 45,756 (238,932) (4,853) 1,184 - - 457,558 - 562,553 2,032 1,022,143 1,041 (1,041) 655,146 (92,593) 4,774 (2,742) 5,074,384 (4,052,241) - 562,553 2,032 1,022,143 2,913,953 (2,913,953) - 1,499,470 (1,041,912) 457,558 33.33 % on cost 3 years 33.33 % on cost 3 years Core Banking Application Computer software 33.33 % on cost 3 years - Nil - 146,646 1,576 45,756 (238,932) (4,853) 1,184 Nil 2019 Goodwill on Website NBP Fund Acquisition Others Total --------------------------------------------------- (Rupees in '000) --------------------------------------------------At January 1, 2019 Cost Accumulated amortisation and impairment Net book value Year ended December 2019 Opening net book value Additions: - developed internally - directly purchased Adjustments - addition Disposals Amortisation charge Other adjustments - cost Other adjustments - amortization Closing net book value At December 31, 2019 Cost Accumulated amortisation and impairment Net book value Rate of amortisation (percentage) Useful life 13.1 2,913,953 (2,800,926) 627,981 (448,693) 1,041 (1,041) 655,146 (92,593) 4,774 (2,742) 113,027 179,288 - 562,553 2,032 856,900 113,027 179,288 - 562,553 2,032 856,900 (113,027) - 57,219 438,010 178,877 (214,855) 8,258 (140,616) - - 57,219 438,010 178,877 (327,882) 8,258 (140,616) 506,181 - 562,553 2,032 1,070,766 1,310,345 (804,164) 1,041 (1,041) 655,146 (92,593) 4,774 (2,742) 4,885,259 (3,814,493) 506,181 - 562,553 2,032 1,070,766 - 2,913,953 (2,913,953) 33.33 % on cost 33.33 % on cost 33.33 % on cost 3 years 3 years 3 years - Nil 4,202,895 (3,345,995) Nil For the purpose of impairment testing of goodwill, management has considered discounted cash flow method using weighted average cost of capital of 15.3% and terminal growth of 3.3% considering five years cash flows. Further, discount for lack of marketability is also considered at the rate of 20%. Other key assumption used in the method are management fees, growth rates on asset under management keeping in view of industry growth, expenses based on the historic growth trends, short term investment with the assumption of reinvestment and discount rate which is based on risk free rate, sector beta and market equity risk premium. As a result, the recoverable amount exceeds the carrying value as at December 31, 2020, therefore, management did not identify any impairment. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 14. 2020 2019 ------------(Rupees in ‘000)----------- RIGHT-OF-USE ASSETS The recognised right-of-use assets relate to the following types of assets: Balance as at January 01, Additions during the period Depreciation charged for the period Balance as at December 31, 15. 7,447,414 1,622,504 2,052,898 7,017,020 8,201,792 1,185,554 1,939,932 7,447,414 The right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. There were no onerous lease contracts that would have required an adjustment to the right of use assets at the date of initial application. 2020 2019 Note ------------(Rupees in ‘000)----------OTHER ASSETS Income / return / mark-up accrued in local currency - net of provision Income / return / mark-up accrued in foreign currency - net of provision Advances, deposits, advance rent and other prepayments Advance taxation (payments less provisions) Income tax refunds receivable Compensation for delayed tax refunds Non-banking assets acquired in satisfaction of claims Assets acquired from Corporate and Industrial Restructuring Corporation (CIRC) Unrealized gain on forward foreign exchange contracts Commission receivable on Government. treasury transactions Stationery and stamps on hand Barter trade balances Receivable on account of Government transactions Receivable from Government under VHS scheme Receivable against sale / purchase of shares Receivable from Pakistan Stock Exchange Receivable from mutual funds Acceptances Others 39,649,974 2,353,317 3,069,977 3,113,391 24,278,882 17,556,551 3,750,925 208,423 4,612,174 499,511 195,399 323,172 418,834 128,290 128,743 892,552 15,741,754 6,760,465 123,682,334 52,636,870 2,577,971 7,989,931 9,310,764 42,667,383 13,722,128 3,284,853 208,423 4,065,704 435,733 195,399 323,172 418,834 492,009 6,331 791,738 26,934,779 10,462,646 176,524,668 11,882,119 10,853,588 Other assets (net of provision) 111,800,215 165,671,080 Surplus on revaluation of non-banking assets acquired in satisfaction of claims Other assets - total 217,404 112,017,619 477,215 166,148,295 Less: Provision held against other assets 15.1 15.6 15.6 15.4 15.2 15.3 15.5 15.1 This includes Rs. 800 million (2019: Rs. 5,808 million) advance against Pre-IPO placement of Term Finance Certificates. 15.2 This represents amount receivable from GoP on account of encashment of various instruments handled by the Group for GoP as an agent of the SBP. Due to uncertainty about its recoverability, full amount has been provided for. 15.3 This represents payments made under the Voluntary Handshake Scheme (VHS), recoverable from GoP. Due to uncertainty about its recoverability, full amount has been provided for. 2020 2019 ------------(Rupees in ‘000)----------- 15.4 Market value of Non-banking assets acquired in satisfaction of claims 3,968,329 3,762,068 An independent valuation of the Bank’s non-banking assets were performed by an independent professional valuer to determine the fair value of the assets as at December 31, 2020. The valuation was carried out by an independent valuer Imtech (Private) Limited, registered at SBP panel of valuers. The valuation conforms to International Valuation Standards. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------(Rupees in ‘000)----------- 15.4.1 Non-banking assets acquired in satisfaction of claims Opening Balance 3,762,068 3,594,660 Revaluation 217,404 477,215 Depreciation (15,784) (29,577) Adjustment Transfer to operating fixed assets Closing Balance 15.5 4,641 38,041 - (318,271) 3,968,329 3,762,068 Income / mark-up accrued in local currency 152,607 152,607 Advances, deposits, advance rent and other prepayments 837,949 837,949 Provision held against other assets Stationery and stamps on hand 96,542 96,542 Barter trade balances 195,399 195,399 Receivable on account of Government transactions 323,172 323,172 Receivable from Government under VHS scheme Protested bills Provision against FE-25 loans Ex-MBL / NDFC - other assets Assets acquired from Corporate and Industrial Restructuring Corporation (CIRC) Others 418,834 418,834 4,092,280 2,555,322 770,398 1,734,591 770,398 208,423 208,423 4,786,515 3,560,351 11,882,119 10,853,588 10,853,588 8,884,661 1,511,502 1,589,466 15.5.1 Movement in provision held against other assets Opening balance Charge for the year Transfer (out) / in Adjustment against provision Closing balance 15.6 (484,393) 1,422 11,882,119 457,738 (78,277) 10,853,588 During the year, the Group has adjusted its advance tax liability and demand of previous tax year against prior year income tax refunds receivables. 2020 2019 ------------(Rupees in ‘000)----------- 16. BILLS PAYABLE In Pakistan Outside Pakistan | National Bank of Pakistan 16,718,064 19,648,708 77,122 218,716 16,795,186 19,867,424
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------(Rupees in ‘000)----------- 17. BORROWINGS Secured Borrowings from State Bank of Pakistan Under Export Refinance Scheme Under Export Refinance Scheme (New Scheme) Financing Scheme for Renewable Energy Refinance Facility for Modernization of SMEs Financing Facility for storage of Agriculture Produce (FFSAP) Under Long-Term Financing Facility (LTFF) Refinance Scheme for Payment of Wages and Salaries Temporary Economic Refinance Facility Refinance Facility for Combating Covid-19 2,451,874 28,686,149 481,261 177,976 256,184 16,380,117 1,167,527 537,912 61,448 1,908,291 20,687,441 236,175 45,000 284,012 8,923,286 - 50,200,448 32,084,205 5,266,007 79,788,522 332,053,770 59,069,167 135,254,977 423,207,142 Call borrowings Overdrawn nostro accounts Bai Muajjal Others - SBP Liabilities on Bangladesh borrowings 2,047,588 1,236,440 - 39,052,969 3,467,767 6,029,474 - Total unsecured 3,284,028 48,550,210 138,539,005 471,757,352 136,491,430 2,047,575 432,843,644 38,913,708 138,539,005 471,757,352 Repurchase agreement borrowings Bai Muajjal Total secured Unsecured 17.1 Particulars of borrowings with respect to currencies In local currency In foreign currencies 17.2 Mark-up / interest rates and other terms are as follows: - The Group has entered into agreements with the SBP for extending export refinance to customers. As per the terms of the agreement, the Group has granted SBP the right to recover the outstanding amount from the Group at the date of maturity of finances by directly debiting the current account maintained by the Bank with the SBP. These borrowings carry mark-up 3% (2019: 3%). - Repurchase agreement borrowings carry mark-up ranging from 7% to 7.05% per annum (2019: 13.2% to 13.32% per annum) having maturity on January 8, 2021. - Call borrowings carry interest ranging from 0% to 2.0% per annum (2019: 1.75% to 4.0% per annum). 17.3 Borrowings from the SBP under export oriented projects refinance schemes of the SBP are secured by the Group's cash and security balances held by the SBP. 17.4 Pakistan Investment Bond and Market Treasury Bills having maturity of 5 years and 6 months respectively, are pledged as security under borrowing having carrying amount of Rs. 5,266 million (2019: Rs. 332,054 million). | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 18. DEPOSITS AND OTHER ACCOUNTS In Local Currency 2020 In Foreign currencies Total 2019 In Foreign currencies In Local Currency Total --------------------------------------------------------------(Rupees in '000) --------------------------------------------------------------Customers Current deposits - remunerative Current deposits non-remunerative Savings deposits Term deposits Others 405,738,851 - 405,738,851 320,884,110 - 320,884,110 433,284,063 637,694,450 276,454,916 4,683,735 1,757,856,015 116,597,781 66,235,665 81,153,488 316,040 264,302,974 549,881,844 703,930,115 357,608,404 4,999,775 2,022,158,989 387,189,069 533,399,568 285,063,204 4,970,352 1,531,506,303 139,244,567 52,502,297 75,448,185 3,924 267,198,973 526,433,636 585,901,865 360,511,389 4,974,276 1,798,705,276 360,373,331 4,253,051 12,392,089 7,109,902 384,128,373 654,758 3,246,855 8,739,494 12,641,107 361,028,089 7,499,906 21,131,583 7,109,902 396,769,480 357,457,518 4,405,416 21,655,082 6,549,217 390,067,233 375,807 2,911,091 5,638,426 286,740 9,212,064 357,833,325 7,316,507 27,293,508 6,835,957 399,279,297 2,141,984,388 276,944,081 2,418,928,469 1,921,573,536 276,411,037 2,197,984,573 Financial Institutions Current deposits Savings deposits Term deposits Others 18.1 2019 2020 -------------- (Rupees in '000) -------------- Composition of deposits Individuals Government (Federal and Provincial) Public Sector Entities Banking Companies Non-Banking Financial Institutions Private Sector 847,730,521 674,985,259 257,336,852 368,302,117 29,051,796 241,521,924 700,612,760 602,785,706 237,284,226 379,108,513 20,196,519 257,996,849 2,418,928,469 2,197,984,573 18.2 Foreign currencies deposits include deposit of foreign branches amounting to Rs. 73,145 million (2019: Rs. 85,488 million). 18.3 This includes deposits eligible to be covered under insurance arrangements amounting to Rs. 981,942 million (2019: Rs. 859,148 million) including islamic branches. 19. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE 2020 2019 Minimum Minimum Financial Principal Financial Principal lease outstanding lease outstanding charges for charges for payments future periods future periods payments -------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------------Not later than one year Later than one year and upto five years Over five years 83,677 10,197 73,480 74,023 17,757 56,266 129,092 - 5,348 - 123,744 - 151,479 - 13,342 - 138,137 - 212,769 15,545 197,224 225,502 31,099 194,403 The Group has entered into lease agreements with various financial institutions for lease of vehicles. Lease rentals are payable in quarterly installments. Financial charges included in lease rentals are determined on the basis of discount factors applied at the rates ranging from 6M KIBOR + 1.75% per annum (2019: 6M KIBOR + 1.75% per annum). At the end of lease term, the Group has option to acquire the assets, subject to adjustment of security deposits. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------(Rupees in ‘000)----------- 20. LEASE LIABILITIES AGAINST RIGHT-OF-USE ASSETS Lease liabilities included in the statement of financial position As at December 31, 7,869,355 7,831,350 Of which are: Current lease liability Non-current lease liability 1,517,181 6,352,174 1,339,898 6,491,452 7,869,355 7,831,350 2,473,379 6,130,245 5,843,702 2,097,191 6,753,791 6,652,960 14,447,326 15,503,942 Maturity analysis - contractual undiscounted cashflows Less than one year One to five years More than five years Total undiscounted lease liabilities as at December 31, 21. DEFERRED TAX At January 1, 2020 2020 Recgonised in Recognised in other profit and loss comprehensive account income At December 31, 2020 -------------------------------------- (Rupees in '000) -------------------------------------Deductible Temporary Differences on - Tax losses carried forward - Post retirement employee benefits - Provision for diminution in the value of investments - Provision against advances - Provision against off-balance sheet obligations - Other provision - Others 10,705 3,905,148 236,751 2,625,495 115,222 105,416 3,827 7,002,564 14,914 6,459,106 (329) 6,473,691 268,139 (441) 267,698 10,705 4,188,201 236,751 9,084,601 115,222 105,416 3,058 13,743,954 (1,695,407) (3,720) (13,816,519) (41,439) (2,314,832) (17,871,917) 452,339 (6,682) 2,314,832 2,760,489 (29,777) (2,278) (1,530,321) (3,274) (1,565,650) (1,272,845) (12,680) (15,346,840) (44,713) (16,677,078) (10,869,353) 9,234,180 (1,297,952) (2,933,124) Taxable Temporary Differences on - Surplus on revaluation of fixed assets - Excess of accounting book value of leased assets over lease liabilities - Surplus on revaluation of investments - Surplus on revaluation of non-banking assets - Others | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 At January 1, 2019 Deductible Temporary Differences on - Tax losses carried forward - Post retirement employee benefits - Provision for diminution in the value of investments - Provision against advances - Provision against off-balance sheet obligations - Other provision - Others 2019 Recgonised in Recognised in other profit and loss comprehensive account income At December 31, 2019 -------------------------------------- (Rupees in '000) -------------------------------------10,705 2,816,109 236,751 622,390 115,222 111,576 3,904 3,916,657 3,845 2,003,105 (6,160) 2,000,790 1,085,194 (77) 1,085,117 154,018 (1,243) 152,775 (27,220) 10,705 3,905,148 236,751 2,625,495 115,222 105,416 3,827 7,002,564 Taxable Temporary Differences on - Surplus on revaluation of fixed assets - Excess of accounting book value of leased assets over lease liabilities - Surplus on revaluation of investments - Surplus on revaluation of non-banking assets - Others (1,822,205) (2,477) (6,667,702) (55,208) (2,314,832) (10,862,424) (6,945,767) 2,153,565 Note 22. (7,148,817) 13,769 (7,162,268) (1,695,407) (3,720) (13,816,519) (41,439) (2,314,832) (17,871,917) (6,077,151) (10,869,353) 2020 2019 ------------(Rupees in ‘000)----------- OTHER LIABILITIES Mark-up / Return / Interest payable in local currency Mark-up / Return / Interest payable in foreign currency Unearned commission and income on bills discounted Accrued expenses Advance payments Acceptances Unclaimed dividends Unrealized loss on forward foreign exchange contracts Unrealized loss on put option Branch adjustment account Employee benefits: Pension fund Post retirement medical benefits Benevolent scheme Gratuity scheme Compensated absences Staff welfare fund Liabilities relating to Barter trade agreements Provision against off-balance sheet obligations Provision against contingencies Payable to brokers Payable to customers PIBs shortselling Others | National Bank of Pakistan 22.1 37,808,884 844,452 1,593,730 18,315,863 398,682 15,741,754 185,516 2,918,017 306,339 917,487 57,027,903 439,959 3,058,753 19,037,792 430,377 26,934,779 186,668 4,358,883 306,339 926,311 15,704,077 22,282,747 2,054,218 2,956,827 9,251,755 371,257 2,142,033 627,494 4,180,071 65,137 301,585 3,237,676 15,339,746 14,785,647 18,333,947 1,749,006 2,403,018 8,344,182 371,257 5,539,436 627,494 4,629,645 38,667 158,180 256,284 14,688,731 157,545,347 184,633,258
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 22.1 2020 2019 Note ------------(Rupees in ‘000)----------- Provision against contingencies Opening balance Charge during the year Transfer out Other movement Closing balance 22.1.1 4,629,645 381,090 (830,664) - 3,734,889 1,152,495 (457,739) 200,000 4,180,071 4,629,645 22.1.1 This represents provision made on account of regulatory violations and reported instances of financial improprieties for which investigations are in progress. 23. SHARE CAPITAL 23.1 Authorized Capital 2020 2019 --------- (Number of shares) --------2,500,000,000 23.2 2,500,000,000 2020 2019 -------------- (Rupees in '000) -------------Ordinary shares of Rs. 10 each 25,000,000 25,000,000 Issued, subscribed and paid up 2020 2019 --------- (Number of shares) --------140,388,000 1,987,125,026 140,388,000 1,987,125,026 2,127,513,026 2,127,513,026 Ordinary shares Fully paid in cash Issued as bonus shares 2020 2019 -------------- (Rupees in '000) -------------1,403,880 19,871,251 1,403,880 19,871,251 21,275,131 21,275,131 The Federal Government and the SBP held 75.60% (2019: 75.60%) shares of the Bank. 23.3 Shares of the Bank held by subsidiary and associate 2019 2020 ---------(Number of shares) --------- Following shares were held by the associate of the Bank as of year end: First Credit & Investment Bank Limited NBP Stock Fund 24. RESERVES 24.1 Exchange translation reserve 70,000 - 70,000 330,000 70,000 400,000 This comprises all foreign currency differences arising from the translation of the financial statements of foreign operations. 24.2 Statutory reserve Every bank incorporated in Pakistan is required to transfer 20% of their profits to a statutory reserve until the reserve equals share capital, thereafter 10% of the profits of the Bank are to be transferred to this reserve. 24.3 General loan loss reserve The Group is cognizant of the fact that a part of its credit or loan portfolio (funded and non-funded) which is not currently impaired as per the applicable Prudential Regulations is underperforming and therefore the potential for risk of credit losses on this part of portfolio is higher than the usual risk. Therefore, as a matter of abundant caution and in order to protect the equity base of the Bank from future contingencies in respect of the credit portfolio, the Board of Directors in their meeting held on April 29, 2015 decided to transfer an aggregate amount of Rs. 12 billion from the unappropriated profits to a "General loan loss reserve". This appropriation was made on the basis of the management's best estimates and judgement regarding the inherent portfolio risks. Subsequently, Board of directors in their meeting held on 11 & 12 July, 2019 decided to transfer Rs. 4 billion from general loss reserve to unappropriated profit based on revised estimates. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2019 2020 Note -------------- (Rupees in '000) -------------25. SURPLUS ON REVALUATION OF ASSETS Net surplus on revaluation of : - Available for sale securities - Fixed Assets - Non-banking assets accquired in satisfaction of claims - On securities of associates and joint venture 10.1 25.1 25.2 43,867,153 45,421,244 2,757,207 (269,430) 39,455,572 45,096,875 2,539,695 (385,602) 91,776,174 86,706,540 (15,346,840) (2,396,819) (44,713) (17,788,372) (13,816,519) (2,489,995) (41,439) (16,347,953) 73,987,802 70,358,587 44,576,547 660,281 44,292,018 653,070 Deferred tax on surplus on revaluation of: - Available for sale securities - Fixed Assets - Non-banking assets accquired in satisfaction of claims 25.1 25.1 25.2 Surplus on revaluation of fixed assets Surplus on revaluation of fixed assets as at January 1 Recognised during the year Realised on disposal during the year - net of deferred tax Transferred to unappropriated profit in respect of incremental depreciation charged during the year - net of deferred tax Related deferred tax liability on incremental depreciation charged during the year Surplus on revaluation of fixed assets as at December 31 - - (230,379) (239,552) (124,050) 44,882,399 (128,989) 44,576,547 (2,489,995) (30,874) 124,050 (2,396,819) (2,588,785) (30,199) 128,989 (2,489,995) Less: related deferred tax liability on: - revaluation as at January 1 - revaluation recognised during the year - incremental depreciation charged during the year Share of surplus on revaluation of fixed assets of associates and joint venture 25.2 538,845 520,328 43,024,425 42,606,880 2,539,695 217,512 2,757,207 2,062,480 477,215 2,539,695 Surplus on revaluation of non-banking assets acquired in satisfaction of claims Surplus on revaluation as at January 1 Recognised during the year Surplus on revaluation as at December 31 Less: related deferred tax liability on: - revaluation as at January 1 - revaluation recognised during the year (41,439) (3,274) (44,713) 2,712,494 | National Bank of Pakistan (55,208) 13,769 (41,439) 2,498,256
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Note 26. CONTINGENCIES AND COMMITMENTS Guarantees Commitments Other contingent liabilities 26.1 26.1 26.2 26.3 206,831,672 1,433,601,765 34,820,672 161,579,745 1,761,652,119 30,664,297 1,675,254,109 1,953,896,161 137,366,954 69,464,718 101,841,274 59,738,471 206,831,672 161,579,745 986,016,071 937,616,635 419,327,735 27,625,340 801,290,548 22,164,581 632,619 - 566,855 - Guarantees: Financial guarantees Performance guarantees 26.2 2020 2019 ------------(Rupees in ‘000)----------- Commitments: Documentary credits and short-term trade-related transactions - letters of credit Commitments in respect of: - forward foreign exchange contracts - forward government securities transactions 26.2.1 26.2.2 Commitments for acquisition of: - operating fixed assets - intangible assets Other commitments 26.2.3 - 13,500 1,433,601,765 1,761,652,119 272,245,550 147,082,185 478,842,756 322,447,792 419,327,735 801,290,548 26.2.1 Commitments in respect of forward foreign exchange contracts Purchase Sale Commitments for outstanding forward foreign exchange contracts are disclosed in these consolidated financial statements at contracted rates. Commitments denominated in foreign currencies are expressed in rupee terms at the rates of exchange prevailing at the statement of financial position date. 2020 2019 ------------(Rupees in ‘000)----------- 26.2.2 Commitments in respect of forward government securities transactions Purchase Sale 496,331 27,129,009 256,814 21,907,767 27,625,340 22,164,581 Commitments for outstanding forward government securities transactions are disclosed in these consolidated financial statements at contracted rates. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------(Rupees in ‘000)----------- 26.2.3 Professional services to be received 26.3 - 13,500 Other contingent liabilities 26.3.1 Claim against the Group not acknowledged as debt 34,820,672 30,664,297 Claims against the Bank not acknowledged as debts including claims relating to former Mehran Bank Limited amounting to Rs. 1,597 million (2019: Rs. 1,597 million). 26.3.2 Taxation Tax returns of the Bank have been filed up to tax year 2019 and amended by tax authorities up to tax year 2019. Tax year 2019 has been selected for tax audit under section 177 of the Income Tax Ordinance, 2001 in July 2020 which is on-going. For Azad Kashmir and Gilgit Baltistan branches no amendment to returns filed under section 120 of the Ordinance has been made, hence returns filed are deemed assessments for all the years till tax year 2020. a) During the year the Taxation Officer issued show-cause notices under section 221 of the Income Tax Ordinance, 2001 to the Bank to withdraw compensation on delayed refunds already given to the Bank, and questioned issuance of refund orders already issued to the Bank in the past several years which had become past and closed transactions and thus legally fall outside the scope of rectification. The amount involved is Rs. 14.8 billion and Rs. 21.25 billion respectively. These notices being totally illegal were challenged by the Bank before the Honourable Sindh High Court (SHC) which instructed the taxation officer not to take adverse action. The Honourable SHC has stayed the recovery of tax demands. The Bank as a matter of abundant caution, have also filed appeal before CIR(A), the hearing may take place after the Honourable SHC decides the outcome of petitions filed in favor of the Bank. b) Sindh High Court had quashed the show-cause notices issued in previous round in 2013 for passing orders for tax years 2006 and 2007 under section 161 of the Ordinance on the grounds that these were time-barred in terms of section 174(3) of the Ordinance. Supreme Court on Department’s appeal has subsequently allowed taxation officer to initiate proceedings through fresh notices, subject to certain directions. Orders are recently passed by taxation officer for tax years 2006 and 2007 on June 30, 2020, treating the Bank as taxpayer-in-default and raising tax demands of Rs. 1,032 million and Rs. 1,395 million respectively. Bank has filed appeals before CIR(A) primarily on the grounds that Supreme Court’s instructions have been blatantly ignored as cogent reasons for late proceedings were not given and neither amount of tax default nor names of parties were disclosed in the show-cause notices or the orders. The orders are also assailed for being passed in quite arbitrary manner and various legal and factual mistakes are made therein. c) The Additional Commissioner, PRA has passed an order creating the Punjab sales tax liability on the non-withholding of Punjab Sales Tax on the insurance services received by the Bank for the tax periods January 2016-December 2016 and January 2017-December 2017 amounting to Rs. 254.734 million and Rs. 281.774 million respectively. The rectification application has been submitted under section 79 of the Punjab Sales Tax on Services Act, 2012 for the apparent mistake of facts. After the rectification, the net principal exposure would be Rs. 56.621 million and Rs. 50.685 million. Based on the legal and factual position, the Tax Advisor is confident that the ultimate outcome of the proceeding will be decided in the Bank’s favor. d) The other matters under tax contingencies include interest credited to suspense account, allocation of common expenditure between taxable income and exempt / low tax rate income, reversal of bad debts expense, reversal of provisions of nonperforming loans, provisions for diminution in value of investment. Surplus on revaluation of Available for Sale Securities disclosed in the Statement of Comprehensive Income has been taxed in respect of tax year 2013. Miscellaneous Application before CIR(A) as well as appeal before Appellate Tribunal have been filed by Bank. The aggregate effect of these contingencies as on December 31, 2020, including amount of Rs. 645.97 million (December 31, 2019: Rs. 183.455 million) in respect of indirect tax issues, amounts to Rs. 21.163 billion (December 31, 2019: Rs. 18.166 billion). No provision has been made against these contingencies, based on the opinion of tax consultants of the Bank, who expect favorable outcome upon decisions of pending appeals. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 26.3.3 Contingencies in respect of employees benefits and related matters The following are the details of the contingencies arising out of the various legal cases pending adjudication in respect of employees’ benefits and related matters. The Group considers that except for Pensionary benefits note 26.3.3.1, the financial impact of other matters is impracticable to determine with sufficient reliability. 26.3.3.1 Pensionary benefits to retired employees In 1977 the Federal Govt. vide letter No. 17 (9) 17 XI / 77 dated November 30, 1977, addressed to the Pakistan Banking Council, directed that all executives / officers of all the nationalized banks would be paid pension as calculated @ 70% of average emoluments upon completion of 30 years of qualifying service of employees and where qualifying service was less than 30 years but not less than 10 years, proportionate reduction in percentage was to be made. This pension scheme was made applicable with effect from May 01, 1977. In the year 1997, the Banks Nationalization Act, 1974 (“BNA, 1974”) was substantially amended whereby the Pakistan Banking Council was abolished and the Board of Directors of the nationalized banks were empowered / mandated respectively to determine personnel policies with the President of the Bank deciding the remuneration and benefits of the employees in accordance with policies determined by the Board. In the year 1999, by virtue of the said amendments in BNA, the Board of Directors of the Bank approved the Revised Pay Structure for the officers / executives of the Bank with effect from January 01, 1999 vide Circular No.37/1999, whereby the basic salary was increased by 110 % to 140% and besides giving multifarious benefits to its employees, formula for monthly gross pension was revised. However, the amount of gross pension on the basis of existing Basic Pay and existing formula was protected. A number of Bank's employees, after attaining the age of superannuation filed Writ Petitions before the Lahore High Court and the Peshawar High Court, praying for re-calculation of their pensionary benefits and increases in accordance with the Bank circular No. 228 (C) dated December 26, 1977 and furthermore, for allowing the increases in their pension as per the increases allowed by the Federal Government to its employees. This litigation started in the year 2010 and 2011. The Peshawar High Court, in terms of judgment dated June 03, 2014, dismissed the petition while observing that the petition was hit by laches and that the Petitioners could not claim the benefits granted to the similarly placed employees of other institutions who were governed through different Statutes and Service Rules. The Lahore High Court, Lahore, vide its judgement dated January 15, 2016, allowed the Writ Petitions on the same matter and the Bank was directed to release the pensionary benefits of the Petitioners. The said order was assailed by the Bank by filing Intra Court Appeals in January 2016 which were dismissed by the Lahore High Court, Lahore, through its judgement dated January 16, 2017. The Bank assailed the said judgement by filing appeals in the Supreme Court of Pakistan. The Honorable Supreme Court of Pakistan after hearing the arguments of both Parties, vide its judgement dated September 25, 2017 upheld the decision of the Division Bench of the Lahore High Court on the contention of increase in Bank’s employees’ pension, thereby instructing the Bank to give pension benefits to its employees in the light of Head Office Instruction Circular No. 228 (c) of 1977. Under this Circular, the pension of employees was to be calculated @ 70% of average emoluments upon completion of minimum qualifying service requirement, besides requiring the Bank to follow subsequent revisions in pension scheme and rates granted by the Federal Government to civil servants from time to time as well. The Bank as well as Federal Government filed Review petitions against the aforesaid judgment of the Honorable Supreme Court of Pakistan and also made an application for constitution of larger bench of the Supreme Court to hear the Review petition, which was reportedly accepted by the Chief Justice. However on March 18, 2019, the matter came up for hearing before a three member Bench instead of a larger bench. As advised by our legal counsels, the Bank considers that due to conflicting decision of the other bench of the Supreme Court in a case which, in all material facts and circumstances, is identical to the Bank’s case and various other legal infirmities in the judgement as highlighted by the Bank in its Review Petition, the Bank has a reasonably strong case on legal grounds to convince the Supreme Court for review of its decision. The Review Petition is ongoing and is expected to be listed for hearing soon. In case this matter is decided unfavorably, the Bank estimates based on the actuarial advice that the financial impact arising from the additional liability would be approximately Rs. 68.2 billion excluding any penal interest / profit payment (if any) due to delayed payment. Pension expense for the current year and onward will also increase by Rs. 6.8 billion due to this decision. Based on the opinion of legal counsel. No provision has been made in these consolidated financial statements for the above-mentioned amount as the Bank is confident about the favorable outcome of the matter. 26.3.3.2 Regularizing the temporary hires / workers deployed by Service provider companies under outsourcing arrangements The Bank outsourced certain noncore jobs to various service provider companies after entering into contracts with them. The resources deployed by the service provider companies were their employees and the said companies have had sole administrative control over these resources. Some of these resources filed writ petitions before the High Courts and NIRC | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 seeking to be absorbed by the Bank in its regular service based on grounds that they were in fact employees of the Bank. Presently, there are 6 cases on appeal pending at the Supreme Court where these have been clubbed to be heard as one. The Chief Justice of Pakistan has constituted a larger bench comprising of five Judges being headed by himself for adjudication. The case is ongoing and is presently adjourned for a date to be fixed. A favorable outcome of this case is expected. 26.3.3.3 Litigation related to management trainee program Treatment of Non-MTOs (regular employees) at Par with the MTOs (also appointed in regular cadres) - Litigation arising out of order dated September 21,2016 passed by the Supreme Court in our CA No.1644/2013 out of our CPLA No. 805/2013 filed against order dated March 13, 2013 of the Division Bench of Sindh High Court, Sukkar in CP No. D-417/2010. Mr. Ashfaq Ali and three (3) others filed a CP No. D-417/2010 before the Sindh High Court, Bench at Sukkur while praying to treat them equally in respect of remunerations with other employees (MTOs) having same grade, nature of job and qualification. The Honorable Division Bench at Sukkur, vide order dated March 13, 2013, directed the Bank to ensure equal treatment to the petitioners with similarly placed employees without any discrimination. The aforementioned order of the Sindh High Court was assailed by the Bank before the Apex Court through CP No. 805/2013. The Civil Appeal was dismissed vide order September 21, 2016 in terms of which the Order of the Sindh High Court was upheld to pay arrears. Review Petition filed by the Bank was also dismissed vide order dated April 14, 2017. Moreover, a number of Bank employees, after their representations were declined by the Bank, filed Writ Petitions before Various Benches of the Sindh High Court, Lahore High Court and Islamabad High Court. The Petitions filed before the Sindh High Court were disposed off with directions to the Bank to constitute a Committee for examining the cases of not only the Petitioners but all employees of the NBP with regard to their entitlement of the benefits as available to the similarly placed staff members keeping in view the judgement given by the honorable Supreme Court of Pakistan in Civil appeal number 1644/2013 dated September 21, 2016. Subsequently, the Karachi Bench of Sindh High Court modified their earlier judgment and restricted the same to the extent of Petitioners only. The Bank formed a Committee and cases of the petitioners / employees, claiming to be similarly placed with the MTOs, were reviewed by the Bank on the touch stone of intelligible differentia. One of those Writ Petitions filed by Mr. Muhammad Naeem in the year 2013 was allowed by the Peshawar High Court, Peshawar, vide order dated May 30, 2018, in the light of the aforesaid judgment of the Supreme Court. The Bank assailed the said order before the Apex court however the same was dismissed vide order dated October 2, 2019 which has now attained finality. During the year, the Bank has entered an out of court settlements which has successfully been executed with many Non-MTO employees ('petitioners‘) and accordingly compromise agreements ('the agreement‘), offering waiver of loans, increase in basic salaries and provision of other allowances, were signed with those petitioners who have withdrawn their cases against the Bank. Further, the Bank has carried out an assessment to ascertain the financial implications of the case with respect to non-petitioners and accordingly, they were also encouraged to enter into a similar agreement with Bank. The management is in the process of negotiation and is confident to undertake the agreement with remaining petitioners and non-petitioners. Furthermore, with respect to ongoing litigation, the management has reflected any potential impact it may have in an appropriate manner in these consolidated financial statements. 26.4 Compliance and risk matters relating to anti-money laundering The Bank and its New York Branch have entered into a Written Agreement with the Federal Reserve Bank of New York and New York State Department of Financial Services (US regulators) in 2016 which inter-alia requires the Bank to address certain compliance and risk management matters relating to anti-money laundering and the US bank secrecy law requirements and the implementation of the requisite systems and controls and allocation of adequate resources to ensure full compliance with such requirements. Management continues to address the matters highlighted in the Written Agreement and in the subsequent inspections and gets them independently validated. The Bank has made considerable progress and seeks to comply with all possible laws and regulations. 2020 2019 ------------(Rupees in ‘000)----------- 27. MARK-UP / RETURN / INTEREST EARNED Loans and advances Investments On securities purchased under resale agreements Balances with other banks | National Bank of Pakistan 99,797,877 154,128,269 2,474,560 1,630,672 109,691,501 122,407,550 5,463,361 2,147,878 258,031,378 239,710,290
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 28. MARK-UP / RETURN / INTEREST EXPENSED Note Deposits Borrowings Cost of foreign currency swaps against foreign currency deposits / borrowings Finance charge on lease liability against right of use assets Securities sold under repurchase agreements 29. 30.1 10.1 167,556,408 1,234,426 773,004 1,054,031 181,504 670,458 2,723,962 477,465 14,855 1,076,858 278,406 9,652,545 1,071,266 113,828 157,844 1,450,895 810,367 657,077 237,625 616,320 3,359,376 440,867 22,656 949,284 392,746 9,958,006 1,182,963 73,008 265,452 19,480,452 20,416,642 7,902,210 10,556 2,127,698 37,826 7,912,766 2,165,524 5,346,600 1,887,298 8 668,304 557,418 1,541,817 28,463 - 7,902,210 2,127,698 20,234 23,053 48,071 3,834,424 39,701 33,031 37,487 44,202 5,639,569 33,729 28,956 3,965,483 5,816,974 OTHER INCOME Rent on property Gain on sale of fixed assets - net Postal, SWIFT and other charges recovered Compensation for delayed tax refunds Digital infrastructure support income Others 31.1 153,651,948 Realised gain on: Federal Government Securities Shares and mutual funds Ijarah Sukuks Foreign Securities 31. 110,045,944 6,981,845 9,157,133 734,741 40,636,745 GAIN ON SECURITIES - NET Realised Unrealised - held for trading 30.1 103,348,851 6,929,625 9,175,328 781,642 33,416,502 FEE AND COMMISSION INCOME Branch banking customer fees Consumer finance related fees Card related fees Credit related fees Investment banking fees Commission on trade Commission on guarantees Commission on cash management Commission on remittances including home remittances Commission on bancassurance Commission on government transactions Management Fee & Sale Load Brokerage Income Others 30. 2020 2019 ------------(Rupees in ‘000)----------- 31.1 This represents compensation of delayed refunds determined under Section 171 of Income Tax Ordinance 2001. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 32. OPERATING EXPENSES Total compensation expense Note 32.1 2020 2019 ------------(Rupees in ‘000)----------41,470,089 46,186,431 425,562 41,267 1,365,253 2,770,744 1,150,350 467,445 15,784 85,593 2,052,898 989,622 52,762 1,218,397 2,562,745 1,078,882 461,382 29,577 161,131 1,939,932 8,374,896 8,494,430 1,368,934 24,421 278,073 238,932 559,235 1,069,328 19,882 312,550 327,882 522,070 2,469,595 2,251,712 36,160 9,175 9,290 2,337,125 829,229 667,989 189,866 1,754,815 70,637 222,231 363,475 1,138,854 319,675 100 85,447 205,857 38,135 257,223 353,324 1,269 117,381 373,834 149,421 1,388,248 508,258 384,466 11,811,484 38,613 6,873 9,163 882,871 794,629 1,084,793 153,825 1,651,965 118,488 214,909 354,206 1,030,548 302,158 26,868 206,690 44,648 297,093 444,739 1,095 108,171 415,779 145,957 1,244,433 387,878 329,097 10,295,489 64,126,064 67,228,062 Property expense Rent and taxes Insurance Utilities cost Security (including guards) Repair and maintenance (including janitorial charges) Depreciation Depreciation on non banking assets Depreciation on Ijarah assets Depreciation on ROUA 32.2 Information technology expenses Software maintenance Hardware maintenance Depreciation Amortisation Network charges Other operating expenses Directors' fees and allowances Directors' fees and allowances - subsidaries Fees and allowances to Shariah Board Legal and professional charges Outsourced services costs Travelling and conveyance NIFT clearing charges Depreciation Training and development Postage and courier charges Communication Stationery and printing Marketing, advertisement and publicity Donations Contributions for other Corporate and Social Responsibility Auditors' remuneration Fixed Assets / Non-banking asset deficit Financial charges on leased assets Entertainment Clearing charges, verification and licence fee Subscription Brokerage Insurance general Vehicle expenses Deposit premium expense Repairs and maintenance general Others | National Bank of Pakistan 32.3 32.4 32.5
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------(Rupees in ‘000)----------- 32.1 Total compensation expense Managerial Remuneration i) Fixed ii) Variable of which; a) Cash Bonus / Awards etc. Charge for defined benefit plan Charge for defined benefit plan - Subsidiaries Rent & house maintenance Utilities Medical Conveyance Club Membership & Subscription Education Allowance Insurance Honorarium to Staff and Staff Welfare Overtime Special Duty Allowance Washing Allowance Key Allowance Unattractive Area Allowance Leave Encashment Teaching Allowance Incentive on CASA deposits mobilization Meal Allowance Liveries Leave Fare Assistance EOBI Hill, Late Sitting & Saturday allowance etc. Grand Total 13,589,108 18,259,935 4,448,698 4,242,652 7,392,388 54,886 4,699,328 1,740,373 3,153,828 3,199,086 81,204 1,463,449 452,455 206,662 25,196 477 15,971 72,208 57,929 9,246 9,199 6,790 126,585 1,086 18,053 9,915 635,969 7,495,742 59,264 4,619,663 1,693,998 3,115,337 3,301,861 43,125 1,570,297 309,152 262,111 53,628 1,143 16,707 78,886 48,282 80,128 7,962 26,063 126,561 490 21,472 9,211 742,761 41,470,089 46,186,431 41,470,089 46,186,431 32.2 This includes Rs. 3.550 million (2019: Rs. 3.201 million) insurance premium against directors' liability insurance. 32.3 Total cost for the year included in other operating expenses relating to outsourced activities is Rs. 829 million (2019: Rs. 795 million). Out of this cost, Rs. 821 million (2019: Rs. 787 million) pertains to the payment to companies incorporated in Pakistan and Rs. 8 million (2019: Rs. 8 million) pertains to payment to companies incorporated outside Pakistan. Total Cost of outsourced activities for the year given to related parties is Rs Nil (Prior Year: Rs Nil). Outsourcing shall have the same meaning as specified in Annexure-I of BPRD Circular No. 06 of 2017. The material outsourcing arrangements along with their nature of services are as follows: | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------(Rupees in ‘000)----------- 32.4 Name of Company Nature of Services ICON Consultant (Private) Limited IT support Services, sales services, collection, reconciliation and engineering services etc. HTECH Solutions (Private) Limited Call center management Virtual World (Private) Limited Call center management 270,438 265,011 - 97,407 5,497 60,994 373,342 326,005 Contributions for Corporate & Social Responsibilities inlcude following amounts exceeding Rs. 500,000: 2020 2019 ------------(Rupees in ‘000)----------- Description Karachi Relief Trust (KRT) 20,000 - Rural Community Development Program 20,000 - National Rural Support Program 25,000 - SAFCO Support Program 5,000 - Thardeep Mirco Finance Foundation 5,000 - Agha Khan Rural Support Program 5,000 - Namal College-Mianwali 5,200 5,198 DHQ Hospital Gawadar - 3,750 Syed Abad Botanical Garden University of Chitral - 525 Earthquake Effectees of Mirpur AJ&K. - 7,500 Aman Foundation - 2,000 85,200 18,973 32.4.1 None of the Directors, Sponsor shareholders and Key Management Personnel or their spouse have an interest in the Donee. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Yousuf Adil Grant Thornton Anjum Rahman Total 2020 Total 2019 ----------------------------- (Rupees in '000) --------------------------------32.5 Auditors' remuneration Audit fee Review of interim financial statements Fee for audit of domestic branches Fee for other statutory certifications Special certifications and sundry advisory services Tax services Sales Tax Out-of-pocket expenses 6,226 2,178 5,060 1,136 1,168 4,500 6,226 2,178 5,060 2,500 1,968 20,000 3,035 4,500 12,452 4,356 10,120 2,500 3,104 20,000 4,203 9,000 12,452 4,356 10,120 3,500 8,472 20,000 4,712 9,000 20,268 45,467 65,735 72,612 Fee for audit of overseas branches including advisory services and out-of-pocket expenses - - 132,328 125,144 Fee for audit of subsidiaries including out-of-pocket expenses - - 7,795 8,934 20,268 45,467 205,857 206,690 Note 33. OTHER CHARGES Penalties imposed by State Bank of Pakistan Penalties imposed by other regulatory bodies (Central Bank of international branches) Penalties imposed by other regulatory bodies (Regulators of subsidiaries) 34. 141,015 4,719 7,076 1,132 2,494 316,439 150,585 10.3 11.4 (33,093) 29,248,974 1,696,095 2,231,186 8,541,775 2,784,140 30,911,976 13,557,101 25,032,667 (9,234,180) 13,430,533 1,053,841 (2,153,565) 15,798,487 12,330,809 TAXATION Current Prior years Deferred 35.1 310,588 PROVISIONS & WRITE OFFS - NET Provisions for diminution in value of investments Provisions against loans and advances Provision against other assets and other liabilities 35. 2020 2019 ------------(Rupees in ‘000)----------- 35.1 Current taxation includes Rs. Nil million (2019: Rs. 319 million) of overseas branches. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 35.2 Relationship between tax expense and accounting profit 2020 2019 ------------(Rupees in ‘000)----------- Accounting profit before tax 46,384,406 28,978,001 Income tax at statutory rate @ 35% (2019: 35%) Super tax at statutory rate @ 4% (2019: 4%) Prior year tax effects Impact of tax order Others 16,234,542 1,848,966 (2,314,832) 29,811 10,142,300 1,120,501 1,053,841 14,167 Tax charge for current and prior years 15,798,487 12,330,809 2020 36. BASIC EARNINGS PER SHARE Profit for the year (Rupees in 000's) Weighted average number of ordinary shares (Number in 000's) Basic earnings per share (Rupees) 37. 30,489,753 16,582,705 2,127,513 2,127,513 14.33 7.79 30,489,753 16,582,705 2,127,513 2,127,513 14.33 7.79 DILUTED EARNINGS PER SHARE Profit for the year (Rupees in 000's) Weighted average number of ordinary shares (adjusted for the effects of all dilutive potential ordinary shares) (Number in 000's) Diluted earnings per share (Rupees) Note 38. 2019 2020 2019 ------------(Rupees in ‘000)----------- CASH AND CASH EQUIVALENTS Cash and balance with treasury banks Balance with other banks Call money lendings Call borrowings Overdrawn nostros | National Bank of Pakistan 7 8 9 17 17 249,969,566 15,015,366 2,040,800 (2,047,588) (1,236,440) 293,198,090 13,598,325 540,800 (39,052,969) (3,467,767) 263,741,704 264,816,479
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 38.1 Reconciliation of movements of liabilities to cash flows arising from financing activities 2020 Lease Unclaimed Obligations Dividend --------------- (Rupees in '000) --------------Balance as at January 1, 2020 Changes from financing cashflows Payment of lease obligation / dividend 8,025,753 186,668 (2,273,256) (1,152) Total charges from financing activities (2,273,256) (1,152) Other charges Renewed lease during the period Interest unwinding Foreign exchange gain 1,671,961 701,144 (59,023) - Total other charges 2,314,082 - Balance as at December 31, 2020 8,066,579 185,516 2019 Lease Obligations Unclaimed Dividend --------------- (Rupees in '000) --------------Balance as at January 1, 2019 Changes from financing cashflows Payment of lease obligation / dividend 8,030,520 188,868 (2,186,508) (2,200) Total charges from financing activities (2,186,508) (2,200) Other charges Renewed lease during the period Increase in unclaimed dividend Foreign exchange gain 1,322,531 734,741 124,469 - Total other charges 2,181,741 - Balance as at December 31, 2019 8,025,753 186,668 2020 2019 ------------(Rupees in ‘000)----------- 39. 39.1 STAFF STRENGTH Permanent On contract 11,278 5,162 11,612 4,982 Staff strength at the end of the year 16,440 16,594 In addition to the above, 1,838 (2019: 2,102) employees of outsourcing services companies were assigned to the Bank as at the end of the year to perform services other than guarding and janitorial services. Further, 1,825 employees are working domestically (2019: 2,096) and abroad 13 (2019: 6) respectively. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 40. DEFINED BENEFIT PLAN 40.1 General description General description of the type of defined benefit plan and accounting policy for recognising actuarial gains and losses is disclosed in note 5.15 to the consolidated financial statements. 40.2 Number of Employees under the scheme The number of employees covered under the following defined benefit schemes are: 2020 2019 ----------------- (Numbers) ---------------Pension fund Gratuity scheme Benevolent scheme 40.3 10,751 3,985 10,751 11,430 3,776 11,430 Principal actuarial assumptions The actuarial valuations were carried out as at December 31, 2020 using the following significant assumptions: 2019 2020 ---------------- (Per annum) --------------Discount rate 9.75% 11.25% Expected rate of return on plan assets 9.75% 11.25% Expected rate of salary increase 9.75% 11.25% 14.00% 6.75% 9.75% 11.25% Expected rate of increase in pension Expected rate of increase in medical benefit | National Bank of Pakistan
| National Bank of Pakistan 40.7.2 Cost recognised in profit and loss (1,605,674) (1,605,674) 2,084,667 2,084,667 2,550,303 3,116,741 Total re-measurements recognised in OCI 554,295 1,996,008 22,282,747 15,704,077 1,517,934 1,598,807 18,333,947 2,550,303 497,146 2,084,667 (1,183,316) Loss / (gain) on obligation - Experience adjustment Re-measurements recognised in OCI during the year Current service cost Actuarial loss recognized - Profit and Loss Net interest on defined benefit asset / liability Charge for defined benefit plans 40.7.1 Opening balance Charge / (reversal) for the year Adjustment against contigency Reserve Contribution by the bank - net Re-measurement loss / (gain) recognized in OCI during the year Benefits paid on behalf of fund - - 22,282,747 14,785,647 3,116,741 2,338,905 (1,148,063) (1,605,674) (1,783,479) 57,038,053 Fair value at the end of the year Movement in (receivable) / payable under defined benefits scheme of Holding Company 51,687,819 5,686,646 1,148,063 (3,427,771) 1,783,479 159,817 Fair value at the beginning of the year Interest income on plan assets Contribution by the Bank - net Benefits paid Benefits paid on behalf of fund Actuarial gain or (loss) on assets Movement in fair value of plan assets 72,742,130 Obligations at the end of the year 18,333,947 554,295 497,146 1,996,008 (1,183,316) 2,084,667 22,282,747 15,704,077 66,473,466 1,517,934 2,338,905 7,285,453 (3,427,771) (1,445,857) 22,282,747 22,282,747 - 72,742,130 (57,038,053) 15,704,077 - Obligations at the beginning of the year Current service cost Adjustment against contigency reserve Interest cost Benefits paid by the Bank Re-measurement loss / (gain) - Profit and Loss Re-measurement loss / (gain) - OCI Movement in defined benefit obligations Present value of obligations Fair value of plan assets Holding Company Subsidaries 270,965 270,965 244,816 61,059 183,757 2,054,218 1,749,006 244,816 20,650 270,965 (231,219) - - 2,054,218 1,749,006 61,059 20,650 183,757 (231,219) 270,965 2,054,218 2,054,218 2,054,218 - 16,153 16,153 555,925 311,438 244,487 2,711,914 2,206,599 555,925 16,153 (66,763) - - 2,711,914 244,487 (66,763) 16,153 2,206,599 311,438 2,956,827 2,711,914 2,711,914 244,913 - - 924,603 133,178 (128,385) 919,810 9,251,755 8,344,182 924,603 319,164 (336,194) - 9,251,755 8,344,182 133,178 319,164 919,810 (336,194) (128,385) - 9,251,755 9,251,755 9,251,755 - 766,111 766,111 7,392,388 2,577,904 (128,385) 4,942,869 52,004,711 45,419,381 7,392,388 3,175,865 (1,148,063) 766,111 (3,600,971) 57,038,053 51,687,819 5,686,646 1,148,063 (3,427,771) 1,783,479 159,817 109,042,764 97,107,200 2,577,904 3,175,865 10,629,515 (5,245,263) (128,385) 925,928 52,249,624 109,042,764 (57,038,053) 52,004,711 244,913 1,521,023 1,521,023 3,071,935 1,422,746 1,649,189 14,785,647 13,069,665 3,071,935 (1,245,917) 1,521,023 (1,631,059) 51,687,819 48,015,260 6,220,036 1,245,917 (3,389,098) 1,631,059 (2,035,355) 66,473,466 61,084,925 1,422,746 7,869,225 (3,389,098) (514,332) 14,785,647 66,473,466 (51,687,819) 14,785,647 1,749,006 1,749,006 1,749,006 - - - 1,749,006 1,391,114 1,391,114 2,499,240 524,008 1,975,232 18,333,947 147,644 147,644 247,236 51,215 196,021 1,749,006 15,371,225 1,604,689 2,499,240 247,236 1,391,114 147,644 (927,632) (250,563) - - 18,333,947 15,371,225 1,604,689 524,008 51,215 1,975,232 196,021 (927,632) (250,563) 1,391,114 147,644 18,333,947 18,333,947 18,333,947 - 40,772 40,772 479,022 252,641 226,381 2,206,599 1,730,265 479,022 40,772 (43,460) - - 2,206,599 1,730,265 252,641 226,381 (43,460) 40,772 2,403,018 2,206,599 2,206,599 196,419 - - 1,198,309 181,761 43,515 973,033 8,344,182 7,541,419 1,198,309 (395,546) - - 8,344,182 7,541,419 181,761 973,033 (395,546) 43,515 - 8,344,182 8,344,182 8,344,182 - 3,100,553 3,100,553 7,495,742 2,432,371 43,515 5,019,856 45,419,381 39,317,263 7,495,742 (1,245,917) 3,100,553 (3,248,260) 51,687,819 48,015,260 6,220,036 1,245,917 (3,389,098) 1,631,059 (2,035,355) 97,107,200 87,332,523 2,432,371 11,239,892 (5,006,299) 43,515 1,065,198 45,615,800 97,107,200 (51,687,819) 45,419,381 196,419 2020 2019 Post Post retirement Pension retirement Benevolent Gratuity Compensated Benevolent Gratuity Compensated Total Pension fund medical Total Scheme fund absences fund medical Scheme fund absences scheme scheme -------------------------------------------------------------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------------------------------------------------------- Reconciliation of (receivable from) / payable to defined benefit plans 40.7 40.6 40.5 40.4 Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 -------------- (Rupees in '000) -------------40.8 Components of plan assets Pakistan Investment Bonds 22,127,729 Treasury Bills Term Finance Certificates 40.9 22,127,729 1,655,750 104,000 104,000 Mutual Funds / Shares 6,427,374 5,870,329 Shares 7,179,354 6,288,248 Defence Saving Certificates 8,479,970 7,538,348 Special Saving Certificates 9,635,360 8,523,972 Cash at Bank 1,428,516 1,235,194 57,038,053 51,687,819 Sensitivity analysis The increase / (decrease) in the present value of defined benefit obligations as a result of change in each assumption should be summarised as below: 2020 Pension fund Post retirement medical scheme Benevolent Scheme Gratuity fund Compensated absences Total ---------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------1% increase in discount rate 65,308,485 19,266,575 1,915,735 2,396,364 8,538,577 97,425,736 1% decrease in discount rate 81,782,213 26,081,439 2,211,838 3,088,758 10,070,396 123,234,644 76,592,777 23,499,623 2,081,710 3,098,775 10,107,352 115,380,237 69,280,964 21,191,648 2,027,093 2,383,069 8,494,357 103,377,131 77,360,353 24,019,702 - - - 101,380,055 68,785,097 20,793,333 - - - 89,578,430 - 23,097,183 - - - 23,097,183 - 21,601,836 - - - 21,601,836 1 % increase in expected rate of salary increase 1 % decrease in expected rate of salary increase 1% increase in expected rate of pension increase 1% decrease in expected rate of pension increase 1% increase in expected rate of medical benefit increase 1% decrease in expected rate of medical benefit increase 40.10 Expected contributions to be paid to the funds in the next financial year 1,478,863 40.11 Expected charge for the next financial year 7,034,716 | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 40.12 Maturity profile The weighted average duration of the obligation Years Pension Fund 11.32 Post retirement medical fund 15.29 Benevolent fund Gratuity fund Compensated absences 40.13 7.21 12.77 8.28 Funding Policy Pension Fund - Bank's current assets and its percentage is given below. Current Assets Amount (Rupees in '000) Cash and cash equivalents - net Government Securities Shares Non-Government Debt Securities Mutual Funds Percentage 1,428,516 41,898,809 7,179,354 104,000 6,427,374 2.5% 73.5% 12.6% 0.2% 11.3% 57,038,053 100.0% Bank will continue to invest with the same percentage in the asset categories mentioned but increase the assets gradually so that there is no deficit in the pension fund. 40.14 Significant risks associated with the staff retirement benefit schemes are as follows: 41. Asset volatility The risk arises when the future earnings are lower than expectation. This risk is measured at a plan level over the obligation period of the current population. The company assets are either invested in fixed securities or cash. Changes in bond yields The risk arises when the actual return on plan assets is lower than expectation. Inflation risk The most common type of retirement benefit is one where the benefit is linked with last drawn salary. The risk arises when the actual increases are higher than expectation and impacts the liability accordingly. Life expectancy / Withdrawal rate The risk arises when the actual lifetime of retirees is longer than expectation. This risk is measured at the plan level over the entire retiree population. The risk of actual withdrawals varying with the actuarial assumptions can impose a risk to the benefit obligation. The movement of the liability can go either way. Investment Risk The risk arises when the actual performance of the investments is lower than expectation and thus creating a shortfall in the funding objectives. DEFINED CONTRIBUTION PLAN A defined contribution (DC) plan is a type of retirement plan in which the employer, employee or both make contributions on a regular basis. Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts (through employee contributions and, if applicable, employer contributions) plus any investment earnings on the money in the account. In defined contribution plans, future benefits fluctuate on the basis of investment earnings. Group currently does not have any defined contribution plan. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 42. COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL 42.1 Total Compensation Expense 2020 Directors Items Chairman NonExecutives Other Key President / material risk Management CEO takers / Personnel controllers Members Shariah Board ------------------------------------------ (Rupees in '000) --------------------------------------Fees and Allowances etc. Managerial Remuneration i) Fixed ii) Total Variable of which a) Cash Bonus / Awards Charge for defined benefit plan Rent & house maintenance Utilities Medical Conveyance Others 3,450 659 Total - Number of Persons 30,150 - - - - - 7,362 54,000 206,031 405,064 1,900 549 683 211 155 330 - 4,500 3,511 64,745 40,979 89,343 27,615 24,633 17,234 13,709 175,480 104,283 193,085 60,211 63,510 50,435 61,611 4,109 32,050 9,290 62,011 484,289 1,113,679 1 8 3 1 34 99 The President and certain executives are also provided with free use of Bank's cars, household equipment, mobile phones and free membership of clubs. 42.1.1 SBP has issued guidelines and disclosure on governance and remuneration practices through BPRD Circular No. 01 of 2017 dated January 25, 2017 effective from January 01, 2019. No bonus payout has yet been made under the said circular and deferral as per Human Resources Policy will be made at the time of payment. Performance bonus is accounted for on payment basis. 2019 Directors Items NonExecutives Chairman Members Shariah Board Key Management Personnel President / CEO ----------------------------------- (Rupees in '000) -------------------------------Fees and Allowances etc. Managerial Remuneration i) Fixed ii) Total Variable of which a) Cash Bonus / Awards Charge for defined benefit plan Rent & house maintenance Utilities Medical Conveyance Others 2,550 1,654 Total Number of Persons - 28,650 - - - 7,359 49,557 146,697 5,759 402 681 211 155 330 25 4,500 790 310 396 2,784 54,435 38,739 80,897 24,939 23,531 16,825 14,857 4,204 34,409 9,163 58,337 400,920 1 10 3 1 29 The above information does not include particulars of directors, chief executives and executives of subsidiaries. | National Bank of Pakistan -
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 42.2 Remuneration paid to Directors for participation in Board and Committee Meetings 2020 Meeting Fees and Allowances Paid For Board Committees S.No. Name of Director Board Board Risk Board Board Board Board HR and International and Technology and Inclusive Total Amount Audit Remuneration Franchises and Compliance Digitalization Development Paid Committee Committee Remittance Committee Committee Committee Committee For Board Meetings -------------------------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------------------------------1 2 3 4 5 6 7 8 9 Mr. Zubyr Soomro Mr. Muhammad Naeem Mr. Muhammad Sohail Rajput Ms. Sadaffe Abid Mr. Tawfiq Asghar Hussain Mr. Zafar Masud Mr. Farid Malik Mr. Imam Bukhsh Baloch Mr. Asif Jooma Total Amount Paid 2,759 554 2,309 1,721 2,100 900 2,456 2,100 1,650 414 1,056 1,200 900 150 1,050 1,139 1,050 - 1,350 600 1,567 1,050 1,350 450 1,634 - 1,050 1,050 1,050 - 1,200 300 - 4,109 1,118 4,415 4,121 5,550 2,250 6,797 4,200 3,600 16,549 3,570 3,389 4,567 3,434 3,150 1,500 36,160 2019 Meeting Fees and Allowances Paid For Board Committees S.No. Name of Director 1 2 3 4 5 6 7 8 9 10 11 Mr. Zubyr Soomro Mr. Muhammad Naeem Mr. Muhammad Sohail Rajput Ms. Sadaffe Abid Mr. Tawfiq Asghar Hussain Mr. Zafar Masud Mr. Farid Malik Mr. Imam Bukhsh Baloch Mr. A. Akbar Sharifzada Mr. Asad Munir Mr. Muhammad Imran Malik Total Amount Paid Board Board Board Risk and Board HR and Board Inclusive International Technology and Total Amount Compliance Remuneration Development Franchises and Digitalization Paid Remittance Committee Committee Committee Committee Committee -------------------------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------------------------------For Board Meetings Board Audit Committee 2,854 2,545 1,333 1,127 1,050 1,200 3,066 1,200 1,050 1,144 750 1,722 1,104 1,050 498 450 766 600 826 450 150 1,350 1,434 1,350 721 583 426 - 323 1,050 1,200 2,237 - 904 750 750 - 300 300 - 4,204 6,790 3,341 2,927 3,000 4,050 6,850 2,400 2,131 1,570 1,350 17,319 4,824 2,792 5,864 4,810 2,404 600 38,613 42.2.1 In last year, Rs. 578,000 was inadvertently disclosed as amount paid to Mr. Zubyr Soomro for attending Board Risk & Compliance Committee. In current year, said amount has been reclassified to Board meeting fees & allowances. Further, Nil figure was erroneously disclosed in Board Inclusive Development Committee last year which is corrected in current year. 42.3 Remuneration paid to Shariah Board Members 2020 Items Resident Member Chairman 2019 NonResident Member(s) Total Resident Member Chairman Non-Resident Member(s) Total --------------------------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------------------------------Retainer Fee & Fixed Remuneration Total Amount Paid Total Number of Persons 3,240 3,240 3,170 3,170 2,880 2,880 9,290 3,240 3,240 3,043 3,043 2,880 2,880 9,163 9,290 1 1 1 3 1 1 1 3 The above information does not include particulars of subsidiaries. | National Bank of Pakistan 9,163
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 43. FAIR VALUE MEASUREMENTS The fair value of quoted securities other than those classified as held to maturity, is based on quoted market price. Quoted instruments classified as held to maturity are carried at cost. The fair value of unquoted debt securities, fixed term loans, other assets, other liabilities, fixed term deposits and borrowings cannot be calculated with sufficient reliability due to the absence of a current and active market for these assets and liabilities and reliable data regarding market rates for similar instruments. 43.1 Fair value of financial assets The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Fair value measurements using input for the asset or liability that are not based on observable market data (i.e. unobservable inputs). The table below analyses financial instruments measured at the end of the reporting period by the level in the fair value hierarchy into which the fair value measurement is categorised: On balance sheet financial instruments 2020 Carrying Value Total Level 1 Level 2 Level 3 ---------------------------------------------------- (Rupees in '000) ---------------------------------------------------- Financial assets - measured at fair value Investments Market Treasury Bills Pakistan Investment Bonds Ijarah Sukuks Ordinary shares of listed companies Investment in mutual funds Preference shares Term Finance Certificates / Musharika and Sukuk Bonds GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities Ordinary shares of a bank outside Pakistan 626,248,790 473,408,082 6,015,600 48,089,192 2,291,013 1,099,850 48,089,192 2,291,013 1,099,850 626,248,790 473,408,082 6,015,600 - - 626,248,790 473,408,082 6,015,600 48,089,192 2,291,013 1,099,850 55,910,547 10,840,875 3,953,016 80,640 17,652,778 4,280,000 17,652,778 51,630,547 10,840,875 3,953,016 80,640 - - 55,910,547 10,840,875 3,953,016 80,640 17,652,778 1,245,590,383 73,412,833 1,172,177,550 - 1,245,590,383 Financial assets - disclosed but not measured at fair value Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Market Treasury Bills Pakistan Investment Bonds Ordinary shares of unlisted companies Debentures, Bonds, Sukuks, Participation Term Certificates and Term Finance Certificates Bai Muajjal with Government of Pakistan GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities Advances Other Assets 249,969,566 15,015,366 126,804,675 - - - - 168,676,415 1,455,089 - - - - 7,838 11,641,133 32,418,809 618 983,871,421 112,017,619 - - - - - - - - 1,701,878,549 - - - - 2,947,468,932 73,412,833 1,172,177,550 - 1,245,590,383 Off-balance sheet financial instruments - measured at fair value Foreign exchange contracts purchase and sale Forward government securities transactions | National Bank of Pakistan 419,327,735 - (2,918,017) - (2,918,017) 27,625,340 - 52,885 - 52,885
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 On balance sheet financial instruments 2019 Carrying Value Total Level 1 Level 2 Level 3 ------------------------------------------------------- (Rupees in '000) ------------------------------------------------------- Financial assets - measured at fair value Investments 621,887,531 329,418,686 2,050,099 41,983,147 2,144,783 79,388 56,252,659 22,476,530 4,646,071 1,422,271 18,831,756 41,983,147 2,144,783 35,956 4,598,000 18,831,756 621,887,531 329,418,686 2,050,099 51,654,659 22,476,530 4,646,071 1,422,271 - 43,432 - 621,887,531 329,418,686 2,050,099 41,983,147 2,144,783 79,388 56,252,659 22,476,530 4,646,071 1,422,271 18,831,756 1,101,192,921 67,593,642 1,033,555,847 43,432 1,101,192,921 Market Treasury Bills Pakistan Investment Bonds Ijarah Sukuks Ordinary shares of listed companies Investments in mutual funds Preference shares Term Finance Certificates / Musharika and Sukuk Bonds GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities Ordinary shares of a bank outside Pakistan Financial assets - disclosed but not measured at fair value Cash and balances with treasury banks Balances with other banks Lending to financial instruments Investments Market Treasury Bills Pakistan Investment Bonds Ordinary shares of unlisted companies Debentures, Bonds, Sukuks, Participation Term Certificates and Term Finance Certificates Bai Muajjal with Government of Pakistan GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities Advances Other assets 293,198,090 13,598,325 134,780,010 - - - - 114,155,009 184,864,103 1,593,609 - - - - 9,573 10,395,235 4,087,591 30,231,741 596 1,008,398,612 166,148,295 - - - - - - - - 1,961,460,789 - - - - 3,062,653,710 67,593,642 1,033,555,847 43,432 1,101,192,921 Off-balance sheet financial instruments - measured at fair value Foreign exchange contracts purchase and sale Forward government securities transactions | National Bank of Pakistan 801,290,548 - (4,358,883) - (4,358,883) 22,164,581 - 107,348 - 107,348
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Valuation techniques used in determination of fair valuation of financial instruments within level 2 and level 3 Item Market Treasury Bills Pakistan Investment Bonds Ijarah Sukuks Ordinary shares of unlisted companies Term Finance Certificates / Musharika and Sukuk Bonds GoP Foreign Currency Bonds Foreign Government Securities Foreign Currency Debt Securities 43.2 Valuation approach and input used PKRV (MUFAP) PKRV (MUFAP) MUFAP Breakup value as per latest available audited financial statements MUFAP Reuter page Reuter page Reuter page Fair value of non-financial assets Information about the fair value hierarchy of Group's non-financial assets as at the end of the reporting period are as follows: 2020 Carrying Value Total Level 1 Level 2 Level 3 ------------------------------------------------------- (Rupees in '000) ------------------------------------------------------Land & building (property and equipment) Non-banking assets acquired in satisfaction of claims 48,770,485 3,750,925 52,521,410 - 48,770,485 3,750,925 52,521,410 - 48,770,485 3,750,925 52,521,410 2019 Carrying Value Total Level 1 Level 2 Level 3 ------------------------------------------------------- (Rupees in '000) ------------------------------------------------------Land & building (property and equipment) Non-banking assets acquired in satisfaction of claims 44. SEGMENT INFORMATION 44.1 Segment Details with respect to Business Activities 48,575,942 3,284,853 51,860,795 - 48,575,942 3,284,853 51,860,795 - 48,575,942 3,284,853 51,860,795 During the year the Group changed its internal organisation structure in a manner that changed the composition of its reportable segments, and accordingly the prior year disclosure is restated to reflect the current reportable segments. Branch banking has been bifurcated in to Retail Banking Group and Inclusive Development Group. | National Bank of Pakistan
| National Bank of Pakistan (292,063) 2,068,891,897 47,703,958 2,116,303,791 - 2,116,303,791 Borrowings Deposits & other accounts Net inter segment borrowing Others Total liabilities Equity Total Equity & liabilities 573,019,328 2,116,303,791 Total Assets Contingencies & Commitments 148,446,514 1,716,041,623 231,940,537 3,796,433 (8,430,326) 227,306,644 24,509,010 Cash and bank balances Investments Net inter segment lending Lendings to ﬁnancial institutions Advances - performing Advances - non-performing Provision against Advances Advances - net Others - 142,735,878 3,511,852 136,108,152 3,115,875 142,735,878 - 142,735,878 9,809,667 128,340,996 22,497,098 (19,538,451) 131,299,642 1,626,569 (1,380,048) 35,117,612 Proﬁt / (loss) before tax Statement of ﬁnancial position 2,177,142 2,177,142 3,818,845 28,602,759 28,602,759 670,506 Segment direct expenses Inter segment expense allocation Total expenses Provisions 15,658,237 (12,345,431) 1,303,132 4,615,938 (76,417,139) 127,171,107 13,636,909 64,390,877 Net mark-up / return / proﬁt Inter segment revenue - net Non mark-up / return / interest income Total Income Proﬁt and loss account Inclusive Development Group 1,046,103,666 588,558,730 46,688,596 200,011,969 323,788,034 17,857,441 588,346,040 212,690 588,558,730 281,210 31,393,587 538,861,528 47,548,441 (52,114,538) 534,295,432 22,588,501 (19,122,981) 906,172 906,172 26,216,211 43,113,972 (38,048,674) 2,934,104 7,999,402 Corporate and Investment Banking - 1,519,715,683 86,290,983 1,377,549,547 12,387,953 1,476,228,483 43,487,200 1,519,715,683 49,710,033 1,342,837,328 126,802,025 366,297 39,289,803 366,426 366,426 (202,726) 113,674,589 (86,111,719) 11,890,634 39,453,504 Treasury 20,577,429 142,744,633 2,047,575 73,225,543 63,868,561 3,138,352 142,280,030 464,603 142,744,633 47,960,766 46,098,046 43,633,881 42,345,094 (41,266,079) 44,712,896 3,972,925 (975,444) 6,337,022 6,337,022 (484,011) 2,944,549 1,933,019 4,877,568 - 88,060,626 75,268,262 9,799,226 2,333,570 87,401,058 659,569 88,060,626 5,724,957 39,828,843 37,546,863 602,913 (602,913) 37,546,863 4,959,963 2,108,916 2,542,000 2,542,000 398,979 5,033,803 (409,849) 425,941 5,049,895 35,553,685 330,204,184 292,062 1,530,800 98,803,091 100,625,953 229,578,231 330,204,184 3,051,784 6,247,569 195,071,897 2,650 8,796,522 55,022,633 (55,109,211) 8,709,944 117,120,341 (8,653,450) 1,736,268 21,774,714 23,510,983 494,170 371,419 9,744,567 5,235,716 15,351,703 - - - 1,675,254,108 4,928,323,512 138,539,005 2,418,928,469 1,911,113,520 185,340,236 4,653,921,230 274,402,282 4,928,323,512 - (1,911,113,520) (1,911,113,520) (1,911,113,520) - (1,911,113,520) 264,984,932 1,466,405,373 1,911,113,520 (1,911,113,520) 126,804,675 989,120,326 171,812,612 (177,061,517) 983,871,421 175,143,591 - 46,384,406 42,667,790 21,774,714 64,442,503 30,911,976 104,379,430 37,359,455 141,738,885 1,675,254,109 3,017,209,992 138,539,005 2,418,928,469 185,340,236 2,742,807,710 274,402,282 3,017,209,992 264,984,932 1,466,405,373 126,804,675 989,120,326 171,812,612 (177,061,517) 983,871,421 175,143,591 46,384,406 42,667,790 21,774,714 64,442,503 30,911,976 104,379,430 37,359,455 141,738,885 2020 International, Aitemaad and Head Ofﬁce / Sub total Eliminations Total Financial Islamic Banking Others Institution and Remittance --------------------------------------------------------------------------------------------------------------------- (Rup ees in '000) ------------------------------------------------------------------------------------------------------------------- Retail Banking Group Notes to the Consolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan (83,637,534) 148,346,359 13,915,664 78,624,489 28,523,599 28,523,599 1,881,924 48,218,966 Segment direct expenses Inter segment expense allocation Total expenses Provisions Proﬁt / (loss) before tax 1,348,351 1,971,199,214 64,354,645 2,036,902,210 - 2,036,902,210 Borrowings Deposits & other accounts Net inter segment borrowing Others Total liabilities Equity Total Equity & liabilities 833,218,160 2,036,902,210 Total Assets Contingencies & Commitments 162,051,623 1,631,347,664 221,843,742 2,973,437 (6,712,559) 218,104,620 25,398,302 Cash and bank balances Investments Net inter segment lending Lendings to ﬁnancial institutions Advances - performing Advances - non-performing Provision against advances Advances - net Others Statement of ﬁnancial position Inclusive Development Group Corporate and Investment Banking Treasury 2019 (Restated) International, Aitemaad and Financial Institution Islamic Banking and Remittance Head Ofﬁce / Others Sub total Eliminations Total - 161,574,433 156,839,607 4,734,824 161,574,431 - 161,574,433 12,045,241 144,537,546 17,309,704 (14,171,794) 147,675,456 1,853,736 (1,310,984) 2,350,847 2,350,847 922,825 15,619,259 (15,451,546) 1,794,975 1,962,688 236,880,686 623,292,803 30,388,706 76,371,345 484,593,419 31,794,954 623,148,424 144,380 623,292,803 238,501 38,801,666 538,385,369 32,196,797 (27,075,335) 543,506,831 40,745,805 (5,495,811) 801,063 801,063 8,030,099 54,921,742 (54,445,167) 2,858,776 3,335,351 823,455,129 1,536,206,318 400,759,524 1,081,180,371 17,079,796 1,499,019,691 37,186,627 1,536,206,318 82,716,513 1,316,800,220 132,718,198 3,971,387 330,960 310,208 310,208 1,899,416 76,654,512 (83,724,892) 9,610,964 2,540,584 28,997,140 164,007,841 38,913,708 85,487,723 36,248,475 1,988,871 162,638,777 1,369,066 164,007,841 42,748,449 61,079,182 55,382,884 41,049,352 (40,266,389) 56,165,847 4,014,363 802,901 4,276,639 4,276,639 (104,320) 3,143,738 1,831,482 4,975,220 - 75,052,426 63,285,897 7,115,268 3,875,565 74,276,729 775,697 75,052,426 4,410,976 29,811,516 2,059,162 33,880,111 203,934 (203,934) 33,880,111 4,890,661 2,038,487 2,601,428 2,601,428 (75,061) 4,396,685 (375,722) 543,892 4,564,855 31,345,046 301,301,379 347,062 1,640,393 99,567,133 101,554,589 199,746,791 301,301,379 2,585,111 6,306,609 134,629,475 2,650 8,686,822 55,643,830 (55,264,906) 9,065,746 148,711,787 (15,606,519) 1,967,246 26,547,614 28,514,859 1,002,220 1,055,481 5,650,967 7,204,113 13,910,561 - - - 28,978,001 40,831,031 26,547,614 67,378,647 13,557,101 72,153,882 37,759,867 109,913,749 1,953,896,161 - 1,953,896,161 - 4,898,337,408 (1,765,977,140) 3,132,360,268 471,757,352 471,757,352 2,197,984,573 2,197,984,573 1,765,977,140 (1,765,977,140) 223,395,788 223,395,788 4,659,114,853 (1,765,977,140) 2,893,137,713 239,222,555 239,222,555 4,898,337,408 (1,765,977,140) 3,132,360,268 306,796,415 306,796,415 1,452,799,192 1,452,799,192 1,765,977,140 (1,765,977,140) 134,780,010 134,780,010 1,002,716,475 1,002,716,475 149,377,054 149,377,054 (143,694,917) (143,694,917) 1,008,398,612 1,008,398,612 229,586,039 229,586,039 28,978,001 40,831,031 26,547,614 67,378,645 13,557,101 72,153,882 37,759,867 109,913,749 --------------------------------------------------------------------------------------------------------------------- (Rupeesin '000) -------------------------------------------------------------------------------------------------------------------- Net mark-up / return / proﬁt Inter segment revenue - net Non mark-up / return / interest income Total Income Proﬁt and loss account Retail Banking Group Notes to the Consolidated Financial Statements For the year ended December 31, 2020
735 ,554 536,152 1,271,706 1,806,638 1,806,638 (325,772) (209,159) 36,123,107 21,774,714 57,897,821 31,413,690 47,323,453 Segment direct expenses Inter segment expense allocation Total expenses Provisions Proﬁt / (loss) before tax | National Bank of Pakistan 19,040,664 30,973,985 2,475,488 35,912,396 (35,725,929) 2,661,954 3,016,719 55,693,323 1,240,487 36,900,634 14,344,870 830,555 53,316,546 2,376,778 55,693,323 3,380,468 215,386,431 1,419,111,415 63,868,561 126,804,675 944,902,218 129,129,200 (135,717,854) 938,313,564 170,927,847 2,934,412,493 136,491,431 2,344,187,228 182,172,934 2,662,851,593 271,560,901 2,934,412,493 1,654,676,680 Cash and bank balances Investments Net inter segment lendings Lendings to ﬁnancial institutions Advances - performing Advances - non-performing Provision against advances Advances - net Others Total Assets Borrowings Deposits & other accounts Net inter segment borrowing Others Total liabilities Equity Total Equity & liabilities Contingencies & Commitments Statement of ﬁnancial position Net mark-up / return/proﬁt Inter segment revenue - net Non mark-up / return / interest income Total Income 101,234,782 35,400,181 136,634,963 Proﬁt and loss account 3,105,342 11,113,698 7,278,305 3,643,594 191,798 11,113,698 - 11,113,698 10,399,385 574,741 1,205,975 (1,205,975) 574,741 139,572 (300,616) 793,919 793,919 (117,586) 59,526 316,191 375,718 7,173,633 23,866,218 9,204,947 13,051,137 1,556,773 23,812,857 53,361 23,866,218 19,076,487 2,927,816 1,680,370 (2,306) 1,678,064 183,851 (1,971,063) 3,173,426 3,173,426 (32,798) 421,629 747,936 1,169,565 6,917,986 55,992,821 807,088 21,357,355 32,828,959 588,176 55,581,578 411,243 55,992,821 1,081,965 13,392,157 39,487,510 5,565,041 (4,409,453) 40,643,098 875,601 1,541,789 770,701 770,701 (25,557) 1,927,939 358,994 2,286,933 1,675,254,109 3,081,078,553 138,539,005 2,418,928,469 63,868,561 185,340,236 2,806,676,270 274,402,282 3,081,078,553 264,984,932 1,466,405,373 63,868,561 126,804,675 989,120,326 171,812,612 (177,061,517) 983,871,421 175,143,591 46,384,406 42,667,790 21,774,714 64,442,503 30,911,976 104,379,430 37,359,455 141,738,885 2020 Asia Paciﬁc United States Pakistan Europe Middle East Total (including South of America Asia) ----------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------------- 44.2 Segment details with respect to geographical locations Notes to the Consolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 1,809,948 1,809,948 (133,107) (1,210,025) 36,144,294 26,725,318 62,869,612 13,629,288 28,210,381 Segment direct expenses Inter segment expense allocation Total expenses Provisions Profit / (loss) before tax 25,653,998 34,982,676 7,818,734 34,842,092 (34,853,042) 7,807,784 3,075,071 71,519,529 1,825,928 40,692,380 25,343,803 941,501 68,803,612 2,715,918 71,519,529 4,703,237 262,626,290 1,389,934,352 36,248,474 134,780,010 947,067,992 107,957,426 (103,342,532) 951,682,886 225,227,346 3,000,499,358 432,843,644 2,111,038,766 221,359,049 2,765,241,459 235,257,903 3,000,499,358 1,924,899,021 Cash and bank balances Investments Net inter segment lendings Lendings to financial institutions Advances - performing Advances - non-performing Provision against advances Advances - net Others Total Assets Borrowings Deposits & other accounts Net inter segment borrowing Others Total liabilities Equity Total Equity & liabilities Contingencies & Commitments Statement of financial position 68,371 398,445 466,816 68,805,824 35,903,457 104,709,281 Net mark-up/return/profit Inter segment revenue - net Non mark-up / return / interest income Total Income Profit and loss account 3,479,436 10,678,196 6,812,172 3,679,631 186,393 10,678,196 - 10,678,196 10,435,547 120,810 1,168,349 (1,168,349) 120,810 121,839 (330,179) 720,501 720,501 (5,771) 81,192 303,359 384,551 6,359,387 30,917,116 2,322,714 12,396,062 15,332,672 480,780 30,532,227 384,888 30,917,116 5,119,150 10,751,978 14,706,409 (34,009) 14,672,400 373,587 250,533 1,328,813 1,328,813 28,281 1,028,536 579,091 1,607,627 14,455,079 63,102,176 34,765,066 27,045,193 428,067 62,238,326 863,849 63,102,176 2,961,430 17,130,186 8,107,633 33,002,530 5,409,187 (4,296,985) 34,114,732 788,196 2,057,293 649,772 649,772 38,409 2,169,958 575,516 2,745,474 1,953,896,161 3,176,716,374 471,757,352 2,197,984,573 44,356,106 223,395,788 2,937,493,819 239,222,555 3,176,716,374 306,796,415 1,452,799,192 44,356,106 134,780,010 1,002,716,475 149,377,054 (143,694,917) 1,008,398,612 229,586,039 28,978,001 40,653,328 26,725,318 67,378,647 13,557,101 72,153,882 37,759,867 109,913,749 2019 (Restated) Asia Pacific United States of Pakistan (including South Europe Middle East Total America Asia) ---------------------------------------------------------------------------------------------- (Rupeesin '000) --------------------------------------------------------------------------------------------- Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 45. TRUST ACTIVITIES 45.1 Endowment Fund Students Loan Scheme was launched by Government of Pakistan with collaboration with the major commercial banks with a view to extend financial help by way of mark-up free loan to the meritorious students without sufficient resources for pursuing scientific technical and professional education within Pakistan. The Scheme is being administered by a high powered committee headed by the Deputy Governor, State Bank of Pakistan and the Presidents of NBP, HBL, UBL, MCB, ABL and the Deputy Secretary, Ministry of Finance as member and Senior Director of SMEFD (Infra Structure Housing &SME Finance Department) as a secretary of the Committee. The State Bank of Pakistan has assigned National Bank of Pakistan to operate the scheme. The Committee in its meeting held on August 7, 2001 approved creation of Endowment Fund initially at an amount of Rs.500 million, Rs.396 million were transferred from the old Qarz-e-Hasna (Defunct) Fund, Rs.50 million contributed by Government of Pakistan and Rs. 54 million were contributed by participating banks (HBL, NBP and UBL 25% each, MCB 17.5% and ABL 7.5%). The amount of the Endowment Funds in investments stands at Rs. 785 million as at December 31, 2020 (2019: Rs. 758 million). 46. RELATED PARTY TRANSACTIONS The Group has related party transactions with its parent, subsidiaries, associates, joint ventures, employee benefit plans and its directors and Key Management Personnel. The details of investment in subsidiary companies, joint venture and associated undertaking and their provisions are stated in note 10 of the financial statement of the Group. The Group 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 executives / officers is determined in accordance with the terms of their appointment. Details of transactions with related parties during the year, other than those which have been disclosed elsewhere in these consolidated financial statements are as follows: | National Bank of Pakistan
| National Bank of Pakistan Key management Associates personnel Joint venture Pension Fund Pension Fund Pension Fund (Current) (Fixed Deposit) (N.I.D.A A/c) Provident Fund Other related parties Directors Key management Associates personnel Joint venture Pension Fund Pension Fund Pension Fund Provident Fund (Current) (Fixed Deposit) (N.I.D.A A/c) 2019 Other related parties 64,850 2,837,287 - Provision held against advances - 233,267 2,981,029 - (65,633) - (31,840) Closing balance - (28,548) - Repaid during the year 228,805 3,046,662 - - *Transfer in / (out) - net - - - Addition during the year - - - - - - - 2,951 2,951 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 305,117 (23,232,497) (115,673,058) 115,824,347 23,386,325 - - - - (69,157) - - 2,827,375 228,805 3,046,662 (45,889) - (22,888) - 74,615 - - - - 222,967 3,115,819 - - - - - - - - - - - 1,159 1,159 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 23,386,325 26,819,881 (14,896,873) 11,246,254 217,063 - - ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (Ru pees in '000) ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Opening balance Advances In current accounts Balances with other banks Directors 2020 Notes to the Consolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan - - - Settled during the year Closing balance (11,228) Withdrawn during the year Joint venture Pension Fund Pension Fund Pension Fund (Current) (Fixed Deposit) (N.I.D.A A/c) - 1,320 - 177,236 (10,823) (620,573) 713,917 94,715 - - - - - - - - - - - - - - - 1,720,157 - - - - - - 9,111 (270,703) - 279,814 - 73 - 58,871 - (46,979,185) 47,037,983 - - - - - - - - - - - - - - - - Provident Fund - - - - - - - - - - 1,941,908 - - - 1,369,644 13,282,016 - (2,920,003) (1,956,775) 3,054,527 1,235,120 13,296,883 * Transfer in (out) - net due to retirement / appointment of directors and changes in key management executives. Contingencis & Commitments Closing balance 41 8,672 Received during the year * Transfer in (out) - net 3,835 Opening balance Deposits and other accounts - Borrowings during the year - Opening balance Borrowings Interest / mark-up accrued Other Assets Key management Associates personnel Other related parties Directors Key management Associates personnel Joint venture Pension Fund Pension Fund Pension Fund Provident Fund (Current) (Fixed Deposit) (N.I.D.A A/c) 2019 Other related parties - 204,446 (40,290,295) (630,132) 708,790 40,416,083 - - - - - 625,431 80,688 - - - - - - 3,835 (8,065) - 94,715 (19,840) (22,146) (591,564) 23,314 10,732 - - - - - - - - - - - - - - - 1,725,222 - - - - - - 279,814 - 241,566 38,248 - - 11,100,000 - - - - - 11,785,192 458,328 - - - - - - 73 - - - - 1,235,120 - (45,833,593) (11,100,000) (11,008,400) 45,832,581 1,085 - - - - - 273,669,395 - - - - - - - 13,296,883 - 1,463,085 40,416,083 45,156,158 (1,415,241) (278,409,470) 2,246,185 12,465,939 - - - - - ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (Ru pees in '000) ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Directors 2020 Notes to the Consolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 46.1 - - - 546,300 - 4,637 - - - - - - - Funds / Others Associates Joint venture Pension Fund 2019 Provident Fund Funds / Others - - - 303 - - 9 - - - 108,346 - - - - - - 1,441,640 - - - 2,087 - 10,712 4,012 19,447 15,755 - - - - - 459,257 - 4,637 - - 6,000 - - - - - - - 780 - - 112 - - - 204,666 - - - - - - 1,690,456 - - - 2,087 - 6,096 4,345,823 15,558 1,860,682 - - The Group also earned commission on handling treasury transactions on behalf of the Government of Pakistan amounting to Rs. 9,653 million (2019: 9,958 million) for the year ended December 31, 2020. As at the statement of financial position date the loans and advances, deposits and contingencies relating to Government–related entities amounted to Rs. 337,572 million (2019: 377,158 million), Rs. 932,317 million (2019: 840,064 million) and Rs. 948,335 million (2019: 876,232 million) respectively and income earned on advances and investment and profit paid on deposits amounted to Rs. 40,908 million (2019: 30,498 million) and Rs. 64,149 million (2019: 50,926 million) respectively. The Group in the ordinary course of business enters into transaction with Government–related entities. Such transactions include lending to, deposits from and provision of other banking service to Government–related entities. The Federal Government through State Bank of Pakistan holds controlling interest (75.60% shareholding) in the Bank and therefore entities which are owned and / or controlled by the Federal Government, or where the Federal Government may exercise significant influence, are related parties of the group. Transactions with Government-related entities Mark-up / return / interest paid Expenses paid to company in which Director of the bank is interested as CEO Remuneration to key management executives including charge for defined benefit plan Post Retirement Benefit paid to Director cum Ex-employee Expense Mark-up / return / interest earned Debts due by Companies in which Directors of the Bank is interested as Directors Dividend income Rent income / Lighting & Power and Bank charges Income Provident Fund Key management personnel ----------------------------------------------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------------------------------------------- Key manageJoint Pension ment Associates venture Fund personnel 2020 Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 47. CAPITAL ADEQUACY, LEVERAGE RATIO & LIQUIDITY REQUIREMENTS The Group's objectives when managing capital, which is a broader concept than the 'equity' on the face of the statement of financial position, are: - to comply with the capital requirements set by the regulators of the banking markets where the Group operates; - to safeguard the Group's ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and - to maintain a strong capital base to support the development of its business. The SBP has issued instructions for Basel-III Implementation vide BPRD Circular No. 06 of 2013 dated August 15, 2013. These instructions are effective from December 31, 2013 in a phased manner with full implementation intended by December 31, 2019. Basel-III instructions comprises of the following three capital standards: i. Minimum Capital Requirement (MCR): The MCR standard sets the nominal amount of capital banks/ DFIs are required to hold. Currently the MCR for banks and DFIs is Rs. 10 billion as prescribed by SBP. ii. Capital Adequacy Ratio: The Capital Adequacy Ratio (CAR) assesses the capital requirement based on the risks faced by the banks/ DFIs. The banks/ DFIs are required to comply with the minimum requirements as specified by the SBP on standalone as well as consolidated basis. Currently the required CAR for banks is 11.50% (plus 2.0% for NBP as D-SIB requirement). iii. Leverage Ratio: Tier-1 Leverage Ratio of 3% is introduced in response to Basel III Accord as the third capital standard. Group level disclosure of the leverage ratio and its components has started from December 31, 2015. The Group has a leverage ratio of 4.16% in the year December 31, 2020 (2019: 3.44%) and Tier-1 capital of Rs 176,735 Million (2019: Rs 146,628 Million). The SBP's regulatory capital as managed by the Group is analysed into following tiers: 1. Tier 1 Capital (going-concern capital) • Common Equity Tier 1 • Additional Tier 1 - Tier I capital, which comprises highest quality capital element and include fully paid up capital, balance in share premium account, reserve for issue of bonus shares, general reserves and un-appropriate profits (net of accumulated losses, if any). 2. Tier 2 Capital (gone-concern capital) - Tier II capital, which includes general reserve for loan losses, revaluation reserve, exchange translation reserve and subordinated debt. Basel III capital rules requires bank to make certain deductions from the capital before arriving at the Capital Adequacy Ratio (CAR). Risk weighted assets are measured according to the nature and reflect an estimate of credit, market and other risks associated with each asset and counterparty, taking into account any eligible collateral or guarantees. A similar treatment is adopted for offbalance sheet exposures, with some adjustments to reflect more contingent nature of potential losses. The Group's policy is to maintain strong capital base so as to maintain, investor, creditor and market confidence and to sustain future development of the business. The adequacy of the Group's capital is monitored using, among other measures, the rules and ratios established by the SBP. The ratios compare the amount of eligible capital with the total of risk-weighted assets. The Group monitors and reports its capital ratio under the SBP rules, which ultimately determines the regulatory capital, required to be maintained by Banks and DFIs. The paid-up capital of the Group for the year ended December 31, 2020 stood at Rs. 21,275 billion (2019: Rs. 21,275 billion) and is in compliance with the SBP requirement for the said year. In addition the Bank has maintained minimum Capital Adequacy Ratio (CAR) of 20.10% (2019: 15.82%). There have been no material changes in the Group's management of capital during the year. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------(Rupees in ‘000)----------- Minimum Capital Requirement Paid-up capital 199,498,333 168,001,436 Eligible Common Equity Tier 1 Capital Eligible Additional Tier 1 Capital Total Eligible Tier 1 Capital Eligible Tier 2 Capital 176,735,007 176,735,007 56,705,915 146,628,152 146,628,152 41,295,951 Total Eligible Capital (Tier 1 + Tier 2) 233,440,922 187,924,103 Risk Weighted Assets Credit Risk Market Risk Operational Risk 862,944,817 88,080,262 210,140,934 918,174,576 93,146,479 176,625,691 1,161,166,013 1,187,946,746 Capital Adequacy Ratio Total Common Equity Tier 1 Capital Adequacy ratio 15.22% 12.34% Tier 1 Capital Adequacy Ratio 15.22% 12.34% Total Capital Adequacy Ratio 20.10% 15.82% Leverage Ratio Tier-1 Capital Total Exposures 176,735,007 4,249,194,554 146,628,152 4,260,315,310 Leverage Ratio 4.16% 3.44% Liquidity Coverage Ratio Total High Quality Liquid Assets Total Net Cash Outflow Liquidity Coverage Ratio 1,200,257,790 666,722,922 890,965,256 603,741,462 180% 148% 2,309,310,465 901,126,786 2,040,913,906 875,207,068 256% 233% Net Stable Funding Ratio Total Available Stable Funding Total Required Stable Funding Net Stable Funding Ratio 47.1 The full disclosures on the Capital Adequacy Leverage Ratio and Liquidity requirements as per SBP instructions issued from time to time, is placed on NBP's website. The link to the full disclosure is available at https://www.nbp.com.pk/blsd/ | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 48. RISK MANAGEMENT Risk management is about understanding and managing the potential for volatility of earnings, loss of access to reliable deposits and funding and depletion of capital arising from the business activities, whilst pursuing its strategic objectives. The Group has in place a well-defined risk management strategy / policy with clear objectives and deliverables through multipronged risk management processes. The Group applies the Basel framework as a cornerstone of the NBP’s risk management framework and capital strategy. The Group maintains a strong capital, funding and liquidity position in line with its on-going commitment to maintain balance sheet strength. The strength of risk profile management of the Group stands at the following pillars: - Identification and assessment of significant material risks. - Overseeing and managing the risk profile of the Group within the context of the risk appetite. - Optimize risk/return decisions by aligning them to business objective of achieving sustainable optimum growth. In order to support Risk Management Group (RMG’s) activities, the strong data management mechanism is also in place to collect and consolidate exposure wise information various risk related analysis and reviews. The mechanism also helps in identification of e-CIB related information, performing periodic review, generates reports and highlights inconsistencies and errors, and issuing instructions to the relevant data entry points for rectification. In addition, Information Security Division (ISD) became an integral part of Risk Management Group to confronting the emerging risks arises due to the introduction and use of IT based systems. Fraud risk management has also been made a part of RMG under the umbrella of Operational and Fraud Risk Management Division. 48.1 Risk Governance Structure Risk Management Group (RMG) operates as an independent group under the supervision of Chief Risk Officer. RMG's scope and coverage has been enhanced to cater enterprise-wide risk management, credit approvals, and asset rehabilitation. CRO reports directly to the President with a dotted line reporting to the Board Risk & Compliance Committee (BRCC). The group is responsible to perform the functions pertaining to development and oversight of the risk framework, methodologies and other functions assigned from time to time in line with local / international best practices and under the supervision of SBP’s regulations/ guidelines. The Group’s Board is responsible to ensure active oversight over implementation of policies and frameworks so as to prevent any significant financial loss or reductions in shareholders' value that may be suffered by the Group. Therefore, it is the responsibility of the Board to ensure that policies and frameworks are in place to recognize all significant/ material risks to which the Group is / may be exposed and that the required human resource, culture, practices and systems are adequate to address such risks. The Board and its relevant committee, i.e. BRCC and the senior management along with its relevant committees i.e. Management Credit Committee (MCC), Enterprise Risk Committee (ERC), ALCO etc. are responsible to ensure implementation of risk management framework. 48.2 Risk Management Framework The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect the changes in market conditions, products and services offered. The Group implements risk management framework through a ‘Three Lines of Defence’ model which defines clear responsibilities and accountabilities for various offices and ensures effective and independent oversight and also that the activities take place as intended. RMG together with Compliance Group acts as second line of defence and performs integrated function of oversight and independently challenges the effectiveness of risk management actions taken by business groups, who are the first line of defence. The risk management is further strengthened by the third line of defence, where Board Audit and Compliance Committee and Audit and Inspection Group add value through independent and objective assurance in improving risk management functions of the Group. Following paragraphs introduce Group’s exposures to material risks associated with its business activities and explain overall strategies and processes to manage those risks: 48.2.1 Credit Risk Credit risk is the risk of loss resulting from the decline in credit quality or possibility that a obligor or counterparty may not honor on its contractual obligations to the Group in accordance with agreed terms. NBP’s lending activities account for most of the Group’s credit risk. Credit risk is continuously evolving in various financial activities including loans and advances, commitments to lend, contingent liabilities such as letter of credit and guarantees, and other types of both on and off-balance sheet transactions. Group has a dedicated setup lead by Chief Risk Officer that ensures the effectiveness of the frameworks for assessment / measurement, review and reporting of credit risk under supervision of Board Risk and Compliance Committee. Group has in place Risk Appetite Framework and Credit Risk Concentration Management Framework to ascertain the levels of credit risk it undertakes by placing limits on exposures in relation to existing or potential obligors, economic groups and to various | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 industry segments. These risks are analysed on perpetual basis and is subject to frequent review. Bank ensures that credit exposures are adequately collateralized and comprehensive risk palliating measures are taken to regulate overall credit risk exposure in accordance with Bank’s tolerance limits. Credit review and approval process of the Bank is well-defined and is managed under strict supervision of senior management. For analysis of counterparties within various asset classes / constitutions / economic group, Bank also has an Internal Ratings System / Model based on multiple risk factors. The model coupled with Cash Flow Analysis Memorandum provides an understanding of obligors’ current and future financial health. This creates an integral contribution in decision making by senior management of the Bank. Concentration of exposure / risk in any of counterparty, economic group, or industry is assessed frequently and accordingly limit setting is tailored. Standardized Approach is used to calculate capital charge for credit risk as per Basel regulatory framework, with simple approach for credit risk mitigation. Additionally, stress testing for credit risk is completed on regular basis to evaluate the conceivable effects of scenarios provided by the regulator. Particulars of Group's significant on-balance sheet and off-balance sheet credit risk in various sectors are analysed as follows: 48.2.1.1 Lendings to financial institutions Credit risk by public / private sector Gross lendings Non-performing lendings Provision held 2020 2019 2020 2019 2020 2019 --------------------------------------------------------------- (R upees in '000) --------------------------------------------------------------Public/ Government Private 126,980,825 2,059,162 132,896,998 176,150 176,150 176,150 176,150 126,980,825 134,956,160 176,150 176,150 176,150 176,150 48.2.1.2 Investment in debt securities Credit risk by industry sector Gross investments Non-performing investments Provision held 2020 2019 2020 2019 2020 2019 --------------------------------------------------------------- (R upees in '000) --------------------------------------------------------------Cement Chemical Construction Engineering Fertilizer Sugar Textile Transport Financial Electronics and electrical appliances Glass and Ceramics Miscellaneous Leather and Tenneries Food and Personal Care Products Pharmaceuticals Technology and Communication Vanaspati and Allied Industries Oil and Gas Marketing Cable and Electrical Goods Automobile Parts and Accessories Power (electricity), Gas, Water, Sanitary Tobacco Paper and Board Jute Metal Products Services 470,168 2,073,812 3,885,490 4,842 1,040,960 766,719 1,151,054 9,658,543 1,308,738 11,361 891,092 5,288 11,184 2,413 11,072 4,238 687 4,509 1,185 37,953,635 144 10,794 7,081 500,000 890,258 19,453 2,073,812 3,885,489 4,842 1,425,089 785,469 1,151,768 2,803,718 9,344,916 1,308,738 11,361 787,524 5,288 11,184 2,413 11,072 4,238 95,986 4,509 1,185 35,464,521 144 10,794 7,081 500,000 950,000 20,168 323,812 1,633,739 4,842 656,831 766,719 651,054 210,020 1,308,738 11,361 25,992 5,288 11,184 2,413 11,072 4,238 687 4,509 1,185 144 10,794 7,081 - 19,453 323,812 1,633,738 4,842 656,831 785,469 651,768 90,886 1,308,738 11,361 25,992 5,288 11,184 2,413 11,072 4,238 686 4,509 1,185 144 10,794 7,081 - 20,168 323,812 1,633,738 4,842 656,831 766,719 651,054 141,691 1,308,738 11,361 25,991 5,288 11,184 2,413 11,072 4,238 687 4,509 1,185 144 10,794 7,081 - 19,453 323,812 1,633,738 4,842 656,831 572,385 651,768 82,126 1,308,738 11,361 25,992 5,288 11,184 2,413 11,072 4,238 686 4,509 1,185 144 10,794 7,081 - 60,665,266 60,670,593 5,671,871 5,571,484 5,603,540 5,349,640 31,849,560 28,815,706 32,463,359 28,207,234 7,620 5,664,251 7,620 5,563,864 7,620 5,595,920 7,620 5,342,020 60,665,266 60,670,593 5,671,871 5,571,484 5,603,540 5,349,640 Credit risk by public / private sector Public / Government Private | National Bank of Pakistan
| National Bank of Pakistan Public/ Government Private Credit risk by public / private sector Agriculture, Forestry, Hunting and Fishing Mining and Quarrying Textile Chemical and Pharmaceuticals Cement Sugar Footwear and Leather garments Automobile and Transportation Equipment Electronics and Electrical Appliances Construction Power (electricity), Gas, Water, Sanitary Wholesale and Retail Trade Exports / Imports Transport, Storage and Communication Financial Services Individuals Flour Mills Rice processing and Trading Food and Tobacco Fertilizer Metal Products Telecommunication Public Sector Commodity Operations General traders Engineering Glass and Ceramics Media Paper and Board Plastic products Sports goods Surgical equipments Others Credit risk by industry sector 48.2.1.3 Advances Non-performing advances Provision held 1,152,093,529 1,160,932,938 149,377,054 5,565,495 870,598 35,442,889 2,789,583 4,177,487 14,441,205 847,135 959,014 2,234,231 5,323,770 5,434,940 10,806,629 68,583 10,106,198 77,317 2,060,883 6,154,918 708,232 4,575,187 3,884,056 2,885,878 23,353,861 1,135,662 73,785 1,423,696 423,641 151,457 953,829 666,403 93,818 1,686,673 Non-performing advances 171,812,612 6,204,022 117,449 37,711,391 2,645,492 6,311,377 15,374,152 840,449 971,267 2,232,278 4,484,629 13,202,534 13,514,848 11,263,369 91,312 4,543,558 5,962,662 735,193 4,665,312 5,251,343 2,947,639 25,111,134 1,159,350 74,198 2,993 1,416,959 396,911 718,124 1,187,897 651,199 93,818 64,674 1,865,079 134,688,966 4,133,877 465,220 34,127,452 2,781,935 2,466,565 12,666,718 846,235 959,014 2,222,981 5,304,434 4,448,807 10,533,434 68,583 7,940,445 77,317 1,619,394 4,218,970 662,512 4,494,866 3,358,342 2,860,734 22,345,884 1,135,662 73,785 1,421,196 423,641 151,457 655,672 488,349 87,818 1,647,667 Provision held 154,587,769 4,514,299 117,449 35,889,959 2,634,249 4,093,767 14,335,087 840,114 966,887 2,223,278 4,481,950 11,271,966 12,083,484 9,184,015 91,312 2,697,680 4,123,937 720,207 4,537,360 5,226,208 2,888,738 24,557,341 1,159,350 74,198 2,244 1,410,274 396,911 293,124 1,187,897 648,950 93,818 64,674 1,777,042 377,158,182 774,935,347 1,152,093,529 337,572,330 823,360,608 1,160,932,938 171,812,612 2,672,432 169,140,180 149,377,054 2,522,432 146,854,622 154,587,769 2,522,432 152,065,337 134,688,966 2,522,432 132,166,534 2020 2019 2020 2019 2020 2019 --------------------------------------------------------------- (R upees in '000) --------------------------------------------------------------- Gross advances 59,016,306 2,079,833 130,890,548 3,698,135 28,285,797 34,415,033 2,095,757 8,711,039 7,204,298 12,243,093 289,464,374 36,292,574 1,486,667 56,141,359 40,447,197 14,209,909 170,918,493 3,467,902 26,950,629 12,026,044 20,813,179 67,474,262 16,307,814 66,638,547 24,966,577 5,043,655 2,222,899 1,820,422 2,751,131 727,511 802,049 2,480,493 63,054,332 282,368 132,990,923 4,033,024 33,124,120 35,278,586 2,461,054 6,607,421 10,036,223 12,266,442 283,229,240 36,642,933 1,687,703 55,190,848 6,358,191 32,929,861 184,106,685 2,809,954 30,685,877 14,023,712 15,733,123 67,320,902 17,064,247 62,413,440 33,444,437 6,859,290 2,189,495 1,601,970 2,627,648 978,994 827,764 2,072,130 2020 2019 2020 2019 2020 2019 --------------------------------------------------------------- (R upees in '000) --------------------------------------------------------------- Gross advances Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 48.2.1.4 Contingencies and Commitments 2020 2019 ------------(Rupees in ‘000)----------- Credit risk by industry sector Agriculture, Forestry, Hunting and Fishing Mining and Quarrying Textile Chemical and Pharmaceuticals Cement Sugar Footwear and Leather garments Automobile and Transportation Equipment Electronics and Electrical Appliances Construction Power (electricity), Gas, Water, Sanitary Wholesale and Retail Trade Exports / Imports Transport, Storage and Communication Financial Services Individuals Fertilizer Metal Products Telecommunication Public Sector Commodity Operations Rice processing and Trading Food and Tobacco Glass and Ceramics Paper and Board Engineering Plastic Products Flour Mills Surgical equipments Others 170,777 2,504,361 15,458,896 9,627,728 4,233,715 303,809 102 8,508,034 2,959,697 9,036,263 112,020,726 1,625,599 317,066 24,687,098 611,642,230 785,767,094 394,092 1,395,322 9,763,519 15,036,956 12,565,661 39,174 404,142 1,007,344 551,970 42,650,307 268,729 5,993 750 2,306,954 235,536 3,000 9,792,996 14,507,473 10,121,549 742,270 10,928 1,979,186 2,154,502 9,697,086 159,559,087 1,555,095 27,996 17,513,951 901,993,463 746,058,170 264,219 3,853,225 2,365,866 15,745,882 1,095,352 44,951 687,387 1,553,100 551,120 48,284,197 142,657 19,352 750 3,335,814 1,675,254,109 1,953,896,161 * Contingent liabilities for the purpose of this note are presented at cost and includes direct credit substitutes, transaction related contingent liabilities and trade related contingent liabilities. Credit risk by public / private sector Public / Government Private 2020 2019 ------------(Rupees in ‘000)----------- 948,334,918 726,919,191 876,232,352 1,077,663,809 1,675,254,109 1,953,896,161 48.2.1.5 Concentration of Advances The bank top 10 exposures on the basis of total (funded and non-funded expsoures) aggregated to Rs. 1,093,518 million (2019: Rs. 1,036,638 million) are as follows: 2020 2019 ------------(Rupees in ‘000)----------- Funded Non Funded Total Exposure 250,314,704 843,203,477 238,481,635 798,156,427 1,093,518,181 1,036,638,062 The sanctioned limits against these top 10 expsoures aggregated to Rs. 1,280,786 million (2019: Rs. 1,073,636 million) | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 Amount Provision held Amount Provision held ------------------------------- ----------- (Rupees in '000) ------------------------------------------ Total funded classified therein 48.2.1.6 Loss 2,522,432 2,522,432 2,522,432 2,522,432 Total 2,522,432 2,522,432 2,522,432 2,522,432 Advances - Province / Region-wise Disbursement and Utilization 2020 Utilization KPK including AJK including Punjab Sindh Balochistan Islamabad FATA Gilgit-Baltistan ----------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------Disbursements Province/Region Punjab Sindh KPK including FATA Balochistan Islamabad AJK including Gilgit-Baltistan 210,145,408 390,658,220 6,176,977 3,855,924 49,991,187 2,798,820 207,931,532 4,704,206 8,853,922 - 1,625,942 377,454,014 12,271,029 - 6,176,977 1,712,540 - 3,332,924 - 8,500,000 27,153,696 - 587,934 523,000 2,798,820 Total 663,626,536 221,489,660 391,350,985 7,889,517 3,332,924 35,653,696 3,909,754 2019 Utilization KPK including AJK including Punjab Sindh Balochistan Islamabad FATA Gilgit-Baltistan ----------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------Disbursements Province/Region 48.2.2 Punjab Sindh KPK including FATA Balochistan Islamabad AJK including Gilgit-Baltistan 228,866,286 364,638,630 9,492,232 4,979 42,498,179 4,921,666 228,147,162 10,707,703 12,015,495 3,882 303,200 262,168,186 10,717,298 - 549,899 9,492,232 2,764,372 - 27,482,303 4,979 - 125,043 63,721,751 17,001,014 - 299,671 4,917,784 Total 650,421,972 250,874,242 273,188,684 12,806,503 27,487,282 80,847,808 5,217,455 Market Risk Market Risk is the potential for losses to arise from trading activities undertaken by the Group as a result of movements in market rates or prices such as interest rates, foreign exchange rates, and equity prices. The Group’s market risk is managed through Market Risk Management (MRM) Framework approved by the Board which is comprised of related policies / procedures with the objective to mitigate market risk through the engagement of various strategies in relation with prices, rates, earning assets, liabilities and trading activities. Group has also worked on devising improved criteria for various market risk limits. Under the developed Value-at-Risk (VaR) models and policy framework, VaR limits are being monitored through pilot run with an objective to be used for capital charge calculation under IMA approach in future. Standardized Approach is used to calculate capital charge for market risk as per Basel regulatory framework. Whereas, stress testing for interest rate, equity prices, and exchange rates risks activities is carried out regularly to estimate the impact on the capital of the Group. In addition to the regulatory requirements, Group has devised proprietary market risk stress testing scenarios which are performed on periodic basis to assess the impact on capital of the Group for Internal Capital Adequacy and Assessment Process (ICAAP). Limits / zones and Management Action Triggers and Management Action Plans corresponding to Liquidity Ratio, Balance Sheet Duration Gap, Government Securities PVBP and Duration have also been developed. These triggers are used for proposing / recommending actions to ALCO for deliberation and necessary action. 48.2.2.1 Statement of Financial Position split by trading and banking books 2020 2019 Banking book Trading book Total Banking book Trading book Total ----------------------------------------------------------- (Rupees in '000) --------------------------------------------------------------Investments 1,368,195,288 98,210,085 1,466,405,373 1,415,094,952 37,704,240 1,452,799,192 1,368,195,288 98,210,085 1,466,405,373 1,415,094,952 37,704,240 1,452,799,192 | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 48.2.2.2 Foreign Exchange Risk Foreign exchange and translation risk arises from the impact of currency movements on the value of the Group’s cash flows, profits and losses, and assets and liabilities as a result of participation in global financial markets and international operations. In order to manage currency risk exposure the Group enters into ready, spot, forward and swaps transactions with the SBP and in the interBank market, financial institutions and corporate. The Group’s foreign exchange exposure comprises forward contracts, purchases of foreign bills, foreign currencies cash in hand, balances with Banks abroad, foreign placements with the SBP and foreign currencies assets and liabilities. Foreign Exchange exposure is managed within the statutory limits, as fixed by the SBP. Appropriate segregation of duties exists between the front, middle and back office functions. 2020 Foreign Currency Assets Foreign Currency Liabilities 2019 Off-balance sheet items Net foreign currency exposure Foreign Currency Assets Foreign Currency Liabilities Off-balance sheet items Net foreign currency exposure ---------------------------------------------------------------------------------- (Rupees in 000') -------------------------------------------------------------------------------------United States Dollar Great Britain Pound Japanese Yen Euro Other currencies 158,975,693 4,253,451 4,080,732 8,625,157 68,372,930 250,386,427 5,613,790 1,123,760 10,298,009 20,716,084 115,299,103 3,235,840 168,624 3,462,911 2,996,887 23,888,369 1,875,502 3,125,596 1,790,059 50,653,733 155,613,306 4,386,930 5,142,262 8,582,016 76,936,212 282,671,076 6,303,626 1,304,374 9,514,725 27,595,177 141,330,602 6,257,773 (1,973,457) 6,608,767 4,171,279 14,272,832 4,341,077 1,864,432 5,676,058 53,512,313 244,307,963 288,138,070 125,163,365 81,333,259 250,660,726 327,388,978 156,394,964 79,666,712 2020 2019 Banking book Trading book Banking book Trading book ----------------------------------- (Rupees in '000) ------------------------------------Impact of 1% change in foreign exchange rates - Profit and loss account - Other comprehensive income - 2,917 5,612 - 48.2.2.3 Equity position Risk The trading activities also raise risk which occurs resulting in negative fluctuations of daily stock prices specifically in those stocks which are held by the Group, hence, deplete capital. The Group’s equity position is managed through limits imposed by regulator for both, overall investment and exposure in single scrip. Moreover, internal limits are set to possibly manage overall earnings in the form of placing of stop loss limits and/ or through diversification within the structure of overall equity position portfolio. 2020 2019 Banking book Trading book Banking book Trading book ----------------------------------- (Rupees in '000) ------------------------------------Impact of 5% change in equity prices - Profit and loss account - Other comprehensive income 3,065,915 - 2,560,070 2,816 - 48.2.2.4 Yield / Interest Rate Risk in the Banking Book (IRRBB)-Basel II Specific Interest rate risk specifically arises due to adverse movements in yield curve of underlying asset which is being monitored by ALCO with an objective to possibly limiting the potential impact over the profitability of the Group which may result in instability of market based interest rates and mismatching or gaps in the amount of financial assets and financial liabilities in different maturity time bands. Group assumes that the sources of IRR are based on following sub-risks. - Re-pricing risk; arising from changes to the overall level of interest rates and inherent mismatches in the re-pricing term of banking book items. - Yield curve risk; arising from a change in the relative level of interest rates for different tenors and changes in the slope or shape of the yield curve. - Basis risk; arising from differences between the actual and expected interest margins on Banking book items over the implied cost of funds of those items. The above mentioned risks are not only measured, monitored, and managed from the regulatory purpose, but from the perspective of internal management. | National Bank of Pakistan
| National Bank of Pakistan (749,159,471) (749,159,471) Cumulative Yield/Interest Risk Sensitivity Gap 4,705,744 414,640 - 632,618 1,085,179,375 30,923,782 (26,632,678) 125,163,364 (26,632,678) - (753,865,215) 10,688,517 1,295,603,069 41 280,806 1,306,572,433 24,564,578 5,167,970 126,804,675 167,155,470 228,603,203 411,322 552,707,218 Total Yield/Interest Risk Sensitivity Gap Off-balance sheet gap Commitments in respect of: - forward foreign exchange contracts - forward government securities transactions Commitments for acquisition of: - operating fixed assets - Other commitments 986,016,071 Off-balance sheet financial instruments Documentary credits and short-term trade-related transactions 16,795,186 138,539,005 2,418,928,469 197,224 7,869,355 154,209,188 2,736,538,427 249,969,566 15,015,366 126,804,675 1,466,405,373 983,871,421 59,589,279 2,901,655,680 165,117,253 0.0% 6.6% 5.2% 9.1% 10.0% 0.0% Liabilities Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Lease liability against right of use assets Other liabilities 12,965,285 131,186 - 14,259,122 175,771 - 60,615,909 809,775,380 86,635,910 92,492 - 86,543,418 - - 723,139,470 10,993,746 88,051,369 21,491 99,066,606 364,979 466,849,352 354,991,745 822,206,076 164,660,294 104,044,385 6,130,312 32,492 - 6,097,820 - - 97,914,073 56,908,784 32,233,664 58,035 9,487 89,209,970 455,390 45,910,297 140,752,581 5,775 187,124,043 246,281,194 81,620,899 1,691,338 92,994 - 1,598,344 - - 79,929,561 42,516,430 52,812,308 73,481 212,985 95,615,204 3,574,948 690,430 105,037,751 66,108,285 133,351 175,544,765 3,509,557 3,913,846 123,743 816,618 8,363,764 - - - - 341,570,422 521,389,071 95,289,228 179,818,649 - - - - 95,289,228 179,818,649 2,392,766 12,050,442 812,047 15,255,255 93,635,069 139,693,515 16,909,414 48,488,652 246 110,544,483 188,182,413 5,108,790 652,508 2,838,255 8,599,553 - - - - 696,687,652 954,957,424 175,298,581 258,269,771 - - - - 175,298,581 258,269,771 6,420,414 13,040,142 1,820,743 21,281,299 124,152,455 237,876,476 72,419,084 28,992,848 8,341 196,579,880 266,869,324 989,459,078 34,501,655 - - - - 34,501,655 1,289,140 1,289,140 10,399,389 25,391,406 35,790,795 1,250,296,629 260,837,550 986,016,071 - - 986,016,071 (725,178,521) 16,795,186 920,571,121 153,918,895 1,091,285,202 221,830,039 8,336,597 75,695,600 1,214,202 59,030,243 366,106,681 2020 Exposed to Yield/ Interest risk Non-interest Upto 1 Above Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 bearing to 3 Month to 6 Months to 1 to 2 to 3 to 5 to 10 10 Years financial Year Years Years Years Years instruments Months Months -------------------------------------------------------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------------------------------------------------Total On-balance sheet gap 0.0% 8.3% 6.6% 11.3% 9.0% 0.0% rate Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets On-balance sheet financial instruments Effective Yield/ Interest 48.2.2.5 Mismatch of Interest Rate Sensitive Assets and Liabilities - Profit and loss account - Other comprehensive income Impact of 1% change in interest rates on 2020 2019 Banking Trading book Banking Trading book book book -------------------------- (Rupees in '000) ---------------------------- Notes to the Consolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 919,422,947 29,284,470 - - - - 29,284,470 1,276,252 1,276,252 - 30,560,722 13,494,958 17,065,764 - 1,182,756,806 263,333,859 937,616,635 - - 937,616,635 (674,282,776) 1,094,291,514 19,867,424 894,365,790 180,058,300 420,008,738 258,322,564 6,476,086 69,676,184 1,176,645 84,357,259 2,742,807,710 2,893,137,713 10,869,353 4,288,665 15,158,018 2,933,124 3,336,159 6,269,283 Total liabilities as per statement of financial position 2,877,979,695 54,919,564 1,070,766 7,447,414 81,127,027 144,564,771 55,086,809 1,022,143 7,017,020 52,428,340 115,554,312 3,132,360,268 2,987,795,497 2,901,655,680 2020 2019 ----------- (Rupees in '000) ----------- 890,138,477 210,705,105 - - - - 210,705,105 5,715,394 2,111,350 180,000 3,424,044 - 216,420,499 186,426,924 29,993,575 - 2,736,538,427 679,433,372 147,902,529 - - - - 147,902,529 14,730,313 2,908,254 10,129,768 1,692,291 - 162,632,842 97,554,750 65,068,887 9,205 Total Financial Liabilities as per note 48.2.2.5 Add: Non-Financial Liabilities Deferred tax liabilities Other liabilities 531,530,843 107,535,418 - - - - 107,535,418 9,307,143 2,927,955 5,387,496 138,137 853,555 - 116,842,561 85,224,162 31,587,097 31,302 3,017,209,992 423,995,424 202,140,891 - - - - 202,140,891 8,221,567 863,588 7,002,425 355,554 - 210,362,458 185,955,357 24,407,101 - Total assets as per statement of financial position Total Financial Assets as per note 48.2.2.5 Add: Non-Financial Assets Fixed assets Intangible assets Right of Use Assets Other assets 48.2.2.6 Reconciliation of Financial Assets and Liabilities with Total Assets and Liabilities 734,409,366 10,697,107 3,848 6,750 10,686,509 - - (1,052,727,270) (685,359,568) (512,554,833) 221,854,534 172,804,735 29,004,137 - 29,004,137 - - 723,712,260 64,859,263 23,324,881 41,302,402 56,266 175,714 - 788,571,523 569,701 662,730 738,447,962 48,727,183 163,947 Cumulative Yield / Interest Risk Sensitivity Gap 367,367,702 66,875,808 8,228 6,750 66,860,830 - - 143,800,598 50,196,070 22,070,344 28,086,713 39,013 - 193,996,668 796,971 435,643 14,695,312 178,068,742 - (1,052,727,270) 28,747,315 554,779 - 566,855 13,500 1,072,941,002 49,843,489 (21,650,953) 156,394,965 (21,650,953) - 300,491,894 110,295,905 37,713,498 72,567,558 14,849 - 410,787,799 599,716 1,212,496 2,099,962 53,453,774 353,421,852 - Total Yield / Interest Risk Sensitivity Gap Off-balance sheet gap Commitments in respect of: - forward foreign exchange contracts - forward government securities transactions Commitments for acquisition of: - operating fixed assets Other commitments 937,616,635 Off-balance sheet financial instruments Documentary credits and short-term trade-related transactions 1,519,086,273 2,877,979,695 (1,081,474,585) 379,837,482 1,138,962,420 78 286,293 437,611,688 2,987,795,497 19,867,424 471,757,352 2,197,984,573 194,403 7,831,350 180,344,593 32,909,138 4,811,370 132,680,048 7,869,810 258,881,767 459,555 293,198,090 13,598,325 134,780,010 1,452,799,192 1,008,398,612 85,021,268 109,815,802 0.0% 13.3% 6.3% 7.6% 10.0% 0.0% Liabilities Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Lease liability against right of use assets Other liabilities 2019 (Restated) Non-interest Exposed to Yield/ Interest risk bearing Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 financial Upto 1 to 3 to 6 Months to 1 to 2 to 3 to 5 to 10 Above instruments Month Months Months Year Years Years Years Years 10 Years -------------------------------------------------------------------------------------------------------- (Rupe es in '000) -------------------------------------------------------------------------------------------------------Total On-balance sheet gap 0.0% 12.2% 13.2% 10.9% 10.3% 0.0% Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets On-balance sheet financial instruments Effective Yield/ Interest rate Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 48.2.3 Operational Risk The Group may suffer losses due to its exposure to Operational Risk. To mitigate, a comprehensive Operational Risk Management (ORM) Framework has been developed to align the Group’s operations with sound practices of operational risk by Basel framework. ORM Framework provides guidance for setting the operational risk strategy of the Group, selection and adoption of risk and loss measurement tools, reporting, and establishment of operational risk management processes. Operational risks are a core component of doing business arising from the day-to-day operational activities of the Group including launching of new products and services by the Group. Group realizes that operational risks cannot be fully mitigated, it therefore determines an appropriate balance between accepting potential losses and incurring costs of mitigation. Further, the Group has adopted a comprehensive Operational Risk Management Strategy and Operational Risk Tolerance limits approved by the Board in-line with Basel framework. Furthermore, the Group has rolled-out Operational Loss Data Collection Mechanism whereby field functionaries are responsible to report operational losses under their jurisdictions on a certain frequency. Operational loss events are reviewed and appropriate corrective measures are taken on an ongoing basis. The Group has also conducted analysis of major Operational Risk Incidents covering key control lapses and accordingly suggested recommendations & mitigations. As per regulatory framework, the Group calculates capital charge for its operational risk using Basic Indicator Approach. Moreover, the Group closely monitored the situation and undertaken required actions to ensure the safety and security of Group staff and maintenance of service to its customers. The Senior Management of the Group including the Covid Crises Management Team closely monitored the situation, and took timely decisions to resolve any concerns. The Group has a duly tested Business Continuity Plan (BCP). The Group has communicated the plan with its customers on how they can connect with the Group through its digital and online channels. The Group continued to take measures to ensure the maintainence of their service levels, customer complaints were resolved, in order for the Group to meet the expectations of its stakeholders. The Group's operations stayed highly resilient, almost more than 95% branches remained open to facilitate its customers. Further, the Group deployed all necessary measures for the health and safety of its employees to prevent them from the pandemic situation. 48.2.4 Information Security Risk We rank cyber security as one of our top priority risks. Our extensive customer base and increasing focus on information technology growth, mean that our data is protected and our systems are safe. Further, due to COVID-19, the Group has taken appropriate actions to monitor and respond to ever evolving cybersecurity risks and adopted a heightened state of cybersecurity. We are living in the highly technology dependent environment, where most of the business functions are performed with information technology for storing, processing and sharing information; the information “assets” that are being used to store, process and transmit the information, face various types of threats. If threats get materialized and are able to exploit the vulnerabilities (weaknesses) present in these information assets, the confidentiality, integrity and availability of information get compromised. In order to mitigate the risks, certain controls and countermeasures need to be assessed and implemented. We have governance mechanisms in place to develop, deploy and monitor information security policies, internal controls and cyber security framework across our businesses. Our staff is first line of defense against any cyber attacks therefore we regularly assess the information security controls and undertake employees’ awareness and trainings. We work with our key technology partners to ensure that potential vulnerable systems are identified and appropriate controls, updates and patches are implemented to secure the systems. The Group is actively communicating with its customers on interacting with the Group in a secure manner through its full suite of channels including online and digital. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 48.2.5 Enterprise-wide Risk In addition to the above mentioned risks, the Group has a structure to identify residual material risks through generation of various MIS reports on periodic basis. The source of these reports includes, but not limited to, the Board approved Internal Capital Adequacy and Assessment Process (ICAAP), which commensurate risks over and above those which directly occurs as a result of daily business and operations of the Group. These risks include Concentration Risk, Interest Rate Risk in Grouping Book (IRRBB), Increase in NPL Categories, Reputational Risk, Strategic Risk, etc. Moreover, all those brewing risks that are material and arise within the Group or due to inherent behavior of country’s market and economic conditions, whether in isolation or in combinations are covered under the Group-wide Recovery Plan. These risks are monitored on certain frequency and corrective actions are taken as and when deemed necessary. The Group has also prepared various scenarios and accordingly quantified losses against different types of risks based on sophisticated statistical models, such as, macro-stress testing - a regression based methodology. This is developed and implemented by the Group assuming deterioration in macro-economic factors that measures any negative impact on the capital of the Group. 48.2.6 Liquidity Risk Liquidity risk is the risk that the Group may be unable to meet short term financial demands. This usually occurs due to the inability to convert a security or hard asset to cash without a loss of capital and/or income in the process. Groups are often evaluated on their liquidity, or their ability to meet cash and collateral obligations without incurring substantial losses. To mitigate this risk, Group has arranged diversified funding sources, manages specific assets with liquidity in mind and monitors liquidity on daily basis. In addition, the Group maintains statutory deposits with central Groups inside and outside Pakistan. The purpose of liquidity management is to ensure that there are sufficient cash flows to meet all of the Group's liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking sustained damage to the Group's reputation, as well as to capitalize on opportunities for business expansion and profitability. This includes the Group's ability to meet deposit withdrawals either on demand or at contractual maturity, to repay borrowings as they mature and to make new loans and investments as opportunities arise. Asset and Liability Company ALCO is responsible for ensuring that the Group has adequate liquidity and monitors liquidity gaps, to execute this responsibility. Regulatory stress as well as proprietary stress testing and ratio based liquidity assessments are performed to probatively identify and manage liquidity position, needs /requirements. Group has various limits / ratios, triggers and management actions in place to monitor and mitigate liquidity risk. The Group calculates and monitors, on regular basis, Basel-III Liquidity standards (includes LCR, NSFR and LMTs), liquidity ratios as per SBP parameters [(LA/ D&B), Gross ADR (net of refinancing from SBP)] besides other internal liquidity measures like total approved securities to deposit, etc. Moreover, the recent fall in interest rate has resulted in substantial MTM gain in Government Securities portfolio, which can be realised in case of any adverse liquidity situation. | National Bank of Pakistan
| National Bank of Pakistan Share capital Reserves Unappropriated profit Surplus/(Deficit) on revaluation of assets Non-controlling interest Net assets Liabilities Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Lease liability against right of use assets Deferred tax liabilities Other liabilities Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Fixed assets Intangible assets Right of use assets Other assets Share capital Reserves Unappropriated profit Surplus on revaluation of assets Non-controlling interest Net assets Liabilities Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Lease liability against right of use assets Deferred tax liabilities Other liabilities Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Fixed assets Intangible assets Right of use assets Other assets Upto 1 Day Over 1 to 7 days 489,997 1,645,612 1,700,000 30,179,598 32,164,790 53,118 1,455 201 941,238 67,176,009 291,148,722 6,676,578 4,947,640 314,485,555 20 25,173,268 642,431,783 81,595 1,584,006 131,180,048 63,689 3,448,494 229,109 136,586,941 21,275,131 53,260,789 93,465,516 70,358,587 862,532 239,222,555 19,867,424 19,867,424 471,757,352 3,468,570 314,697,849 2,197,984,573 1,834,856,695 16,489,427 194,403 7,831,350 10,869,353 184,633,258 79,135,146 730,486 2,893,137,713 1,937,327,836 331,917,762 239,222,555 (1,294,896,053) (195,330,821) 293,198,090 13,598,325 134,780,010 1,452,799,192 1,008,398,612 54,919,564 1,070,766 7,447,414 166,148,295 3,132,360,268 Over 3 to 6 Months 4,727,114 51,070,288 6,266,632 13,467,529 56,908,784 66,056,859 Over 7 to 1 Over 14 days to Over 1 to 1 Month 2 Months 4 days 867,922 1,500,000 1,318,622 48,123,224 57,759 57 716,570 52,584,155 5,715,707 55,955,355 9,565,683 114,411,441 78 406,431 985,613 15,687,821 171,352,486 (10,451,767) (118,768,331) 2,152,912 1,476,531 1,604,893 1,719 5,236,055 2,392,766 12,454,175 Over 6 to Over 9 months Over 1 to 9 Months to 1 year 2 years 73,480 194,773 870,055 2,275 1,141,620 15,947,785 20,937,459 31,664,781 54,630,858 149,864,622 1,042,206 18,483,105 23,926,202 12,464,141 1,155 29,705,804 66,097,301 45,180,989 22,070,344 22,981,161 343,720 863,588 37,582,592 35,590,618 27,718,422 11,749,879 56,266 39,013 20,309 155,405 355,554 15,991,287 1,056,906 956,693 18,253,862 75,683,236 59,648,994 29,230,506 31,222,883 30,363,221 524,688,117 257,228,567 252,146,681 601,101 796,971 569,701 470,900 747,632 435,643 281,610 381,123 2,099,962 5,711,294 47,929,607 14,695,312 523,958,573 254,853,386 189,531,577 47,540,751 33,979,136 76,113,053 58,168,112 27,636,798 36,974,683 79 87,144 16,585 817,231 2,857,355 21,689 126,077 124,983 12,813 1,094 39,062 18,712 152,551 333,520 28,301,015 28,511,989 13,949,831 1,910,103 1,922,206 53,547,444 84,737,914 111,278,290 106,046,457 584,337,111 286,459,073 283,369,564 13,787,296 56,248,507 13,695 15,212,576 85,262,073 (524,159) Over 2 to 3 years 674,695 5,339,632 18,001,805 222,574,902 3,509,557 8,477,921 157,346,293 78,281,159 734,166 127,175 736,833 3,351,081 240,576,707 Over 2 to 3 years Over 3 to 5 Years 123,744 1,897,552 2,930,849 10,747,569 43,207,091 245,365,022 6,420,414 21,086,963 125,301,464 157,296,409 1,617,909 65,974 1,528,327 2,762,030 288,572,113 Over 3 to 5 Years Over 5 Years 4,127,395 10,091,800 20,799,160 423,871,847 5,108,790 1,471,175 253,762,168 137,732,080 48,843,616 562,553 3,766,306 4,284 444,671,007 Over 5 Years 2,927,955 14,177,962 138,137 853,555 4,527,368 22,624,976 146,204,041 104,055,918 53,753,611 754,858 183,241 815,155 9,266,233 168,829,017 2,908,254 25,542,734 1,692,291 6,382,513 9,142,946 45,668,738 236,636,432 98,526,197 177,837,223 1,681,390 52,222 1,611,699 2,596,438 282,305,170 2,111,350 1,586,472 4,700,296 4,486,840 8,528,141 21,413,099 366,745,639 205,730,845 128,733,080 48,647,162 562,553 4,462,730 22,369 388,158,739 (Rupees in '000) ----------------------------------------------------------------------------------------------------------------------------------------- 2019 (Restated) Over 2 to Over 3 to 3 Months 6 Months 25,319 1,210,882 63,587,751 81,392,839 41,474,224 20,877,326 3,574,948 381,940 39,062,131 97,899,248 30,140,836 41,668,685 893,464 2,879,531 109,455 131,741 201,414 683,219 1,204,129 38,266,979 75,568,317 181,529,403 Over 6 to Over 9 months Over 1 to 9 Months to 1 year 2 years 205,127 159,852 455,390 308,490 230,232,181 236,617,171 45,910,297 113,118,951 59,734,019 16,613,801 60,217,771 30,309,223 22,765 40,105 2,135 2,728 2,728 8,877 8,184 14,649 5,276 51,391 29,405 17,934,892 18,136,013 10,892,766 1,206,337 308,146,361 271,574,946 117,538,627 144,980,590 2020 Over 2 to 3 Months 41 15,141 6,349 58,035 280,904 1,092,932 9,347,200 24,852,920 15,236,144 16,675,846 107,315,745 65,159,743 44,593,430 138,259,822 117,565,842 (40,139,734) 242,986,618 226,981,516 (20,721,195) 5,266,007 3,455,970 11,128,935 102,766,802 2,300,000 128,486,813 3,454,238 637 134,241,688 Over 7 to 1 Over 14 days to Over 1 to 1 Month 2 Months 4 days ------------------------------------------------------------------------------------------------------------------------------------------ Total 21,275,131 57,591,417 120,631,784 73,987,802 916,148 274,402,282 731,652 24,444,854 104,959,619 197,224 7,869,355 2,933,124 157,545,347 61,524,307 2,742,807,710 2,148,160,224 274,402,282 (1,534,930,471) 845,550 2,659,756 122,804,675 983,775 1,854,530 546 255,641 129,404,473 Over 1 to 7 days 23,713,202 245,059,070 9,199,199 7,505,285 334,403,880 91 17,062,228 613,229,753 Upto 1 Day 16,795,186 1,966,540 2,067,874,191 16,795,186 138,539,005 2,418,928,469 249,969,566 15,015,366 126,804,675 1,466,405,373 983,871,421 55,086,809 1,022,143 7,017,020 112,017,619 3,017,209,992 Total 48.2.6.1 Maturities of Assets and Liabilities - based on contractual maturity of the assets and liabilities of the Group Notes to the Consolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan Share capital Reserves Unappropriated profit Surplus/(Deficit) on revaluation of assets Non-controlling interest Net assets Liabilities Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Lease liability against right of use assets Deferred tax liabilities Other liabilities Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Fixed assets Intangible assets Right of use assets Other assets Share capital Reserves Unappropriated profit Surplus/(Deficit) on revaluation of assets Non-controlling interest Net assets Liabilities Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Lease liability against right of use assets Deferred tax liabilities Other liabilities Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Fixed assets Intangible assets Right of use assets Other assets Upto 1 Month 8,784,880 10,688,517 691,637,237 14,255 61,524,307 2,148,160,224 (1,534,930,471) 150,576,268 13,504,566 126,804,675 167,155,470 303,935,213 53,118 91 201 38,346,832 800,376,434 499,727 10,993,746 118,540,644 21,491 38,344,563 168,400,171 467,958,483 1,763,659 364,979 466,849,352 149,736,917 62,870 19,924 17,560,952 636,358,653 6,439,082 56,908,784 338,032,867 58,035 15,612,721 417,051,488 (259,666,984) 45,629,218 455,390 45,910,297 56,019,840 2,135 1,239 51,391 9,314,994 157,384,504 194,485 42,516,430 336,495,938 73,480 233,248 2,278 3,279,386 382,795,245 (116,786,991) 49,204,166 690,430 153,236,466 59,209,071 893,464 133,371 230,818 2,410,468 266,008,254 877,012 2,392,766 309,364,692 848,036 15,947,785 329,430,291 (145,104,635) 2,796,253 97,899,248 41,668,685 2,879,531 131,741 683,219 38,266,979 184,325,656 3,509,557 305,388,438 669,345 5,339,632 314,906,972 (74,330,264) 157,346,293 78,281,159 734,166 127,175 736,834 3,351,081 240,576,708 6,420,414 317,997,480 123,744 1,897,552 2,930,846 10,747,569 340,117,605 (51,549,162) 125,301,464 157,288,456 1,617,909 65,974 1,528,327 2,766,313 288,568,443 5,108,790 1,471,174 2,838,255 5,053,492 14,471,711 312,671,695 237,876,475 86,006,957 69,073 562,553 2,628,348 327,143,406 1,289,138 5,038,308 6,327,446 110,140,486 14,830,308 51,725,124 48,774,543 1,137,958 116,467,933 21,275,131 53,260,789 93,465,516 70,358,587 862,532 239,222,555 19,867,424 471,757,352 2,197,984,573 194,403 7,831,350 10,869,353 184,633,258 2,893,137,713 239,222,555 293,198,090 13,598,325 134,780,010 1,452,799,192 1,008,398,612 54,919,564 1,070,766 7,447,414 166,148,295 3,132,360,268 Total 9,433,021 379,837,482 666,411,562 78 68,624,279 1,124,306,421 (454,212,906) 165,580,920 11,287,456 132,680,048 7,993,610 301,052,085 60,385 52,222 77 51,386,712 670,093,515 570,011 37,713,498 109,958,653 14,849 53,683,032 201,940,043 58,116,975 3,238,348 1,212,496 2,099,962 53,453,774 167,020,539 87,223 13,907 32,930,769 260,057,018 204,891 22,070,344 270,008,867 39,013 19,033,656 311,356,772 (166,739,665) 58,620,388 435,643 14,935,084 58,704,756 16,585 39,062 11,865,589 144,617,107 8,241,485 23,324,881 321,735,872 56,266 175,714 2,839,973 356,374,192 572,719,909 58,393,118 662,730 779,950,229 84,415,381 820,869 147,765 171,263 4,532,745 929,094,101 1,418,016 863,588 270,687,403 355,554 18,253,864 291,578,424 (946,164) 7,365,317 189,531,577 36,874,683 2,854,733 124,984 333,520 53,547,444 290,632,260 2,927,955 273,115,486 138,137 853,555 4,527,367 281,562,500 (112,852,485) 104,055,918 53,761,740 751,216 183,241 691,665 9,266,233 168,710,015 2,908,254 284,480,259 1,692,291 6,382,513 9,142,946 304,606,262 (22,218,637) 98,526,197 177,837,223 1,692,577 1,735,189 2,596,438 282,387,625 2,111,350 1,586,471 3,424,044 4,486,840 4,264,070 15,872,776 261,557,231 186,426,924 87,170,265 562,553 3,270,264 277,430,007 1,276,252 4,264,070 5,540,323 103,798,308 17,925,879 41,561,943 48,635,974 1,192,466 22,369 109,338,631 2019 (Restated) Over 1 to 3 Over 3 to 6 Over 6 Months to Over 5 to 10 Above 10 Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Months Months 1 Year Years Years ------------------------------------------------------------------------------------------------------------------ (Ru pees in '000) ----------------------------------------------------------------------------------------------------------------- 21,275,131 57,591,417 120,631,784 73,987,802 916,148 274,402,282 16,795,186 138,539,005 2,418,928,469 197,224 7,869,355 2,933,124 157,545,347 2,742,807,710 274,402,282 249,969,566 15,015,366 126,804,675 1,466,405,373 983,871,421 55,086,809 1,022,143 7,017,020 112,017,619 3,017,209,992 Total 2020 Over 1 to 3 Over 3 to 6 Over 6 Months to Over 5 to 10 Above 10 Upto 1 Month Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Months Months 1 Year Years Years ------------------------------------------------------------------------------------------------------------------ (Ru pees in '000) ----------------------------------------------------------------------------------------------------------------- 48.2.6.2 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Group Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 48.2.7 Derivative Risk A derivative is a contract that derives its value from the performance of an underlying asset which can be an index, interest rate, commodity price, security price, FX rate etc. Derivatives include forwards, futures, foreign currency and interest rate swaps, options etc. In Pakistan, futures and forwards are most commonly traded derivatives. Currently, the Group is not an active participant in the Pakistan derivatives market as it does not hold an Authorized Derivative Dealer (ADD) licence to perform derivate contracts. Once acquired, the Bank will carry out the transactions which are permitted under the Financial Derivatives Business Regulations issued by the SBP, which may include Interest rate swaps, forward rate agreements, foreign currency options etc. Moreover, the Group may also offer other derivative products to satisfy customer requirements, specific approval of which will be sought from the SBP on a transaction by transaction basis. 49. EVENTS AFTER THE REPORTING DATE The Board of Directors has proposed a cash dividend of Rs. Nil per share (2019: Rs. Nil per share) amounting to Rs. Nil (2019: Rs. Nil) at its meeting held on February 24, 2021 for approval of the members at the annual general meeting to be held on March 29, 2021. These consolidated financial statements do not reflect this appropriation as explained in note 5.22. 50. CORRESPONDING FIGURES Certain corresponding figures have been reclassified wherever necessary to confirm to the presentation adopted in the current year. 51. GENERAL 51.1 Figures have been rounded off to the nearest thousand rupees. 52. DATE OF AUTHORIZATION FOR ISSUE These consolidated financial statements were authorized for issue on February 24, 2021 by the Board of Directors of the Bank. Zubyr Soomro Chairman Arif Usmani President & CEO | National Bank of Pakistan Abdul Wahid Sethi Chief Financial Officer Imam Bakhsh Baloch Director Asif Jooma Director
| National Bank of Pakistan Muhammad Akhtar Muhammad Akhtar S/O Muhammad Shafi, Mohallah Saddiq Pura Marowal 34501-2010714-9 Late Hafiz Nazar Ali Latif Colony Rahmatpur Muhalla Dist Larkana Late Deedar Ali S/O Muhammad Khan Village meer Khan P.O Qubo Saeed Khan Dist Kamber Shahdadkot Late Sultan Ahmed S/O Bahram Khan Muhalla Misri Shah P.O Shahdadkot Dist:Kamver Shahdadkot Late Muhammad Akbar S/O Mirza Khan Jagirani Village Haut Dahoot taluka Kamber Dist: Kamber Shahdaddkot Late Qamaruddin S/O Moor Khan Jiho Village Wasand Jeho P.O Khan Waha Wasand Jeho Ratodero Dist Larkana Late Ghulam Hyder S/O Nabi Bux Solangi Shaki Sulman Shah Colony Bhanseedabad Taluka Sehwan Dist Jamshoro Late Shabir Ahmed S/O Mehar Khan Mashori Village Mehrani Taluk Dokri Dist Larkana 4 5 6 Late Ali Akbar Attar Late Ali Akbar Attar Village Muhammad Yousif Aataar Khasa Chandia Dadu 41409-7424261-9 Late Najeebullah S/O Abdul Latif Abro Late Najeebullah Village Agham No.02 Banguldero Taluka Ratodero Dist 43205-0746683-5 Larkana 19 20 18 17 Late Qurban Ali 41201-1761586-7 Late Muhammad Sadique 43201-5697388-9 Late Rehmutullah 43204-6997069-9 Late Muhammad Sadique S/O Nek Muhammad Village Nek Muhammad Khaskheli, Taluka Dokri Late Rehmutullah S/O Khuda Bux Village Abdul Haq Khan Khoso P.O Behram Sistt Kamber Shahdadkot Late Qurban Ali S/O Haji Ali Sher Village Ghulam Panhwar P.O Phulji Station Distt Dadu Late Muhammad Bux 43203-6881404-5 Late Khalid Akber 43203-4663692-5 Late Muhammad Sharif 41203-1684038-7 Late Muhammad Uris 41203-8342097-7 16 15 14 13 Late Muhammad Bux S/O Gul Hassan Shaikh Allah Abad Muhalla Bakrani Road Larkana Late Khalid Akber S/O Ghulam Akber Near Petrol Pump Lahori Muhalla Larkana Late Muhammad Sharif S/O Qurban Ali Qureshi R/O Shahbaz Colony Khairpur Nathan Shah Late Muhammad Uris S/O Ali Bux Khoso Mir Pur Muhalla K.N Shah Late Shabir Ahmed 43201-6119252-1 Late Ghulam Hyder 41206-5183938-7 Late Qamaruddin 43205-4474253-7 Late Muhammad Akbar 43203-9191745-9 Late Sultan Ahmed 43406-0364231-5 Late Deedar Ali 43206-2090547-9 Late Hafiz Nazar Ali 43203-7490491-1 Syed Mutee Ullah Shah 36304-1352078-9 12 11 10 9 8 7 Syed Mutee Ullah Shah Near Railway Phatak Chah Bakhi wala, Mirali wahan, shujaabad 3 Khalid Mehmood 36102-1203646-7 Khalid Mehmood Mohri Pur, P.O, Khas, Kabirwala 2 3 Altaf Hussain 36302-6946741-1 Name of Individuals/Partners/ Directors with NIC No. 2 Altaf Hussain Mohallah Raj Ghaat Suraj Miani Multan Name & Address of the borrower 1 1 Sr. No. Abdul Latif Abro Muhammad Essa Attar Haji Ali Sher Khuda Bux Nek Muhammad Ali Bux Khoso Qurban Ali Qureshi Ghulam Akber Gul Hassan Shaikh Mehar Khan Mashori Nabi Bux Solangi Moor Khan Jiho Mirza Khan Jagirani Bahram Khan Muhammad Khan 905 708 757 650 578 944 649 752 612 600 779 612 701 1,054 1,272 1,600 513 Muhammad Shafi Ali Murad Mastoi 737 593 5 1,154 Principal Ghulam Nabi Shah Malik Khadim Hussain 4 Wahid Bukhsh Fathers/Husband's name. 6 - - - - - - - - - - - - - - - - - - 226 85 Interest/ mark-up 7 - - - - - - - - - - - - - - - - - - - - Others 905 708 757 650 578 944 649 752 612 600 779 612 701 1,054 1,272 1,600 513 737 819 8 1,239 Total Outstanding liabilities at beginning of year 905 709 757 650 578 944 649 752 612 600 779 612 702 1,054 1,273 1,600 513 737 593 9 1,154 Principal written-Off 10 - - - - - - - - - - - - - - - - - - - - 11 - - - - - - - - - - - - - - - - - - - - Other Interest/ financial Mark-up relief/waiver written off. provided. STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF OF RUPEES FIVE HUNDRED THOUSAND OR ABOVE PROVIDED DURING THE YEAR ENDED DECEMBER 31, 2020 12 905 709 757 650 578 944 649 752 612 600 779 612 702 1,054 1,273 1,600 513 737 593 1,154 Total (9+10+11) Rs. in 000 Annexure - I Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Late Muhammad Ibrahim S /O Muhammad Paryal Dayo Late Muhammad Ibrahim New Doctor Colony Ratoderao 43205-4020282-7 Late Shah Nawaz S/O Ghulam Murtaza Village Fatahpur K.N.Shah Late Mumtaz Ali S/O Wali Muhammad CNIC NO.43404-0370901-3 Village Gul Muhammad Chandio, P.O Miro Khan Late Haji Amir Ali S/O Haji Allah Rakhio Near Hydri Plice Station, Muhalla Chandia Larkana Distt: Larkana Late Saeed Khan S/O Khair Muhammad Jakhar Tharo Dero Bughti Baloch Taluka Larkana Late Maqbool Ahmed S/O Abdul Razak Sejawal Junejo /Village Kot Lal Bux Late Fareed Ahmed S/O Nizamuddin Peoples Colony, Muhalla Lahori Larkana Late Lal Bux S/O Allah Wadhayo Abro Muhall Galib Nagar Larkana Late Shafi Muhammad S/O Gul Hassan Village & P.O Hamayoon Taluka & Dist Shikarpur Late Kala Alyas Wazir Ali S/O Bashir Ahmed Near Qubo Road H. No.2665/82 Drib Muhammad P.O ShahdadkotDist Kamber Shahdadkot Late Ghulam Sarwar S/O Hidayatullah Village Phillri Taluka Sijawal Junejo Distt: Kamber Shahdadkot Late Zahid Hussain S/O Muhammad Roshan Samo R/O Kori Muhalla Khairpur Nathan Shaha Late Allah Dino S/O Mazhar Hussain Solangi Ward No.05 Solangi Muhalla Sita Road Taluka K.N Shah Dist Dadu Late Ahmed Ali S/O Amanullah Joyo CNIC NO.43207-0849012-9 Late Muhammad Fareed S/O Muhammad Mureed CNIC NO.43203-7753014-3 Near Dargah Sharif Makan No.601 Muhalla Rahmatpur Late Ghulam Hyder S/O Mehmood Mirbhar Muhalla Per Jo Goth Taluka Naudero Distt Larkana Late Aga Abdul Sattar Khan Muhalla Khair Muhammad Khan Shikarpur Late Abdul Razaq S/O Bagan Banglani Village Bilawal Banglani Taluka Thull Dist Larkana Late Ramdas S/O Mangha Ram Muhalla Harefan Ratodero Late Muhammad Mako Village Ghulam Qadir Dakhan Ratodero Late Ali Sher S/O Mubarak Chandio Village Din Muhammad Chandio Larkana Late Irshad Ahmed S/O Muhammad Usman Massan Road Muhalla Muhammad Pur Larkana 24 | National Bank of Pakistan 27 28 29 30 35 37 41 43 44 42 40 39 38 36 34 33 32 31 26 25 Late Ali Sher 43203-6704535-7 Late Irshad Ahmed 43203-7737131-9 Late Ramdas 43205-0110482-7 Late Muhammad Mako 43301-4080311-9 Late Ghulam Hyder 43205-4232086-9 Late Aga Abdul Sattar Khan 43304-1870923-5 Late Abdul Razaq 43105-7856760-5 Late Muhammad Fareed 43203-7753014-3 Late Ahmed Ali 43207-0849012-9 Late Allah Dino 41203-7373911-1 Late Zahid Hussain 41203-0458636-1 Late Ghulam Sarwar 43204-1149630-9 Late Lal Bux 43203-0687077-5 Late Shafi Muhammad 43304-8743973-1 Late Kala Alyas Wazir 43406-0357163-7 Late Fareed Ahmed 43203-1354620-3 Late Maqbool Ahmed 43204-9627749-3 Late Saeed Khan 43203-7505426-3 Late Haji Amir Ali 43203-6180269-5 Late Shah Nawaz 41203-7142814-7 Late Mumtaz Ali 43404-0370901-3 Late Wali Muhammad 43105-0611960-5 23 22 Late Abdul Qayoom 43105-9171427-1 Name of Individuals/Partners/ Directors with NIC No. Late Abdul Qayoom S/O Muhammad Bux Khan Village Jan Beg Khan Kanrani Taluka Thull Distt Jacobabad Late Wali Muhammad S/O Shafi Muhammad Soomro Village Mirpur Buriro Taluka Thull Distt Jacobabad Name & Address of the borrower 21 Sr. No. Muhammad Usman Mubarak Chandio Muhammad Hashim Mangha Ram Bagan Banglani Aga Abdul Fatah Mehmood Mirbhar Muhammad Mureed Amanullah Joyo Mazhar Hussain Solangi Muhammad Roshan Samo Hidayatullah Bashir Ahmed Gul Hassan Allah Wadhayo Abro Nizamuddin Abdul Razak Khair Muhammad Jakhar Haji Allah Rakhio Wali Muhammad Ghulam Murtaza Muhammad Paryal Dayo Shafi Muhammad Soomro Muhammad Bux Khan Fathers/Husband's name. 513 581 586 539 601 539 592 522 520 501 516 599 540 913 703 614 751 832 511 805 741 926 777 828 Principal - - - - - - - - - - - - - - - - - - - - - - - - Interest/ mark-up - - - - - - - - - - - - - - - - - - - - - - - - Others 513 581 586 539 601 539 592 522 520 501 516 599 540 913 703 614 751 832 511 805 741 926 777 828 Total Outstanding liabilities at beginning of year 513 581 587 539 601 539 592 522 520 502 516 599 540 913 703 614 752 832 511 805 742 926 777 828 Principal written-Off - - - - - - - - - - - - - - - - - - - - - - - - Interest/ Mark-up written off. - - - - - - - - - - - - - - - - - - - - - - - - Other financial relief/waiver provided. 513 581 587 539 601 539 592 522 520 502 516 599 540 913 703 614 752 832 511 805 742 926 777 828 Total (9+10+11) Rs. in 000 Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Mr .Malik Muhammad Afzal S/o Malik Hussain Bukhsh Basti samja wahgan,P/O zahirpir,tehsil,Khanpur. Syed Sikandar Jalal H.No. 128, Street No. 5 Shiekh Maltoon Town Mardan Raja Muhammad Aslam, Village Cheleyana Jageer, Tehsil Athmuqam, Distt Neelum, AK Syed Zameer Hussain Shah, Village Neelum, P/O Karin, Tehsil Athmuqam, Distt Neelum, AK Kashif Mehmood Awan Near Ara Machine Mohalla Uper Chatter Mzd Muhammad Waris VPO Chanjjana Kotli Sattian, Rawalpindi Mr.Muhammad Akram S/o Muhammad Ashraf Chak Bala Arain, Bahawalpur Mr.Muhammad Siddique S/oDin Muhammad H# 21, muslim town, renala khurd , dist. Okara Muhammad Bashir (Layyah) Sahibzada Wajih ur Rasool Rasool Mohallah Khair Shah, Pind Dadan Khan, T&D, Jhelum M/S Abbas Khakhi & Company situated at Mouza Rajghat Suraj Miani Multan Mr. Dewan Syed Muhammad Taqi, near sunny bakers siddiqia road new gulgasht colony multan. Muhammad Khursheed S/o Muhammad Sharif Bhero Waal, Post Office Khanewal Tehsil and District Khanewal Mst.Suraya Begum House no 493, Mohallah Qazi Jalal, Inside Pak Gate Multan Muhammad Afzal Tahir Jamal Naghar Kotli Junaid Tehsil Mailsi District Vehari M/S Dress Valley Sharif Plaza LMQ Road, Multan Muhammad Iqbal Bhatti Galli No. 6 , Mahallah Haji Noor Pura , Daska Muncipal Town Committee , Tehsil Daska , M/s.Ahmed Brothers Ginners (Pvt.) Ltd. Address Chak # 112 Multan Road Jehanian Distt Khanewal M/s Farmer Cotton Ginners Address Bypass Road Jehanian Distt Khanewal 47 49 | National Bank of Pakistan 53 54 55 56 65 64 63 62 61 60 59 58 57 52 51 50 48 46 Late Ghulam Akber S/O Ali Nawaz Shaikh Near Mustafa Masjid Muhalla New Shaikh Zed Colony Larkana Manzoor Ahmad, Momin Pura Syedan Chak Ramdas Disttrict Gujranwala Name & Address of the borrower 45 Sr. No. Aman Ullah 36101-1235934-5 Fozia Aman 36303-1861958-6 Nasreen Akhtar 36101-6838097-8 Muhammad Iftikhar 36303-0986831-3 Sajid Ali 36302-3438348-9 Samina Sajid 36302-8562640-0 Mr.Muhammad Iqbal Bhatti 34601-9185407-9 Muhammad Afzal Tahir 36602-7023083-3 Kh. Anees ur Rehman 42000-7480710-1 Mst. Suraya Begum 36302-2486354-2 Muhammad Khursheed 36103-6550070-5 Mr. Safdar Abbas Khakhi 36303-0897990-1 Mr. Dewan Syed Muhammad Taqi 36302-8994032-9 Muhammad Bashir 32203-2026317-1 Sahibzada Wajih ur Rasool 37302-1043762-1 Mr.Muhammad Siddique 35303-2100954-9 Mr.Muhammad Akram 31101-8414687-7 Kashif Mehmood Awan 82203-4515133-7 Muhammad Waris 37403-7827627-3 Syed Zameer Hussain Shah 82201-9867009-1 Raja Muhammad Aslam 82201-1887006-7 Mr.Malik Muhammad Afzal 36301-9459345-5 Syed Sikandar Jalal Qasim 16101-5375266-9 Manzoor Ahmad 34102-1894803-3 Late Ghulam Akber 43204-3518049-7 Name of Individuals/Partners/ Directors with NIC No. Sajid Ali Muhammad Ibrahim Rehmat Ali Aman Ullah Muhammad Ayyub Nazeer Hussain Nathay Khan Bhatti Baig Kh. Mujeeb ur Rehman Mian Ahmad Bux Malik Falak Sher Muhammad Sharif Dewan Syed Khurshid Ahmad Malik Bilal Khakhi Sahibzada Maqsood ur Rasool Ahmad Bakhsh Din Muhammad Muhammad Ashraf Qaim Din Muhammad Shaukat Syed Jehangir Shah Hadaytullah Janjuya Syed Muhammad Saleem Malik Hussain Bukhsh Muhammad Abdullah Ali Nawaz Shaikh Fathers/Husband's name. 2,910 - - 405 5,530 470 - - 198 705 866 545 914 519 710 694 720 602 528 741 988 Principal 71 99 2,645 2,413 - 881 3,818 2,108 1,797 2,172 2,103 - - - - - - - - - - Interest/ mark-up 72 50 79 30 30 30 3,569 - - 150 - - - - - - - - - - - Others 5,585 2,443 3,569 1,336 9,427 2,608 1,797 2,172 2,451 777 866 545 914 519 710 694 720 673 528 840 988 Total Outstanding liabilities at beginning of year - - - - - - - - - 705 866 546 914 519 710 694 720 602 528 741 988 Principal written-Off - - - - - - - - - - - - - - - - - Interest/ Mark-up written off. - - - - 1,595 1,981 2,192 577 1,342 993 1,438 1,629 1,362 - - - - - - - - - - - - Other financial relief/waiver provided. 1,595 1,981 2,192 577 1,342 993 1,438 1,629 1,362 705 866 546 914 519 710 694 720 602 528 741 988 Total (9+10+11) Rs. in 000 Notes to the Consolidated Financial Statements For the year ended December 31, 2020
| National Bank of Pakistan 70 M/S. Shikrani Traders. Main Bazar, Uch Sharif M/s.H.W.Dairies Pvt Ltd. Hujra Chunian Road, Mirajabad, District Okara 69 (2) S/o Mian Muhammad Ilyas Miraj (3) S/o Mian Muhammad Riaz Miraj (3) Mian Waqas Riaz 35202-2562237-9 (1) S/o Mian Miraj Din Khuda Bukhsh (2) Haseeb Ilyas 35202-7459668-5, Mr. Muhammad Asghar Badar, 31202-2785705-7 (1) Muhammad Ilyas Miraj 35202-7301494-9 2. Muhammad Sharif 1. Khuda Bukhsh 3. Khuda Bukhsh. 3. Mr. Muhammad Ajmal Khan 31201-6511835-7 M/S.Shikrani Zari Service . 1. Mr. Muhammad Sharif Near Old Larry Adda Mohallah Shams Colony,Uchsharif 31201-4834670-3 Teh Ahmadpur East Distt Bahawalpur 2. Muhammad Iqbal Khan 31202-3147441-3 2. Khuda Bukhsh 2. Mr. Muhammad Asghar Badar, 31202-2785705-7 68 1. Khuda Bukhsh. Muhammad Arshad Khan Fathers/Husband's name. 1.Mr. Muhammad Sharif, 31201-4834670-3 M/S.Shikrani Model Industries, Cotton Ginning Pressing and Oil Mills, KLP Road, UchSharif 67 Name of Individuals/Partners/ Directors with NIC No. Firdous Arshad Firdous Arshad Mouza Rango Khan, tehsil Kehrore Pecca, Distt 36602-4385686-4 Lodhran Name & Address of the borrower 66 Sr. No. 91,496 34,779 900 1,299 1,868 2,885 Principal 36,884 15,664 - - 1,280 1,522 Interest/ mark-up 4,354 205 32 35 55 17 Others 132,734 50,648 932 1,334 3,203 4,424 Total Outstanding liabilities at beginning of year 40,260 - - - - - Principal written-Off - - - - - 17,243 605 554 776 1,656 543 Other Interest/ financial Mark-up relief/waiver written off. provided. 57,503 605 554 776 1,656 543 Total (9+10+11) Rs. in 000 Notes to the Consolidated Financial Statements For the year ended December 31, 2020
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Annexure - II ISLAMIC BANKING BUSINESS The bank is operating 191 (2019: 190) Islamic banking branches and no Islamic banking windows at the year ended December 31, 2020. Note 2020 2019 ------------ (Rupees in '000) ------------ ASSETS Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets - net Fixed assets Right of use assets (ROUA) Other assets Total Assets 5,713,009 11,948 42,109,641 37,546,704 148,884 755,116 2,676,118 88,961,420 4,405,856 5,841 2,059,162 29,811,515 33,880,482 174,862 861,049 4,853,963 76,052,730 339,103 75,268,262 4,124,758 903,196 2,198,144 82,833,463 256,804 63,285,896 2,784,801 943,375 3,767,018 71,037,894 NET ASSETS 6,127,957 5,014,836 REPRESENTED BY Islamic banking fund Surplus on revaluation of assets Unappropriated / unremitted profit 3,360,000 659,569 2,108,388 2,200,000 775,696 2,039,140 6,127,957 5,014,836 1 2 3 LIABILITIES Bills payable Due to financial institutions Deposits and other accounts Due to head office Lease liability against right of use assets Other liabilities 4 6 - - The profit and loss account of the Bank's Islamic banking branches for the year ended December 31, 2020 is as follows: Note Profit / return earned Profit / return expensed Net profit / return Other income Fee and commission income Foreign exchange income Other income Total other income 7 8 2020 2019 ------------ (Rupees in '000) -----------7,994,894 (3,456,533) 4,538,361 7,144,877 (3,284,831) 3,860,046 367,852 56,745 1,344 425,941 436,935 105,951 1,006 543,892 4,964,302 4,403,938 (2,453,894) (2,512) (2,456,406) (2,439,232) (1,280) (2,440,512) Profit before provisions Provisions and write offs - net Profit before taxation Taxation 2,507,896 (399,508) 2,108,388 - 1,963,426 75,714 2,039,140 - Profit after taxation 2,108,388 2,039,140 Total income Other expenses Operating expenses Other charges Total other expenses | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 1 2020 2019 In local In local In foreign In foreign Total Total currency currency currencies currencies --------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------- Due from Financial Institutions Unsecured Bai Muajjal Receiveable from State Bank of Pakistan - - - 2,059,162 - 2,059,162 - - - 2,059,162 - 2,059,162 This represent Bai Muajjal agreement with State Bank of Pakistan which carries profit rate of Nil (2019: 10.39%) per annum. 2019 2020 2 Investments by segments: Cost / Provision for Amortised cost diminution Surplus / (deficit) Carrying value Cost / Provision for amortised cost diminution Surplus / (deficit) Carrying value ------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------Federal Government Securities: - Ijarah Sukuks - Others (Bai Muajjal with GOP @ 13.30%) Non Government Debt Securities - Listed - Unlisted Total Investments 3 6,000,000 11,641,133 17,641,133 - 15,600 15,600 6,015,600 2,000,000 11,641,133 10,395,235 17,656,733 12,395,235 - (21,200) (21,200) 1,978,800 10,395,235 12,374,035 8,400,000 15,539,747 23,939,747 (130,807) (130,807) 311,741 332,228 643,969 8,711,741 4,400,000 15,741,168 12,371,391 24,452,909 16,771,391 (130,807) (130,807) 602,100 194,796 796,896 5,002,100 12,435,380 17,437,480 41,580,879 (130,807) 659,569 42,109,641 29,166,626 (130,807) 775,696 29,811,515 Islamic financing and related assets Ijarah Murabaha Musawama Diminishing Musharaka Istisna Other Islamic Modes (Wakala tul Istismar) Advances against Islamic assets (Ijarah, Murbaha, DM, Istisna) Inventory related to Islamic financing (Istisna) Gross Islamic financing and related assets Note 3.1 3.2 2020 2019 ------------ (Rupees in '000) ------------ 168,788 3,464,401 17,614,309 50,000 8,500,000 8,076,678 275,600 38,149,776 255,639 1,716,542 22,243 15,869,641 8,500,000 7,180,631 539,349 34,084,045 Less: provision against Islamic financings - Specific (602,913) - General (159) (239) (603,072) (203,563) Islamic financing and related assets - net of provision | National Bank of Pakistan 37,546,704 (203,324) 33,880,482
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 Cost At January 1, 2020 Accumulated Depreciation As at December 31, 2020 Additions / (deletions) Charge/ Adjustment for the year At January 1, 2020 Book Value as at December 31, 2020 As at December 31, 2020 -------------------------------------------------------------------------------- (Rupeesin '000) ------------------------------------------------------------------------------------ Plant & Machinery 255,075 - 249,123 137,966 42,760 (5,952) Vehicles 277,812 - 239,219 139,282 42,832 (38,593) Total 532,887 175,050 74,073 144,504 94,715 319,554 168,788 (5,676) (37,610) - 488,342 277,248 85,592 (44,545) (43,286) 2019 Cost At January 01, 2019 Accumulated depreciation Additions / (deletions) As at December 31, 2019 At January 01, 2019 Charge/ Adjustment for the year Book Value as at December 31, 2019 As at December 31, 2019 -------------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------------------ Plant & Machinery 573,290 Vehicles 319,205 - 255,075 350,797 277,812 105,629 (318,215) 28,958 75,826 892,495 28,958 117,109 139,282 138,530 277,248 255,639 (288,657) 85,305 (70,351) Total 137,966 (51,652) 532,887 456,426 (388,566) 161,131 (340,309) Future Ijarah payments receivable 2019 2020 Not later than 1 year Later than 1 year & less than 5 years Over five years Total Not later than 1 year Later than 1 year & less than 5 years Over five years Total ------------------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------------------Ijarah rental receivables 85,318 91,290 - 176,608 86,070 217,069 2020 3.2 - 303,139 2019 Murabaha Note ------------------- (Rupees in '000) ------------------- Murabaha financing 3.2.1 Advances for Murabaha | National Bank of Pakistan 3,464,401 1,716,542 1,199,500 2,000,000 4,663,901 3,716,542
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Note 3.2.1 Murabaha receivable - gross 3.2.2 3,629,825 1,835,295 Less: Deferred murabaha income 3.2.4 47,306 71,105 Less: Profit receivable shown in other assets Murabaha financings 3.2.2 Sales during the year 1,835,295 2,112,680 10,600,101 9,329,239 8,805,571 9,606,624 Closing balance 3,629,825 1,835,295 10,600,101 9,329,239 9,901,022 8,842,127 699,079 487,112 Murabaha sale price Deferred murabaha income Opening balance 71,105 25,372 Arising during the year 287,727 487,847 Less: Recognised during the year 311,526 442,114 47,306 71,105 Closing balance 4 47,648 1,716,542 Adjusted during the year Murabaha purchase price 3.2.4 118,118 3,464,401 The movement in Murabaha financing during the year is as follows: Opening balance 3.2.3 2020 2019 ------------ (Rupees in '000) ------------ 2020 Deposits In local currency 2019 In Foreign currencies Total In local currency In foreign currencies Total -------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------------ Customers Current deposits 26,363,269 Savings deposits 33,051,442 Term deposits 10,129,005 69,543,716 26,474,979 20,455,905 94,851 20,550,756 - 33,051,442 22,671,179 - 22,671,179 - 10,129,005 12,720,085 - 12,720,085 69,655,426 55,847,169 94,851 55,942,020 111,710 111,710 Financial Institutions Current deposits 778,039 - 778,039 815,386 - 815,386 Savings deposits 3,633,797 - 3,633,797 3,028,490 - 3,028,490 Term deposits 1,201,000 - 1,201,000 3,500,000 - 3,500,000 5,612,836 - 5,612,836 7,343,876 - 7,343,876 75,268,262 63,191,045 94,851 63,285,896 75,156,552 | National Bank of Pakistan 111,710
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------ (Rupees in '000) -----------4.1 Composition of deposits - Individuals 36,485,509 28,456,381 - Government / Public Sector Entities 23,406,681 17,564,494 - Banking Companies 2,698,853 7,339,558 - Non-Banking Financial Institutions 2,913,983 4,318 - Private Sector 9,763,236 9,921,145 75,268,262 63,285,896 4.2 This includes deposits eligible to be covered under insurance arrangements amounting to Rs. 39,137 million (2019: Rs. 31,851 million). 5 Charity Fund Opening Balance 10,911 1,059 710 11,852 11,621 12,911 1,500 - 9,500 2,000 Additions during the period Received from customers on account of delayed payment Payments / utilization during the period Education Health 11,000 2,000 621 10,911 3,000 1,000 - 1,000 The Prime Minister‘s Covid-19 Pandemic Relief Fund -2020 5,000 - Shaukat Khanum Memorial Trust 1,000 - Institute of Business Administration (IBA) 1,500 2,000 Closing Balance Charity amount exceeding Rs. 0.5 million paid to the following organizations. The Indus Hospital Sindh Institute of Urology and Transplantation (SIUT) 10,500 6 Islamic Banking Business Unappropriated/ Unremitted Profit / (loss) Opening Balance Add: Islamic Banking profit for the year Less: Transferred / remitted to Head Office Closing Balance 7 2,039,140 2,108,388 (2,039,140) 2,108,388 (57,150) 2,039,140 57,150 2,039,140 Financing 3,991,541 3,385,613 Investments 2,714,544 2,325,785 Profit / Return Earned on Financing, Investments and Placement Profit earned on: Placements Others (Bai Muajjal) | National Bank of Pakistan 30,245 206,344 1,258,564 1,227,135 7,994,894 7,144,877
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 2020 2019 ------------ (Rupees in '000) ------------ 8 Profit on Deposits and other Dues Expensed Deposits and other accounts Amortisation of lease liability against - ROUA Others (General Account) 2,956,946 2,817,622 89,738 91,487 409,849 375,722 3,284,831 3,456,533 9 Pool Management NBP-AIBG has managed following pools for profit and loss distribution. a) General depositor pool The General pool consists of all other remunerative deposits. NBP Aitemaad (the Mudarib) accept deposits on the basis of Mudaraba from depositors (Rab ul Maal). The net return on the pool is arrived at after deduction of direct costs from the gross return earned on the pool. The entire net return after paying equity share to Mudarib is considered as distributable profit of the pool. b) Special depositor pools (Total 140 during the year and 43 as at December 31, 2020) Special pool(s) are created where the customers desire to invest in high yield assets. These pool(s) rates are higher than the general pool depending on the assets. In case of loss in special pool, the loss will be borne by the special pool members. The net return on the pool is arrived at after deduction of direct costs from the gross return earned on the pool. From the net return, and after allocation of share of profit to commingled equity, profit is paid to the Mudarib in the ratio of the Mudarib’s equity in the pool to the total pool. The balance represents the distributable profit. c) Equity pool Equity pools include AIBG's fund and current account deposits. The equity pool may have constructive liquidation every month and risk associated with assets of pool includes operational, market, equity, return and Shariah. Key features and risk & reward characteristics Deposits are accepted from customers on the basis of Qard (current accounts) and Mudarabah (Saving and term deposits). No profit or loss is passed on to current account depositors. For deposits accepted on Mudarabah basis from depositors (Rab ul Maal) the Bank acts as Manager (Mudarib) and invests the funds in the Shariah Compliant modes of financings. Rab ul Maal share is distributed among depositors according to weightages declared for a month before start of the 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 investment. For all pools, the Mudarib’s share is deducted from the distributable profit to calculate the profit to be allocated to depositors. The allocation of the profit to various deposit categories is determined by the amount invested in that category relative to the total pool, as well as by the weightage assigned to the various deposit categories. The assets, liabilities, equities, income and expenses are segregated for each of the pool. No pool investment is intermingled with each other. The risk associated with each pool is thus equally distributed among the pools. | National Bank of Pakistan
Notes to the Consolidated Financial Statements For the year ended December 31 , 2020 Avenues/sectors of economy/business where Modaraba based deposits have been deployed. Sector Fertilizer Textile Fuel & energy Leasing/Modarbas Sugar Cement Gas Financial Federal Government Real Estate Others Total 2020 2019 ---------------- Percentage ---------------1.54% 3.21% 48.01% 0.21% 6.51% 9.00% 1.58% 2.00% 19.68% 2.20% 6.06% 2.16% 4.94% 41.72% 0.29% 5.88% 10.54% 2.57% 4.87% 17.43% 2.80% 6.81% 100% 100% Parameters for profit allocation and charging expenses Profit of the pools has been distributed between Mudarib and Rab-ul-Mall by using preagreed profit sharing ratios. The share of Rab-ul-Mall's profit has been distributed among different customers using the various weightages assigned to the different categories of the pool. No provision 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. Administrative expense are borne by mudarib and not charged to Mudaraba pool. 31-Dec-20 Mudarib Share (Rupees in '000) Gross Distributable Income 4,871,556 Mudarib (Bank) share of profit before Hiba 1,814,707 Mudarib Share in percentage 37% Hiba from Mudarib Share Mudarib (Bank) share of profit before Hiba Hiba from bank's share to depositors Hiba from bank's share to depositors in percentage 1,814,707 284,690 16% Profit rates During the year the average profit rate earned by NBP Islamic Banking Group is 11.52% and the profit rate distributed to the depositors is 6.69%. | National Bank of Pakistan
National Bank of Pakistan Pattern of Shareholding Report As of December 31 , 2020 Description No of shareholders No of Shares per % Government M/S. FEDERAL GOVERNMENT OF PAKISTAN M/S. PAKISTAN ATOMIC ENERGY COMMISSION PRIVATISATION COMMISSION OF PAK MINISTRY OF PRVT. & INVEST. 1 1 1 6,238,919 679,424 1,656,788 0.29 0.03 0.08 Associated Companies, Undertakings and related parties FIRST CREDIT & INVESTMENT BANK LIMITED 1 70,000 0.00 STATE BANK OF PAKISTAN 1 1,599,845,728 75.20 19 10,620,999 0.50 Director, Chief Executive, and their spouse and minor children FARID MALIK SAADIA SOHAIL RAJPUT 1 1 1,000 3,000 0.00 0.00 Executives 1 949 0.00 Public Sector Companies and Corporations 9 128,784,732 6.05 26 36,454,746 1.71 11,154 64 139,512,942 1,192,490 6.56 0.06 56 125,850,420 5.92 177 76,600,889 3.60 11,513 2,127,513,026 100.00 1,599,845,728 75.20 Mutual Funds Banks, Development finance institutions, non-banking finance companies, insurance companies, takaful companies, and modarabas General Public Local Foreign Foreign Companies Others TOTALS Shareholders holding five percent or more voting rights in the public sector company. STATE BANK OF PAKISTAN
72nd ANNUAL GENERAL MEETING OF NATIONAL BANK OF PAKISTAN Form of Proxy Folio No . or CDC participant identity no. CDC A/C No. I/We of being a member(s) of the National Bank of Pakistan, holding shares no. hereby appoint of also a member of the National Bank of Pakistan (Folio No. of ) or failing him/her also a member of National Bank of Pakistan (Folio No. ) as my/our Proxy to attend the 72nd Annual General Meeting of National Bank of Pakistan, to be held at 10:30 a.m. (PST) on Monday, March 29, 2021, through electronic means and at any adjournment thereof. Proxy’s email address(for attending meeting through electronic means): and mobile number: Signed this Witnesses: 1. Name: Address: day of 2021 Affix Revenue Stamp of Five Rupees CNIC No. 2. Name: Address: CNIC No. Signature ________________ (Signature should agree with the specimen signature registered with the Bank) NOTE: A. General: 1. A member entitled to attend and vote at a General Meeting is entitled to appoint a Proxy to attend and vote instead of him/her. No person shall act as a Proxy, who is not a member of the bank except that the Government of Pakistan/State Bank of Pakistan/Corporation may appoint a person who is not a member. 2. The instrument appointing a Proxy should be signed by the member or his/her attorney duly authorized in writing. If the member is a corporation (other than the Government of Pakistan and State Bank of Pakistan), its common seal should be affixed on the instrument. 3. The instrument appointing a Proxy, together with the power of Attorney, if any, under which it is signed or a notarially certified copy thereof, should be deposited with our Registrar/Transfer Agents, Messrs CDC Share Registrar Services Limited, CDC House, 99-B, Block “B", SMCHS, Main Shahrah-e-Faisal, Karachi, not less than 48 hours before the time of holding the meeting. 4. If a member appoints more than one Proxy, and more than one instruments of Proxy are deposited by a member with the Bank, all such instruments of Proxy shall be rendered invalid. B. For CDC Account Holder: 1. The Proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned on the form. 2. Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the Proxy Form. 3. The Proxy shall produce his/her original CNIC or original passport at the time of the meeting. 4. In case of Government of Pakistan/State Bank of Pakistan/corporate entity, the Board of Directors' resolution/power of attorney with specimen signature shall be submitted along with Proxy Form to the Bank.