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Soneri Bank: Annual Report 2016

IM Research
By IM Research
7 years ago
Soneri Bank: Annual Report 2016

Ard, Arif, Dinar, Faqir , Islam, Islamic banking, Mal, Mudaraba , Mudarib, Mufti, Murabaha , Musharakah, PLS, Riba, Salam , Shariah , Shariah compliant, Shirkah, Sukuk , Takaful , Zakat, Falah, Commenda, Credit Risk, Isar, Mark-Up, Net Assets, Participation, Provision, Receivables, Reserves, Sales, Specific Provision

Sukuk

Social Finance

Islamic Wealth Management Zero

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  1. Journey of excellence Annual Report 2016
  2. Annual Report 2016
  3. Soneri Bank ’s 25 year journey encompasses the challenges we resiliently faced through a commitment to deliver innovative financial solutions, state-of-the-art banking convenience and security. Our ethos of Roshan Har Qadam remains a guiding light for all our initiatives for products and services as we now embark on the journey ahead.
  4. Contents 06 Vision 42 Key Performance Indicators 55 Market Statistics of SNBL Shares 77 Auditors ’ Report to the Members 08 Mission 10 Core Values 43 Six Years’ Financial Summary 56 Financial Calendar 78 Statement of Financial Position 12 Board of Directors 46 Branch Performance Profit & Loss Account 14 Senior Management 69 Statement of Internal Controls 80 Statement of Comprehensive Income 16 Products and Services Concentration of Advances, NPLs, Deposits and Off-Balance Sheet Items Directors’ Report to Shareholders 79 47 57 Code of Conduct 81 Cash Flow Statement Corporate Social Responsibility (CSR) Activities Maturities of Assets and Liabilities 70 26 48 73 83 Notes to the Financial Statements 33 Corporate Information 50 Statement of Value Addition Mechanism adopted for Board's own Performance Evaluation Statement of Changes in Equity Complaint Handling Key Interest Bearing Assets and Liabilities 82 32 49 34 Organizational Structure 51 Quarterly Performance 74 36 List of Committees of the Board of Directors 52 Six Years’ Vertical Analysis Statement of Compliance with the Best Practices of Code of Corporate Governance 39 Management Committees 53 Six Years’ Horizontal Analysis 76 41 Inspiring Growth 54 Cash Flow Analysis Auditors’ Review Report to the Members on Statement of Compliance With the Best Practices of Code of Corporate Governance 161 Report of Shari’ah Board 163 Notice of the Annual General Meeting 168 Pattern of Shareholding 171 List of Branches 177 List of Foreign Correspondents
  5. Vision To better serve customers to help them and the society grow . Ours is a journey enlightened by the philosophy of the majestic sun. Inspired by a vision to provide superior customer service, Soneri Bank offers a full range of financial solutions that cater to our retail and corporate clients.
  6. 09 Mission We provide innovative and efficient financial solutions to our customers . As we sail into the future our technological infrastructure continues to expand for better customer experience.
  7. Core Values We are customer centric We have high moral standards We take ownership We are proactive We collaborate Our employees are important partners in our journey towards excellence . They uphold the brand values to provide enhanced convenience and quality customer service, as we reach for even greater milestones.
  8. Board of Directors Muhammad Rashid Zahir Alauddin Feerasta Chairman Shahid Anwar Amar Zafar Khan Director Mohammad Aftab Manzoor President & Chief Executive Officer Syed Ali Zafar Director (NIT Nominee) Director Nooruddin Feerasta Director Director Manzoor Ahmed Director (NIT Nominee)
  9. Senior Management Mohammad Aftab Manzoor Mubarik Ali President & Chief Executive Officer Country Credit Head Anita Lalani Amin A. Feerasta Head of Human Resources Chief Operating Officer Abdul Aleem Qureshi Ali Hassan Shah Head of Commerical Head of Operations & Retail Banking Shahid Abdullah Ahmed Saqib Asad Head of Treasury, Capital Markets, FI & PRI Muhammad Qaisar Chief Information Officer Iqbal Zaidi Head of Corporate & Investment Banking Head of Compliance & Control Anjum Hai Chief Financial Officer Syed Asim Ali Head of Internal Audit
  10. Soneri Bank Limited | Annual Report 2016 17 Products and Services At Soneri Bank, we strive to offer vibrant range of products and services to exceed our customer’s expectations. Our commitment to the customers is to leverage our brand promise “Roshan Har Qadam” by constantly innovating our product suite to best match the personal & business needs of our customers, including Commercial, Retail & Corporate and Islamic segments. Current Accounts Customers can open any current account for their transactional needs and enjoy banking convenience offered via over 285 branches and a growing network of 300+ ATMs across the country. Our current accounts include: Soneri Ikhtiar Account Soneri Ikhtiar is the flagship current account which is ideally suited for businesses who need a bank account with features that fulfill their daily banking needs with convenience. This account offers numerous free facilities, including: Banker’s Cheque Issuance, Online Banking, Cheque Books, VISA Classic Debit Card and much more. In addition, Soneri Ikhtiar Account offers free Worldwide Accidental Insurance and ATM Withdrawal Coverage to help protect customers and their loved ones. Soneri Current Account Soneri Current Account lets the customer enjoy a host of free banking services with no restriction on number of transactions. It also provides complete peace of mind with the free Worldwide Accidental Insurance and ATM Withdrawal Coverage. Savings Accounts Soneri Bank offers a complete range of savings products with attractive returns. These accounts are designed to cater to the specific needs of individuals, senior citizens and corporates. Our savings product suite include: PLS Savings Account Basic deposit account with no minimum balance requirement. It can be opened with an initial deposit of just PKR 100/-. The complete range of ADC services are offered on this account, i.e. VISA Debit Card, Internet/Mobile Banking, Online Banking and SMS Alerts.
  11. Soneri Bank Limited | Annual Report 2016 19 Soneri Savings Account Flexible and fast growing cumulative monthly profit account. The rate of profit on this account increases with the account balance as per the defined tiers. The complete range of ADC services are offered on this account. Soneri Sahara Account It is a savings account for senior citizens, retired individuals and pensioners aged 60 years and above, for meeting their basic banking needs, while offering them high monthly returns. The complete range of ADC services are offered on this account. Soneri Asaan Account Soneri Asaan Account offers a simple and convenient way to fulfill all banking needs with minimum documentation requirement. It is offered in both current & savings account types and is suitable for self-employed individuals, students, housewives & daily wagers. The complete range of ADC services are available on these accounts. Rupee Term Deposit Accounts Term Deposits Soneri Term Deposits are for customers who intend to retain their savings for a fixed period and earn a higher rate of profit. Term Deposits allow customers to save a fixed amount in Rupees for a set period ranging from 1 month to 3 years at attractive profit rates. The depositor has the option to reinvest the deposit automatically with or without profit. Diamond Deposits (Monthly Income Scheme) Soneri Diamond Deposits provide investment opportunities to investors looking for additional monthly income with an attractive return. With terms from 1 year to 3 years, investors earn a monthly profit credited to an associated current account for easy withdrawal and use. Foreign Currency Accounts Dealing in foreign currencies is no more a hassle. Soneri Bank offers FCY Current, Savings & Term Deposit accounts to cater to the foreign currency transactional and saving needs of the customers with a host of attractive features. Financing Products Soneri Bank ensures meeting all banking needs of its customers by offering variety of financing products to facilitate them to grow their businesses and also contribute their share towards industrial growth of the country. The Bank is also committed to play its role towards strengthening the SME sector by encouraging quality players to avail credit facilities through our nationwide branches, empowering them to grow beyond financial limitations. In addition to our conventional financing products including Running Finance, Cash Finance, Term/Demand Finance, Letter of Credits (LCs), Finance against Imported Merchandise (FIM), Finance against Trust Receipts (FATR) and Letter of Guarantees (LGs), the Bank also offers the following specific financing products to help its customers to operate their businesses without worrying about funding requirements.
  12. Soneri Bank Limited | Annual Report 2016 21 Agriculture Financing Soneri Speed Finance Soneri Speed Finance is focused towards providing quick and flexible financing solutions to its customers while keeping their savings secure. This product is offered to Individuals, Small & Medium Enterprises, Commercial and Corporate businesses for meeting their business needs. It has been designed to provide hassle-free and swift financing solutions to meet both short and long term financing needs of the customer. It is primarily secured against liquid security including Soneri Bank’s deposits (LCY & FCY Term Deposits, Cash Margin, Lien on Account) and Government Securities (DSC/SSC/RIC). Agriculture contributes a handsome share in GDP of our country & livelihood of a large number of rural population is based on this. Soneri Bank offers various Agriculture Financing Products in conventional as well as Islamic domains for the farming/rural communities to meet their working capital/development needs. All these products help them grow their agricultural produce & livelihood. Following Agriculture Financing Products are available for the uplifting of Agri-Economy: • • • • • • • • • • • • • • Prime Minister Youth Business Loan (PMYBL) Scheme The Government has introduced Prime Minister’s Youth Business Loan Scheme with a markup subsidy and partial guarantee facility for extension of small business loans. The scheme was launched by the Prime Minister for promoting youth entrepreneurship in the country. The main objective of the PMYBL Scheme is to provide loans to the unemployed youth for establishing or extending business enterprises. As an executing agency, Soneri Bank is also offering loans under this scheme. Consumer Finance Soneri Car Finance Now you can become the owner of a brand new car through Soneri Car Finance Scheme. Soneri Bank offers Car Finance facility up to Rs. 3 million, repayable up to 5 years in equal monthly installments. Option of used and reconditioned cars is also available. Processing of application is fast and hassle-free with partial payment and early settlement options. Soneri Personal Finance Applicants of Soneri Personal Finance are offered up to Rs. 500,000 with amount repayable in 5 years in equal monthly installments. Soneri Ghar Finance To facilitate customers to realize their dream of a beautiful house, Soneri Bank offers Soneri Ghar Finance of up to Rs.10 million, repayable in 20 years in equal monthly installments. Farm Production Loans - Revolving Credit Farm Development Loans Tractor & Implements Loans Non-Farm Working Capital Loan - Dairy Farming Non-Farm Development Loan - Dairy Farming Non-Farm Working Capital Loan - Poultry Farming Non-Farm Development Loan - Poultry Farming Non-Farm Working Capital Loan - Fish Farming Non-Farm Development Loan - Fish Farming Non-Farm Working Capital Loan - Cattle Farming Non-Farm Development Loan - Cattle Farming Value Chain - Contract Farmers Financing Mustaqeem Tractor loans Ijarah
  13. Soneri Bank Limited | Annual Report 2016 23 Alternate Delivery Channel Home Remittance Soneri Bank Limited (SBL) under guidance of Pakistan Remittance Initiative (PRI) (a joint venture of State Bank, Ministry of Finance and Ministry of Overseas Pakistanis, Pakistan), started Home Remittance Payments Disbursement Initiative in July – 2012. In a very short span of time and with exceptional customer support and service delivery standards, Soneri Bank managed to make a positive contribution towards Home Remittance Business. Soneri Bank has recognized the potential in Home Remittance business and therefore brands its business with the product name of “Soneri Mehnat Wasool Remittance” the Home Remittance Service. This service provides the customer avenue to receive their money with ease sent from abroad and over 285 Soneri Bank branches in 130 cities across Pakistan. Soneri Bank has already established the relationships with many Exchange Companies operating in different region of Gulf Countries, UK, America and Canada to facilitate its customers. ATMs With a growing network of 300+ ATMs across the country, customer can conveniently withdraw cash and avail ancillary services through our ATMs. Soneri Mobile Banking With Soneri Mobile Banking, customers can access their accounts anytime and anywhere via their mobile phones. They can view their account statements, perform fund transfers, get mobile top-ups and pay their bills conveniently sitting in the comfort of their homes and workplaces. Soneri Direct Internet Banking's app is also available for Android/iOS users. Soneri Direct Internet Banking Soneri Direct Internet Banking provides our customers a simple, convenient and secure solution to operate their bank account(s) online 24/7 from anywhere in the world. Customers can access their account(s) anytime, print account statements, pay utility bills, transfer funds and view the history of their Soneri Internet Banking activities with a single click from their computers. Soneri VISA Debit Card With Soneri VISA Debit Card, customers enjoy a cashless experience of spending and making payments anywhere within the country and across the globe. Customers are able to avail unmatched opportunities and benefits of the VISA Debit Classic & Gold Cards. SMS Alerts Soneri Bank offers SMS Alerts Service to all of its customers in order to make them feel secure and in control of their spending. The alerts are instant and keep customers updated about their account transactions. Phone Banking Customers can not only access their accounts 24/7 with Soneri Phone Banking, but can also request for different services being offered including VISA Debit Card Replacement, Stop Cheque Request, Banker’s Cheque, e-Statement & Account Statement Request. Simply dialing + 92-21-111-SONERI (766374) can give a lot of ease to customers and will help to fulfill their financial needs with just a call.
  14. Soneri Bank Limited | Annual Report 2016 Protection and Coverage Products Bancassurance Soneri Bank offers numerous coverage products to protect customers and their dear ones. These include an array of Bancassurance products to match your specific needs, ranging from children’s education, retirement, middle-age saving and business protection planning: Sunehra Saver Plan & Sunehra Saver Takaful Plan This bancassurance plan is designed for young executives, entrepreneurs, middle-aged professionals, working ladies and housewives to meet their future financial needs. Sunehra Saver lets you save money in different stages of your career, which helps augment funds later when your expenses exceed your income, letting you enjoy life with less worries. Roshan Takmeel Plan A bancassurance plan designed for self-employed professionals, business people, lower and middle management employees who wish to have financial independence after retirement or wish to retire early. Roshan Aghaz & Roshan Aghaz Takaful Plan A bancassurance plan designed for parents to plan for their children’s educational expenses and marriage of daughters. Karobar Muhafiz A bancassurance plan designed to enable you to save regular amounts and safeguard you and your family against unforeseen circumstances, such as death of a key person running the business. SMEs, large enterprises and partnerships can avail this plan to ensure stability of their businesses. ATM Withdrawal Coverage – Soneri Tahaffuz Soneri Tahaffuz ATM Withdrawal Coverage covers you in the event of loss of cash resulting from armed hold-up or forced deprivation on cash withdrawals from any 1-Link/M-net ATMs in Pakistan. The coverage is available for both Conventional and Islamic account holders. 25 Soneri Mustaqeem Islamic Banking “Soneri Mustaqeem Islamic Banking” offers a broad range of 100% Shari’ah-compliant financial solutions for the customers. Our Islamic portfolio includes: Financing Products • Murabaha • Commercial Ijarah • Consumer Car Ijarah • Salam • Istisna • Diminishing Musharakah • Running Musharakah • Letter of Credit & Guarantees • Islamic Export Refinance Deposit Products • Soneri Rahat Business Account • Soneri Asaan Account • Soneri Bachat Savings Account • Soneri Munafa Savings Account • Soneri Meaadi Term Deposit • Soneri Jari Current Account (Local & Foreign Currency) Corporate & Investment Banking Soneri Bank’s Corporate & Investment Banking is well equipped to meet the requirements of Corporate clients having strong presence in Karachi, Lahore and Islamabad. Our team of Relationship Managers and Team Leaders are fully geared to establish meaningful relationships with our blue chip Corporate & Institutional clients including public sector entities to become partners in their growth by acting as financial advisors, effectively catering to their financial needs and offering financial solutions through the following suite of products: Working Capital & Trade Finance Facilities Our Corporate Banking teams offer working capital funding solutions for efficient financing of business cycles through pre & post shipment facilities alongside trade finance products which are structured as per our clients’ specific requirements. These are instrumental in improving liquidity and cost efficiency of business activity of our clientele. Investment Banking Our Investment Banking wing offers medium & long term loans under bilateral as well as syndicate arrangements for financing of CAPEX, BMR & Project funding activity. Investment Banking team is also carrying out Advisory Services for our clients besides giving the best solutions for the financial modeling and effective structuring of their funding requirements. Supply Chain Management Being a provider of financial services, we offer end-to-end supply chain financing solutions to dealers & vendors of our blue chip Corporate customers to meet business requirements. Cash Management SBL’s Cash Management coupled with our next generation, web-based Cash Management System ‘Soneri Trans@ct’, provides our valued customers with comprehensive, one stop solution for cash flow management, i.e. Receivables and Payables Management, in the most effective and efficient manner. Our Cash Management services, comprise of a full array of products & services, designed and tailored to enable our Corporate, Commercial and SME customers to securely exchange funds and financial information in real-time with their trading partners, for optimal management of working capital. Underwriting Underwriting commitment business maintained its momentum in 2016 as well. Going forward our focus will be to increase this business and capture opportunities as per the risk appetite of the Bank. Further, we continued to facilitate our clients and retail investors as a banker to the issue in 2016. China Desk The China–Pakistan Economic Corridor is a collection of projects currently under construction at a cost of $54 billion as part of China's ambitious One Belt, One Road initiative, and is part of Pakistan's Vision 2025. Projects under CPEC are intended to strengthen the Pakistani economy by the rapid overhaul and construction of major infrastructure projects, establishment of special economic zones, power generating projects and Gwadar Port which will connect China’s northwestern region via network of highways and railways. We have established a Chinese Business Unit at Blue Area, Islamabad to cater all banking requirements of Chinese customers via our tailor-made product suite under one roof. Trade We are offering trade solutions such as, LC Advising, LC Confirmation, LC Negotiation/Discounting, Letter of Guarantees, Risk Participation and others. SBL also facilitates their correspondents by catering foreign guarantee business against their counter guarantees favoring beneficiaries in Pakistan.
  15. Soneri Bank Limited | Annual Report 2016 27 Corporate Social Responsibility (CSR) Activities To ensure the spirit of its brand promise of ‘Roshan Har Qadam’ Soneri Bank aims to enrich the society in all walks of life. In 2016, our CSR activities embodied principle of inclusiveness for the betterment of fellow beings in the field of education, healthcare, community, arts and culture, women empowerment, environment, sports and rehabilitation. Contribution to Healthcare Soneri Bank has generously contributed to healthcare organizations, to serve the purpose of humanity. The Kidney Centre (TKC) The Kidney Centre (TKC), a non-profit organization provides comprehensive quality renal care to patients suffering from kidney problems. Soneri Bank took the opportunity to support one of its fundraising events of the year. Lady Dufferin Hospital Lady Dufferin, Pakistan’s largest and well known women’s hospital provides quality healthcare to all socio-economic groups at subsidized rates. To improve the healthcare facilities of the organization, Soneri Bank extended its support by sponsoring its annual fundraising event for society’s prosperity. Fatimid Foundation Fatimid Foundation, a non-profit organization provides free blood/blood components to patients suffering from various chronic blood disorders requiring blood/blood component therapy as an essential part of their treatment. To support the cause Soneri Bank co-sponsored the seminar for International Thalassaemia Day. Patient’s Aid Foundation Patient’s Aid Foundation is a charity based organization committed to provide free quality healthcare to all. In collaboration with JPMC (Jinnah Postgraduate Medical Centre) various patient related activities have been accomplished which includes reconstructing and renovating buildings, reinstating crucial equipment, and providing free medicine and laboratory tests. PAF also brought CyberKnife technology in Pakistan that treats cancer. Soneri Bank pledged to the cause by sponsoring its annual fundraising event. Installation of RO Water Plant for Public Use The need of clean water is a necessity for every human being, thus, to support this noble cause, Soneri Bank installed an RO water plant in a village called Nathuwala Chak, Tehsil Shahkot, District Nankana Sahib to provide clean drinking water for the villagers. Promoting Arts and Culture Gallery 6, Islamabad Gallery 6, Islamabad, a well-known Art Gallery, promotes and awards young Pakistani artists with “Arjumand Painting Award”. The objective is to highlight the importance of classical painting and generate interest in classical art. Soneri Bank supported the cause to revive the culture of classical arts. SIACHEN – A Pakistani Theatrical Masterpiece Siachen has been one of the most popular patriotic plays staged over a hundred shows in the country. As part of its Employee Engagement Drive 2016, Soneri Bank reserved three consecutive staff shows that received a heartening response. Mauseeqar-e-Azam Memorial Society Soneri bank packaged and partly sponsored Pakistani classic music arranged by Mauseeqar-e-Azam Memorial Society, a Lahore based music academy to pay tribute to late "Master Ghulam Haider" to preserve the classical music of the sub-continent. Empowering Education With the focus in the field of education, Soneri Bank has generously supported and promoted various educational organizations for its development. Aga Khan Education Service, Pakistan The Aga Khan Education Service, Pakistan is amongst the largest private network of education institutions in Pakistan. The institutions working under AKESP works to eradicate illiteracy. Soneri Bank has sponsored several educational programs for the enhancement and improvement of education. The Citizens Foundation The Citizens Foundation (TCF), a non-profit organization brings positive social change through education. It is one of Pakistan’s leading organizations in the field of education for the less privileged. To support TCF’s cause of improving the literacy rate of Pakistan, Soneri Bank sponsored basic education of 3 children for 11 years i.e. (Kindergarten to Matric)
  16. Soneri Bank Limited | Annual Report 2016 Institute of Business Administration, Karachi Institute of Business Administration (IBA) is the oldest educational institution in Karachi. IBA has maintained its position as the premier institution of higher learning in the field of Management and Business Administration. Soneri Bank widened its support by partially sponsoring a CPEC Business Conference in order to create awareness for China-Pakistan Economic Corridor (CPEC) Program among public/private sector investors, policy makers, government officials and others. Family Education Services Foundation Family Educational Services Foundation (FESF) is a non-profit educational organization active in Pakistan since 1984. FESF is dedicated to enhance the quality of life for all members of the community, especially those who are disadvantaged. Soneri Bank supported generously in their educational development training programs in order to empower the underpriviledged to reach their full potential. Citizens Archive of Pakistan (CAP) CAP, a non-profit organization dedicated to cultural and historic preservation, aims at educating the community and creates quality awareness about our nation’s history. To support CAP in achieving its mission to build and support educational programs and develop educational product-based testimonies, Soneri Bank supported the cause by providing sponsorship for the fundraiser carnival in 2016. Development in Literacy Developments in Literacy, educates and empowers underprivileged students, especially girls, by operating student-centered model schools; and provides a high-quality professional development to teachers and principals across Pakistan. Soneri Bank has supported this cause by sponsoring the fundraising event for the development of education and literacy. 29 SOS Children’s Villages Pakistan SOS Children's Villages Pakistan is a social welfare organization affiliated with the world's largest orphan and abandoned children charity. SOS is working for their shelter, education, job trainings to help them lead a better life in the long-term. Soneri Bank continued to support this cause by sponsoring an annual carnival for kids. Rehabilitation Efforts Saving Thar – Old Associates of Kinnaird Society (OAKS) Saving Thar is a life-saving project for building the lives and empowering communities in the drought-prone areas of Tharparkar. Soneri Bank expanded the Village Development Model by adopting a village of Rohaj Halepoto which caters 157 households. Several activities like ber grafting, tree plantation, kitchen gardening training, gifting goats and providing solar panels for households are part of the sustainability program. NOWPDP Network of Organizations Working with People with Disabilities, Pakistan (NOWPDP) raises awareness in the society about the rights of persons with disabilities. For this noble cause, the Bank has sponsored 25 Baithaks to the well-being of the disabled. Rotary Metropolitan Trust Rotary Metropolitan Trust is a non-profit organization working for the development of community. Their projects are focused in the field of health, basic education and skill development in Karachi and across Sindh. Soneri Bank extended its support by sponsoring its annual fundraising event for community development projects.
  17. Soneri Bank Limited | Annual Report 2016 31 Promoting Sports Karachi Golf Club The Karachi Golf Club is the oldest golf club in Pakistan. To promote and support Golf in Karachi, Soneri Bank sponsored a Golf Tournament which provided a recreational sports forum for corporate clientele and staff. Airmen Golf Club The Airmen Golf Course is one of the largest golf courses in the country spread over hundreds of acres. To promote sports and recreational activities, the Bank sponsored a golf event at the Club. Women Empowerment Environment Care International Women Leaders Summit Soneri Bank was part of International Women Leaders Summit in 2016. The conference was a professional forum to collate successful and diversified professional women leaders across the globe to impart and integrate their experiences at a local forum for an exchange of broader perspectives and learning. WWF, Pakistan WWF is one of the world’s largest and recognized nature conservation organization. For this noble cause of saving nature and environment, SBL contributed through employee activities which included beach cleaning, planting mangrove sapling, transit walk, web yarn and various environment preservation for the protection and conservation of nature. Attock Sahara Foundation Attock Sahara Foundation (ASF) is a welfare based non-profit organization serving the community since 1966. Its aim is to play a vital role in uplifting the socio-economic conditions of the surrounding communities through various welfare projects. Soneri Bank supported their mission by sponsoring an annual fundraising exhibition for this noble cause. Behbud Association Karachi Behbud Association Karachi is a well-known NGO conducting the development programs in the areas of health, education and women empowerment for many years. By contributing in their annual fundraising event, Soneri Bank supported their cause of serving humanity. Seeding Hope With the objective to support environment preservation, Soneri Bank metaphorically depicted the journey of the Bank via a ‘Seed Concept’, a harbinger for growth, happiness and celebration of 25 Years of Silver Jubilee. With the provision of a seed bag as part of the concept and design, it motivated people to plant a ‘Seed of Hope’ for environmental nurturance. Supporting Golfer In the spirit of promoting new talent and ambitious people to achieve their dreams, Soneri Bank has sponsored an inspiring golfer, to represent the Bank in various tournaments nationwide.
  18. Soneri Bank Limited | Annual Report 2016 Complaint Handling Soneri Bank Limited (SBL) is committed to provide outstanding banking services to its customers and aims to offer services at par with international banking standards. Complaint Management Unit (CMU) owns the Service Pledges completely and has inculcated it into all stages of complaint handling. These service pledges are: • • • • • We manage time We provide equality We know customers We think forward We listen more CMU has been established for thorough evaluation of customers’ complaints and to address customer grievances along with the timely resolution in compliance with all regulatory requirements. CMU plays an integral role between customers and core units of SBL to get feedback properly addressed and answered. All feedback received are classified into 3 category i.e. complaints, queries and dispute, and are worked on according to their nature. Following channels are available for customers to register their complaints: • • • • Phone Banking Branches Soneri Bank Website Emails CMU monitors, investigates and responds to the complaints based on their findings and feedback received; keeping in view the regulatory guidelines. The unit also maintains full record of complaints including action that has been taken to resolve them. In order to enhance control environment and to improve the review regarding customer complaints, we have implemented Complaints System in 2016 through which proper record of customer complaints are obtained. During the year 2016, 3,658 complaints were received through different channels, out of which 100% were investigated and resolved within the prescribed timeline, which is reflected in the following bar chart: Year 2016: Turn around time 1962 1318 Complaints 376 Days 0-5 6-10 11-15 2 0 0 16-20 21-30 30+
  19. 33 Corporate Information CHAIRMAN LEGAL ADVISORS MR . ALAUDDIN FEERASTA MANAN ASSOCIATES, ADVOCATES CHIEF EXECUTIVE OFFICER REGISTERED OFFICE MR. MOHAMMAD AFTAB MANZOOR RUPALI HOUSE 241-242, UPPER MALL SCHEME, ANAND ROAD, LAHORE - 54000 DIRECTORS MR. NOORUDDIN FEERASTA MR. MUHAMMAD RASHID ZAHIR MR. AMAR ZAFAR KHAN SYED ALI ZAFAR MR. MANZOOR AHMED (NIT NOMINEE) MR. SHAHID ANWAR (NIT NOMINEE) CHIEF FINANCIAL OFFICER MS. ANJUM HAI COMPANY SECRETARY MR. MUHAMMAD ALTAF BUTT AUDITORS A.F. FERGUSON & CO. CHARTERED ACCOUNTANTS SHARI’AH BOARD MUFTI EHSAN WAQUAR AHMAD (CHAIRMAN) MUFTI MUHAMMAD ZAHID (RESIDENT MEMBER) MUFTI BILAL QAZI (MEMBER) CENTRAL OFFICE 10TH FLOOR, PNSC BUILDING, M.T. KHAN ROAD, KARACHI REGISTRAR AND SHARE TRANSFER AGENT THK ASSOCIATES (PRIVATE) LTD., 1ST FLOOR, 40-C, BLOCK-6, P.E.C.H.S., KARACHI - 75400 UAN: (021) 111-000-322 FAX: (021) 341 68271
  20. Soneri Bank Limited | Annual Report 2016 35 Organizational Structure Head of Administration Head of Information Technology Head of Legal Chief Operating Officer Head of Risk Management ShariÕah Board Head of Security Head of Operations President & CEO Company Secretary Head of Islamic Banking Head of Marketing Head of Remedial Management Unit Head of Compliance & Controls Head of Human Resources Country Credit Head Head of Corporate & Investment Banking Chief Financial Officer Board of Directors Head of Retail & Commercial Banking Head of Treasury, FI & PRI Head of Audit Board Audit Committee
  21. Soneri Bank Limited | Annual Report 2016 List of Committees of the Board of Directors Audit Committee of the Board 1. Mr. Amar Zafar Khan 2. Mr. Nooruddin Feerasta 3. Mr. Muhammad Rashid Zahir 4. Mr. Shahid Anwar Mr. Muhammad Altaf Butt Chairman Member Member Member Secretary Credit Committee of the Board 1. Mr. Nooruddin Feerasta 2. Mr. Alauddin Feerasta 3. Mr. Mohammad Aftab Manzoor 4. Mr. Muhammad Rashid Zahir 5. Mr. Amar Zafar Khan Mr. Muhammad Altaf Butt Chairman Member Member Member Member Secretary Risk Management Committee of the Board 1. Mr. Shahid Anwar 2. Mr. Mohammad Aftab Manzoor 3. Mr. Amar Zafar Khan Mr. Javed H. Siddiqi Chairman Member Member Secretary Human Resource Committee of the Board 1. Mr. Manzoor Ahmed 2. Mr. Mohammad Aftab Manzoor 3. Mr. Shahid Anwar 4. Mr. Amar Zafar Khan Mr. Muhammad Altaf Butt Chairman Member Member Member Secretary
  22. 37 List of Committees of the Board of Directors Audit Committee Terms of Reference Constitution : Audit Committee is mandated the responsibilities to determine appropriateness of measures taken by the management to safeguard Bank's assets, ensure consistency of accounting policies, review financial statements and recommend appointment of the external auditors as well as to have close coordination with them so as to comply with statutory and CCG requirements. The Committee is inter-alia also responsible to ascertain the effectiveness of the Internal Control System including financial and operational controls, ensuring adequate and effective accounting and reporting structure and monitoring compliance with the best practices of the corporate governance. The other functions of the Committee include consideration of major findings of internal investigations and management's response thereto as well as ensuring that an effective internal audit functions is in place. Mr. Amar Zafar Khan Chairman Mr. Nooruddin Feerasta Member Mr. Muhammad Rashid Zahir Member Mr. Shahid Anwar Member Credit Committee Terms of Reference Constitution: The primary functions of the Credit Committee of the Board are to ensure adherence to the lending policies, review the credit policies, systems and controlling strategies for their further strengthening and monitoring the loan portfolios regularly on an overall basis including a periodical review of problem loans including classified and stuck-up cases. The Committee is also required to ensure that there are adequate systems, procedures and controls in the Bank for all significant areas related to credit and that the laid down procedures / guidelines are effectively communicated down the line and put in place a reasonable setup to implement the same. The Committee has also assigned the responsibility to review the credit related activities of the Executive Credit Committee (ECC) on a quarterly basis for threshold; fund based Rs.200.00 million & above, nonfund based Rs.400.00 million & above and total exposure Rs.400.00 million & above. Mr. Nooruddin Feerasta Chairman Mr. Alauddin Feerasta Member Mr. Mohammad Aftab Manzoor Member Mr. Muhammad Rashid Zahir Member Mr. Amar Zafar Khan Member Risk Management Committee Terms of Reference Constitution: Primary responsibilities of the Board Risk Management Committee is to provide oversight and advice to the BoD of Soneri Bank Limited in relation to current and potential future risk exposures of the Bank and future risk strategy, including approval of risk appetite and tolerance. The Committee also ensures that an organizational culture that places a high priority required for effective risk management is established by promoting a risk awareness culture within the bank. It also validates that resources allocated for risk management are adequate, given the size, nature and volume of the business and the managers and staff that take, monitor and control risk posses sufficient knowledge and expertise. The Committee also monitors the development of appropriate financial models and a system used to calculate each category of risk, and ensure that the Bank has a clear, comprehensive and well documented polices and procedural guidelines relating to risk management available at all times and the relevant staff fully understand those policies. The Committee also ensures that the Bank's overall exposure to credit, market, liquidity, and operational risk is maintained at prudent levels and consistent with the available capital under rigorous stress tests. Mr. Shahid Anwar Chairman Mr. Mohammad Aftab Manzoor Member Mr. Amar Zafar Khan Member Human Resource Committee Terms of Reference Constitution: The Human Resource Committee is responsible for overseeing the Human Resources function of the Bank by ensuring development and implementation of HR strategies that recruit, retain and inspire professional excellence in employees of the Bank. It recommends human resource management policies to the Board that ensures equal opportunity, gender balance, and transparency. It also reviews the significant HR policies of the Bank and ensures that they are well aligned to the market. Mr. Manzoor Ahmed Chairman Mr. Mohammad Aftab Manzoor Member Mr. Amar Zafar Khan Member Mr. Shahid Anwar Member
  23. Soneri Bank Limited | Annual Report 2016 Board and Committees' Meetings Details of the meetings of the Board of Directors and its Committees held during 2016 and the attendance by each director/committee member are given as under: Board of Directors Meetings Board Risk Management Committee Meetings Held during the year 1 Mr. Alauddin Feerasta 6 6 * * 4 4 * * * * 2 Mr. Mohammad Aftab Manzoor 6 6 * * 4 4 4 4 3 3 3 Mr. Nooruddin Feerasta 6 5 4 2 4 3 * * * * 4 Mr. Muhammad Rashid Zahir 6 6 4 4 4 4 * * * * 5 Mr. Amar Zafar Khan 6 6 4 4 4 4 4 3 3 2 6 Syed Ali Zafar 6 3 * * * * * * * * 7 Mr. Manzoor Ahmed (NIT Nominee) 6 6 * * * * 4 4 * * 8 Mr. Shahid Anwar (NIT Nominee) 6 6 4 4 * * 4 4 3 3 Total Number of meetings held during the year 6 Held during the year 4 4 4 Attended** Held during the year Attended** Held during the year Attended** Held during the year Board Human Resource Committee Meetings Attended** Name of Director Board Credit Committee Meetings Attended** S.No. Board Audit Committee Meetings 3 * Not a member of the Committee ** Leave of absence was granted to those directors/members, by the Board/Committee, who could not attend some of the meetings.
  24. 39 Management Committees 1 . Management Committee 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Mr. Mohammad Aftab Manzoor - Chairman Mr. Amin A. Feerasta Mr. Iqbal Zaidi Mr. Abdul Aleem Qureshi Mr. Shahid Abdullah Mr. Ali Hassan Shah Mr. Muhammad Qaisar Ms. Anjum Hai Ms. Anita Lalani Mr. Mubarik Ali Mr. Ahmed Saqib Asad Mr. Abbas Hatim, Secretary 2. Executive Credit Committee 1. 2. 3. 4. 5. Mr. Mohammad Aftab Manzoor, Chairman Mr. Amin A. Feerasta Mr. Abdul Aleem Qureshi Mr. Muhammad Qaisar Mr. Mubarik Ali, Secretary 3. Assets and liability Committee 1. 2. 3. 4. 5. 6. 7. 8. Mr. Mohammad Aftab Manzoor, Chairman Mr. Amin A. Feerasta Mr. Abdul Aleem Qureshi Mr. Mubarik Ali Ms. Anjum Hai Mr. Javed Hussain Siddiqi Mr. Muhammad Qaisar Mr. Shahid Abdullah, Secretary 4. Investment Committee 1. 2. 3. 4. 5. 6. 7. Mr. Mohammad Aftab Manzoor, Chairman Mr. Amin A. Feerasta Mr. Shahid Abdullah Mr. Abdul Aleem Qureshi Ms. Anjum Hai Mr. Muhammad Qaisar Mr. Muhammad Imran Khan, Secretary 5. I.T. Steering Committee 1. 2. 3. 4. 5. 6. 7. 8. Mr. Mohammad Aftab Manzoor, Chairman Mr. Amin A. Feerasta Mr. Abdul Aleem Qureshi Ms. Anjum Hai Mr. Ahmed Saqib Asad Mr. Ali Hassan Shah Mr. Mir Tehmeed Mr. Qurban R. Punjwani, Secretary 6. Credit Risk Management Committee 1. 2. 3. 4. 5. 6. 7. Mr. Mohammad Aftab Manzoor, Chairman Mr. Amin A. Feerasta Mr. Abdul Aleem Qureshi Mr. Mubarik Ali Ms. Anjum Hai Mr. Muhammad Qaisar Mr. Javed H. Siddiqi, Secretary
  25. Soneri Bank Limited | Annual Report 2016 Management Committees 1. 2. 3. 4. 5. 6. 7. 8. Ms. Anjum Hai, Chairperson Mr. Javed H. Siddiqi Mr. Shahid Abdullah Mian Nadeem Aslam Mr. Junaid Qamar Mr. Muhammad Imran Khan Syed Ahmed Ali Jafari Mian Umar Farooq, Secretary 7. Market & Liquidity Risk Management Committee 8. Operational Risk Management Committee 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Mr. Mohammad Aftab Manzoor, Chairman Mr. Amin A. Feerasta Mr. Abdul Aleem Qureshi Mr. Iqbal Zaidi Mr. Ali Hassan Shah Ms. Anjum Hai Syed Asim Ali Mr. Muhammad Qaiser Mr. Mubarik Ali Mr. Ahmed Saqib Asad Mr. Javed H. Siddiqi, Secretary 9. Business Continuity Plan Steering Committee 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Mr. Mohammad Aftab Manzoor, Chairman Mr. Amin A. Feerasta Mr. Abdul Aleem Qureshi Mr. Iqbal Zaidi Ms. Anjum Hai Mr. Ahmed Saqib Asad Mr. Ali Hassan Shah Ms. Anita Lalani Syed Asim Ali Lt. Col(R) Zahid Raza Mr. Javed Munshi Mr. Muhammad Azizullah Abid Mian Asif Iqbal Mr. Muhammad Khawar Ali Shah Mr. Gul Husnain Mr. Javed H. Siddiqi, Secretary
  26. 41 Inspiring Growth As of 31 December 2016 2016 Advances - Gross 2015 Growth Rs . In Million 133,753 120,617 10.89% Deposits " 210,840 185,222 13.83% Net assets " 18,289 18,192 0.53% Profit after tax " 1,879 2,213 -15.09% Interest income " 6,844 7,597 -9.91% Non-markup income " 2,736 3,150 -13.14% Rs. 1.7042 2.0071 -15.09% Rs. In Million 9,580 10,748 -10.87% Return on equity % 12.01% 15.03% -20.03% Return on capital employed % 16.83% 19.77% -14.87% 276,512 269,312 2.67% 542 510 6.27% Earnings per share Total revenue Trade business Rs. In Million Number of accounts (In '000) Statement of Financial Position Variance during the FY 16 (Rs. in Million) 11% Equity, 18,289 10% Liabilities, 260,232 Assets, 278,521 1% Assets Liabilities Equity
  27. Soneri Bank Limited | Annual Report 2016 Key Performance Indicators 2016 2015 Variance Compared to 2015 Amount % Financial Investment-Gross Rs. In Million 117,998 108,972 9,026 8% Advances-Gross " 133,753 120,617 13,136 11% Deposits " 210,840 185,222 25,618 14% Shareholders' equity (including surplus) " 18,289 18,192 97 1% Net-interest income " 6,844 7,597 (753) -10% Non-interest income " 2,736 3,150 (414) -13% Profit before provisions " 3,102 4,625 (1,523) -33% Provisions " 24 1,029 (1,005) -98% Profit before taxation " 3,077 3,596 (519) -14% Profit after taxation " 1,879 2,213 (334) -15% 470,379 438,245 32,134 7% 25 20 5 20% Non Financial No. of customers Absolute No. of new branches opened " No. of branches closed " 3 3 100% No. of new accounts opened " 75,602 80,171 (4,569) -6% No. of ATM cards issued " 84,416 104,556 (20,140) -19% No. of permanent employees " 2,715 2,715 No. of virtual banking customers " 32,841 30,344 2,497 8% No. of mobile banking customers " 35,073 27,726 7,347 26% Rs. 1.7042 2.0071 - Key Financial Ratios Earnings per share Book value per share " 14.46 13.91 Share price " 17.65 15.13 Market capitalization 19,458 16,680 Times 10.38 7.53 Return on equity % 12.01% 15.03% Return on assets % 0.71% 0.95% Capital adequacy ratio % 14.12% 15.39% Price earning ratio Rs. In Million - 0%
  28. 43 Six Years Õ Financial Summary 2011-2016 (Rs. In Million) 2016 2015 2014 2013 2012 2011 Mark-up / return / interest earned 17,524 18,319 16,906 13,639 13,813 12,940 Mark-up / return / non interest expensed 10,680 10,722 10,626 8,751 8,934 8,997 6,844 7,597 6,280 4,888 4,879 3,943 Profit & loss account Fund based income Fee, commission, brokerage and exchange income 1,577 1,809 1,939 1,600 1,191 1,194 Dividend income and capital gain 1,131 1,284 535 623 528 428 Other income 29 57 35 22 12 154 Non interest income 2,737 3,150 2,509 2,245 1,731 1,776 Total income 9,581 10,747 8,789 7,133 6,610 5,719 Operating expenses 6,480 6,123 5,798 4,868 4,368 3,369 Profit before tax and provisions 3,101 4,624 2,991 2,265 2,242 2,350 24 1,029 549 735 520 1,272 Provisions Profit before tax 3,077 3,595 2,442 1,530 1,722 1,078 Profit after tax 1,879 2,213 1,582 1,037 1,104 784 1,002 Bonus shares issued - - - Right shares issued - - - Cash dividend paid - 1,378 Fund based income 1,102 993 1003 - - 1001 - - - Non-Markup Income (Rs. in Million) (Rs. in Million) 7,597 3,150 6,844 8,000 3,500 6,280 7,000 3,000 2,245 6,000 5,000 2,736 2,509 4,879 4,888 2,500 3,943 1,776 1,731 2011 2012 2,000 4,000 1,500 3,000 1,000 2,000 500 1,000 0 0 2011 2012 2013 2014 2015 2016 Profit before tax 2013 2014 2015 Profit after tax (Rs. in Million) (Rs. in Million) 2,213 3,596 2,500 4,000 1,879 3,077 3,500 1,582 2,000 2,442 3,000 1,104 1,500 1,722 2,500 1,037 784 1,530 2,000 2016 1,000 1,078 1,500 500 1,000 0 0 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016
  29. Soneri Bank Limited | Annual Report 2016 Six YearsÕ Financial Summary 2011-2016 (Rs. In Million) 2016 2015 2014 2013 2012 2011 11,025 10,023 10,023 10,023 9,021 8,028 1,424 1,049 934 618 410 1,183 Statement of Financial Position Paid up capital - net of discount Reserves Unappropriate profit 3,496 4,264 3,150 1,810 1,947 982 Shareholders' equity 15,945 15,336 14,107 12,451 11,378 10,193 Surplus on revaluation of assets 2,344 2,856 2,932 832 954 740 Net assets 18,289 18,192 17,039 13,283 12,332 10,933 Total assets 278,521 253,342 213,175 169,234 158,629 129,756 Earning assets 248,727 223,942 184,288 147,225 137,810 112,212 Gross advances 133,753 120,617 115,614 104,673 83,599 71,355 Advances-Net of provisions 125,306 112,002 107,968 97,534 77,170 65,623 10,419 11,584 10,224 10,424 9,927 8,942 Investments 117,884 108,846 75,716 46,703 59,517 45,776 Total liabilities 260,232 235,150 196,136 155,951 146,297 118,823 Deposits and other accounts 210,840 185,222 163,250 140,580 120,591 99,419 Current and saving deposits (CASA) 151,076 132,461 110,135 98,633 82,363 62,033 38,905 39,876 25,825 10,485 20,398 14,557 199,807 184,209 149,236 116,929 114,209 94,364 83,398 117,301 64,358 74,136 61,327 41,731 Non-performing loans (NPLs) Borrowings Interest bearing liabilities Contingent and commitments Paid up Capital ShareholdersÕ Equity (excluding surplus) (Rs. in Million) Total Assets (Rs. in Million) (Rs. in Million) 278,521 11,025 10,023 12,000 10,023 10,023 18,000 9,021 16,000 8,028 10,000 14,107 15,945 253,342 300,000 213,175 12,451 250,000 11,378 14,000 8,000 15,336 158,629 169,234 10,193 200,000 12,000 129,756 10,000 150,000 6,000 8,000 4,000 100,000 6,000 4,000 50,000 2,000 2,000 0 0 2011 2012 2013 2014 2015 2011 2012 Gross Advances Deposits (Rs. in Million) (Rs. in Million) 120,617 140,000 104,673 120,000 100,000 0 2016 2013 2014 2015 140,000 80,000 120,000 60,000 100,000 40,000 80,000 20,000 0 0 2012 2013 2014 2015 2016 117,884 140,580 100,000 99,419 75,716 59,517 80,000 46,703 45,776 60,000 40,000 40,000 10,000 2016 120,000 60,000 2011 2015 108,846 185,222 120,591 160,000 20,000 2014 (Rs. in Million) 163,250 180,000 71,355 2013 210,840 200,000 83,599 2012 Investments 133,753 115,614 2011 2016 20,000 0 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016
  30. 45 Six Years Õ Financial Summary 2011-2016 2016 2015 2014 2013 % " " Times % " " Rs. Rs. % " Rs. " " % Times % " " " Times Times Times 32.12% 39.06% 28.57% 1.48 12.01% 0.71% 16.82% 2.79 1.7 63.44% 59.43% 14.46 15.75 16.59 89.30% 1.24 3.47% 71.65% 7.79% 80.58% 17.47 252.63 13.22 33.45% 41.47% 29.31% 1.76 15.03% 0.95% 19.76% 3.59 2.01 65.12% 60.47% 15.30 17.04 18.15 88.40% 1.22 4.42% 71.51% 9.60% 73.97% 16.52 252.76 12.08 27.78% 37.15% 28.55% 1.52 11.91% 0.83% 14.33% 2.44 1.44 70.82% 66.14% 14.07 15.77 17.00 86.45% 1.23 6.18% 67.46% 8.84% 74.44% 15.11 212.69 11.57 21.45% 35.84% 31.47% 1.47 8.70% 0.63% 11.60% 1.53 0.94 74.46% 69.38% 12.42 12.67 13.25 86.99% 1.26 5.85% 70.16% 9.96% 68.20% 13.59 168.85 11.29 26.05% 18.85% 35.32% 30.47% 26.19% 31.05% 1.51 1.70 10.24% 8.44% 0.77% 0.66% 14.32% 10.56% 1.91 1.34 1.00 0.78 69.32% 71.77% 63.99% 66.01% 12.61 12.70 12.96 12.83 13.67 13.62 86.88% 86.48% 1.21 1.19 6.84% 7.88% 68.30% 62.40% 11.87% 12.53% 64.68% 64.01% 13.94 12.73 175.84 161.63 10.60 9.75 Rs.in Million " % " " 15,329 141,609 10.82% 14.12% 1.33% 15,032 128,905 11.66% 15.39% 1.72% 13,916 12,229 124,596 106,768 11.17% 11.45% 12.50% 11.93% 1.27% 0.97% 11,240 10,048 96,176 84,045 11.69% 11.96% 12.37% 12.64% 1.15% 0.93% Bonus shares issued % 0% 0% 0% Cash Dividend % *12.50% 12.50% 10.00% Financial Ratios Profit before tax ratio (PBT/total income) Gross spread (NIM/Interest income) Non interest income to total income Income /expense ratio (excluding provisions) Return on average equity (ROE) Return on average assets (ROA) Return on capital employed (ROCE) Earning per share (EPS before tax) Earning per share (EPS after tax) Gross advances to deposit ratio Net advances to deposit ratio Break up value per share (excl. surplus on revaluation of assets) Break up value per share (excl. surplus on revaluation of fixed assets) Break up value per share (incl. surplus on revaluation of assets) Earning assets to total assets Earning assets to interest bearing liabilities Weighted average cost of deposits CASA to total deposits NPLs to total advances ratio Coverage ratio (Specific provisions/NPLs) Assets to equity Total assets per share Deposits to shareholders' equity 2012 2011 Risk Adequacy Tier I Capital Risk Weighted Assets (RWA) Tier I to RWA Capital Adequacy Ratio Net Return on Average RWA Stock Dividend 10.00% - 11.00% - 12.50% - Share Information Market Value per share-31 December - High during the year - Low during the year Market Capitalization Price to book value (excl. surplus on revaluation of assets) Price earning ratio Rs. 17.65 " 17.90 " 12.76 Rs.in Million 19,458.48 Rs. 1.22 Times 10.38 15.13 12.33 10.93 15.35 16.73 11.38 10.06 9.50 5.90 16,680.27 13,593.37 12,049.93 0.99 0.88 0.88 7.53 8.56 11.63 7.09 3.90 9.40 8.01 3.71 3.56 7,105.88 3,521.38 0.56 0.31 7.09 5.00 Industry Share Deposits Advances Non Financial Information No. of branches No. of permanent employees No. of ATMs * Subject to shareholderÕs approval in the forthcoming AGM. % " Absolute " " 1.88% 2.40% 288 2,715 306 1.99% 2.52% 266 2,715 274 1.96% 2.59% 246 2,639 263 1.87% 2.57% 239 2,835 265 1.80% 2.17% 233 2,644 251 1.69% 2.04% 214 2,286 216
  31. Soneri Bank Limited | Annual Report 2016 Per Branch Performance Gross Advances Deposits (Rs. in Million) (Rs. in Million) 469.98 453.44 464.42 437.96 500 400 800 358.79 450 732.08 663.62 696.32 588.16 700 333.44 600 350 300 500 250 400 200 300 150 517.55 464.57 200 100 100 50 0 0 2011 2012 2013 2014 2015 2011 2016 2012 2013 CASA Profit Before Tax (Rs. in Million) (Rs. in Million) 2014 412.69 500 400 451.20 14 497.97 2016 13.52 524.57 600 2015 10.68 9.93 12 353.49 7.39 10 288.40 8 6.40 5.04 300 6 200 4 100 2 0 0 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016
  32. 47 Concentration of Advances , NPLs, Deposits and Off-Balance Sheet Items - 31 December 2016 Advances (Gross) (Rupees (Percent) in '000) Agriculture, Forestry, Hunting and Fishing 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 Financial Food and Allied Individuals Others 3,222,913 28,707,232 4,844,065 1,215,055 2,837,320 954,568 891,890 1,381,090 900,940 7,358,320 17,879,883 6,842,185 999,275 31,175,457 6,788,432 17,754,411 133,753,036 2.41% 21.46% 3.62% 0.91% 2.12% 0.71% 0.67% 1.03% 0.67% 5.50% 13.37% 5.12% 0.75% 23.31% 5.08% 13.27% 100.00% Classified Advances (Rupees (Percent) in '000) 240,810 6,304,340 450,871 86,454 24,900 49,310 50,898 233,301 70,498 2,908,038 10,419,420 2.31% 60.51% 4.33% 0.00% 0.83% 0.24% 0.47% 0.49% 0.00% 0.00% 0.00% 0.00% 2.24% 0.00% 0.68% 27.90% 100.00% Advances (Gross) 83,271 2,033,721 2,682,125 73,336 233,554 788,401 7,843,582 810,801 1,694,297 6,407,546 3,396,733 1,915,437 12,588,410 4,771,451 101,114,282 64,402,699 210,839,646 0.04% 0.96% 1.27% 0.03% 0.11% 0.37% 3.72% 0.38% 0.80% 3.04% 1.61% 0.91% 5.97% 2.26% 47.96% 30.57% 100.00% Classified Advances 0.24% 23% Deposits (Rupees (Percent) in '000) 5% 0.49% 27.90% 3% 0.68% 7% % 0.4 2.31 % 0.00 5% % 4.3 13 1% % 24 2. 13% 2% 21 % 6% 2% 4% %1 % 1% 1% 1 % 1 60.51% Off-Balance Sheet items Deposits 0.95% 0.03% 1.27% 0.11% 0.96% 0.37% 0.04% 3.72% 0.38% 15.94% 7% .5 30 10.75% 7.39% 0.80% 3.04% 1.61% 0.02% 1.21% 5.97% 5.47% 0.58% 1.56% 2.26% 4.68% 6.22% 5.19% 3.46% 0.34% 13.85% 22.39% 47.96% Agriculture, Forestry, Hunting and Fishing Chemical and Pharmaceuticals Sugar Automobile and transportation eqjuipment Construction Wholesale and Retail Trade Financial Individuals Textile Cement Fotwear and Leather garments Electronics and electrical appliances Power (electricity), Gas, Water, Sanitary Exports/Imports Food and Allied Others Contingencies (Rupees (Percent) in '000) 434,278 4,906,597 3,372,462 551,519 9,390 264,313 714,212 2,840,490 2,371,761 2,137,140 6,323,110 2,495,322 1,578,513 7,277,675 156,732 10,221,576 45,655,090 0.95% 10.75% 7.39% 1.21% 0.02% 0.58% 1.56% 6.22% 5.19% 4.68% 13.85% 5.47% 3.46% 15.94% 0.34% 22.39% 100.00%
  33. Soneri Bank Limited | Annual Report 2016 Maturities of Assets and Liabilities (Contractual) TOTAL Upto 3M to 1Y to 3Y to 5Y & 3M 1Y 3Y 5Y above -------------------------------(Rupees in Million)------------------------------Assets Cash and balances with treasury banks Balances with other banks Lendings to financial and other institutions 18,279 18,279 - - - - 823 823 - - - - 5,537 4,491 1,046 Investments - net 117,884 20,039 33,240 34,895 20,125 9,585 Advances - net 125,306 25,815 68,356 9,610 8,230 13,295 5,138 222 832 1,239 962 1,883 - - Operating fixed assets Deferred tax assets Other assets - net - - - - - 5,554 4,452 1,096 - 278,521 74,121 104,570 - - 6 45,744 29,323 24,763 Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans 3,254 3,254 - - - 38,905 33,294 4,739 70 341 461 210,840 182,320 27,643 877 - 2,999 1 1 2 2 2,993 Deferred tax liabilities - net 1,138 - 1,138 - - - Other liabilities 3,096 2,715 381 - - - 260,232 221,584 33,902 949 343 3,454 Assets Liabilities (Rs. in Million) (Rs. in Million) 221,584 104,570 250,000 120,000 74,121 200,000 80,000 150,000 100,000 45,744 60,000 33,902 50,000 29,323 40,000 24,763 15,000 10,000 20,000 949 5,000 0 343 3,454 0 Upto 3M 3M to 1Y 1Y to 3Y 3Y to 5Y 5Y & above Upto 3M 3M to 1Y 1Y to 3Y 3Y to 5Y 5Y & above
  34. 49 Key Interest Bearing Assets and Liabilities Avg .Vol (Rs. in Million) 2016 Effective Interest Rate % Interest (Rs. in Million) Avg.Vol (Rs. in Million) 2015 Effective Interest Interest Rate % (Rs. in Million) Interest Bearing Assets Balances with other banks 816 0.45 4 427 1 4 6,649 4.93 328 3,348 7.39 247 Advances (excluding NPLs) 129,093 7.33 9,463 103,168 8.33 8,594 Investments (excluding equity investments) 125,859 7.52 9,465 98,209 9.65 9,477 171,134 4.04 6,914 171,134 5.00 8,557 2,080 7.64 159 2,080 8.61 179 33,200 5.27 1,750 33,226 5.96 1,980 Lendings to financial and other institutions Interest Bearing Liabilities Deposits Sub-ordinated loans Borrowings Effective interest rate on Assets & Liabilities 2016 2015 12 9.65 8.33 7.39 10 8.61 7.33 7.64 7.52 8 5.27 5 4.93 5.96 4.04 6 4 1.00 0.45 2 0 Balances with other Banks Return on lendings to F.Is Return on Loans Return on Investments Cost of Deposits Cost of Borrowings Cost of Sub-ordinated loans KIBOR-6 Months 2016 2015 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan
  35. Soneri Bank Limited | Annual Report 2016 Statement of Value Addition 31 DECEMBER 2016 (Rs. in Million) 2015 % (Rs. in Million) % Value added Net Interest Income 6,844 7,597 Non interest income 2,737 3,150 (3,062) (2,885) (24) (1,029) 6,495 6,834 Operating expenses excluding staff costs,depreciation, amortization,donation and Workers Welfare Fund Provision against advances,investments & others Value added available for distribution To employees -Salaries, allowances and other benefits 2,674 41.17% 2,519 36.86% 1,198 18.44% 1,382 20.22% 64 0.99% 82 1.20% *1,378 21.22% 1,378 20.16% 15 0.23% 15 0.22% 576 8.87% 584 8.55% To Government -Income tax -Workers Welfare Fund To providers of capital -Cash dividends To Society -Donations To expansion and growth - Depreciation - Amortization -Retained in business 89 1.37% 38 0.56% 501 7.71% 836 12.23% 6,495 100% 6,834 100% * Subject to shareholderÕs approval in the forthcoming AGM. 2016 2015 To Providers of Capital 21% To Providers of Capital 20% Employees 41% Society 0% Expansion & Growth 18% Employees 37% Society 0% Expansion & Growth 41% Govt. 20% Govt. 21%
  36. 51 Quarterly Performance 2016 & 2015 (Rs. In Million) 4th Quarter 2016 3rd Quarter 2nd Quarter 1st quarter 4th Quarter 2015 3rd Quarter 2nd Quarter 1st quarter Profit & Loss Account Interest / Return / Non Interest Income Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provisions Non-mark-up / interest income Non-mark-up / interest expenses Profit before taxation Taxation Profit after taxation Statement of Financial Position Assets Cash and balances with treasury banks Balances with other banks Lendings to financial & other institutions Investment-net Advances-net Operating fixed assets Deferred tax assets -net Other assets Total assets Liabilities Bills payable Borrowings Customer deposits Sub-ordinated loans Deferred tax liabilities -net Other liabilities Total liabilities Equity Share capital - net of discount Reserves Un-appropriated profit Surplus on revaluation of assets Total equity 4,150 (2,566) 1,584 (51) 569 (1,644) 458 (120) 338 4,045 (2,581) 1,464 92 633 (1,618) 571 (205) 366 4,796 (2,891) 1,905 (9) 965 (1,635) 1,226 (590) 636 4,533 (2,642) 1,891 (56) 569 (1,582) 822 (283) 539 4,484 (2,509) 1,975 (235) 775 (1,543) 972 (348) 624 4,657 (2,760) 1,897 (374) 726 (1,540) 709 (227) 482 4,517 (2,619) 1,898 (237) 891 (1,588) 964 (470) 494 4,661 (2,834) 1,827 (183) 758 (1,452) 950 (337) 613 18,279 823 5,537 117,884 125,306 5,138 5,554 278,521 18,212 899 10,113 124,806 98,606 5,232 4,321 262,189 19,278 1,095 5,486 151,368 115,885 5,257 6,981 305,350 13,341 1,090 6,635 133,334 112,765 5,006 4,333 276,504 16,718 1,635 3,094 108,846 112,002 4,957 6,090 253,342 14,213 547 4,818 114,493 101,713 4,989 4,872 245,645 13,251 1,966 3,345 99,976 104,598 5,044 6,735 234,915 11,599 1,060 1,390 99,779 100,148 5,089 6,134 225,199 3,254 38,905 210,840 2,999 1,138 3,096 260,232 2,680 31,623 201,967 2,999 1,347 3,310 243,926 3,399 74,775 202,222 2,999 1,448 2,432 287,275 2,718 52,817 195,618 2,999 1,546 3,210 258,908 2,706 39,876 185,222 3,000 1,417 2,929 235,150 2,375 41,062 176,114 3,000 1,687 3,338 225,889 3,354 27,423 179,339 1,850 5,128 217,094 2,485 33,998 162,731 1,871 6,849 207,934 11,025 1,424 3,496 2,344 18,289 11,025 1,356 3,192 2,690 18,263 11,025 1,283 2,868 2,898 18,074 11,025 1,156 2,338 3,077 17,596 10,023 1,049 4,264 2,856 18,192 10,023 925 3,739 3,382 18,069 10,023 828 3,321 3,649 17,821 10,023 730 2,889 3,623 17,265
  37. Soneri Bank Limited | Annual Report 2016 Six YearsÕ Vertical Analysis Statement of Financial Position/ Profit & Loss Account 2016 Rs.in Mln % 2015 Rs.in Mln % 2014 Rs.in Mln % 2013 Rs.in Mln % 2012 Rs.in Mln % 2011 Rs.in Mln % Statement of Financial Position Assets Cash and balances with treasury banks Balances with other banks Lendings to financial & other institutions Investment-net Advances-net Operating fixed assets Deferred tax assets-net Other assets Total assets 18,279 823 5,537 117,884 125,306 5,138 5,554 278,521 7% 0% 2% 42% 45% 2% 0% 2% 100% 16,718 1,635 3,094 108,846 112,002 4,957 6,090 253,342 7% 1% 1% 43% 44% 2% 0% 2% 100% 15,776 575 604 75,716 107,968 5,014 7,522 213,175 7% 0% 0% 36% 51% 2% 0% 4% 100% 12,673 707 2,988 46,703 97,534 3,734 103 4,792 169,234 7% 0% 2% 28% 58% 2% 0% 3% 100% 11,491 1,249 1,123 59,517 77,170 3,821 304 3,954 158,629 7% 1% 1% 38% 49% 2% 0% 2% 100% 8,959 879 813 45,776 65,623 3,651 386 3,669 129,756 7% 1% 1% 35% 51% 3% 0% 3% 100% Liabilities and Equity Customer deposits Borrowings Bills payable Other liabilities Deferred tax liabilities-net Sub-ordinated loans 210,840 38,905 3,254 3,096 1,138 2,999 76% 14% 1% 1% 0% 1% 185,222 39,876 2,706 2,929 1,417 3,000 73% 16% 1% 1% 1% 1% 163,250 25,825 2,780 2,861 1,420 - 77% 12% 1% 1% 1% 0% 140,580 10,485 2,578 2,308 - 83% 6% 2% 1% 0% 0% 120,591 20,398 2,522 2,487 299 76% 13% 2% 2% 0% 0% 99,419 14,557 1,571 2,378 898 77% 11% 1% 2% 0% 1% Total liabilities 260,232 93% 235,150 93% 196,136 92% 155,951 92% 146,297 92% 118,823 92% 18,289 7% 18,192 7% 17,039 8% 13,283 8% 12,332 8% 10,933 8% 11,025 1,424 3,496 2,344 18,289 4% 1% 1% 1% 7% 10,023 1,049 4,264 2,856 18,192 4% 0% 2% 1% 7% 10,023 934 3,150 2,932 17,039 5% 0% 1% 1% 8% 10,023 618 1,810 832 13,283 6% 0% 1% 0% 8% 9,021 410 1,947 954 12,332 6% 0% 1% 1% 8% 8,028 1,183 982 740 10,933 6% 1% 1% 0% 8% 17,524 86% 18,320 85% 16,906 87% 13,639 86% 13,813 89% 12,940 88% 1,577 1,131 29 20,261 8% 6% 0% 100% 1,809 1,284 57 21,470 8% 6% 0% 100% 1,939 535 35 19,415 10% 3% 0% 100% 1,600 623 22 15,884 10% 4% 0% 100% 1,191 528 12 15,544 8% 3% 0% 100% 1,194 428 154 14,716 8% 3% 1% 100% Mark-up / Return / Non Interest Expenses Mark-up / return / non interest expensed 10,680 Operating expenses 6,480 Provisions 24 Taxation 1,198 Total expenses 18,382 Profit after taxation 1,879 53% 32% 0% 6% 91% 9% 10,722 6,123 1,029 1,383 19,257 2,213 50% 29% 5% 6% 90% 10% 10,626 5,798 549 860 17,833 1,582 55% 30% 3% 4% 92% 8% 8,751 4,868 735 493 14,847 1,037 55% 31% 5% 3% 93% 7% 8,934 4,368 520 618 14,440 1,104 57% 28% 3% 4% 93% 7% 8,997 3,369 1,271 295 13,932 784 61% 22% 9% 2% 95% 5% Net assets Represented by:Share capital - net of discount Reserves Un-appropriated profit Surplus on revaluation of assets Profit & loss account Interest / Return / Non Interest Income Mark-up / return / interest earned Fee, commission, brokerage and exchange income Capital gain and dividend income Other income Total Income
  38. 53 Six Years Õ Horizontal Analysis Statement of Financial Position/ Profit & Loss Account 2016 16 vs 15 2015 15 vs 14 2014 14 vs 13 2013 13 vs 12 2012 12 vs 11 2011 Rs.in Mln % Rs.in Mln % Rs.in Mln % Rs.in Mln % Rs.in Mln % Rs.in Mln 11 vs 10 % BALANCE SHEET Assets Cash and balances with treasury banks Balances with other banks Lendings to financial & other institutions 18,279 9% 16,718 6% 823 -50% 1,635 184% 15,776 24% 12,673 10% 11,491 28% 8,959 24% 575 -19% 707 -43% 1,249 42% 879 -37% 5,537 79% 3,094 412% 604 -80% 2,988 166% 1,123 38% 813 -68% Investment-net 117,884 8% 108,846 44% 75,716 62% 46,703 -22% 59,517 30% 45,776 31% Advances-net 125,306 12% 112,002 4% 107,968 11% 97,534 26% 77,170 18% 65,623 19% Operating fixed assets 5,138 4% 4,957 -1% 5,014 34% 3,734 -2% 3,821 5% 3,651 12% Deferred tax assets -net - 0% - 0% - 103 -66% 304 386 0% Other assets 5,554 -9% 6,090 -19% 7,522 57% 4,792 21% 3,954 8% 3,669 9% Total assets 278,521 10% 253,342 19% 213,175 26% 169,234 7% 158,629 22% 129,756 20% Customer deposits 210,840 14% 185,222 13% 163,250 16% 140,580 17% 120,591 21% 99,419 21% Interbank borrowings 38,905 -2% 39,876 54% 25,825 146% 10,485 -49% 20,398 40% 14,557 18% Bills payable 3,254 20% 2,706 -3% 2,780 8% 2,578 2% 2,522 61% 1,571 -15% Other liabilities 3,096 6% 2,929 2% 2,861 24% 2,308 -7% 2,487 5% 2,378 36% Deferred tax liabilities 1,138 -20% 1,417 0% 1,420 100% - 0% - 0% - Sub-ordinated loans 2,999 0% 3,000 0% - 0% - 0% 299 -67% 898 -25% Total liabilities 260,232 11% 235,150 20% 196,136 26% 155,951 7% 146,297 23% 118,823 20% Share capital - net of discount 11,025 10% 10,023 0% 10,023 0% 10,023 11% 9,021 12% 8,028 33% Reserves 1,424 36% 1,049 12% 934 51% 618 51% 410 -65% 1,183 -42% Un-appropriated profit 3,496 -18% 4,264 35% 3,150 74% 1,810 -7% 1,947 98% 982 198% Surplus on revaluation of assets 2,344 -18% 2,856 -3% 2,932 252% 832 -13% 954 29% 740 38% Total equity 18,289 1% 18,192 7% 17,039 28% 13,283 8% 12,332 13% 10,933 23% 17,524 -4% 18,320 8% 16,906 24% 13,639 -1% 13,813 7% 12,940 26% 1,577 -13% 1,809 -7% 1,939 21% 1,600 34% 1,191 0% 1,194 98% 1,131 -12% 1,284 140% 535 -14% 623 18% 528 23% 428 144% Other income 29 -49% 57 64% 35 59% 22 83% 12 -92% 154 -59% Total income 20,261 -6% 21,470 11% 19,415 22% 15,884 2% 15,544 14,716 29% -100% -21% Liabilities and equity 0% PROFIT & LOSS ACCOUNT Mark-up / return / interest earned Fee, commission , brokerage and exchange income Capital gain and dividend income 6% Mark-up / Return / Non Interest Expenses Mark-up / return / non interest expensed 10,680 0% 10,722 1% 10,626 21% 8,751 -2% 8,934 -1% 8,997 25% Operating expenses 6,479 6% 6,123 6% 5,798 19% 4,868 11% 4,368 30% 3,369 28% Provisions 24 -98% 1,029 87% 549 -25% 735 41% 520 -59% 1,271 -12% Taxation 1,198 -13% 1,383 61% 860 74% 493 -20% 618 109% 295 1866% Total expenses 18,382 -5% 19,257 8% 17,833 20% 14,847 3% 14,440 4% 13,932 23% Profit after taxation 1,879 -15% 2,213 40% 1,582 53% 1,037 -6% 1,104 41% 784 527%
  39. Soneri Bank Limited | Annual Report 2016 Cash Flow Statement Direct Method 2016 2015 (Rupees in '000) CASH FLOW FROM OPERATING ACTIVITIES Markup / return / interest and commission receipts Markup / return / interest payments Cash payments to employees, suppliers and others 21,382,925 (10,912,123) (5,746,743) 4,724,059 21,660,092 (10,935,947) (5,462,457) 5,261,688 (2,442,639) (13,433,330) (134,464) (16,010,433) (2,489,596) (5,153,607) (167,914) (7,811,117) 547,969 (1,102,159) 25,617,263 339,030 25,402,103 14,115,729 (1,831,964) 12,283,765 (28,631) 14,293,729 21,972,012 228,790 36,465,900 33,916,471 (171,001) 33,745,470 (9,531,096) 194,129 (1,004,102) 53,526 (10,287,543) (32,971,998) 152,160 (610,461) 32,577 (33,397,722) CASH FLOW FROM FINANCING ACTIVITIES Sub-ordinated loans Dividend paid Net cash (used in) financing activities (1,200) (1,378,079) (1,379,279) 3,000,000 (1,102,464) 1,897,536 (Decrease) / increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 616,943 18,346,786 18,963,729 2,245,284 16,101,502 18,346,786 18,278,840 684,889 18,963,729 16,718,428 1,628,358 18,346,786 (Increase) / decrease in operating assets Lendings to financial & other institutions Advances - net Others assets - (excluding advance taxation) Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities Income tax paid Net cash (used in) / flows from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investments in securities Dividend received Investment in operating fixed assets (including intangible assets) Proceeds from disposal of fixed assets Net cash flows from / (used in) investing activities CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR Cash and balances with treasury banks Balances with other banks INDIRECT METHOD - SUMMARY Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Cash and cash equivalent at the beginning of the year Cash and cash equivalent at the end of the year 2016 12,284 (10,288) (1,379) 18,347 18,964 2015 33,745 (33,398) 1,898 16,102 18,347 2014 30,230 (27,389) 13,261 16,102 2016 2013 (11,213) 12,076 (299) 12,697 13,261 2012 17,573 (13,881) (599) 9,604 12,697 - 2011 11,373 (10,994) 702 8,523 9,604 2015 Investing activities (10,288) Investing activities (33,398) Financing activities (1,379) Operating activities 12,284 Financing activities 1,898 Operating activities 33,745
  40. 55 Market Statistics of SNBL Shares Market Share Price Trend Year Quarter end High (Rs.) Low (Rs.) Closing (Rs.) 2016 March June September December 15.90 14.50 15.49 17.90 12.76 13.00 13.40 14.10 14.00 14.22 14.64 17.65 2015 March June September December 14.30 13.70 14.62 15.35 10.06 10.99 11.92 13.01 11.25 12.43 13.30 15.13 Monthly Pattern of Market Share Price 17 14 11 8 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 Lowest Closing Highest Historical Trend vs KSE Index 2011 Year end 2012 2013 2014 2015 10.93 12.33 15.13 17.65 16,905 25,261 32,131 32,812 47,807 3.90 Share Price (Rs.) KSE-100TM Index 11,348 7.09 2016 Soneri Bank Price vs KSE Index (2011-2016) 20.00 60,000 17.65 18.00 50,000 15.13 16.00 12.33 14.00 40,000 10.93 12.00 10.00 30,000 7.09 8.00 6.00 20,000 3.90 4.00 10,000 2.00 Soneri Bank Ltd. Price KSE Index 0 0 2011 2012 2013 2014 2015 2016
  41. Soneri Bank Limited | Annual Report 2016 Financial Calendar 2016 1st Quarter Results issued on 20 April 2016 2nd Quarter Results issued on 16 August 2016 3rd Quarter Results issued on 21 October 2016 Annual Results issued on 15 February 2017 25th Annual General Meeting Scheduled for 28 March 2017 2015 1st Quarter Results issued on 17 April 2015 2nd Quarter Results issued on 13 August 2015 3rd Quarter Results issued on 20 October 2015 Annual Results issued on 11 February 2016 24th Annual General Meeting held on 25 March 2016
  42. 57 Directors Õ Report to Shareholders On behalf of the Board of Directors, I am pleased to present the Directors' Report of Soneri Bank Limited (Bank) along with the audited financial statements and auditors' report thereon for the year ended 31 December, 2016. ECONOMY FY 2016 was another consecutive year of macroeconomic improvement for Pakistan. Country met most of the key economic milestones with hallmark being successful completion of the US$ 6.4 billion IMF Extended Fund Facility (EFF) program and issuance of US$ 1 billion five-year dollar denominated international Sukuk bonds. During the year, the Country's FX reserves increased by US$ 2.4 billion to US$ 23.2 billion at December 2016. A stable reserves position supported stability in the exchange rate. Headline CPI inflation was also contained during the year at 3.7 percent (CY 2015: 3.2 percent), allowing the State Bank of Pakistan (SBP) to keep interest rates low. SBP made only one rate cut of 25bp in May-16. Growth momentum also picked up, with GDP growth of 4.71 percent in 2016 compared to 4.04 percent during FY 2015. It was supported mainly by strengthening of service and manufacturing sectors. China Pakistan Economic Corridor (CPEC) related initiatives remained at the forefront adding stimulus to the economy. Domestic business sentiment improved, with expansion planned in cement, autos, and steel sectors announced. Major concerns that linger include current account deficit which rose sharply towards the end of 2016 (1HFY17 deficit of US$ 3.6 billion, a 100% increase over the previous year) due to the impact of increase in oil prices and decline in exports and remittances. Other factors which can be an impediment going forward are persistent power outages, which though having declined over the last three years, still persist. The chronic issue of fiscal deficit and financial losses of ailing public sector enterprises also needs to be tackled for long term sustainability. BUSINESS OVERVIEW FY 2016 marked the year of Soneri Bank's 25th anniversary. The Bank has since grown from strength to strength to attain a position which is synonymous with a seasoned banking practices and financial stability. Bank continues to make progress on its strategic objectives. The year unfolded many challenges resulting from reduced margins and intense competition due to low interest rate environment. Notwithstanding, the Bank grew in terms of branch footprint, balance sheet footing and delivered requisite shareholder return. The Bank is presently providing banking services from 288 branches and 306 ATMs across 132 cities. The Bank has been focusing on improving customer experience and brand building through various initiatives like launching of new products, implementation of new complaint management/ phone banking software and staff trainings. Further your Bank adequately meets the SBP Basel III requirements and is well positioned to meet its growth plans with Capital Adequacy ratio of 14.12 percent. The Bank's strategic focus has been and remains on managed business growth, process improvement, and proactive management of cost and delinquent assets. The Bank has an ADR which has been consistently above industry average and reflects bank's focus and contribution to the economy. Looking at the last six years' performance, the deposits base of the Bank increased to Rs. 210.84 billion which translates into compounded annual growth rate (CAGR) of 16.15 percent. The CASA component of deposits showed an impressive growth, with six years CAGR of 18.21 percent. This represents the bank's policy to mobilize low cost deposits. Similarly, net advances rose to Rs.125.31 billion with six year CAGR of 13.91 percent. Gross Advances Deposits 133.75 160.00 140.00 250.00 210.84 115.61 2013 2014 83.60 100.00 71.36 163.25 140.58 150.00 PKR bln PKR bln 104.67 120.00 185.22 200.00 120.59 100.00 120.62 99.42 80.00 60.00 40.00 20.00 50.00 0 0 2011 2012 2013 2014 2015 2016 2011 2012 2015 2016
  43. Soneri Bank Limited | Annual Report 2016 DirectorsÕ Report to Shareholders OPERATING RESULTS The highlights of financial results for FY 2016 are presented as follows: Profit & Loss Account 31 December 2016 31 December 2015 Variance (%) ---------------- (Rs. in million) ---------------Net Interest Margin & Non Markup Income Non Markup Expenses Profit before tax & provisions Profit before tax Profit after tax Earnings Per Share - Rupees 9,580.38 6,478.63 3,101.75 3,077.34 1,878.84 1.7042 Statement of Financial Position 10,747.85 6,123.00 4,624.85 3,595.61 2,212.77 2.0071 31 December 2016 31 December 2015 (10.86) 5.81 (32.93) (14.41) (15.09) (15.09) Variance (%) ---------------- (Rs. in million) ---------------Shareholders Equity (excluding surplus) Deposits Advances - net Investments - net 15,944.77 210,839.65 125,305.77 117,883.96 15,335.96 185,222.38 112,001.75 108,846.11 3.97 13.83 11.88 8.30 Profit After Tax The Bank has posted a profit after tax of Rs.1.88 billion which translates into earnings per share of Rs.1.7042 (31 December, 2015: Rs. 2.0071). Profit before tax for the year stands at Rs.3.08 billion against Rs. 3.59 billion last year. 2.21 2.50 The results incorporate higher tax charge on account of super tax which was re-imposed this year. Revenue comprising net mark-up income and non-mark-up income has decreased by 10.86 percent versus 2015. The key reasons are pressure on net mark-up income which is down by 9.91 percent, lower exchange earnings which PKR bln 2.00 The reduction in earnings is mainly a factor of industry predicament due to lower interest rates versus 2015. This pressure was offset by higher recovery of non-performing loans. The provision against non-performing loans for the year thus stands at Rs. 24.4 million only versus Rs. 1.03 billion last year. 1.88 1.58 1.50 1.10 1.00 1.04 0.78 0.50 0.00 2011 2012 2013 2014 2015 Interest Income 2016 Non-Interest Income 2016 (Rs in Million) (Rs in Million) Balance with other banks 31 2016 Other Income 29 Lendings to FI 313 Gain on sale of Securities 939 Loan & Advances 7,730 Fee, Commission & Brokerage 1,286 Investments 9,451 Income from dealing in FX 290 Dividend Income 192
  44. 59 Directors Õ Report to Shareholders are down by 38.58 percent as well as lower capital gains by 16.09 percent. The impact on net mark-up income is due to maturity of high yielding PIBs during third quarter of the year topped with overall reduction in margins/fee due to lower interest rates and stiff competition. Non-markup expenses increased by 5.81 percent in spite of inflationary pressure and new branches opened during the year. The branch network of the Bank now stands at 288 (2015: 266) The Bank's net assets (including surplus) amounted to Rs.18.29 billion as at 31 December, 2016. Overall deposits show an impressive growth of 13.83 percent with CASA deposits increasing by 12.90 percent. Contributing to CASA growth is growth in current deposits of 20.32 percent. Advances (net of provisions) grew by 11.88 percent. The Bank's net Advances to Deposits ratio decreased to 59.43 percent from 60.47 percent in 2015. The NPL coverage has been prudently managed and increased to 81.07 percent (2015: 74.37 percent). Investments grew by 8.30 percent with main deployment being in government securities. The gross surplus on revaluation of securities being Rs. 2.18 billion is lower than last year's position of Rs. 2.67 billion which is a factor of gains realized and market yield increasing in December, 2016. DIVIDEND The Board has recommended a final cash dividend (D-8) of Rs. 1.25/- per share (i.e. 12.50%) for the year ended 31 December, 2016 to be approved in the 25th Annual General Meeting of the Shareholders. LOOKING AHEAD On the core profitability front, 2017 is likely to be another challenging year for the banking sector. Continued maturity of high yielding PIBs, falling credit spreads on lending and low likelihood of an interest rate increase as an election year approaches are the key factors that are likely to keep net interest income growth subdued. The Bank's strategy will be to capitalize on the improvement in economic growth, and the rising trend of both investment and consumption in the economy. A key focus will be to improve fee income through trade as well as accentuating consumer finance business. Expanding the loan portfolio is also a priority, both on the corporate and commercial side, keeping a prudent approach with regards to risk. Management is cognizant of the downside risks to macroeconomic stability, in particular on the balance of payments front. The current account has deteriorated sharply in the last few months, as a result of rising imports, whilst exports and remittances have fallen. As a result, our approach to lending will remain prudent. On the deposit front, management will keep a focus on increasing low cost deposits, through existing as well as new branches. Despite the challenging headwinds, your Bank believes that there are beneficial opportunities to be exploited and it is geared up for the course. The Bank is well capitalized under the SBP defined Basel III based Capital Adequacy ratio. During 2016, the Bank embarked on the upgrade of core banking system which is expected to culminate in 2017 thus improving the back end efficiency as well customer experience. Furthermore, the Bank is committed to investing in digital solutions, the first of which was launched in form of Soneri mobile application during the year. SECOND (2ND) ISSUANCE OF TERM FINANCE CERTIFICATES (TFCs) The Bank had issued its second Term Finance Certificates in the year 2015. It has been regular on meeting its commitments under the agreement and the third (3rd) redemption and profit payments were duly made to the TFC investors on 06 January, 2017. CREDIT RATING The Pakistan Credit Rating Agency (PACRA) maintained the long term credit rating of AA- (Double A Minus) and short term rating of A1+ (A One Plus) through its notification dated: 17 June, 2016 [2015: long term AA- (Double A Minus): short term A1+ (A One Plus)] PACRA has also maintained credit rating of unsecured, subordinated and listed Term Finance Certificates (TFC-2) issue of worth PKR 3,000 million at A+ (Single A plus) vide its notification dated 16.12.2016. BOARD OF DIRECTORS The existing Board which was elected on 28 March, 2014 will complete its three years' term on 28 March, 2017. New Board of Directors shall be elected in 25th Annual General Meeting scheduled to be held on 28 March, 2017. The Board remained fully compliant with the provision with regard to their training program. Two directors have received "Certificate of Director Education" from the Pakistan Institute of Corporate Governance (ÒPICGÓ). One director has also received ÒCertificate in Company Direction (International)Ó from Institute of Directors, UK. Four directors are exempt from training as mentioned in proviso to clause 5.19.7 of the Pakistan Stock Exchange Regulations.
  45. Soneri Bank Limited | Annual Report 2016 DirectorsÕ Report to Shareholders Our directors have also attended various courses/workshops. In the year 2015, three directors attended a week long course on ÒThe Accelerated Certificate in Company DirectionÓ a program of the Institute of Directors, UK arranged in Pakistan by the PICG. Further during the year under review, three other directors also participated in a three full days' workshop on ÒCorporate Governance & Director Duties ExcellenceÓ held in Malaysia. BOARD AND COMMITTEES' MEETINGS Details of the meetings of the Board of Directors and its Committees held during 2016 and the attendance by each director/committee member are given as under:- Held during the year Held during the year 1 Mr. Alauddin Feerasta 6 6 * * 4 4 * * * * 2. Mr. Mohammad Aftab Manzoor 6 6 * * 4 4 4 4 3 3 3. Mr. Nooruddin Feerasta 6 5 4 2 4 3 * * * * 4. Mr. Muhammad Rashid Zahir 6 6 4 4 4 4 * * * * 5 Mr. Amar Zafar Khan 6 6 4 4 4 4 4 3 3 2 6 Syed Ali Zafar 6 3 * * * * * * * * 7 Mr. Manzoor Ahmed (NIT Nominee) 6 6 * * * * 4 4 * * 8 Mr. Shahid Anwar (NIT Nominee) 6 6 4 4 * * 4 4 3 3 Name of Director Total Number of meetings held during the year Held during the year 6 Held during the year 4 4 4 Attended** Board Risk Management Committee Meetings Attended** Board Human Resource Committee Meetings Attended** Board Credit Committee Meetings Attended** Board Audit Committee Meetings Held during the year S.No. Attended** Board of Directors Meetings 3 * not a member of the Committee **Leave of absence was granted to those directors/members, by the Board/Committee, who could not attend some of the meetings. STATEMENT OF INVESTMENTS OF PROVIDENT AND GRATUITY FUNDS The Bank operates approved funded provident and gratuity fund schemes covering all its permanent employees. The investment balances (doesn't include deposit with banks) are as follows: 31 December 31 December 2016 2015 (Un-audited) (Audited) ------------- (Rupees in '000) -----------Investments of Provident Fund Investments of Gratuity Fund 525,730 144,304 681,956 358,793
  46. 61 Directors Õ Report to Shareholders COMPLIANCE WITH CODE OF CORPORATE GOVERNANCE As required by the Code of Corporate Governance (the Code), a prescribed statement by the Board, along with Auditors' Review Report thereon, forms part of this Annual Report. The directors are pleased to give the following statement as required by clause (xvi) of the Code: ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ The financial statements present fairly the state of affairs of the Bank, the results of its operations, cash flows and changes in equity. Proper books of account of the Bank have been maintained. Accounting policies as stated in the notes to the financial statements have been consistently applied in the preparation of financial statements except for change referred to in note 3.5 to the accounts which has no effect on these financials. Accounting estimates are based on reasonable and prudent judgment. International Financial Reporting Standards, as applicable to banks in Pakistan, and as stated in note 3 to the financial statements, have been followed in the preparation of the financial statements. The system of internal control is sound in design and has been effectively implemented and monitored. There are no significant doubts upon the Bank's ability to continue as a going concern. There has been no material departure from the best practices of corporate governance, as detailed in the listing regulations. The details of outstanding statutory payments, if any, have been adequately disclosed in the financial statements. STATEMENT ON RISK MANAGEMENT FRAMEWORK The Bank's risk management framework is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with international best practices. The Board of Directors has oversight on all the risks assumed by the Bank. Specific Committees have been constituted to facilitate focused oversight of various risks. The Bank's risk management strategy is targeted at ensuring proper risk governance so as to facilitate ongoing effective risk discovery and to set aside adequate capital efficiently to cater for the risks arising from our business activities. Risks are managed within levels established by the senior management committees and approved by the Board and its committees. We have put in place a comprehensive framework of policies, methodologies, tools and processes that will help us identify measure, monitor and manage all material risks faced by the Bank. This allows us to concentrate our efforts on the fundamentals of banking and to create long-term value for all our stakeholders. The Bank's risk appetite, policies and governance frameworks provide the overarching principles and guidance for the Bank's risk management activities. They help to shape our key decisions for capital management, strategic planning and budgeting, and performance management to ensure that the risk dimension is appropriately and sufficiently considered. In particular, the Bank Risk Appetite is part of the Bank's Internal Capital Adequacy Assessment Process (ICAAP), which incorporates stress testing to ensure that the Bank's capital, risk and return are within acceptable levels under stress scenarios. The CEO has established senior management committees to assist in making business decisions with due consideration to risks and returns. The main senior management committees involved in this are the Management Executive Committee, Asset and Liability Committee (ALCO), Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC) and Market and Liquidity Risk Management Committee (MRMC). These committees also assist the BRMC/Board in specific risk areas. The Bank has continued with the system of comprehensive risk profiling of the Bank in line with regulatory guidelines that will facilitate integrated risk management and to achieve business growth with improved safety, soundness and profitability. The Bank has persistently invested in human capital and technology; best available market resources, technology (SAS) have been made part of Risk Management Division. The Bank continuously improves/updated its Risk Management Framework in the light of the international best practices and State Bank of Pakistan guidelines through significant investments in human resources, technology and training. STATEMENT ON INTERNAL CONTROLS The Board of Directors acknowledges its responsibility for ensuring that an adequate and effective internal control system covering all aspects of our banking operations is in existence and vigorously followed by senior management.
  47. Soneri Bank Limited | Annual Report 2016 DirectorsÕ Report to Shareholders Based on our review of internal control system through various reports from Internal Audit Division, Internal Control Compliance & Control Group and Statutory Auditors as well as various policies, procedures and other matters presented for our review and approval, from time to time, the management believes that the Bank's existing system of Internal Control is considered reasonable in design and is being effectively implemented and monitored. FINANCIAL STATEMENTS The financial statements of the Bank have been audited without qualification by the auditors of the Bank, M/s. A.F. Ferguson & Co., Chartered Accountants and approved/authorized by the Board in its meeting held on 15 February, 2017 for issuance to the shareholders. No material changes and commitments affecting the financial position of your Bank have occurred between the end of the financial year to which these financial statements relate and the date of the Directors' Report. EXTERNAL AUDITORS The retiring auditors M/s. A.F. Ferguson & Co., Chartered Accountants, being eligible, offer themselves for re-appointment. The audit committee of the Board has recommended their re-appointment. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Bank is committed to serving the society both directly and indirectly and in this regard, has contributed in various ways and means. Besides, contributing towards national exchequer and employee benefit schemes, the Bank has been a regular contributor in the philanthropic and sports activities. A summary of Bank's key CSR activities during the year forms part of this Annual Report. SIX YEARS' OPERATING AND FINANCIAL DATA Six years financial performance of the bank is presented on page No. 43. PATTERN OF SHAREHOLDING The pattern of shareholding as required under section 236(2)(d) of the Companies Ordinance, 1984 and Clause (xvi) of the Code of Corporate Governance forms part of this Annual Report. ACKNOWLEDGEMENT On behalf of the Board, I would like to express my sincere appreciation to the customers and shareholders for their continued trust and patronage, the State Bank of Pakistan, the Securities and Exchange Commission of Pakistan and other regulatory bodies for their continued guidance and support. I would also like to record specific appreciation for all employees for their dedication, devotion and hard work throughout the year 2016. On behalf of the Board of Directors ALAUDDIN FEERASTA Chairman Lahore: 15 February, 2017
  48. 63 43
  49. Soneri Bank Limited | Annual Report 2016 3.5
  50. 65 * * * * 4 4 * * 6 6 1 3 3 4 4 4 4 * * 6 6 2 * * * * 3 4 2 4 5 6 3 * * * * 4 4 4 4 6 6 4 2 3 3 4 4 4 4 4 6 6 5 * * * * * * * * 3 6 6 * * 4 4 * * * * 6 6 7 3 3 4 4 * * 4 * 6 6 8 3 4 4 4 6
  51. Soneri Bank Limited | Annual Report 2016
  52. 67 (10.86) 5.81 (32.93) (14.41) (15.09) (15.09) 10,747.85 6,123.00 4,624.85 3,595.61 2,212.77 2.0071 9,580.38 6,478.63 3,101.75 3,077.34 1,878.84 1.7042 3.97 13.83 11.88 8.30 15,335.96 185,222.38 112,001.75 108,846.11 15,944.77 210,839.65 125,305.77 117,883.96 2.21 2.50 PKR bln 2.00 1.88 1.58 1.50 1.10 1.00 1.04 0.78 0.50 0.00 2011 2012 2013 2014 2015 2016 Balance with other banks 31 Other income 29 Lendings to FI 313 Gain on sale of Securities 939 Fee, commission & Brokerage 1,286 Loan & Advances 7,730 Income from dealing in FX 290 Dividend Income 192 Investments 9,451
  53. Soneri Bank Limited | Annual Report 2016 133.75 160.00 120.62 140.00 104.67 250.00 115.61 210.84 120.00 83.60 185.22 200.00 100.00 163.25 80.00 PKR bln PKR bln 71.36 60.00 40.00 20.00 140.58 150.00 120.59 100.00 99.42 50.00 0 0 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016
  54. 69 Statement of Internal Controls Year ended 31 December 2016 This Statement of Internal Controls is based on an ongoing process designed to : ¥ ¥ ¥ Identify the significant risks in achieving the Bank's policies, aims and objectives; Evaluate the nature and extent of those risks; Manage these risks efficiently, effectively and economically. This process was in place for the year ended 31 December 2016. The Board of Directors has instituted an effective Internal Audit Division which not only monitors compliance with the Bank's policies, procedures and controls and reports significant deviations regularly to the Board Audit Committee but also regularly reviews the adequacy of the overall Internal Control system. The observations and weaknesses pointed out by the external auditors are also addressed promptly and necessary steps are taken by the management to eliminate such weaknesses. It is the responsibility of the Bank's management to establish and maintain an adequate and effective system of internal control, to implement sound control procedures and to maintain a suitable control environment. In order to ensure implementation as well as to minimize various regulatory, reputational and compliance risks, the management conducts on-site monitoring of branches through periodical visits and off-site monitoring through various automated tools such as SAS AML, World Check, Sonaware dot net as well as various internally developed systems by Compliance & Control Group. The Bank has adopted the internationally accepted COSO (Committee of Sponsoring Organizations of the Tread-way Commission) Internal Control- Integrated Framework. A reputable advisory firm had been appointed to provide services on implementation of SBP guidelines on Internal Controls over Financial Reporting (ICFR) in the prior years. To further strengthen controls, enhance governance and monitoring, the management had constituted an Internal Control Department which is also an integral part of Compliance & Control Group of the Bank. In order to ensure consistency in the process of compliance with the relevant guidelines, the Bank followed a structured roadmap. Accordingly, the Bank completed a detailed documentation of the existing processes and controls, together with a comprehensive gap analysis of the control design and development of implemented remediation plans for the gaps in 2010. Furthermore, the Bank has developed a comprehensive management testing and reporting framework for ensuring ongoing operating effectiveness of majority of key controls and has significantly addressed the design improvement opportunities identified to complete the project related initiatives. While concerted efforts have always been made to comply with the SBP Guidelines issued, the identification, evaluation, and management of risks within each of the Bank's key activities, their continued evaluation and changes to procedure remains an ongoing process. In accordance with SBP directives, the Bank has completed all the stages of ICFR and upon satisfactory completion of ICFR roadmap, the SBP granted waiver from the submission of external auditor Long Form Reports effective 2012. An annual assessment report by Board Audit Committee on ICFR duly signed by chairman BAC is being submitted to SBP annually since then. The Bank has also successfully completed the cycle of SBP's Internal Control over Financial Reporting exercise for the Year 2016 and report will be submitted by Board Audit Committee to the State Bank of Pakistan during the year 2017. MOHAMMED AFTAB MANZOOR President & Chief Executive Officer Lahore: 15 February 2017
  55. Soneri Bank Limited | Annual Report 2016 Code of Conduct (Summarized Version) This Code of Conduct (Code) outlines the principles, policies and laws that govern the activities of Soneri Bank Limited (Bank), and to which the Board members, employees and others who work with the Bank, or represent the Bank directly or indirectly must adhere. All employees are required to read, understand, sign and follow the Code of Conduct. OBJECTIVE Soneri Bank Limited (Bank) expects all of its employees to act in full compliance with the policies & guidelines set forth in this Code of Conduct. It is the employee's responsibility to make oneself familiar with the following and other policies related to their own business unit: 1. 2. 3. OUTSIDE BUSINESS INTEREST No employees shall engage directly or indirectly, in any other business but shall faithfully and diligently, perform the duties entrusted to him /her from time to time and devote maximum time and attention to work of the Bank, and ensure his/her best endeavors to promote its interest and welfare. No employee shall take up any activity which will bring him/her any reward or remuneration or benefit, directly or indirectly other than from the job at the Bank. FINANCIAL INTEREST No employee or his/her immediate family shall enter into speculative and trading activity in stocks, shares, bonds, or any other securities or commodities, either on his/her own account or that of any other person, firm, company, nor shall involve in other speculative activity (ies) including betting/gambling. Further, an employee and his/her immediate family shall not derive any benefit or assist others to derive any benefit from the access to and possession of information about the Bank, which is not in the public domain and thus constitutes inside information. All the employees are required to comply with the applicable company law on prevention of insider trading. ANTI BRIBERY & CORRUPTION No employee shall accept any presents either in cash or kind from Bank clients, suppliers, vendors and contractors or others, by way of illegal gratification or otherwise. Any such instance where business judgment has been compromised due to such monetary or non-monetary gifts will be considered as a violation of this code. Accepting gifts and benefits that may appear as engaging others in bribery or influencing for a consideration for an official or business favor is prohibited. 5. POLITICAL PARTICIPATION No employee shall take part in, subscribe in any aid of, assist in or take part in any political activity whatsoever. No employee shall canvass or otherwise, interfere or use his/her influence in connection with or take part in any election to a legislative or local body, whether in Pakistan or elsewhere. Provided that a Bank employee who is qualified to vote at such elections may exercise his/her right to vote. 6. PROTECTING BANKS RESOURCES An employee must not persue such outside business activity(ies) and relationships using Banks resources (including but not limited to physical space, office supplies, office communication equipment or time) or allow any outside business, civic or charitable activities to interfere with his/her job performance. Employees must never compromise on integrity, either for personal or professional benefit. Each employee is also personally responsible for the integrity of the information, reports and records under his/her control. 7. ACT OF MISCONDUCT Employee shall not commit any act of subversion or misconduct or misbehavior; and will also not act in any manner, which could be prejudicial or detrimental to the interest of the Bank. The Bank shall be entitled to dispense with the services of any employee, any time per the law of his/her employment and/or repeated negligence, disobedience, dishonesty, breach of trust, acts of any other misconduct or subversion without any notice. 8. DATA SECURITY AND CONFIDENTIALITY All employees shall avoid, during his/her employment or thereafter to disclose or divulge to any person whomsoever any information relating to the Bank or its customers, suppliers, employees or any confidential information which he/she may have access to while being in the service of the Bank. All employees shall be bound to protect the confidentiality of the non-public information at all times. 9. ABIDANCE OF LAWS OF THE LAND Notwithstanding anything contained hereinabove every employee will abide by all the laws of the land including Labor Laws where applicable. 10. PUNCTUALITY Employees are expected to be at work on time every business day. In the event that employee is absent or late due to illness, accident or personal reasons, he/she is required to inform his/her supervisor as soon as possible so that the department may make other arrangements for substitute help while the employee is away. 11. SEPARATION FROM THE BANK In case of resignation every employee will have to attend his/her duties until the resignation is accepted and employee is properly relieved by the competent authority. In case he/she fails to attend his/her duty after tendering resignation, No employee shall give or take bribes or engage in any form of corruption. 4. VIOLATION OF LAW No payment or transaction should be made or undertaken, by an employee or authorized or instructed to be made or undertaken by any other person or the Bank if the consequence of that transaction or payment would be the violation of any law in force.
  56. 71 Code of Conduct (Summarized Version) the resignation will not be considered and he/she may be dealt according to the relevant HR Policy. etc are primarily for business purposes. Employees may not use these systems in a manner that could be harmful or embarrassing to the Bank. Personal communications using these systems must be kept to a minimum. In case of his/her separation from the Bank, all rights to property and information generated or obtained as part of an employment relationship remains the exclusive property of the Bank only. Employees at the time of separation from Bank should return Bank assets, facilities (blackberry, laptop, mobile etc), visiting and Identity cards, stamps etc. 12. 13. ETHICS, DISCRIMINATION OR HARASSMENT All employees are expected to comply with ethical standards as a critical element of their responsibilities. It is encouraged to raise possible ethical issues and Bank prohibits any retaliatory action against any individual for raising legitimate concerns regarding ethics, discrimination or harassment matters or for reporting suspected violations. In case of any issue that has been reported, investigation/inquiry shall be held, and all employees are required to fully co-operate with any appropriately authorized internal or external investigations. An employee must never use Bank systems to transmit or receive electronic images or text of a sexual nature or containing ethnic slurs, racial epithets or any other material of a harassing, offensive or lewd nature. 18. RECORD MANAGEMENT Records are very important business assets. The Bank is committed to managing its records in a consistent, systematic and reliable manner; records provide evidence for business activities and decisions and are often required to meet legal and regulatory requirements. Employees are required to retain the records in accordance with their importance and applicable statutory record retention requirements and Bank policies. 19. TAXATION The Bank is also committed to accuracy in tax related records and tax reporting in compliance with the overall intent and applicable laws. Tax returns must be filed on a timely basis and taxes due paid in time. 20. WORKFORCE DIVERSITY The Bank believes that diversity in the staff is critical to its success and is fully committed to equal employment opportunity, compliance with fair employment practices and non discrimination laws. The Bank prohibits sexual or any other kind of discrimination, harassment or intimidation, whether committed by or against a supervisor, co-worker, customer, vendor or visitor. 21. RELATED STAFF MEMBERS Where husbands, wives or other relatives are employed in the same or related areas, no employee should allow personal and/or domestic circumstances to impinge upon or affect either working relationships or the breach of Bank's employment regulations regarding confidentiality and fidelity. 22. DRUG FREE WORKPLACE Selling, manufacturing, distributing, possessing, using or being under the influence of illegal drugs on the job is prohibited. 23. HEALTH AND SAFETY To protect the well being of the Bank's valued customers and employees, smoking and eating betel leaf within the premises of Bank is strictly prohibited. 24. UNFAIR DEALING PRACTICES No employee may take unfair advantage of anyone through DRESS CODE & PERSONAL HYGIENE Employees are expected to dress in a manner consistent with the nature of work performed. While at work, all employees are expected to dress neatly and appropriately in normal office as per the Dress code policy of the Bank. All employees are expected to abide with the personal hygiene requirements. 14. 15. 16. 17. PROTECTING BANK RESOURCES All employees are responsible for safeguarding the tangible and intangible assets of the Bank and its customers, suppliers and distributors that are under their control. Bank assets may be used only for proper company purpose. Misappropriation, carelessness or waste of Bank assets is a breach of one's duty to the Bank and should be avoided at all cost. FRAUD, THEFT OR ILLEGAL ACTIVITY An employee must not: - steal, embezzle or misappropriate money, funds or anything of value from the Bank, doing so shall subject him/her to potential disciplinary action according to the Bank policy - use BankÕs assets for personal gain or advantage - remove BankÕs assets from their premises and facilities unless properly authorized by the relevant competent authority - use Bank's stationery or corporate documents, Bank's brand name for non official purposes since such implies endorsement from Soneri Bank EMPLOYEE IDENTIFICATION & SECURITY If employees are supplied with an identification card, this must be worn visibly when on Bank's premises. Each employee is also responsible for the safekeeping of his/her ID card. USE OF COMMUNICATION TOOLS Bank's telephone, e-mail, voice-mail, computer, systems
  57. Soneri Bank Limited | Annual Report 2016 Code of Conduct (Summarized Version) manipulation, concealment, abuse of confidential information, misrepresentation of facts or other unfair dealing practices. 25. 26. 27. MEDIA AND PUBLIC SPEAKING No employee other than the authorized personnel is allowed to publish, make speech, give interviews or make public appearance that are connected to Bank's business interests, else an approval is required from Head of HR, Head of Compliance and President. VENDOR RELATIONSHIP Employees responsible for buying assets on Bank's behalf should purchase all goods and services on the basis of quality, price, availability, terms and service. Employees responsible for customer relationship must never lead a supplier or customer to believe that they can inappropriately influence any procurement decisions at Bank. Employees shall ensure to abide by all the provisions of the Fixed Asset Management and Expenditure Control Policies of the Bank CONFLICT OF INTEREST Real or perceived conflicts of interest in any process or form should be disclosed and avoided. An employee or any of his/her relatives/associates should not derive any undue personal benefit or advantage by virtue of his/her position or relationship with the Bank. Any dealings with a related party must be conducted in such a way that no preferential treatment is given and adequate disclosures are made as required by the law and as per the applicable policies of the Bank. Employees must be sensitive to any activities, interests or relationships that might interfere with or even appear to interfere with his/her ability to act in the best interests of the Bank and its customers. An employee must notify an authorized person or HR of any business relationship or proposed business transaction Bank may have with any company in which he/she or a related party has a direct or indirect interest or from which he/she or related party may drive a benefit. Even if related party or relative is employed, this may raise conflict of interest. Therefore, it should be avoided. 28. ACCESS TO BUSINESS INFORMATION Employees should also take steps to ensure that business related paper work and documents are produced, copied properly filed and stored or if not needed, should be properly discarded to minimize the risk that an unauthorized person might obtain access to confidential information. Access to work areas and systems should also be properly controlled. 29. CUSTOMER CONFIDENTIALITY Employees of the Bank are strictly prohibited to disclose the fact to the customer or any other quarter that a suspicious transaction or related information is being or has been reported to any authority, except if required by law. 30. PERSONAL INVESTMENTS If any personal investment that affects or appears to affect an employee's ability to make an unbiased business decision for Bank, should be avoided. 31. PERSONAL FINANCIAL NEEDS Bank employee and their families are encouraged to use the Bank for their personal financial services needs. 32. MODIFICATIONS AND AMENDMENTS The Code of Conduct is subject to variances, modifications, and amendments, from time to time through the resolution of the Board of Directors. 33. BREACH OF CODE OF CONDUCT In case of the breach of any of the above ÒCode of ConductÓ, the employee shall be liable to disciplinary action. This shall be without prejudice, to any other rights and remedies of the Bank. Failure to observe these policies may result in a disciplinary action, up to and including immediate termination of employment or any other relationship with the Bank. Furthermore, violations of this Code may also be violations of the law and may result in civil or criminal penalties. If an employee has any questions about these policies or would like to report violation of the Code of Conduct, he/she may approach Head of Compliance Division for further guidance and advice.
  58. 73 Mechanism adopted for Board 's own Performance Evaluation Soneri Bank Limited has put in place a mechanism whereby performance of overall Board is evaluated annually.Quantitative technique is used where scaled questionnaire is provided to each Director to obtain their feedback.This questionnaire consists of the following main sections:a) Strategic Plan and Performance b) Management Interaction c) Board of DirectorsÕ Operations d) Board Committees Scale from 1 to 5 (1 ÒStrongly disagreeÓ and 5 being ÒVery strongly agreeÓ) is used to rate the assessment criteria given under each sections. Feedback so received from each Director is then collated and analyzed to determine performance in percentage terms against each of the above mentioned section. Final result of the annual evaluation of the Board's own performance is then presented to the Board of Directors which it accordingly reviews and identifies any issues, weaknesses or challenges along with how these can be adequately addressed. This mechanism on the evaluation process adopted by the Bank is being published for all the stakeholders in compliance of the BPRD Circular No.11 dated: 22 August 2016.
  59. Soneri Bank Limited | Annual Report 2016 Statement of Compliance with the Best Practices of Code of Corporate Governance This statement is being presented to comply with the Code of Corporate Governance contained in Regulation No 5.19 of listing regulations of Pakistan Stock Exchange Limited for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance. The Bank has applied the principles contained in the CCG in the following manner: 1. The Bank encourages representation of independent non-executive directors and directors representing minority interests on its Board of Directors. At present the Board includes seven non-executive directors including two independent directors and one executive director (President/CEO): Category Names Independent Directors Mr. Amar Zafar Khan Syed Ali Zafar Executive Director Mr. Mohammad Aftab Manzoor (President & CEO) Non-Executive Directors Mr. Alauddin Feerasta Mr. Nooruddin Feerasta Mr. Muhammad Rashid Zahir Mr. Manzoor Ahmed Mr. Shahid Anwar The independent directors meet the criteria of independence under clause 5.19.1.(b) of the CCG. 2. The directors have confirmed that none of them is serving as a director on more than seven listed companies, including this Bank (excluding the listed subsidiaries of listed holding companies where applicable). 3. All the resident directors of the Bank are registered as taxpayers and none of them have defaulted in payment of any loan to a banking company, a DFI or an NBFC or, being a broker of the stock exchange, has been declared as a defaulter by that stock exchange. 4. No casual vacancy occurred on the Board during the year. 5. The Bank has prepared a ÒCode of ConductÓ and has ensured that appropriate steps have been taken to disseminate it throughout the Bank along with its supporting policies and procedures. 6. The Board has developed a vision/ mission statement, overall corporate strategy and significant policies of the Bank. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained. 7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO, other executive and non-executive directors, have been taken by the Board. 8. The meetings of the Board were presided over by the Chairman and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. 9. The Board remained fully compliant with the provision with regard to their training program. Two directors have received "Certificate of Director Education" from the Pakistan Institute of Corporate Governance (ÒPICGÓ). One director has also received ÒCertificate in Company Direction (International)Ó from Institute of Directors, UK. Four directors are exempt from training as mentioned in proviso to clause 5.19.7 of the Pakistan Stock Exchange Regulations. 9.1 Our directors have also attended various courses/workshops. In the year 2015, three directors have attended a week - long course on ÒThe Accelerated Certificate in Company DirectionÓ a program of the Institute of Directors, UK arranged in Pakistan by the PICG. Further during the year under review, three other directors have also participated in a three full days' workshop on ÒCorporate Governance & Director Duties ExcellenceÓ held in Malaysia.
  60. 75 Statement of Compliance with the Best Practices of Code of Corporate Governance 10 . The Board has approved appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of employment. There were no changes in these positions during the year. 11. The directors' report for this year has been prepared in compliance with the requirements of the CCG and fully describes the salient matters required to be disclosed. 12. The financial statements of the Bank were duly endorsed by the Chief Executive Officer and Chief Financial Officer before approval of the Board. 13. The directors, Chief Executive Officer and executives do not hold any interest in the shares of the Bank other than that disclosed in the pattern of shareholding. 14. The Bank has complied with all the corporate and financial reporting requirements of the CCG. 15. The Board has formed an audit committee. It comprises of four members, all are non-executive directors. The Chairman of the committee is an independent director. 16. The meetings of the audit committee were held once every quarter prior to approval of interim and final results of the Bank and as required by the CCG. The terms of reference of the committee have been formed and advised to the committee for compliance. 17. The Board has formed an HR Committee. It comprises of four members, of whom three are non-executive directors and one is an executive director. The Chairman of the committee is also a non-executive director. 18. The Board has set-up an effective internal audit function. The Head of Internal Audit and Audit team are suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the Bank. 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, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Bank and that the firm and all its 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. 20. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. 21. The 'closed period', prior to the announcement of interim/final results, and business decisions, which may materially affect the market price of Bank's securities, was determined and intimated to directors, employees and the stock exchange. 22. Material/price sensitive information has been disseminated among all market participants at once through the stock exchange. 23. During the year, Board has conducted ÒOwn Performance EvaluationÓ as per the CCG requirements and the result of which was also reviewed by the Board. 24. The Bank has complied with the requirements relating to maintenance of register of persons having access to inside information by designated senior management officer in a timely manner and maintained proper record including basis for inclusion or exclusion of names of persons from the said list. 25. We confirm that all other material principles enshrined in the CCG have been fully complied with. MOHAMMAD AFTAB MANZOOR President & Chief Executive Officer Lahore: 15 February 2017
  61. Soneri Bank Limited | Annual Report 2016 AuditorsÕ Review Report to the Members on Statement of Compliance With the Best Practices of Code of Corporate Governance We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of Corporate Governance (the Code) prepared by the Board of Directors of Soneri Bank Limited ('the Bank') for the year ended December 31, 2016 to comply with the requirements of Rule 5.19 of the Pakistan Stock Exchange Regulations issued by the Pakistan Stock Exchange Limited where the Bank is listed. The responsibility for compliance with the Code is that of the Board of Directors of the Bank. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Bank's compliance with the provisions of the Code and report if it does not and to highlight any non-compliance with the requirements of the Code. A review is limited primarily to inquiries of the Bank's personnel and review of various documents prepared by the Bank to comply with the Code. As a part of our audit of the financial statements, we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of Directors' statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Bank's corporate governance procedures and risks. The Code requires the Bank to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval its related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price and recording proper justification for using such alternate pricing mechanism. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not. Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Bank's compliance, in all material respects, with the best practices contained in the Code as applicable to the Bank for the year ended December 31, 2016. Chartered Accountants Karachi: February 27, 2017 A. F. FERGUSON & CO., Chartered Accountants, a member firm of the PwC network State Life Building No. 1-C, I.I. Chundrigar Road, P.O. Box 4716, Karachi-74000, Pakistan Tel: +92 (21) 32426682-6/32426711-5; Fax: +92(21) 32415007/32427938/32424740; <www.pwc.com/pk> • KARACHI • LAHORE • ISLAMABAD
  62. 77 Auditors Õ Report to the Members We have audited the annexed statement of financial position of Soneri Bank Limited (the Bank) as at December 31, 2016 and the related profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof (here-in-after referred to as the 'financial statements') for the year then ended, in which are incorporated the unaudited certified returns from the branches, except for thirty five branches, which have been audited by us and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief were necessary for the purposes of our audit. It is the responsibility of the Bank's Management to establish and maintain a system of internal control, and prepare and present the financial statements in conformity with the approved accounting standards and the requirements of the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984). Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the International Standards on Auditing as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion and after due verification, which in the case of loans and advances covered more than sixty percent of the total loans and advances of the Bank, we report that: (a) in our opinion, proper books of accounts have been kept by the Bank as required by the Companies Ordinance, 1984 (XLVII of 1984), and the returns referred to above received from the branches have been found adequate for the purposes of our audit; (b) in our opinion: (i) the statement of financial position and profit and loss account together with the notes thereon have been drawn up in conformity with the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984), and are in agreement with the books of accounts and are further in accordance with accounting policies consistently applied except for the change as disclosed in note 3.5 to the financial statements with which we concur; (ii) the expenditure incurred during the year was for the purpose of the Bank's business; and (iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the Bank and the transactions of the Bank which have come to our notice have been within the powers of the Bank; (c) in our opinion and to the best of our information and according to the explanations given to us the statement of financial position, profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and give the information required by the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984), in the manner so required and give a true and fair view of the state of the Bank's affairs as at December 31, 2016, and its true balance of the profit, its comprehensive income, its cash flows and changes in equity for the year then ended; and (d) in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980) was deducted by the Bank and deposited in the Central Zakat Fund established under section 7 of that Ordinance. Chartered Accountants Engagement Partner: Noman Abbas Sheikh Karachi: February 27, 2017 A. F. FERGUSON & CO., Chartered Accountants, a member firm of the PwC network State Life Building No. 1-C, I.I. Chundrigar Road, P.O. Box 4716, Karachi-74000, Pakistan Tel: +92 (21) 32426682-6/32426711-5; Fax: +92(21) 32415007/32427938/32424740; <www.pwc.com/pk> • KARACHI • LAHORE • ISLAMABAD
  63. Soneri Bank Limited | Annual Report 2016 Statement of Financial Position As at 31 December 2016 Note ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial and other institutions Investments - net Advances - net Operating fixed assets Deferred tax assets - net Other assets - net LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities - net Other liabilities 6 7 8 9 10 11 18 12 18,278,840 822,689 5,536,577 117,883,960 125,305,765 5,138,424 5,554,451 278,520,706 16,718,428 1,634,544 3,093,938 108,846,113 112,001,752 4,956,732 6,090,322 253,341,829 14 15 16 17 3,254,243 38,905,078 210,839,646 2,998,800 1,137,530 3,096,182 260,231,479 2,706,274 39,875,623 185,222,383 3,000,000 1,417,042 2,928,565 235,149,887 18,289,227 18,191,942 11,024,636 1,423,829 3,496,305 15,944,770 2,344,457 11,024,636 1,049,465 (1,001,361) 4,263,217 15,335,957 2,855,985 18,289,227 18,191,942 18 19 NET ASSETS REPRESENTED BY Share capital Reserves Discount on issue of right shares Unappropriated profit 20 Surplus on revaluation of assets - net of tax CONTINGENCIES AND COMMITMENTS 2016 2015 ------------ (Rupees in '000) ----------- 21 22 The annexed notes 1 to 45 and Annexures I, II, III and IV form an integral part of these financial statements. Alauddin Feerasta Mohammad Aftab Manzoor Manzoor Ahmed Shahid Anwar Chairman President & Chief Executive Officer Director Director
  64. 79 Profit & Loss Account For the year ended 31 December 2016 Note 2016 2015 ------------ (Rupees in '000) ----------17,524,408 (10,680,270) 6,844,138 18,319,732 (10,722,265) 7,597,467 31,072 (6,941) 276 24,407 6,819,731 1,034,602 (9,277) 3,916 1,029,241 6,568,226 1,286,185 192,429 290,364 945,150 1,336,066 160,253 472,787 1,126,369 (6,484) 28,593 2,736,237 9,555,968 (2,453) 57,361 3,150,383 9,718,609 Extraordinary / unusual items 6,388,894 30 89,705 6,478,629 3,077,339 - 5,972,315 66 150,621 6,123,002 3,595,607 - Profit before taxation 3,077,339 3,595,607 1,099,377 161,371 (62,253) 1,198,495 1,402,494 98,199 (117,854) 1,382,839 1,878,844 2,212,768 Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / return / interest income Provision against loans and advances - net Reversal of provision against diminution in the value of investments - net Bad debts written off directly - net 23 24 10.4.1 9.3 10.8 Net mark-up / return / interest income after provisions Non mark-up / interest income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies - net Gain on sale of securities - net Unrealised loss on revaluation of investments classified as 'held for trading' - net Other income Total non-mark-up / interest income Non mark-up / interest expenses Administrative expenses Provision against other assets - net Other charges Total non-mark-up / interest expenses Taxation - Current - Prior years - Deferred 25 26 27 28 12.1 29 30 30 30 Profit after taxation (Rupees) Basic and diluted earnings per share 31 2.0071 1.7042 The annexed notes 1 to 45 and Annexures I, II, III and IV form an integral part of these financial statements. Alauddin Feerasta Mohammad Aftab Manzoor Manzoor Ahmed Shahid Anwar Chairman President & Chief Executive Officer Director Director
  65. Soneri Bank Limited | Annual Report 2016 Statement of Comprehensive Income For the year ended 31 December 2016 Note Profit after taxation for the year 2016 2015 ------------ (Rupees in '000) ----------1,878,844 2,212,768 (18,537) 6,488 (12,049) 1,866,795 5,730 (2,006) 3,724 2,216,492 (493,705) 172,797 (320,908) 151,614 (112,927) 38,687 Other comprehensive income: Item that will not be reclassified to profit and loss account Components of comprehensive income reflected in equity - Remeasurements of defined benefit plan - Tax on remeasurements of defined benefit plan Comprehensive income transferred to equity Items that may be reclassified subsequently to profit and loss account Components of comprehensive income not reflected in equity Net change in value of "available-for-sale" securities Deferred tax asset / (liability) on changes in value of "available-for-sale" securities (i) Surplus on revaluation of operating fixed assets - (ii) 1,545,887 Total comprehensive income 2,255,179 (i) Surplus / (deficit) on revaluation of "available-for-sale securities - net of tax" has been shown in the Statement of Comprehensive Income in order to comply with the revised "Prudential Regulations for Corporate / Commercial Banking" issued by the State Bank of Pakistan. (ii) Surplus on revaluation of operating fixed assets-net of tax is presented under separate head below equity as "Surplus / (deficit) on revaluation of assets" in accordance with the requirements of section 235 of the Companies Ordinance, 1984. The annexed notes 1 to 45 and Annexures I, II, III and IV form an integral part of these financial statements. Alauddin Feerasta Mohammad Aftab Manzoor Manzoor Ahmed Shahid Anwar Chairman President & Chief Executive Officer Director Director
  66. 81 Cash Flow Statement For the year ended 31 December 2016 Note CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Less : Dividend income 2016 2015 ------------ (Rupees in '000) ----------3,077,339 192,429 2,884,910 3,595,607 160,253 3,435,354 575,700 97,969 89,382 24,871 (6,941) 6,484 31,072 30 (11,565) (600) 276 806,678 3,691,588 584,034 81,542 38,322 24,870 (9,277) 2,453 1,034,602 66 (12,106) 3,916 1,748,422 5,183,776 (2,442,639) (13,433,330) 1,087,957 (14,788,012) (2,489,596) (5,153,607) 110,426 (7,532,777) 547,969 (1,102,159) 25,617,263 149,080 25,212,153 14,115,729 (1,831,964) 12,283,765 (28,631) 14,293,729 21,972,012 28,362 36,265,472 33,916,471 (171,001) 33,745,470 790,865 (11,740,670) 1,418,709 194,129 (1,004,102) 18,000 35,526 (10,287,543) (51,008) (33,445,762) 524,772 152,160 (610,461) 32,577 (33,397,722) CASH FLOWS FROM FINANCING ACTIVITIES (Payments) / proceeds from sub-ordinated loans Dividends paid Net cash (used in) / generated from financing activities (1,200) (1,378,079) (1,379,279) 3,000,000 (1,102,464) 1,897,536 Increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 616,943 18,346,786 18,963,729 2,245,284 16,101,502 18,346,786 Adjustments: Depreciation on operating fixed assets Depreciation on ijarah assets Amortisation of intangible assets Operating fixed assets written off directly Reversal of provision for diminution in the value of investments-net Unrealised loss on revaluation of investments classified as held-for-trading-net Provision against non-performing loans and advances Provision against other assets Gain on sale of operating fixed assets Gain on sale of non-banking assets Bad debts written off directly (Increase) / decrease in operating assets Lendings to financial and other institutions Advances - net Others assets (excluding advance taxation) Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Net investments in held-for-trading securities Net investments in available-for-sale securities Net investments in held-to-maturity securities Dividends received Purchase of operating fixed assets Sale proceeds on disposal of non-banking assets Sale proceeds on disposal of operating fixed assets Net cash used in investing activities 32 The annexed notes 1 to 45 and Annexures I, II, III and IV form an integral part of these financial statements. Alauddin Feerasta Mohammad Aftab Manzoor Manzoor Ahmed Shahid Anwar Chairman President & Chief Executive Officer Director Director
  67. Soneri Bank Limited | Annual Report 2016 Statement of Changes in Equity For the year ended 31 December 2016 Capital reserves Discount Share Statutory on issue of premium reserve (a) shares Share capital Particulars General reserve Unappropriated profit (b) Total ------------------------------------------------ (Rupees in '000) ---------------------------------------------- 11,024,636 Balance as at 1 January 2015 Profit after taxation for the year (1,001,361) 1,405 932,506 - 3,150,185 14,107,371 - - - - - 2,212,768 2,212,768 - - - - - 5,730 (2,006) 3,724 5,730 (2,006) 3,724 Final cash dividend for the year ended 31 December 2014 at Rs.1 per share - - - - - (1,102,464) (1,102,464) Transfer from statutory reserve to unappropriated profit - - - - 327,000 Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax (note 21.1) - - - - 114,558 Transfer from unappropriated profit to statutory reserve - - - 442,554 - (442,554) 1,048,060 - 4,263,217 - - (999,956) Other comprehensive income for the year - Remeasurements of defined benefit plan - Tax on remeasurements of defined benefit plan Transactions with owners recognised directly in equity 11,024,636 Balance as at 31 December 2015 (1,001,361) 1,405 1,001,361 (1,405) (327,000) - - 114,558 15,335,957 Discount on issue of shares adjusted against share premium / unappropriated profit - Profit after taxation for the year - - - - - 1,878,844 1,878,844 - - - - - (18,537) 6,488 (12,049) (18,537) 6,488 (12,049) Final cash dividend for the year ended 31 December 2015 at Rs 1.25 per share - - - - - (1,378,079) (1,378,079) Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax (note 21.1) - - - - - 120,097 120,097 Transfer from unappropriated profit to statutory reserve - - - 375,769 - (375,769) - - 1,423,829 - 3,496,305 Other comprehensive income for the year - Remeasurements of defined benefit plan - Tax on remeasurements of defined benefit plan - Transactions with owners recognised directly in equity Balance as at 31 December 2016 11,024,636 15,944,770 (a) This represents reserve created under section 21(i)(a) of the Banking Companies Ordinance, 1962. (b) As explained in note 10.5 to these financial statements, unappropriated profit includes an amount of Rs. 716.711 million net of tax as at 31 December 2016 (31 December 2015: Rs. 972.681 million) representing additional profit arising from availing forced sales value benefit for determining provisioning requirement which is not available for distribution either as cash or stock dividend to shareholders and bonus to employees. The annexed notes 1 to 45 and Annexures I, II, III and IV form an integral part of these financial statements. Alauddin Feerasta Mohammad Aftab Manzoor Manzoor Ahmed Shahid Anwar Chairman President & Chief Executive Officer Director Director
  68. 83 Notes to and Forming Part of the Financial Statements For the year ended 31 December 2016 1 . STATUS AND NATURE OF BUSINESS Soneri Bank Limited ("the Bank") was incorporated in Pakistan on 28 September 1991 as a public limited company under the Companies Ordinance, 1984. Its registered office is situated at Rupali House 241-242, Upper Mall Scheme, Anand Road, Lahore, Punjab and its shares are quoted on Pakistan Stock Exchange Limited. The Bank is engaged in banking services as described in the Banking Companies Ordinance, 1962 and operates with 288 branches including 16 Islamic banking branches (2015: 266 branches including 16 Islamic banking branches) in Pakistan. Based on the financial statements of the Bank for the year ended 31 December 2015, the Pakistan Credit Rating Agency Limited (PACRA) has maintained the Bank's long-term rating as AA- (31 December 2014: AA-) and short-term rating as A1+ (31 December 2014: A1+). 2. BASIS OF PRESENTATION 2.1 In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, the State Bank of Pakistan has issued various circulars from time to time. Permissible forms of trade-related modes of financing include purchase of goods by banks from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these financial statements as such but are restricted to the amount of facility actually utilised and appropriate portion of mark-up thereon. 2.2 The financial results of the Islamic banking branches of the Bank have been consolidated in these financial statements for reporting purposes, after eliminating material intra branch transactions / balances. The financial results of the Islamic banking branches are disclosed in Annexure II to these financial statements. 3. STATEMENT OF COMPLIANCE 3.1 These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan. The approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board and Islamic Financial Accounting Standards (IFASs) issued by the Institute of Chartered Accountants of Pakistan, as are notified under the Companies Ordinance, 1984, provisions of and the directives issued under the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962, and the directives issued by the SECP and the SBP. Wherever the requirements of provisions and directives issued under the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962, the IFASs notified under the Companies Ordinances, 1984 and the directives issued by the SECP and the SBP differ from the requirements of the IFRSs, the provisions and directives issued under the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962, IFASs notified under the Companies Ordinance, 1984 and the directives issued by the SECP and the SBP prevail. 3.2 The State Bank of Pakistan has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments: Recognition and Measurement' and International Accounting Standard (IAS) 40, 'Investment Property' for Banking Companies through BSD Circular No. 10 dated 26 August 2002 till further instructions. In addition, the Securities and Exchange Commission of Pakistan has deferred the applicability of International Financial Reporting Standard 7, Financial Instruments: Disclosures (IFRS 7) vide SRO 411(I) / 2008 dated 28 April 2008 till further orders. Accordingly, the requirements of these standards have not been considered in the preparation of these financial statements. However, investments and non-banking assets have been classified and valued in accordance with the requirements prescribed by the State Bank of Pakistan through various circulars. 3.3 The SBP vide its BSD Circular No. 07 dated 20 April 2010 has clarified that for the purpose of preparation of financial statements in accordance with International Accounting Standard - 1 (Revised), 'Presentation of Financial Statements', two statement approach shall be adopted i.e. separate 'Profit and Loss Account' and 'Statement of Comprehensive Income' shall be presented, and Balance Sheet shall be renamed as 'Statement of Financial Position'. Furthermore, the surplus / deficit on revaluation of available for sale (AFS) securities shall be included in the 'Statement of Comprehensive Income'. However, it should continue to be shown separately in the Statement of Financial Position below equity. Accordingly, the above requirements have been adopted in the preparation of these financial statements. 3.4 The SBP vide its BPRD Circular No. 04 dated 25 February 2015 has clarified that the reporting requirements of IFAS-3 for Islamic Banking Institutions (IBIs) relating to annual, half yearly and quarterly financial statements would be notified by SBP through issuance of specific instructions and uniform disclosure formats in consultation with IBIs. These reporting requirements have not been ratified to date. Accordingly, the disclosures requirements under IFAS 3 have not been considered in these financial statements.
  69. Soneri Bank Limited | Annual Report 2016 3.5 Change in accounting policy The Bank has changed its accounting policy effective from 1 January 2016 for recording of non-banking assets acquired in satisfaction of claims to comply with the requirements of the 'Regulations for Debt Property Swap' (the regulations) issued by SBP vide its BPRD Circular No. 1 of 2016, dated: 1 January 2016. In line with the guidance provided in the Regulations, the non banking assets acquired in satisfaction of claims are required to be carried at revalued amounts less accumulated depreciation and accumulated impairment losses, if any. These assets are to be revalued by professionally qualified valuers with sufficient regularity to ensure their net carrying value does not differ materially from their fair value. A surplus arising on revaluation of non-banking assets acquired in satisfaction of claims is required to be credited to the 'surplus on revaluation of assets' account appearing on the Statement of Financial Position below equity. Any deficit arising on revaluation is first set off against the surplus account for that non-banking asset, if any, or if no surplus exists, is charged to the profit and loss account directly. Legal fees, transfer cost and direct cost of acquiring title to property is charged to the profit and loss account. Previously, non-banking assets acquired in satisfaction of claims were carried at cost (including legal fees, transfer costs and direct cost) less accumulated impairment, if any. The above change in accounting policy does not have any impact on these financial statements. 3.6 Standards, interpretations and amendments to published approved accounting standards that are effective in the current year 3.6.1 There are certain new and amended standards and interpretations that are mandatory for the Bank's accounting periods beginning on or after 01 January 2016 but are considered not to be relevant or do not have any significant effect on the Bank's operations and are, therefore, not disclosed in these financial statements. 3.7 Standards, interpretations and amendments to published approved accounting standards that are not yet effective: 3.7.1 The following revised standards, amendments and interpretations with respect to the approved accounting standards would be effective from the dates mentioned below against the respective standard, amendments or interpretation: Standard, Interpretations or Amendments - IFRS 9 - Financial instruments IFRS 15 - Revenue from contracts IFRS 16 - Leases Effective date (accounting periods beginning on or after) 01 January 2018 01 January 2018 01 January 2019 The management is in the process of assessing the impact of these standards on the financial statements of the Bank. 3.7.2 There are certain new and amended standards and interpretations that are mandatory for the Bank's accounting periods beginning on or after 01 January 2017 but are considered not to be relevant or will not have any significant effect on the Bank's operations and are therefore not detailed in these financial statements. 4. BASIS OF MEASUREMENT 4.1 Accounting convention These financial statements have been prepared under the historical cost convention, except that certain fixed assets are stated at revalued amounts, certain investments and commitments in respect of forward exchange contracts have been marked to market and are carried at fair values and staff retirement benefits are carried at present value. 4.2 Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the Bank operates. These financial statements are presented in Pakistani Rupee which is the Bank's functional and presentation currency. 4.3 Critical accounting estimates and judgements The preparation of the financial statements in conformity with the approved accounting standards as applicable in Pakistan requires the management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and income and expenses. It also requires management to exercise judgement in application of its accounting policies. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.
  70. 85 4 .4 Significant accounting estimates and areas where judgements were made by the management in the application of accounting policies are as follows: i) classification and provisioning against investments (notes 5.3 and 9); ii) classification and provisioning against loans and advances (notes 5.4 and 10); iii) current and deferred taxation (notes 5.7, 18, 22.9.1, 22.9.3 and 30); iv) accounting for defined benefit plan (notes 5.9 and 34); v) depreciation, amortisation methods, useful lives and revaluation of operating fixed assets (notes 5.5 and 11); and vi) impairment of assets (note 5.6). 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented except for the change in accounting policy as disclosed in note 3.5 to these financial statements. 5.1 Cash and cash equivalents Cash and cash equivalents for the purpose of cash flow statement represent cash in hand and balances with treasury banks, balances with other banks in current and deposit accounts, national prize bonds, if any, and overdrawn nostro accounts. 5.2 Lendings to / borrowings from financial and other institutions The Bank enters into repurchase agreements (repo) and reverse repurchase agreements (reverse repo) at contracted rates for a specified period of time. These are recorded as under: (a) Sale of securities under repurchase agreements Securities sold subject to a repurchase agreement (repo) are retained in the financial statements as investments and the counter party liability is included in borrowings. The differential in sale and repurchase value is accrued over the period of the contract and recorded as an expense. (b) Purchase of securities under resale agreements Securities purchased under agreement to resell (reverse repo) are included in lendings to financial and other institutions. The underlying security is not recognised as a separate asset in the financial statements. The difference between the contracted price and resale price is amortised over the period of the contract and recorded as income. (c) Lending under margin trading system Securities purchased under margin financing are recorded as "lendings to financial and other institutions" at the fair value of the consideration given. All margin financing transactions are accounted for on the transaction date. Income on margin financing is accrued over the period of the contract. (d) Borrowings These are recorded at the proceeds received. Mark-up on such borrowings is charged on a time proportion basis to the profit and loss account over the period of borrowings. (e) Bai Muajjal Bai Muajjal transactions with the SBP and other financial institutions are classified under lendings. In Bai Muajjal, the Bank sells shariah compliant instruments on credit to customers. The credit price is agreed at the time of sale and such proceeds are received at the end of the credit period. The difference between the sale and the credit price is recognised over the credit period and recorded as income. 5.3 Investments The Bank classifies its investments as follows: (a) Held for trading These represent securities, which are either acquired for the purpose of generating profit from short-term fluctuations in market prices, interest rates or dealerÕs margin or are securities included in the portfolio in which a pattern of short-term profit making exists.
  71. Soneri Bank Limited | Annual Report 2016 (b) Held to maturity These are securities with fixed or determinable payments and maturity, which the Bank has the positive intent and ability to hold till maturity. (c) Available for sale These are investments, other than those in subsidiaries and associates, if any, that do not fall under the held for trading or held to maturity categories. Investments other than those categorised as held for trading are initially recognised at fair value which includes transaction costs associated with the investment. Investments classified as held for trading are initially recognised at fair value, and transaction costs are expensed in the profit and loss account. All purchases and sales of investments that require delivery within the time frame established by regulations or market conventions are recognised at the trade date. Trade date is the date on which the Bank commits to purchase or sell the investment. Premium or discount on acquisition of investments is amortised through the profit and loss account over the remaining period till maturity using effective interest method. In accordance with the requirements of the State Bank of Pakistan, quoted securities, other than those classified as 'held to maturity', are subsequently remeasured at market values. Surplus / (deficit) arising on revaluation of quoted securities classified as 'available for sale', is taken to a separate account shown in the Statement of Financial Position below equity. Surplus / (deficit) arising on revaluation of quoted securities which are classified as 'held for trading', is taken to the profit and loss account. Cost of investment is determined on a weighted average basis. In accordance with the BSD circular No. 14 dated 24 September 2004 issued by the State Bank of Pakistan, investments classified as 'held to maturity' are carried at amortised cost less impairment, if any. Unquoted equity securities, excluding investments in subsidiaries and associates, if any are valued at the lower of cost and break-up value. Break-up value of unquoted equity securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements. Impairment loss in respect of investments categorised as available for sale (except term finance certificates) and held to maturity is recognised based on management's assessment of objective evidence of impairment as a result of one or more events that may have an impact on the estimated future cash flows of the investments. A significant or prolonged decline in the fair value of a listed equity investment below its cost is also considered an objective evidence of impairment. Provision for diminution in the value of term finance certificates is made as per the requirements of the Prudential Regulations issued by the SBP. In case of impairment of available for sale securities, the cumulative loss that has been recognised directly in surplus / deficit on revaluation of securities on the statement of financial position below equity is removed therefrom and recognised in the profit and loss account. For investments classified as held to maturity, the impairment loss is recognised in the profit and loss account. Gain / loss on sale of investments is credited / charged to the profit and loss account. 5.4 Advances Advances are stated net of specific and general provisions. Specific provision for advances are made in accordance with the requirements of the Prudential Regulations and other directives issued by the SBP and charged to the profit and loss account. General provision against consumer and small enterprises financings portfolio is maintained as per the requirements of the Prudential Regulations issued by the State Bank of Pakistan. Advances are written off when there is no realistic prospect of recovery. In addition to conventional products, the Bank also offers various Islamic financing products which among others include: Murabaha Murabaha financings are reflected as receivables at the invoiced amount. Actual sales and purchases are not reflected, as the goods are purchased by the customer as an agent of the Bank and all documents relating to purchase are in the customer's name. However, the profit on that sale revenue not due for payment is deferred and is recognised on a time proportion basis. Funds disbursed under Murabaha financing arrangements for purchase of goods are recorded as "Advance Against Murabaha" in advances.
  72. 87 Salam Salam financings are reflected as receivables at the invoiced amount . Profit not due for payment is deferred and is recognised on a time proportion basis. Funds disbursed under Salam financing arrangements for purchase of goods are recorded as "Advance Against Salam" in advances. Diminishing Musharaka In Diminishing Musharaka based financing, the Bank enters into a Musharaka based on Shirkat-ul-milk for financing an agreed share of fixed asset (e.g. house, land, plant or machinery) with its customers and enters into periodic profit payment agreement for the utilization of the Bank's Musharaka share by the customer. Ijarah assets Ijarah assets are stated at cost less accumulated depreciation and impairment losses, if any. Depreciation is charged from the date of recognition of ijarah assets on a straight line basis over the period of Ijarah. Impairment of Ijarah assets is determined on the same basis as that of operating fixed assets. Ijarah income is recognised in income on an accrual basis as and when the rental becomes due. Impairment of Ijarah rental is determined in accordance with the requirements of the Prudential Regulations and other directives issued by the SBP and charged to the profit and loss account. 5.5 Operating fixed assets and depreciation (a) Tangible assets - owned Operating fixed assets (other than land and buildings) are stated at cost less accumulated depreciation and impairment losses, if any. Buildings are carried at revalued amount less any accumulated depreciation and subsequent impairment losses, if any. Land is carried at revalued amount less subsequent impairment losses, if any. Depreciation on all operating fixed assets (excluding land which is not depreciated) is charged using the straight line method in accordance with the rates specified in note 11.1 to the financial statements after taking into account residual values, if any. The residual values and useful lives are reviewed and adjusted, if appropriate, at each reporting date. Depreciation on additions is charged from the month the assets are available for use while in the case of assets disposed of, it is charged upto the date of disposal. 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. All other repair and maintenance expenditure are charged to the profit and loss account as and when incurred. Lands and buildings are revalued by professionally qualified valuers with sufficient regularity to ensure that the net carrying amount does not differ materially from their fair value. Surplus arising on revaluation is credited to the surplus on revaluation of fixed assets account. Deficit arising on subsequent revaluation of fixed assets is adjusted against the balance in the above mentioned surplus account as allowed under the provisions of the Companies Ordinance, 1984. The surplus on revaluation of fixed assets to the extent of incremental depreciation charged on the related assets is transferred to unappropriated profit. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal of fixed assets are charged / credited to the profit and loss account currently, except that the related surplus on revaluation of fixed assets (net of deferred taxation) is transferred directly to unappropriated profit. (b) Tangible assets - leased Leases are classified as finance lease wherever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating lease. Lease payments, if any, under operating lease are charged to income on a straight line basis over the lease term. Assets held under finance lease, if any, are stated at lower of fair value or present value of minimum lease payments at inception less accumulated depreciation. The outstanding obligations under the lease agreements are shown as a liability net of finance charges allocable to future periods. The finance charges are allocated to accounting periods in a manner so as to provide a constant periodic rate of return on the outstanding liability.
  73. Soneri Bank Limited | Annual Report 2016 Depreciation on assets held under finance lease is charged in a manner consistent with that for depreciable assets which are owned by the Bank. (c) Intangible assets Intangible assets having a definite useful lives are stated at cost less accumulated amortisation and impairment losses, if any. Intangible assets are amortised from the month, when these assets are available for use, using the straight line method, whereby the cost of the intangible asset is amortised on the basis of the estimated useful life over which economic benefits are expected to flow to the Bank. The residual values, useful lives and amortisation method is reviewed and adjusted, if appropriate, at each reporting date. Subsequent costs are included in the assetÕs carrying amounts or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. Intangible assets having an indefinite useful life are stated at acquisition cost less accumulated impairment losses, if any. Gains and losses on disposals, if any, are taken to the profit and loss account in the period in which they arise. (d) Capital work in progress Capital work-in-progress is stated at cost less accumulated impairment losses, if any. All expenditure connected with specific assets incurred during installation and construction / development period are carried under this head. These are transferred to specific assets as and when assets become available for use. 5.6 Impairment The carrying amount of assets is reviewed at each reporting date to determine whether there is any indication of impairment of any asset or group of assets. If any such indication exists, the recoverable amount of such assets is estimated and impairment losses are recognised immediately in the financial statements. The resulting impairment loss is taken to the profit and loss account except for impairment loss on revalued assets, which is adjusted against related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of that asset. An impairment loss is reversed (except for impairment loss relating to goodwill), if there has been a change in the estimate used to determine the recoverable amount. Such reversals are only made to the extent that the assetÕs carrying amount does not exceed the amount that would have been determined if no impairment loss had been recognised. 5.7 Taxation Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity or below equity, in which case it is recognised in equity or below equity. Current Provision for current taxation is based on the taxable income at the current rates of taxation after taking into account available tax credit and rebates. The charge for current tax also includes adjustments, where considered necessary relating to prior years, which arises from assessments / developments made during the year. Deferred Deferred tax is recognised using the balance sheet liability method on all temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and amounts used for taxation purposes. Deferred tax is calculated at the rates that are expected to apply to the period when the differences are expected to reverse based on tax rates that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. The carrying amount of deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilised.
  74. 89 The Bank also recognises deferred tax asset / liability on deficit / surplus on revaluation of fixed assets and securities which is adjusted against the related deficit / surplus in accordance with the requirements of International Accounting Standard (IAS) 12, 'Income Taxes'. 5.8 Provisions and contingent assets and liabilities Provisions are recognised when the Bank has a legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate. Contingent assets are not recognised and are also not disclosed unless an inflow of economic benefits is probable. Contingent liabilities are not recognised but disclosed unless the probability of an outflow of resources embodying economic benefits are remote. 5.9 Staff retirement benefits Defined benefit plan The Bank operates an approved funded gratuity scheme for its permanent employees. The liability recognised in the statement of financial position in respect of defined benefit gratuity scheme, is the present value of the defined benefit obligation at the statement of financial position date less the fair value of plan assets. Contributions to the fund are made on the basis of actuarial recommendations using the Projected Unit Credit Method. Valuations are conducted by an independent actuary with the last valuation conducted on 31 December 2016. Amounts arising as a result of "remeasurements", representing the actuarial gains and losses and the difference between the actual investment returns and the return implied by the net interest cost are recognised in the Statement of Financial Position immediately, with a charge or credit to "Other Comprehensive Income" in the periods in which they occur. Gratuity is payable to staff on completion of the prescribed qualifying period of service under the scheme. Defined contribution plan The Bank operates an approved funded provident fund scheme for all its permanent employees. Equal monthly contributions are made, both by the Bank and its employees, to the Fund at the rate of 8.33% of basic salaries of the employees. 5.10 Borrowings / deposits and their cost Borrowings / deposits are recorded at the proceeds received. Borrowing / deposit costs are recognised as an expense in the period in which these are incurred to the extent that they are not directly attributable to the acquisition of or construction of qualifying assets. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) are capitalised as part of the cost of the asset. 5.11 Sub-ordinated loans Sub-ordinated loans are initially recorded at the amount of proceeds received. Mark-up on sub-ordinated loans is charged to the profit and loss account over the period on an accrual basis and is recognised separately as part of other liabilities. 5.12 Revenue recognition - Mark-up income / interest on advances and return on investments are recognised on a time proportion basis using the effective yield on the arrangement / instrument except that mark-up / return on non-performing advances and investments is recognised on receipt basis. Interest / return / mark-up on rescheduled / restructured advances and investments is recognised as permitted by the State Bank of Pakistan except where, in the opinion of the management, it would not be prudent to do so. - Fee, commission and brokerage income is recognised upon performance of services. - Dividend income from investments is recognised when the Bank's right to receive the dividend is established. - Premium or discount on acquisition of investments is amortised using effective yield method and taken to profit and loss account.
  75. Soneri Bank Limited | Annual Report 2016 5.13 - 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. - Profits on Bai Muajjal lendings are recognised on straight line basis. Foreign currencies (a) Foreign currency transactions Foreign currency transactions are translated into rupees at the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities in the foreign currencies are expressed in rupee terms at the exchange rates ruling on the reporting date. Outstanding forward foreign exchange contracts and foreign bills purchased are valued at the forward rates applicable to the respective maturities. Exchange gains and losses are included in the profit and loss account. (b) Translation gains and losses Translation gains and losses are included in the profit and loss account. 5.14 Commitments Commitments for outstanding forward foreign exchange contracts are disclosed in the financial statements at the contracted rates. 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 ruling on the reporting date. 5.15 Provision for guarantee claims and other off balance sheet obligations Provision for guarantee claims and other off-balance sheet obligations are recognised when intimated and where reasonable certainty exists for the Bank to settle the obligation. Charge to profit and loss account is stated net of expected recoveries. 5.16 Acceptances Acceptances comprise undertakings by the Bank to pay bills of exchange drawn on customers. The Bank expects most acceptances to be simultaneously settled with the reimbursement from the customers. Acceptances are accounted for as offbalance sheet transactions and are disclosed under "Contingencies and Commitments". 5.17 Financial instruments 5.17.1 Financial assets and liabilities Financial instruments carried on the balance sheet include cash and balances with treasury banks, balances with other banks, lendings to financial and other institutions, investments, advances, certain receivables, bills payable, borrowings from financial institutions, deposits and other accounts, sub-ordinated loans and other payables. The particular recognition methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with them. 5.17.2 Derivative financial instruments Derivative financial instruments, if any, are initially recognised at fair value on the date on which a derivative contract is entered into and are, subsequently, remeasured at fair value using appropriate valuation techniques. All derivative financial instruments are carried as assets when fair value is positive and liability when fair value is negative. Any change in the fair value of derivative financial instruments is taken to the profit and loss account. 5.17.3 Off-setting Financial assets and financial liabilities are off-set and the net amount is reported in the financial statements when there exists a legally enforceable right to set-off and the Bank intends either to settle on a net basis or to realise the assets and to settle the liabilities simultaneously. Income and expense items of such assets and liabilities are also off-set and the net amount is reported in the financial statements. 5.18 Basic and diluted 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.
  76. 91 5 .19 Dividend and appropriation to reserves Dividend and appropriation to reserves after the reporting date, except appropriations which are required by law are recognised as liability in the Bank's financial statements in the year in which these are approved. 5.20 Segment reporting A segment is a distinguishable component of the Bank that is engaged either in providing product or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Segments are reported as per the Bank's functional structure and are as follows: (a) Business segments (i) Corporate finance Corporate banking includes financing and services provided to corporate customers including services in connection with mergers and acquisitions, underwriting, privatisation, securitisation, syndication, Initial Public Offers (IPOs), etc. It also includes deposits mobilized from Corporate branches. (ii) Trading and sales It includes fixed income, equity, foreign exchanges, lendings and repos. (iii) Retail banking It includes all retail related lendings and banking services (including staff, consumer and SME financing) as well as deposits mobilized from Retail branches. (b) Geographical segment The operations of the Bank are currently based only in Pakistan. Therefore, geographical segment is not relevant. Note 6. 2016 2015 (Rupees in '000) CASH AND BALANCES WITH TREASURY BANKS In hand Local currency Foreign currencies 6.1 3,818,859 976,734 3,599,650 1,048,364 - 91,544 6.2 6.3 9,225,205 697,883 8,529,943 534,809 6.4 2,000,422 1,530,053 1,559,737 18,278,840 1,384,065 16,718,428 In transit Local currency Foreign currency With State Bank of Pakistan in Local currency current accounts Foreign currency current accounts Foreign currency deposit accounts against foreign currency deposits mobilised With National Bank of Pakistan in Local currency current accounts
  77. Soneri Bank Limited | Annual Report 2016 6.1 This includes National Prize Bonds of Rs. 4.047 million (2015: Rs. 5.226 million). 6.2 The local currency current accounts are maintained with the State Bank of Pakistan (SBP) as per the requirements of Section 36 of the State Bank of Pakistan Act, 1956. This section requires banking companies to maintain a local currency cash reserve in current accounts opened with the SBP at a sum not less than such percentage of its time and demand liabilities as may be prescribed by the SBP. 6.3 This represents cash reserve account maintained with SBP at an amount equivalent to at least 5% of the Bank's foreign currency deposits mobilised under FE-25 scheme and carry Nil return (2015: Nil return). 6.4 These represent special cash reserve maintained with SBP at an amount equivalent to atleast 15% of the Bank's foreign currency deposits mobilised under FE-25 scheme and 6% special cash reserve requirement on FE-25 deposits maintained by Islamic banking branches. These carry Nil return (2015: Nil return). Note 7. BALANCES WITH OTHER BANKS In Pakistan In current accounts In deposit accounts Outside Pakistan In current accounts 7.1 7.1 31,474 182,555 649,449 822,689 1,420,515 1,634,544 2016 2015 (Rupees in '000) LENDINGS TO FINANCIAL AND OTHER INSTITUTIONS Call money lending Margin Trading System Letter of placement Foreign currency placement Bai Muajjal 8.1 32,110 141,130 This includes Rs 636.305 million (2015: Rs 1,297.630 million) eligible for Automated Investment Plans. This balance is current in nature. However, if increased over a specified amount, it entitles the Bank to earn interest income from the correspondent banks at agreed upon rates. Note 8. 2016 2015 (Rupees in '000) 8.2 8.3 8.4 8.5 2,500,000 300,000 1,045,985 1,690,592 5,536,577 1,800,000 69,557 700,000 524,381 3,093,938 4,490,592 1,045,985 5,536,577 3,093,938 3,093,938 Particulars of lendings In local currency In foreign currencies 8.2 This represents lending to a commercial bank which carries mark-up at the rate of 6.25% per annum (2015: 6.50%) and is due to mature on 03 January 2017. 8.3 This represents lending to a financial institution which carries mark-up at the rate of 6.30% per annum (2015: 7.00%) and is due to mature on 10 February 2017. 8.4 This represents lending to a overseas branch of a commercial bank which carries interest at the rate of 2.15% per annum (2015: Nil) and is due to mature on 22 May 2017. 8.5 These carry mark-up at rates ranging between 5.90% to 7.04% per annum (2015: 5.99% to 6.00%) and are due to mature latest by 20 March 2017.
  78. 93 9 . INVESTMENTS - NET 9.1 Investments by types 2015 2016 Note Held by bank Given as collateral Held by bank Total Given as collateral Total ----------------------------------------- (Rupees in '000) ----------------------------------------Held-for-trading securities Fully paid-up ordinary shares - - - 55,106 - 55,106 Pakistan Investment Bonds - - - 310,721 - 310,721 Market Treasury Bills - - - Government of Pakistan -Ijarah Sukuks - - - Term Finance Certificates - - - - Market Treasury Bills 37,857,303 6,304,140 Pakistan Investment Bonds 41,508,591 20,537,270 2,118,675 - 2,118,675 1,600,000 - - - - 212,306 - 212,306 Term Finance Certificates and Sukuks 2,503,559 - 2,503,559 704,001 - 704,001 Fully paid-up ordinary shares 2,988,906 - 2,988,906 2,471,373 - 2,471,373 200,000 - 200,000 321,383 - - - - 400,000 - 400,000 - 25,038 - 25,038 - 790,865 - 790,865 Available-for-sale securities 44,161,443 37,466,249 609,762 38,076,011 62,045,861 35,983,103 22,914,274 58,897,377 Government of PakistanIjarah Sukuks Bai Muajjal with Government of Pakistan Units of mutual funds 87,177,034 26,841,410 114,018,444 78,758,415 23,524,036 1,600,000 321,383 102,282,451 Held-to-maturity securities Pakistan Investment Bonds 259,643 - 259,643 261,521 - 261,521 - - - 1,300,000 - 1,300,000 1,538,879 - 1,538,879 1,655,710 - 1,655,710 1,798,522 - 1,798,522 3,217,231 - 3,217,231 Government of Pakistan Ijarah Sukuks Term Finance Certificates, Bonds and Sukuks 88,975,556 Investments at cost 26,841,410 115,816,966 82,766,511 23,524,036 106,290,547 Less: Provision for diminution in the value of investments 9.3 (114,284) 88,861,272 Investments (net of provision) - (114,284) (125,900) - 26,841,410 115,702,682 82,640,611 23,524,036 (125,900) 106,164,647 Net surplus on revaluation of held-for-trading securities 9.13 - - - 6,483 21.2 2,109,200 72,078 2,181,278 1,998,687 - 6,483 Net surplus on revaluation of available-for-sale securities Total investments 90,970,472 676,296 2,674,983 26,913,488 117,883,960 84,645,781 24,200,332 108,846,113
  79. Soneri Bank Limited | Annual Report 2016 Note 9.2 2016 2015 (Rupees in '000) Investments by segments Federal Government Securities - Market Treasury Bills - Pakistan Investment Bonds - Government of Pakistan Ijarah Sukuks - Government of Pakistan Bai Muajjal 9.5 9.5 44,161,443 62,305,504 2,118,675 108,585,622 38,076,011 59,469,619 3,300,000 212,306 101,057,936 29,805 77,142 85,731 113,993 420,426 265,233 120,017 129,117 160,180 48,971 53,190 4,615 - 25,539 73,316 72,756 157,072 136,818 359,076 83,786 24,670 52,042 104,990 144,006 250,219 86,278 361,864 324,727 32,800 407,798 - 12,224 198,156 317,576 129,089 47,743 320,023 37,919 43,256 169,622 Fully paid-up ordinary shares of Rs. 10 each Listed companies - Agritech Limited [851,560 (2015: 729,679) shares] - Altern Energy Limited [2,100,000 (2015: 2,000,000) shares] - Bank AL Habib Limited [2,000,000 (2015: 1,727,000) shares] - Bank Alfalah Limited [4,000,000 (2015: 5,500,000) shares] - D.G. Khan Cement Company Limited [Nil (2015: 1,000,000) shares] - Engro Corporation Limited [1,400,000 (2015: 1,370,000) shares] - Engro Fertilizers Limited [3,649,500 (2015: 900,000) shares] - Fauji Fertilizer Bin Qasim Limited [ 2,210,500 (2015: Nil) shares] - Fauji Fertilizer Company Limited [Nil (2015: 200,000) shares] - Faysal Bank Limited [Nil (2015: 3,000,000) shares] - Habib Bank Limited [590,100 (2015: Nil) shares] - Habib Metropolitan Bank Limited [Nil (2015: 3,500,000) shares] - Fatima Fertilizer Company Limited [5,000,000 (2015: Nil) shares] - Dawood Lawrancepur Limited [257,500 (2015:Nil) shares] - Allied Bank Limited [534,500 (2015: Nil) shares] - NIB Bank Limited [2,758,000 (2015: Nil) shares] - Lucky Cement Limited [Nil (2015: 260,000) shares] - MCB - Arif Habib Savings and Investments Limited [Nil (2015: 535,000) shares] - MCB Bank Limited [1,080,300 (2015: 780,000) shares] - Nishat Chunian Limited [2,150,000 (2015: Nil) shares] - Nishat Mills Limited [3,300,000 (2015: 3,000,000) shares] - Oil and Gas Development Company Limited [2,300,000 (2015: 900,000) shares] - Pakistan International Bulk Terminal Limited [1,000,000 (2015: Nil) shares] - Pakistan Petroleum Limited [Nil (2015: 350,000) shares] - Pakistan State Oil Company Limited [1,100,000 (2015: 900,000) shares] - Pakistan Telecommunication Company Limited [Nil (2015: 2,000,000) shares] - Tariq Glass Limited [Nil (2015: 600,500) shares] - United Bank Limited [Nil (2015: 1,025,000) shares] Un-listed companies - DHA Cogen Limited [5,853,822 (2015: 5,853,822) shares] (Chief Executive: Mr. Siraj ul Haq) 9.6 - - - ISE Towers REIT Management Company Limited (formerly Islamabad Stock Exchange Limited) [3,034,603 (2015: 3,034,603) shares] (Chief Executive: Mian Ayyaz Afzal) 9.7 11,100 11,100 - Pakistan Export Finance Guarantee Agency Limited [569,958 (2015: 569,958) shares] (Liquidator: Mr. Usman Khawaja) 9.8 5,700 5,700 2,988,906 2,526,479 16,269 16,269 111,590,797 103,600,684 Term Finance Certificates, Debentures, Bonds and Participation Term Certificates Listed Term Finance Certificates of Rs. 5,000 each - Azgard Nine Limited [10,000 (2015: 10,000) certificates] Balance carried forward
  80. 95 Note Balance brought forward Un-listed Term Finance Certificates of Rs . 5,000 each, unless otherwise specified - Agritech Limited [1,488 (2015: 1,488) certificates] - Askari Bank Limited 5th issue [Nil (2015: 5,000) certificates] - Azgard Nine Limited [2,150 (2015: 2,150) certificates] - Bank Alfalah Limited- 4th issue [10,000 (2015: 10,000) certificates] - Faysal Bank Limited - 2nd issue [15,000 (2015: 15,000) certificates] - Habib Bank Limited [1,000 (2015: Nil) certificates] - JS Bank Limited [50,000 (2015: Nil) certificates] - Standard Chartered Bank (Pakistan) Limited 4th issue [40,000 (2015: 40,000) certificates] Sukuk Certificates and Bonds of Rs. 5,000 each, unless otherwise specified - Al Baraka Bank (Pakistan) Limited [175 (2015: 194) certificates of Rs 1,000,000 each] - Amreli Steels Limited [10,000 (2015: 10,000) units)] - Eden Housing Limited [10,000 (2015: 10,000) certificates] - Engro Fertilizers Limited [32,300 (2015: 32,300) certificates] - K- Electric Limited (Al-Shirkah) [100,000 (2015: 124,686) certificates] - K- Electric Limited [80,000 (2015: 80,000) certificates] - Liberty Power Tech Limited [1,099,430 (2015: 1,099,430) certificates of Rs. 100 each] - Pak Elektron Limited [Nil (2015: 10,000) certificates] - Pakistan Mobile Communication Limited [100,000 (2015: 100,000) certificates] - Meezan Bank Limited [425 (2015: Nil) certificates of Rs. 1,000,000 each] - Nelum Jhelum Hydro Power Company (Pvt) Limited [9,750 (2015: Nil) certificates of Rs. 100,000 each] - Three Star Hosiery Mills (Private) Limited [5,100 (2015: 5,100) certificates] - Water and Power Development Authority (WAPDA) bonds [4,000 (2015: 4,000) certificates] 2016 2015 (Rupees in '000) 111,590,797 103,600,684 7,440 10,750 33,247 37,425 99,988 450,000 7,440 25,038 10,750 49,880 74,850 - 200,000 200,000 124,999 6,560 145,350 500,000 400,000 166,286 19,000 6,560 153,425 623,430 400,000 65,335 - 76,032 10,714 500,000 425,000 500,000 - 975,000 - 25,215 25,215 19,860 4,026,169 19,860 2,368,480 100,000 100,223 100,000 100,000 200,000 121,160 321,383 9.3 115,816,966 (114,284) 106,290,547 (125,900) 21.2 115,702,682 2,181,278 106,164,647 6,483 2,674,983 117,883,960 108,846,113 9.9 Units of Mutual Funds Open-ended - NIT Islamic Equity Fund [9,756,098 (2015: 10,022,257) units] (Managed by National Investment Trust Limited) - NIT Income Fund [9,211,835 (2015: 9,211,835) units] (Managed by National Investment Trust Limited) Closed-end - PICIC Growth Fund [ Nil (2015: 7,500,000) certificates] (Managed by HBL Asset Management Company Limited) Total investments at cost Less: Provision for diminution in the value of investments Surplus on revaluation of held-for-trading securities- net Surplus on revaluation of available-for-sale securities - net
  81. Soneri Bank Limited | Annual Report 2016 Note 9.3 2016 2015 (Rupees in '000) Particulars of provision for diminution in the value of investments Opening balance Charge for the year Reversals made during the year Provision reversed on disposal Closing balance 125,900 3,773 (10,714) (6,941) (4,675) 114,284 135,177 1,438 (10,715) (9,277) 125,900 22,490 23,392 5,700 5,700 7,440 27,019 7,440 27,019 6,560 25,215 19,860 114,284 6,560 10,714 25,215 19,860 125,900 9.3.1 Particulars of provision for diminution in the value of investments by type and segment Available-for-sale securities Listed companies - Fully paid up ordinary shares of Rs. 10 each Unlisted companies - Fully paid up ordinary shares of Rs. 10 each - Pakistan Export Finance Guarantee Agency Limited Held-to-maturity securities Term Finance Certificates of Rs 5,000 each - Agritech Limited - Azgard Nine Limited Sukuk Certificates and Bonds of Rs 5,000 each - Eden Housing Limited - Pak Elektron Limited - Three Stars Hosiery Mills (Private) Limited - Water and Power Development Authority (WAPDA) 9.9 9.4 Investments include certain approved government securities which are held by the Bank to comply with the Statutory Liquidity Requirement determined on the basis of the Bank's demand and time liabilities as set out under section 29 of the Banking Companies Ordinance, 1962. 9.5 Pakistan Investment Bonds include securities having book value of Rs. 30.700 million (2015: Rs. 30.700 million) pledged with the State Bank of Pakistan and National Bank of Pakistan to facilitate T. T. discounting facility for the branches of the Bank. Market Treasury Bills and Pakistan Investment Bonds are eligible for discounting with the State Bank of Pakistan. 9.6 DHA Cogen Limited shares were received under the enforcement of a pledge of third party shares by the consortium banks. These shares were recorded at Nil value as the break-up value of these shares as per the available audited financial statements is Rs. (29.10). 9.7 This denotes shares of ISE Towers REIT Management Company Limited, formerly Islamabad Stock Exchange Limited (ISEL), acquired in pursuance of corporatization and demutualization of ISEL as a public company limited by shares. 9.8 This investment is fully provided and as per "shares subscription agreement", can only be sold to an existing investor. 9.9 The Bank purchased 4,000 certificates (on 29 September 2009) of WAPDA through a market based transaction for a cash consideration of Rs. 19.8 million having a face value of Rs. 20 million. These certificates were available in the seller's CDC account and on completion of the transaction were transferred to the Bank's CDC account. A periodic Ijarah rental was due on 22 October 2009 which was not paid to the Bank on the plea that certain discrepancy in the Central Depository Register was the reason for non-payment. The Bank through a legal notice clarified the position that it had purchased the aforesaid sukuk certificates from the market for a valuable consideration when these sukuks were already entered in the CDC's Register of seller's account. However, the Bank has made full provision against these certificates. The Bank has filed a recovery suit which is currently pending before the Honourable High Court of Sindh, Karachi. 9.10 During the year, the Bank transferred Rs. 1,300 million Government of Pakistan Ijarah Sukuks from 'held to maturity' to 'available for sale' category after obtaining the required internal and State Bank of Pakistan's approvals. Subsequently, out of total transferred amount of Rs. 1,300 million, sukuks amounting to Rs. 800 million have matured during the year.
  82. 97 9 .11 Significant particulars relating to government securities, term finance certificates and sukuk bonds are as follows: Maturity Principal payments Yield / Coupon rate (%) Coupon payments March 2017 to July 2017 July 2017 to January 2024 June 2017 to December 2018 On maturity On maturity On maturity 5.77 to 6.21 6.00 to 12.90 3.98 to 5.45 At maturity Semi-annually Semi-annually Type of investment Market Treasury Bills Pakistan Investment Bonds Ijarah sukuks Term Finance Certificates (Refer Annexure IV) Sukuk Bonds (Refer Annexure IV) 9.12 Quality of available-for-sale securities 2016 Securities (at market value) Amount 2015 Latest Available Amount Latest Available Rating (Rupees in '000) Federal Government Securities - Market Treasury Bills - Pakistan Investment Bonds - Ijarah sukuks Rating (Rupees in '000) 44,147,931 63,679,488 2,139,500 N/A N/A N/A 38,144,282 61,550,414 1,618,080 N/A N/A N/A 10,798 63,718 86,625 117,980 151,840 65,148 442,526 248,093 184,450 113,200 161,245 256,917 4,992 134,224 502,490 380,305 32,990 477,631 - D AA(L) A1+(S) N/A AA+(L) A1+(S) AA(L) A1+(S) N/A AA(L) A1+(S) AA-(L) A1+(S) AA-(L) A1+(S) AA(L) A1+(S) AAA(L) A1+(S) AAA(L) A1+(S) AA-(L) A1+(S) N/A AA(L) A1+(S) AAA(L) A1+(S) N/A AA(L) A1+(S) - 6,822 65,000 71,844 158,510 147,590 335,268 75,717 23,596 46,290 106,645 128,710 162,638 16,211 284,610 105,606 42,634 293,193 32,980 41,945 158,824 D N/A N/A AA+(L) A1+(S) AA(L) A1+(S) N/A N/A AA(L) A1+(S) AA-(L) A1+(S) N/A AA(L) A1+(S) AA+(L) A1+(S) N/A AAA(L) A1+(S) AM2+ AA(L) A1+(S) AAA(L) A1+(S) N/A AA(L) A1+(S) N/A N/A AA+(L) A1+(S) 11,100 5,700 N/A N/A 11,100 5,700 N/A N/A 125,171 96,987 N/A A+(f) 98,920 99,095 N/A A+(f) Fully paid up ordinary shares of Rs. 10 each Listed companies - Agritech Limited - Allied Bank Limited - Altern Energy Limited - Bank AL Habib Limited - Bank Alfalah Limited - D.G.Khan Cement Company Limited - Dawood Lawrancepur Limited - Engro Corporation Limited - Engro Fertilizers Limited - Fatima Fertilizer Company Limited - Fauji Fertilizer Bin Qasim Limited - Fauji Fertilizer Company Limited - Faysal Bank Limited - Habib Bank Limited - Habib Metropolitan Bank Limited - Lucky Cement Limited - MCB Bank Limited - MCB-Arif Habib Savings and Investments Limited - NIB Bank Limited - Nishat Chunian Limited - Nishat Mills Limited - Oil and Gas Development Company Limited - Pakistan International Bulk Terminal Limited - Pakistan Petroleum Limited - Pakistan State Oil Company Limited - Pakistan Telecommunication Company Limited - Tariq Glass Limited - United Bank Limited Un-listed companies - at cost - ISE Towers REIT Management Company Limited (formerly Islamabad Stock Exchange Limited) - Pakistan Export Finance Guarantee Agency Limited Units of mutual funds Open-ended - NIT Islamic Equity Fund - NIT Income Fund Balance carried forward 113,641,049 103,832,224
  83. Soneri Bank Limited | Annual Report 2016 2016 Securities (at market value) Amount 2015 Latest Available Amount Latest Available Rating (Rupees in '000) Balance brought forward 113,641,049 Closed-end - PICIC Growth Fund - 103,832,224 - Term Finance Certificates - Habib Bank Limited - JS Bank Limited 100,230 450,000 AAA A+ Sukuk certificates - Al Baraka Bank (Pakistan) Limited - K-Electric Limited - Meezan Bank Limited - Nelum Jhelum Hydro Power Company (Pvt.) Ltd. 52,978 515,337 442,638 975,000 A AA AAAAA Total Rating (Rupees in '000) 116,177,232 168,975 MFR 3-Star - - 79,963 640,574 - AA-1 AA - 104,721,736 L represents "long-term rating" S represents "short-term rating" N/A represents "Not Available" Note 9.13 2016 2015 (Rupees in '000) Unrealised gain / (loss) on revaluation of investments classified as held for trading Ordinary shares of listed companies Term Finance Certificates Government of Pakistan - ijarah Sukuks Pakistan Investment Bonds - (1,105) (103) 4,520 3,171 6,483 124,932,351 111,921,349 1,631,223 4,912,059 6,543,282 3,761,206 3,438,619 7,199,825 10.2 10.3 268,841 2,008,562 133,753,036 229,923 1,265,863 120,616,960 10.4.1 10.4.1 (8,395,931) (51,340) (8,447,271) (8,568,984) (46,224) (8,615,208) 125,305,765 112,001,752 10.1.1 In local currency In foreign currencies 126,123,910 7,629,126 133,753,036 115,173,189 5,443,771 120,616,960 10.1.2 Short-term (upto one year) Long-term (over one year) 102,618,230 31,134,806 133,753,036 94,001,203 26,615,757 120,616,960 10. ADVANCES - NET Loans, cash credits, running finances, etc. In Pakistan Bills discounted and purchased (excluding treasury bills) Payable in Pakistan Payable outside Pakistan Assets held under Ijarah (IFAS-2) Advance against Islamic financings Advances - gross Provision against non-performing advances - specific Provision against consumer and small enterprise loans - general Advances - net of provision 10.1 Particulars of advances (gross)
  84. 99 10 .2 Assests held under Ijarah (IFAS-2) 2016 Accumulated Depreciation At 31 At 01 Charge for the At 31 Net investment Rate of December January year/(depreciation December in ijarah as at depreciation 2016 2016 on deletions) / 2016 31 December 2016 % (Adjustment) ---------------------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------- Cost At 01 January Additions / 2016 (Deletions) / (Adjustment) Motor vehicles Plant and machinery 231,270 302,681 533,951 119,229 (43,150) (15,128) 24,961 (113,809) (42,158) 144,190 (156,959) (57,286) 292,221 171,675 463,896 82,367 221,661 304,028 49,995 (25,632) (27,241) 47,974 (102,428) (51,641) 97,969 (128,060) (78,882) 79,489 212,732 20 to 100 115,566 56,109 20 to 33.33 195,055 268,841 2015 Accumulated Depreciation At 01 January At 31 At 01 Charge for the At 31 Net investment Rate of 2015 December January year/(depreciation December in ijarah as at depreciation 2015 2015 on deletions) 2015 31 December 2015 % ---------------------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------Cost Additions / (Deletions) Motor vehicles 178,733 Plant and machinery 287,640 466,373 94,120 (41,583) 15,526 (485) 109,646 (42,068) 231,270 102,587 302,681 160,943 533,951 263,530 20,339 (40,559) 61,203 (485) 81,542 (41,044) 82,367 148,903 20 to 50 221,661 81,020 20 to 33.33 304,028 229,923 The Ijarah payments receivable from customers for each of the following periods under the terms of the respective arrangements are given below: 2016 2015 (Rupees in '000) Not later than one year* Later than one year but not later than five years* 88,183 111,916 200,099 250,816 30,313 281,129 57,543 1,008,948 580,556 361,515 2,008,562 28,044 791,322 23,122 89,108 334,267 1,265,863 *This excludes the amount of security deposit received from customers. 10.3 Advance against Islamic financings Car Ijarah Diminishing musharaka Machine Ijarah Murabaha Salam
  85. Soneri Bank Limited | Annual Report 2016 10.4 Advances include Rs. 10,419.420 million (2015: Rs. 11,584.107 million) which have been placed under non-performing status as detailed below: 2016 Category of Classified Advances Provision Required Provision Held Classification Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total ---------------------------------------------------------- (Rupees in '000) --------------------------------------------------------Other Assets Especially Mentioned* 68,938 68,938 1,859 1,859 1,859 1,859 Substandard 698,888 698,888 121,947 121,947 121,947 121,947 Doubtful 564,124 564,124 107,106 107,106 107,106 107,106 Loss 9,087,470 9,087,470 8,165,019 8,165,019 8,165,019 8,165,019 10,419,420 10,419,420 8,395,931 8,395,931 8,395,931 8,395,931 Category of Classification Other Assets Especially Mentioned* Substandard Doubtful Loss 2015 Classified Advances Provision Required Provision Held Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total ---------------------------------------------------------- (Rupees in '000) --------------------------------------------------------- 48,738 1,368,932 796,814 9,369,623 11,584,107 - 48,738 1,368,932 796,814 9,369,623 11,584,107 1,545 223,235 368,966 7,975,238 8,568,984 - 1,545 223,235 368,966 7,975,238 8,568,984 1,545 223,235 368,966 7,975,238 8,568,984 - 1,545 223,235 368,966 7,975,238 8,568,984 * The 'Other Assets Especially Mentioned' category pertains to agricultural finance, consumer and small enterprises amounting to Rs 50.356 million (2015: Rs 33.191 million), Rs NIL (2015: Rs. 0.087 million) and Rs 18.582 million (2015: Rs 15.460 million) respectively. 10.4.1 Particulars of provision against non-performing loans and advances Note Opening balance Charge for the year Reversals Transfers Amount written off Closing balance 10.8 2016 2015 General General Specific Consumer Small Total Specific Consumer Small Total Enterprises Enterprises --------------------------------------------------- (Rupees in '000) --------------------------------------------------8,568,984 27,224 19,000 8,615,208 7,610,972 15,558 1,352,429 (1,326,473) 25,956 2,116 2,116 3,000 3,000 1,357,545 (1,326,473) 31,072 1,814,735 (791,799) 1,022,936 11,666 11,666 5,852 (204,861) (64,924) 8,447,271 8,568,984 5,852 (204,861) 8,395,931 29,340 22,000 27,224 19,000 7,645,530 - 1,826,401 (791,799) 1,034,602 - (64,924) 19,000 8,615,208 10.4.1.1 The SBP vide circular 10 of 2016 has revised the Prudential Regulations for consumer financing. In the revised Regulations, SBP has specified that general provision against consumer financing should be maintained at varying percentages based on the non-performing loan ratio present in the portfolio. These percentages range from 1% to 2.5% for secured and 4% to 7% for unsecured portfolio. Previously, the Regulations required provision to be maintained at 1.5% for secured portfolio and 5% for unsecured portfolio. As a consequence of the above change, the BankÕs general provisioning requirement against consumer portfolio has reduced by Rs 10.071 million. 10.4.1.2 The Bank has maintained general provision against housing finance portfolio @ 0.50% of the performing portfolio and provision against small enterprises represents general provision maintained at an amount equal to 1.0% of the fully secured performing portfolio and 2.0% of the unsecured performing portfolio as required under the Prudential Regulations issued by the State Bank of Pakistan.
  86. 101 10 .4.1.3 Particulars of provision against non-performing loans and advances 2016 2015 General General Specific Consumer Small Total Specific Consumer Small Total Enterprises Enterprises --------------------------------------------------- (Rupees in '000) --------------------------------------------------In local currency In foreign currencies 7,946,650 449,281 8,395,931 29,340 29,340 22,000 22,000 7,997,990 449,281 8,447,271 8,119,093 449,891 8,568,984 27,224 27,224 19,000 19,000 8,165,317 449,891 8,615,208 10.5 The Bank has availed the benefit of forced sales value of pledged stocks and mortgaged residential and commercial properties held as collateral against non-performing advances as allowed under the regulation issued by the State Bank of Pakistan. Had the benefit not been taken by the Bank, the specific provision against non-performing advances would have been higher by Rs.1,102.633 million (2015: Rs. 1,496.433 million. The additional profit arising from availing this benefit - net of the tax amounts to Rs. 716.711 million (2015: 972.681 million). This profit is not available for distribution either as cash or stock dividend to shareholders and bonus to employees. 10.6 The SBP has granted relaxation in provisioning requirements in respect of exposures in Dewan Mushtaq Group (DMG). Had this relaxation not been available, provision against loans and advances would have been higher by Rs 44.930 million (2015: Rs 44.930 million). 10.7 Although the Bank has made provision against its non-performing portfolio as per the category of classification of the loans, however, the Bank still holds enforceable collateral realisable through litigation. These securities comprise of charge against various tangible assets of the borrower including land, building and machinery, stock in trade, etc. Note 10.8 Particulars of write offs: 10.8.1 Against provisions Directly charged to the profit and loss account - net 10.8.2 Write offs of Rs. 500,000 and above Write offs of below Rs. 500,000 2016 2015 (Rupees in '000) 10.4.1 204,861 276 205,137 64,924 3,916 68,840 10.8.2.1 204,683 454 205,137 68,361 479 68,840 10.8.2.1 Details of loan write offs of Rs. 500,000 and above In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the statement in respect of written-off loans or any other financial relief of five hundred thousand rupees or above allowed to a person(s) during the year ended 31 December 2016 is given in Annexure - I. However, this write off does not affect the Bank's right to recover the outstanding debts from these customers. 10.9 Particulars of loans and advances to directors, associated companies, etc. Debts due by directors, executives or officers of the Bank or any of them either severally or jointly with any other persons*. 2016 2015 (Rupees in '000) Balance at beginning of the year Loans granted during the year Repayments Balance at end of the year 2,783,602 1,267,149 (867,748) 3,183,003 * Represents loans given by the Bank to its executives and other employees as per the terms of their employment. 2,132,902 1,236,538 (585,838) 2,783,602
  87. Soneri Bank Limited | Annual Report 2016 11. 2016 2015 (Rupees in '000) 11.1 11.2 11.3 4,678,852 202,303 257,269 5,138,424 OPERATING FIXED ASSETS Property and equipment Intangible assets Capital work-in-progress 11.1 Note 4,803,699 72,651 80,382 4,956,732 Property and equipments 2016 ------------------------ COST / REVALUATION ------------------------ ---- ACCUMULATED DEPRECIATION ---- At Additions / Revaluation At At Charge At Book value at Rate of 01 January (deletions) surplus 31 December 01 January for the year / 31 December 31 December depreciation 2016 adjustments* 2016 2016 (depreciation 2016 2016 % on deletions) / adjustments* ----------------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------------- Freehold land 923,215 - Leasehold land 186,967 Building on freehold land - 936,055 - - - 936,055 - - - 186,967 - - - 186,967 - 138,136 - 160 - - 138,296 28,632 - 9,547 100,117 5-9 Building on leasehold land 2,968,500 13,290 (239,504) - - 2,742,286 1,071,811 205,355 (101,299) 1,175,867 1,566,419 5 - 13 Leasehold improvements 1,031,999 221,999 (22,476) - - 1,231,522 193,194 56,327 (7,098) 242,423 989,099 5 47,240 (5,972) - 427,233 183,051 35,480 (4,707) 213,824 213,409 10 267,682 (311,460) 497* - 2,293,532 1,779,687 230,147 1,701,351 (308,980) 497 * 592,181 20 230,160 44,970 (17,469) - 257,661 141,681 94,605 20 8,201,755 608,181 (596,881) 497 * - 8,213,552 3,398,056 Furniture and fixtures 385,965 Electrical, office and computer equipment 2,336,813 Vehicles 12,840 - 38,179 - 38,844 (17,469) 163,056 575,700 3,534,700 4,678,852 (439,553) 497 *
  88. 103 2015 ------------------------ COST / REVALUATION ------------------------ ---- ACCUMULATED DEPRECIATION ---- At Additions / Revaluation At At Charge At Book value at Rate of 01 January (deletions) surplus 31 December 01 January for the year / 31 December 31 December depreciation 2015 adjustments* 2015 2015 (depreciation 2015 2015 % on deletions) / adjustments* ----------------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------------- Freehold land 927,571 Leasehold land 185,366 Building on freehold land 140,035 Building on leasehold land Leasehold improvements Furniture and fixtures Electrical, office and computer equipment Vehicles - 923,215 - - - 923,215 - 186,967 - - - 186,967 1,677 (3,576)* - 138,136 21,215 9,151 (1,734) 2,966,576 15,003 (13,079) - - 2,968,500 864,039 212,280 (4,508) 941,752 130,561 (40,314) - - 1,031,999 160,741 48,233 (15,780) 28,939 (2,215) - - 295,374 (69,682) (4,228)* - 2,336,813 1,603,758 203,769 37,125 (10,734) - - 230,160 114,764 7,839,659 511,280 (144,956) (4,228)* - 8,201,755 2,917,082 359,241 2,115,349 1,000 (5,356) 1,601 28,632 - 109,504 5-9 1,071,811 1,896,689 5 - 13 193,194 838,805 5 202,914 10 557,126 20 88,479 20 - 385,965 152,565 32,059 (1,573) 183,051 - 245,321 1,779,687 (67,209) (2,183)* 36,990 (10,073) 141,681 584,034 3,398,056 4,803,699 (100,877) (2,183)* * These represent reclassification adjustments. 11.1.1 The cost of fully depreciated property and equipment still in use amounts to Rs. 1,651.181 million (2015: Rs. 1,555.060 million). 11.1.2 During the year 2014, the Bank's freehold / leasehold land and buildings on freehold / leasehold land were revalued by M/s Harvester Services (Private) Limited (Valuation and Engineering Consultants) on the basis of their professional assessment of the present market value. As a result of revaluation, the market value of freehold / leasehold land was determined at Rs. 1,112.937 million and buildings on freehold / leasehold land was determined at Rs. 2,221.357 million. Had there been no revaluation, the carrying amount of freehold / leasehold land and buildings on freehold / leasehold land as at 31 December 2016 would have been Rs.1,012.706 million and Rs. 407.942 million respectively (2015: Rs. 999.866 and Rs. 454.337 million respectively). 11.1.3 Details of disposals / deletion of property and equipment to executives and other persons with original cost or book value in excess of Rs. 1 million or Rs. 250,000 respectively (whichever is less) are given in Annexure - III which is an integral part of these financial statements.
  89. Soneri Bank Limited | Annual Report 2016 11.2 Intangible assets 2016 ---------Accumulated Amortization--------At 01 Charge At 31 Net Book January for the year/ December value at 31 2016 (amortisation 2016 December on deletion)/ 2016 adjustments* ----------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------- ---------------------- Cost -----------------------At 01 Additions/ At 31 January (deletions)/ December 2016 adjustments* 2016 Software 454,291 Trademark 4,208 458,499 217,456 (497) * 671,250 382,105 5,786 3,743 677,036 385,848 1,578 219,034 (497) * 88,811 (497)* 571 89,382 (497)* 470,419 200,831 33.33 4,314 1,472 33.33 474,733 202,303 2015 ---------Accumulated Amortization--------At 01 Charge At 31 Net Book January for the year/ December value at 31 2015 (amortisation 2015 December on deletion)/ 2015 adjustments* ----------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------- ---------------------- Cost -----------------------At 01 Additions/ At 31 January (deletions)/ December 2015 adjustments* 2015 Software 402,472 Trademark 4,180 406,652 49,141 (1,550) 4,228 * 454,291 342,335 4,208 3,296 458,499 345,631 28 49,169 (1,550) 4,228 * 37,875 (288) 2,183 * 447 38,322 (288) 2,183 * Annual rate of amortisation % Annual rate of amortisation % 382,105 72,186 33.33 3,743 465 33.33 385,848 72,651 * These represent reclassification adjustments. 11.2.1 The additions mainly represent Microsoft license fee in respect of various softwares amounting to Rs. 150.768 million (2015: Rs. 49.141 million). Note 11.3 Capital work-in-progress Civil works Advances to suppliers and contractors Consultant's fee and other charges 12. 2016 2015 (Rupees in '000) 44,885 210,421 1,963 257,269 45,574 31,262 3,546 80,382 3,499,946 10,077 14,650 353,124 1,095,725 33,650 53,250 253,000 397,106 5,710,528 (156,077) 5,554,451 4,726,676 5,768 16,350 340,152 524,509 5,500 17,400 29,330 61,493 250,000 270,970 6,248,148 (157,826) 6,090,322 OTHER ASSETS Income / mark-up accrued in local currency Income / mark-up accrued in foreign currency Dividend receivable Advances, deposits and prepayments Advance taxation (provisions less payments) Cash margin against margin trading Non-banking assets acquired in satisfaction of claim Stationery and stamps in hand Due from the State Bank of Pakistan Advance against subscription of Term Finance Certificates Others Less: Provision held against other assets Other assets (net of provision) 12.3 12.2 12.1 & 12.2
  90. 105 2016 2015 (Rupees in '000) 12.1 Provision against other assets Opening balance 157,826 157,760 Charge for the year Reversal 30 30 (248) (1,531) 156,077 66 66 157,826 Transfer Write-offs Closing balance 12.2 This includes an amount of Rs.143.443 million (2015: Rs.143.443 million) in respect of fraud and forgery claims relating to cash embezzlement made in the Bank. The Bank has initiated legal proceedings against the alleged and has also taken necessary steps to further strengthen its internal control system. 2016 2015 (Rupees in '000) 12.3 Book value / market value of non-banking asset acquired in satisfaction of claim - 17,400 3,254,243 3,254,243 2,706,274 2,706,274 36,256,914 2,648,164 38,905,078 37,320,678 2,554,945 39,875,623 36,256,914 2,648,164 38,905,078 37,320,678 2,554,945 39,875,623 The non-banking asset was disposed of during the year. 13. CONTINGENT ASSETS There were no contingent assets as at the balance sheet date. 14. BILLS PAYABLE In Pakistan Outside Pakistan 15. BORROWINGS In Pakistan Outside Pakistan 15.1 Particulars of borrowings with respect to currencies In local currency In foreign currencies
  91. Soneri Bank Limited | Annual Report 2016 Note 15.2 2016 2015 (Rupees in '000) Details of borrowings secured / unsecured Secured Borrowings from the State Bank of Pakistan Under Export Refinance Scheme Long term Financing Facility for plant and machinery Long term Finance - export oriented projects Modernisation of SME-Rice Husking Financing facility for storage of agriculture produce Repurchase agreement borrowings Repurchase agreement borrowings - other banks Borrowings from other financial institutions Unsecured Call borrowings Overdrawn nostro accounts 15.2.1 15.2.2 15.2.3 15.2.4 15.2.5 15.2.6 15.2.7 15.2.8 8,139,378 880,459 17,200 11,250 20,561,740 6,299,081 2,510,364 38,419,472 8,582,028 985,892 602 22,800 27,472 23,591,859 610,025 2,548,759 36,369,437 15.2.9 347,806 137,800 485,606 3,500,000 6,186 3,506,186 38,905,078 39,875,623 15.2.1 The Bank has entered into an agreement with the State Bank of Pakistan (SBP) for extending Export Finance to its customers. Borrowings under the Export Refinance Scheme of SBP carry interest at rates ranging from 1.00% to 2.50% per annum (2015: 2.50% to 3.50%). These are secured against demand promissory notes and are due to mature latest by 28 June 2017. 15.2.2 These represent borrowings from the SBP under scheme for Long-term Financing Facility at rates ranging from 4.50% to 9.70% per annum (2015: 3.00% to 9.70%), and have varying long term maturities due by 10 September 2025. Under the agreement, SBP has a right to recover the outstanding amount from the Bank at the respective maturity date of each finance by directly debiting the current account of the Bank maintained with SBP. 15.2.3 These borrowings are obtained from the SBP to provide financing facilities to export oriented units for the import of machinery, plant, equipment and accessories thereof (not manufactured locally). 15.2.4 These represent borrowings from the SBP under the scheme for Modernisation of SME Rice Husking Mills in Sindh at the rate ranging from 4.75% to 6.25% per annum (2015: 4.75% to 6.25%) and are due to mature latest by 16 December 2019. 15.2.5 These represent borrowings from the SBP under scheme for storage of agriculture produce at the rates ranging from 3.50% to 4.75% per annum (2015: 4.75% to 6.25%) and are due to mature latest by 20 March 2018. 15.2.6 This represents repurchase agreements executed with the State Bank of Pakistan which carry mark up at the rate of 5.95% per annum (2015: 6.11%) and are due to mature latest by 06 January 2017. 15.2.7 These represents repurchase agreements at rates ranging from of 5.50% to 5.95% per annum (2015: 5.75% to 6.50%) and are due to mature latest by 22 May 2017. 15.2.8 This represents borrowings against foreign bills from various foreign banks at rates ranging from 1.60% to 1.75% per annum (2015: 1.60% to 1.71%) and are due to mature latest by 06 June 2017. 15.2.9 This represents borrowings from a commercial bank in the inter bank money market. It carries mark-up at the rate of 5.60% per annum (2015: 6.05%) and is due to mature latest by 08 March 2017.
  92. 107 2016 2015 (Rupees in '000) 16. DEPOSITS AND OTHER ACCOUNTS Customers Remunerative Fixed deposits Savings deposits Non-remunerative Current accounts Call deposits Margin deposits Financial institutions Remunerative - savings deposits Non-remunerative - current deposits 16.1 49,164,840 1,063,104 2,316,868 198,251,236 41,505,296 471,170 1,648,294 171,170,881 12,335,522 252,888 12,588,410 13,793,944 257,558 14,051,502 210,839,646 185,222,383 197,533,847 13,305,799 210,839,646 175,093,333 10,129,050 185,222,383 2,998,800 3,000,000 SUB-ORDINATED LOANS - UNSECURED (NON-PARTICIPATORY) Listed Term Finance Certificates 17.1 52,761,956 74,784,165 Particulars of deposits In local currency In foreign currencies 17. 59,765,887 85,940,537 This denotes rated, listed and unsecured Term Finance Certificates (TFCs) issued as instrument of redeemable capital with a tenor of 8 years. The Pakistan Credit Rating Agency Limited (PACRA) has assigned a credit rating of A+ to the instrument as on 16 December 2016. The instrument is sub-ordinated as to the payment of principal and profit to all other indebtness of the Bank (including deposits) and is not redeemable before maturity without prior approval of the State Bank of Pakistan. Principal is redeemable semi-annually in such a way that 0.30% of the principal will be redeemed in the first 90 months and the remaining principal of 99.70% at maturity at the end of the 96th month in July 2023. Mark-up is payable semi-annually in arrears calculated on a 365 days period on the outstanding principal amount and is chargeable at a floating rate of six months KIBOR (prevailing immediately preceding the date before the start of each six months period) plus 1.35% per annum (subject to no floor and cap). The TFCs contains a lock-in clause which stipulates that neither mark-up nor principal may be paid (even at maturity) if such payments will result in shortfall in the BankÕs MCR or CAR or increase any existing shortfall in MCR and CAR. The instrument will be subject to loss absorbency and / or any other requirements under SBPÕs Basel III Capital Rules. Upon the occurrence of a Point of Non-Viability event as defined by SBPÕs Basel III Capital Rules, SBP may at its option, fully and permanently convert the TFCs into common shares of the Bank and / or have them immediately written off (either partially or in full). Number of shares to be issued to TFC Holders at the time of conversion will be equal to the ÔOutstanding Face Value of the TFCÕ divided by market value per share of the BankÕs common equity on the date of trigger of the non-viability event as declared by SBP, subject to the cap of 225,000,000 shares. Note 2016 2015 (Rupees in '000) 18. DEFERRED TAX LIABILITIES - NET Deferred credits arising in respect of: Accelerated tax depreciation Surplus on revaluation of fixed assets Surplus on revaluation of securities Deferred debits arising in respect of: Actuarial loss on defined benefit plan Provision against non-performing advances Deferred tax liabilities - net 21.1 21.2 326,408 442,284 763,447 1,532,139 317,517 544,926 936,244 1,798,687 (26,415) (368,194) (394,609) (19,927) (361,718) (381,645) 1,137,530 1,417,042
  93. Soneri Bank Limited | Annual Report 2016 Note 19. 2016 2015 (Rupees in '000) OTHER LIABILITIES Mark-up / return / interest payable in local currency Mark-up / return / interest payable in foreign currencies Unearned commission and income on bills discounted Unrealised loss on forward foreign exchange contracts Accrued expenses Branch adjustment account - net Payable to Workers' Welfare Fund Sundry deposits Others 19.1 1,046,386 37,192 24,435 6,911 471,720 336,312 382,357 370,072 420,797 3,096,182 1,289,242 26,189 33,594 27,921 432,016 170,797 318,053 307,327 323,426 2,928,565 19.1 The Bank has made full provision for Workers Welfare Fund (WWF) based on profit for the respective years (2008-2016). During the current year, the Supreme Court of Pakistan vide its order dated: 10 November 2016 has held that the amendments made in the law introduced by the Federal Government for the levy of WWF were not lawful. The Federal Board of Revenue has filed review petitions against this order which are currently pending. Legal advice obtained on the matter indicates that consequent to filing of these review petitions the judgment may not currently be treated as conclusive. Accordingly, the Bank continues to maintain the provision in respect of WWF. 20. SHARE CAPITAL 20.1 Authorised capital 2016 2015 (Number of shares) 1,500,000,000 20.2 1,500,000,000 2016 2015 (Rupees in '000) Ordinary shares of Rs. 10/- each 15,000,000 Issued, subscribed and paid-up capital 2016 2015 Issued Issued as Issued Issued as Total Total for cash bonus shares for cash bonus shares ------------------------------------------------ Number of shares ------------------------------------------------ Opening balance Shares issued during the year Closing balance 20.3 15,000,000 387,397,655 387,397,655 715,065,828 715,065,828 1,102,463,483 1,102,463,483 387,397,655 387,397,655 715,065,828 715,065,828 1,102,463,483 1,102,463,483 2016 2015 (Rupees in '000) 11,024,636 11,024,636 11,024,636 11,024,636 Major shareholders as at 31 December 2016 are as follows: Name of shareholder Number of shares held Percentage of shareholding National Investment (Unit) Trust Trustees - Alauddin Feerasta Trust Trustees - Feerasta Senior Trust Trustees - Alnu Trust Mr. Amir Feerasta 117,680,572 387,386,560 128,006,009 64,067,005 62,140,630 759,280,776 10.67% 35.14% 11.61% 5.81% 5.64% 68.87% 145,033,966 387,386,560 128,006,009 64,067,005 62,140,630 786,634,170 13.16% 35.14% 11.61% 5.81% 5.64% 71.36% Major shareholders as at 31 December 2015 were as follows: Name of shareholder National Investment (Unit) Trust Trustees - Alauddin Feerasta Trust Trustees - Feerasta Senior Trust Trustees - Alnu Trust Mr. Amir Feerasta
  94. 109 21 . Transferred to unappropriated profit in respect of incremental depreciation charged on related assets - net of deferred tax Related deferred tax liability Realised on disposal / write off during the year - net of deferred tax Related deferred tax liability on surplus reversed on disposal / write off Surplus on revaluation of operating fixed assets Related deferred tax liability on surplus at 01 January Related deferred tax liability in respect of incremental depreciation charged during the year Related deferred tax liability on surplus reversed on disposal / write off Less: Related deferred tax liability Related deferred tax liability 22. CONTINGENCIES AND COMMITMENTS 22.1 Direct credit substitutes Financial guarantees issued favouring: - Government - Others 1,662,172 1,839,797 (120,097) (64,669) (184,766) (114,558) (63,067) (177,625) (70,523) (37,973) (108,496) 1,368,910 1,662,172 (544,926) (607,993) 64,669 37,973 (442,284) 926,626 63,067 (544,926) 1,117,246 1,640,940 32,624 485,556 22,158 2,181,278 (763,447) 1,417,831 2,739,389 16,537 (78,736) (2,207) 2,674,983 (936,244) 1,738,739 1,972,010 1,983,754 3,955,764 1,869,017 348,968 2,217,985 6,561,129 112,714 4,276,255 10,950,098 4,444,972 89,254 2,060,428 6,594,654 27,450,143 17,219,009 3,299,085 2,312,668 5,595,318 5,212,790 Trade-related contingent liabilities Letters of credit Acceptances 22.4 1,117,246 1,738,739 2,855,985 Transaction-related contingent liabilities Guarantees issued favouring: - Government - Financial institutions - Others 22.3 926,626 1,417,831 2,344,457 Surplus on revaluation of available for sale securities - net of tax Federal government securities Sukuk certificates Quoted shares / closed end mutual funds Others - open ended mutual funds 22.2 21.1 21.2 Surplus on revaluation of fixed assets - net of tax Surplus on revaluation of operating fixed assets - opening 21.2 2016 2015 (Rupees in '000) SURPLUS ON REVALUATION OF ASSETS (NET OF TAX) - Operating fixed assets - Available-for-sale securities 21.1 Note Commitments in respect of forward lendings Commitments to extend credit
  95. Soneri Bank Limited | Annual Report 2016 The Bank has certain other commitments to extend credit that represent revocable commitments and do not attract any significant penalty or expense in case the facility is withdrawn unilaterally. 2016 2015 (Rupees in '000) 22.5 Committments in respect of forward exchange contracts Purchase - From other banks - From customers Sale - To other banks To customers 13,910,917 4,250,556 18,161,473 41,950,008 2,013,518 43,963,526 13,246,036 547,268 13,793,304 39,355,948 393,506 39,749,454 - 7,775 194,207 22,337 The maturities of the above contracts are spread over a period of one year. 22.6 Commitments in respect of lendings to financial & other institutions Margin trading system 22.7 Commitments in respect of purchase of fixed assets 22.8 Other contingencies 22.9 Taxation 22.9.1 (a) The Income tax returns of the Bank have been filed upto tax year 2016 (accounting year ended 31 December 2015). The Income tax authorities have amended assessment orders for tax years 2011, 2014 and 2015 and created an additional tax demands of Rs 846.668 million which have been fully paid as required under the law. The Bank has filed appeals before the various appellate forums against these amendments. Assessments from Tax Year 2001-2002 upto Tax Year 2010 have been decided at the level of Appellate Tribunal Inland Revenue. The department has filed tax references in respect of certain matters with the Honourable Lahore High Court which are currently pending. In case of any adverse decision an additional tax liability of Rs 617.120 million (which includes impact of certain timing differences as well) may arise. Further, assessments for tax years 2012 and 2013 have been decided at the level of Commissioner Inland Revenue (Appeals). The department has filed appeals with Appellate Tribunal Inland Revenue which are currently pending. In case of any adverse decision an additional tax liability of Rs 866.384 million (which include impact of certain timing differences as well) may arise. However, the management is confident that these matters will be ultimately decided in favor of the Bank and the Bank will not be exposed to any additional tax liability on these account. (b) Tax Authorities have passed orders for tax years 2008 to 2012 levying Federal Excise Duty on certain items. The Bank has filed appeals against these assessments which are pending before various Appellate forums. The aggregate net amount involved is Rs 71.376 million. The management of the Bank is confident that the appeals will be decided in the favor of the Bank. (c) Tax Authorities have passed order for tax years 2014 and 2015 under section 161/205 of the Income Tax Ordinance 2001, creating a demand of Rs 106.685 million and Rs 67.672 million respectively for non-deduction of tax at source. Against the said demands, the Bank has already filed an appeals before the Commissioner Inland Revenue (Appeals), which are currently pending . 22.9.2 Claims against the Bank not acknowledged as debts amounted to Rs 2.4 million (2015: Rs 2.4 million). 22.9.3 During the current period the Assistant Commissioner Inland Revenue vide order under Section 182 / 140 of the Income Tax Ordinance, 2001 has levied a penalty against one of the staff of the Bank, amounting to Rs. 30 million. The action taken by the Bank in this case was backed by legal opinion of the customer's lawyer. An appeal has been filed by the staff before the Commissioner Inland Revenue (Appeals), which is currently pending. In case of any adverse decision in appeal Bank reserves right of recourse on the customer for re-imbursement. 22.9.4 A penalty of Rs. 50 million has been imposed by Competition Commission of Pakistan ("the Commission") on the Bank on account of uncompetitive behaviour and imposing uniform cost on cash withdrawal from the Bank's ATM transactions. The Bank, alongwith other Banks, had filed a constitutional petition before the Competition Appellate Tribunal which has set aside the order of the Commission. Against the said order of the Competition Appellate Tribunal, the Commission has filed an appeal before the Supreme Court of Pakistan, the hearing of which is currently pending.
  96. 111 22 .9.5 Through the Finance Act, 2008 an amendment was made in the Employees Old Age Benefits Act, 1976 whereby the exemption available to banks and their employees was withdrawn by omission of clause (e) of Section 47 of the said Act and banks and their employees were made liable for contribution to Employee Old Age Benefit Institution. The Lahore High Court, subsequently, nullified the amendments made through the Finance Act, 2008. Subsequently, several other banks also filed the Constitutional Petition before the Sindh High Court which decided the matter in favor of the banks. As a result of the decision of the Lahore and Sindh High Courts, the Bank stopped EOBI contribution w.e.f. February 2012. An appeal was filed by the EOBI in the Supreme Court of Pakistan which has been disposed off by the Honorable Court during the current period vide its order dated: 10 November 2016 in favor of the banks. However, EOBI has filed review Petition on 09 December 2016 before the Supreme Court of Pakistan which is currently pending. In case of any adverse decision by the Supreme Court of Pakistan, a contribution of Rs.102.489 million (upto 31 December 2015: Rs. 77.047 million) will become payable by the Bank to the EOBI. The said amount of Rs.102.489 million has not been provided in these financial statements as the Bank is fully confident that the case will be decided in the Bank's favour. 2016 2015 (Rupees in '000) 23 . MARK-UP / RETURN / INTEREST EARNED On loans and advances to customers Ijarah income - net On investments: - Held-for-trading securities - Available-for-sale securities - Held-to-maturity securities On deposits with financial institutions On securities purchased under resale agreements On placements and call money lendings Income on bai muajjal placements 24. 8,562,444 32,284 141,630 9,168,548 140,768 30,907 47,178 143,058 122,359 17,524,408 116,720 9,066,772 289,262 75,085 95,026 77,115 5,024 18,319,732 8,006,336 2,124,075 242,784 77,975 229,100 10,680,270 8,562,621 1,426,662 405,195 148,791 178,996 10,722,265 MARK-UP / RETURN / INTEREST EXPENSED Deposits Securities sold under repurchase agreements Borrowings from the State Bank of Pakistan under various re-finance schemes Call borrowings Sub-ordinated loans 25. 7,719,754 10,206 INCOME FROM DEALING IN FOREIGN CURRENCIES - NET This includes conversion cost of foreign currency transactions into / from local currency funds (i.e. swap cost on foreign currency transactions) which amounts to Rs. 134.558 million (2015: Rs. 117.117 million). 2016 2015 (Rupees in '000) 26. GAIN ON SALE OF SECURITIES - NET Ordinary shares - listed equity securities Ordinary shares - unlisted equity securities Units of mutual funds Pakistan Investment Bonds Market Treasury Bills Term Finance Certificates GOP Ijarah Sukuks 27. 379,739 77,094 438,461 16,456 3,327 30,073 945,150 373,768 18,750 24,280 630,484 73,234 200 5,653 1,126,369 11,565 600 16,428 28,593 12,106 24,351 20,904 57,361 OTHER INCOME Gain on sale of property and equipment Gain on sale of non-banking assets Provision no longer required written back Staff notice period and other recoveries
  97. Soneri Bank Limited | Annual Report 2016 Note 28. ADMINISTRATIVE EXPENSES Salaries, allowances, etc. Charge for defined benefit plan Contribution to defined contribution plan Non-executive directors' fees, allowances and other expenses Rent, taxes, insurance, electricity, etc. Legal and professional charges Communications Repairs and maintenance Stationery and printing Advertisement and publicity Donations Auditors' remuneration Depreciation Amortisation Brokerage and commission Automation expenses Entertainment Fees and subscription Motor vehicles running expenses Remittance charges Service charges Training expenses Travelling expenses Others 28.1 2016 2015 (Rupees in '000) 28.4 34.5 35 28.1 28.2 11.1 11.2 28.3 2,489,237 84,176 100,376 11,725 954,808 50,845 87,007 184,348 114,648 147,646 15,221 9,759 575,700 89,382 25,144 407,977 153,643 51,303 106,822 2,300 548,137 27,690 34,945 116,055 6,388,894 2,353,153 71,762 94,247 9,975 910,204 57,472 78,351 167,021 127,586 117,086 15,000 7,090 584,034 38,322 27,265 350,443 144,156 60,992 109,837 2,359 488,193 18,615 23,488 115,664 5,972,315 2,500 7,500 5,000 221 15,221 10,000 5,000 15,000 Details of the donations given during the year are as follows: Donee The Aga Khan Hospital and Medical College Foundation The Aga Khan Education Service, Pakistan The Aga Khan Planning and Building Service, Pakistan Institute of Business Administration - Karachi Old Associates of Kinnaird Society, Karachi Directors or their spouse have no interest in any of the donee in current year. Last year donation was given to Aga Khan Hospital and Medical College Foundation, where the Chief Operating Officer of the Bank is a member of the Governing Body. 2016 2015 (Rupees in '000) 28.2 Auditors' remuneration Audit fee Fee for audit of provident and gratuity funds Audit of branches and other certifications Fee for half yearly review of financial statements Out-of-pocket expenses 1,341 130 7,097 536 655 9,759 1,265 118 4,561 536 610 7,090 28.3 This includes an amount of Rs. 0.345 million (2015: Rs 0.244 million) paid to the Kidney Centre Karachi, under Corporate Social Responsibilities activities of the Bank to sponsor its fund raising event. One of the directors of the Bank is a member of the Board of Governors of the Kidney Centre, Karachi. 28.4 This includes aggregate amount of bonus paid in respect of executives and President and Chief Executive Officer amounting to Rs 151.785 million and Rs 18.000 million respectively (2015: Rs 143.935 million and Rs 16.000 million respectively).
  98. 113 2016 2015 (Rupees in '000) 29. OTHER CHARGES Penalties imposed by the State Bank of Pakistan Operating fixed assets written-off Fraud and forgery Workers' Welfare Fund Unreconciled balances written off 30. For prior years Current Deferred 31. 1,099,377 (62,253) 1,037,124 1,402,494 (117,854) 1,284,640 161,371 161,371 98,199 98,199 1,198,495 1,382,839 The Finance Act, 2016 re-imposed one time levy of super tax for rehabilitation of temporarily displaced person at the rate of 4% of the taxable income for the tax year 2016. Accordingly, an amount of Rs 161.371 million has been recognised in these financial statements as prior year taxation charge. Note 30.2 43,467 24,870 500 81,778 6 150,621 TAXATION For the year Current Deferred 30.1 530 24,871 64,304 89,705 2016 2015 (Rupees in '000) Relationship between tax expense and accounting profit Profit before taxation 3,077,339 3,595,607 Tax at the applicable tax rate of 35% (2015: 35%) Tax effect on permanent differences Prior years Others 1,077,069 2,013 161,371 (41,958) 1,198,495 1,258,462 15,213 98,199 10,965 1,382,839 1,878,844 2,212,768 BASIC / DILUTED EARNINGS PER SHARE Profit for the year after taxation Number of shares Weighted average number of ordinary shares 1,102,463,483 1,102,463,483 (Rupees) Basic and diluted earnings per share 32. 1.7042 2.0071 18,278,840 822,689 (137,800) 18,963,729 16,718,428 1,634,544 (6,186) 18,346,786 CASH AND CASH EQUIVALENTS Cash and balances with treasury banks Balances with other banks Overdrawn nostro accounts 6 7 15.2
  99. Soneri Bank Limited | Annual Report 2016 Note 33. 2016 2015 (Number of employees) STAFF STRENGTH Permanent Temporary / on contractual basis Bank's own staff strength at the end of the year Outsourced Total staff strength at the end of the year 33.1 2,715 29 2,744 981 3,725 2,715 38 2,753 923 3,676 33.1 Outsourced represents employees hired by an outside contractor / agency and posted in the Bank to perform various tasks / activities of the Bank. 34 DEFINED BENEFIT PLAN 34.1 General description As mentioned in note 5.9, the Bank operates a funded gratuity scheme for all its permanent employees. The benefits under the gratuity scheme are payable on retirement at the age of 60 or earlier cessation of service, in lump sum. The benefit (for all employees other than the President) is equal to one month's last drawn basic salary for each year of eligible service with the Bank subject to a minimum qualifying period of service of five years. For the President, the benefit is determined as per the terms of his employment. The plan assets and defined benefit obligations are based in Pakistan. 34.2 2016 2015 7.50 6.50 SLIC (2001-2005) Heavy 9.00 7.00 SLIC (2001-2005) Heavy Principal actuarial assumptions a) b) c) d) Discount factor used (% per annum) Expected rate of salary increase (% per annum) Mortality rates (for death in service)* Rate of employee turnover * Assumptions regarding future mortality are set based on actuarial advice in accordance with the published statistics and experience in Pakistan. The rates assumed are based on the State Life Insurance Corporation Limited [SLIC (2001 - 2005)] ultimate mortality tables rated down one year. Note 34.3 2016 2015 (Rupees in '000) The amount recognised in the statement of financial position Present value of defined benefit obligation Fair value of plan assets 34.4 34.4 629,630 (629,630) - 523,705 (523,705) -
  100. 115 34 .4 The movement in the defined benefit obligation is as follows: 2016 Present value Fair value of of obligation plan assets Total -------------------------- (Rupees in '000) -------------------------As at 1 January Current service cost Interest expense / (income) Remeasurements: - Return on plan assets, excluding amounts included in interest expense - Gain from change in financial assumptions - Loss from change in experience adjustments Contributions during the year Benefit payments As at 31 December 523,705 84,176 48,537 656,418 (523,705) (48,537) (572,242) 84,176 84,176 43,348 (6,262) 37,086 (18,549) (18,549) (18,549) 43,348 (6,262) 18,537 (63,874) 629,630 (102,713) 63,874 (629,630) (102,713) - 2015 Present value Fair value of of obligation plan assets Total -------------------------- (Rupees in '000) -------------------------As at 1 January Current service cost Interest expense / (income) Remeasurements: - Return on plan assets, excluding amounts included in interest income - Gain from change in financial assumptions - Loss from change in experience adjustments Contributions during the year Benefit payments As at 31 December 446,315 71,762 52,824 570,901 (446,315) (52,824) (499,139) 71,762 71,762 (4,787) 5,294 507 (6,237) (6,237) (6,237) (4,787) 5,294 (5,730) (47,703) 523,705 (66,032) 47,703 (523,705) (66,032) - 2016 2015 (Rupees in '000) 34.5 Charge for defined benefit plan Current service cost Interest cost Expected return on plan assets 84,176 48,537 (48,537) 84,176 71,762 52,824 (52,824) 71,762
  101. Soneri Bank Limited | Annual Report 2016 34.6 Composition of plan assets As on 31 December 2016 As on 31 December 2015 Quoted Non-quoted Total Quoted Non-quoted Total --------------------------------------------- (Rupees in '000)------------------------------------------------Cash and bank balances Equity instruments: - Mutual funds and shares Debt instruments: - Government - Corporates - 490,544 131,556 131,556 7,530 498,074 490,544 - 131,556 93,168 7,530 629,630 93,168 147,759 282,778 430,537 147,759 93,168 282,778 523,705 2016 2015 (Rupees in '000) 34.7 Analysis of present value of defined benefit obligation Split by vested / non-vested (i) Vested benefits (ii) Non-vested benefits 543,514 86,116 629,630 34.8 The plan assets and defined benefit obligations are based in Pakistan. 34.9 Historical information 433,304 90,401 523,705 2016 2015 2014 2013 2012 ------------------------------ (Rupees in '000) ------------------------------Present value of defined benefit obligation Fair value of plan assets Surplus / (deficit) 629,630 (629,630) - 523,705 (523,705) - 446,315 (446,315) - 385,636 (385,636) - Experience adjustments on plan liabilities Experience adjustments on plan assets 37,086 (18,549) 18,537 507 (6,237) (5,730) (5,922) (832) (6,754) 33,187 4,341 37,528 266,409 (234,635) (31,774) 18,298 6,133 24,431 34.10 Actual return on plan assets during the year amounted to Rs 76.163 million (2015: Rs 51.452 million). The Gratuity scheme exposes the entity to the following risks: Mortality risks This is the risk that the actual mortality experience is different. The effect depends on the beneficiariesÕ service / age distribution and the benefit. Investment risks This is the risk of the investment underperforming and not being sufficient to meet the liabilities. Final salary risks This is the risk that the final salary at the time of cessation of service is greater than what was assumed. Since the benefit is calculated on the final salary, the benefit amount increases similarly. Withdrawal risks This is the risk of higher or lower withdrawal experience than assumed. The final effect could go either way depending on the beneficiariesÕ service / age distribution and the benefit.
  102. 117 34 .11 The sensitivities of the defined benefit obligation to changes in the principal actuarial assumptions are as under: -------- As at 31 December 2016 -------Particular Change in assumption -------- As at 31 December 2015 -------- Increase / (decrease) in present value of defined benefit obligation (%) Change in assumption Increase / (decrease) in present value of defined benefit obligation (Rupees in '000) (%) (Rupees in '000) Discount rate +1% -1% -7.06% 8.11% (44,422) 51,085 +1% -1% -6.81% 7.79% (35,641) 40,806 Salary increase rate +1% -1% 8.37% -7.40% 52,678 (46,584) +1% -1% 8.12% -7.20% 42,527 (37,725) The above sensitivities analyses are based on a change in an assumption while holding all other assumptions constant. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied when calculating the gratuity liability recognised within the statement of financial position. 34.12 The weighted average duration of the defined benefit obligation is 7.55 years (31 December 2015: 7.26 years). 34.13 Expected maturity analysis of undiscounted defined benefit obligation for the gratuity scheme is as follows: --------------- As at 31 December 2016 --------------Within a Between 2 Between 4 Between 6 year and 3 years and 5 years and 10 years ---------------------------- (Rupees in '000) ------------------------------ Particulars Defined benefit obligation 59,335 200,502 165,691 565,904 34.14 The expected gratuity expense for the next year commencing 1 January 2017 works out to be Rs 97.562 million (2015: Rs 84.176 million). 34.15 The disclosure made in notes 34.1 to 34.14 are based on the information included in the actuarial valuation report of the Bank as of 31 December 2016. 35. DEFINED CONTRIBUTION PLAN The Bank operates an approved funded provident fund scheme for all its permanent employees. Equal monthly contributions are made, both by the Bank and its employees, to the fund at the rate of 8.33 percent of basic salaries of the employees. The contribution made by the Bank during the year amounted to Rs. 100.376 million (2015: Rs. 94.247 million each). The total number of employees as at 31 December 2016 eligible under the scheme were 2,370 (2015: 2,379 employees). 36. COMPENSATION OF DIRECTORS AND EXECUTIVES Fees Managerial remuneration Charge for defined benefit plan Contribution to defined contribution plan Rent and house maintenance Utilities Medical Leave encashment and others Number of persons President / Chief Executive Officer Directors **Executives 2016 2015 2016 2015 2016 2015 ----------------------------------------------- (Rupees in '000) ---------------------------------------------11,725 9,975 39,272 687,860 37,151 618,761 4,968 66,910 4,732 47,607 3,271 17,672 1,144 752 1,279 68,358 3,095 16,718 1,417 275 1,053 64,441 11,725 9,975 51,939 269,675 67,429 273,351 1,417,164 48,227 246,049 61,533 362,266 1,384,443 1 1 7 7 738 626
  103. Soneri Bank Limited | Annual Report 2016 The aggregate amount charged to income as fee to directors and remuneration to other key management personnel was Rs. 11.725 million and Rs. 221.340 million (2015: Rs. 9.975 million and Rs. 197.671 million) respectively. ** Executives mean employees, other than the Chief Executive Officer and directors, whose basic salary exceed five hundred thousand rupees in a financial year. In addition to above, all executives and President / Chief Executive Officer of the Bank are also entitled to bonus which is disclosed in note 28.4 to these financial statements. In addition, the Bank also provide club membership fee to its President / Chief Executive Officer and certain executives. The amount charged on account of club membership fee during the year amounted to Rs 0.881 million (2015: Rs 0.681 million). Furthermore, the President / Chief Executive Officer and certain other executives are also provided with free use of Bank maintained car in accordance with their entitlements. 37. FAIR VALUE MEASUREMENTS 37.1 Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm's length transaction. The fair values of traded investments are based on quoted market prices, except for tradable securities classified as 'held-tomaturity' which are carried at amortised cost. The fair values of unquoted equity investments are determined on the basis of break-up values of these investments as per the latest available audited financial statements. The fair values of fixed-term loans and deposits, other assets and other liabilities cannot be calculated with sufficient reliability due to absence of current and active market for such assets and liabilities and reliable data regarding market rates for similar instruments. The provision for impairment of loans and advances has been calculated in accordance with the Bank's accounting policy as stated in note 5.4 to these financial statements. The repricing profile, effective interest rates and maturities are stated in note 42 to these financial statements. In the opinion of the management, the fair value of the remaining financial assets and liabilities are not significantly different from their carrying values since these assets and liabilities are either short-term in nature or, in the case of financings and deposits, are periodically repriced. 37.2 37.3 Off-balance sheet financial instruments 2016 2015 Book value Fair value Book value Fair value -------------------------------- (Rupees in '000) -------------------------------- Forward purchase of foreign exchange 18,161,473 18,049,972 43,963,526 43,794,450 Forward sale of foreign exchange 13,793,304 13,688,715 39,749,454 39,608,299 The table below analyses the financial and non-financial assets carried at fair values, by valuation methods. For financial assets, the Bank essentially carries its investments in debt and equity securities at fair values. Valuation of investments is carried out as per guidelines specified by the SBP. In case of non-financial assets, the Bank has adopted revaluation model (as per IAS 16) in respect of land and building. The different levels have been defined as follows: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and - Inputs for the assets or liabilities that are not based on observable market data (i.e. unobservable inputs e.g. estimated future cash flows) (level 3).
  104. 119 2016 Level 1 Level 2 Level 3 Total -------------------------------- (Rupees in '000) -------------------------------RECURRING FAIR VALUE MEASUREMENTS Financial Assets - on balance sheet INVESTMENTS - Net Available-for-sale securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan Ijarah Sukuks Sukuk certificates Term Finance Certificate Fully paid-up ordinary shares - Listed Units of mutual funds - 44,147,931 63,679,488 2,139,500 1,985,953 550,230 - 44,147,931 63,679,488 2,139,500 1,985,953 550,230 3,435,172 222,158 - - 3,435,172 222,158 - 18,049,972 13,688,715 - 18,049,972 13,688,715 3,657,330 144,241,789 2,789,558 2,789,558 2,789,558 150,688,677 Financial Assets - off balance sheet Forward purchase of foreign exchange Forward sale of foreign exchange Non - Financial Assets Operating fixed assets (land and buildings)* 2015 Level 1 Level 2 Level 3 Total -------------------------------- (Rupees in '000) -------------------------------RECURRING FAIR VALUE MEASUREMENTS Financial Assets - on balance sheet INVESTMENTS - Net Held-for-trading securities Fully paid-up ordinary shares Pakistan Investment Bonds Market Treasury Bills Government of Pakistan - Ijarah Sukuks Term Finance Certificates Available-for-sale securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan Ijarah Sukuks Sukuk certificates Fully paid-up ordinary shares - Listed Units of mutual funds Financial Assets - off balance sheet Forward purchase of foreign exchange Forward sale of foreign exchange Non - Financial Assets Operating fixed assets(land and buildings)* 54,001 2,304,633 366,990 2,725,624 313,892 404,520 24,935 - 54,001 313,892 404,520 24,935 38,144,282 61,550,414 1,618,080 720,537 - 38,144,282 61,550,414 1,618,080 720,537 - 2,304,633 366,990 - 43,794,450 39,608,299 43,794,450 39,608,299 186,179,409 3,116,375 3,116,375 3,116,375 192,021,408 * The Bank carries out periodic valuation of these assets for reasons disclosed in note 5.5 (a) to these financial statements. The Bank's policy is to recognise transfers into and out of the different fair value hierarchy levels at the date the event or change in circumstances that caused the transfer occurred. There were no transfers between levels 1 and 2 during the year. (a) Financial instruments in level 1 Financial instruments included in level 1 comprise of investments in listed ordinary shares and units of mutual funds. (b) Financial instruments in level 2 Financial instruments included in level 2 comprise of GoP Ijarah Sukuks, Pakistan Investment Bonds, Market Treasury Bills, corporate bonds, term finance and sukuk certificates. (c) Financial instruments in level 3 Financial instruments included in level 3 comprise of operating fixed assets (land and building) and non-banking assets.
  105. Soneri Bank Limited | Annual Report 2016 Valuation techniques and inputs used in determination of fair values Item Fully paid-up ordinary shares Valuation techniques and input used Fair values of investments in listed equity securities are valued on the basis of closing quoted market prices available at the stock exchange. Pakistan Investment Bonds / Market Treasury Bills Fair values of Pakistan Investment Bonds and Treasury Bills are derived using the PKRV rates (Reuters page). Government of Pakistan - Ijarah Sukuks Fair values of GoP Ijarah Sukuks are derived using the PKISRV rates announced by the Financial Market Association (FMA) through Reuters. These rates denote an average of quotes received from eight different pre-defined / approved dealers / brokers. Term Finance, Bonds and Sukuk certificates Investments in debt securities (comprising term finance certificates, bonds, sukuk certificates and any other security issued by a company or a body corporate for the purpose of raising funds in the form of redeemable capital) are valued on the basis of the rates announced by the Mutual Funds Association of Pakistan (MUFAP) in accordance with the methodology prescribed by the Securities and Exchange Commission of Pakistan. In the determination of the rates, the MUFAP takes into account the holding pattern of these securities and categorises there as traded, thinly traded and non-traded securities. Units of mutual funds Fair values of investments in units of mutual funds are determined based on redemption prices as at the close of the business day. Operating fixed assets (land and building) Land and buildings are revalued on a periodic basis using professional valuers. The valuation is based on their assessment of the market value of the assets. The effect of changes in the unobservable inputs used in the valuations cannot be determined with uncertainty. Accordingly, a qualitative disclosure of sensitivity has not been presented in these financial statements. 38 SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES The segment analysis with respect to business activity is as follows:Corporate Trading & Retail Total Sales Banking -------------------------- (Rupees in '000) -------------------------31 December 2016 Total income Total expenses (excluding provisions) Profit before provisions and taxes Provisions Profit before tax Segment assets (gross) Segment non-performing assets Segment provision required * Segment liabilities Segment return on net assets (ROA) (%)** Segment cost of funds (%)*** 4,879,491 10,867,195 4,513,959 20,260,645 4,667,908 7,856,431 4,634,560 17,158,899 211,583 3,010,764 (120,601) 3,101,746 353,245 (328,838) 24,407 (141,662) 3,010,764 208,237 3,077,339 84,691,703 123,887,413 78,659,222 287,238,338 3,096,799 40,159 7,396,746 10,533,704 2,260,294 40,159 6,417,179 8,717,632 19,974,518 30,507,544 209,749,417 260,231,479 (0.17) 2.43 0.29 1.11 4.78 5.98 3.92 4.29 Corporate Trading & Retail Total Sales Banking -------------------------- (Rupees in '000) -------------------------31 December 2015 Total income Total expenses (excluding provisions) Profit before provisions and taxes Provisions Profit before tax Segment assets (gross) Segment non-performing assets Segment provision required * Segment liabilities Segment return on net assets (ROA) (%)** Segment cost of funds (%)*** 5,368,991 11,201,920 4,899,204 21,470,115 4,904,722 7,373,613 4,566,932 16,845,267 464,269 3,828,307 332,272 4,624,848 509,479 519,762 1,029,241 (45,210) 3,828,307 (187,490) 3,595,607 75,885,599 113,209,981 73,145,183 262,240,763 3,354,382 44,834 8,468,617 11,867,833 1,907,049 44,834 6,947,051 8,898,934 11,301,969 31,054,753 192,793,166 235,149,887 (0.06) 3.38 0.28 1.42 4.74 6.49 5.00 5.16 * The provision against each segment represents provision held against advances, investments and other assets. ** Segment ROA= Net Income / (Segment Assets - Segment Provisions) computed on cut-off balances. *** Segment cost of funds have been computed based on the average balances. 38.1 The above analysis includes allocation of items as per the approved mapping policy of the Bank. The responsibility domain of deposits between corporate and retail has been redefined in 2016. Prior year figures have been changed for comparison.
  106. 121 39 . TRUST ACTIVITIES The Bank commonly acts as a trustee and in other fiduciary capacity that results in the holding or placing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions. These are not assets of the Bank and, therefore, are not included in the Statement of Financial Position. The following is the list of assets held under trust: Category Type Asset Management Companies Asset Management Companies Asset Management Companies Asset Management Companies Asset Management Companies Employee Funds / NGO's Employee Funds / NGO's Employee Funds / NGO's Employee Funds / NGO's Individuals Individuals Individuals Individuals Individuals Corporate Corporate Corporate Staff retirement funds - related parties Bank's executive - related party 40. No. of IPS account 2016 2015 Ijarah Sukuks 3 years Sukuks 3 years PIB 5 years MTB 12 months MTB 6 months PIB 3 years PIB 5 years PIB 10 years MTB 6 months MTB 12 months PIB 3 years PIB 5 years PIB 10 years PIB 20 years MTB 12 months PIB 3 years PIB 5 years PIB 3 to 20 years MTB 3 months 3 5 3 2 2 1 3 1 1 1 4 2 28 Face Value 2016 2015 (Rupees in '000) 8 1 2 2 6 1 1 2 2 2 1 2 1 1 2 3 7 1 45 19,000 217,500 120,000 330,000 62,000 5,000 45,400 10,000 20,000 12,000 18,000 10,000 868,900 191,100 105,000 950,000 500,000 278,000 13,500 5,000 65,000 303,500 62,000 5,000 40,000 10,000 85,000 230,000 39,000 343,000 3,500 3,228,600 RELATED PARTY TRANSACTIONS The related parties of the Bank comprise related group companies, major shareholders, directors and their close family members (including their associates), staff retirement funds and key management personnel. Usual transactions with related parties include deposits, advances, acceptances and provision of other banking services which are carried out in accordance with agreed terms. Transactions with executives are undertaken at terms in accordance with employment agreements and services rules and include provision of advances on terms softer than those offered to the customers of the Bank. Contributions to and accruals in respect of staff retirement benefit plan are made in accordance with the actuarial valuation / terms of the benefit plan as disclosed in notes 34 and 35. Remuneration to the key management personnel is disclosed in note 36 to these financial statements. Assets held under trust are disclosed in note 39 to these financial statements. The details of transactions with related parties during the year other than those which have been disclosed else where in these financial statements, are as follows: Key management personnel Other related parties Bank's Chief Directors & their Close Related Group Major Staff Retirement Executive / Family Members Companies Shareholders Funds Executives 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 -------------------------------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------------------------- Deposits Balance at beginning of the year Placement during the year Transfer in * Withdrawal during the year Transfer out ** Balance at end of the year 102,216 444,951 71 (436,925) (17) 110,296 69,900 533,898 70 (498,774) (2,878) 102,216 880,074 2,103,422 (2,020,947) 962,549 Advances Balance at beginning of the year Disbursements during the year Transfer in * Repayments during the year Transfer out ** Balance at end of the year 168,716 22,715 8,841 (24,588) (8,424) 167,260 123,817 73,665 610 (20,148) (9,228) 168,716 37,597 25,002 (57,533) 5,066 950,311 623,401 492,286 930,734 1,978,938 48,819,248 49,568,894 6,662,800 (2,049,175) (48,709,090) (49,437,779) (6,649,927) 880,074 733,559 623,401 943,607 97,155 20,544 (80,102) 37,597 345,412 103,662 (122,830) 326,244 * This represents balances pertaining to parties that became related during the current year. ** This represents balances pertaining to parties that ceased to be related during any part of the current year. 294,462 197,264 (146,314) 345,412 - 784,405 307,666 10,341,929 1,682,409 (10,195,600) (1,034,210) 930,734 955,865 - - 216,346 1,031,283 (939,963) 307,666 -
  107. Soneri Bank Limited | Annual Report 2016 Key management personnel Other related parties Bank's Chief Directors & their Close Related Group Major Staff Retirement Executive / Family Members Companies Shareholders Funds Executives 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 -------------------------------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------------------------- Profit / interest expense on deposits 6,134 7,475 101,329 107,773 55,613 44,970 Mark-up / return / interest earned 9,278 7,491 4,715 8,239 21,404 37,334 Commission / brokerage & bank charges recovered 55 45 80 47 2,615 918 Transaction-related contingent liabilities - 900 - - 1,733 29,623 - - - - Trade-related contingent liabilities - - - - 64,350 65,509 - - - - Other administrative expenses - - 9,009 8,034 - - - - 8,343 11,529 96,139 - 89,271 - 5 38,739 18,216 - 10 - 1 7 2016 2015 (Rupees in '000) Investments - NIT Income Fund - NIT Islamic Equity Fund Donation / CSR activities 41. CAPITAL ADEQUACY 41.1 Capital Management 100,000 100,000 200,000 100,000 100,223 200,223 345 10,244 The State Bank of Pakistan (SBP) introduced guidelines with respect to disclosure of capital adequacy related information in the financial statements of banks vide its communication dated February 4, 2014. These guidelines are based on the requirements of Basel III which were introduced earlier by the SBP in August 2013 for implementation by the banks in Pakistan. The SBP has specified a transitional period till 2018 for implementation of Basel III guidelines. The SBP vide its BPRD Circular No. 11 of 2014 dated November 5, 2014 revised the disclosure requirements with respect to capital adequacy related information. The disclosures below have been prepared on the basis of the SBP's circular. The objective of managing capital is to safeguard the Bank's ability to continue as a going concern, so that it could continue to provide adequate returns to shareholders by pricing products and services commensurating with the level of risk. It is the policy of the Bank to maintain adequate capital base so as to maintain investor, creditor and market confidence and to support future development of the business. The impact of the level of capital on shareholdersÕ return is also recognised and the Bank recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position. Goals of managing capital The goals of capital management are as follows: - To be an appropriately capitalised institution, as defined by regulatory authorities and in accordance with risk profile; - Maintain strong ratings and protect the Bank against unexpected events; - Ensure availability of adequate capital (including the quantum) at a reasonable cost so as to enable the Bank to expand; and achieve overall low cost of capital with appropriate mix of capital elements. Statutory minimum capital requirement and management of capital The State Bank of Pakistan requires all banks to have minimum paid up capital (net of losses) of Rs. 10 billion. The paid up capital of the Bank for the year ended 31 December 2016 stood at Rs. 11,024.636 million. In addition banks are also required to maintain a minimum Capital Adequacy Ratio (CAR) of 10.65 percent of the risk weighted exposure of the Bank as at 31 December 2016. The BankÕs CAR as at 31 December 2016 was approximately 14.12 percent of its risk weighted exposure. The capital of the Bank is managed keeping in view the minimum ÒCapital Adequacy RatioÓ required by the SBP through BPRD Circular No. 06 dated 15 August 2013. The adequacy of the capital is measured with reference to the risk-weighted assets of the Bank.
  108. 123 The required capital adequacy ratio is achieved by the Bank through improvement in the asset quality , ensuring better recovery management and striking balance with low risk assets. Banking operations are categorised as either trading book or banking book and risk-weighted assets are determined according to specified requirements of the State Bank of Pakistan that seek to reflect the varying levels of risk attached to assets and off-balance sheet exposures. The total risk-weighted exposures comprise the credit risk, market risk and operational risk. For the purpose of calculating capital under the capital adequacy framework, the capital of the bank is classified in two tiers as per the Basel III framework. The total regulatory capital consists of the sum of Tier 1 Capital and Tier 2 Capital. Tier 1 Capital includes Common Equity Tier 1 (CET1) and Additional Tier 1 Capital (AT1). CET1 of the Bank includes the sum of fully paid up capital, balance in share premium, reserves for issuance of bonus share, general / statutory reserves as disclosed in the balance sheet, un-appropriated profit, less regulatory adjustments. The Bank's common shares are perpetual in nature and have the last subordination in case of liquidation. AT1 capital includes instruments issued by the banks that meet the qualifying criteria for AT1, share premium resulting from the issuance of AT1 instruments less regulatory adjustments applicable on AT1 Capital. The Bank has not allocated any AT1 capital. Tier 2 Capital includes Subordinated debt / Instruments, share premium resulting from the issue of instruments included in Tier 2, Revaluation Reserves (net of deficits, if any), General Provisions or General Reserves for loan losses, Foreign Exchange Translation Reserves, Undisclosed Reserves less regulatory adjustments applicable on Tier-2 capital. The Bank Tier-2 capital comprises subordinated Term Finance Certificates (TFCs') of Rs 2.998 billion, revaluation reserve (upto a maximum of 78% net of taxes of the balance in the related revaluation reserve) and general provisions for loan losses. The calculation of capital adequacy enables the Bank to assess its long-term soundness. As the Bank carries on the business on a wide area network basis, it is critical that it is able to continuously monitor the exposure across the entire organisation and aggregate the risks so as to take an integrated approach / view. 41.2 Capital Adequacy Ratio (CAR) disclosure 2016 Particulars 2015 Amount ------------ (Rupees in '000) -----------Common Equity Tier 1 capital (CET1): Instruments and reserves Fully paid-up capital / capital deposited with the SBP Balance in share premium account Reserve for issue of bonus shares Discount on issue of shares General / Statutory Reserves Gain / (Losses) on derivatives held as Cash Flow Hedge Unappropriated profits Minority Interests arising from CET1 capital instruments issued to third party by consolidated bank subsidiaries (amount allowed in CET1 capital of the consolidation group) CET 1 before Regulatory Adjustments Total regulatory adjustments applied to CET1 (Note 41.2.1) Common Equity Tier 1 Additional Tier 1 (AT 1) Capital Qualifying Additional Tier-1 capital instruments plus any related share premium of which: classified as equity classified as liabilities Additional Tier-1 capital instruments issued by consolidated subsidiaries and held by third parties of which: instrument issued by subsidiaries subject to phase out AT1 before regulatory adjustments Total of Regulatory Adjustment applied to AT1 capital (Note 41.2.2) Additional Tier 1 capital after regulatory adjustments Tier 1 Capital (CET1 + admissible AT1) 11,024,636 1,423,829 3,496,305 11,024,636 1,405 (1,001,361) 1,048,060 4,263,217 15,944,770 (615,993) 15,328,777 15,335,957 (303,494) 15,032,463 - - - - - - 15,328,777 15,032,463
  109. Soneri Bank Limited | Annual Report 2016 2016 Particulars 2015 Amount ------------ (Rupees in '000) -----------Tier 2 Capital Qualifying Tier 2 capital instruments under Basel III plus any related share premium Capital instruments subject to phase out arrangement issued 2,998,800 3,000,000 Tier 2 capital instruments issued to third parties by consolidated subsidiaries - - - - - of which: instruments issued by subsidiaries subject to phase out General Provisions or general reserves for loan losses-up to maximum of 1.25% of Credit Risk Weighted Assets 51,340 46,224 Revaluation Reserves (net of taxes) of which: - Revaluation reserves on fixed assets - Unrealized gains / losses on AFS 722,768 748,555 1,105,908 1,164,955 Foreign Exchange Translation Reserves - Undisclosed/Other Reserves (if any) - T2 before regulatory adjustments 4,878,816 4,959,734 Total regulatory adjustment applied to T2 capital (Note 41.2.3) (208,871) (156,469) Tier 2 capital (T2) after regulatory adjustments 4,669,945 4,803,265 Tier 2 capital recognized for capital adequacy 4,669,945 4,803,265 Portion of Additional Tier 1 capital recognized in Tier 2 capital - - 4,669,945 4,803,265 19,998,722 19,835,728 141,609,046 128,904,908 CET1 to total RWA 10.82% 11.66% Tier-1 capital to total RWA 10.82% 11.66% Total capital to total RWA 14.12% 15.39% Total Tier 2 capital admissible for capital adequacy TOTAL CAPITAL (T1 + admissible T2) Total Risk Weighted Assets (RWA) {for details refer Note 41.3.4} Capital Ratios and buffers (in percentage of risk weighted assets) Bank specific buffer requirement (minimum CET1 requirement plus capital - - conservation buffer plus any other buffer requirement) of which: - capital conservation buffer requirement -- - - countercyclical buffer requirement -- - - D-SIB or G-SIB buffer requirement -- CET1 available to meet buffers (as a percentage of risk weighted assets) - 4.82% 5.66% 6.00% 6.00% National minimum capital requirements prescribed by SBP CET1 minimum ratio Tier 1 minimum ratio Total capital minimum ratio 7.50% 7.50% 10.65% 10.25%
  110. 125 Particulars 2016 Pre-Basel III Amount treatment * 2015 Pre-Basel III Amount treatment* -------------------- (Rupees in '000) ------------------41.2.1 Common Equity Tier 1 capital: Regulatory adjustments Goodwill (net of related deferred tax liability) All other intangibles (net of any associated deferred tax liability) Shortfall of provisions against classified assets** - - 403,363 - - - - - - Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related tax liability) - 72,651 - - - - - - - - - 117,980 - Cash flow hedge reserve - - - - Investment in own shares / CET1 instruments - - - - Securitization gain on sale - - - - Capital shortfall of regulated subsidiaries - - - - Deficit on account of revaluation from bank's holdings of property / AFS - - - - 94,650 - - - - - - - - - - - Defined-benefit pension fund net assets Reciprocal cross holdings in CET1 capital instruments 230,843 - Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) Significant investments in the common stocks of banking, financial and insurance entities that are outside the scope of regulatory consolidation (amount above 10% threshold) Deferred Tax Assets arising from temporary differences (amount above 10% threshold, net of related tax liability) Amount exceeding 15% threshold of which: - significant investments in the common stocks of financial entities - - - - - deferred tax assets arising from temporary differences - - - - National specific regulatory adjustments applied to CET1 capital - - - Investment in TFCs of other banks exceeding the prescribed limit - - - - Any other deduction specified by SBP - - - - - - - - 615,993 - - Regulatory adjustment applied to CET1 due to insufficient AT1 and Tier 2 to cover deductions Total regulatory adjustments applied to CET1 303,494 -
  111. Soneri Bank Limited | Annual Report 2016 Particulars 2016 Pre-Basel III Amount treatment* 2015 Pre-Basel III Amount treatment* -------------------- (Rupees in '000) ------------------41.2.2 Additional Tier 1 Capital: regulatory adjustments - - - - Investment in own AT1 capital instruments - - - - Reciprocal cross holdings in Additional Tier 1 capital instruments - - - - - - - - - - - - - - - - - - - - - - - - Investment in mutual funds exceeding the prescribed limit (SBP specific adjustment) Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) Significant investments in the capital instruments issued by banking, financial and insurance entities that are outside the scope of regulatory consolidation Portion of deduction applied 50:50 to core capital and supplementary capital based on pre-Basel III treatment which, during transitional period, remain subject to deduction from tier-1 capital Regulatory adjustments applied to Additional Tier 1 due to insufficient Tier 2 to cover deductions Total of Regulatory Adjustment applied to AT1 capital * This column highlights items that are still subject to Pre Basel III treatment during the transitional period ** State Bank of Pakistan has granted relaxation in respect of provision held against a customer as disclosed in note 10.6. State Bank of Pakistan has allowed the bank to avail this relaxation in calculation of capital adequacy ratio. Particulars 2016 Pre-Basel III Amount treatment* 2015 Pre-Basel III Amount treatment* -------------------- (Rupees in '000) ------------------41.2.3 Tier 2 Capital: regulatory adjustments Portion of deduction applied 50:50 to core capital and supplementary capital based on pre-Basel III treatment which, during transitional period, remain subject to deduction from tier-2 capital - - - - Reciprocal cross holdings in Tier 2 instruments - - Investment in own Tier 2 capital instrument - - - - 208,871 - - - - - - - 208,871 - 156,469 - Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) Significant investments in the capital instruments issued by banking, financial and insurance entities that are outside the scope of regulatory consolidation Amount of Regulatory Adjustment applied to T2 capital * This column highlights items that are still subject to Pre Basel III treatment during the transitional period 156,469 -
  112. 127 2016 2015 (Rupees in '000) 41.2.4 Risk Weighted Assets subject to pre-Basel III treatment Risk weighted assets in respect of deduction items (which during the transitional period will be risk weighted subject to Pre-Basel III Treatment) of which: Deferred tax assets of which: Defined-benefit pension fund net assets of which: Recognized portion of investment in capital of banking, financial and insurance entities where holding is less than 10% of the issued common share capital of the entity of which: Recognized portion of investment in capital of banking, financial and insurance entities where holding is more than 10% of the issued common share capital of the entity Amounts below the thresholds for deduction (before risk weighting) Non-significant investments in the capital of other financial entities Significant investments in the common stock of financial entities Deferred tax assets arising from temporary differences (net of related tax liability) Applicable caps on the inclusion of provisions in Tier 2 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to standardized approach (prior to application of cap) Cap on inclusion of provisions in Tier 2 under standardized approach Provisions eligible for inclusion in Tier 2 in respect of exposures subject to internal ratings-based approach (prior to application of cap) Cap for inclusion of provisions in Tier 2 under internal ratings-based approach - - - - - - - - - - - - - - 41.2.5 Leverage ratio According to Basel III instructions issued by State Bank of Pakistan (BPRD circular # 06 dated August 15, 2013), it is mandatory for all the banks to calculate and report the Leverage Ratio on a quarterly basis with the minimum benchmark of 3%. The reason for calculating leverage ratio is to avoid excessive on- and off-balance sheet leverage in the banking system. A simple, transparent and non-risk based ratio has been introduced with the following objectives: - Constrain the build-up of leverage in the banking sector which can damage the broader financial system and the economy; and - Reinforce the risk based requirements with an easy to understand and a non-risk based measure. Particulars 2016 2015 -------- (Rupees in '000) --------1 2 3 On balance sheet exposures On-balance sheet items (excluding derivatives but including collateral) Derivatives (Forward contracts and currency swaps) Total On balance sheet exposures 4 5 6 Off balance sheet exposures Off-balance sheet items (excluding derivatives) Commitment in respect of derivatives (derivatives having negative fair value are also included) Total Off balance sheet exposures 7 8 Capital and total exposures Tier 1 capital (Note 41.2) Total exposures (sum of lines 3 and 6) Basel III leverage ratio 278,520,706 114,609 278,635,315 253,341,829 235,143 253,576,972 58,948,414 308,766 59,257,180 40,230,763 824,649 41,055,412 15,328,777 337,892,495 15,032,463 294,632,384 4.54% 5.10% The current year's leverage ratio is 4.54% (2015: 5.10%) whereas total tier 1 capital and total exposures are Rs 15,328.777 million and Rs 337,892.495 million respectively.
  113. Soneri Bank Limited | Annual Report 2016 41.3 Capital Structure Reconciliation 41.3.1 Reconciliation of each financial statement line item to item under regulatory scope of reporting - Step 1 Balance sheet Under as in regulatory published scope of financial reporting statements ------------ (Rupees in '000) ------------ Particulars Assets Cash and balances with treasury banks Balances with other banks Lending to financial and other institutions Investments Advances Operating fixed assets Deferred tax assets Other assets Total assets 18,278,840 822,689 5,536,577 117,883,960 125,305,765 5,138,424 5,554,451 278,520,706 18,278,840 822,689 5,536,577 117,883,960 125,305,765 5,138,424 5,554,451 278,520,706 Liabilities and equity Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities Other liabilities Total liabilities 3,254,243 38,905,078 210,839,646 2,998,800 1,137,530 3,096,182 260,231,479 3,254,243 38,905,078 210,839,646 2,998,800 1,137,530 3,096,182 260,231,479 Share capital Reserves Unappropriated profit Surplus on revaluation of assets - net of tax Total liabilities and equity 11,024,636 1,423,829 3,496,305 2,344,457 278,520,706 11,024,636 1,423,829 3,496,305 2,344,457 278,520,706 41.3.2 Reconciliation of balance sheet to eligible regulatory capital - Step 2 Particulars Balance sheet Under as in regulatory Reference published scope of financial reporting statements ------------ (Rupees in '000) ------------ Assets Cash and balances with treasury banks Balances with other banks Lending to financial and other institutions Investments of which: non-significant capital investments in capital of other financial institutions exceeding 10% threshold significant capital investments in financial sector entities exceeding regulatory threshold mutual Funds exceeding regulatory threshold reciprocal crossholding of capital instrument others Advances shortfall in provisions / excess of total EL amount over eligible provisions under IRB general provisions reflected in Tier 2 capital Operating fixed assets of which: Intangibles Deferred tax assets of which: DTAs that rely on future profitability excluding those arising from temporary differences DTAs arising from temporary differences exceeding regulatory threshold Other assets of which: goodwill defined-benefit pension fund net assets Total assets 18,278,840 822,689 5,536,577 18,278,840 822,689 5,536,577 117,883,960 117,883,960 a 303,521 303,521 b c d e 117,980 125,305,765 117,980 125,305,765 f g 5,138,424 403,363 5,138,424 403,363 k - - h i 5,554,451 5,554,451 j l 278,520,706 278,520,706
  114. 129 Particulars Liabilities and equity Bills payable Due from financial institutions Deposits and other accounts Sub-ordinated loans of which : eligible for inclusion in AT1 eligible for inclusion in Tier 2 Liabilities against assets subject to finance lease Deferred tax liabilities of which: DTLs related to goodwill DTLs related to intangible assets DTLs related to defined pension fund net assets other deferred tax liabilities Other liabilities Total liabilities Share capital of which: amount eligible for CET1 of which: amount eligible for AT1 Reserves of which: portion eligible for inclusion in CET1 - Statutory reserve portion eligible for inclusion in CET1 - General reserve portion eligible for inclusion in Tier 2 General reserve Balance sheet Under as in regulatory Reference published scope of financial reporting statements ------------ (Rupees in '000) ------------ m n o p q r s t u v 3,254,243 38,905,078 210,839,646 2,998,800 2,998,800 1,137,530 1,137,530 3,096,182 260,231,479 3,254,243 38,905,078 210,839,646 2,998,800 2,998,800 1,137,530 1,137,530 3,096,182 260,231,479 11,024,636 11,024,636 1,423,829 1,423,829 - 11,024,636 11,024,636 1,423,829 1,423,829 - Discount on issue of shares - Unappropriated profit Minority Interest of which: portion eligible for inclusion in CET1 portion eligible for inclusion in AT1 portion eligible for inclusion in Tier 2 Surplus on revaluation of assets of which: Revaluation reserves on Fixed Assets Unrealized Gains/Losses on AFS In case of Deficit on revaluation (deduction from CET1) Total liabilities and equity w x y z aa ab 3,496,305 2,344,457 926,626 1,417,831 278,520,706 3,496,305 2,344,457 926,626 1,417,831 278,520,706 41.3.3 Basel III Disclosure (with added column) - Step 3 Particulars Source based on reference number from step 2 Component of regulatory capital reported by bank (Rupees in '000) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Common Equity Tier 1 capital (CET1): Instruments and reserves Fully Paid-up Capital Balance in share premium account Discount on issue of shares Reserve for issue of bonus shares General / Statutory Reserves Gain / (Losses) on derivatives held as Cash Flow Hedge Unappropriated / unremitted profits Minority Interests arising from CET1 capital instruments issued to third party by consolidated bank subsidiaries (amount allowed in CET1 capital of the consolidation group) CET 1 before Regulatory Adjustments Common Equity Tier 1 capital: Regulatory adjustments Goodwill (net of related deferred tax liability) All other intangibles (net of any associated deferred tax liability) Shortfall of provisions against classified assets Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related tax liability) Defined-benefit pension fund net assets Reciprocal cross holdings in CET1 capital instruments Cash flow hedge reserve (s) (u) (w) (x) (j) - (s) (k) - (p) (f) (h) - (r) * x% (l) - (q) * x% (d) 11,024,636 1,423,829 3,496,305 15,944,770 403,363 117,980 -
  115. Soneri Bank Limited | Annual Report 2016 Particulars 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Investment in own shares / CET1 instruments Securitization gain on sale Capital shortfall of regulated subsidiaries Deficit on account of revaluation from bank's holdings of property / AFS Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) Significant investments in the capital instruments issued by banking, financial and insurance entities that are outside the scope of regulatory consolidation (amount above 10% threshold) Deferred Tax Assets arising from temporary differences (amount above 10% threshold, net of related tax liability) Amount exceeding 15% threshold of which: significant investments in the common stocks of financial entities deferred tax assets arising from temporary differences National specific regulatory adjustments applied to CET1 capital Investment in TFCs of other banks exceeding the prescribed limit Any other deduction specified by SBP (mention details) Regulatory adjustment applied to CET1 due to insufficient AT1 and Tier 2 to cover deductions Total regulatory adjustments applied to CET1 Common Equity Tier 1 Additional Tier 1 (AT 1) Capital Qualifying Additional Tier-1 instruments plus any related share premium of which: Classified as equity Classified as liabilities Additional Tier-1 capital instruments issued by consolidated subsidiaries and held by third parties of which: instrument issued by subsidiaries subject to phase out AT1 before regulatory adjustments Additional Tier 1 Capital: regulatory adjustments Investment in mutual funds exceeding the prescribed limit (SBP specific adjustment) Investment in own AT1 capital instruments Reciprocal cross holdings in Additional Tier 1 capital instruments Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) Significant investments in the capital instruments issued by banking, financial and insurance entities that are outside the scope of regulatory consolidation Portion of deduction applied 50:50 to core capital and supplementary capital based on pre-Basel III treatment which, during transitional period, remain subject to deduction from tier-1 capital Regulatory adjustments applied to Additional Tier 1 due to insufficient Tier 2 to cover deductions Source based on reference number from step 2 Component of regulatory capital reported by bank (ab) (Rupees in '000) - (a) - (ac) - (ae) 94,650 (b) - (ad) - (af) - (i) 615,993 15,328,777 - (t) (m) - (y) - - (ac) - (ad) - -
  116. 131 Particulars Source based on reference number from step 2 Component of regulatory capital reported by bank (Rupees in '000) 43 44 45 Total of Regulatory Adjustment applied to AT1 capital Additional Tier 1 capital Additional Tier 1 capital recognised for capital adequacy - Tier 1 Capital (CET1 + admissible AT1) 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 Tier 2 Capital Qualifying Tier 2 capital instruments under Basel III Capital instruments subject to phase out arrangement from Tier 2 Tier 2 capital instruments issued to third party by consolidated subsidiaries of which: instruments issued by subsidiaries subject to phase out General Provisions or general reserves for loan losses-up to maximum of 1.25% of Credit Risk Weighted Assets Revaluation Reserves eligible for Tier 2 of which: portion pertaining to Fixed Asset portion pertaining to AFS securities Foreign Exchange Translation Reserves Undisclosed / Other Reserves (if any) T2 before regulatory adjustments Tier 2 Capital: regulatory adjustments Portion of deduction applied 50:50 to core capital and supplementary capital based on pre-Basel III treatment which, during transitional period, remain subject to deduction from tier-2 capital Reciprocal cross holdings in Tier 2 instruments Investment in own Tier 2 capital instrument Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) Significant investments in the capital instruments issued by banking, financial and insurance entities that are outside the scope of regulatory consolidation Amount of Regulatory Adjustment applied to T2 capital Tier 2 capital (T2) Tier 2 capital recognised for capital adequacy Excess Additional Tier 1 capital recognised in Tier 2 capital Total Tier 2 capital admissible for capital adequacy TOTAL CAPITAL (T1 + admissible T2) 15,328,777 (n) (z) 2,998,800 - (g) 51,340 56% of (aa) (v) 722,768 1,105,908 4,878,816 - (ae) 208,871 (af) 208,871 4,669,945 4,669,945 4,669,945 19,998,722
  117. Soneri Bank Limited | Annual Report 2016 41.3.4 Risk-weighted exposures Note Credit Risk 2016 Capital Risk adjusRequirement ted value -------- (Rupees in '000) -------- 2015 Capital Risk adjusRequirement ted value -------- (Rupees in '000)-------- Portfolios subject to standardised approach (Comprehensive Approach) On-balance sheet items: Cash and cash equivalent Sovereign and central banks Public sector entities (PSEs) Banks and securities firms Corporate portfolio Retail non mortgages Mortgages Ð Residential Past due loans Operating fixed assets Other assets 41.4 41.4 3,997 105,351 286,309 7,438,417 924,066 103,854 254,519 473,506 95,594 9,685,613 39,972 1,053,514 2,863,094 74,384,170 9,240,663 1,038,542 2,545,187 4,735,061 955,939 96,856,142 1,759 4,631 160,647 7,163,241 1,008,687 88,024 365,590 488,408 94,413 9,375,400 17,592 46,305 1,606,473 71,632,408 10,086,867 880,241 3,655,900 4,884,081 944,131 93,753,998 1,268,680 425,151 563,732 2,257,563 12,686,804 4,251,507 5,637,316 22,575,627 1,002,450 225,951 342,110 1,570,511 10,024,503 2,259,505 3,421,103 15,705,111 16,406 16,406 164,056 164,056 27,272 27,272 272,721 272,721 443,782 1,665 445,447 12,405,029 4,437,820 16,650 4,454,470 124,050,295 242,772 1,665 244,437 11,217,620 2,427,715 16,650 2,444,365 112,176,195 11,940 35,545 14,926 62,411 149,250 444,313 186,575 780,138 34,122 59,359 8,784 102,265 426,525 741,988 109,800 1,278,313 1,342,289 16,778,613 1,236,032 15,450,400 13,809,729 141,609,046 12,555,917 128,904,908 Off balance sheet items: Non-market related:Direct credit substitutes Performance-related contingencies Trade-related contingencies 41.5 41.5 41.5 Market related:Outstanding interest rate contracts Outstanding foreign exchange contracts 41.6 Equity Exposure Risk in the Banking Book Listed equity investments held in banking book Unlisted equity investments held in banking book Recognised portion of significant investment Total credit risk exposures Market risk Capital Requirement for portfolios subject to Standardized Approach Interest rate risk Equity position risk Foreign exchange risk Position in options Total market risk exposures Operational risk Capital requirement for operational risks TOTAL Capital Adequacy Ratio CET1 to total RWA Tier-1 capital to total RWA Total capital to total RWA Required Actual 31 December 2016 6.00% 7.50% 10.65% 10.82% 10.82% 14.12% Required Actual 31 December 2015 6.00% 7.50% 10.25% 11.66% 11.66% 15.39%
  118. 133 41 .4 Cash margin and eligible securities amounting to Rs. 33,769.638 million (2015: Rs. 22,965.012 million) have been deducted from gross advances using comprehensive approach to credit risk mitigation under Basel III. Advances are not net off with general provision amounting to Rs.51.340 million (2015: 46 million) which is reported separately in Tier II (supplementary) capital as per BSD circular letter number 03 dated 20 May 2006. 41.5 Cash margin and eligible securities amounting to Rs. 727.996 million (2015: Rs. 894.745 million) have been deducted from offbalance sheet items. 41.6 Contracts having original maturities of 14 days or less have been excluded. 41.7 Main Features of Regulatory Capital Instruments 1 2 3 4 4.1 4.2 4.3 4.4 5 6 7 8 9 9.1 10 10.1 10.2 11 11.1 11.2 11.3 11.4 11.5 11.6 12 12.1 Main Features Issuer Unique identifier (e.g. KSE Symbol or Bloomberg identifier etc.) Governing law(s) of the instrument Regulatory treatment Transitional Basel III rules Post-transitional Basel III rules Eligible at solo/ group/ group & solo Instrument type Amount recognized in regulatory capital (Currency in PKR thousands, as of reporting date) Par value of instrument Accounting classification Original date of issuance Perpetual or dated Original maturity date Issuer call subject to prior supervisory approval Optional call date, contingent call dates and redemption amount Subsequent call dates, if applicable Coupons / dividends Fixed or floating dividend/ coupon coupon rate and any related index/ benchmark Existence of a dividend stopper Fully discretionary, partially discretionary or mandatory Existence of step up or other incentive to redeem Non-cumulative or cumulative Convertible or non-convertible If convertible, conversion trigger (s) into common equity upon occurrence of certain Common Shares Soneri Bank Ltd SNBL Laws of Islamic Republic of Pakistan Instrument 1 Soneri Bank Ltd SNBL - TFCs Laws of Islamic Republic of Pakistan Common Equity Tier 1 Common Equity Tier 1 Solo Ordinary Shares Rs 11,024,636 Rs.10 Shareholders' Equity Various From 1992 Perpetual N/A No N/A N/A Tier 2 Tier 2 Solo Subordinated Debt Rs 2,998,800 Rs.5,000 Liability July 2015 Dated July 2023 Yes, after 5 years from last day of public subscription N/A N/A N/A N/A No Fully Discretionary No Non-cumulative Non-convertible N/A 12.2 12.3 12.4 12.5 12.6 13 14 If convertible, fully or partially If convertible, conversion rate If convertible, mandatory or optional conversion If convertible, specify instrument type convertible into If convertible, specify issuer of instrument it converts into Write-down feature If write-down, write-down trigger(s) N/A N/A N/A N/A N/A No N/A 15 16 17 If write-down, full or partial If write-down, permanent or temporary If temporary write-down, description of write-up mechanism N/A N/A N/A Floating Floating rate at 6 month KIBOR plus 1.35% Yes Mandatory No Cumulative Convertible in case of PONV "At the option of supervisor it can be converted trigger events , called point of non viability (PONV). The PONV is the earlier of; 1. A decision made by SBP that a conversion or temporary/ permanent write off is necessary without which the bank would become non viable. 2. the decision to make a public sector injection of capital, or equivalent support, without which the bank would have become non viable, as determined by SBP." May convert fully or partially in case of PONV To be determined in the case of trigger event Convertible at the discretion of SBP in case of PONV Common Equity Tier 1 SNBL (Ordinary shares) Yes "At the option of supervisor it can be either written off upon occurrence of a certain trigger events, called point of non viability(PONV). The PONV is the earlier of: 1. A decision made by SBP that a conversion or temporary/ permanent write off is necessary without which the Bank would become non viable. 2. the decision to make a public sector injection of capital, or equivalent support, without which the Bank would have become non viable, as determined by SBP." May be written-down fully or partially; N/A As may be determined by reversal of trigger events and subject to regulatorÕs approval 18 Position in subordination hierarchy in liquidation (specify instrument type immediately senior to instrument Non-compliant transitioned features If yes, specify non-compliant features N/A No N/A 19 20 42. Senior to ordinary shareholders No N/A RISK MANAGEMENT The primary goal of risk management is to identify, assess and monitor risks inherent in the activities of the Bank and take adequate measures to manage and control these risks on a timely basis. This will help in achieving sustainable business growth, financial and non-financial targets with better protection and soundness. The BankÕs aim is to achieve an appropriate balance between risk and return and to minimise potential adverse effects on the BankÕs financial performance.
  119. Soneri Bank Limited | Annual Report 2016 The Bank's risk management framework encompasses the culture, processes and structure and is directed towards the effective management of potential opportunities and threats to the Bank. The prime objective of the Bank's risk management strategy is to abandon the traditional approach of 'managing risk by silos' and to put in place integrated risk and economic capital management capabilities that will enable the Bank to achieve integrated view of risks across its various business operations and to gain strategic advantage from its risk management capabilities. The Board of Directors (BOD) keeps an oversight on the Bank-wide risk management framework and approves the risk management strategy and policies of the Bank. The Board Risk Management Committee (BRMC), ensures that the Bank maintains a complete and prudent integrated risk management framework at all times and ensures that the risk exposures are maintained within acceptable levels. Moreover, the Credit Risk Management Committee (CRMC), Market Risk Management Committee (MRMC) and the Operational Risk Management Committee (ORMC) and all other senior management committees are mainly responsible for ensuring the compliance of the BOD approved risk management policy and for monitoring and managing risk levels in relevant areas of the Bank. The Bank's risk management policy, formulated on regulatory guidelines, covers all major types of risk that the Bank is exposed to. The policy is laid down on key risk management principles which includes management oversight and control culture, risk recognition and assessment, control activities and segregation of duties, information and communication and monitoring activities and correcting deficiencies. Board of Directors Approves risk management strategy and policy Board Audit Committee Board Risk Management Committee Considers the adequacy & effectiveness of Internal Control Frame work C Review risk Profile Review RM strategies, policies, systems & procedures Ensures Credit, Market, Liquidity, Operational & other risk, are maintained at an acceptable level Board Credit Committee ShariÕah Board Review lending policies, procedures & establishes strategy to strengthen & monitor the loan portfolio. The ShariÕah Board ensure that all the procedure manuals product programs structure, process flows, related agreements marketing advertisement, sales illustrations and brochures are in conformity with the rules and principles of ShariÕah President & CEO Assessment & Monitoring Credit Risk Mangement Committee Asset Liability Committee (ALCO) Monitor Liquidity Risk, Develop strategies to manage Liquidity needs in view of current economic political situation Regulate structure / composition of assets & liabilities and decide pricing of loans & advances. Ensure implementation of CRM policy/ strategy, Ensure compliance with regulatory requirements & internal policies and compliance with limits with respect to Credit Review and assess the credit portfolio structure; Analyse market conditions and economic sectors in which the Bank has exposure or is willing to take exposure Review and analyse NPLs portfolio Ensure adequacy of credit assessment and monitoring mechanism Assess adequacy of credit risk rating/ scoring systems of the Bank Operation Risk Management Committee Review Operation Risk Management Framework and ensure its compliance: Assess the effectiveness and efficiency of internal controls inviorment of the bank: Monitor Bank-wide operational risk: Ensure adequacy of capital with respect to required operational risk charge: To conduct risk and control assessment exercise for processes/products/systems. Market Risk Management Committee Monitor and ensure compliance with regulatory and internal policies covering foreign exchange risk, interest rate risk, equity price risk, and liquidity risk, Review the profitability objectives and investment strategies Discuss and/or devise strategies to mitigate risks and ensure optimum level of risk-return relationship is maintained BCP Steering Committee Investment Committee Manage Capital Market risk Chief Operating Officer Establish business continuity plan and ensure its effective implementation: Ensure the protection and availability of critical business processes and supporting technology in case of crises: Sponsor the execution and maintenance of risk assessment, business impact analysis, crises recovery plans and training programs: Ensure the adequacy of plans: Ensure that alternate sites and / or spaces are available for each critical process Ensure that proper training sessions are conducted. Risk Management Division Develop risk framework/policies & procedures for management of Credit, Market, Liquidity, Operational and other inherent risks Development of system & procedures for identification assessment monitoring & control of Credit, Market, Liquidity, Operational and other inherent risks Monitoring of risk on a portfolio basis Assurance C Internal Audit Compliance Assesses the adequacy of Risk Management Processes Assesses the adequacy of Internal control Framework Ensure compliance with all statutory and regulatory requirements. Ensure compliance with bankÕs policies The Bank has a well-established risk management structure, with an active Board of Directors and Board Risk Management Committee supported by an experienced senior management team and a centralised risk management group which is independent of the business lines.
  120. 135 Risk Management Function BOD / BRMC President & CEO Chief Operating Officer (COO) Head of Risk Management Division Credit Risk Management / Review Department Operational Risk / BCP Management Department Market & Liquidity Risk Management Department / Treasury Middle Office Risk Analytics & Economic Capital Department Base II / III Implementation & Policy Review Department The Bank has undertaken a number of initiatives in the areas of assessment, measurement and monitoring of credit risk, market risk, funding liquidity risk and operational risk. These measures are providing competitive advantage to the Bank besides preparing the Bank for the full implementation of Basel-III. 42.1 Credit risk Credit risk is a risk arising from the potential that an obligor is either unwilling to perform on an obligation or its ability to perform is impaired resulting in financial loss to the Bank. Credit risk mainly arises from all placement of deposits, lending and investing activities i.e. transactions that give rise to actual, contingent or potential claims against any counterparty, borrower or obligor. Credit Risk Management Objectives and Organisation Lending of money is the core business activity, a major source of revenue and a significant exposure for the Bank. Lendings are mainly funded from depositors' money. Therefore, in order to protect the stakeholders' wealth, the Bank has deployed considerable resources and adequate controls to manage, monitor and control credit risk throughout the Bank. The main objective of the credit risk management process is to identify, assess, measure and monitor credit risk in all the financial exposures of the Bank. The Bank has established a rigorous credit risk management framework to timely and effectively manage credit risk in each and every credit transaction as well as at portfolio level. In addition to this, the Enterprise Risk Management (ERM) solution of SAS provides information / analysis in making better credit decisions, measured risk-taking, better loan pricing and efficient capital allocation thereagainst thus resulting in efficient and effective use of funds and increase in profitability of the Bank. The Bank has an organisational structure for managing credit risk, established on internal control environment and equipped with adequate level of expertise and resources. CREDIT RISK MANAGEMENT STRUCTURE Board of Directors Board Risk Management Committee Board Credit Committee President & CEO Chief Operating Officer Credit Risk Management Committee Head of Risk Management Division Executive Credit Committee Credit Risk Management Department Credit Division Credit Policy and Credit manual Credit Approval and Monitoring Credit Administration Credit Risk Review Department Corporate, SE, ME, Agriculture Risk Review Consumer Risk Review
  121. Soneri Bank Limited | Annual Report 2016 Credit Approval Authorities and Credit Standards The Board of Directors has delegated lending powers to different tiers of credit approving authorities, constituted at central and regional levels. Extension of credit is executed, in strong internal control environment, in the light of the Bank's credit policies and procedures and regulatory requirements. Credit Portfolio Management Besides managing credit risk at transaction level, the Bank regularly monitors credit risk at portfolio level and ensures that no undue concentration of risk is present in the overall credit exposure at Bank level. The Bank has a well established and rigorous management information set-up which allows efficient and effective assessment, monitoring and management of its credit risk profile in various dimensions. Credit Risk Rating The Credit risk Rating System provides solid grounds for the assessment and measurement of credit risk against each obligor in addition to fulfilling regulatory requirements. The Bank has revised and updated / in the process of updation Obligor Risk Rating (ORR) systems for its Corporate, Small and Medium Enterprises (SMEs), Consumer and Agriculture Finance borrowers which are duly approved by the Board of Directors (BOD). The automated and updated Obligor Risk Rating (ORR) systems for Corporate and Agriculture Finance obligors were implemented on a bank wide basis in Year 2015 while the updated ORR of Small and Medium Enterprises (SMEs) and Consumer Finance will be automated on a Bank wide basis upon completion of its testing. Through automation of the ORR process, the Bank plans to ensure review of 100% ORR by the Risk Management Division so as to ensure the integrity of data and consistency in generation of accurate obligor risk ratings, while giving due importance to the turnaround time. The Bank also has a BOD approved Facility Risk Rating System (FRR) for its borrowers. The ORR assigns risk grades to customers, in accordance with the regulatory requirements, in twelve (12) grades, out of which top nine (9) grades refer to regular customers whereas remaining three (3) grades pertain to defaulted ones. Whereas, FRR assigns each loan facility in six (6) categories, in accordance with regulatory requirements. Business Units assign credit risk rating to every customer and loan facility as an integral part of the Bank's credit approval process. Credit Risk Management Policy A sound credit risk management framework forms part of the overall business strategy and credit operations of the Bank. The principles for credit risk management have been laid down in the Bank's credit policy, credit manual, and credit risk procedural manual. The policy has been developed in accordance with the requirements of the State Bank of Pakistan and is reviewed and updated (where required) on a periodic basis. Credit Risk Assessment The Bank has a well established and rigorous pre-approval evaluation process of credit risk embedded in each credit transaction executed by the Business Units. The entire process broadly encompasses, gathering relevant information on the borrower, credit investigations and visits, detailed credit appraisal and credit risk assessment / measurement. Credit Risk Limit Structure In addition to monitoring credit limits specified in the Prudential Regulations of the State Bank of Pakistan, the credit limit structure of the Bank includes internal limits as established by the senior management and the BOD. Internal limits include limits with respect to BOD approved risk appetite, industry / sector, credit approval authority, large exposures limits, linkage ratio limits for corporate borrowers, exposure with banks and NBFIs, exposure with insurance companies and foreign countries. All these limits are monitored on a regular basis and any exceptions are reported to the relevant authorities for their timely action where necessary. Collateral Collateral act as mitigants in case of default by the borrower. Therefore, most of the facilities extended by the Bank are backed by appropriate and quality collaterals. Similarly, lendings to financial institutions and DFIs are backed by securities viz., Treasury Bills and Pakistan Investment Bonds. Clean facilities are provided, under strict control environment, only to the extent permissible under the Prudential Regulations of the State Bank of Pakistan. The credit manual of the Bank contains list of approved collaterals that the Bank can take and internal control standards for the management of collaterals obtained against credit facilities. Early Warning System The Bank has an effective early warning system which enables the Business Units / credit managers / credit administration personnel to identify and report problem loans on a prompt basis. Reports are received from Business Units on a regular basis, which are escalated to the concerned authority for necessary action on a timely basis. Remedial Management and allowances for impairment The Bank has standards for identification and classification of credit facilities, restructuring as well as related provisioning requirements and write-off policy, with clear responsibilities pertaining to all processes that are required to be followed. Non-performing loans beyond certain aging / classification category are required to be referred to Remedial Management Group (RMG) which initiates recovery proceedings against the borrowers in accordance with the applicable laws.
  122. 137 42 .1.1 Segmental information 42.1.1.1 Segments by class of business Advances (Gross) (Rupees in '000) Agriculture, Forestry, Hunting and Fishing 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 Financial Food and Allied Individuals Others* 3,222,913 28,707,232 4,844,065 1,215,055 2,837,320 954,568 891,890 1,381,090 900,940 7,358,320 17,879,883 6,842,185 999,275 31,175,457 6,788,432 17,754,411 133,753,036 (Percent) 2.41% 21.46% 3.62% 0.91% 2.12% 0.71% 0.67% 1.03% 0.67% 5.50% 13.37% 5.12% 0.75% 23.31% 5.08% 13.27% 100.00% Advances (Gross) (Rupees in '000) Agriculture, Forestry, Hunting and Fishing 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 Financial Food and Allied Individuals Others* 3,330,928 28,416,076 5,857,102 2,090,678 2,793,818 1,166,362 878,896 1,125,632 868,992 5,762,384 3,482,537 5,043,102 1,421,015 36,652,402 4,896,896 16,830,140 120,616,960 (Percent) 2.76% 23.56% 4.86% 1.73% 2.32% 0.97% 0.73% 0.93% 0.72% 4.77% 2.89% 4.18% 1.18% 30.39% 4.06% 13.95% 100.00% 2016 Deposits (Rupees (Percent) in '000) 83,271 0.04% 2,033,721 0.96% 2,682,125 1.27% 73,336 0.03% 233,554 0.11% 788,401 0.37% 7,843,582 3.72% 810,801 0.38% 1,694,297 0.80% 6,407,546 3.04% 3,396,733 1.61% 1,915,437 0.91% 12,588,410 5.97% 4,771,451 2.26% 101,114,282 47.96% 64,402,699 30.57% 210,839,646 100.00% 2015 Deposits (Rupees (Percent) in '000) 369,461 0.20% 4,015,305 2.17% 3,855,220 2.08% 510,985 0.28% 673,822 0.36% 608,273 0.33% 1,035,718 0.56% 644,907 0.35% 1,263,340 0.68% 3,250,732 1.76% 2,530,585 1.37% 838,337 0.45% 14,051,502 7.59% 3,022,863 1.63% 95,837,423 51.74% 52,713,910 28.45% 185,222,383 100.00% **Contingencies and commitments (Rupees in '000) 434,278 4,906,597 3,372,462 551,519 9,390 264,313 714,212 2,840,490 2,371,761 2,137,140 6,323,110 2,495,322 1,578,513 7,277,675 156,732 10,221,576 45,655,090 (Percent) 0.95% 10.75% 7.39% 1.21% 0.02% 0.58% 1.56% 6.22% 5.19% 4.68% 13.85% 5.47% 3.46% 15.94% 0.34% 22.39% 100.00% **Contingencies and commitments (Rupees in '000) 95,283 3,378,255 1,539,977 298,194 4,269 207,631 558,466 1,431,378 1,480,201 1,385,452 3,134,219 1,410,286 278,709 5,112,160 531,764 7,498,072 28,344,316 (Percent) 0.34% 11.92% 5.43% 1.05% 0.02% 0.73% 1.97% 5.05% 5.22% 4.89% 11.06% 4.98% 0.98% 18.04% 1.87% 26.45% 100.00% * All other business classes are less than ten percent of the total exposure. ** Contingencies only include direct credit substitutes, transaction related contingent liabilities and trade related contingent liabilities.
  123. Soneri Bank Limited | Annual Report 2016 42.1.1.2 Segment by sector 2016 Advances (Gross) Deposits Contingencies and commitments (Rupees (Percent) in '000) (Rupees (Percent) in '000) (Rupees (Percent) in '000) Public / Government 34,526,634 25.81% 39,209,705 18.60% 1,646,373 3.61% Private 99,226,402 74.19% 171,629,941 81.40% 44,008,717 96.39% 133,753,036 100.00% 210,839,646 100.00% 45,655,090 100.00% 2015 Advances (Gross) Deposits Contingencies and commitments (Rupees (Percent) in '000) 42.1.1.3 (Rupees (Percent) in '000) (Rupees (Percent) in '000) Public / Government 21,405,443 17.75% 32,794,375 17.71% 1,690,695 5.96% Private 99,211,517 82.25% 152,428,008 82.29% 26,653,621 94.04% 120,616,960 100.00% 185,222,383 100.00% 28,344,316 100.00% Details of non-performing advances and specific provisions by class of business segment 2016 2015 Classified Advances Specific Classified Specific Provision Advances Provision Held Held ------------------------------ (Rupees in '000) -----------------------------Agriculture, Forestry, Hunting and Fishing 240,810 140,103 175,325 93,582 6,304,340 5,582,698 6,087,210 4,685,026 Chemical and Pharmaceuticals 450,871 430,264 94,643 59,117 Production and Transmission of energy 166,121 166,121 Sugar 86,454 86,454 86,454 86,454 Footwear and Leather garments 24,900 24,900 1,954 1,954 Automobile and transportation equipment 49,310 49,310 Electronics and electrical appliances 50,898 50,898 Textile - 119,527 - 108,559 Construction - - - - Power (electricity), Gas, Water, Sanitary - - - - Wholesale and Retail Trade - - - - Exports / Imports - - - - Financial Insurance Services Individuals Others 233,301 70,498 233,301 48,935 257,636 40,136 243,719 35,240 2,741,917 1,582,947 4,721,222 3,255,333 10,419,420 8,395,931 11,584,107 8,568,984
  124. 139 42 .1.1.4 Details of non-performing advances and specific 2016 2015 provision by sector Classified Specific Classified Specific Advances Provision Advances Provision Held Held ------------------------------ (Rupees in '000) -----------------------------Public / Government Private 42.1.1.5 - - - - 10,419,420 8,395,931 11,584,107 8,568,984 10,419,420 8,395,931 11,584,107 8,568,984 Profit before Total assets Net assets taxation employed employed Geographical segment analysis 2016 Contingencies and Commitments ------------------------------- (Rupees in '000) -------------------------------- Pakistan 3,077,339 278,520,706 18,289,227 83,399,392 Asia Pacific (including South Asia) - - - - Europe - - - - United States of America and Canada - - - - Middle East - - - - Others 3,077,339 Profit before taxation 278,520,706 83,399,392 2015 Net assets employed Contingencies and Commitments ------------------------------- (Rupees in '000) -------------------------------- Pakistan 3,595,607 253,341,829 18,191,942 117,300,198 Asia Pacific (including South Asia) - - - - Europe - - - - United States of America and Canada - - - - Middle East - - - - Others - - - - 3,595,607 42.2 Total assets employed 18,289,227 253,341,829 18,191,942 117,300,198 Credit risk - General Disclosures, Basel III Specific The Bank has adopted the Standardised Approach of the Basel II Accord. According to the regulatory statement submitted under the Standardised Approach, the portfolio has been divided into claims fully secured by residential property, claims on corporate (excluding equity exposure) and claims categorised as retail portfolio. Claims on corporate constitute 83% (2015: 82%) of the total exposure, 3% (2015: 3%) represent claims that are fully secured against residential property and the remaining 14% (2015: 15%) exposure pertains to claims categorised as retail portfolio.
  125. Soneri Bank Limited | Annual Report 2016 42.3 Credit risk: Standardized Approach Currently, the Bank does not have any policy whereby customers have to be rated by a rating agency. Therefore, the Bank uses unsolicited / solicited ratings of JCR-VIS, PACRA and other foreign agencies approved by the SBP, wherever applicable. Following are the types of exposure for which each agency is used: Exposure Corporate Banks Sovereigns SMEs Securitizations JCR-VIS PACRA Fitch, Moody's & S&P P P - P P - P - Most of the Bank's asset base is short or medium term. Therefore, the Bank uses the entity's rating to assess the risk of exposure without any adjustments. For exposure amounts after risk mitigation subject to the standardised approach, amount of Bank's / DFI's outstanding (rated and unrated) in each risk bucket as well as those that are deducted are as follows: Exposure Rating category No. - Cash and Cash Equivalent - Corporate Amount Deduction Net Amount outstanding CRM* ---------------------------- (Rupees in '000) -----------------------------4,795,592 - 4,795,592 1 2 3,4 5,6 Unrated Unrated-2 9,845,578 1,556,662 15,001 42,533,342 24,240,066 2,079,183 202,000 385,196 247,736 7,766,395 1,354,662 15,001 42,148,146 23,992,330 - Public Sector Entities 1 2,3 Unrated 724,182 1,003,084 18,100,671 17,286,398 724,182 1,003,084 814,273 - Banks 1,2,3 4,5,6 Unrated 755,044 1,140,571 9,265,534 83,513 4,172,737 671,531 1,140,571 5,092,797 - Sovereigns etc. 1 2 3 4,5 6 Unrated 26,648 - - Government of Pakistan - SBP - Retail - Residential Mortgage - Past Dues Loans - Past Dues against Residential Mortgage - Significant investment in Commercial entities - Significant investment and DTAs above 15% threshold - Unlisted Equity Investments - Listed Equity Investments - Operating Fixed Assets - Other Assets 159,926,345 2,671,657 12,640,215 2,967,263 2,073,012 18,121 11,100 4,437,820 4,735,061 955,939 304,438,508 35,645,574 319,332 60,421,669 26,648 124,280,771 2,671,657 12,320,883 2,967,263 2,073,012 18,121 11,100 4,437,820 4,735,061 955,939 244,016,839
  126. 141 The Bank has adopted the comprehensive approach to credit risk mitigation under Basel III and , therefore, has applied haircuts to the collateral. Moreover, all eligible collaterals that includes cash / liquid securities have been taken into account with respect to credit risk mitigation. 42.4 Market risk 42.4.1 Market risk is the risk that the value of on and off-balance sheet positions of a financial institution will be adversely affected by movements in market rates or prices such as interest rates, foreign exchange rates, equity prices and / or commodity prices resulting in a loss to earnings and capital. Market Risk Management Objective and Organisation The Risk Management Framework requires that strong risk management practices are integrated in key strategic, capital and financial planning processes and day-to-day business processes across the Bank. The Bank has established a rigorous market risk management framework to efficiently and effectively monitor and manage market risk in every transaction as well as on a portfolio level. The Bank has made substantial investment to add value to its market risk management framework by purchasing the license of Market Risk Management System (MRMS), part of Enterprise Risk Management (ERM) solution, of SAS. The said solution provides adequate analysis to facilitate better investment decisions, measured risk-taking and efficient capital allocation thereagainst; thus, leading to efficient and effective use of funds. The Bank has a sound organisation structure for managing market risk, established on strong internal control environment and equipped with adequate level of expertise and resources. The Risk Management Committee (RMC), a BOD level subcommittee, is primarily responsible to monitor and manage market risk in all the financial exposures of the Bank, supported by senior management committees namely Asset and Liability Management Committee (ALCO) and Market Risk Management Committee (MRMC). MARKET RISK MANAGEMENT STRUCTURE Board of Directors Board Risk Management Committee President & CEO ALCO Chief Operating Officer Market Risk Management Committee Head of Risk Management Division Market Risk Management Department
  127. Soneri Bank Limited | Annual Report 2016 Market Risk Monitoring The BankÕs market risk policies set out risk management parameters, governance and control frameworks as well as reporting arrangements for key risk indicators. The Bank has a well-established structure of internal limits with respect to its treasury and investment operations. The Treasury Middle Office (TMO), within the Market Risk Management Department, monitors each and every transaction executed through treasury, monitors risk limits, reports breaches, off market rates, rate reasonability against benchmark rates, tolerance PV01 limits and assesses market risk in money market transactions, investments in equity securities, monitors impairments in equity securities and its stop loss limit and foreign exchange transactions. In order to mitigate unnecessary risk and ensure minimum business losses, Earmarking Policy has also been implemented to ensure risk migration from high risk to low risk transactions. Portfolio Analysis and Management Besides managing market risk at transaction level, the Bank regularly monitors market risk at portfolio level and ensures that no undue concentration of risk and adverse correlation is present in the overall financial exposures at the Bank level. The Bank has a well established management information set-up which allows efficient and effective assessment, monitoring and management of its market risk profile in various dimensions. Marking-to-Market The Bank is marking-to-market (MTM) its investment in tradable and available for sale securities, i.e., equity securities, debt securities and foreign exchange ready and forward transactions, on a regular basis. The same is independently reviewed by the Risk Management Division. Market Risk Assessment and Measurement The Bank is assessing and measuring market risk in all of its financial exposures using various types of measurement and analytical tools like Value at Risk (VaR), duration and convexity, interest rate gap and duration gap. The Bank is using Standardized Approach for exposures in its balance sheet, to calculate market risk capital charge and risk weighted asset for Capital Adequacy Ratio (CAR) calculation purposes. The Bank's principle market risk measurement methodology are VAR and stress testing. Historical financial market rates, prices and volatility serve as the basis for the statistical VAR model underlying the potential loss estimation. The Bank uses ten days as well as 30 days holding period at 99% confidence level to model risk in different portfolios. The main assumptions and scenarios of our stress analysis includes: 1. Parallel shift in yield curve by 2%, 3% and 4%. 2. Change in the slope of yield curve by changing short-term, medium-term and long-term maturities by different rates. 3. Penalty or reward depending on net long or net short position in foreign currency exposure. 4. Fall in general equity price upto 50%. 42.4.2 Foreign Exchange Risk Foreign exchange risk is the probability of loss resulting from adverse movements in exchange rates. Exchange position arising from trading activities is monitored through foreign exchange limits on aggregate and individual currency basis. Hedging strategies and mark-to-market valuations are used to mitigate exchange risk resulting from open position. Overall exchange position risk is maintained in accordance with the regulatory requirements prescribed by the State Bank of Pakistan.
  128. 143 Assets 2016 Off-balance sheet items Net foreign currency exposure --------------------------------- (Rupees in '000) -------------------------------Pakistan Rupee United States Dollar Great Britain Pound Japanese Yen Euro Other currencies 265,511,030 12,338,889 300,331 4 352,672 17,780 278,520,706 Assets Liabilities 244,233,413 13,739,269 1,497,250 637 760,898 12 260,231,479 18,103,979 174,204 2,947 (646) 1,434 7,309 18,289,227 2015 Off-balance sheet items Net foreign currency exposure --------------------------------- (Rupees in '000) -------------------------------Pakistan Rupee United States Dollar Great Britain Pound Japanese Yen Euro Other currencies 42.4.3 243,267,005 9,318,777 282,593 87 440,487 32,880 253,341,829 Liabilities (3,173,638) 1,574,584 1,199,866 (13) 409,660 (10,459) - 222,411,781 10,312,566 1,568,293 4,426 850,863 1,958 235,149,887 (2,769,899) 1,079,179 1,285,022 8,805 411,365 (14,472) - 18,085,325 85,390 (678) 4,466 989 16,450 18,191,942 Equity Position Risk The Bank invests mainly in blue chip securities depending upon market mispricing through arbitrage. Further, the risk arising from investments in equity securities lies in both its banking and trading books which is measured and assessed using the Value at Risk (VaR) approach. The VaR of the portfolio is reported to the BRMC, ALCO/MRMC and other authorities on a periodical basis. 42.4.4 Mismatch of Interest Rate Sensitive Assets and Liabilities Yield risk is the risk of decline in earnings due to adverse movement of the yield curve. Interest rate risk represents the risk that value of financial instruments will fluctuate due to change in market interest rates. The Bank is exposed to yield / interest rate risk as a result of mismatches or gaps in the amounts of assets and liabilities and off-balance sheet instruments that mature or re-price in a given period. The Bank manages this risk by matching the re-pricing of assets and liabilities and offbalance sheet instruments. The Bank's yield / interest rate sensitivity position for on-balance sheet instruments is based on the earlier of contractual re-pricing or maturity date and for off-balance sheet instruments is based on settlement date. The Bank quantifies the yield curve risk via duration, PVBP and convexity for rate sensitive assets and liabilities held in banking and trading book. The Bank also measure impact on net worth depending on duration gap of rate sensitive assets and liabilities.
  129. Soneri Bank Limited | Annual Report 2016 Effective Yield / Interest rate % 2016 Exposed to Yield/ Interest risk Total Over 1 to 3 Months Up to 1 Month Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years Above 10 Years Non-Interest bearing financial instruments ----------------------------------------------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------------------------------------------------------------On-balance sheet financial instruments Assets Cash and balances with treasury banks 0.00% 18,278,840 Balances with other banks 3.49% 822,689 141,130 Lendings to financial and other institutions 5.14% 5,536,577 2,603,228 1,887,364 1,045,985 Investments 6.51% 117,883,960 11,459,986 5,947,345 24,156,770 12,943,977 23,110,725 9,215,467 19,505,899 Advances 6.67% 125,305,765 8,286,819 54,470,728 60,327,404 15,720 83,543 106,703 42,699 Other assets 0.00% 5,090,321 272,918,152 - 22,491,163 - - - - - - - - 18,278,840 - - - - - - - - 681,559 - - - - - - 62,305,437 85,530,159 12,959,697 23,194,268 9,322,170 19,548,598 7,875,361 - - 3,668,430 - - 1,972,149 - - 5,090,321 - 29,691,299 - 3,254,243 - 137,800 52,799,878 7,875,361 Liabilities Bills payable 0.00% 3,254,243 Borrowings 4.96% 38,905,078 27,487,185 5,669,245 4,739,121 Deposits and other accounts 4.59% 210,839,646 61,045,855 68,474,009 14,588,471 Sub-ordinated loans 7.41% 2,998,800 2,998,800 Other liabilities 0.00% 2,522,481 258,520,248 On-balance sheet gap Non financial net assets Total net assets 14,397,904 - 91,531,840 - 74,143,254 - 19,327,592 (69,040,677) (11,837,817) 66,202,567 13,054,100 - - - 52,449 17,200 560,719 316,614 - - 340,919 461,159 - - - - - - - - - - 2,522,481 613,168 333,814 340,919 461,159 - 58,714,402 (94,403) 22,581,100 8,988,356 19,207,679 7,414,202 - (29,023,103) 13,054,100 - - - 3,891,323 18,289,227 Off-balance sheet financial instruments Forward purchase of foreign exchange Forward sale of foreign exchange Off-balance sheet gap 18,161,473 6,899,877 (13,793,304) (7,473,778) 4,368,169 (573,901) 8,189,838 3,010,609 (4,245,629) (2,073,897) 3,944,209 936,712 (7,893,608) 67,139,279 61,149 61,149 - - - - - - - - - - - - - - - - - - Total Yield / Interest Risk Sensitivity Gap (69,614,578) (33,254) 22,581,100 8,988,356 Cumulative Yield / Interest Risk Sensitivity Gap (69,614,578) (77,508,186) (10,368,907) (10,402,161) 12,178,939 21,167,295 19,207,679 7,414,202 - (29,023,103) 40,374,974 47,789,176 47,789,176 (29,023,103)
  130. 145 Effective Yield / Interest rate % 2015 Exposed to Yield/ Interest risk Total Over 1 to 3 Months Up to 1 Month Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years Above 10 Years Non-Interest bearing financial instruments ----------------------------------------------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------------------------------------------------------------On-balance sheet financial instruments Assets Cash and balances with treasury banks - 16,718,428 2.14% 1,634,544 182,555 12.10% 3,093,938 1,800,000 769,557 524,381 Investments 9.60% 108,846,113 7,496,236 23,067,029 3,173,469 50,664,788 4,394,756 2,035,890 Advances 7.63% 112,001,752 10,473,690 50,445,584 48,060,669 22,537 19,882 10,491 Other assets 0.00% 5,357,696 Balances with other banks Lending to financial and other institutions 247,652,471 - 19,952,481 - - - - - - - - 16,718,428 - - - - - - - - 1,451,989 - - - - - - 74,282,170 51,758,519 50,687,325 4,414,638 2,046,381 6,904,935 8,372,286 - - 2,736,724 - - - 2,968,899 - - - 5,357,696 - 29,233,736 - 2,706,274 - 6,186 43,882,318 6,904,935 8,372,286 Liabilities Bills payable - 2,706,274 Borrowings 4.86% 39,875,623 28,502,779 8,081,390 2,291,549 31,222 Deposits and other accounts 5.73% 185,222,383 56,715,448 61,647,128 11,782,450 9,705,887 Sub-ordinated loans 8.39% 3,000,000 3,000,000 Other liabilities 0.00% 2,520,975 233,325,255 - - - - - 976,498 70,882 512,654 172,349 719,266 - - - - - - - - - - - - - - - - - - - - 2,520,975 88,218,227 69,728,518 14,073,999 9,737,109 976,498 583,536 172,349 719,266 - 49,115,753 On-balance sheet gap 14,327,216 (68,265,746) 4,553,652 37,684,520 40,950,216 3,438,140 1,462,845 6,732,586 7,653,020 - (19,882,017) Non financial net assets 3,864,726 Total net assets 18,191,942 14,131,437 6,464,339 12,407 Off-balance sheet financial instruments Forward purchase of foreign exchange Forward sale of foreign exchange Off-balance sheet gap 43,963,526 23,355,343 (39,749,454) (23,697,959) (14,164,898) (1,886,597) 4,214,072 - (342,616) (33,461) 4,577,742 12,407 Total Yield / Interest Risk Sensitivity Gap (68,608,362) 4,520,191 42,262,262 40,962,623 Cumulative Yield / Interest Risk Sensitivity Gap (68,608,362) (64,088,171) (21,825,909) 19,136,714 - - - - - - - - - - - - - - - - - - 3,438,140 1,462,845 22,574,854 24,037,699 6,732,586 7,653,020 - (19,882,017) 30,770,285 38,423,305 38,423,305 (19,882,017) (a) The effective interest rate is a historical rate (for December month) for a fixed rate instrument carried at amortised cost and a current market rate for a floating rate instrument. (b) The effective interest rate has been computed by excluding non-performing advances. (c) The effective interest rate has been computed by excluding non-remunerative deposits.
  131. Soneri Bank Limited | Annual Report 2016 42.5 Liquidity Risk Liquidity risk is the potential inability to meet contractual and contingent financial obligations, either on or off balance sheet, as they become due. Primary liquidity objective of the Bank is to provide adequate funding for businesses throughout market cycles, including periods of financial stress. Liquidity Management Day to day funding, is managed by Treasury Division through net cash flows from payment systems, fresh deposits mobilised by branches, maturing money market deposits, etc. The Bank maintains a portfolio of highly marketable assets viz., Market Treasury Bills and Pakistan Investment Bonds, that can either be sold in the open market or funds can be arranged thereagainst under repo arrangements. This is further supported by investments in short term securities viz., Certificate of Investments etc. In line with its liquidity risk management policy, the Bank maintains a cushion over and above the minimum statutory liquidity requirement of the SBP, for maintaining liquidity reserves, to ensure continuity of cash flows. Liquidity Risk Monitoring The Bank monitors its liquidity risk through various liquidity ratios and liquidity risk indicators and any deviations or breaches are reported to the relevant authorities for timely action. Moreover, Asset and Liability Management Committee (ALCO), a senior management committee, also reviews the liquidity position of the Bank on at least monthly basis and takes appropriate measures where required. Liquidity Risk Assessment The Bank uses liquidity gap ladder to assess the liquidity gaps and liquidity needs in different time buckets, under normal and stressed scenarios. Whereas, the Contingency Funding Plan (CFP) of the Bank is also tested on the basis of the results of liquidity stress testing. Sources of liquidity are regularly reviewed / monitored by the Asset and Liability Management Committee (ALCO). The ALCO reviews the current economic situation, projected cash flows and asset / liability mix and approves strategy for managing appropriate liquidity. The liquidity risk management policy of the Bank encompasses liquidity contingency plan for actions to be taken in case of liquidity crises. Mandatory stress tests of SBP are conducted, on a periodic basis, to test the adequacy of liquidity contingency plan and to identify the extent of liquidity stress that the Bank is able to take in current conditions. Liquidity management framework allows the Bank to run stress analysis on the balance sheet and off-balance positions, which include, but are not limited to, the following: 1. 2. 3. 4. Significant withdrawals from corporate clients deposits. Withdrawal of top ten, top fifteen, and top twenty deposits. Loss in the funding value of unencumbered assets. Availability of secure lending is subject to significant over collateralisation.
  132. 147 42 .5.1 Maturities of assets and liabilities 2016 Over Over 1 to Over 2 to Over 3 to Over 5 to Above 6 Months 2 Years 3 Years 5 Years 10 Years 10 Years to 1 Year ------------------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------------------Total Assets Cash and balances with treasury banks Balances with other banks Lendings to financial and other institutions Investments - net Advances - net Operating fixed assets Deferred tax assets - net Other assets - net Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Deferred tax liabilities - net Other liabilities Up to 1 month Over 1 to 3 Months Over 3 to 6 Months 18,278,840 822,689 9,506,922 822,689 3,222,322 - 2,540,546 - 3,009,050 - 5,536,577 117,883,960 125,305,765 5,138,424 5,554,451 278,520,706 2,603,228 11,459,986 19,827,022 44,648 4,452,247 48,716,742 1,887,364 8,579,767 23,277,763 177,272 37,144,488 1,045,985 20,095,305 33,098,765 199,739 56,980,340 13,144,599 3,559,380 632,504 1,095,725 21,441,258 25,192,173 3,408,227 474,315 29,074,715 9,702,467 9,083,542 764,204 19,550,213 20,124,610 11,112,023 961,649 6,479 32,204,761 3,254,243 38,905,078 210,839,646 2,998,800 1,137,530 3,096,182 260,231,479 3,254,243 27,624,985 43,102,348 600 2,713,825 76,696,001 5,669,245 44,780,120 50,449,365 4,739,121 35,305,588 40,044,709 41,816,319 600 1,137,530 382,357 43,336,806 52,449 7,844,465 1,200 7,898,114 17,200 3,776,024 1,200 3,794,424 340,919 34,214,782 2,400 34,558,101 16,935,631 (21,895,548) 21,176,601 15,755,789 (2,353,340) Net assets 18,289,227 Share capital Discount on issue of shares Reserves Unappropriated profit - net Surplus on revaluation of assets 11,024,636 1,423,829 3,496,305 2,344,457 18,289,227 (27,979,259) (13,304,877) - - - - - 9,585,053 7,390,442 14,548,601 536,401 1,347,692 17,511,896 15,896,293 461,159 2,992,800 3,453,959 - 14,057,937 15,896,293 2015 Over Over 1 to Over 2 to Over 3 to Over 5 to Above 6 Months 2 Years 3 Years 5 Years 10 Years 10 Years to 1 Year ------------------------------------------------------------------------------------- (Rupees in '000) ------------------------------------------------------------------------------------Total Assets Cash and balances with treasury banks Balances with other banks Lendings to financial and other institutions Investments - net Advances - net Operating fixed assets Deferred tax assets - net Other assets - net Up to 1 month Over 1 to 3 Months Over 3 to 6 Months 16,718,428 1,634,544 9,034,947 1,634,544 2,882,802 - 2,214,806 - 2,585,873 - 3,093,938 108,846,113 112,001,752 4,956,732 6,090,322 253,341,829 1,800,000 7,496,236 20,484,608 74,361 5,559,328 46,084,024 769,556 24,172,897 40,150,231 129,724 68,105,210 524,382 26,002 14,349,262 89,281 17,203,733 50,732,868 1,408,483 430,632 524,509 55,682,365 5,666,567 5,023,510 824,246 11,514,323 4,448,316 4,203,686 357,000 9,009,002 7,469,290 12,400,081 980,721 6,485 20,856,577 8,833,937 5,646,941 613,076 15,093,954 2,706,274 39,875,623 185,222,383 3,000,000 1,417,042 2,928,565 235,149,887 2,706,274 28,508,965 39,402,606 600 2,610,512 73,228,957 8,081,390 39,214,936 47,296,326 2,291,549 30,128,148 32,419,697 31,222 35,175,789 600 1,417,042 318,053 36,942,706 7,426,498 1,200 7,427,698 70,882 3,576,077 1,200 3,648,159 172,349 30,298,329 2,400 30,473,078 719,266 2,994,000 3,713,266 Net assets 18,191,942 (27,144,933) 20,808,884 (15,215,964) 18,739,659 4,086,625 5,360,843 (9,616,501) 11,380,688 Share capital Discount on issue of shares Reserves Unappropriated profit - net Surplus on revaluation of assets 11,024,636 (1,001,361) 1,049,465 4,263,217 2,855,985 18,191,942 Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Deferred tax liabilities - net Other liabilities - - - - 8,334,950 1,457,691 9,792,641 9,792,641 Cash and balances with treasury banks, savings and current deposits and running finance do not have any contractual maturities. However, these have been allocated into the above time bands based on historical withdrawal pattern of the said cash and balances with treasury banks, deposits and running finances. Furthermore, it has been assumed that on a going concern basis, these are not expected to fall below the current year's level.
  133. Soneri Bank Limited | Annual Report 2016 42.5.2 Maturities of assets and liabilities - based on contractual maturity of the assets and liabilities of the Bank 2016 Total Assets Cash and balances with treasury banks Balances with other banks Lendings to financial & other institutions Investments - net Advances - net Operating fixed assets Deferred tax assets - net Other assets - net Up to 1 month Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years ------------------------------------------------------------------------------------- (Rupees in '000) -----------------------------------------------------------------------------------18,278,840 822,689 18,278,840 822,689 5,536,577 117,883,960 125,305,765 5,138,424 5,554,451 278,520,706 2,603,228 11,459,986 8,300,600 44,648 4,452,247 45,962,238 1,887,364 8,579,767 17,514,552 177,272 28,158,955 1,045,985 20,095,305 30,217,159 199,739 51,558,188 13,144,599 38,138,648 632,504 1,095,725 53,011,476 25,192,173 1,967,424 474,315 27,633,912 9,702,467 7,642,739 764,204 18,109,410 20,124,610 8,230,417 961,649 6,479 29,323,155 9,585,053 5,229,238 536,401 15,350,692 3,254,243 38,905,078 210,839,646 2,998,800 1,137,530 3,096,182 260,231,479 3,254,243 27,624,985 159,024,762 600 2,713,825 192,618,415 5,669,245 23,294,980 28,964,225 4,739,121 14,588,471 19,327,592 13,054,100 600 1,137,530 382,357 14,574,587 52,449 560,719 1,200 614,368 17,200 316,614 1,200 335,014 340,919 2,400 343,319 461,159 2,992,800 3,453,959 Net assets 18,289,227 (146,656,177) (805,270) 32,230,596 38,436,889 27,019,544 17,774,396 28,979,836 11,896,733 Share capital Discount on issue of shares Reserves Unappropriated profit - net Surplus on revaluation of assets 11,024,636 1,423,829 3,496,305 2,344,457 18,289,227 Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Deferred tax liabilities - net Other liabilities Above 10 Years - - - - - - - 8,064,988 1,347,692 9,412,680 9,412,680 2015 Over Over 1 to Over 2 to Over 3 to Over 5 to Above 6 Months 2 Years 3 Years 5 Years 10 Years 10 Years to 1 Year ------------------------------------------------------------------------------------- (Rupees in '000) -----------------------------------------------------------------------------------Total Over 1 to 3 Months Over 3 to 6 Months 3,093,938 108,846,113 112,001,752 4,956,732 6,090,322 253,341,829 16,718,428 1,634,544 1,800,000 7,496,236 10,752,819 74,361 5,559,328 44,035,716 769,556 24,172,897 36,552,866 129,724 61,625,043 524,382 26,002 12,550,580 89,281 13,190,245 50,732,868 25,529,730 430,632 524,509 77,217,739 5,666,567 4,124,169 824,246 10,614,982 4,448,316 3,304,345 357,000 8,109,661 7,469,290 10,601,399 980,721 6,485 19,057,895 8,833,937 4,297,929 613,076 13,744,942 2,706,274 39,875,623 185,222,383 3,000,000 1,417,042 2,928,565 235,149,887 2,706,274 28,508,965 142,055,764 600 2,610,512 175,882,115 8,081,390 20,189,129 28,270,519 2,291,549 11,782,451 14,074,000 31,222 9,705,887 600 1,417,042 318,053 11,472,804 976,498 1,200 977,698 70,882 512,654 1,200 584,736 172,349 2,400 174,749 719,266 2,994,000 3,713,266 Net assets 18,191,942 (131,846,399) 33,354,524 (883,755) 65,744,935 9,637,284 7,524,925 18,883,146 10,031,676 Share capital Discount on issue of shares Reserves Unappropriated profit - net Surplus on revaluation of assets 11,024,636 (1,001,361) 1,049,465 4,263,217 2,855,985 18,191,942 Assets Cash and balances with treasury banks Balances with other banks Lendings to financial & other institutions Investments - net Advances - net Operating fixed assets Deferred tax assets - net Other assets - net Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Deferred tax liabilities - net Other liabilities 16,718,428 1,634,544 Up to 1 month 4,287,915 1,457,691 5,745,606 5,745,606 The management believes that the above maturity analysis does not reveal the expected maturity of cash and balances with treasury banks, current and saving deposits and running finance, as contractual maturity analysis alone does not provide information about the conditions expected in normal circumstances. The management believes that the maturity profile disclosed in note 42.5.1 that includes maturities of cash and balances with treasury banks, current and saving deposits and running finance determined by the Asset and Liability Management Committee (ALCO) keeping in view historical behaviour of these balances reflects a more meaningful analysis of the liquidity risk of the Bank.
  134. 149 42 .6 Operational risk Operational risk 'OpRisk' is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or external events. This includes legal risk as well as the reputational consequences of failures in operational risk management. The Bank uses Basic Indicator approach for assessing capital charge for operational risk. Operational Risk Management Objective and Organisation OPERATIONAL RISK MANAGEMENT STRUCTURE Board of Directors Board Risk Management Committee Operational Risk Management Committee President & CEO BCP Streering Committee Chief Operating Officer Head of Risk Management Division Operational Risk Management Department The main objective of the operational risk management is to minimise expected and unexpected losses arising out of operational activities of the Bank. The Bank has established a rigorous operational risk management framework to efficiently and effectively monitor and manage operational risk in each business and support activity of the Bank as well as those arising from external events like from natural disasters, outsourcing, etc. The Bank has a sound organisation structure for managing operational risk, established on strong internal control environment and equipped with adequate level of expertise and resources. The bank has also formed an Operational Risk Management Committee (ORMC), a senior management committee to assist the Board Risk Management Committee (RMC), to ensure the compliance of BoD approved operational risk management framework, supported by the Risk Management Division (RMD). Operational Risk Assessment The Bank has been conducting risk and control self assessment (RCSA) exercise for each business and support function of the Bank in order to identify and assess operational risks inherent in existing activities, processes and systems. Through the RCSA exercise, the Bank has been able to develop inventory of risks, controls and key risk indicators (KRI) and has identified gaps in its operating activities which are rectified on a priority basis. Operational Risk Monitoring Operational risk monitoring is conducted through KRIs, identified in the RCSA exercise for each process. All branches, offices, divisions / departments furnish KRI reports on a periodical basis to the Operational Risk Management Department (within the Risk Management Division).
  135. Soneri Bank Limited | Annual Report 2016 Operational Risk Measurement The Bank keeps a detailed track of its operational loss events and maintains a database in SAS OpRisk Monitor. This helps the Bank to step towards advanced approach of Basel II accord and also allows the Bank to formulate strategy to rectify the gap of reoccurrence of the incident. The Bank has, in compliance of BPRD Circular No. 04 of 2014 "Implementation of Operational Risk Management Framework" created separate Op-Loss general ledgers in the Bank's system which are being used for reporting of operational losses and are bifurcated into 7 operational loss categories as per the requirement of Basel II accord. The Bank also gathers external loss events occurring in the banking industry and designs strategies to prevent occurrence of similar incidents in the Bank. Operational Risk Assessment for New Products and Services Operational risk in all new products, systems and processes are identified and assessed by the RMD so that risk associated can be mitigated to an acceptable level. Assessment comprises of: - review of new process flows and their control activities; - conduct RCSA exercise; and - identification, adequate assessment and ranking of all risks and controls. Business Continuity Plan In order to ensure continuity of the Bank's operations, the Bank has in place a well developed, BoD approved Business Continuity Plan (BCP) which has been implemented across the Bank. The BCP has been well communicated down the line and regular trainings and testing is conducted across the country. Permanent back up sites have also been established and related testing carried out by critical staff to their designated back up sites. The BCP Steering Committee, a senior management committee, is responsible to ensure the adequacy of the BCP of the Bank as well as to ensure its effective implementation and compliance. The committee reports to the Board Risk Management Committee. 43. DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on 15 February 2017 by the Board of Directors of the Bank. 44. GENERAL 44.1 Comparative Comparative information has been re-classified, re-arranged or additionally incorporated in these financial statements, wherever necessary to facilitate comparison and better presentation. There were no significant reclassification during the current year except for the reclassification as mentioned below: 44.1.1 State Bank of Pakistan through the BPRD Circular Letter No. 05 dated 29 February 2016, has advised all banks having Islamic Banking operations to report Bai Muajjal transactions with Government of Pakistan under Investment as "Other Federal Government Securities". Accordingly the Bai Muajjal Transaction with Government of Pakistan amounting to Rs. 212.306 million has been reclassified from "Lendings to Financial and Other Institutions" to "Investments". There was no reclassification for the year 2015 as the amount outstanding as at 31 December 2015 was Rs Nil. 44.1.2 An amount of Rs 44.810 million has been reclassified from "Bills payables" to "Other Liabilities". There was no reclassification for the year 2015 as the amount outstanding as at 31 December 2015 was Rs Nil. 44.2 Figures have been rounded off to the nearest thousand rupees unless otherwise stated. 45. NON-ADJUSTING EVENT AFTER THE BALANCE SHEET DATE The Board of Directors in its meeting held on 15 February 2017 has proposed a cash dividend in respect of the year ended 31 December 2016 of Rs.1.25 per share. This appropriation will be approved in the forthcoming Annual General Meeting. The financial statements for the year ended 31 December 2016 do not include the effect of these appropriations which will be accounted for in the financial statements of the Bank for the year ending 31 December 2017. Alauddin Feerasta Mohammad Aftab Manzoor Manzoor Ahmed Shahid Anwar Chairman President & Chief Executive Officer Director Director
  136. 151 STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF OF FIVE HUNDRED THOUSAND RUPEES AND ABOVE PROVIDED DURING THE YEAR ENDED 31 DECEMBER 2016 Annexure - I Outstanding liabilites at beginning of the year S . No. Name and address of borrower Name of individuals/ partners/directors (with CNIC No.) Father/ Husband's Name 1 2 3 4 Principal Mark-up Others Total 5 6 7 8 Mark-up Principal Written off Written off / Waived 9 10 Other Financial Relief Provided Total 11 12=9+10+11 ---------------------------------------------------------- (Rupees in million) ---------------------------------------------------------- 1 Bukhari Commercial Exporters Flat No. 1/114, Street No. 5 Khayaban-e-Faiz DHA Phase-VI, Karachi Mr. Abdul Qadir CNIC No. 42301-5862447-7 Mr. Abdul Razzak 57.851 31.271 - 89.122 57.851 90.277 0.218 148.346 2 Shafqat Copy House Shop No.7, Student Urdu Bazar, M.A.Jinnah Road, Karachi Mr. Shafqat Ali CNIC No. 36301-0967305-1 Mr. Hashim Ali 0.399 0.400 - 0.799 0.399 0.390 0.075 0.864 3 Muddassar Hayat Mouza Jalpana & Kot Bhai Khan Teh:.Shahpur, Dist: Sargodha Mr. Muddassar Hayat CNIC No. 38404-65496254-9 Mr. Umer Hayat - 0.983 - 0.983 - 0.983 0.058 1.041 4 Muhammad Saeed Babar P-152,Ghousia Gole Bhowana Bazar, Near Anarkali Bazar, Faisalabad Mr. Muhammad Saeed Babar CNIC No. 33100-6707246-5 Mr. Abdul Hameed - 0.664 - 0.664 - 0.616 5 K.K. Trading Co. T-20, Rafi Plaza, Hall Road, Lahore Mr. Khadim Hussain CNIC No. 35200-1429849-5 Mr. Talib Hussain 0.400 0.410 - 0.810 0.400 1.375 0.467 2.242 6 Al-Hasnain Jewellers House No. 15/1 KC, Qadir Colony, Okara Mr. Abdul Ghaffar CNIC No. 35302-1930117-3 Mr. Muhammad Bashir Naaz 0.100 0.693 - 0.793 0.100 0.925 0.095 1.120 7 Alpha Tex C I-48, Sector 6-B, North Karachi Industrial Area, Karachi Mrs. Tasneem Javed CNIC No. 42201-9464461-2 W/o. Javed Akhter 1.123 5.264 - 6.387 1.123 5.275 0.144 6.542 8 Taha Enterprises 84, Mirza Kalem Baig Road, J.M No.1, Soldier Road, Karachi Mr. Shoukat Husein CNIC No. 42201-1853547-9 Mr. Husein Ali 1.954 0.921 - 2.875 1.954 6.241 0.041 8.236 9 Mahmood (Pvt) Ltd. Seher House Plot ST-5, Block-4, Metroville, SITE, Karachi Mr. Nayyar Mehmood CNIC No. 505-90-179695 Mr. Mahmood Ahmed 51.957 1.347 - 53.304 51.957 149.074 1.699 202.730 Mrs. Yasmin Mahmood CNIC No. 270-55-348801 W/o. Nayyar Mehmood Mr. Hussain Akthar Kazmi CNIC No.35202-6379818-5 Mr. Syed Muhammad Akber Mr.Syed Irfan Ullah CNIC No. 42101-2915523-9 Mr. Syed Hafeezullah 10 Ocean Tex M-155, Jillani Center, M.W.Tower, M.A.Jinnah Road, Karachi Mr. Mohammad Rafiq CNIC No. 42101-5236478-6 Mr. Mohammad Ibrahim - 1.176 1.176 1.906 0.117 3.199 11 Khalid Javed & Brothers 52-57, Awan-e-Tijarat Building, Awan-e-Tijarat Road, Karachi Mr. Shahid Ahmed CNIC No. 42301-0889594-7 Mr. Manzoor Ahmed Mr. Faisal Imran CNIC No. 42301-0889596-9 Mr. Javaid Iqbal Mr. Haroon Rashid CNIC No. 36302-0412269-9 Mr. Shaikh Mian Manzoor Ahmed Mr. Javaid Iqbal CNIC No. 42301-0910340-5 Mr. Shaikh Manzoor Ahmed Mr. Zaeem Javaid CNIC No. 42101-1664282-8 Mr. Javaid Iqbal Mrs. Noor Jehan CNIC No. 42101-1664282-8 Mr. Shaikh Manzoor Ahmed Mr. Tariq Ahmed CNIC No. 42000-0549111-5 Mr. Manzoor Ahmed 12 Rakhani Export Import Trading Co. "Mr. Hamad Shaikh (Previously Mr. Vashdev Rakhani)" Mr. Nenumal Plot # 37/7, Sector # 15 Korangi Industrial Area, Karachi. CNIC No. 42301-7832646-3 13 Callmate Telips Telecom Ltd. 99-CF, 1/5 Clifton, Karachi Mr. Ahmed Jamil Ansari CNIC No. 42301-4085207-5 Mr. Zill Ur Rehman Ansari Mr. Mohammed Ajmal Ansari CNIC No. 42000-0677785-3 Mr. Zill Ur Rehman Ansari Mr. Hasan Jamil Ansari CNIC No. 42301-4170707-5 Mr. Ahmed Jamil Ansari Mrs. Yuba Jamil Ansari CNIC No. 42301-4918316-4 W/o. Ahmed Jamil Ansari Miss. Maria Jamil Ansari CNIC No. 42301-2403949-4 W/o. Salman Moiz Ahmed Mr. Abu Shamim Muhammed Arif Mr. Mohammed Arif CNIC No. 42301-7193007-3 Mrs. Nuzhat Ikramullah CNIC No. 42301-3534786-6 W/o. Syed Ahmed Ikramullah 1.176 - - 0.616 33.270 7.693 - 40.963 33.270 23.853 1.474 58.597 10.953 22.121 - 33.074 10.953 37.718 0.229 48.900 39.587 16.812 - 56.399 39.587 46.927 0.559 87.073
  137. Soneri Bank Limited | Annual Report 2016 STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF OF FIVE HUNDRED THOUSAND RUPEES AND ABOVE PROVIDED DURING THE YEAR ENDED 31 DECEMBER 2016 Annexure - I Outstanding liabilites at beginning of the year S. No. Name and address of borrower Name of individuals/ partners/directors (with CNIC No.) Father/ Husband's Name 1 2 3 4 Principal Mark-up Others Total 5 6 7 8 Mark-up Principal Written off Written off / Waived 9 10 Other Financial Relief Provided Total 11 12=9+10+11 ---------------------------------------------------------- (Rupees in million) ---------------------------------------------------------- Mr. Ahmed Mirza Jamil CNIC No. 42201-4027981-3 Mr. Mirza Noor Ahmed Mr. Khalid Mirza Jamil CNIC No. 42301-876979-1 Mr. Ahmed Mirza Jamil Mr. Owais Mirza Jamil CNIC No. 42000-6524471-9 Mr. Ahmed Mirza Jamil 15 Ch. Muhammad Hanif Fateh, Thesil Pasrur, Distt: Sialkot Ch. Muhammad Hanif CNIC No. 34602-0722142-5 Ch. Nawab Din 16 Shahbaz Rasool Faqir wali Tehsil Daska, Distt: Sialkot Mr. Shahbaz Rasool CNIC No. 34601-6276041-7 Mr. Ghulam Rasool 17 Tanveer Ahmed KorayKeyTehsil Daska, Distt: Sialkot Mr. Tanveer Ahmed CNIC No. 34601-3732959-1 Mr. Faqir Sian 0.035 18 Hussain Sons 17-KM Atta Bukhsh Road Beside Rohi Nala, Off Ferozpur Road, Lahore Mr. Khalid Hussain CNIC No. 35202-8174240-1 Mirza Khadim Hussain 0.309 Mr. Tariq Hussain CNIC No. 35200-1413552-1 Mirza Khadim Hussain Mirza Tahir Hussain CNIC No. 35202-2929560-1 Mirza Khadim Hussain Mirza Zahid Hussain CNIC No. 35202-0236600-9 Mirza Khadim Hussain 14 Elite Publishers Ltd. D-118, SITE, Karachi 19 Friends Associates 141-B, Shahi Road, Rahimyar Khan 93.239 59.652 1.037 63.928 - 1.229 0.088 1.317 0.769 - 0.529 - 0.529 - 1.180 - 0.917 - 0.917 - 0.309 1.776 - 3.459 - 1.079 - 1.079 2.109 - 2.109 - 1.235 - 1.235 4.716 - 127.516 - 35.486 1.778 37.264 10.526 7.602 - 18.128 - 8.663 0.015 8.678 7.697 5.442 - 13.139 - 5.615 0.300 5.915 16.364 2.639 - 19.003 10.721 0.395 13.481 0.494 0.313 - 0.807 - 0.559 0.067 0.626 1.146 1.363 - 2.509 - 0.874 0.047 0.921 453.063 180.107 - 633.170 494.562 8.907 708.152 Mr. Muhammad Wasim Arshad Mr. Muhammad Irshad CNIC No. 31303-7089062-5 62.339 - 155.578 - 1.315 - 1.315 - 0.769 - 1.145 1.683 Mr. Nadeem Akhtar Cheema CNIC No. 31303-4967644-3 Mr. Nusrat Hussain Mr. Haji Muhammad Ashraf CNIC No. 31303-2432947-3 Mr. Ali Muhammad Mr. Khalid Mehmood CNIC No. 31303-2387198-3 Mr. Miraj Din 20 Ashraf Auto Mobile Engineers Opposite New Vegetable Market, Shahbazpur Road, Rahimyar Khan Mr. Muhammad Ashraf CNIC No. 31303-2432947-3 Mr. Ali Muhammad 21 Molasses Exports Company (Pvt) Ltd. Railway Wharf, Dagin Lane, Kemari, Karachi Mr. Noor Mohammad Vayani CNIC No. 42301-6362914-9 Mr. Yakoob Vayani Mr. Anees Vayani CNIC No. 42301-1066028-9 Mr. Noor Mohammad Yakoob Vayani Mr. Amin Vayani CNIC No. 42301-3342034-9 Mr. Noor Mohammad Yakoob Vayani Mr. Abdul Majeed Vayani CNIC No. 42301-3242934-3 Mr. Noor Mohammad Yakoob Vayani - 122.800 - 3.239 0.309 2.443 0.004 2.756 Mr. Abdul Sattar Yaqoob Vayani Mr. Yakoob Vayani CNIC No. 42301-8596564-1 Mr. Abdul Qadir CNIC No. 42301-2653697-7 Mr. Abdul Sattar Mr. Muhammad Zahoor CNIC No. 42000-2551639-1 Mr. Rehmatullah Mrs. Rabea Zahoor CNIC No. 42000-7258150-6 W/o.Mr. Muhammad Zahoor Mr. Shadman Qadir CNIC No. 42301-8080244-9 Mr. Abdul Qadir 23 Rasool Bakhsh & Company Mund Buloo, Distt: Turbat Mr. Rasool Bakhsh CNIC No. 52201-1057129-1 Mr. Karim Bakhsh 24 Waqas Electronics 9-11 Rehman Chamber, 132-Temple Road, Lahore. Mr. Asad Ullah CNIC No. 35202-2666605-5 Mian Muhammad Usman 25 KAZ CNG Filling Station 35-Lyton Road, Lahore Mr. Muhammad Khalid CNIC No. 35202-9781589-1 Mr. Muhammad Sadiq Mr. Muhammad Zahid CNIC No. 35202-8933914-7 Mr. Muhammad Sadiq Mr. Muhammad Abid CNIC No. 35202-1949072-9 Mr. Muhammad Sadiq Mr. Muhammad Amin CNIC No. 34101-2424486-1 Mr. Atta Muhammad Mr. Muhammad Saleem Chaudhary CNIC No. 34101-2439940-9 Mr. Atta Muhammad 22 Classic Packages Plot # 1B-1/1, Sector # 15 Korangi Industrial Area, Karachi 26 Ch. Building Material Store Atta Muhammad Road, Grid Station (Bijli Ghar), Mohallah Shaheenabad, Climixabad No. 1, Gujranwala. TOTAL 2.365 204.683
  138. 153 Annexure - II ISLAMIC BANKING BUSINESS The Bank is operating sixteen Islamic banking branches at the end of current year (2015: sixteen branches). The statement of financial position, profit and loss account and cash flow statement of these branches (including Islamic Banking Division) are as follows: BSD circular letter No. 03 dated January 22, 2013 requires all Islamic Banks and Banks with Islamic Banking Branches to present all financing, advances for assets under Islamic modes of financing and any other related items pertaining to Islamic mode of financing under the caption Islamic Financing and Related Assets in the statement of Financial position. (i) Statement of Financial Position As at 31 December 2016 ASSETS Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Operating fixed assets Due from head office Other assets Total assets LIABILITIES Bills payable Due to financial institutions Deposits and other accounts - Current accounts - Saving accounts - Term deposits - Others Other liabilities Total liabilities 2016 2015 (Rupees in '000) vi 654,429 28 524,381 4,863,239 3,644,898 144,602 149,201 182,807 10,163,585 86,939 71,538 49,985 240,202 1,830,029 5,363,061 2,896,033 263,677 157,266 10,668,543 1,533,494 4,998,630 2,307,565 158,626 163,504 9,452,006 1,199,294 711,579 1,000,000 114,918 1,114,918 84,376 1,199,294 600,000 72,012 672,012 39,567 711,579 ii.b NET ASSETS REPRESENTED BY: Islamic Banking Fund Accumulated profit Surplus on revaluation of assets (ii) 646,512 26 1,690,592 5,265,057 3,727,219 157,391 167,209 213,831 11,867,837 Profit and Loss Account For the year ended 31 December 2016 Profit / return on financing, investments and placements earned Return on deposits and other dues expensed Net income earned before provision 687,317 (415,927) 271,390 619,012 (366,286) 252,726 9,798 9,798 281,188 979 979 253,705 32,841 22,194 2,764 338,987 25,635 119 3,672 283,131 Other expenses Administrative expenses Other charges Provision against other assets 222,380 1,689 - 210,986 6 127 Profit before taxation 114,918 72,012 Reversal of provision against non-performing financings Provision for diminution in the value of investments Net income earned after provision Other income Fee, commission and brokerage income Gain on sale of securities - net Other income ii.a (ii.a) These figures have been adjusted to exclude inter segment profitability charge of Rs.48.087 million @ 6.35 % (2015: Rs. 45.593 million @ 7.87 %) in line with financial reporting requirement. (ii.b) Deposits and other accounts include redeemable capital of Rs.8,259.094 million (31 December 2015: Rs. 7,420.146 million) and deposits on Qard basis of Rs. 2,093.706 million (31 December 2015: Rs. 1,578.169 million). Remunerative deposits which are on Mudaraba basis are considered as Redeemable capital and non-remunerative deposits are classified as being on Qard basis.
  139. Soneri Bank Limited | Annual Report 2016 Annexure - II 2016 2015 (Rupees in '000) (iii) Cash Flow Statement For the year ended 31 December 2016 CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Less: Dividend income 114,918 114,918 72,012 72,012 120,823 (9,798) (1,180) 109,845 224,763 103,965 (979) (930) 102,056 174,068 (1,166,211) (170,492) (18,008) (31,024) (1,385,735) (286,475) (442,840) 209,452 (58,393) (578,256) Income tax paid Net cash (used in) / generated from operating activities 36,954 (168,664) 1,354,485 (78,250) 1,144,525 (16,447) (16,447) 44,748 59,561 1,841,023 37,196 1,982,528 1,578,340 1,578,340 CASH FLOWS FROM INVESTING ACTIVITIES Net investments in securities Dividend received Investment in operating fixed assets Proceeds from disposal of fixed assets Net cash used in investing activities (357,009) (35,643) 1,180 (391,472) (1,540,831) (8,820) 2,403 (1,547,248) CASH FLOWS FROM FINANCING ACTIVITIES Funds received from Head Office Net cash generated from financing activities 400,000 400,000 100,000 100,000 (Decrease) / Increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year (7,919) 654,457 646,538 131,092 523,365 654,457 646,512 26 646,538 654,429 28 654,457 5,290 1,332 952 (952) - 61 (61) - Adjustments: Depreciation / amortisation Reversal of provision against non-performing advances Gain on sale of fixed assets (Increase) / decrease in operating assets Due from financial institutions Islamic Financing and Related Assets-net Due from Head Office Others assets (excluding advance taxation) Increase / (decrease) in operating liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR Cash and balances with treasury banks Balances with other banks (iv) Remuneration to Shariah Board members / advisor (v) CHARITY FUND Opening balance Addition during the year Payment / utilisation during the year Closing balance
  140. 155 Annexure - II 2016 2015 (Rupees in '000) (vi) Islamic Modes of Financing Murabaha Assets held under Ijarah (IFAS- 2) Diminishing Musharaka Salam Advance against islamic financings: - Murabaha - Car Ijarah - Machine Ijarah - Diminishing Musharaka - Salam Other Islamic modes Islamic financing and related assets - Gross Provision against non-performing islamic financings Islamic financing and related assets - net of provision (vi) (vi) a 662,268 229,923 1,150,137 404,166 580,556 57,543 1,008,948 361,515 3,785,208 (57,989) 3,727,219 89,108 28,044 23,122 791,322 334,267 1,049 3,713,406 (68,508) 3,644,898 212,732 56,109 268,841 148,903 81,020 229,923 Assets held under Ijarah (IFAS-2) Motor vehicles Plant and machinery (vii) 500,261 268,841 958,966 48,578 Deposits Deposits are generated through the following pools: (i) Normal pool Deposits generated under this pool are on the basis of Qard and Mudaraba (ii) Special pool Deposits generated under this pool are on the basis of Mudaraba from high net worth customers. Deposits taken on a Qard basis are classified as 'Current accounts' and Deposits generated on 'Modaraba basis' are classified as 'Savings deposits' and 'Fixed deposits'. No profit or loss is passed on to current account depositors. While the product features of each product differ, there is usually no restriction on withdrawals or number of transactions in current and saving accounts. In case of fixed deposits, pre-mature withdrawals can be made as per approved terms only. (viii) Profit / (loss) distribution to depositor's pool The Bank maintained the following pools for profit declaration and distribution during the year ended 31 December 2016: i) ii) Mudaraba Pool; ia) normal pool; ib) special pool; Musharaka Pool under SBP's Islamic Export Refinance Scheme. Profits realised through normal / special pool are distributed between the Bank and the depositors in proportion to their respective share in the pool. All Modaraba based deposits are fully invested in accordance with their respective Pool to produce returns for them. In case where the Bank is unable to utilise all funds available for investment, priority is given to the deposit account holders. Rab-ul-Maal share is distributed among depositors according to weightages assigned at the inception of profit calculation period. Mudarib can distribute its share of profit to Rab-ul-Maal upto a maximum of 60% of their profit as incentive profits (Hiba). Profits are distributed from the pool such that the depositors (remunerative) only bear the risk of assets in accordance with their respective pool during the profit calculation period. In case of loss in a pool during the profit calculation period, the loss is distributed among the depositors (remunerative) according to their ratio of investments. The deposits and funds accepted under the Mudaraba Pool are provided to diversified sectors and avenues of the economy / business mainly to 'Chemical and Pharmaceutical', 'Textile and Allied', 'Food and Allied', 'Automobile and transportation', 'Shoes and Leather', 'Electronics and electrical appliances', 'Financial' and 'Investment in Government of Pakistan Ijarah Sukuks'.
  141. Soneri Bank Limited | Annual Report 2016 Annexure - II 2016 Normal Pool 2015 Special Pool Total Normal Pool Special Pool Total ----------------------------------------- (Rupees in '000) ----------------------------------------Chemical and Pharmaceutical Textile Cement Sugar GOP Ijarah Sukuk Financial Electronic and electrical appliances Production and transmission of energy Carpet and Rugs Manufacturer Glass and Ceramics Food and Allied Services Others 443,771 527,129 350,000 58,175 1,629,451 11,785 827,206 601,009 359,403 248,964 5,056,893 296,964 300,000 2,100,000 554,037 1,875,000 500,000 5,626,001 740,735 527,129 350,000 300,000 2,158,175 2,183,488 11,785 2,702,206 601,009 859,403 248,964 10,682,894 195,596 606,056 29,105 300,000 1,930,443 542,415 748,330 206,725 213,395 276,656 489,144 121,690 5,659,555 67,049 537,316 1,200,000 165,621 913,750 370,091 119,164 3,372,991 262,645 606,056 566,421 300,000 3,130,443 708,036 1,662,080 206,725 213,395 646,747 608,308 121,690 9,032,546 Musharaka investments from the SBP under Islamic Export Refinance Scheme (IERS) are channeled towards the export sector of the economy and other financings as per SBP guidelines. (ix) Key features and risk and reward characteristics of all pools The 'Mudaraba Pool' for Local Currency caters to all Soneri Bank Limited - Islamic Banking depositors and provides profit / loss based on Mudaraba. The IERS Pool caters to the 'Islamic Export Refinance' requirements based on the guidelines issued by the SBP. The risk characteristic of each pool mainly depends on the asset and liability profile of each pool. Jointly financed by the Bank and unrestricted investments / PLS deposit account holders This represents all earning assets of the Bank except those tagged to the Islamic Export Refinance Scheme. Major categories include: Funded Income Expenses Gains / (Loss) on sale of securities Total ------------------------ (Rupees in '000) -----------------------Islamic financing and related assets Investments Due from financial institutions Others 238,763 284,859 149,596 35,605 708,823 (4,674)* 4,674 22,194 22,194 238,763 284,859 149,596 53,125 726,343 * This includes initial direct cost of Rs. 4.674 million. (x) Incentive profits (Hiba) The Bank paid an aggregate amount of Rs 75.490 million as incentive profits (Hiba), which includes Rs 51.728 million for normal pool and Rs. 23.762 millions for special pool during the year ended 31 December 2016. The following guidelines are approved by the Bank's Sharia Advisor for determination of incentive profits (Hiba): - Special weightage deposits in designated tiers / slabs in Mudaraba Pool shall be offered extra weightages outside the Mudaraba Pool, provided the specified parameters are met ; - The deposit deal shall be at least of Rs 100 thousands ; - In case a Term Deposit is pre-maturely encashed, profit shall be paid at the expected rate of completed tenor; - The payment of Hiba on deposits will be at the sole discretion of the Bank and could be decreased or / and removed any time during the tenure of the deposit, under intimation to the customer, if the customer fails to meet the pre-requisites at any time during the tenure of the deposit and / or the profit rate no longer remains sustainable from Bank's share; and - The Bank shall ensure that all the operational procedures and controls to the satisfaction of Shariah are in place.
  142. 157 (xi) Contractual maturities of mudaraba based deposit accounts 2016 Total Up to 1 month Over 1 to 3 Over 3 to 6 Months Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Years ------------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------Fixed Deposits Savings Deposits 2,896,033 5,363,061 8,259,094 468,657 5,363,061 5,831,718 1,114,848 1,114,848 52,911 52,911 1,257,367 1,257,367 2,250 2,250 - - Profit distribution to depositor's pool General Remunerative Depositor's Pools Mudaraba Pool Normal Pool Special Pool Total Profit Sharing Ratio (Depositor: Mudarib) Profit rate / return earned 75.00% 75.00% 75.00% 5.94% 7.23% 6.42% Mudarib share transferred to depositors through Hiba (Rs '000) Mudarib share transferred to depositors through Hiba (Percent) 51,728 23,762 75,490 IERS Musharaka Pool 6.13% 9.13% 6.84% Ratio of weightage of Bank to SBP Mudarib ShareNet of Hiba (Rs '000) 159,090 41,288 200,378 Share of profit to SBP (Rs. in '000) Profit rate and weightage announcement period Mudarib ShareNet of Hiba (Percent) 18.87% 15.87% 18.35% Profit rate / return distributed Monthly Monthly Monthly HIBA (Rs. in '000) Profit rate and weightage announcement period 2.83% 5.99% 4.00% Profit rate / return earned by SBP Musharaka Pool SBP's Islamic Export Refinance Scheme 0.3456 0.7402 1.4599 0.0858 2,358.979 4,428.391 3,110.393 705.031 587.591 78.657 5.164 0.228 Quarterly Quarterly Quarterly Quarterly 2.59% 3.86% 6.55% 8.58% Parameters used for allocation of profit, charging expenses and provisions, etc. along with a brief description of their major components: Income generated from relevant assets, calculated at the end of each month is first set aside for the Musharaka pool arrangement between the Bank and the State Bank of Pakistan. It is then allocated between the participants of the pool as per the agreed weightages and rates. The Mudaraba Pool profit is divided between the Bank and depositors in the ratio of BankÕs average equity (pertaining to Islamic banking branches) and average depositors balances commingled in each pool on a pro-rata basis. The depositors' share of profit is allocated amongst them on the basis of weightages declared before start of each month, after deduction of a mudarib fee. During the year ended 31 December 2016, the Bank charged 25% (2015: 25%) of the profit as Mudarib fee. These weightages are declared by the Bank in compliance with the requirements of the SBP and Shariah. The allocation (of income and expenses to different pools) is made on a pre-defined basis and accounting principles / standards. Provisions against any non-performing assets of the pool are not passed on to the pool. (xii) Allocation of Income and Expenses to Depositors' Pools a) Following are material items of revenues, expenses, gains and losses 2016 2015 (Rupees in '000) Profit / return earned on financings, investments and placements Other income (including other charges) Directly related costs attributable to pool b) 673,218 57,799 (4,674) 726,343 609,271 29,307 (1,453) 637,125 Following weightages have been assigned to different products under the Mudaraba Pool during the year: Percentage of total Mudaraba based deposits Savings - Soneri Munafa Account Savings - Soneri Bachat Account Savings - Assan Account Time Deposits - Soneri Meadi 63% 2% 6% 30% Minimum Weightage 0.3750 0.3750 0.3750 0.6917 Maximum Weightage 1.1000 0.5417 0.5417 1.1167 The Bank shares all its revenue generated through banking operations with the deposit account (pertaining to Islamic Operation) holders.
  143. Soneri Bank Limited | Annual Report 2016 Disposal of fixed assets (refer note 11.1.3) Disposals / deletions of property and equipment with original cost or book value in excess of rupees one million or two hundred fifty thousand respectively (whichever is less): Particulars Leasehold building ------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------Items with WDV of below Rs.250,000/or cost of less than Rs.1,000,000/- Leasehold Improvement ------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------------------- do ------------Items with WDV of below Rs.250,000/or cost of less than Rs.1,000,000/- Furniture and fixtures ------------- do ------------Items with WDV of below Rs.250,000/or cost of less than Rs.1,000,000/- Cost Book value Sale price / insurance proceeds -------------- (Rupees in '000) -------------83,538 40,495 25,206 21,215 15,471 5,334 4,893 4,320 3,567 3,025 2,868 2,524 2,418 2,132 2,092 1,795 1,745 1,532 1,407 1,368 1,094 1,030 878 868 745 704 682 617 598 578 569 487 476 434 392 363 54,489 17,430 14,577 13,838 6,625 3,704 3,191 1,700 2,058 1,746 1,243 1,686 1,405 1,211 1,401 1,098 1,024 978 916 474 745 677 501 498 504 300 467 415 380 329 298 322 251 278 289 Mode of settlement / disposal 17,003 1,204 459 286 - Write off Tender Write off Write off Write off Write off Write off Write off Write off Write off Tender Write off Write off Write off Write off Write off Write off Write off Write off Write off Tender Write off Write off Write off Write off Write off Tender Write off Write off Write off Write off Write off Write off Write off Write off Write off Various 2,044 1,157 298 239,504 138,205 19,250 3,287 3,287 2,947 2,203 1,970 1,479 1,162 935 833 781 762 514 437 380 317 1,380 2,548 1,632 1,859 1,617 1,059 901 767 350 659 578 339 339 272 265 173 - Write off Write off Write off Write off Write off Write off Write off Write off Write off Write off Tender Write off Write off Write off Write off 1,182 813 4 Various 22,476 15,378 177 1,003 - - Write off Various 4,969 1,265 442 5,972 1,265 442 Particulars of buyers / insurance companies Muhammad Kashif Muhammad Kashif Muhammad Kashif Muhammad Kashif Various Usama Steel Work Various Various
  144. 159 Disposal of fixed assets (refer note 11.1.3) Particulars Cost Sale price / insurance proceeds -------------- (Rupees in '000) -------------- Electrical office and computer equipment ------------- do ------------17,721 ------------- do ------------12,989 ------------- do ------------6,341 ------------- do ------------5,240 ------------- do ------------4,537 ------------- do ------------4,537 ------------- do ------------4,123 ------------- do ------------3,385 ------------- do ------------3,385 ------------- do ------------3,385 ------------- do ------------3,385 ------------- do ------------3,371 ------------- do ------------3,371 ------------- do ------------2,926 ------------- do ------------2,506 ------------- do ------------2,294 ------------- do ------------2,280 ------------- do ------------2,244 ------------- do ------------2,016 ------------- do ------------2,016 ------------- do ------------2,016 ------------- do ------------2,016 ------------- do ------------2,016 ------------- do ------------2,016 ------------- do ------------1,798 ------------- do ------------1,790 ------------- do ------------1,790 ------------- do ------------1,784 ------------- do ------------1,784 ------------- do ------------1,658 ------------- do ------------1,658 ------------- do ------------1,658 ------------- do ------------1,553 ------------- do ------------1,519 ------------- do ------------1,519 ------------- do ------------1,408 ------------- do ------------1,314 ------------- do ------------1,235 ------------- do ------------1,205 ------------- do ------------1,190 ------------- do ------------1,190 ------------- do ------------1,183 ------------- do ------------1,137 ------------- do ------------1,128 ------------- do ------------1,111 ------------- do ------------1,091 ------------- do ------------1,049 ------------- do ------------1,028 ------------- do ------------1,017 ------------- do ------------1,010 ------------- do ------------1,004 Items with WDV of below Rs.250,000/each or cost of less than Rs.1,000,000/- 174,533 311,460 Motor vehicles ------------- do ------------Items with WDV of below Rs.250,000/each or cost of less than Rs.1,000,000/- Book value Mode of settlement / disposal Particulars of buyers / insurance companies 886 317 55 - 52 38 19 15 13 13 12 10 10 10 10 10 10 6 6 6 6 6 6 6 5 5 5 5 5 5 4 4 6 6 4 6 4 4 7 7 3 9 3 9 135 3 6 9 Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Write off Write off Write off Write off Tender Tender Tender Tender Tender Tender Write off Tender Tender Tender Write off Tender Tender Tender Write off Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender Tender S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer Touch Point (Pvt) Ltd 1,222 2,480 3,539 4,062 Various Various S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer S.M Umer Touch Point (Pvt) Ltd Touch Point (Pvt) Ltd S.M Umer Touch Point (Pvt) Ltd S.M Umer S.M Umer Touch Point (Pvt) Ltd Touch Point (Pvt) Ltd S.M Umer Touch Point (Pvt) Ltd S.M Umer Touch Point (Pvt) Ltd Touch Point (Pvt) Ltd S.M Umer Touch Point (Pvt) Ltd Touch Point (Pvt) Ltd 3,979 - 2,350 Tender Muhammad Altaf 13,490 17,469 - 9,245 11,595 Various Various 596,881 157,328 35,526
  145. Soneri Bank Limited | Annual Report 2016 Particulars of investment in Term Finance Certificates and Sukuk Bonds - (refer note 9.11) Name of Investee a) Held to maturity securities (i) Listed Term Finance Certificates Azgard Nine Limited Number of Certificates held Paid up value per certificate (Rupees) 2016 2015 10,000 10,000 5,000 Total paid up value (before redemption) (Rs. in ‘000) Profit Principal Redemption Annexure - IV Balance as Balance as at 31 at 31 Name of December December Chief Executive 2016 2015 Officer (Rupees in ‘000) 50,000 - 6 months Kibor + 1.00% (1-2 years) 0.88% of principal amount in 42 months, 1.63% from - 6 months Kibor + 1.25% (3-5 years) 48 months to 66 months remaining principal in four equal - 6 months Kibor + 1.00% (6-7.5 years) semi annual instalments starting from the 72nd month from the date of issue. 16,269 16,269 Mr. Ahmed Shaikh (ii) Un-listed Term Finance Certificates Agritech Limited 1,488 1,488 5,000 Azgard Nine Limited 2,150 2,150 5,000 10,750 NIL 10% of principal amount from 24 months to 36 months , 15% from 42 months to 48 months remaining principal in two equal semi annual instalments starting from the 54th month from the date of issue. 10,750 10,750 Mr. Ahmed Shaikh Bank Al Falah Limited - 4th issue 10,000 10,000 5,000 50,000 6 months Kibor + 2.50% 0.02% of principal amount in the first 78 months and remaining principal in three equal semi annual instalments starting from the 84th month from the date of issue. 33,247 49,880 Mr. Atif Bajwa Faysal Bank Limited 2nd Issue 15,000 15,000 5,000 75,000 6 months Kibor + 2.25% 0.02% of principal amount in the first 60 months and remaining principal in four equal semi annual instalments starting from the 66th month from the date of issue. 37,425 74,850 Mr. Nauman Ansari 7,440 11.00 % Per Annum 0.02% of principal amount in the first 60 months and remaining principal paid in 66th month from the date of issue. 7,440 7,440 Mr. Faisal Muzammil 100 - 1,000,000 99,980 6 months Kibor + 0.50% 0.02% of principal amount in the first 108 months and remaining principal in two equal semi annual instalments starting from the 114th month from the date of issue. 99,988 JS Bank Limited 50,000 - 5,000 450,000 6 months Kibor + 1.40% 0.02% of principal amount in the first 72 months and remaining principal in two equal semi annual instalments starting from the 78th month from the date of issue. 450,000 Standard Chartered Bank (Pakistan) Limited 40,000 40,000 5,000 200,000 6 months Kibor + 0.75% Principal paid in two equal semi annual instalments starting from the 114th month from the date of issue. 200,000 200,000 Mr. Shahzad Dada (iii) Listed Sukuk Bonds Engro Fertilizers Limited 32,300 32,300 5,000 161,500 6 months Kibor + 1.75% 2.50% of principal amount in 24 months , 10.00% from 30 months to 36 months remaining principal in four equal semi annual instalments starting from the 42nd month from the date of issue. 145,350 153,425 Mr. Ruhail Muhammad K-Electric Limited AZM Sukuk 80,000 80,000 5,000 400,000 3 months Kibor + 2.25% Principal paid in 36 months from the date of issue 400,000 400,000 Mr. Tayyab Tareen 100 100 1,000,000 100,000 6 months Kibor + 1.25% Principal paid in fourteen equal semi annual instalments 71,428 85,716 Mr. Shafqaat Ahmed Amreli Steels Limited - 10,000 5,000 50,000 3 months Kibor + 2.50% Principal amount of first instalment due from 27th month to 60th month remaining principal in eight equal quarterly instalments starting from the 63rd month from the date of issue. - 19,000 Mr. Abbas Akber Ali Eden Housing Limited 10,000 10,000 5,000 50,000 3 months Kibor + 2.5% 12.50% of principal amount from 18 to 24 months, 0.38% in 15 months, 2.27% from 18 to 21 months, 2.60% in 24 months, 4.72% from 27 months to 36 months 5.62% from 39 months to 48 months and remaining principal in four equal quarterly instalments starting from the 51st month from the date of issue. 1,099,430 1,099,430 100 109,943 3 months Kibor + 3.00% Habib Bank Limited (iv) Un-listed Sukuk Bonds AlBaraka Bank (Pakistan) Limited Liberty Power Tech Limited Quarterly instalments starting from 01 April 2011 - Mr. Nouman K. dar - Mr. Khalid Imran 6,560 6,560 Mr. Muhammad Amjad 65,335 76,032 Mr. Ashraf Salim Mukaty - 10,000 5,000 100,000 100,000 5,000 Three Star Hosiery Mills (Pvt) Limited 5,100 5,100 5,000 25,500 3 months Kibor + 3.25% with floor of 11% and Cap of 25% Principal paid in seven equal semi annual instalments starting from the 24th month from the date of issue. 25,215 25,215 Mr. Muhammad Rasheed WAPDA 4,000 4,000 5,000 20,000 6 months Kibor + 0.35% Principal paid in 80 months from the date of issue 19,860 19,860 Lt. Gen.(R) Muzammil Hussain 100,000 124,686 5,000 500,000 3 months Kibor + 1.00% Principal paid in twenty equal quarterly instalments starting from the 27th month from the date of issue. 500,000 194 425 9,750 194 - 1,000,000 1,000,000 80,571 6 months Kibor + 1.25% 425,000 6 months kibor + 0.50% Principal paid in fourteen equal semi annual instalments Principal paid in 120 months from the date of issue 53,571 425,000 - 100,000 975,000 6 months kibor + 1.10% Principal paid in sixteen equal semi annual instalments starting from the 30th month from the date of issue. 975,000 5,000 24,990 6 months Kibor + 1.20% 0.36% of principal amount in the first 108 months and remaining principal in two equal semi annual instalments starting from the 114th month from the date of issue. Pak Elektron Limited Pakistan Mobile Communication Limited 50,000 3 months Kibor + 1.75% with floor of 10% and cap of 25% 500,000 3 months Kibor + 0.88% Principal paid in six equal quarterly instalments starting from the 93rd month from the date of issue. Principal paid in twelve equal quarterly instalments starting from the 27th month from the date of issue. - 10,714 Mr. Murad Saigal 500,000 500,000 Mr. Aamir Ibrahim (b) Available for sales securities (i) Listed Sukuk Bonds K-Electric Limited Sukuk-ul-Shirkah (ii)Un-listed Sukuk Bonds AlBaraka Bank (Pakistan) Limited Meezan Bank Limited Neelum Jhelum Hydro Power Company (Pvt) Limited 623,430 Mr. Tayyab Tareen 80,570 Mr. Shafqaat Ahmed - Mr. Irfan Siddiqui - Muhammad Zubair (c) Held for trading securities (i) Un-listed Term Finance Certificates Askari Bank Limited - 5th issue - 5,000 4,042,438 25,038 Syed Majeedullah Hussaini 2,384,749
  146. 161 Report of Shari Õah Board For the year ended 31 December 2016 In the name of Allah, the Beneficent, the Merciful While the Board of Directors and Executive Management are solely responsible to ensure that the operations of Soneri Bank Limited - Islamic Banking (Mustaqeem) (herein referred as ÒThe BankÓ) are conducted in a manner that comply with Shariah principles at all times, we are required to submit a report on the overall Shariah compliance environment of Soneri Bank Limited - Islamic Banking (Mustaqeem). To form an opinion on the overall Shariah Compliance environment as required by the regulatory framework, the Shariah Compliance Department of the bank needs to carry out reviews, on test check basis, of each class of transactions, the relevant documentation and process flows. Further, the report of the Internal Shariah audit also form the basis of this report. Based on the above, we are of the view that: i. The Bank has a mechanism in place to ensure Shariah compliance in their overall operations. We hope to continuously improve this mechanism with adequately staffed Shariah Compliance Department (SCD) as per the needs of the Bank. ii. The Bank has overall complied with Shariah rules and principles in the light of fatawa, rulings and guidelines issued by its Shariah Board. iii. The Bank has overall complied with directives, regulations, instructions and guidelines related to Shariah compliance issued by SBP in accordance with the rulings of SBP's Shariah Board. iv. The bank has a considerable system in place to ensure that any earnings realized from prohibited sources are not made part of Bank's income. A charity of Rupees nine hundred fifty two thousand four hundred twenty and ten paisas (PKR 952,420.10) has been disbursed in charitable purposes. v. The Bank has complied with the SBP instructions on profit and loss distribution and pool management. However, a comprehensive automated solution for profit distribution on multiple pools with proper asset tagging is in progress to be implemented. The management of the Bank must complete this development to ensure smooth profit distribution. vi. It is pertinent to mention that the previous Resident Shariah Board Member had resigned in the first half of the year. However, the executive management stepped up to place the Shariah controls in day to day transactions through close coordination with the Shariah Board. vii. During the year under review, the constitution of SCD was delayed due to limitations which have been subsequently resolved because of the determination of the board of directors and the executive management towards the Shariah Compliance in the Bank. Alhamdulillah. viii. Primarily the Bank employs the traditional products for its financing such as Ijarah, Murabaha, and Diminishing Musharakah. It is encouraging that a Shariah compliant alternative to running finance, named Running Musharakah, has been developed. With this product, the Bank will hopefully be able to fulfill the needs of the current business environment. ix. Although the bank has noticeably strengthened its SCD and thereby improved the overall outlook of the Shariah environment, however, continuous improvements in this area and further enhancement of the Internal Shariah Audit and product development activities is still needed. x. It is recommended to make Islamic Banking training mandatory for all staff in the Bank. Based on the Shari'ah review of transactions, in our opinion, the general conduct of the Bank activities is Shariah Compliant. We pray to Almighty Allah, for the success of Islamic Banking and provide us the guidance to adhere to his Shariah in day to day operations and forgive our mistakes. And Allah knows the best Mufti Ehsan Waquar Ahmad Chairman Shariah Board Mufti Muhammad Zahid Resident Shariah Board Lahore: 15 February 2017 Mufti Bilal Ahmed Qazi Shariah Board Member
  147. Soneri Bank Limited | Annual Report 2016
  148. 163 Notice of the Annual General Meeting Notice is hereby given that Twenty Fifth (25th) Annual General Meeting of Soneri Bank Limited will be held at Nishat Hotel, 9 A, Gulberg-III, Lahore on Tuesday, 28 March 2017 at 9:00 a.m. to transact the following business: Ordinary Business 1) To confirm the minutes of last Annual General Meeting held on 25 March 2016. 2) To receive, consider and adopt Annual Audited Accounts together with the Directors'and Auditors' Reports thereon for the year ended 31 December 2016. 3) To approve and declare the final cash dividend of Rs.1.25/- per share (i.e.12.50%) for the financial year ended 31 December 2016 as recommended by the Board of Directors in its 154th meeting held on 15 February 2017. 4) To elect seven (7) Directors of the Bank in accordance with the provisions of Section 178 of the Companies Ordinance, 1984 for a term of three years commencing from 28 March 2017. Following are the retiring directors, who are eligible to offer themselves for re-election: i. iii. v. vii. Mr. Alauddin Feerasta Mr. Muhammad Rashid Zahir Syed Ali Zafar Mr. Shahid Anwar ii. Mr. Nooruddin Feerasta iv. Mr. Amar Zafar Khan vi. Mr. Manzoor Ahmed 5) To appoint Auditors of the Bank for the year ending 31 December 2017 till the conclusion of next Annual General Meeting and fix their remuneration. Retiring Auditors, M/s. A.F. Ferguson & Co., Chartered Accountants, being eligible, have offered themselves for re-appointment. 6) To transact such other ordinary business as may be placed before the meeting with the permission of the Chair. Special Business 7) To consider and approve the amendments to be made in Articles of Association of the Bank for the purpose of compliance with the mandatory e-voting requirements as prescribed in the Companies (E-Voting) Regulations, 2016 issued vide SRO 43 (I)/2016 dated 22.01.2016 and if thought fit to pass the following resolution as special resolution: ÒRESOLVED THAT the Articles of Association of the Bank be amended by adding following new clauses as 46(a), 46(b) and 48(a): 46(a) E-Voting: Members may exercise voting rights at General Meetings through electronic means, if the Bank receives the requisite demand for poll in accordance with the Companies (E-voting) Regulations, 2016 and any amendments made from time to time, hereinafter refer to as E-Voting. The Bank shall provide E-voting facility in accordance with the mandatory requirements prescribed under said Regulations and amendments made to them from time to time by the Securities & Exchange Commission of Pakistan, irrespective of anything contained in any other provisions of these Articles and anything contradictory therein. 46(b) Notwithstanding anything contained in these Articles, in case of E-Voting both members and non-members can be appointed as proxy and the instrument appointing shall be deposited, in writing, with the Bank in the form and within such timelines as prescribed by the Commission from time to time. 48(a) E-Voting: An instrument of proxy in relation to e-voting shall be in the following form: I/We ----------of-----------,being a member of -----------,holder of-----------ordinary share(s) as per Register Folio No.----------hereby opt for e-voting through intermediary and hereby consent the appointment of execution officer -----------as proxy and will exercise evoting as per the Companies (E-Voting) Regulations, 2016 and hereby demand for poll for resolutions. My secured email address is----------------, please send login details, password and electronic signature through email. ___________________ Signature of Member (Signature should agree with the specimen signature registered with the Bank) Signed in the presence of: __________________ Signature of Witness ___________________ Signature of Witness (The proxy e-voting form shall be required to be witnessed by two persons whose names, address and CNIC number shall be mentioned on the form.) FURTHER RESOLVED THAT the Company Secretary be and is hereby authorized to do all acts, deeds and things necessary to complete the legal formalities and file the required documents as maybe necessary or ancillary for the purpose of implementing the aforesaid resolution.Ó
  149. Soneri Bank Limited | Annual Report 2016 Notice of the Annual General Meeting 8) To approve transmission of annual audited financial statements, auditor's report and directors' report etc. (Òannual audited accountsÓ) along with notice of general meeting to members through CD/DVD/USB at their registered address as allowed by the Securities and Exchange Commission of Pakistan (SECP) and if thought fit to pass the following resolution as ordinary resolution: ÒRESOLVED THAT transmission of annual audited financial statements, auditor's report and directors' report etc. (Òannual audited accountsÓ) along with notice of general meeting to members at their registered address in soft form i.e. CD/DVD/USB as notified by SECP vide its SRO No. 470 (1)/2016 dated May 31, 2016 be and is hereby approved.Ó 9) To approve payment of remuneration to Non-Executive Directors for attending the Board and its Committees meetings in compliance with the State Bank of Pakistan BPRD Circulars No.14 and 09 dated 07.08.2009 and 06.05.2015 respectively. A statement under Section 160(1)(b) of the Companies Ordinance, 1984 pertaining to Special Businesses alongwith the Special Resolutions proposed to be passed, are being sent to the shareholders with the Notice. BY ORDER OF THE BOARD Muhammad Altaf Butt Company Secretary Lahore: 15 February 2017 NOTES: 1. Share Transfer Books of the Bank will remain closed from 22 March 2017 to 28 March 2017 (both days inclusive). 2. 2.1. In accordance with Section 178 (1) of the Companies Ordinance, 1984 the number of Directors to be elected has been fixed as seven (7). The retiring Directors are eligible to offer themselves for re-election. Mr. Mohammad Aftab Manzoor, President/Chief Executive Officer shall continue to be a deemed Director in terms of Article 54 of the Articles of Association of the Bank read with Sub-section (2) of Section (200) of the Companies Ordinance, 1984. 2.2 In terms of Section 178(3) of the Companies Ordinance, 1984, any person who seeks to contest an election to the office of Director, shall file with the Bank, not later than fourteen (14) days before the date of this meeting, a notice of his/her intention to offer himself/herself for election as a Director together with (a) consent on Form-28 (b) declaration with consent to act as Director in the manner as provided in the Code of Corporate Governance 2012. 2.3 In terms of the State Bank of Pakistan (the ÒSBPÓ) BPRD Circular No. 4 of 2007 dated 23 April 2007, on Fit and Proper Test (FPT), appointment of the directors require prior clearance in writing from State Bank of Pakistan, and all requests for seeking approval of SBP for appointment of directors of the Bank should be routed through the Bank alongwith information as per proforma ÒFit and Proper TestÓ given in the above circular. The copies of the proforma and other documents complete in all respects must be submitted to the Bank not later than 14 days before the date of this meeting for submission to the SBP. 2.4 Any person who seeks to contest the election to the office of a director, whether he is a retiring director or otherwise, shall undertake and confirm to the Bank that such person fulfills all the requirements and criteria for being elected to the office of a director of the Bank and that such person does not violate any of the provisions or conditions prescribed by SBP for holding such office and further that such person shall fully comply with all the SBP Directives issued or to be issued by the SBP in the form of circulars, notifications, directions, letters, instructions and other orders. In addition, he will also be evaluated on the basis of the BankÕs mechanism for appointment of Non-Executive Directors and may be asked to provide such further information, as may be deemed necessary. 3. A member entitled to attend and vote at this meeting may appoint another member as his or her proxy to attend and vote. Proxies, in order to be effective, must be received at the registered office of the Bank not less than 48 hours before the time of holding the meeting. Proxy form shall be witnessed by two persons whose names, addresses and Computerized National Identity Card (CNIC) numbers shall be mentioned on the form. Proxy form is enclosed herewith. 4. The CDC account/sub account holders shall have to produce their original Computerized National Identity Card (CNIC) or original passport at the time of attending the meeting for identification purpose, alongwith participant's I.D Number and their Account No. in CDS. In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signature of the nominee together with the original proxy form duly filled in must be received at the registered office of the Bank not less than 48 hours before the time of holding the meeting. The nominees shall produce their original CNIC or original passport at the time of attending the meeting for identification purpose. 5. Shareholders are requested to notify change in their addresses, if any, to our Share Registrar, M/s. THK Associates (Pvt.) Ltd, 1st Floor, 40-C, Block-6, P.E.C.H.S. Karachi.
  150. 165 Notice of the Annual General Meeting 6 . Mandatory submission of CNIC Those shareholders who have not yet submitted a valid copy of their CNIC, are once again requested to submit the same immediately to our Share Registrar at the address mentioned at Sr. No.5 above in order to meet the mandatory requirement of the SECP, SRO 831(I)/2012 dated July 05, 2012 which requires that the dividend warrant should bear CNIC number of the member. 7. Transmission of Audited Financial Statements & Notice Of Annual General Meeting Through E-Mail As per the directives issued by the Securities and Exchange Commission of Pakistan (ÒSECPÓ) vide S.R.O.787(1)2014 dated 08 September 2014, companies are allowed to circulate their annual balance sheet and profit & loss account, auditor's report and directors' report etc. (ÒAudited Financial StatementsÓ) along with Notice of Annual General Meeting (ÒNoticeÓ) to their shareholders through email. In this regard, response from very few shareholders was received to our Circular dated 12.01.2015. If you wish to receive Bank's Annual Report via email in future, you are requested to fill the consent form and return it to our Share Registrar at the address mentioned at Sr. No.5 above. Consent form may be accessed at http://www.soneribank.com/investor-relations/stock-information/ 8. Increase in withholding tax on dividend income for Non-Filers and payment cash dividend through electronic mode The Shareholders are hereby informed that pursuant to amendments in Section 150 of the Income Tax Ordinance, 2001 through Finance Act, 2016, Income Tax will be deducted at source @ 12.50% for filers and @20.00% for non-filers of income tax return (determined as per ÒActive Tax Payer List (ATL)Ó available on Federal Board of Revenue's website) from the dividend amount, if any. In case of joint account, each holder is to be treated individually as either a filer or non-filer and tax will be deducted on the basis of shareholding of each joint holder as may be notified by the shareholder, in writing as follows, to our Share Registrar at the address mentioned above. In case no such notification is received by us, equal deduction of tax will be made where proportionate holding is not available with us. Company Name Folio/CDS A/c. No. Total Shares Principal Shareholder Shareholding Name & proportion CNIC No. (No, of Shares) Joint Shareholder Shareholding Name & proportion CNIC No. (No, of Shares) The CNIC number/NTN details is now mandatory and is required for checking the tax status as per the Active Taxpayers List (ATL) issued by Federal Board of Revenue (FBR) from time to time. 9. Deposit of Physical shares into CDC Account The Shareholders having shares in physical form are advised to open CDC sub-account with any of the brokers or Investor Account directly with the CDC to place their shares in scrip-less form, this will facilitate them in many ways including safe custody and sale of shares at any time they want, as the trading of physical shares is not permitted as per existing regulations of the Stock Exchange. 10. Video Conference Facility for attending Annual General Meeting As per the SECP's Circular No.10 dated 21.05.2014, members may avail video conference facility subject to fulfillment of certain requirements & procedures. The members who wish to attend Annual General Meeting via video conference, may send their consent on the below format to the Bank at its registered office address. If the Bank receives consent from members holding in aggregate 10% or more shareholding residing at a geographical location, to participate in the meeting through video conference at least 10 days prior to date of the meeting, the Bank will arrange video conference facility in that city subject to availability of such facility in that city. Consent Form for Video Conference Facility ÒI/We ----------------------------------------of----------------------, being a member of Soneri Bank Limited, holder of -------------------Ordinary shares as per registered Folio/CDC Account No.-------------------hereby opt for video conference facility at ------------------------------(geographical location). ___________________ Signature of Member
  151. Soneri Bank Limited | Annual Report 2016 Notice of the Annual General Meeting 11. Availability of Audited Financial Statements & Election related information on the Bank's website The audited financial statements of the Bank for the year ended 30 December 2016 have been made available on the Bank's website www.soneribank.com, in addition to annual and quarterly financial statements for the prior years. Notice of 25th Annual General Meeting along with statement under Section 160(1)(b) of the Companies Ordinance, 1984 is also placed on the web portal of the Bank. Further, election related documents shall also be placed & will remain available as per the timelines advised vide SRO(I)/2015 dated 10.12.2015 by the Securities & Exchange Commission of Pakistan. Statement under Section 160(1)(b) of the Companies Ordinance, 1984 This statement sets out the material facts concerning the special businesses to be transacted at Twenty Fifth (25th) Annual General Meeting of Soneri Bank Limited to be held on 28 March 2017. Agenda Item No. 7 Amendments in the Articles of Association of the Bank To give effect to the Companies (E-Voting) Regulation 2016, shareholders' approval is being sought to amend the Articles of Association of the Bank to enable the Shareholders to appoint non-members as their proxies in line with the requirements of e-voting regulations issued by the Securities & Exchange Commission of Pakistan. Agenda Item No. 8 Transmission of Annual Audited Financial Statements through CD/DVD/USB The SECP through SRO 470 (1)/2016 dated May 31, 2016 has allowed companies to circulate the annual balance sheet and profit and loss account, auditor's report and directors report etc. (Òannual audited accountsÓ) along with notice of general meeting to its shareholders in electronic form through CD/DVD/USB at their registered addresses. This would result in timely delivery of Annual Audited Accounts to the shareholders. The Bank has placed on its website i.e. www.soneribank.com a standard request form containing postal and e-mail address of Company Secretary/Share Registrar, so that shareholders may request a hard copy of the Annual Audited Accounts. The Bank will provide one hard copy free of cost to the requesting shareholder at their registered address within one week of the request. Agenda Item No. 9 Payment of remuneration to Non-Executive Directors for attending the Board and its Committees meetings The State Bank of Pakistan (SBP), Banking Policy & Regulations Department vide its BPRD Circulars No.14 and 09 dated 07.08.2009 and 06.05.2015 respectively, has allowed the Banks to pay a reasonable and appropriate remuneration to their Non-Executive Directors for attending the Board or its committees meetings. Such remuneration shall be approved by the shareholders on a pre or post facto basis in the Annual General Meeting (AGM). For compliance of the SBP's directive, the following draft resolution is proposed to be passed by the shareholders at the 25th AGM as Ordinary Resolution: ÒRESOLVED THAT approval for the payment of remuneration be and is hereby accorded to Non-Executive Directors of Soneri Bank Limited for attending the Board and Board committees meetings @ Rs.75,000 (net of tax) per meeting effective from 15 February 2017 as approved by the Board of Directors in its 154th meeting held on 15 February 2017.Ó Inspection of Documents: The copies of the existing and amended Memorandum & Articles of Association have been kept at the registered office of the Bank which may be inspected on any working day during business hours till the date of 25th Annual General Meeting. Interest of Directors: The Directors of the Bank have no direct or indirect interest in the above mentioned special businesses that would require further disclosure except to the extent of their meeting fee as well as shareholding in the Bank.
  152. 167
  153. Soneri Bank Limited | Annual Report 2016 FORM 34 PATTERN OF HOLDING OF THE SHARES HELD BY THE SHAREHOLDERS (CDS AND PHYSICAL) AS AT 31 DECEMBER 2016 (SECTION 236) Shareholding No. of Shareholders 987 1308 1099 2115 1461 605 152 68 47 27 16 13 10 22 11 9 5 5 7 3 3 2 12 2 5 3 4 1 1 2 1 2 1 1 2 3 1 1 4 1 1 1 1 2 1 1 1 1 2 2 1 1 From 1 101 501 1001 5001 10001 15001 20001 25001 30001 35001 40001 45001 50001 55001 60001 65001 70001 75001 80001 85001 90001 95001 100001 105001 110001 115001 120001 125001 130001 135001 140001 145001 150001 155001 160001 170001 185001 195001 200001 210001 215001 230001 235001 240001 250001 275001 280001 285001 290001 295001 320001 To - 100 500 1000 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 75000 80000 85000 90000 95000 100000 105000 110000 115000 120000 125000 130000 135000 140000 145000 150000 155000 160000 165000 175000 190000 200000 205000 215000 220000 235000 240000 245000 255000 280000 285000 290000 295000 300000 325000 Total Shares Held 35,145 358,406 864,193 4,807,150 11,935,942 7,093,354 2,639,384 1,522,504 1,289,144 896,564 609,444 554,813 471,150 1,156,518 626,748 555,957 331,965 361,807 541,416 247,084 261,407 183,516 1,182,494 205,916 544,869 335,636 467,678 122,100 128,024 266,404 137,875 282,983 147,502 154,000 317,550 492,056 170,940 189,835 800,000 203,002 214,864 215,730 232,268 471,562 243,269 250,004 276,000 281,196 577,342 584,735 295,838 322,522
  154. 169 FORM 34 PATTERN OF HOLDING OF THE SHARES HELD BY THE SHAREHOLDERS (CDS AND PHYSICAL) AS AT 31 DECEMBER 2016 (SECTION 236) Shareholding No. of Shareholders 1 1 1 2 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 8088 From 335001 350001 355001 365001 375001 385001 415001 435001 445001 490001 495001 570001 600001 610001 775001 895001 985001 1070001 1125001 1210001 2095001 2765001 3440001 3590001 4445001 4450001 4995001 5060001 5490001 8430001 9475001 10890001 11095001 13230001 13545001 22290001 24630001 26785001 36210001 37280001 37505001 37865001 45140001 47105001 51385001 76615001 86005001 108430001 301375001 To Total 340000 355000 360000 370000 380000 390000 420000 440000 450000 495000 500000 575000 605000 615000 780000 900000 990000 1075000 1130000 1215000 2100000 2770000 3445000 3595000 4450000 4455000 5000000 5065000 5495000 8435000 9480000 10895000 11100000 13235000 13550000 22295000 24635000 26790000 36215000 37285000 37510000 37870000 45145000 47110000 51390000 76620000 86010000 108435000 301380000 Total Shares Held 336,611 353,709 356,000 733,246 375,134 387,500 420,000 436,427 448,500 493,500 498,460 571,046 1,208,661 614,839 776,650 900,000 989,450 1,075,000 1,129,647 1,214,807 2,100,000 2,766,216 3,441,416 3,591,580 4,449,000 4,450,500 5,000,000 5,060,452 5,494,500 8,430,965 9,477,018 10,891,450 11,098,050 13,232,450 13,546,734 22,291,500 24,631,642 26,786,763 36,214,344 37,280,242 37,508,988 37,866,654 45,143,700 47,109,707 51,386,588 76,619,421 86,008,806 108,430,049 301,377,754 1,102,463,481
  155. Soneri Bank Limited | Annual Report 2016 FORM 34 PATTERN OF HOLDING OF THE SHARES HELD BY THE SHAREHOLDERS (CDS AND PHYSICAL) AS AT 31 DECEMBER 2016 (SECTION 236) Categories of Shareholders Directors, Chief Executive Officer and their spouses and minor children DIRECTORS Mr. Alauddin Feerasta Mr. Nooruddin Feerasta Mr. Amar Zafar Khan Mr. Muhammad Rashid Zahir Syed Ali Zafar CHIEF EXECUTIVE OFFICER Mr. Mohammad Aftab Manzoor DIRECTORS' SPOUSES AND MINOR CHILDREN Mrs. Aziza A. Feerasta w/o Mr. Alauddin Feerasta Mrs. Amyna N. Feerasta w/o Mr. Nooruddin Feerasta No. of Shareholders Shares Held Percentage 2 1 1 1 1 10,080,679 14,048 17 10,065 1,069 0.9144 0.0013 0.0000 0.0009 0.0001 0.0000 1 5,401 0.0005 1 7,021 0.0006 8 10,118,300 0.9178 2 2 2 1 387,386,560 128,006,009 64,067,005 5,401 35.1383 11.6109 5.8113 0.0005 7 117,260,572 10.6362 8 3 4 35,562,751 13,562,912 4,899 3.2258 1.2302 0.0004 Associated Companies undertakings and related parties Trustees Alauddin Feerasta Trust Trustees Feerasta Senior Trust Trustees Alnu Trust Executives National Bank of Pakistan - Trustee Department, NIT and ICP Banks Development Financial Instituions, Non Banking Financial Instituions. Insurance Companies Modarabas Mutual Funds NIT-Equity Market Opportunity Fund AKD Index Tracker Fund Safeway Mutual Fund Limited TRI Star Mutual Fund Limited Joint Stock Companies Foreign Companies Others General Public: a) Local b) Foreign 1 1 1 1 50 10 6 420,000 72,947 6,820 276 148,416,950 48,204,991 161,228 0.0381 0.0066 0.0006 0.0000 13.4623 4.3725 0.0146 6,788 1,193 136,239,830 12,966,030 12.3578 1.1761 Total: 8,088 1,102,463,481 100.00 387,386,560 128,006,009 35.1383 11.6109 117,680,572 64,067,005 62,140,630 10.6743 5.8113 5.6365* Shareholders Holding Five Percent or More Voting Interest in the Bank Trustees Alauddin Feerasta Trust Trustees Feerasta Senior Trust National Bank of Pakistan - Trustee Department, NIT and ICP Trustees Alnu Trust Mr. Amir Feerasta * Voting rights on shares are restricted upto five percent only. -:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:Trading in shares during the year 2016: Directors, CEO, CFO, Company Secretary and Executives NIL
  156. 171 List of Branches As at 31 December 2016 REGISTERED OFFICE Rupali House 241-242 , Upper Mall Scheme, Anand Road, Lahore, Pakistan Tel.: (+92-42) 35713101-4, 35792180 Fax: (+92-42) 35713095-6 CENTRAL REGION CENTRAL OFFICE 10th Floor, PNSC Building, M. T. Khan Road Karachi, Pakistan Tel.: (+92-21) 32444401-5 & 111-567-890 Fax: (+92-21) 35643314, 24 & 55 Swift: SONEPKKAXXX 17 Wahdat Road Branch, Lahore Tel. No: (042) 37424821-6 & 37420591 34 Jail Road Branch, Lahore Tel. No: (042) 35408935-7 18 Gunpat Road Branch, Lahore Tel. No: (042) 37361607-9 35 Badami Bagh Branch, Lahore Tel. No: (042) 37731601, 2 & 4 19 Airport Road Branch, Lahore Tel. No: (042) 35700115-7 36 Montgomery Road Branch, Lahore Tel. No: (042) 36291013-4 03 Gulberg Branch, Lahore Tel. No: (042) 35713445-8, 35759273 & (042) 35772294-5 20 Ravi Road Branch, Lahore Tel. No: (042) 37725356-7 37 DHA Phase: VI Branch, Lahore Tel. No: (042) 37180536-7 04 Circular Road Branch, Lahore Tel. No: (042) 37670486 & 37670489 21 Shahdara Branch, Lahore Tel. No: (042) 37941741-3 38 Bahria Town Branch, Lahore Tel. No: 0316-8226348 & 9 05 Model Town Branch, Lahore Tel. No: (042) 35889311-2 & 35915666 22 Manga Mandi Branch, Lahore Tel. No: (042) 35383517-8 39 Expo Centre Branch, Lahore Tel. No: (042) 35314087-8 06 Peco Road Branch, Lahore Tel. No: (042) 35177800-2, 35222306-7 23 Badian Road Branch, Lahore Tel. No: (042) 37165390 & 3 40 Wapda Town Branch, Lahore Tel. No: (042) 35187611, 2 & 5 07 Cavalry Ground Branch, Lahore Tel. No: (042) 36653728-9 & 36619697 24 Mughalpura Branch, Lahore Tel. No: (042) 36880892-4 41 Shah Alam Market Branch, Lahore Tel. No: (042) 37376212 & 5 Islamic Banking 08 Temple Road Branch, Lahore Tel. No: (042) 36376341, 2 & 6 25 Upper Mall Branch, Lahore Tel. No: (042) 35789346-9 42 DHA Phase-V Branch, Lahore Tel. No: (042) 35695678 & 0316-8226322-3 26 Islampura Branch, Lahore Tel. No: (042) 37214394-6 43 Chauburji Branch, Lahore Tel. No: (042) 37112228 & 0316-8226325-7 27 Garhi Shahu Branch, Lahore Tel. No: (042) 36294201-2 44 Walton Road Branch, Lahore Tel. No: (042) 36672305 & 0316-8226339, 40 & 41 01 Main Branch, Lahore Tel: (042) 36368141-8 & 111-567-890 02 Defence Branch, Lahore Tel. No: (042) 35897181-2 & 35691037-8 09 Allama Iqbal Town Branch, Lahore Tel. No: (042) 37812394-5 10 Baghbanpura Branch, Lahore Tel. No: (042) 36832811-3 11 Thokar Niaz Baig Branch, Lahore Tel. No: (042) 35313651, 3 & 4 12 Ghazi Chowk Branch, Lahore Tel. No: (042) 35188505-7 Islamic Banking 13 New Garden Town Branch, Lahore Tel. No: (042) 35940611,3 & 8 14 DHA Phase-III Branch, Lahore Tel. No: (042) 35734083-5 15 Chungi Amer Sadhu Branch, Lahore Tel. No: (042) 35922182-4 16 Johar Town Branch, Lahore Tel. No: (042) 35204191-3 28 Zarrar Shaheed Road Br., Lahore Tel. No: (042) 36635167-8 29 Hamdard Chowk Kot Lakhpat Br., Lahore Tel. No: (042) 35140261-5 45 Faisal Town Branch, Lahore Tel. No: (042) 35170540 & 0316-8226335, 7 & 8 30 Kana Kacha Branch, Lahore Tel. No: (042) 36187413 46 Karim Block Branch, Lahore Tel. No: (042) 35417757 & 0316-8226412, 3 & 4 31 Sabzazar Branch, Lahore Tel. No: (042) 37830881-2 47 Defence Road Branch, Lahore Tel. No: 0316-8226415-8 32 DHA Phase-IV Br., Lahore Tel. No: (042) 35694156-7 48 Muridke Branch Tel. No: (042) 37166511-2 33 Azam Cloth Market Branch, Lahore Tel. No: (042) 37662203-4 49 Main Branch, Gujranwala Tel. No: (055) 3843560-2, 111-567-890
  157. Soneri Bank Limited | Annual Report 2016 List of Branches As at 31 December 2016 50 Gujranwala Cantt. Branch, Gujranwala Tel. No: (055) 3861932-4 68 Daska Branch, Distt. Sialkot Tel. No: (052) 6617847-8 86 Hasilpur Branch Tel. No: (062) 2441481-3 51 Wapda Town Branch, Gujranwala Tel. No: (055) 4291136-7 69 Sheikhupura Branch Tel. No: (056) 3613570 & 3813133 87 Sargodha Branch Tel. No: (048) 3726021-3 52 Kamokee Branch, Distt. Gujranwala Tel. No: (055) 6813501-6 70 Nankana Sahib Branch Tel. No: (056) 2876342-3 88 Pull-111 Branch, Distt. Sargodha 53 Main Branch, Faisalabad Tel. No: (041) 2639873, 7 & 8 & (041) 111-567-890 71 Wazirabad Branch Tel. No: (055) 6603703-4 & 6608555 54 Peoples Colony Branch, Faisalabad Tel. No: (041) 8555715-6 55 Ghulam Muhammadabad Branch, Faisalabad Tel. No: (041) 2680113-4 Islamic Banking 56 East Canal Road Branch, Faisalabad Tel. No: (041) 2421381-2 57 Civil Lines Branch, Faisalabad Tel. No: (041) 2648111 58 Jaranwala Branch, Distt. Faisalabad Tel: No: (041) 4312201-2 59 Samundri Branch, Distt. Faisalabad Tel. No: (041) 3423983-4 60 Painsera Branch, Distt. Faisalabad Tel. No: (041) 2557100-500 & 2574300 61 Khurrianwala Branch Tel. No: (041) 4360701, 2, 4 & 5 62 Chiniot Branch Tel. No: (047) 6333840-2 63 Jhang Branch Tel. No: (047) 7651601-2 64 Small Industrial Estate Branch, Sialkot Tel. No: (052) 3242607-9 65 Pasrur Road Branch, Sialkot Tel. No: (052) 3521655 & 3521755 Islamic Banking 66 Sialkot Cantt Branch, Sialkot Tel. No: (052) 4560023-4 67 Godhpur Branch, Sialkot Tel. No: (052) 4563932-3 72 Ghakkar Mandi Branch Tel. No: (055) 3832611-2 73 Main Branch, Multan Tel. No: (061) 4519927 & 4512884 Islamic Banking 74 Shah Rukn-e-Alam Branch, Multan Tel. No: (061) 6784052-3 & 6782081 75 Bosan Road Branch, Multan Tel. No: (061) 6210690-3 & 6520693 76 Mumtazabad Branch, Multan Tel No: (061) 6760212, 3 & 4 77 Chowk Shaheedan Branch, Multan Tel. No: (061) 4581280 & 1 89 Bhawal Branch Tel. No: (048) 6642224 & 0316-8226331-2 90 Khanewal Branch Tel. No: (065) 2551560-2 91 Kabirwala Br., Distt. Khanewal Tel. No: (065) 2400910-3 92 Abdul Hakeem Br., Distt. Khanewal Tel. No: (065) 2441888 93 Mian Channu Branch Tel. No: (065) 2662201-2 94 Depalpur Branch Tel. No: (044) 4541341-2 95 Okara Branch Tel. No: (044) 2553012-4 78 Gulgasht Colony Branch, Multan Tel. No: (061)-6222701 & 0316-8226393-5 96 Hujra Shah Muqeem Branch District Okara Tel. No: (044) 4860401-3 & 0316-8226419, 20 & 21 79 Azmat Road Br., Dera Ghazi Khan Tel. No: (064) 2471630-7 97 Haveli Lakha Branch Tel. No: 044-4775412 80 Lodhran Branch Tel. No: (0608) 364766-7 98 Sahiwal Branch Tel. No: (040) 4467742-3 81 Rahim Yar Khan Branch Tel. No: (068) 5886042-4 99 Chichawatni Br., Distt. Sahiwal Tel. No: (040) 5484852-3 82 Liaqatpur Br., Distt. Rahim Yar Khan Tel. No: (068) 5792041-2 100 Layyah Branch Tel. No: (060) 6414207-8 83 Sadiqabad Branch Tel. No: (068) 5702162 & 5800168 101 Chowk Azam Branch, Distt. Layyah Tel. No: (060) 6372103 & 0316-8226401, 2 & 3 84 Bahawalpur Branch Tel. No: (062) 2731703-1 85 Ahmedpur Sharqia Br., Distt. Bahawalpur Tel. No: (062) 2271345 & 0316-8226404, 6 & 8 102 Kharoor Pacca Branch Tel. No: (0608) 341041-2 103 Muzafargarh Branch Tel. No: (066) 2422901, 3 & 5
  158. 173 List of Branches As at 31 December 2016 104 Fazal Garh Sanawan Branch , Distt. Muzafargarh Tel. No: (066) 2250214-5 121 Gojra Branch, Distt. Toba Tek Singh Tel. No: (046) 3516388-9 138 AKU Branch, Karachi Tel. No: (021) 34852252-3 122 Kamalia Branch, Distt. Toba Tek Singh Tel. No: (046) 3411405-6 139 Haidery Branch, Karachi Tel. No: (021) 36638617 & 36630409-410 123 Pir Mahal Branch Tel. No: (046) 3361690 & 5 140 Jodia Bazar Branch, Karachi Tel. No: (021) 32413627, 32414920 124 Gujrat Branch Tel. No: (053) 3520591, 2 & 4 141 Shahrah-e-Faisal Branch, Karachi Tel. No: (021) 34535551-4 125 Kharian Branch Tel. No: (053) 7602904, 5 & 7 142 DHA Branch, Karachi Tel. No: (021) 35852209 & 35845211 108 Jalalpur Bhattian Branch, District Hafizabad Tel. No: (0547) 500847-52 126 Lalamusa Branch Tel. No: (053) 7511072-3 143 Gulshan-e-Iqbal Branch, Karachi Tel. No: (021) 34811831-2 109 Pattoki Branch Tel. No: (049) 4422435-6 127 Pak Pattan Br., Distt. Pak Pattan Tel.: (0457) 371781 & 2 144 SITE Branch, Karachi Tel. No: (021) 32568213 & 32550997 110 Ellahabad Branch Tel. No: (049) 4751130 128 Arif wala Br., Distt. Pak Pattan Tel.: (0457) 834015 & 6 145 Zamzama Branch, Karachi Tel. No: (021) 35375836-7 111 Khudian Branch Tel. No: (049) 2791595 129 Chishtian Branch Tel. No: (063) 2501141 & 0316-8226305 146 Gole Market Branch, Karachi Tel. No: (021) 36618932 & 36681324 112 Sambrial Branch Tel. No: (052) 6523451-2 130 Khanpur Branch Tel. No: (068) 5577719-20 & 0316-8226307-9 147 Gulistan-e-Jauhar Branch, Karachi Tel. No: (021) 34020944-5 113 Vehari Branch Tel. No: (067) 3360015, 24 & 25 131 Narowal Branch Tel. No: (0542) 411405 & 0316-8226328-30 148 M. A. Jinnah Road Branch, Karachi Tel. No: (021) 32213972 & 32213498 114 Gagoo Mandi Branch, Distt. Vehari Tel. No: (067) 3500311-2 132 Rajanpur Branch Tel. No: (0604) 688108 & 0316-8226396 149 Gulbahar Branch, Karachi Tel. No: (021) 36607744 & 36682701 105 Sheikho Sugar Mills Branch Distt. Muzafargarh Tel. No: (061) 6006257 106 Shahbaz Khan Road Branch, Kasur Tel. No: (0492) 764891-2 107 Hafizabad Branch Tel. No: (0547) 541641-2 115 Mailsi Branch, Distt. Vehari Tel. No: (067) 3750140-5 SOUTH REGION 116 Burewala Branch, Distt. Vehari Tel. No: (067) 3773110 & 20 133 Main Branch, Karachi Tel. No: (021) 32436990-4 & 32444401-5 & UAN: 111 567 890 117 Mandi Bahauddin Branch Tel. No: (0546) 507601-2 134 Clifton Branch, Karachi Tel. No: (021) 35877773-4, 35861286 118 Bahawalnagar Branch Tel. No: (063) 2274795-6 135 Garden Branch, Karachi Tel. No: (021) 32232877-8 119 Haroonabad Br., Distt. Bahawalnagar Tel. No: (063) 2251664-5 136 F. B. Area Branch, Karachi Tel. No: (021) 36373782-3 & 36811646 120 Toba Tek Singh Branch Tel. No: (046) 2513203-4 137 Korangi Industrial Area Br., Karachi Tel. No: (021) 35113898-9, 35113900-1 150 North Karachi Branch, Karachi Tel. No: (021) 36920140-1 151 Block-7 Gulshan-e-Iqbal Branch, Karachi Tel. No: (021) 34815811-2 Islamic Banking 152 Cloth Market Branch, Karachi Tel. No: (021) 32442961 & 32442977 153 Paria Street Kharadar Branch, Karachi Tel. No: (021) 32201059-60 154 Suparco Branch, Karachi Tel. No: (021) 34970560 & 34158325-6 155 Chandni Chowk Branch, Karachi Tel. No: (021) 34937933 & 34141296
  159. Soneri Bank Limited | Annual Report 2016 List of Branches As at 31 December 2016 156 Allama Iqbal Road Branch, Karachi Tel. No: (021) 34387673-4 175 North Karachi Township Branch, Karachi Tel. No: (021) 36968605-6 193 Gulberg Branch, Karachi Tel. No: (021) 36340553 & 0316-8226291-2 157 Nishtar Road Branch, Karachi Tel. No: (021) 32239711 & 3 176 Karachi Stock Exchange Branch, Karachi Tel. No: (021) 32414003-4 194 New Sabzi Mandi Branch, Karachi Tel. No: (021) 36870506 & 0316-8226409, 10 & 11 Islamic Banking 158 Waterpump Branch, Karachi Tel. No: (021) 36312113 & 36312108 177 Gulshan-e-Jamal Branch, Karachi Tel. No: (021) 34682682-3 159 Apwa Complex Branch, Karachi Tel. No: (021) 32253143 & 32253216 160 Clifton Block-2 Branch, Karachi Tel. No: (021) 35361115-6 161 Malir Branch, Karachi Tel. No: (021) 34518730 & 34517983 178 Alyabad Branch, Karachi Tel. No: (021) 36826727 & 36332517 179 Saudabad Branch, Malir, Karachi Tel. No: (021) 34111904-5 180 Shireen Jinnah Colony Branch, Karachi Tel. No: (021) 34166262-4 162 Bahadurabad Branch, Karachi Tel. No: (021) 34135842-3 Islamic Banking 181 Al-Tijarah Centre Branch, Karachi Tel. No: (021) 34169252-3 163 New Challi Branch, Karachi Tel. No: (021) 32625246 & 32625279 182 Barkat-e-Haidery Branch, Karachi Tel. No: (021) 36645688-9 164 Shah Faisal Colony Branch, Karachi Tel. No: (021) 34602446-7 183 Shadman Town Branch, Karachi Tel. No: (021) 36903038-9 165 Zaibunissa Street Saddar Branch, Karachi Tel. No: (021) 35220026-7 184 New Town Branch, Karachi Tel. No: (021) 32220704 & 5 166 Liaquatabad Branch, Karachi Tel No: (021) 34860723-6 & 34860725 185 Enquiry Office Nazimabad No. 2 Branch, Karachi Tel. No: (021) 36601504-5 167 Lea Market Branch, Karachi Tel. No: (021) 32526193-4 168 Korangi Township No: 2 Branch, Karachi Tel. No: (021) 35071176, 80 & 81 169 North Karachi Ind. Area Branch, Karachi Tel. No: (021) 36962851-3 170 F. B. Industrial Area Branch, Karachi Tel. No: (021) 36829961-3 171 Napier Road Branch, Karachi Tel. No: (021) 32713538-9 172 Gulshan-e-Hadeed Branch, Karachi Tel. No: (021) 34710252 & 34710256 173 Metroville Branch, Karachi Tel. No: (021) 36752206-7 174 Defence Phase-II Extension Br., Karachi Tel. No: (021) 35386910 & 1 186 Blk 13-D Gulshan-e-Iqbal Br., Karachi Tel. No: (021) 34983883-4 187 Timber Market Branch, Karachi Tel. No: (021) 32742491-2 188 Khayaban-e-Ittehad Branch, Karachi Tel: (021) 35347414-5 195 Clifton Block-08 Branch, Karachi Tel. No: (021) 35867435 196 Block-02 Gulshan-e-Iqbal Br., Karachi Tel. No: (021) 34988781-2 197 Garden Market Branch, Karachi Tel. No: (021) 32244195 198 Block-N North Nazimabad Branch, Karachi Tel. No: (021) 36441622 199 Marriot Road Branch, Karachi Tel. No: (021) 32461840 200 Main Branch, Hyderabad Tel. No: (022) 2781528-9 & UAN: 111-567-890 201 F. J. Road Branch, Hyderabad Tel. No: (022) 2728131 & 2785997 202 Latifabad Branch, Hyderabad Tel. No: (022) 3816309 203 Qasimabad Branch, Hyderabad Tel. No: (022) 2651968 Islamic Banking 204 Isra University Br., Distt. Hyderabad Tel. No: (022) 2032322 & 2030161-4 205 Prince Ali Road Branch, Hyderabad Tel. No: (022) 2638515-6 206 S.I.T.E. Branch, Hyderabad Tel. No: (022) 3886861-2 189 Sindhi Muslim Co-operative Housing Society Branch, Karachi Tel. No: (021) 34527085-6 207 Faqir Jo Pir Branch, Hyderabad Tel. No: (022) 2612685-6 190 Bahria Complex-III Branch, Karachi Tel. No: (021) 35640731 & 2 & 35640490-4 208 Auto Bhan Road Branch, Hyderabad Tel. No: (022) 2100062-3 & 0316-8226313-4 191 New M. A. Jinnah Road Branch, Karachi Tel. No: (021) 34894941-2 209 Matyari Branch, Distt. Matyari Tel. No: (022) 2760125-6 192 DHA Phase-IV Branch, Karachi Tel. No: (021) 35311491 210 Tando Allah Yar Branch Tel. No: (022) 3890262-3
  160. 175 List of Branches As at 31 December 2016 211 Sultanabad Branch , Distt. Tando Allah Yar Tel. No: (022) 3404101-2 212 Tando Muhammad Khan Branch Tel. No: (022) 3340371 & 2 213 Sukkur Branch Tel. No: (071) 5622382 & 5622925 214 Sanghar Branch, Distt. Sanghar Tel. No: (0235) 543376-8 215 Tando Adam Branch, Distt. Sanghar Tel. No: (0235) 571640-44 216 Shahdadpur Br., Distt. Sanghar Tel. No: (0235) 841982 & 4 217 Golarchi Branch, Distt. Badin Tel. No: (0297) 853193-4 218 Talhar Branch, Distt. Badin Tel. No: (0297) 830389 219 Deh. Sonhar Branch, Distt. Badin Tel. No: (0297) 870729 & 870783 220 Matli Branch Tel. No: (0297) 840171-2 229 Panjhatti Branch Tel. No: (0243) 552183-4 230 Ghotki Branch Tel. No: (0723) 680305-6 231 Deharki Branch Tel. No: (0723) 644157-8 232 Thull Branch Tel. No: (0722) 610150, 1 & 3 233 Kandkhot Branch Tel. No: (0722) 572883, 4 & 5 234 Jacobabad Branch Tel. No: (0722) 654041 & 5 235 Shahdadkot Br., Distt. Qamber Shahdadkot Tel. No: (074) 4012402 & 3 236 Dadu Branch Tel. No: (025) 4711417 237 Shikarpur Branch Tel. No: (0726) 540381-3 & 0316-8226319-21 238 Main Branch, Quetta Tel. No: (081) 2821610 & 2821641 221 Tando Bago Branch, Distt. Badin Tel. No: (0297) 854554-5 Islamic Banking 239 Shahrah-e-Iqbal Branch, Quetta Tel. No: (081) 2820227-30 & 2820237 222 Buhara Branch, Distt. Thatta Tel. No: (0298) 613169 240 Chamman Branch Tel. No: 0826-613685 & 0316-8226342-3 223 Jati Branch, Distt. Thatta Tel. No: (0298) 777120 & 129 224 Hub Branch, Distt. Lasbela Tel. No: (0853) 310225-7 25 Umerkot Branch Tel. No: (0238) 571350 & 571356 NORTH REGION 241 Main Branch, Peshawar Tel. No: (091) 5277914-6 & 5277394 242 Chowk Yadgar Branch, Peshawar Tel. No: (091) 2573335-6 226 Nawabshah Branch Tel. No: (0244) 363919 Islamic Banking 243 Khyber Bazar Branch, Peshawar Tel. No: (091) 2566812-3 227 Mirpurkhas Branch Tel. No: (0233) 876418-9 244 Hayatabad Branch, Peshawar Tel. No: (091) 5893365-8 228 Larkana Branch Tel. No: (074) 4058601-4 245 Main Branch, Rawalpindi Tel. No: (051) 5123123, 5 & 8 & (051) 5123132, 4 & 6 246 Chandni Chowk Branch, Rawalpindi Tel. No: (051) 4571186-7 & & (051) 4571160, 3, 5, & 8 247 22 Number Chungi Branch, Rawalpindi Tel. No: (051) 5563576, 7 & 8 248 Muslim Town Branch, Rawalpindi Tel. No: (051) 5405514 & 4931112 249 Pindora Branch, Rawalpindi Tel. No: (051) 4419019-22 250 Gulraiz Branch, Rawalpindi Tel. No: (051) 5509690-2 Islamic Banking 251 Peshawar Road Br., Rawalpindi Tel. No: (051) 5460115-6 252 Bahria Town Branch, Rawalpindi Tel. No: (051) 5733772-3 253 Bewal Br., Distt. Rawalpindi Tel. No: (051) 3360274-5 254 Main Branch, Islamabad Tel. No: (051) 2348174 & 2348178 & UAN 111-567-890 255 G-9 Markaz Branch, Islamabad Tel. No: (051) 2850171-3 Islamic Banking 256 I-10 Markaz Branch, Islamabad Tel. No: (051) 4101733-5 257 I-9 Markaz Branch, Islamabad Tel. No: (051) 4858101-3 258 E-11 Branch, Islamabad Tel. No: (051) 2228756-9 259 DHA Phase-II Br., Islamabad Tel. No: (051) 5161969 & 5161970 Islamic Banking 260 F-8 Markaz Branch, Islamabad Tel. No: (051) 2818019-21 261 G-11 Markaz Branch, Islamabad Tel. No: (051) 2830152-4 262 F-11 Markaz Branch, Islamabad Tel No: (051) 2101076 & 7
  161. Soneri Bank Limited | Annual Report 2016 List of Branches As at 31 December 2016 263 F-6 Branch, Islamabad Tel. No: 051-2826573-4 & 0316-8226303 279 Abbottabad Branch Tel. No: (0992) 385231-3 264 Lathrar Road Branch, Tarlai, Distt. Islamabad Tel. No: (051) 2241664-6 280 Jhelum Branch Tel. No: (0544) 625794-5 265 Soan Garden Br., Distt. Islamabad Tel. No: (051) 5738942-4 266 Gujar Khan Branch Tel. No: (051) 3516327, 29 & 30 267 Waisa Branch, Distt. Attock Tel. No: (057) 2651066-8 268 Swabi Branch, Distt. Swabi Tel. No: (0938) 221741, 3 & 4 281 Chitral Branch, Distt. Chitral Tel. No: (0943) 412078-9 282 Chakwal Branch Tel. No: (0543) 543128-30 283 Mardan Branch Tel. No: (0937) 864755-7 284 Muzaffarabad Branch Tel. No: (0582) 2920025-6 269 Topi Branch, Distt. Swabi Tel. No: (0938) 271612, 5 & 6 Islamic Banking 285 Chillas Branch, Distt. Diamer Tel. No: (05812) 450631-2 270 Mirpur Branch, (AJK) Tel. No: (05827) 444488 & 448044 286 Islamic Banking Mingora Branch Tel. No: (0946) 714355 271 Islamgarh Branch, (AJK) Tel. No: (05827) 423981-2 287 Battagram Branch Tel. No: (0997) 311045-7 272 Jattlan Branch, Distt. Mirpur (AJK) Tel. No: (05827) 403591-4 288 Mansehra Branch Tel. No: (0997) 301931, 2, 5 & 6 273 Gilgit Branch Tel. No: (05811) 453749 274 Denyore Branch, Distt. Gilgit Tel. No: (05811) 459986-7 275 Jutial Branch, Distt. Gilgit Tel. No: (05811) 457233-5 276 Aliabad Branch, Hunza Tel. No: (05813) 455000 & 455001 277 Gahkuch Branch Tel. No: (05814) 450408-10 278 Skardu Branch Tel. No: (05815) 450327 & 450189
  162. 177 Foreign Correspondents As at 31 December 2016 Country Name of Bank 01 Afghanistan - Bank Alfalah Limited Afghanistan Bank E Millie Afghanistan Habib Bank Limited Afghanistan National Bank Of Pakistan Ltd . Afghanistan 02 Algeria - Citibank NA Algeria 03 Argentina - Banco Credicoop Cooperativo Limitado Banco de Galicia Y Buenos Aires 04 Australia - Australia And Newzealand Banking Group Ltd. Australia BNP Paribas Australia CitiGroup PTY Limited Citibank NA Australia Commonwealth Bank of Australia HSBC Bank Australia Limited J. P. Morgan Chase Bank NV Mizuho Bank Limited Australia National Australia Bank Ltd. 05 Austria - Erste Group Bank AG Austria Erste Bank der oesterreichischen Sparkassen AG Austria Oberbank AG Raiffeisen Bank International AG Raiffeisenlandes Bank Vorarlberg Raiffeisenlandesbank Niederšsterreich-Wien AG Austria Raiffeisenlandesbank Oberšsterreich Aktiengesellschaft Austria UniCredit Bank Austria AG 06 Bahrain - Al-Baraka Islamic Bank Allied Bank Limited Bahrain Bank Alfalah Limited Bahrain Bank Al Habib Limited Citibank N.A. Habib Bank Limited JS bank Limited Bahrain Standard Chartered Bank The Arab Investment Co. United Bank Limited 07 Belarus - Joint Stock Co. Saving Bank Belarus Bank Joint Stock Co. Minsk Transit Bank Belarus 08 Bulgaria - UniCredit BulBank AD Citibank Europe Plc Bulgaria 09 Bangladesh - Bank Asia Limited Bangladesh Brac Bank Bangladesh Dhaka Bank Ltd. Bangladesh Eastern Bank Limited Bangladesh Habib Bank Limited Jamuna Bank Limited Bangladesh National Bank Limited Bangladesh Standard Chartered Bank Woori Bank Southeast Bank Ltd. Bangladesh The City Bank Ltd. Bangladesh United Commercial Bank Ltd. Bangladesh
  163. Soneri Bank Limited | Annual Report 2016 Foreign Correspondents As at 31 December 2016 Country Name of Bank 10 Belgium - Bank Of America NA Belgium Belfius Bank SA/NV BNP Paribas Fortis Citibank Europe Plc Belgium Commerzbank AG Credit Europe Bank NV Deutsche Bank AG Habib Bank Limited KBC Bank NV The Bank Of Newyork Mellon SA/NV Belgium 11 Brazil - Banco Do Brasil SA Brazil Banco \Fibra SA Brazil Banco Santander (Brasil) SA Brazil Banco Itaœ BBA SA Brazil Deutsche Bank SA 12 Cameron - Citi Bank N.A 13 Canada - Bank Of Montreal Canada Canadian Imperial Bank of Commerce Federation Des Caisses Desjardins Du Quebec Canada Habib Canadian Bank HSBC Bank Canada Royal Bank of Canada 14 Cayman Islands - Banco Santander Brasil SA Cayman Island 15 Chile - Banco de Credito E Inversiones 16 China - Agricultural Bank of China Agricultural Development Bank of China Bank of America N.A Bank of Beijing Bank of China Bank of Communications Bank of Guiyang Co Ltd Bank Of Hebei Co. Limited China Bank of Jiangsu Co Bank Of Ningbo co. Ltd. China Bank Of Ningxia China Bank Of Ruifeng China Bank of Shanghai China Citic Bank China Construction Bank Corporation China Everbright Bank China Guangfa Bank co. Ltd. China China Merchants Bank China Minsheng Banking Corporation Ltd. China Citibank (China) Co. Ltd. Commerzbank AG Export Import Bank of China Guangdong Huaxing Bank Co Ltd Guangdong Nanhai Rural Commercial Bank Co. Ltd. China HSBC Bank (China) Company Ltd. Hua Xia Bank Industrial Bank Co. Ltd. China Industrial and Commercial Bank of China
  164. 179 Foreign Correspondents As at 31 December 2016 Country Name of Bank - Industrial Bank Of Korea (China) Limited Jinan Rural Commercial Bank Co. Ltd. China J. P. Morgan Chase Bank (China) Company Ltd. Jiangsu Jiangyin Rural Commercial Bank Co Ltd KBC Bank NV Mizuho Bank (China) Co. Ltd. Ping An Bank Co Qilu Bank Co., Ltd. Shandong Zhangdian Rural Commercial Bank Co Ltd Shanghai Pudong Development Bank Shengjing Bank China Skandinaviska Enskilda Banken AB Standard Chartered Bank (China) Limited Sumitomo Mitsui Banking Corporation (China) Limited Unicredit Spa China Weifang Rural Commercial Bank Co Ltd Woori Bank China Zhejiang Mintai Commercial Bank Zhejiang Tailong Commercial Bank 17 Colombia - BanColombia S.A Bank Of Ceylon Srilanka Commercial Bank Of Ceylon Plc Srilanka Habib Bank Limited Colombo Srilanka Hatton National Bank Plc Srilanka Hongkong & Shanghai Banking Corp. Srilanka National Development Bank Plc Srilanka Peoples Bank Srilanka Standard Chartered Bank Colombo Srilanka 18 Cyprus - Bank of Cyprus Public Company Ltd. Hellenic Bank Public Company Ltd. 19 Czech Republic - Ceska Sporitelna AS Ceskoslovenska Obchodni Banka Citi Bank Europe PLC Commerz Bank AG Komercni Banka AS Unicredit Bank Czech Republic 20 Denmark - Danske Bank 21 Egypt - Banque Misr SAE Citibank Cairo HSBC Bank Egypt SAE Egypt Mashreq Bank psc Societe Arabe Internationale De Banque Egypt Suez Canal Bank Sae Egypt 22 Ethiopia - Bank Of Abyssinia SC Ethiopia Dashen Bank SC Cooperative Bank of Oromia SC Ethiopia 23 Finland - Danske Bank OP Corporate Bank Plc Finland 24 France - Banque Federative Du Credit Mutuel France Banque Palatine France
  165. Soneri Bank Limited | Annual Report 2016 Foreign Correspondents As at 31 December 2016 Country Name of Bank - BNP-Paribas S.A. Citibank Europe Plc France CrŽdit Industriel et Commercial France Habib Bank Limited HSBC France (Formerly HSBC CCF) KEB Hana Bank France National Bank of Pakistan Credit Du Nord Societe Generale 25 Germany - Bank Of America NA Germany Commerzbank AG Danske Bank Deutsche Bank AG DZ Bank AG Deutsche Zentral Genossenschaftsbank Germany Hamburger Sparkasse HSH Nordbank AG JP Morgan Chase Bank Kreissparkasse Steinfurt Landesbank Baden-Wurttemerg M. M. Warburg U. Co National Bank of Pakistan SEB AG Sparkasse Dortmund Sparkasse Krefeld Sparkasse Westmuensterland Standard Chartered Bank UniCredit Bank AG (Hypovereinsbank) 26 Greece - Alpha Bank AE Bank Of Cyprus Public Co. Ltd. Greece Citibank Europe PLC Piraeus Bank S.A. 27 Hong Kong - ABN Amro Bank NV Hongkong Bank of America NA BNP Paribas Citibank N.A. Commerzbank AG Deutsche Bank AG Hongkong Habib Bank Zurich Hongkong Limited Hongkong HSBC HBZ Finance Hongkong Limited Hongkong J. P. Morgan Chase Bank N.A. KBC Bank NV,Hongkong Branch Mashreqbank psc National Bank of Pakistan Punjab National Bank Hongkong Shinhan Bank, Hong Kong Standard Chartered Bank (Hong Kong) Limited Sumitomo Mitsui Banking Corporation The Bank of New York Mellon Hongkong UniCredit Bank AG Hongkong Wells Fargo Bank NA
  166. 181 Foreign Correspondents As at 31 December 2016 Country Name of Bank 28 Hungary - CIB Bank Ltd . Citibank Europe PLC Raiffeisen Bank ZRT UniCredit Bank Hungary ZRT 29 India - Citibank N.A. Bank of America Bank of Ceylon DCB Bank Limited Deutsche Bank AG HongKong and Shanghai Banking Corporation Limited ICICI Bank Limited Indusind Bank Ltd.India J. P. Morgan Chase Bank NA Kalupur Commercial Co-op Mashreqbank psc Punjab and Sind Bank Punjab National Bank Standard Chartered Bank 30 Indonesia - Bank Indonesia Bank Mandiri Jakarta The Bank of Tokyo-Mitsubishi UFJ Ltd. Citibank N.A. HongKong and Shanghai Banking Corporation Limited J. P. Morgan Chase Bank NA PT BPD Jawa Barat Dan Banten Indonesia Standard Chartered Bank 31 Ireland - Citibank Europe plc Danske Bank A/S 32 Italy - Banca Carige SPA Banca Delle Marche SPA Banca di Credito Popolare Banca di Napoli SpA Banca Monte Dei Paschi Di Siena Banca Nuova SPA Banca Popolare Di Bari Scpa Italy Banca Popolare Di Mantova Spa Italy Banca Popolare di Vicenza Banca UBAE Spa Banco Popolare di Sondrio Banco Popolare Soc. Coop. Bper Banca Spa Italy Cassa di Risparmio Di Fermo SPA Cassa di Risparmio del Friuli Venezia Giulia SpA Italy Cassa Di Risparmio in Bologna Spa Italy Commerzbank AG Citibank NA Italy Credito Valtellinese Deutsche Bank SPA Intesa Sanpaolo S.P.A. Mediocredito Italiano SpA Italy Mizuho Bank Limited Italy Unicredit S.P.A Union Di Banche Italiane SPA Italy
  167. Soneri Bank Limited | Annual Report 2016 Foreign Correspondents As at 31 December 2016 Country Name of Bank 33 Japan - The Bank of Tokyo-Mitsubishi UFJ Ltd. Citibank Japan Limited Deutsche Bank AG Hong Kong & Shanghai Banking Corporation., (The) JP Morgan Chase Bank Mizuho Corporate Bank National Bank of Pakistan Resona Bank Ltd. Saitama Resona Bank Ltd. Standard Chartered Bank Sumitomo Mitsui Banking Corporation The Tokushima Bank Limited 34 Jordan - Citibank N.A. 35 Kenya - Citibank N.A. Habib Bank Limited Kenya Commercial Bank Limited Standard Chartered Bank Kenya Limited 36 Korea (South) - The Bank of Tokyo-Mitsubishi UFJ Ltd. Busan Bank Citibank Korea Inc. Daegu Bank Korea KEB Hana Bank HongKong & Shanghai Banking Corporation Limited Industrial Bank of Korea JPMorgan Chase Bank Kookmin Bank Korea Development Bank Korea National Bank of Pakistan National Federation of Fisheries Corp. Korea NongHyup Shinhan Bank Standard Chartered Bank Korea Ltd The Export Import Bank Of Korea The Bank Of Newyork Mellon Korea Woori Bank Wells Fargo Bank N.A Korea 37 Kuwait - Citibank NA Commercial Bank of Kuwait SAK National Bank of Kuwait 38 Kyrgyzstan - National Bank of Pakistan 39 Latvia - AS Citadele Banka Latvia 40 Lebanon - Banque Libano-Francaise SAL CitiBank Beirut First National Bank SAL 41 Macau - Standard Chartered Bank Macau 42 Malaysia - Ambank (M) Berhad Malaysia Bank of Tokyo-Mitsubishi UFJ Ltd.
  168. 183 Foreign Correspondents As at 31 December 2016 Country Name of Bank - Bank Pertanian Malaysia Citibank Berhad Hong Leong Bank Bhd HSBC Bank Malaysia Berhad J . P. Morgan Chase Bank Berhad Standard Chartered Bank Malaysia Berhad 43 Malta - AK Bank TAS Credit Europe Bank NV Fimbank Plc Malta 44 Mauritius - Habib Bank Limited The Mauritius Commercial Bank Limited 45 Macedonia - Silk Road Bank AD Skopje Mecedonia 46 Mexico - Banco Nacional de Mexico SA 47 Morocco - Citibank Maghreb Morocco Attijariwafa Bank Morocco 48 Nepal - Himalayan Bank 49 Netherlands - ABN-AMRO Bank N.V. Citibank Europe PLC CommerzBank AG Kantoor Credit Europe Bank N.V. Deutsche Bank AG GE Artesia Bank Netherlands HSBC Netherlands Habib Bank Limited 50 New Zealand - Bank of New Zealand 51 Norway - DNB Bank ASA Danske Bank AS Skandinaviska Enskilda Banken 52 Oman - Bank Sohar SAOG Bank of Dhofar Piraeus Bank Oman International SAOG Oman Standard Chartered Bank 53 Panama - Banesco SA Panama 54 Philippines - Asian Development Bank Standard Chartered Bank Phillipines Limited The Bank of Tokyo-Mitsubishi UFJ Ltd. 55 Poland - Bank Handlowy W Wearszawie SA Mbank S.A Danske Bank A/S Poland Bank Zachodni WBK SA Poland
  169. Soneri Bank Limited | Annual Report 2016 Foreign Correspondents As at 31 December 2016 Country Name of Bank 56 Portugal - Banco BPI SA Novo Banco SA Caixa Central De Credito Agricola Mutuo Crl Portugal Banco Popular Portugal SA Portugal BNP Paribas Fortis SA/NV Portugal Banco Santander Totta SA Portugal 57 Qatar - HSBC Bank Middle East Limited Mashreq Bank Standard Chartered Bank United Bank Limited 58 Romania - Banca Commerciala Romana SA Citibank Europe PLC, Dublin-Sucursala Romania Marfin Bank Romania SA Romania Unicredit Bank SA Romania 59 Russia - Credit Bank Of Moscow Intercommerz Commercial Bank Russia Joint Stock Company Commercial Bank Citibank Russia 60 Saudi Arabia - Alawwal Bank Al Inma Bank Bank Al Jazira Saudi Arabia J. P. Morgan Chase Bank National Bank of Pakistan National Commercial Bank (The) Samba Bank Limited 61 Serbia - Unicredit Bank Srbija AD Halkbank A.D Belgrade Serbia 62 Singapore - ABN Amro Bank NV Bank Mandiri (Persero) PT Bank of America NA Bank of Tokyo Mitsubishi UFJ Ltd. Citibank N.A. Commerzbank AG Cooperatieve Rabobank UA Singapore Deutsche Bank AG Habib Bank Limited HongKong & Shanghai Banking Corporation Limited HSH Nordbank AG Intesa Sanpaolo SPA JPMorgan Chase Bank National Association Singapore KBC Bank Singapore Branch Mizuho Corporate Bank Ltd National Bank of Kuwait SAK Portigon AG Singapore RaboBank Shinhan Bank Standard Chartered Bank Sumitomo Mitsui Banking Corporation Woori Bank Singapore Wells Fargo Bank N.A Singapore
  170. 185 Foreign Correspondents As at 31 December 2016 Country Name of Bank 63 Slovakia - Ceskoslovenska Obchodna Banka AS Ceska Sporitelna as Slovakia Tatra Bank AS 64 Slovenia - Abanka DD Slovenia UniCredit Banka Slovenija DD Nova Kreditna Banka Maribor DD Slovenia 65 South Africa - Citibank South Africa FirstRand Bank Ltd . HBZ Bank Limited Mercantile Bank Limited South Africa Standard Bank of South Africa Limited Standard Chartered Bank South Africa 66 Spain - Banco Papular Espanol SA Banco de Sabadell Banco Santander SA Spain Bankia SA Spain Banque Marocaine du Commerce Exterieur International SA Spain Bank of Tokyo Mitsubishi UFJ Ltd. Caixa Bank SA Spain Citibank Europe Plc Spain Commerzbank AG Deutsche Bank SAE Spain HSBC Bank plc Kutxabank SA 67 Sri-Lanka - Bank of Ceylon Commercial Bank of Ceylon Limited Habib Bank Limited Hatton National Bank Limited MCB Bank Limited People's Bank Standard Chartered Bank The HongKong & Shanghai Banking Corporation Limited 68 Sweden - Citibank Europe Plc Sweden Danske Bank Skandinaviska Enskilda Banken AB Svenska Handelsbanken AB 69 Switzerland - Arab Bank (Switzerland) Ltd. Banque Cantonale Vaudoise Banque de Commerce et de Placements S.A. Barclays Bank (Suisse) S.A CA Indosuez Switzerland SA Switzerland Citibank NA Switzerland Credit Agricole (Suisse) S.A. Deutsche Bank AG Habib Bank AG Zurich Hinduja Bank (Switzerland) Ltd. HSBC Bank Plc Switzerland Royal bank of Scotland UBS AG United Bank Switzerland AG Zurcher Kantonalbank 70 Taiwan - Citibank Taiwan Limited
  171. Soneri Bank Limited | Annual Report 2016 Foreign Correspondents As at 31 December 2016 Country Name of Bank - Deutsche Bank AG J. P. Morgan Chase Bank NA Mega International Commercial Bank Mizuho Corporate Bank Ltd. Standard Chartered Bank (Taiwan) Limited Sunny Bank Limited Wells Fargo Bank N.A Taiwan 71 Tanzania - UBL Bank Tanzania Ltd. 72 Thailand - Citibank N.A. J. P. Morgan Chase Bank NA Kasikornbank Public Company Ltd Krung Thai Bank Public Co Ltd Thailand Mizuho Corporate Bank Ltd. Standard Chartered Bank (Thai) PLC Sumitomo Mitsui Banking Cororation Thanachart Bank Public Company Limited The Siam Commercial Bank Public Company Limited 73 Tunis - Citi Bank NA Tunis International Bank 74 Turkey - Akbank T.A.S. Albaraka Turk Participation Bank Alternatifbank A.S. Citibank A.S. Denizbank AS QNB Finansbank Habib Bank Limited Kuveyt Turk Katilim Bankasi AS QNB Finansbank Turkey Turkiye Cumhuriyeti Ziraat Bankasi AS Turkey Turkey Garanti Bankasi AS Turkiye Finans Katilim Bankasi AS Turkiye Vakiflar Bankasi TAO Vakif Katilim Bankasi AS Turkey Yapi Ve Kredi Bankasi AS 75 Turkeminstan - National Bank of Pakistan 76 U.A.E. - Abu Dhabi Commercial Bank Citibank N.A. Credit Europe Bank (Dubai) Ltd. Deutsche Bank AG Dubai Islamic Bank Emirates Islamic Bank Emirates NBD Bank PJSC First Gulf Bank Habib Bank AG Zurich Habib Bank Limited HSBC Bank Middle East Limited KEB Hana Bank UAE MCB Bank Limited Dubai UAE Mashreq Bank psc
  172. 187 Foreign Correspondents As at 31 December 2016 Country Name of Bank - National Bank of Fujairah Standard Chartered Bank United Bank Limited 77 U .K. - Bank Of America NA UK Bank Mandiri (Europe) Limited Bank of Cyprus UK Bank of Ireland (UK) PLC Citibank N.A. Clydesdale Bank plc Commerzbank AG Deutshce Bank AG Habib - UK PLC Habib Bank AG Zurich Hongkong & Shanghai Banking Corp. LTD. UK HSBC Bank plc Intesa Sanpaolo SPA UK J. P. Morgan Chase Bank NA MashreqBank Psc Mizuho Bank China Limited UK Northern Bank Ltd.UK Santander UK Plc UK Sonali Bank (UK) Ltd. Standard Chartered Bank Sumitomo Mitsui Banking Corporation Europe Ltd. United National Bank Limited UK Zenith Bank UK Limited UK 78 U.S.A. - ABN-AMRO Capital USA LLC Bank of America NA Bank of New York Mellon Bank Of Tokyo Mitsubishi UFJ Limited BOKF,NA Branch Banking & Trust Co. Citibank N.A. Citizen Bank N.A USA Comerica Bank Commerzbank AG USA Deutsche Bank Trust Company Americas East-West Bank First Tennessee Bank National Association USA Global Commerce Bank USA Habib American Bank Habib Bank Limited International Finance Corporation Intesa Sanpaolo SPA J. P. Morgan Chase Bank MashreqBank psc Metro City Bank USA MUFG Union Bank National Association USA National Bank of Pakistan New York Commercial Bank USA Nonghyup Bank USA PNC Bank National Association USA Peoples United Bank National Association USA Citizens Bank NA
  173. Soneri Bank Limited | Annual Report 2016 Foreign Correspondents As at 31 December 2016 Country Name of Bank - Regions Bank Shinhan Bank America Standard Chartered Bank Sumitomo Mitsui Banking Corporation The Bank of Tokyo-Mitsubishi UFJ Ltd., UMB Bank NA United Bank Limited US Century Bank Wells Fargo Bank NA Woori Bank 79 Ukraine - PJSC 'CITIBANK' UKREXIMBANK Ukraine 80 Uzbekistan - National Bank for Foreign Economic 81 Vietnam - An Binh Commercial Joint Stock Citibank NA J. P. Morgan Chase Bank NA Kookmin Bank Military Commercial Joint Stock Bank Vietnam Shinhan Bank Vietnam Standard Chartered Bank Vietnam Export Import Commercial Joint Stock Bank Vietnam 82 Yemen (Republic of) - National Bank of Yemen Yemen Commercial Bank
  174. PROXY FORM 25th Annual General Meeting I / We of being member(s) of SONERI BANK LIMITED and holder of ordinary shares. Register Folio No. CDC participant I.D. No.: Sub-Account No.: CNIC No.: or Passport No.: hereby appoint of of or failing him / her who is / are also member(s) of SONERI BANK LIMITED as my / our proxy to attend and vote for me / our behalf at the 25th Annual General Meeting of the Bank to be held on 28 March 2017 or at any adjournment thereof. (Signatures should agree with the specimen signature registered with the Bank) Affix Rs. 5 Revenue Stamp Dated this day of 2017 Signature of Shareholder Signature of Proxy 1. WITNESS 2. WITNESS Signature : Signature : Name: Name: Address: Address: CNIC No.: CNIC No.: or Passport No: or Passport No: IMPORTANT: 1. This Proxy Form, duly completed and signed, must be received at the Registered Office of the Bank at SONERI BANK LIMITED, Rupali House, 241-242 Upper Mall Scheme, Anand Road, Lahore54000, not less than 48 hours before the time of holding the meeting. 2. No person shall act as Proxy unless he / she himself / herself is a member of the Company, except that a corporation may appoint a person who is not a member. 3. If a member appoints more than one proxy and more than one instruments of proxy are deposited by a member with the Company, all such instruments of proxy shall be rendered invalid. 4. CDC Shareholders and their Proxies should attach an attested photocopy of their Computerized National Identity Card (CNIC) or Passport with the proxy form before submission to the Company. (Original CNIC / Passport is required to be produced at the time of the meeting). 5. In case of corporate entity, the Board of Directors' resolution / power of attorney with specimen signature of the nominee shall be submitted along with proxy form to the Company.
  175. Soneri Bank Limited AFFIX CORRECT POSTAGE The Company Secretary Soneri Bank Limited Rupali House 241-242 Upper Mall Scheme Anand Road Lahore-54000
  176. 54000 241 , 242
  178. Journey of excellence Annual Report 2016