Soneri Bank: Quarterly Financial Report - 31 March 2017

Transcription

1. Journey of Excellence Quarterly Report March 2017 Soneri Bank Limited Registered Office : Rupali House 241-242, Upper Mall Scheme, Anand Road, Lahore - 54000, Pakistan Tel: (042) 35713101-04 Central Office: 10th Floor, PNSC Building, M.T. Khan Road, Karachi - 74000, Pakistan Tel: (021) 32444401-5 24/7 Phone Banking: 021-111-SONERI (766374) Over 280 branches & 300+ ATMs | www.soneribank.com SoneriBankPK | @SoneriBank_Pk
2. Quarterly Report March 2017 (Un-audited)
3. Contents 04 05 09 10 Corporate Information Directors Õ Review Statement of Financial Position Profit and Loss Account 11 12 13 14 32 Statement of Comprehensive Income Cash Flow Statement Statement of Changes in Equity Notes to the Financial Information List of Branches
4. Soneri Bank Limited | Quarterly Report 2017 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. AMIN A. FEERASTA MR. MUHAMMAD RASHID ZAHIR SYED ALI ZAFAR MR. INAM ELAHI MR. MANZOOR AHMED (NIT NOMINEE) CHIEF FINANCIAL OFFICER MS. ANJUM HAI COMPANY SECRETARY MR. MUHAMMAD ALTAF BUTT AUDITORS A.F. FERGUSON & CO. CHARTERED ACCOUNTANTS SHARIÕAH BOARD MUFTI EHSAN WAQUAR AHMAD (CHAIRMAN) MUFTI MUHAMMAD ZAHID (RESIDENT MEMBER) MUFTI BILAL QAZI (MEMBER) * FPT clearance of the directors is currently in process by the State Bank of Pakistan. 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
5. 05 Directors Õ Review On behalf of the Board of Directors, I am pleased to present the Directors' Review of Soneri Bank Limited ('the Bank') along with the un-audited condensed interim financial statements for the quarter ended 31 March 2017. Economy Pakistan's economy is well poised to grow in 2017 with Government estimating Gross Domestic Product (GDP) growth to exceed 5 percent for the fiscal year 2016-17, which will be a multi-year high. State Bank of Pakistan (SBP) in its March 2017 monetary policy review has stated that the country's real economic activity is gathering pace with revival in agriculture sector growth and improvement in selected sectors in Large Scale Manufacturing (LSM). The overall estimate for inflation for the current fiscal year remains low with SBP estimated inflation range of 4 -5 percent for 2016-17. Hence SBP has kept the policy rate unchanged at 5.75 percent since May 2016. Pakistan's exports have remained flat at around US$ 14 billion during the eight months July-February 2017 while imports have increased 11% to US$ 29.4 billion. This has led to significant rise in the country's current account deficit (CAD) to US$ 5.5 billion during the eight months July-February, 2017 compared to US$ 2.5 billion during the same period last year. However, the country has received Coalition Support Fund flows of US$ 550 million in March 2017 which will provide required support to the reserves. Further, exports are expected to pick up somewhat in the remaining four months on the back of Government's announcement of export package in January 2017. Lastly, SBP's imposition of 100% cash margin on import of certain items in March 2017 is expected to curtail import growth. Resultantly, the current account deficit is expected to remain manageable with SBP expecting it to be in the range of 1-2 percentage of GDP. During the nine months July-March 2017, the Federal Board of Revenue (FBR) has reportedly collected Rs.2,265 billion as compared to target of Rs.3,621 billion for the fiscal year 2016-17. Considering that 37% of the target remains, achieving tax target of Rs.3,621 billion appears highly unlikely. As per SBP estimates fiscal deficit will most likely fall in the range of 4-5 percent of GDP. Progress of China Pakistan Economic Corridor (CPEC) remains broadly on track with two major power projects, Sahiwal Coal Power Plant and Port Qasim Coal Power Plant of around US$ 2 billion each, expected to come online in May 2017 and 1Q-2018 respectively. Operating Results and Business Overview The summarized operating results of the Bank for the quarter ended 31 March 2017 along with key financial indicators are as follows Profit & Loss Account 31 March 2017 31 March 2016 Variance % --------------------- (Rs. in million) -------------------Net Interest Margin & Non Markup Income Non Mark-up Expenses Profit before Tax & Provisions Profit before Tax Profit after Tax Earnings Per Share (Rupees) Statement of Financial Position Shareholders Equity (excluding Surplus) 2,793.55 1,701.07 1,092.48 916.33 595.62 0.5403 31 March 2017 2,459.29 1,580.91 878.39 822.31 539.21 0.4891 31 December 2016 --------------------- (Rs. in million) -------------------15,188.97 15,944.77 13.59 7.60 24.37 11.43 10.46 10.46 Variance % (4.74) Deposits 216,284.74 209,925.45 3.03 Advances - net 132,596.02 125,305.77 5.82 Investments - net 121,070.76 117,883.96 2.70
6. Soneri Bank Limited | Quarterly Report 2017 DirectorsÕ Review The Bank posted profit before tax of Rs.916.33 million and profit after tax of Rs.595.62 million for the quarter ended 31 March 2017. These amounts are higher than the corresponding period last year by 11.43 percent and 10.46 percent respectively. Earnings per share of the bank thus stand at Rs.0.5403 which is 10.46 percent higher than corresponding period of 2016. Revenue, comprising net mark-up income and non-mark-up income, has increased by 13.59 percent versus first quarter of 2016. While the key reason for this is higher capital gains Bank has worked to sustain pressures on net markup and fee commission income as well. The compression in spreads due to maturity of high yielding Government bonds has been countered by substantial growth in earning assets and reduction in funding cost. Non mark-up expenses have increased by 7.60 percent as compared to corresponding period last year. One factor is larger Branch network which presently stands at 282 fully-operational branches as against 266 branches at March 2016. The Bank has also closed 6 branches in first quarter 2017 as they were lacking potential. Following the practice of prudently providing for non-performing loans and in line with the regulatory requirements your Bank has provided an amount of Rs.176.14 million during the first quarter ended 31 March 2017 (March 2016: Rs.58.80 million). Your Bank's net assets (including surplus) amounted to Rs.17.21 billion as at 31 March 2017, being 5.88 percent lower than 2016 base of Rs.18.29 billion. This is due to appropriation of 2016 final cash dividend during the quarter. Deposits grew by 3.03 percent during the period closing at Rs.216.28 billion (December 2016: Rs.209.92 billion). Net advances grew by 5.82 percent standing at Rs.132.59 billion (December 2016: Rs.125.30 billion). It is with great satisfaction that I inform you that your Bank continues to operate with adequate liquidity and capital adequacy levels and enjoys respectable standing with the international financial institutions. I am confident that with an effective risk management, strong internal controls and compliance systems the Bank will remain satisfactorily compliant with all the regulatory requirements and will continue to maintain the present trend of growth in business and profitability. 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 December 2016. Acknowledgment I would like to take this opportunity to thank the State Bank of Pakistan, the Securities and Exchange Commission of Pakistan and the Ministry of Finance for their continued support and guidance. I am also thankful to our valued customers for their patronage and confidence and want to extend my appreciation to the Bank employees as the driving force in the growth of the Bank over the years. ALAUDDIN FEERASTA Chairman Lahore: 17 April 2017
7. 07 2016 31 2017 31 13 .59 2,459.29 2,793.55 7.60 1,580.91 1,701.07 24.37 878.39 1,092.48 11.43 822.31 916.33 10.46 539.21 595.62 10.46 0.4891 0.5403 2016 31 2017 31 (4.74) 15,944.77 15,188.97 3.03 209,925.45 216,284.74 5.82 125,305.77 132,596.02 2.70 117,883.96 121,070.76
8. Soneri Bank Limited | Quarterly Report 2017
9. 09 Condensed Interim Statement of Financial Position As at 31 March 2017 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 (Un-audited) (Audited) 31 March 31 December 2017 2016 (Rupees in '000) 7 8 9 10 11 12 13 14 15 NET ASSETS REPRESENTED BY Share capital Reserves Unappropriated profit Surplus on revaluation of assets - net of tax CONTINGENCIES AND COMMITMENTS 15,453,429 1,001,781 12,821,204 121,070,755 132,596,020 5,158,545 4,605,390 292,707,124 18,278,840 822,689 5,536,577 117,883,960 125,305,765 5,138,424 5,554,451 278,520,706 3,858,548 47,702,846 216,284,740 2,998,200 940,266 3,708,743 275,493,343 4,168,436 38,905,078 209,925,453 2,998,800 1,137,530 3,096,182 260,231,479 17,213,781 18,289,227 11,024,636 1,542,954 2,621,382 15,188,972 11,024,636 1,423,829 3,496,305 15,944,770 2,024,809 17,213,781 2,344,457 18,289,227 16 The annexed notes 1 to 24 form an integral part of this condensed interim financial information. CHAIRMAN PRESIDENT AND CHIEF EXECUTIVE OFFICER DIRECTOR DIRECTOR
10. Soneri Bank Limited | Quarterly Report 2017 Condensed Interim Statement of Profit And Loss Account (Un-audited) For the Quarter ended 31 March 2017 Note 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 11.3 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 Unrealised loss on revaluation of investments classified as held-for-trading Gain on sale of securities - net Other income Total non mark-up / interest income 17 Non mark-up / interest expenses Administrative expenses Provision against other assets - net Other charges Total non mark-up / interest expenses Extraordinary / unusual items Profit before taxation Taxation - Current - Prior - Deferred Profit after taxation 2017 2016 (Rupees in '000) 4,256,620 2,647,095 1,609,525 4,532,903 2,642,231 1,890,672 176,142 12 176,154 1,433,371 58,808 (3,083) 355 56,080 1,834,592 343,722 39,434 66,150 317,558 40,272 91,716 (5,052) 731,963 7,810 1,184,027 2,617,398 (2,286) 112,966 8,392 568,618 2,403,210 1,678,013 23,055 1,701,068 916,330 916,330 1,554,855 26,050 1,580,905 822,305 822,305 360,206 (39,499) 320,707 595,623 295,585 (12,489) 283,096 539,209 ------------- (Rupee) ------------Earnings per share - basic and diluted 18 0.5403 0.4891 The annexed notes 1 to 24 form an integral part of this condensed interim financial information. CHAIRMAN PRESIDENT AND CHIEF EXECUTIVE OFFICER DIRECTOR DIRECTOR
11. 11 Condensed Interim Statement of Comprehensive Income (Un-audited) For the Quarter ended 31 March 2017 Note Profit after taxation for the period 2017 2016 (Rupees in '000) 595,623 539,209 Other comprehensive income Items that will not be reclassified to profit and loss account Components of comprehensive income reflected in equity - Remeasurement of defined benefit plan - Tax on remeasurements of defined benefit plan - Comprehensive income transferred to equity - 595,623 539,209 (450,753) 403,836 (i) 157,763 (292,990) (141,343) 262,493 (ii) - 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 Surplus on revaluation of operating fixed assets Total comprehensive income 302,633 801,702 (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 24 form an integral part of this condensed interim financial information. CHAIRMAN PRESIDENT AND CHIEF EXECUTIVE OFFICER DIRECTOR DIRECTOR
12. Soneri Bank Limited | Quarterly Report 2017 Condensed Interim Cash Flow Statement (Un-audited) For the Quarter ended 31 March 2017 Note CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Less: Dividend income Adjustments for non-cash and other items: Depreciation on operating fixed assets Depreciation on ijarah assets Amortisation of intangible assets Provision against loans and advances - net Reversal of provision against diminution in the value of investments Reversal of provision against diminution in the value of investments recognised in capital gains Unrealised loss on revaluation of investments classified as held-for-trading-net (Gain) / loss on sale of fixed assets Bad debts written off directly-net 2017 2016 (Rupees in '000) 916,330 (39,434) 876,896 822,305 (40,272) 782,033 143,691 22,639 30,037 176,142 - 146,494 31,489 13,629 58,808 (3,083) 5,052 (834) 12 376,739 1,253,635 (4,352) 2,286 5,085 355 250,711 1,032,744 (7,284,627) (7,489,048) 868,666 (13,905,009) (3,541,078) (854,250) 1,570,489 (2,824,839) (309,888) 8,632,482 6,359,287 612,559 15,294,440 2,643,066 (261,505) 2,381,561 (20,163) 12,731,260 10,382,075 326,336 23,419,508 21,627,413 (84,714) 21,542,699 (3,642,600) 21,128 (196,047) 3,032 (3,814,487) (24,079,004) 17,365 (239,973) 5,322 (24,296,290) Sub-ordinated loans Dividend paid Net cash used in financing activities (600) (1,378,079) (1,378,679) (600) (1,378,079) (1,378,679) Decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period (2,811,605) 18,963,729 16,152,124 (4,132,270) 18,346,786 14,214,516 15,453,429 1,001,781 (303,086) 16,152,124 13,340,793 1,090,481 (216,758) 14,214,516 (Increase) / decrease in operating assets Lendings to financial and other institutions Advances Others assets (excluding advance taxation) Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities Income tax paid Net cash flows generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Net investments in securities Dividends received Purchase of operating fixed assets (including intangible assets) Sales proceeds on disposal of operating fixed assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD Cash and balances with treasury banks Balances with other banks Overdrawn nostro accounts 7 8 14 The annexed notes 1 to 24 form an integral part of this condensed interim financial information. CHAIRMAN PRESIDENT AND CHIEF EXECUTIVE OFFICER DIRECTOR DIRECTOR
13. 13 Condensed Interim Statement of Changes in Equity (Un-audited) For the Quarter ended 31 March 2017 Share capital Capital reserves Discount Share Statutory on issue of premium reserve (a) shares General reserve Unappropriated profit (b) Total --------------------------------------------- (Rupees in '000) -------------------------------------------- Balance as at 1 January 2016 11,024,636 (1,001,361) 1,405 1,048,060 - 4,263,217 15,335,957 Changes in equity for quarter ended 31 March 2016 Discount on issue of shares adjusted against share premium / unappropriated profit - 1,001,361 (1,405) - - (999,956) - Transactions with owners recognised directly in equity Final cash dividend for the year ended 31 December 2015 at Rs.1.25 per share - - - - - Profit after tax for quarter ended 31 March 2016 - - - - - Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax - - - - Transfer from unappropriated profit to statutory reserve - - - 107,842 - - 1,155,902 - 2,338,361 14,518,899 - - - - - 1,339,635 1,339,635 - - - - - (18,537) 6,488 (12,049) (18,537) 6,488 (12,049) - - - - - 98,285 98,285 Balance as at 31 March 2016 11,024,636 (1,378,079) (1,378,079) 539,209 539,209 - 21,812 21,812 - (107,842) - Changes in equity for the nine months ended 31 December 2016 Profit after tax for nine months ended 31 December 2016 Other comprehensive income for the period Remeasurement of defined benefit plan Tax on remeasurement of defined benefit plan Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax Transfer from unappropriated profit to statutory reserve Balance as at 31 December 2016 (Audited) - - - 267,927 - - - 1,423,829 - 3,496,305 15,944,770 - - - - - (1,378,079) (1,378,079) 11,024,636 (267,927) - Changes in equity for quarter ended 31 March 2017 Transactions with owners recognised directly in equity Final cash dividend for the year ended 31 December 2016 at Rs.1.25 per share Profit after tax for quarter ended 31 March 2017 - - - - - 595,623 595,623 Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax - - - - - 26,658 26,658 Transfer from unappropriated profit to statutory reserve - - - 119,125 - (119,125) - - 1,542,954 - Balance as at 31 March 2017 11,024,636 - 2,621,382 15,188,972 (a) This represents reserve created under section 21 (i) (a) of the Banking Companies Ordinance, 1962. (b) As more fully explained in note 11.4 of this condensed interim financial information, unappropriated profit includes an amount of Rs 616.084 million net of tax as at 31 March 2017 (31 December 2016: Rs 716.711 million) representing additional profit arising from availing forced sale value benefit for determining provisioning requirement which is not available for the purpose of distribution of dividend to shareholders. The annexed notes 1 to 24 form an integral part of this condensed interim financial information. CHAIRMAN PRESIDENT AND CHIEF EXECUTIVE OFFICER DIRECTOR DIRECTOR
14. Soneri Bank Limited | Quarterly Report 2017 Notes To And Forming Part Of The Condensed Interim Financial Information (Un-audited) For the Quarter ended 31 March 2017 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 282 branches including 16 Islamic banking branches (31 December 2016: 288 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- and short term rating as A1+. 2. BASIS OF PRESENTATION 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 the Bank from its customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchase and sales arising under these arrangements are reflected in this condensed interim financial information to the extent that these represent the amount of facility actually utilised and the appropriate portion of mark-up thereon. The results of the Islamic banking branches have been consolidated in this condensed interim financial information for reporting purposes after eliminating material inter branch transactions and balances. In accordance with the directives issued by the SBP, the un-audited condensed interim statement of financial position of Islamic banking branches is disclosed in note 21 of these condensed interim financial information. 3. STATEMENT OF COMPLIANCE 3.1 This condensed interim financial information has been prepared in accordance with the approved accounting standards as applicable in Pakistan. 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 Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP). Wherever the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962, IFASs notified under the Companies Ordinance, 1984, or the directives issued by the SECP and SBP differ with the requirements of IFRSs, the provisions of and the directives issued under the Companies Ordinance ,1984, the Banking Companies Ordinance, 1962, and 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 information. 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 information.
15. 15 3 .4 The SBP vide its BPRD Circular No. 04 dated: February 25, 2015 has clarified that the reporting requirements of IFAS-3 for Islamic Banking Institutions (IBIs) relating to annual, half yearly and quarterly financial statements would be notified by SBP through issuance of specific instructions and uniform disclosure formats in consultation with IBIs. These reporting requirements have not been ratified to date. Accordingly, the disclosures requirements under IFAS 3 have not been considered in these financial statements. 3.5 The disclosures made in this condensed interim financial information have been limited based on the format prescribed by the State Bank of Pakistan through BSD Circular Letter No. 2 dated: 12 May 2004 and the requirements of the International Accounting Standard 34, "Interim Financial Reporting". This do not include all of the information required for the full set of annual financial statements and should be read in conjunction with the financial statements of the Bank for the year ended 31 December 2016. 4. BASIS OF MEASUREMENT 4.1 Accounting convention This condensed interim financial information has been prepared under the historical cost convention, except that certain fixed assets are carried at revalued amounts, certain investments and commitments in respect of certain forward exchange contracts been marked to market and are carried at fair value. In addition, obligation in respect of staff retirement benefits is carried at present value. 4.2 Functional and presentation currency Items included in this condensed interim financial information are measured using the currency of the primary economic environment in which the Bank operates. This condensed interim financial information is presented in Pakistani Rupees, which is the Bank's functional and presentation currency. 4.3 Critical accounting estimates and assumptions The basis and the methods used for critical accounting estimates and judgements adopted in this condensed interim financial information are the same as those applied in the preparation of the annual financial statements of the Bank for the year ended 31 December 2016. 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies and the methods of computation used in the preparation of this condensed interim financial information are the same as those applied in the preparation of the annual financial statements of the Bank for the year ended 31 December 2016. 6. FINANCIAL RISK MANAGEMENT The Bank's Financial Risk Management objectives and policies are consistent with those disclosed in the annual financial statements of the Bank for the year ended 31 December 2016. Un-audited Audited 31 March 31 December 2017 2016 (Rupees in '000) 7. CASH AND BALANCES WITH TREASURY BANKS In hand Local currency Foreign currencies In transit Local currency Foreign currency With State Bank of Pakistan in Local currency current account Foreign currency current account Foreign currency deposit account against foreign currency deposits mobilised With National Bank of Pakistan in Local currency current account 3,661,153 928,611 67,179 3,818,859 976,734 - 8,044,700 505,044 9,225,205 697,883 1,411,143 2,000,422 835,599 15,453,429 1,559,737 18,278,840
16. Soneri Bank Limited | Quarterly Report 2017 Un-audited Audited 31 March 31 December 2017 2016 (Rupees in '000) 8. BALANCES WITH OTHER BANKS In Pakistan In current accounts In deposit accounts Outside Pakistan In current accounts 9. 35,111 287,468 32,110 141,130 679,202 1,001,781 649,449 822,689 6,000,000 990,548 3,665,000 1,048,458 1,117,198 12,821,204 2,500,000 300,000 1,045,985 1,690,592 5,536,577 LENDINGS TO FINANCIAL AND OTHER INSTITUTIONS Call money lendings Repurchase agreement lendings Letters of placement Foreign currency placement Bai Muajjal 10. INVESTMENTS 10.1 Investments by types Un-audited Audited 31 March 2017 31 December 2016 Note Held by Given as Total Held by Given as Total Bank collateral Bank collateral -------------------------------------(Rupees in '000)-------------------------------------Held-for-trading securities Available-for-sale securities Held-to-maturity securities Investments at cost Provision for diminution in the value of investments Deficit on revaluation of held-for-trading securities Surplus on revaluation of available-for-sale securities Investments - net of provisions 10.2 10.2 10.3 10.4 2,089,197 85,647,252 3,203,628 90,940,077 10.8 (114,284) - (114,284) (5,052) - (5,052) 1,684,107 92,504,848 2,089,197 28,519,489 114,166,741 3,203,628 28,519,489 119,459,566 46,418 87,177,034 1,798,522 88,975,556 (114,284) - 26,841,410 26,841,410 - - 114,018,444 1,798,522 115,816,966 (114,284) - 1,730,525 2,109,200 72,078 2,181,278 28,565,907 121,070,755 90,970,472 26,913,488 117,883,960 Held-for-trading securities Fully paid-up ordinary shares Market Treasury Bills 146,775 1,942,422 2,089,197 - 146,775 1,942,422 2,089,197 - - -
17. 17 Un-audited Audited 31 March 2017 31 December 2016 Held by Given as Total Held by Given as Total Bank collateral Bank collateral ------------------------------------- (Rupees in '000)------------------------------------10.3 Available-for-sale securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan Ijarah Sukuks Sukkuk certificates Term Finance Certificates Fully paid-up ordinary shares Units of mutual funds 10.4 32,727,086 44,917,518 11,131,008 17,388,481 43,858,094 62,305,999 37,857,303 41,508,591 6,304,140 20,537,270 44,161,443 62,045,861 2,118,675 1,948,213 324,975 3,410,785 200,000 85,647,252 2,118,675 1,948,213 324,975 3,410,785 200,000 28,519,489 114,166,741 2,118,675 1,953,571 549,988 2,988,906 200,000 87,177,034 26,841,410 2,118,675 1,953,571 549,988 2,988,906 200,000 114,018,444 Held-to-maturity securities Pakistan Investment Bonds Term Finance and Sukuk Certificates 2,132,706 1,070,922 3,203,628 - 2,132,706 1,070,922 3,203,628 Note 10.5 259,643 1,538,879 1,798,522 - 259,643 1,538,879 1,798,522 Un-audited Audited 31 March 31 December 2017 2016 (Rupees in '000) Investments by segment Federal Government Securities - Market Treasury Bills - Pakistan Investment Bonds - Government of Pakistan Ijara Sukuks Fully paid-up ordinary shares - Listed companies - Unlisted companies 10.6 10.7 Units of mutual funds - Open ended - Closed-end Term Finance and Sukuk Certificates - Listed Term Finance Certificates - Unlisted Term Finance Certificates - Sukuk certificates Investments at cost Provision for diminution in the value of investments Deficit on revaluation of held-for-trading securities Surplus on revaluation of available-for-sale securities Investments (net of provisions) 10.8 45,800,516 64,438,705 2,118,675 112,357,896 44,161,443 62,305,504 2,118,675 108,585,622 3,540,760 16,800 3,557,560 2,972,106 16,800 2,988,906 200,000 200,000 200,000 200,000 16,269 613,837 2,714,004 3,344,110 119,459,566 (114,284) (5,052) 1,730,525 121,070,755 16,269 838,850 3,187,319 4,042,438 115,816,966 (114,284) 2,181,278 117,883,960 10.6 This includes securities having book value of Rs 30.700 million (31 December 2016: 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. 10.7 This includes 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.
18. Soneri Bank Limited | Quarterly Report 2017 Note 10.8 Un-audited Audited 31 March 31 December 2017 2016 (Rupees in '000) Particulars of provision for diminution in the value of investments Opening balance Charge for the period / year Reversal for the period / year Provision reversed on disposal Closing balance 11. 125,900 3,773 (10,714) (4,675) 114,284 114,284 114,284 ADVANCES Loans, cash credits, running finances, etc. In Pakistan Outside Pakistan 133,023,542 - 124,932,351 - 1,352,769 4,099,203 5,451,972 254,071 2,457,228 141,186,813 1,631,223 4,912,059 6,543,282 268,841 2,008,562 133,753,036 Bills discounted and purchased (excluding government treasury bills) Payable in Pakistan Payable outside Pakistan Assets held under Ijarah (IFAS-2) Advance against islamic financings Advances - gross 11.1.1 11.1 Provision against consumer & small enterprises loans - general 11.4 (53,337) (51,340) Provision against non-performing advances - specific 11.4 (8,537,456) (8,395,931) 132,596,020 125,305,765 738,904 60,717 1,040,086 617,521 2,457,228 580,556 57,543 1,008,948 361,515 2,008,562 218,586 35,485 254,071 212,732 56,109 268,841 Advances - net of provision 11.1 11.1.1 Advance against islamic financings - Murabaha - Car ijarah - Machine ijarah - Diminishing musharaka - Salam Asset held under Ijarah (IFAS-2) Motor vehicles Plant and machinery 11.2 Advances include Rs 10,488.986 million (31 December 2016: Rs 10,419.420 million) which have been placed under non-performing status as detailed below: Category of Classification Classified Advances Domestic Overseas Total 31 March 2017 (Un-audited) Provision Required Domestic Overseas Total Provision Held Domestic Overseas Total ------------------------------------------------------ (Rupees in '000) ------------------------------------------------------ Other Assets Especially Mentioned* Substandard Doubtful Loss 74,083 918,174 392,118 9,104,611 10,488,986 74,083 918,174 392,118 - 9,104,611 - 10,488,986 1,195 163,940 98,917 8,273,404 8,537,456 - 1,195 163,940 98,917 8,273,404 8,537,456 1,195 163,940 98,917 8,273,404 8,537,456 - 1,195 163,940 98,917 8,273,404 8,537,456
19. 19 Category of Classification Classified Advances Domestic Overseas Total 31 December 2016 (Audited) Provision Required Domestic Overseas Total Provision Held Domestic Overseas Total ------------------------------------------------------ (Rupees in '000) ------------------------------------------------------ Other Assets Especially Mentioned * 68,938 Substandard 698,888 Doubtful 564,124 Loss 9,087,470 10,419,420 68,938 698,888 564,124 - 9,087,470 - 10,419,420 1,859 121,947 107,106 8,165,019 8,395,931 - 1,859 121,947 107,106 8,165,019 8,395,931 1,859 121,947 107,106 8,165,019 8,395,931 - 1,859 121,947 107,106 8,165,019 8,395,931 *The 'Other Assets Especially Mentioned' category pertains to agriculture finance and small enterprise finance amounting to Rs.49.341 million (31 December 2016: Rs 50.356 million) and Rs.24.742 million (31 December 2016: Rs.18.582 million) respectively. 11.3 Particulars of provision against non-performing loans and advances Specific Un-audited 31 March 2017 General Consumer Small Enterprises Total Specific Audited 31 December 2016 General Consumer Small Enterprises Total --------------------------------------------- (Rupees in '000) -------------------------------------------Opening balance Charge for the period / year Reversals made during the period / year Transfer Amounts written off Closing balance 8,395,931 29,340 357,292 1,997 (183,147) 174,145 1,997 (32,620) 8,537,456 22,000 8,447,271 8,568,984 27,224 19,000 8,615,208 - 359,289 1,352,429 2,116 3,000 1,357,545 - (183,147) 176,142 (1,326,473) 25,956 2,116 3,000 (1,326,473) 31,072 - - - - 31,337 22,000 - 5,852 - - 5,852 (32,620) (204,861) - - (204,861) 8,590,793 8,395,931 29,340 22,000 8,447,271 11.3.1 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. 11.3.2 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% of the fully secured performing portfolio and 2% of the unsecured performing portfolio as required under the Prudential Regulations issued by the State Bank of Pakistan. 11.4 The Bank has availed the benefit of forced sale value of pledged stocks and mortgaged residential and commercial properties held as collateral against non-performing advances and investments 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 947.822 million (31 December 2016: Rs 1,102.633 million). The additional profit arising from availing this benefit - net of the tax amounts to Rs 616.084 million (31 December 2016: Rs 716.711). This profit is not available for distribution either as cash or stock dividend. 11.5 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 (31 December 2016: Rs 44.930 million). 11.6 Although the Bank has made provision against its non-performing portfolio as per the category of the loans forming part thereof, 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.
20. Soneri Bank Limited | Quarterly Report 2017 Un-audited Audited 31 March 31 December 2017 2016 (Rupees in '000) 12. OPERATING FIXED ASSETS Capital work-in-progress Property and equipments Land - Freehold - Leasehold Building on - Freehold land - Leasehold land Leasehold improvements Furniture, fixtures, equipments and computers Vehicles Intangible assets 303,284 257,269 936,055 186,967 936,055 186,967 97,394 1,517,990 997,577 833,012 87,224 100,117 1,566,419 989,099 805,590 94,605 199,042 5,158,545 202,303 5,138,424 Un-audited Un-audited 31 March 31 March 2017 2016 (Rupees in '000) 12.1 The cost of additions made during the period was as follows: Freehold land Building on - Freehold land - Leasehold land Leasehold improvements Furniture, fixtures, equipment and computers Vehicles Intangibles assets 12.2 235 25,618 95,574 1,827 26,778 150,032 236 33,922 56,090 10,799 90,299 191,346 The written down values of fixed assets disposed of / deleted during the period were as follows: Freehold land Building on - Freehold land - Leasehold land Leasehold improvements Furniture, fixtures, equipment and computers 1,832 366 2,198 25,374 3,008 1,884 30,266