United Bank Limited: Unconsolidated Condensed Interim Financial Statements For The Six Months Ended June 30, 2017

Transcription

1. United Bank Limited UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30 , 2017 (UNAUDITED)
2. UN I T E D B A N K L I M I T E D Directors ’ Report to the Members On behalf of the Board of Directors, I am pleased to present the financial statements of United Bank Limited (the Bank) for the half year ended June 30, 2017. Performance Highlights ▪ ▪ ▪ ▪ UBL posted unconsolidated profit before tax (PBT) of Rs. 22.97 billion during the half year ended June 30, 2017 (H1’16: Rs. 24.77 billion). The Bank’s domestic deposits crossed a landmark to reach Rs. 1.02 trillion at Jun’17 end (Dec’16: Rs. 946 billion). Expense growth remained curtailed at 6% on a year on year basis. Net provision reversals stood at Rs. 0.46 billion in the half year ended 30 Jun’17 as against a net provision charge of Rs. 1.68 billion in H1’16. Financial Highlights Overall Performance UBL reported profit after tax (PAT) of Rs. 13.24 billion in H1’17, a reduction of 7% over the corresponding period last year. Earnings per share (EPS) amounted to Rs. 10.82 (H1’16: Rs. 11.68). On a consolidated basis, profit after tax was recorded at Rs. 13.29 billion (H1’16: Rs. 14.60 billion). Net Markup Income Net markup income stood at Rs. 28.01 billion for the half year ended Jun’17, 4% lower in comparison to H1’16. Average earning assets grew by 11% over the prior year to close at Rs. 1.35 trillion YTD Jun’17. Average performing advances recorded growth of 10% over last year, led by expansion in the domestic corporate book. Average domestic deposits grew by 14% over H1’16, with the domestic market share at 8.52% in June’17 (Dec’16: 8.44%). The strong growth in deposits was led by mobilization of current accounts, with average portfolio growth of 18% i.e Rs 56.8 billion (H1’17 vs H1’16). The domestic cost of deposits thus stood reduced by 14bps from 2.90% in H1’16 to 2.75% in H1’17. Overall at bank level the cost of deposits was measured at 2.6% (H1’16: 2.7%). Directors’ Report H1’2017 Page |1
3. UN I T E D B A N K L I M I T E D Average earning investments witnessed a 12 % increase year on year with reinvestment mainly within short term treasury bills. Net interest margins stood lower at 4.3% in H1’17 (5.0% in H1’16) as a result of repricing and maturities within the investment portfolio. Non-Markup Income Non-markup income constituted 31% of gross revenues and was recorded at Rs. 12.35 billion during the half year ended June 30, 2017 (H1’16: Rs. 13.96 billion). Contributing 48% to overall non-markup income, fees and commissions stood at Rs. 5.91 billion during first half of the year, down 7% compared to H1’16. Omni revenues were lower as a result of growing competition across the domestic remittances business. However, the Bank maintained its strong momentum within Bancassurance sales, with commissions increasing by 48% over H1’16. Corporate service charges saw a 22% increase over the previous year, whereas cash management commissions grew by 13%. ATM / Debit cards continued to generate steady fee revenues, growing by 8% over the corresponding period last year. Sustained business volumes across all major corridors resulted in the home remittances market share being maintained at 25% in H1’17. Capital gains of Rs. 3.84 billion were realized in the current period (H1’16: Rs. 4.52 billion), mainly generated on sale of long-term fixed income securities. Dividend income closed at Rs. 1.29 billion (H1’16: Rs. 1.52 billion), with yields nearing 10%. Foreign exchange income stood at Rs. 0.82 billion as compared to Rs. 0.98 billion in H1’16. Provisions and loan losses The Bank recorded net provision reversals of Rs. 0.46 billion for the half year ended June 30, 2017 as against a net provision charge of Rs. 1.68 billion in the corresponding period last year. Non-performing loans reduced by Rs. 1.04 billion to close at Rs. 43.53 billion (Dec’16: Rs. 44.57 billion), as a result of a strong focus led by the Special Asset Management unit. Asset quality was measured at 7.2% as at Jun’17, a strong improvement over the Dec’16 level of 8.1%. The Bank remains well reserved with specific coverage enhanced from 83.9% at Dec’16 to 84.2% at Jun’17. Cost management UBL’s administrative expenses were recorded at Rs. 17.32 billion during H1’17 (H1’16: Rs. 16.29 billion), a growth of 6% on a year on year basis. Personnel cost recorded an 8% growth over H1’16 owing to better staffing levels across the branch network this year. Premises costs were up by 12% over the prior period on account of rent escalations, branch refurbishments and Directors’ Report H1’2017 Page |2
4. UN I T E D B A N K L I M I T E D higher utilities expense . The Bank incurred higher variable expenses in the current period in view of advertising costs and increased sales force commissions. Balance Sheet Management UBL’s balance sheet size grew by 17% over Dec’16 to reach Rs. 1.85 trillion at Jun’17. During the six months ended June 30, 2017, UBL achieved the milestone of crossing the Rs. 1 trillion mark in domestic deposits to close at Rs. 1.02 trillion, a year to date growth of 8%. Strong current account mobilization remains the core of our liability strategy, driven by aggressive new to bank acquisitions as well as more deepening and better deposit retention. Net loans closed at Rs. 564.9 billion; growing by 11% compared to the Dec’16 level. Strong buildup was witnessed within domestic operations where the portfolio expanded by 15% over Dec’16. Investments closed at Rs. 999.6 billion as at Jun’17, a 24% growth over Dec’16. The portfolio is mainly concentrated in government securities with Rs. 606.3 billion (Dec ’16: Rs. 570.6 billion) deployed in Pakistan Investment Bonds yielding approx. 8.8%. The Bank’s equity portfolio closed at Rs. 16.8 billion (Dec’16: Rs. 16.0 billion), consisting of holdings acquired with a view of maintaining stable dividend income. The gross revaluation surplus on investments stood at Rs. 18.7 billion at Jun’17 (Dec’16: Rs. 23.3 billion). Capital Ratios UBL’s capital ratios remained strong as the Tier-1 and the overall capital adequacy stood at 10.8% and 14.9% at Jun’17 respectively (Dec’16: 10.9% and 15.1%). The Board of Directors of UBL declared an interim dividend of 30% (Rs. 3 per share) in their meeting held in Islamabad on July 27, 2017, along with the results for the half year ended June 30, 2017. Economy Review The economy continued to be on a sound footing during the first half of the year. Underlying macros remained largely stable, albeit within heightened political noise surrounding the market sentiment. With the ongoing progress on the CPEC program, Pakistan remains on track to more sustainable economic growth. Inflation remained well-controlled with the average H1’17 CPI recorded at 4.4%. Backed by improving business confidence, reduced input prices and enhanced energy supply, Large Scale Manufacturing (LSM) continued on its upwards trajectory with a year on year growth of 5.7% during 11M FY’17. GDP growth stood at 5.3% during FY’17, an increase from 4.7% in FY’16. Directors’ Report H1’2017 Page |3
5. UN I T E D B A N K L I M I T E D The current account deficit continued to deteriorate , increasing to USD 12.1 billion during FY’17 (FY’16: USD 4.9 billion). The trade deficit was up by 36.3% on a year on year basis as exports declined by 1.6% year whereas imports climbed up by 18.7%. With a slow down across major corridors, home remittances recorded a 3.1% decline year on year. Resultantly, the balance of payments witnessed a net outflow of USD 1.9 billion during FY’17. FX reserves ended Jun’17 at USD 21.4 billion, down by USD 1.8 billion over the period on account of external debt servicing and Euro Bond maturity of USD 750 million. The USD-PKR exchange rate remained stable and within the Rs. 104 – 105 range with nominal appreciation of 0.24% over Dec’16. SBP continued its cautious stance during the first half of the year and kept its policy rate unchanged at 5.75%. As of June 30, 2017 banking sector deposits stood 6.9% higher in comparison to the Dec’16 level. Loan growth gathered momentum as industry advances picked up by 10.8% over Dec’16. Non-performing loans for the industry declined by 0.15% QoQ to Rs. 604 billion as of Mar’17. As a result, the infection ratio dropped to 9.9% in Mar’17 against 10.1% in Dec’16. UBL International The GCC economic environment remained challenging during the first half of 2017 as growth across gulf economies remained modest. UAE, by virtue of its diversification within the non-oil sector, remains better positioned. Qatar’s economy, despite being supported by large fiscal buffers, has been impacted by the recent diplomatic rift between Qatar and other Arab states, which is expected to constrain the overall liquidity and fiscal account balance. Despite impacted by the economic slowdown, the International business delivered consistent results in terms of asset growth and profitability. The Bank remained focused on its strategy of growing low cost deposits in order to maintain its organic balance sheet structure and to support asset growth across the International network. In view of the current economic environment, the International business is growing selectively in territories offering the acceptable risk profile. UBL International deposits closed at USD 2.24 billion in Jun’17, in line with the Dec’16 level. The gross advances portfolio grew by 3% over Dec’16 to reach USD 1.76 billion. The Corporate business maintains its emphasis on deepening existing relationships and soliciting trade volumes of established large local corporates. The investment portfolio, consisting mainly of foreign sovereign bonds earning stable yields, grew by 5% over Dec’16 to close at USD 728 million. Fee earnings remained aligned with the corresponding period of last year. Strong growth was witnessed across general banking fees, corporate service charges and cash management revenues. However, trade revenues faced pricing competition with flows maintained at par Directors’ Report H1’2017 Page |4
6. UN I T E D B A N K L I M I T E D with the previous year ’s levels. During the first half of the year, UBL international seized favorable trading opportunities to realize timely capital gains. In addition, the Financial Institutions Group concluded several syndications for the Government of Pakistan, Kenya and Tanzania. Credit Rating On June 30, 2017, JCR-VIS Credit Rating Company Limited (JCR-VIS) re-affirmed the entity ratings of United Bank Limited (UBL) at ‘AAA/A-1+’ (Triple A/A-One Plus). Outlook on the assigned ratings is ‘Stable’. The ratings depict sustained soundness across key performance areas including asset quality, capitalization and profitability. Apart from a strong domestic franchise, the ratings are also based on a well-diversified business model, sizeable overseas presence and continuous focus on innovation. Moreover, a key rating driver was the considerable improvement in capital position over the last two years, achieved through strong internal capital generation and synergies within the profile of Risk Weighted Assets. Future Outlook Progress on the China Pakistan Economic Corridor (CPEC) remains pivotal to rejuvenating the economic engine of the country. Along with this strategic partnership, stable law and order, a low interest rate regime and much improved energy situation is necessary to provide the impetus to industrial growth. We continue to target more aggressive acquisition of new to bank customers, while reducing cost of deposits. Our investment in people and technology across both urban and rural geographies remains a key driver to better network performance. We aim to revitalize our Consumer and SME lending arms in order to fully leverage our presence within these segments. Asset quality considerations along with proactive NPL management remains crucial to minimizing cost of risk. Staying true to our innovation agenda, we shall remain at the forefront of Pakistan’s transition into the digital banking age. We remain committed to maximizing cost efficiencies with greater synergies amongst various functions whilst elevating service standards. With its strong foothold across all business segments, UBL is well positioned to serve Pakistan’s economic transformation. Directors’ Report H1’2017 Page |5
7. UN I T E D B A N K L I M I T E D Change in CEO The Board appointed Ms . Sima Kamil as the new President and Chief Executive Officer with effect from June 1, 2017, following the completion of the term of Mr. Wajahat Husain. The Board would like to acknowledge and appreciate the services of Mr. Wajahat Husain and wish Ms. Sima Kamil success in her new role. Acknowledgements In conclusion, we would like to express our gratitude to UBL’s shareholders and customers for their patronage and support. We value the firm commitment and dedication of our staff towards achieving the results for the current half year. We also extend our appreciation to the Government of Pakistan, the State Bank of Pakistan, the Securities & Exchange Commission and other regulatory bodies for their direction and continued support. For and on behalf of the Board, Sir Mohammed Anwar Pervez, OBE, HPk Chairman Islamabad 27 July 2017 Directors’ Report H1’2017 Page |6
8. . 7 UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2017 Note ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax asset - net Other assets 6 7 8 9 LIABILITIES Bills payable Borrowings Deposits and other accounts Subordinated loans Liabilities against assets subject to finance lease Deferred tax liability - net Other liabilities 10 11 NET ASSETS REPRESENTED BY: Share capital Reserves Unappropriated profit Surplus on revaluation of assets - net of deferred tax 12 CONTINGENCIES AND COMMITMENTS 13 (Un-audited) (Audited) June 30, December 31, 2017 2016 --------------(Rupees in '000)------------- 149,855,715 14,978,923 36,171,178 999,556,684 564,914,230 38,172,557 48,312,545 1,851,961,832 131,506,861 14,920,994 34,168,287 806,531,246 510,110,924 35,581,758 44,730,953 1,577,551,023 17,544,815 390,326,421 1,255,870,023 4,051,734 30,744,925 1,698,537,918 11,756,422 201,549,619 1,179,887,048 4,691,544 27,879,529 1,425,764,162 153,423,914 151,786,861 12,241,798 41,698,955 67,621,752 121,562,505 12,241,798 40,454,505 64,246,270 116,942,573 31,861,409 153,423,914 34,844,288 151,786,861 The annexed notes from 1 to 23 form an integral part of these unconsolidated condensed interim financial statements. Aameer Karachiwalla Chief Financial Officer Sima Kamil President & Chief Executive Officer Amar Zafar Khan Director Sir Mohammed Anwar Pervez, OBE, HPk Chairman
9. . 7 UNCONSOLIDATED CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 January January April - June April - June June 2017 June 2016 2017 2016 ---------------------------------------- (Rupees in '000) --------------------------------------Note Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / return / interest income 14 15 Reversal / (provision) against loans and advances - net Reversal of provision against lendings to financial institutions - net Provision for diminution in value of investments - net Bad debts written off directly 692,578 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 Gain on sale of securities - net Unrealized gain on revaluation of investments classified as held for trading Other income Total non mark-up / interest income Non mark-up / interest expenses Administrative expenses Other (provisions) / reversals - net Workers' Welfare Fund Other charges Total non mark-up / interest expenses Profit before taxation Taxation - Current Taxation - Prior Taxation - Deferred Profit after taxation 25,794,875 (11,492,275) 14,302,600 16 26,101,306 (10,357,723) 15,743,583 875,137 49,683,101 (21,668,388) 28,014,713 49,524,794 (20,194,452) 29,330,342 663,403 (728,328) 7,260 (137,480) (8,913) 553,445 14,856,045 (514,880) (23,869) 336,388 16,079,971 8,260 (188,888) (24,888) 457,887 28,472,600 (657,585) (45,370) (1,431,283) 27,899,059 3,120,833 739,386 404,209 1,493,060 3,211,334 1,084,925 381,063 676,421 5,907,757 1,291,554 822,422 3,833,565 6,386,076 1,515,826 977,248 4,513,514 8,082 304,698 6,070,268 20,926,313 6,807 234,078 5,594,628 21,674,599 2,483 488,043 12,345,824 40,818,424 4,745 557,270 13,954,679 41,853,738 (8,797,242) (13,320) (241,073) (58,322) (9,109,957) 11,816,356 (7,844,969) (58,293) (254,099) (1,633) (8,158,994) 13,515,605 (17,316,904) 2,508 (473,371) (58,640) (17,846,407) 22,972,017 (16,294,642) (251,393) (506,251) (30,250) (17,082,536) 24,771,202 (4,298,744) (459,532) (1,069,090) (5,827,366) 5,988,990 (4,913,544) (1,700,050) 92,925 (6,520,669) 6,994,936 (8,301,375) (459,532) (966,975) (9,727,882) 13,244,135 (8,799,580) (1,813,578) 136,528 (10,476,630) 14,294,572 -------------------------------------------- (Rupees) -------------------------------------------Earnings per share - basic and diluted 4.89 5.71 10.82 11.68 The annexed notes from 1 to 23 form an integral part of these unconsolidated condensed interim financial statements. Aameer Karachiwalla Chief Financial Officer Sima Kamil President & Chief Executive Officer Amar Zafar Khan Director Sir Mohammed Anwar Pervez, OBE, HPk Chairman
10. . UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 April - June April - June January January 2017 2016 June 2017 June 2016 ------------------------------------ (Rupees in '000) -----------------------------------Profit after taxation 5,988,990 6,994,936 13,244,135 14,294,572 Other comprehensive income: Items that are not to be reclassified to profit or loss in subsequent periods - - - - Items that may be reclassified to profit or loss in subsequent periods Exchange differences on translation of net investment in foreign branches Other comprehensive income transferred to equity (186,695) (630,381) (79,964) (607,913) (186,695) (630,381) (79,964) (607,913) 5,802,295 6,364,555 13,164,171 13,686,659 (4,431,557) 1,557,130 (2,874,427) 4,413,648 (1,544,777) 2,868,871 (4,560,882) 1,596,308 (2,964,574) 6,481,679 (2,268,588) 4,213,091 2,927,868 9,233,426 10,199,597 17,899,750 Items that may be reclassified to profit or loss in subsequent periods (Deficit) / surplus arising on revaluation of available for sale securities Related deferred tax reversal / (charge) Total comprehensive income during the period - net of tax The annexed notes from 1 to 23 form an integral part of these unconsolidated condensed interim financial statements. Aameer Karachiwalla Chief Financial Officer Sima Kamil President & Chief Executive Officer Amar Zafar Khan Director Sir Mohammed Anwar Pervez, OBE, HPk Chairman
11. . UNCONSOLIDATED CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 January January June 2017 June 2016 -----------(Rupees in '000)----------CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Less: Dividend income Adjustments: Depreciation on operating fixed assets Depreciation on Islamic financing against leased assets (Ijarah) Amortization Workers' Welfare Fund Provision for retirement benefits Provision for compensated absences (Reversal) / provision against loans and advances - net Reversal of provision against lendings to financial institutions - net Provision for diminution in value of investments - net Gain on sale of operating fixed assets - net Gain on sale of ijarah assets - net Unrealized gain on revaluation of investments classified as held for trading Bad debts written-off directly Other (reversal) / provisions - net (Increase) / decrease in operating assets Lendings to financial institutions Held for trading securities Advances Other assets (excluding advance taxation) Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities (excluding current taxation) Payments on account of staff retirement benefits Income taxes paid Net cash inflow from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investment in securities Dividend income received Investment in operating fixed assets Sale proceeds from disposal of operating fixed assets Sale proceeds from disposal of ijarah assets Net cash outflow from investing activities CASH FLOW FROM FINANCING ACTIVITIES Dividends paid Exchange differences on translation of net investment in foreign branches Increase / (decrease) in cash and cash equivalents during the period Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 22,972,017 (1,291,554) 21,680,463 24,771,202 (1,515,826) 23,255,376 992,052 97,272 163,955 473,371 309,864 149,359 (663,403) (8,260) 188,888 (25,785) (1,144) (2,483) 24,888 (2,508) 1,696,066 23,376,529 775,415 101,039 159,423 506,251 95,512 149,936 728,328 657,585 (22,454) (1,238) (4,745) 45,370 251,393 3,441,815 26,697,191 (1,994,631) (20,539,486) (54,260,919) (808,906) (77,603,942) (12,276,632) 6,903,920 (41,855,625) (4,308,228) (51,536,565) 5,788,393 188,776,802 75,982,975 2,045,911 272,594,081 218,366,668 (446,633) (11,340,709) 206,579,326 (1,172,668) 52,891,950 90,686,253 499,852 142,905,387 118,066,013 (378,985) (11,950,747) 105,736,281 (177,233,239) 1,114,221 (3,764,312) 47,746 37,685 (179,797,899) (110,597,902) 1,341,249 (3,044,160) 37,142 46,375 (112,217,296) (8,294,680) 18,486,747 (79,964) 18,406,783 146,427,855 164,834,638 (7,998,024) (14,479,039) (607,913) (15,086,952) 128,870,394 113,783,442 The annexed notes from 1 to 23 form an integral part of these unconsolidated condensed interim financial statements. Aameer Karachiwalla Chief Financial Officer Sima Kamil President & Chief Executive Officer Amar Zafar Khan Director Sir Mohammed Anwar Pervez, OBE, HPk Chairman
12. UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED JUNE 30 , 2017 Capital reserve UnappropTotal Exchange riated profit translation --------------------------------------------------(Rupees in '000)------------------------------------------------Balance as at January 1, 2016 (Audited) Share capital Statutory reserve 12,241,798 24,424,604 13,977,699 55,222,960 105,867,061 Transactions with owners for the six months ended June 30, 2016 Final cash dividend - December 31, 2015 declared subsequent to the year end at Rs. 4.0 per share Interim cash dividend - March 31, 2016 declared at Rs. 3.0 per share - - Profit after taxation for the six months ended June 30, 2016 Other comprehensive income - net of tax Total comprehensive income for the six months ended June 30, 2016 - - Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax - - Transfer to statutory reserve - - (4,896,719) (3,672,539) (8,569,258) (4,896,719) (3,672,539) (8,569,258) 14,294,572 14,294,572 14,294,572 (607,913) 13,686,659 Total comprehensive income for the six months ended June 30, 2016 Balance as at June 30, 2016 (Un-audited) 12,241,798 1,429,457 25,854,061 (607,913) (607,913) 13,369,786 25,185 (1,429,457) 59,544,002 25,185 111,009,647 Transactions with owners for the six months ended December 31, 2016 - - Profit after taxation for the six months ended December 31, 2016 Other comprehensive income - net of tax Total comprehensive income for the six months ended December 31, 2016 - - Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax - - Transfer to statutory reserve - Interim cash dividend - June 30, 2016 declared at Rs. 3.0 per share Interim cash dividend - September 30, 2016 declared at Rs. 3.0 per share - (3,672,539) (3,672,539) (7,345,078) (3,672,539) (3,672,539) (7,345,078) 13,435,540 (69,832) 13,365,708 13,435,540 (182,728) 13,252,812 Total comprehensive income for the six months ended December 31, 2016 Balance as at December 31, 2016 (Audited) 12,241,798 1,343,554 27,197,615 (112,896) (112,896) 13,256,890 25,192 (1,343,554) 64,246,270 25,192 116,942,573 Transactions with owners for the six months ended June 30, 2017 Final cash dividend - December 31, 2016 declared subsequent to the year end at Rs. 4.0 per share Interim cash dividend - March 31, 2017 declared at Rs.3.0 per share - - - (4,896,719) (3,672,539) (8,569,258) (4,896,719) (3,672,539) (8,569,258) Profit after taxation for the six months ended June 30, 2017 Other comprehensive income - net of tax Total comprehensive income for the six months ended June 30, 2017 - - (79,964) (79,964) 13,244,135 13,244,135 13,244,135 (79,964) 13,164,171 Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax - - - Transfer to statutory reserve - Total comprehensive income for the six months ended June 30, 2017 Balance as at June 30, 2017 (Un-audited) 12,241,798 1,324,414 28,522,029 13,176,926 25,019 (1,324,414) 67,621,752 25,019 121,562,505 The annexed notes from 1 to 23 form an integral part of these unconsolidated condensed interim financial statements. Aameer Karachiwalla Chief Financial Officer Sima Kamil President & Chief Executive Officer Amar Zafar Khan Director Sir Mohammed Anwar Pervez, OBE, HPk Chairman
13. . NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 1. STATUS AND NATURE OF BUSINESS United Bank Limited (the Bank) is a banking company incorporated in Pakistan and is engaged in commercial banking and related services. The Bank's registered office and principal office are situated at UBL Building, Jinnah Avenue, Blue Area, Islamabad and at UBL Head Office, I. I. Chundrigar Road, Karachi respectively. The Bank operates 1,345 (December 31, 2016: 1,341) branches inside Pakistan including 47 (December 31, 2016: 47) Islamic Banking branches and 2 (December 31, 2016: 2) branches in Export Processing Zones. The Bank also operates 18 (December 31, 2016: 18) branches outside Pakistan. The Bank is a subsidiary of Bestway (Holdings) Limited which is incorporated in the United Kingdom. The Bank's ordinary shares are listed on Pakistan Stock Exchange. Its Global Depository Receipts (GDRs) are on the list of the UK Listing Authority and the London Stock Exchange Professional Securities Market. These GDRs are also eligible for trading on the International Order Book System of the London Stock Exchange. Further, the GDRs constitute an offering in the United States only to qualified institutional buyers in reliance on Rule 144A under the US Securities Act of 1933 and an offering outside the United States in reliance on Regulation S. 2. BASIS OF PRESENTATION The disclosures made in these unconsolidated condensed interim financial statements have been limited based on the format prescribed by the State Bank of Pakistan vide BSD Circular No. 2 dated May 12, 2004, International Accounting Standard 34, Interim Financial Reporting, provisions of and directives issued under the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 and directives issued by the Securities and Exchange Commission of Pakistan. In case where requirement differ, the provisions of or directives issued under the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 have been followed. The Companies Ordinance, 1984 has been repealed after the enactment of the Companies Act, 2017. However, as allowed by the SECP vide its press release dated July 20, 2017, these unconsolidated condensed interim financial statements have been prepared in accordance with the provisions of the repealed Companies Ordinance, 1984. In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, the State Bank of Pakistan (SBP) 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 unconsolidated condensed interim financial statements as such, but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. The Islamic Banking branches of the Bank have complied with the requirements set out under the Islamic Financial Accounting Standards issued by the Institute of Chartered Accountants of Pakistan and notified under the provisions of the Companies Ordinance, 1984. Key financial figures of the Islamic Banking branches are disclosed in note 21 to these unconsolidated condensed interim financial statements. 3. STATEMENT OF COMPLIANCE 3.1 These unconsolidated condensed interim financial statements of the Bank have been prepared in accordance with the requirements of International Accounting Standard (IAS) 34, Interim Financial Reporting, Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan, the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance,1962 and directives issued by the Securities and Exchange Commission of Pakistan (SECP) and the SBP. In case requirements differ, the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the said directives have been followed. 3.2 The SBP vide BSD circular letter no. 10, dated August 26, 2002 has deferred the applicability of International Accounting Standard 39, Financial Instruments: Recognition and Measurement and International Accounting Standard 40, Investment Property for banking companies till further instructions. Further, SBP vide BPRD circular no. 4, dated February 25, 2015 has deferred the applicability of Islamic Financial Accounting Standards (IFAS) 3, Profit and Loss Sharing on Deposits. Further, according to the notification of the SECP issued vide SRO 411(I)/2008 dated April 28, 2008, International Financial Reporting Standard (IFRS) 7, Financial Instruments: Disclosures has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these unconsolidated condensed interim financial statements. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP. Further, segment information is being disclosed in accordance with SBP’s prescribed format as per BSD circular 4 dated February 17, 2006 which prevails over the requirements specified in IFRS 8. 6
14. . NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 3.3 SECP vide its notification SRO 633 (I)/2014 dated 10 July 2014, adopted IFRS 10 effective from the periods starting from 30 June 2014. However, vide its notification SRO 56 (I)/2016 dated 28 January 2016, it has been notified that the requirements of IFRS 10 and section 237 of the Companies Ordinance, 1984 will not be applicable with respect to the investment in mutual funds established under Trust structure. 3.4 The disclosures made in these unconsolidated condensed interim financial statements have been limited based on a format prescribed by the SBP vide BSD Circular Letter No. 2 dated May 12, 2004 and IAS 34, Interim Financial Reporting. They do not include all the disclosures required for annual financial statements, and these unconsolidated condensed interim financial statements should be read in conjunction with the unconsolidated financial statements of the Bank for the year ended December 31, 2016. 3.5 These unconsolidated condensed interim financial statements represent the separate condensed interim financial statements of the Bank. The consolidated condensed interim financial statements of the Bank and its subsidiary companies are presented separately. 4. SIGNIFICANT ACCOUNTING POLICIES AND FINANCIAL RISK MANAGEMENT 4.1 The accounting policies adopted in the preparation of these unconsolidated condensed interim financial statements are consistent with those applied in the preparation of the unconsolidated financial statements of the Bank for the year ended December 31, 2016. 4.2 The financial risk management objectives and policies are consistent with those disclosed in the financial statements of the Bank for the year ended December 31, 2016. 5. BASIS OF MEASUREMENT 5.1 These unconsolidated condensed interim financial statements have been prepared under the historical cost convention except that certain operating fixed assets and non-banking assets acquired in satisfaction of claims have been stated at revalued amounts and certain investments and derivative financial instruments have been stated at fair value. 5.2 The preparation of these unconsolidated condensed interim financial statements in conformity with approved accounting standards requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and income and expenses. It also requires management to exercise judgment in the application of its accounting policies. The estimates and 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 recognized 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. The significant judgments made by management in applying its accounting policies and the key sources of estimation uncertainty were the same as those applied to the unconsolidated financial statements of the Bank for the year ended December 31, 2016. (Un-audited) (Audited) June 30, December 31, 2017 2016 ------------(Rupees in '000)-----------6. LENDINGS TO FINANCIAL INSTITUTIONS Call money lendings Repurchase agreement lendings Bai Muajjal receivable from State Bank of Pakistan Bai Muajjal receivable from other financial institutions Other lendings to financial institutions 550,000 4,000,000 3,109,215 9,680,687 19,630,713 36,970,615 (799,437) 36,171,178 Provision against lendings to financial institutions 7 1,500,000 11,226,452 22,247,898 34,974,350 (806,063) 34,168,287
15. . NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 7. 7.1 (Un-audited) INVESTMENTS Investments by type Held for trading securities Market Treasury Bills Pakistan Investment Bonds 9,224,934 19,589,435 28,814,369 Available for sale securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan Sukuk Government of Pakistan Eurobonds Ordinary shares of listed companies Preference shares Ordinary shares of unlisted companies Investment in REIT Term Finance Certificates Foreign bonds - sovereign Foreign bonds - others 71,630,413 92,965,645 15,056,342 12,048,643 16,762,781 372,529 258,389 458,590 498,845 24,437,641 9,938,239 244,428,057 Held to maturity securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan Eurobonds Government of Pakistan Sukuk Term Finance Certificates Sukuks Participation Term Certificates Debentures Foreign bonds - sovereign Foreign bonds - others Recovery note CDC SAARC Fund Associates United Growth and Income Fund UBL Liquidity Plus Fund UBL Money Market Fund UBL Retirement Savings Fund UBL Government Securities Fund UBL Gold Fund UBL Asset Allocation Fund Al Ameen Islamic Cash Fund Al Ameen Islamic Aggressive Income Fund Al Ameen Islamic Sovereign Fund Al Ameen Islamic Asset Allocation Fund Al Ameen Islamic Financial Planning Fund UBL Insurers Limited Khushhali Bank Limited Oman United Exchange Company, Muscat DHA Cogen Limited 7.2 Subsidiaries United National Bank Limited (UBL UK) UBL (Switzerland) AG UBL Fund Managers Limited UBL Bank (Tanzania) Limited United Executors and Trustees Company Ltd. Provision for diminution in value of investments Investments - net of provisions Surplus on revaluation of available for sale securities Surplus / (deficit) on revaluation of held for trading securities Total investments 7.2 (Audited) June 30, 2017 December 31, 2016 Held by Given as Total Held by Given as Total Note Bank collateral Bank collateral ----------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------165,729,934 166,191,379 331,921,313 9,224,934 19,589,435 28,814,369 8,120,078 154,805 8,274,883 237,360,347 259,157,024 15,056,342 12,048,643 16,762,781 372,529 258,389 458,590 498,845 24,437,641 9,938,239 576,349,370 25,117,903 184,088,469 7,233,271 14,053,787 16,007,107 372,636 243,084 458,590 556,284 19,250,876 9,500,569 276,882,576 47,933,801 96,854,633 144,788,434 8,120,078 154,805 8,274,883 73,051,704 280,943,102 7,233,271 14,053,787 16,007,107 372,636 243,084 458,590 556,284 19,250,876 9,500,569 421,671,010 11,125,243 327,546,151 4,252,561 6,891,801 10,408,407 1,503 2,266 8,667,404 1,218,065 322,283 228 370,435,912 - 11,125,243 327,546,151 4,252,561 6,891,801 10,408,407 1,503 2,266 8,667,404 1,218,065 322,283 228 370,435,912 26,968,740 289,522,875 6,897,076 683,000 4,715,333 9,024,950 2,795 2,266 6,608,534 357,609 322,399 228 345,105,805 - 26,968,740 289,522,875 6,897,076 683,000 4,715,333 9,024,950 2,795 2,266 6,608,534 357,609 322,399 228 345,105,805 419,308 10,079 9,850 765,000 216,000 403,370 240,000 832,485 6,981 2,903,073 - 419,308 10,079 9,850 765,000 216,000 403,370 240,000 832,485 6,981 2,903,073 419,308 10,079 9,850 30,000 2,699,175 100,000 680,000 10,470 25,944 50,000 100,000 504,690 240,000 832,485 6,981 5,718,982 - 419,308 10,079 9,850 30,000 2,699,175 100,000 680,000 10,470 25,944 50,000 100,000 504,690 240,000 832,485 6,981 5,718,982 2,855,223 589,837 100,000 1,322,014 30,100 4,897,174 983,399,898 2,855,223 589,837 100,000 1,322,014 30,100 4,897,174 640,879,420 2,855,223 589,837 100,000 1,322,014 30,100 4,897,174 651,478,585 (2,578,599) 331,921,313 - (2,578,599) (2,428,208) 144,788,434 - 2,855,223 589,837 100,000 1,322,014 30,100 4,897,174 785,667,854 (2,428,208) 648,899,986 331,921,313 980,821,299 638,451,212 144,788,434 783,239,646 10,940,285 7,792,617 18,732,902 13,646,446 9,647,338 23,293,784 2,483 659,842,754 339,713,930 2,483 999,556,684 (2,184) 652,095,474 154,435,772 (2,184) 806,531,246 As a result of exercise of a pledge in 2013, the Bank holds 20.99% of the issued and paid up capital of DHA Cogen Limited without any consideration having been paid. Consequently, DHA Cogen Limited is classified as an associated company. 8
16. . NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 Note 8. ADVANCES (Un-audited) (Audited) June 30, December 31, 2017 2016 -------------(Rupees in '000)------------ Loans, cash credits, running finances, etc. In Pakistan Outside Pakistan Islamic financings and related assets 21.4 Bills discounted and purchased Payable in Pakistan Payable outside Pakistan Advances - gross Provision against advances Specific General 8.1 8.2 Advances - net of provision 8.1 391,965,709 139,668,956 531,634,665 347,415,817 139,967,248 487,383,065 6,289,843 7,371,974 22,341,597 44,472,687 66,814,284 16,677,528 39,203,743 55,881,271 604,738,792 550,636,310 (36,661,338) (3,163,224) (37,396,612) (3,128,774) 564,914,230 510,110,924 Advances include Rs. 43,525.304 million (December 31, 2016: Rs. 44,566.984 million) which have been placed under nonperforming status as detailed below: Category of Classification June 30, 2017 (Un-audited) Classified advances Provision required Provision held Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total ----------------------------------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------------------------------- Other assets especially mentioned* 91,427 Substandard 547,979 Doubtful 1,952,337 Loss 27,615,914 30,207,657 Category of Classification 2,257,224 1,744,700 9,315,723 13,317,647 91,427 2,805,203 3,697,037 36,931,637 43,525,304 3,435 132,500 1,148,246 26,558,584 27,842,765 520,168 686,176 7,612,229 8,818,573 3,435 652,668 1,834,422 34,170,813 36,661,338 3,435 132,500 1,148,246 26,558,584 27,842,765 520,168 686,176 7,612,229 8,818,573 3,435 652,668 1,834,422 34,170,813 36,661,338 December 31, 2016 (Audited) Classified advances Provision required Provision held Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total ----------------------------------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------------------------------- Other assets especially mentioned* 126,711 Substandard 908,055 Doubtful 2,471,496 Loss 29,007,185 32,513,447 1,259,239 2,216,423 8,577,875 12,053,537 126,711 2,167,294 4,687,919 37,585,060 44,566,984 3,576 222,697 1,203,332 27,881,140 29,310,745 276,506 795,729 7,013,632 8,085,867 3,576 499,203 1,999,061 34,894,772 37,396,612 3,576 222,697 1,203,332 27,881,140 29,310,745 276,506 795,729 7,013,632 8,085,867 3,576 499,203 1,999,061 34,894,772 37,396,612 * The other assets especially mentioned category pertains to agricultural finance and advances to small enterprises. 8.2 General provision represents provision amounting to Rs. 224.255 million (December 31, 2016: Rs. 218.074 million) against consumer finance portfolio, Rs. 44.088 million (December 31, 2016: Rs. 39.088 million) against advances to small enterprises as required by the Prudential Regulations issued by the SBP and Rs. 2,404.691 million (December 31, 2016: Rs. 2,382.615 million) pertaining to overseas advances to meet the requirements of the regulatory authorities of the respective countries in which the overseas branches operate. General provision also includes Rs. 490.190 million (December 31, 2016: Rs. 488.997 million) which is based on regulatory instructions. 8.3 The Bank has availed the benefit of Forced Sale Value (FSV) of certain mortgaged properties held as collateral against non-performing advances as allowed under BSD Circular 1 of 2011. Had the benefit under the said circular not been taken by the Bank, the specific provision against non-performing advances would have been higher by Rs. 29.837 million (December 31, 2016: Rs. 56.375 million). The FSV benefit availed is not available for the distribution of cash or stock dividend to shareholders. 8.4 Exposure amounting to Rs. 6,656 million relating to certain facilities of Power Holding (Pvt.) Limited, which is a government guaranteed loan, has not been classified as non-performing, pursuant to a relaxation given by SBP in this respect. The relaxation is valid upto August 31, 2017. 9
17. . NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 Note 9. OPERATING FIXED ASSETS Capital work-in-progress Property and equipment Intangible assets 9.1 9.1 10. 3,281,363 33,965,048 926,146 38,172,557 2,924,670 31,679,912 977,176 35,581,758 Additions and disposals during the period amounted to Rs. 3,764.312 million (June 30, 2016: Rs. 3,044.160 million) and Rs. 130.803 million (June 30, 2016: Rs. 81.445 million), respectively. (Un-audited) (Audited) June 30, December 31, 2017 2016 -------------(Rupees in '000)------------- BORROWINGS Secured Borrowings from the State Bank of Pakistan under: Export refinance scheme Refinance facility for modernization of SME Long term financing facility Repurchase agreement borrowings Unsecured Call borrowings Overdrawn nostro accounts Trading liabilities Bai Muajjal payable to other financial institutions Other borrowings 11. (Un-audited) (Audited) June 30, December 31, 2017 2016 -------------(Rupees in '000)------------ 13,226,392 14,899 14,925,964 28,167,255 338,638,934 366,806,189 14,702,567 19,550 11,955,687 26,677,804 153,643,464 180,321,268 10,970,035 601,641 1,521,672 3,973,577 6,453,307 23,520,232 390,326,421 14,188,048 300,765 6,739,538 21,228,351 201,549,619 319,570,092 380,889,226 31,865,005 5,921,716 7,382,424 464,243,247 1,209,871,710 283,620,672 370,630,580 22,515,064 4,226,027 10,398,987 420,335,909 1,111,727,239 33,296,519 12,701,794 45,998,313 57,467,411 10,692,398 68,159,809 1,255,870,023 1,179,887,048 DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Savings deposits Sundry deposits Margin deposits Current accounts - remunerative Current accounts - non-remunerative Financial Institutions Remunerative deposits Non-remunerative deposits 10
18. NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 12. 12.1 SURPLUS ON REVALUATION OF ASSETS - NET OF DEFERRED TAX (Un-audited) (Audited) June 30, December 31, Note 2017 2016 -------------(Rupees in '000)------------ Surplus arising on revaluation of assets - net of tax: Fixed assets / Non-banking assets Available for sale securities 12.1 12.2 19,703,328 15,140,960 34,844,288 20,286,217 20,193,941 Surplus on revaluation of fixed assets / non-banking assets Surplus on revaluation of fixed assets / non-banking assets as at January 1 Revaluation of non-banking assets during the period / year Exchange adjustments Transferred to unappropriated profit in respect of incremental depreciation charged during the period / year - net of deferred tax Related deferred tax liability on incremental depreciation charged during the period / year Less: Related deferred tax liability on: Less: Revaluation as at January 1 Less: Revaluation of non-banking assets during the period / year Less: Exchange adjustments Less: Reversal on transfer to fixed assets Less: Incremental depreciation charged during the period / year 12.2 19,685,023 12,176,386 31,861,409 43 169,861 (82) (25,019) (50,377) (13,472) (38,448) 20,247,769 (27,126) 92,276 20,286,217 582,889 15 (6,686) (13,472) 562,746 19,685,023 550,593 59,451 (29) (27,126) 582,889 19,703,328 (54,337) 11,690,477 5,116,803 34,603 156,028 1,789,328 18,732,902 (6,556,516) 12,176,386 (9,729) 14,625,102 7,432,229 (5,420) 104,054 1,147,548 23,293,784 (8,152,824) 15,140,960 9,158,866 903,869 4,559,909 14,622,644 10,418,980 1,277,955 6,148,339 17,845,274 Surplus / (deficit) on revaluation of available for sale securities Market Treasury Bills Pakistan Investment Bonds Listed shares REIT Investment Term Finance Certificates, Sukuks, other bonds, etc. Foreign bonds Related deferred tax liability 13. CONTINGENCIES AND COMMITMENTS 13.1 Direct credit substitutes Contingent liabilities in respect of guarantees given favouring: Government Banking companies and other financial institutions Others 11
19. NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 13.2 (Un-audited) (Audited) June 30, December 31, 2017 2016 -------------(Rupees in '000)------------ Transaction-related contingent liabilities Contingent liabilities in respect of performance bonds, bid bonds, warranties, etc. given favouring: Government Banking companies and other financial institutions Others 13.3 114,871,452 7,068,771 38,178,662 160,118,885 63,416,801 129,762,758 193,179,559 63,290,127 104,922,885 168,213,012 11,862,063 12,381,804 Trade-related contingent liabilities Contingent liabilities in respect of letters of credit opened favouring: Government Others 13.4 123,535,637 7,922,365 45,017,977 176,475,979 Other contingencies 13.4.1 Claims against the Bank not acknowledged as debts These mainly represent counter claims filed by the borrowers for restricting the Bank from disposal of assets (such as mortgaged / pledged assets kept as security). Based on legal advice and / or internal assessments, management is confident that the matters will be decided in the Bank's favour and the possibility of any outcome against the Bank is remote and accordingly no provision has been made in these financial statements. 13.4.2 Penalties amounting to Rs. 4.058 billion have been levied by the FE Adjudication Court of the State Bank of Pakistan relating to alleged contraventions of the requirements of foreign exchange regulations with respect to issuance and certification of E-Forms by the Bank to certain customers (Exporters) who failed to submit the export documents thereagainst, consequently Foreign Exchange on account of Export Proceeds have not been repatriated. The Bank maintains that it fully discharged its liability, in accordance with the law and has filed a civil suit in the High Court of Sindh challenging the levy of the penalty. The High Court has granted a stay on action being taken against the Bank. The management, based on the advice from legal counsel, is confident that the view of the Bank will prevail and the Bank will not be exposed to any loss on this account. 13.4.3 United Bank Limited Yemen (UBL) issued two Standby Letters of Credit (SBLCs) for USD 12 million (Rs. 1,258.248 million) and USD 13 million (Rs. 1,363.102 million) in favor of Ministry of Oil and Minerals, Yemen (MOM) against the counter SBLCs of a foreign bank. In March 2015, counter party to performance agreement notified MOM of suspension of SBLCs because of force majeure. In September 2015, MOM filed a law suit against UBL at the Preliminary Commercial Court in Sana’a claiming the payment of both SBLCs for the sum of USD 25 million (Rs. 2,621.350 million). UBL management is pursuing the matter in the Court in Yemen and so far no major debate has been held as hearing has been adjourned to subsequent dates due to either non-appearance of legal counsel of Ministry of Oil and Mineral and nonsubmission of responses required by legal counsel of UBL. The case is still in the Court schedule however no summon is received for next hearing. Based on the legal advice of the Bank's legal counsel in Yemen and in view of facts surrounding the matter, management is of the view that it is unlikely that there will be any financial impact on the Bank. 13.5 Commitments to extend credit The Bank makes commitments to extend credit in the normal course of its business but these being revocable commitments do not attract any significant penalty or expense if the facility is unilaterally withdrawn. 12
20. NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2017 13.6 Commitments in respect of forward foreign exchange contracts Purchase Sale (Un-audited) (Audited) June 30, December 31, 2017 2016 -------------(Rupees in '000)-----------209,917,984 205,649,048 186,835,721 162,987,703 Interest rate swaps Cross currency swaps FX options - purchased FX options - sold Forward purchase of Government securities Forward sale of Government securities 5,459,989 180,764 180,764 999,667 2,099,315 6,986,094 522,051 213,081 213,081 4,998,400 3,553,866 13.8 Commitments in respect of capital expenditure 1,411,817 2,755,836 13.9 For contingencies relating to taxation refer note 17. 13.7 Commitments in respect of derivatives --------------- (Un-audited) --------------January January June 2017 June 2016 -------------(Rupees in '000)------------14. MARK-UP / RETURN / INTEREST EARNED On loans and advances to customers On lendings to financial institutions Call money lendings Repurchase agreement lendings Other lendings to financial institutions On investments in Held for trading securities Available for sale securities Held to maturity securities On deposits with financial institutions 15. 15,484,923 14,970,517 99,392 217,083 780,405 1,096,880 60,488 67,845 411,481 539,814 685,765 17,531,294 14,764,775 32,981,834 262,751 18,158,775 15,462,451 33,883,977 119,464 130,486 49,683,101 49,524,794 15,384,482 5,254,604 798,904 230,398 21,668,388 14,105,696 5,162,284 729,003 197,469 20,194,452 MARK-UP / RETURN / INTEREST EXPENSED On deposits On securities sold under repurchase agreements On other short term borrowings On long term borrowings 13