Annual Report 2009

Overcoming Challenges

Annual Report 2009

Overcoming Challenges

Contents
04 18 20 22 24 32 34 40 41 Our Vision and Mission Statement Our Core Values Awards Products / Services We Offer Corporate Information Board Committees Management Committee Organisational Structure President’s Message 46 47 48 48 49 49 50 61 62 65 66 Vertical Analysis Horizontal Analysis Quarterly Performance for 2009 and 2008 Summary of Cash Flows Calendar of Major Events Monthly Market Statistics of MCB’s Share Directors’ Report to the Members Corporate Social Responsibility Statement of Ethics & Business Practices Statement of Compliance with the Code of Corporate Governance Auditors’ Review Report to the Members on Code of Corporate Governance

Stakeholder’s Information 42 Value Added Statement 43 Graphical Presentation of Financial Statements 44 Six Years’ Progress 45 Graphical Presentation of Financial Progress in Six Years
02 | MCB Bank Limited

Standalone Financial Statements 67 Auditors’ Report to the Members 68 Balance Sheet 69 Profit and Loss Account 70 Cash Flow Statement 71 Statement of Changes in Equity 72 Statement of Comprehensive Income 73 Notes to the Financial Statements 134 Annexures Consolidated Financial Statements 154 Directors’ Report on Consolidated Financial Statements 155 Auditors’ Report to the Members 156 Consolidated Balance Sheet 157 Consolidated Profit and Loss Account

158 159 160 161 223 241 243 246 247 249

Consolidated Cash Flow Statement Consolidated Statement of Changes in Equity Consolidated Statement of Comprehensive Income Notes to the Consolidated Financial Statements Annexures Branch Network Pattern of Shareholdings Categories of Shareholders Notice of 62nd Annual General Meeting Form of Proxy

Annual Report 2009 | 03

Vision
To be the leading financial services provider, partnering with our customers for a more prosperous and secure future.

04 | MCB Bank Limited

providing innovative and efficient financial solutions to create and nurture long-term relationships with our customers.Mission We are a team of committed professionals. In doing so. we ensure that our shareholders can invest with confidence in us. Annual Report 2009 | 05 .

our enthusiasm and confidence helps us to shape a future full of prospects and opportunities. At MCB. During these financially trying times.Overcoming challenges with optimism. our positive approach to life and business enables us to anticipate and welcome change. Adapting to change can be a huge challenge. 06 | MCB Bank Limited .

Annual Report 2009 | 07 .

At MCB.Overcoming challenges with courage. After all. we dare to brave the unchartered. By spearheading relief efforts in refugee settlements. strength and belief. we continued to serve in a territory others were hesitant to enter. only by facing challenges can one appraise life with courage. 08 | MCB Bank Limited .

Annual Report 2009 | 09 .

10 | MCB Bank Limited . At MCB. We believe that cultivating team spirit is critical to foster personal and organizational growth.Overcoming challenges with teamwork. this signature approach to teamwork proves how collective progress helps achieve continuous growth.

Annual Report 2009 | 11 .

12 | MCB Bank Limited . It is this brand of conviction that culminates in greater success. we are driven to deliver the best. Under the most demanding circumstances.Overcoming challenges with conviction. At MCB. we are committed to achieving our vision of growth and prosperity through innovation.

Annual Report 2009 | 13 .

The vision of a secure and prosperous future requires insight.Overcoming challenges with focus. A combination of foresight and hindsight that has enabled MCB to withstand new and demanding challenges — and emerge as one of the forebearers of stability. 14 | MCB Bank Limited .

Annual Report 2009 | 15 .

Overcoming challenges with persistence. Which is why. Success comes with perseverance. not to mention. endurance and a commitment to tenacity. our dedication to excelling in all areas manifests itself through an ever-expanding portfolio of products and services. a consistently growing branch network. 16 | MCB Bank Limited .

Annual Report 2009 | 17 .

Innovation We encourage and reward people who challenge the status quo and think beyond the boundaries of the conventional. We believe in being the best at always doing the right thing. Excellence We take personal responsibility for our role as leaders in pursuit of excellence. We deliver on our responsibilities and commitments to our customers as well as our colleagues. result oriented organization where merit is the only criterion for reward.Values Integrity We are the trustees of public funds and serve our community with integrity. 18 | MCB Bank Limited . We are a performance driven. Our teams work together for the smooth and efficient implementation of ideas and initiatives.

Respect We respect our customers’ values. culture and history. beliefs. We thrive on the challenge of understanding their needs and aspirations. both realized and unrealized. We create an environment where each individual is enabled to succeed. We make every effort to exceed customer expectations through superior services and solutions.Customer Centricity Our customers are at the heart of everything we do. We value the equality of gender and diversity of experience and education that our employees bring with them. Annual Report 2009 | 19 .

Awards 2009 2009 2008 2008 Asiamoney: Best Domestic Bank in Pakistan The Asset: Best Domestic Bank in Pakistan Euromoney: Best Bank in Asia Euromoney: Best Bank in Pakistan 2008 2006 2006 2005 Asiamoney: Best Domestic Bank in Pakistan Asiamoney: Best Domestic Bank in Pakistan Euromoney: Best Bank in Pakistan Asiamoney: Best Domestic Bank in Pakistan 20 | MCB Bank Limited .

2005 2004 2004 2003 Euromoney: Euromoney: Asiamoney: Euromoney: Best Bank in Pakistan Best Bank in Pakistan Best Domestic Bank in Pakistan Best Bank in Pakistan 2001 2000 Euromoney: Euromoney: Best Bank in Pakistan Best Bank in Pakistan Annual Report 2009 | 21 .

multiple and diversified product range. As members of MCB Privilege. MCB Syndicated Loans And Debt Capital Markets It involves arrangement. 5 million + deposit. Lahore. MCB Agri Products MCB has been providing finance to the agriculture sector since 1973. These accounts ensure ease and freedom to bank from any of the 1. including working capital loans. specialized staff posted in the branches. where the loan is tightly structured around the cash flows.100 branches across the country. supported by real-time MIS. It offers other Value Added Services that include a portfolio of e-banking and payment system products as well as management and day-to-day operations of the same. rights issues and private equity placements. Pay Orders and lots more to meet the day to day business requirements. e Current Account MCB Bank offers a variety of current accounts to cater to the everyday transactional needs of various customers. MCB Project & Structured Finance Involves financing complex projects. MCB Privilege A first from a local bank. commercial structuring support and access to capital resources to help companies successfully finance their business/project. a product for small banks and financial institutions to use our vast branch network platform to make payments in areas where their own branch network does not exist. Members include 10 local and foreign financial institutions enjoying ATM sharing and Value Added Services. more rewarding in-branch experiences and a wide array of deposit and investment products that are tailored to meet the financial expectations of our affluent clientele. and for all the others the conventional Current Account. In addition. usually in an SPV structure. Current Life Account which offers the security of life insurance free of cost. a unique product: Smart Savings is an account run solely via a debit cart. Demand Drafts. The different accounts include: the basic account that has no minimum balance. offers for sale. and there is limited or no recourse to the sponsors. 22 | MCB Bank Limited MCB Equity Capital Raising Equity Services relate to raising capital for our clients by offering common or preferred equity to public or private investors. Islamabad and Multan. Savings Account It offers a wide array of savings products that suit short term growth & transactional needs. along with cash payments from other correspondents all over the world. Samba (SpeedcashNow) and Moneygram. term loans. MCB Islamic Banking provides Riba Free and Shariah Compliant solutions to various customer segments in a growing number of cities. MCB Local Rupee Drawing Arrangement Transaction Banking Department at MCB. MCB Corporate Financing MCB Corporate Financing provides access to diversified financing options.Products and Services MCB Online Banking MCB has a fast growing network of over 1. MCB Islamic Banking With the help of Shariah specialists. Savings Xtra is targeted for customers having Rs. Cash payments can also be made at our designated branches on behalf of Xpressmoney. world class Privilege Centers offers a higher level of personalized services. customers experience unparalleled advantages that put them ahead of others.100 online branches in the country providing customers real time online transaction facilities. MCB Cash Management Cash Management provides a wide range of value added services to large corporations through its vast network of online branches. This product enables our customer's dealers to leverage themselves and increase their business capacity with their respective business partners. MCB Home Remittance MCB Home Remittance provides a seamless inflow of foreign remittances credited in the beneficiary’s account within minutes. we cater to the financing requirements of the farming community spread throughout the country and facilitate in achieving increased productivity. MCB’s dedicated Privilege Centers await to welcome you in Karachi. MCB Channel Financing MCB Channel Financing provides working capital facilities to dealers and vendors of selected companies under a structured product program. lawyers and professional commercial bankers. through initial public offers. MCB MNET MNET is an electronic inter-bank connectivity platform for online transactions on ATM and other remote banking channels. with plans to expand to mor locations. MCB Privilege through its dedicated. With the help of our vast branch network. trade finance services and investment banking. risks are allocated amongst various stakeholders. . MCB Quasi Equity/Hybrid Instruments It structures and places a category of debt that has some characteristics of equity such as being unsecur subordinated ed. provides Local Rupee Drawing Arrangement. or with a potential equity upside. offering a very competitive rate to small savers. underwriting and placement services for significant financing requirements by large corporate and institutional clients to other financial institutions or through the debt capital markets. Business Account offering free online transactions. MCB Advisory Services Financial and Capital Raising Advisory provides our clients with financial advisory services. Our savings accounts offer attractive profit rates as well as flexibility to transact. Our structured and customized products enable our customers to realize their sales proceeds swiftly from all over the country. thus extending their reach countrywide. 365 Gold offers profit rate on daily balance while PLS savings has a lower minimum balance requirement.

easy processing and above all. MCB Call Center There’s no easier way to bank than the new enhanced 24/7 MCB Call Center. convenience and security. flexible conditions. MCB Bancassurance has created a one-stop shop for all your financial and insurance needs. or work with you to create a personalized solution completely focused on your expectations of the capital markets. MCB Car4U MCB Car4U not only gets you a car of your own choice but is also affordable with competitive mark-up. pay MCB Visa Credit Card bill from your MCB account. MCB Full Day Banking Enjoy the convenience of extended banking hours form 9am to 5pm. including Saturdays at MCB FULL Day Banking branches across the country. MCB Investment Services Make the most of your wealth with investment opportunities that match your unique financial aspirations. confirm last 5 transactions. login to www. MCB Mobile ATM With MCB Mobile ATM not only do we provide you with world class banking service but we also provide convenience. top-up your mobile. travel privileges & shopping pleasure. Salary Club provides the convenience of having an extensive range of financial services available to employees at their place of work. office or on travel. transfer money within your own accounts in MCB and register complaints. This is combined with different profit payout options and the added facility of being able to avail credit facility against their deposits. These unique features include i-revolve. funds transfer services and much more. superior service. transfer funds. MCB Instant Finance With MCB instant Finance get a loan instantly at any MCB branch against liquid collateral at competitive pricing. MCB Salary Club A payroll solution designed to make life easy. MCB Investment Services offer distribution of mutual funds managed by the leading fund managers of Pakistan. pay bills and do much more. Our innovative mobile ATMs ensure that you are given service close to you. Gold and Platinum Visa Credit Cards focusing on providing. utility bill payment. for the security of dignity after retirement or gaining maximum return on savings.pk and enjoy 24 hour access to all your accounts at MCB for a great number of services such as Funds T ransfer. pay utility & mobile phone bills.com. pay utility and mobile bills. mini statements and credit card related information once your card is linked. Smart Card allows you to manage your account. No need to visit a branch or an ATM anymore. reward points and SMS alerts that give a different feel to the world of Credit Cards. is the most widely accepted way to pay cash for travel-related purposes. It also offers comprehensive insurance & installment plans. We can suggest the products most suited for your needs. Whether you want to save for your child’s education or marriage. MCB Virtual Banking MCB provides the convenience of banking via internet.mcb. check your account balances. Lockers of different capacities are available nationwide. MCB Rupee Travelers Cheque. which makes variable mark-up rate available to customers allowing them to repay at affordable rates. whether at home. being the market leader. MCB Rupee Travelers Cheque It is a safe and secure way to make payments nationwide.Terms Deposit MCB Term Deposits offer attractive short to mid-term investment options with flexibility.com using your mobile phone and start transacting. transfer money. it simplifies all the monthly payroll related banking needs of employers and opens the door to a world of special offers for employees. register for mobile and internet banking services and much more. MCB Lockers MCB Lockers are the best protection for your valuables. recharge prepaid connections. MCB Bancassurance Combining the best of banking and insurance solutions. MCB SMS Banking Banking at your finger tips: SMS anytime to get information regarding balance. MCB Smart Card MCB Smart Card is the key that enables access to convenient banking services. MCB ATMs MCB has one of the nation's largest ATM networks with over 450 ATMs and still growing. no hidden costs. Mobile Top-ups and much more. log on to www. MCB Bancassurance has a plan just for you. MCB Visa Credit Card MCB offers a complete suite of Classic. withdraw cash. With MCB Call Centre you can maintain your VISA credit & ATM/Debit cards.mcbmobile. Utility Bill Payments. mini-statement. With various tenor options available customers can choose one that suits their needs. MCB ATMs give you 24-hours convenience of cash withdrawal. which blends innovation and convenience to provide Banking Services that go beyond expectations. Annual Report 2009 | 23 . MCB Mobile MCB Mobile is a quick easy and secure way to recharge mobile phones.

Muhammad Yaqub Mian Raza Mansha Mian Umer Mansha Dato’ Mohammed Hussein 24 | MCB Bank Limited (Non-Executive Director) Abdul Farid Bin Alias Aftab Ahmad Khan Muhammad Ali Zeb (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) Atif Bajwa President & Chief Executive Officer (Executive Director) Audit Committee Tariq Rafi – Chairman Dr.Corporate Information Board of Directors Mian Mohammad Mansha Chairman S. Muneer Vice Chairman Tariq Rafi Shahzad Saleem Sarmad Amin Dr. Muhammad Yaqub Dato’ Mohammed Hussein Aftab Ahmad Khan Muhammad Ali Zeb Malik Abdul Waheed (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) (Advisor to the Chairman) .M.

Lahore. Advocates & Legal Consultants Registered Office MCB Building. Chartered Accountants Legal Advisors Khalid Anwer & Co. Sami Auditors KPMG Taseer Hadi & Co. F-6/G-6. UAN: (042) 111-000-111 PABX: (042) 36041998-9 Website: www. Karachi.Chief Financial Officer Salman Zafar Siddiqi Company Secretary Abdus S.pk Email: info@mcb.3.com.com. Jinnah Avenue.pk Shares Registrar M/s. Principal Office MCB 15 Main Gulberg. Annual Report 2009 | 25 . State Life Building No. Dr. Ziauddin Ahmed Road.) Ltd. THK Associates (Pvt.. Islamabad.mcb.

Atif Bajwa President 26 | MCB Bank Limited .Board of Directors Mian Mohammad Mansha Chairman Mr. S. Muneer Vice Chairman Mr.M.

Tariq Rafi Mr.Mr. Shahzad Saleem Annual Report 2009 | 27 .

Sarmad Amin Dr. Muhammad Yaqub Dato’ Mohammed Hussein Mian Raza Mansha 28 | MCB Bank Limited .Mr.

Mr. Muhammad Ali Zeb Annual Report 2009 | 29 . Abdul Farid Bin Alias Mian Umer Mansha Mr. Aftab Ahmad Khan Mr.

Muneer Vice Chairman With experience in sectors ranging from tanneries. moved to Dubai with Mashreqbank to lead their Retail and Small Business Group. Mansha has served as the Chairman of MCB since its privatization in 1991. for his contributions to industrial development. He is currently a member of the Audit Committee and the Business Strategy & Development Committee. he was part of ABN AMRO Bank where. Mr. In addition. joined the MCB Board as an Independent Non-Executive Director in August 2008. Mr. Electrical Manufacturing and Textiles. Appointed to the MCB Board in April 2006 he is a member of the Audit Committee. Mr. At MCB. Dr. the Business Strategy & Development Committee and the Human Resource Committee. Atif Bajwa President Mr. Mr. He serves as a Director for various companies. of Pakistan). His years of experience in the financial sector include 31 years with the Maybank Group where he held various senior management positions including Deputy President and Chief Financial Officer until he retired in 2008. He has been awarded with The Best Export Performance trophy by the Federation of Pakistan Chamber of Commerce & Industry (FPCCI). Asia Pacific. textiles and leather garments. Rafi is a recipient of the coveted civil award Sitara-e-Imtiaz and the Best Businessman of the Decade. In June 2007. S. Sarmad Amin Mr. Karachi. Member of the Committee on Physical Planning. he is the Chairman of the Audit Committee. Along with that he is serving as the Chief Executive of Nishat Chunian Ltd and Chairman of Nishat Chunian Power Ltd. He is a member of the International Advisory Board at Babson College in the USA. His contributions and achievements go beyond the economic sphere into the education sector as well. Muhammad Yaqub Former Governor of SBP (1993-1999). Amin has 30 years of business experience in the fields of Construction. UK and Best Businessman of the Year Award from FPCCI. He was awarded an Honorary PhD degree by the Governor of Sindh and is also a member of the Board of Directors of CBM and Greenwich College. Yaqub has held various offices for the Government of Pakistan and the IMF. Dato’ Mohammed Hussein Dato' Mohammed Hussein. he is the Chairman of the Committee on Physical Planning.2001. Tariq Rafi Mr. he joined MCB Bank and has brought along with him the vision and leadership to lead the bank to new horizons. Civil Aviation Authority (Govt. In 2004. He is also on the Board of Engineering Management Foundation (FASAT). he has received the Sitara-e-Isaar and the Sitara-e-Imtiaz in 2006 and 2007 respectively. Bajwa has 28 years of diverse national and international experience in corporate and consumer banking. Mr. Board of Investment (Govt.M. Pakistan and later Consumer Banking Head. At MCB. IT System & Contingency Arrangements. Nominee). Muneer is a consummate industrialist. He began his career at Citibank Pakistan as a corporate banker in 1982 and went on to become a senior member of the Corporate Banking & Finance Unit for the Gulf Markets. Mr. Mr. he is the Chairman on the Board of Punjab Coal Mining Company. he was presented with Pakistan's highest civil award the Sitara-e-Imtiaz. Dr. Presently he also sits on the board of a number of 30 | MCB Bank Limited . Shahzad Saleem Mr. Shalamar Medical & Dental College and also serves as the Honorary Director of Punjab Board of Investment & Trade (PBIT). From 1993 . Bajwa re-joined Citibank in 2001 as Regional Head for Central and Eastern Europe covering corporate and consumer banking and then in 2005. Member of the Risk Management & Portfolio Review Committee. among other significant roles. the Gold Medallion Award from the International Export Association. In addition. he served as Country Head. IT Systems & Contingency Arrangements and a member of the Risk Management & Portfolio Review Committee.Profile of the Board Mian Mohammad Mansha Chairman Mr. Shahzad Saleem is an active member of the Risk Management & Portfolio Review Committee at MCB.

Presently he is the Chairman of the Risk Management & Portfolio Review Committee and is a member of the Business Strategy & Development Committee at MCB. Aftab Ahmad Khan is the Group Director. He was elected as a Director at MCB in the 61st AGM held in March 2009. he is a board member for various other businesses. Muhammad Ali Zeb is currently the CEO of Adamjee Insurance and has more than 15 years of professional experience in Finance. Abdul Farid Bin Alias Mr. Finance and Accounts at Nishat Group of Companies. Aftab Ahmad Khan Mr. Malaysia. From April 2009 to May 2009 he served as a member of the Committee on Physical Planning. Raza Mansha. strategic decision making and investment appraisals for the group. Umer Mansha was elected as a Director to the MCB Board in November 1997 and served till September 2007. Textile. several government-linked institutions in Malaysia and the Exim Bank of Malaysia. Mian Umer Mansha Mr. Human Resource. Hotel and Tourism sectors.Profile of the Board companies listed on the Stock Exchange in Malaysia and Singapore. Mr. He is also a fellow Chartered Accountant of the Institute of Chartered Accountants of Pakistan. he is a member of the Audit Committee. Annual Report 2009 | 31 . He has also served on the Punjab Industrial Development Board and in Public sector organizations such as Ghee. Mr. Presently he serves on the board of Commercial Banking. he is a Director on the Board of Adamjee Insurance Company and Pakistan Business Council. Paper. Physical Planning. Muhammad Ali Zeb Mr. Risk Management & Portfolio Review. Insurance & Manufacturing sectors. He has held senior positions at a number of Malaysian and global financial institutions primarily in the area of Investment Banking. In addition. Aftab Ahmad Khan has over 47 years of diversified professional experience in various sectors. At MCB. Energy. Mr. IT System & Contingency Arrangements at MCB. In addition. is a member of the Committee for Business Strategy & Development. 2009. which involves financial planning. Mr. At MCB he is a member of the Audit Committee. He was re-elected as a Director at MCB in the 61st AGM held on March 27. Sugar and Rice mills. Mian Raza Mansha Mr. Farid is the Head of International at Maybank. IT Systems & Contingency Arrangements at MCB.

receiving and reviewing related party transactions. Tariq Rafi Chairman Dr. monitoring of progress towards Basel II. Human Resource Committee Members Mian Mohammad Mansha Chairman Dr. write-offs. carrying surveillance functions on behalf of the Board. market and liquidity risks. Shahzad Saleem Terms of Reference Main terms of the RM & PR Committee are review of risk management strategies. reviewing management letter issued by external auditors. job description and methods of periodical reviews. reviewing scope of internal audit functions and adequacy of resources at internal audit. Atif Bajwa Mr. ensuring coordination between internal and external auditors and communication between employees and the committee.Board Committees Audit Committee Members Mr. development of in-house expertise. restructuring and rescheduling. Sarmad Amin Mian Raza Mansha Mian Raza Mansha Mr. considering of significant findings of internal investigations. approval and monitoring of limits in respect of credit. development of risk management policies and portfolio management parameters. proper classification and reclassification of employees' pay scales. training and performance appraisals and effective management of information systems to monitor implementation of policies as approved by the Board. reviewing financial statements and statement on internal control prior to approval of the Board. Risk Management and Portfolio Review Committee Members Mian Umer Mansha Chairman Mr. approval and revision of organizational setup. Mr. Aftab Ahmad Khan Mr. Muhammad Ali Zeb Malik Abdul Waheed (Advisor to the Chairman) 32 | MCB Bank Limited . Tariq Rafi Mr. monitoring of Bank's portfolio and approval of policy framework to be followed by the management for lending operations. determining effectiveness and efficiency of internal controls. setup of latest criterions for recruitment. Muhammad Yaqub Terms of Reference The main tasks of the Human Resource Committee are ensuring review of existing policies and revision in these policies as deemed necessary. making recommendations to the Board for appointment of external auditors. Muhammad Yaqub Dato' Mohammed Hussein Terms of Reference The main terms of Audit Committee are determination of suitable measures to safeguard bank's assets. monitoring of relevant statutory violations and any considering any other issue as assigned by the Board.

Muhammad Yaqub Dato' Mohammed Hussein Terms of Reference Major tasks include review and development of 'Vision & Mission' statements and 'Core Values' for the Bank. Muneer Mr. M. medium and long term business plans and policies based on strategy. changes in plans arising from this review. future direction and milestones set by the Board and monitoring the progress of the key strategy initiatives undertaken by the Bank. master development agreements. IT system and contingency arrangements for the Bank. information technology & contingency arrangements and review of the administrative structures & plans in place to ensure the ongoing health and safety of utilities and physical assets.Board Committees Business Strategy and Development Committee Members Mian Mohammad Mansha Chairman S. devising short. including land & buildings. review and monitoring of all work in progress based on physical planning. development of Bank's initiatives relating to business philosophy and acquisition. Muneer Dr. Sarmad Amin Chairman S. monitoring and recommending to the Board the building plans. IT Systems and Contingency Arrangements Members Mr. Mian Raza Mansha Mr. capital raising exercise. as appropriate. Committee on Physical Planning. investment and divestment. IT infrastructure and recommend. Atif Bajwa Annual Report 2009 | 33 . M. strategic alliances and brand management. Atif Bajwa Mian Raza Mansha Mian Umer Mansha Mr. Tariq Rafi Terms of Reference Development of an overall plan for physical infrastructure.

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U.A Usmani 35 | MCB Bank Limited . Salman Zafar Siddiqi • Mr. Atif Bajwa.Management Committee From left to right: Mr. M. President & CEO • Mr.

• Mr. Muhtashim Ashai . Laqa Sarwar • Mr. Ali Munir • Mr. Kamran Zaffar Muggo • Mr.

Imran Maqbool • Mr. Mehreen Ahmed . Faisal Farooq Khan • Mr.• Mr. Azfar Alam Nomani • Ms.

• Mr. Usman Hassan • Mr. Agha Saeed Khan Annual Report 2009 | 37 . Romana Abdullah • Mr. Mohammad Nauman Chughtai • Ms.

Working together is success. Keeping together is progress.” –Henry Ford .“Coming together is a beginning.

Organizational Structure Board of Directors Chairman President Audit & RAR Wholesale Banking Consumer Banking Islamic Banking Commercial Banking Treasury & Forex Special Assets Management Public Relations Risk Management Compliance & Control Strategic Planning & Investment Banking Financial Control Information Technology Project Management Human Resource Management Operations Business Development and New Initiatives 40 | MCB Bank Limited .

To get top market share. we became the first Pakistani bank to launch mobile banking. we introduced Bancassurance and Investment Products in many of our branches. My task and that of the entire team is to ensure that we continue to go from strength to strength. With best regards. we also delivered a superior return on equity of 27. develop a unit cost culture and generally be on top of our game. • Finally. we also reached an agreement with RBS Pakistan to acquire their business. strengthened transaction processing and leading financial products menu. balance sheet and reputation are unparalleled. • We will continue to invest in our branches to make them more sales and service oriented. We look forward to an even better 2010. we will further strengthen our reserve of talent and leadership powered by a strong performance culture and training. If we can understand our customer’s financial objectives and offer them the right products and services so that they can be financially successful. • No organization can deliver without investing in its employees. this is just the beginning and we are committed to taking the Bank to the next levels of success. Atif Bajwa President and CEO Annual Report 2009 | 41 . We will build stronger controls. 23. to meet the growth and protection needs of our customers. to expand our reach and customer proposition. Islamic & SME. These coupled with several other initiatives enabled us to continue on the path of growing our customer base and profitability. This growth is directly attributable to an increase of 14% in our CASA deposits. I am pleased to announce that MCB Bank Ltd in 2009 delivered a profit before tax of Rs. we will continue to invest in our alternate channel payment capabilities and services as well as getting a larger share of transaction driven businesses like remittances. we will continue down the path of further segmenting our customer needs and developing focused customer propositions. 21% in revenues and a tight control on our expense base enabling us to retain our position as one of the most profitable banks in the country. Key features of our multi-pronged plan are as follows: • We want to be viewed as the leader in transactional convenience. we took several initiatives that brought us even closer to our customers. 500 Billion mark. then MCB Bank will continue to build on it’s leadership position and provide requisite returns to it’s shareholders. With the launch of MCB Privilege. mid market and corporate segments.2 Billion registering a growth of 6% over last year. During 2009. For MCB. In 2009. payroll and trade. for us as an organization. Last year. controls and efficiency is central to our existence. Our fundamental belief is that a financial services company can only succeed if it meets it’s customers’ needs.President’s Message To our owners. Bank’s performance in 2009 is an attestation of the commitment & passion that the team brings to MCB and the strong support of the shareholders. we became the first local bank to offer a dedicated proposition for the affluent segment. • In addition to our core focus on mass. cash management. we aspire to achieve this ambition. particularly in Privilege. Unfortunately. In order to deliver our growth targets. to enhance transactional convenience for our customers. MCB’s strengths in terms of its franchise. the deal did not go through but we continue to invest organically to further strengthen our businesses. This performance is all the more remarkable keeping in view the economic & political challenges faced by the country during this past year and miscreant created issues that MCB specifically grappled with for a large part of the year. Through introduction of our new sales and service model.4% and our assets crossed the Rs.

81% 100% 815.084 5.686.465.521.297 29.478.642.563 (5.549.885 (6.897) (4.285) 3.791.647 28.042.63% 437. in '000 % 35.853.371 34.867 27.138 8.351 6.648 1. depreciation.145) 27.205 142.45% 25.966 1.042.966.637) (7.13% -14.78% 26. in '000 Value Added Net interest income Non interest income Operating expenses excluding staff costs.91% 7.256) 24.99% 463.24% -21.264.371 Distribution of value added To employees Remuneration.244 27.723.736 To government Worker welfare fund Income tax To providers of capital Dividends to shareholders To expansion and growth Depreciation Amortization Retained earnings 909.483.67% 27.099 7. provident fund and other benefits Pension fund reversal 6.005 7.397 7.287. amortization and WWF Provision against advances.98% 6.99% 5.15% 10. investments & others Value added available for distribution % 2008 Rs.348 24.440 (5.923.319) 1.Statement of Value Added 2009 Rs.682.544 5.549.021 (3.462 31.228.201.399.492.54% 100% 8.293.647 29.471 153.723.999 8.24% 2009 2008 to employees 5% to employees 11% to expansion and growth 30% to government 29% to expansion and growth 35% to government 28% to providers of capital 30% to providers of capital 32% 42 | MCB Bank Limited .774.659.

721 NII 5.736) 2008 Operating CF 2.234) Annual Report 2009 | 43 .484 Assets 509.148 Financing CF.032 Investing CF (70.740 Equity Including Surplus 19% Liabilities 14% Liabilities 439.155 PAT 15.643 Provisions 7. in Millions) Variance During the FY09 PAT PBT Operating Expense (excluding PF reversal) Provisions N II -3% NIM 26% Operating Expense (excluding PF reversal) 14.465 1% 6% 8% 85% PBT 23.369) Operating CF 78.224 Assets 15% Profit & Loss (Rs.775 Cash Flows (Rs. in Millions) Variance During the FY09 Equity. in Millions) 2009 Financing CF (6.Graphical Presentation of Financial Statements Balance Sheet (Rs. 69.313) Investing CF (8.495 NIM 35. (10.

155 15.058 7.616 15.00 75.797 30.369 3.03% 78.80% 71.91 87.142 3.14% 24.66 399.160 370 1.64% 10.500 5.500 3.06% 37.14% 62.65% 62.60% 103.265 9.55% 8.35% 3.85% Rs.42 73.00 2.721 349 994 9.354 259.46% 12.50 71.225 628 31.48% 10.483 4.79% 42.424 298.378 188.418 26.99% 4.20% 8.072 13.net of provisions FINANCIAL RATIOS Profit before tax ratio (PBT/ total income) Gross Spread (NIM/Int Income) Income/ expense ratio Return on average equity (ROE) Return on average assets (ROA) Return on Capital Employed (ROCE) Earnings per share (EPS before tax) Earnings per share (EPS after tax) Advances/ deposits ratio (Gross) Advances/ deposits ratio (Net) Breakup value per share Breakup value per share (including surplus) Earning assets to total assets ratio Earning assets to Deposits & borrowings NPLs to Gross advances ratio Deposits to shareholder equity ratio Capital Adequacy Ratio DIVIDEND RATIOS Cash Dividend Per Share Dividend Yield Ratio (based on cash dividend) Dividend Payout Ratio Bonus Shares Issued SHARE INFORMATION Market value per share .193 52.018 8.076 8.486 6.000 6.135 18.191 443.245 6.409 1.75% 70.74% 8.495 7.84 27.224 367.68 244.922 1.81 79.531 35.943 206. *** Rs. *** Rs.090 1.31 21.620 7.662 5.23% 107.525 21.773 7.49 34.725 113.432 843 337 2008 2007 2006 2005 2004 Times Rs.95 434.199 5.64% 79.52% 4.55 85.055 4.961 10.481 6.10 284.28% 70.960 819 17.54% 34.638 14.465 23.10 85.73% 0. *** Rs.549 19.058 2.00% 11.68 Rs.778 4.838 67.22% 30.174 221. 11.283 36.084 2.89% 88.044 1.59% 9.net of tax Total Assets Deposits & other accounts Borrowings from financial institutions Gross Advances Advances .60 84.706 410.83 22.38% 46.60% 31.501 12.462 23.91 82. *** Times ** * Absolute numbers ** 2009 .975 4.372 5.Dec 31 High .47% 77.65% 4.35% 33.35% 8.318 8.000 6.26% 5.657 5.348 20.777 229.042 21.66 5.365 25.244 6.96% 65.12% 18.279 6.49% 3.00 5% 53.96% 13.70% 6.24% 8.377 234 946 9.866 23.417 10.49% 82.06 86.34% 101.09 78.275 8.22% 8.487 429 4.13% 56.51% 18.Six Years Progress 2004 .188 342.59 59.369 6.451 4.39% 75.66% 4.10 31.79% 15.781 14.25 82.74% 9.328 2.00 45.62% 9.12% 13.769 9.31% 3.255 34.283 34.249 23.269 96.463 24.00 151.91% 69.06 37.561 28.605 44.722 253.182 22.00 58.12 64.80 125.84 12.12% 17.54% 103.00% 12.848 198.87 3.20% 58.25 2.04% 9.during the year Market Capitalisation Price to book value ratio Price to earning ratio Industry Shares Deposits Advances Total Assets Market Capitalisation Non Financial Information Number of branches* Number of permanent employees* Number of ATMs* 1.000 6.573 1.069 7.91% 24.396 69.49 9.911 38.70 65.13% 4.65% 74.414 9.52 65.311 5.792 4.00% 51.59% 0.50 9.14% 7.50 150.662 269.87% 3.026 3.061 21.47% 6.02 19.01 45.62% 6.50% 8.net of provisions Non-Performing Loans (NPLs) Investments .575 1.16% 75.57 80.48% 26.537 1.060 10.011 263 952 9.11 246.50 22.342 27.64% 14.22 18.70% 107.37% 68.37 100.131 45.63% 26.234 41.35% 1. brokerage & FX income Dividend and capital gains Total income Operating expenses Operating profit before tax and provision Provisions/ write-offs Profit before tax Profit after tax Dividends Bonus shares BALANCE SHEET Authorised capital Paid up capital Reserves Unappropriated Profit Shareholder's equity Surplus on revaluation of assets .66% 12.253 3.25% 27.50 50.52% 10.44% 4.664 272.34% 3.71 79.572 6.239 167.266 7.847 262.43% 16.756 2.77 17.64 22.098 39.33 13.05 251.632 10.26% 99. Commission.571 63.64% 20.308 15.662 165 9.044 11.081 9.30 134.868 15.00% 4.140 180. Rs.602 691 40.486 292.591 144.52% 22.03 9.715 853 9.80 175.616 330.17% 5.01 167.728 6.822 2.172 11.81 494.00% 2.134 10.95% 49.77 14.60 244.00% 7.286 4.63% 8.49% 31.53% 10.34 87.841 35.001 5.50 3.00% 3.406 1.026 9.53 12.80 125.76 83.41 16.500 4.2008 and 2007 based on BASEL II framework *** Adjusted for prior years to affect bonus shares issued during 2009 44 | MCB Bank Limited .58% 8.00% 55.80% 84.194 18.386 15.000 24.07% 63.779 61.889 217 8. M Times Times 219.67% 6.2009 Rupees in Million 2009 PROFITS Mark-up/ return earned Mark-up/ return expensed Fund based income Fee. Rs.14% 56.664 509.50 4.108 257.921 4.58% 8.32 16.43 16.during the year Low .120 30.910 4.195 51.397 495 1.787 7.323 8.81% 11.09 18.089 6.34% 77.775 4.35 19.50% 8.75% 6.695 1.62 28. Rs.854 25.239 8.19% 10.990 18.733 218.88% 98.010 137.407 229.375 7.

769 35. in Millions) 18.058 2009 2008 2007 2006 2005 2004 Shareholders’ Equity (Rs.253 5.487 3. in Millions) 61. in Millions) 52.055 2009 2008 2007 2006 2005 2004 2009 2008 2007 2006 2005 2004 Where we Stand 2009 Variance compared to 2008 Amount % Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provisions & write off Non-mark-up / interest income Non-mark-up / interest expenses Profit before taxation Taxation Profit after taxation EPS Rs.616 15.910 24.501 25.42 11.643 10.026 2009 2008 2007 2006 2005 2004 Profit Before Tax (Rs.090 2009 2008 2007 2006 2005 2004 4.662 4.386 Reserves (Rs.076 38.17 5.433 1.975 2009 2008 2007 2006 2005 2004 7.308 30.369 13. in Millions) 6.620 Operating Income before Provision and Tax (Rs.291 3.775 7.155 7.868 21.199 9.657 34.495 22.245 45.018 19.167 121 0.281 7.797 23. in Millions) 35.265 14.414 36.155 21. in Millions) 23. M " " " " " " " " Rupees 51.841 35.660 15.572 4.311 24.463 4.287 1.483 6.695 14.911 Paid-up Capital (Rs.921 21.775 6.423 (149) 2.283 23.662 9.372 29% 37% 26% 85% -3% 29% 6% 18% 1% 1% Annual Report 2009 | 45 .Graphical Presentation of Financial Progress in Six Years Fund Based Income (Rs.465 5.283 28.001 18.

708 10.408 211 5.net Advances .net of tax 6.142 46 | MCB Bank Limited .526 94% 3% 3% 3% 85% 1% 0% 86% 385.481 180.375 12.135 17.441 5.943 257.684 3.346 0% 5% 2% 5% 74% 10.182 0% 192 5.844 5.666 1.486 342.448 (6.026 (429) 6.7% 34% -53% 29% -12% Profit after taxation 15.120 13% 40.662 5.553 6% Represented by Share capital Reserves Unappropriated profit Surplus on revaluation of assets .436 13% 55.965 67.465) 28.040 509.643 (10.058 (1.188 12% 2% 7% 2% 2% 23.366 87% 301.407 292.561) 28.466 6.999 69.616 (15.015 23.810 9% 1% 1% 22% 59% 4% 4% 39.911 38.171 88% 3% 275.182 437 21.493) 87% -25% 62% -9% 53% 13% -18% 48% -14% 34% 31.740 1% 8% 3% 2% 14% 6.778 (4.266 84% -21% 63% -8% 55% 17% -16% 56% -16% 40% 25.195 137.283 36.191 58.553 3.000 0% 6.042) 24.841) 35.577 21.462 1.174 100% 443.486 198.598 3% 244.868 (6.024 17.591 221.120 13% 2% 8% 1% 2% 40.061) 20.483 (4.264 Net assets 69.265 13.463 24.549) 18.084 (2.706 55.787 (7.781) 14.754 (6.042) 15.605 3.201 44.599 269 6.net Other assets .756 (2.031 9% 2% 6% 19% 58% 3% 23.495 27% 15.180 11.626) 18% 66% -15% 51% -3% 47.621 3% 9% 77% 1% 7.308 8% 14.961 16.000) 21.386 15.632 262.866) 23.069 1.059 4.860 6.072) 13.975 (1.082 63.309 5.769 9.424 8% 1% 4% 0% 2% 14.808 1.664 330.616 100% 410.844 12% 23.051 113.469 9.239 9.501 (6.net Operating fixed assets Deferred tax assets .797) 23.662 367.096) 38% 76% -12% 64% -5% 59% 24% -28% 55% -17% 2.662 165 5.323 8.819 439.537 27.197 15.131 9.193 6.479 39.869 10% 1% 0% 28% 53% 4% 4% 100% 32.378 229.100 96.224 8% 1% 1% 33% 50% 4% 5% 2008 % Rs M % 2007 Rs M % 2006 Rs M % 2005 Rs M % 2004 Rs M % 39.660) 90% -28% 62% -13% 49% 10% -19% 40% -13% 40.134 253.043 4.154 100% 9% 2% 4% 26% 53% 3% 2% 3% 2% 259.567 7.108 100% 298.638) 13.253 (1.775 6.432 9.283 34.155 (7.000 167.044 (11.358) 84% -15% 69% -4% 65% 16% -21% 60% -21% 39% 8.469 2% 7% 75% 0% 8.net Other liabilities 8.054 172 11.597 4.903 5.354 6% 1% 2% 0% 2% Profit & Loss Account Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provisions & write off Net mark-up / interest income after provisions Non-mark-up / interest income Non-mark-up / interest expenses Profit before taxation Taxation 51.090 23.058) 7.089 218.318 8.722 3% 10% 71% 0% 0% 3% 7.018 (4.612 92% 8.286) 4.249 18.991 (6.net 38.833 5.747 (7.264 19.525) 21.531 5.484 2% 9% 72% 1% 3% 10.436 13% 1% 8% 2% 1% 6.597 11.345 1.922 17.308 4.372 5.664 69.777 Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loan Deferred tax liabilities .001 5.631 4.464 100% 8% 0% 3% 23% 60% 3% 23.921 (3.194) 20.308 (6.791 (8.551 22.180 87% 355.010 3.779 8.775 (7.098 479 1.740 14% 58.Six Years’ Vertical Analysis Balance Sheet / Profit & Loss Rupees in Million 2009 Rs M Balance sheet Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments .365) 21.

921 (3.net of tax 6.net Other liabilities 8.265 13.551 22.779 8.net Other assets .597 11.024 22% -42% -95% 78% 10% 77% -100% 62% 20% 32.869 410.501 (6.664 69.486 198.154 -5% 23.463 24.756 (2.194) 20.599 269 6.net 38.net Advances .015 23.844 75% 28% 84% 2526% -4% 4.010 3.465) 28.135 17.577 21.120 15% 38% -7% 87% 35% 5.308 12.283 34.286) 4.722 355.134 253.943 257.664 330.051 113.378 229.441 5.264 275.224 -2% 49% -27% 73% -3% 4% 16% 15% 39.195 137.386 15.553 3.553 31% Represented by Share capital Reserves Unappropriated profit Surplus on revaluation of assets .026 (429) 6.358) 36% 45% 63% 42% 11% 44% -13% -1% 42% 55% 8.239 9.424 60% 27% 137% 28% 1% 14.191 58.084 (2.308 60% 14.283 36.775 (7.660) 15.042) 24.778 (4.018 (4.000 -5% -1% 338% 5% -48% 41% 75% - 342.072) 13.561) 28.253 (1.436 6% 55.632 262.841) 35.042) 15.198 15.965 67.591 221.171 9% 30% -17% -13% 12% 0% 8.616 11% 8% 0% 6% 290% -15% 20% 8% 17.495 29% 37% 26% 85% 16% -3% 29% 6% 18% 1% 40.201 44.308 (6.754 (6.100 96.432 9.069 1.479 39.769 9.Six Years’ Horizontal Analysis Balance Sheet / Profit & Loss Rupees in Million 2009 Rs M 09 Vs 08 % 2008 Rs M 08 Vs 07 % 2007 Rs M 07 Vs 06 % 2006 Rs M 06 Vs 05 % 2005 Rs M 05 Vs 04 % 2004 Rs M 04 Vs 03 % Balance sheet Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments .1% 5% -3% 12% 18% 10% 4% 72% 40% 19% 6.777 23.833 5.797) 23.098 479 1.089 218.345 1.090 23.108 Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loan Deferred tax liabilities .448 (6.407 292.747 (7.662 367.188 40.000 167.354 31% 10% 29% -41% 58% 23.860 6.484 632% -26% 14% -22% 97% 11% 10.469 Net assets 69.309 5.408 211 5.911 38.058) 7.059 4.999 69.844 75% 23.616 (15.174 6.249 18.662 5.366 48% 65% 13% -70% 100% 5% 7.182 437 21.180 11.605 3.621 7.706 55.526 -6% -10% -77% 5% 0% -62% 2% 18% 301.323 8.975 (1.597 4.120 35% 40.493) 15.375 26% 47% 19% 32% 17% -10% 39% 3% 7% 1% 31.469 9.567 7.058 (1.662 165 5.549) 18.684 3.787 (7.346 385.466 6.638) 13.868 (6.096) 267% 95% 35% 113% 150% 111% 21% -9% 221% 152% 2.991 (6.054 172 11.903 5.740 19% 58.708 10.082 63.961 16.031 37% 348% 111% -9% 10% 11% -10% 102% 15% 298.180 1% -42% 13% -100% -63% 82% 8% 10.866) 23.598 13% 261% 4% 0% -100% 32% 244.155 (7.481 180.264 19.626) 9% -12% -30% -6% -48% -0.131 9.044 (11.810 443.525) 21.372 5.486 39.740 Profit & Loss Account Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provisions & write off Net mark-up / interest income after provisions Non-mark-up / interest income Non-mark-up / interest expenses Profit before taxation Taxation Profit after taxation 51.436 0% 8% 79% -36% 6% 6.818 439.000) 21.537 27.net Operating fixed assets Deferred tax assets .193 6.781) 14.631 4.001 5.666 1.464 15% -1% -74% -9% 3% 31% 2% 100% -11% 259.531 5.182 192 5.142 Annual Report 2009 | 47 .922 17.365) 21.483 (4.040 509.043 4.791 (8.775 6.643 (10.318 8.061) 20.266 26% 23% 74% 13% 156% 4% 29% -8% 15% -5% 25.808 1.462 1.612 13% 8.

586 125.151 1.541 4.812 14.net 38.043 Rupees in Million 2005 2.132 2004 (53.386 14.288 4.740 67.554 12.327 4.885 2.459 62.551 7.135 248.936 3.742 1.835 3.258 8.516 55.616) (5.937 116.847) 39.463 5.771 509.206 402.684 456.120 1.631 47.720 3.150 3.759 1.740 6.820 3.555 23.785 43.836 17.780 8.829 3.net of tax 6.356 29.445 (1.718 755 1.992 6.104 56.308 1.918 5.596 6.502 1.172 615 1.net Other liabilities 8.678 13.572 1.724 60.149 262.180 9.520 1.814 6.352 96.795 15.667 1.616 25.826 7.082 439.134 142.722 301.622 13.414 836 914 1.810 20.719 3.882 6.043 9.467 13.430 443.940 1.830 8.914 3.802 467.436 56.238 2.010 2.870 1.298 2.013 2.283 44.812 1.899 (51.283 36.183 2.796 228.337 396.029 Summary of Cashflows 2009 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 78.283 34.350 3.621 4.002 3.897 394.311 330.452 (6.792 55.283 35.616 453.211 18.649 37.609 56.491 2006 3.193 6.179 8.688 2.911 37.247 22.386 4.957 21.116 361.256 6.483 367.489 19.179 1.946 8.770 16.632 90.664 69.655 1.814) (155) 29.428 5.605 362.049 12.802 6.032 8.832 244.412 (819) 25.769 9.256 58.723 9.074 16.923 9.233 41.674 44.565 8.565 11.436 6.770 2.049 394.093 5.094 1.089 253.786 6.369) 2008 2.234 2007 61.029 7.696 6.420 6.056 5.452 25.499 15.775 39.911 38.432 7.000 4.2009 & 2008 Rupees in Million 2009 4th Quarter Profit & Loss Account Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision & write off Non-mark-up / interest income Non-mark-up / interest expenses Profit before taxation Taxation Profit after taxation Balance sheet Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments .135 11.165 10.132 39.671 918 437 271 730 962 17.491 43.433 7.935 5.662 12.386 15.198 23 469 15.351 340.052 2.506 30.313 5.191 58.388 167.100 18.283 36.110 20.657 Net assets Represented by: Share capital Reserves Unappropriated profit Surplus on revaluation of assets .174 385.148 2.996 14.112 36.882 17.532 17.040 22.968 350.392 6.709 9.908 9.201 8.351) 58.911 37.738 5.484 401.674 48 | MCB Bank Limited .Quarterly Results .662 99.306 3.249 238.976 229.103 4.911 37.565 450.180 397.618 5.779 8.652 17.818 17.516 6.224 468.043 43.292 258.690 12.net Operating fixed assets Other assets .721 7.992 19.165 1.182 323.640 2.356 6.755 5.015 17.959 3.964 1.314 7.850 18.264 17.596 64.812 3.510 67.440 10.259 21.148 (70.732 39.751 3rd 2nd Quarter Quarter 2008 1st 4th 3rd 2nd Quarter Quarter Quarter Quarter 1st Quarter 11.686 Liabilities Bills payable Borrowings Deposits and other accounts Deferred tax liabilities .664 39.701 14.451 1.786 62.985 56.029 69.net Advances .646 4.485 85.313) 43.793 16.736) (10.916 4.063 64.985 6.436 338.346 26.

000.000 40.000 20.000 60.000 Share Price (Rupees) 300 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 July 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 250 20.000.000 120.000.000 100.000 40.000 140.000.000.000.000.000.000.000 100.MCB Calendar Monthly Market Statistics of MCB’s Share (Rs.000 80.000.000 80. in Millions) 180.000 Turnover 120.000.000 200 150 Market Capitalisation (Rs. in Millions) 140.000.000.000.000 60.000 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 July 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 100 50 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 July 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Annual Report 2009 | 49 .000 160.000.000.

The group reported a revenue growth of 41% on the back of 18% asset build-up. The group managed to maintain the quality of their risk assets and derived comfort from the fact that corporate non-performing loans constituted only 1% of the total corporate portfolio as compared to industry percentage of 4%. 12% fee income increase and improved spreads. The external account benefited from robust remittances from foreign workers and an improved trade balance due to demand management and the global recovery. Going forward. It is imperative for the government to formulate a long-term strategy to resolve the structural issues in the power sector. However. The banking system. There was increased focus on enhancing cross sell to deposit customers by expanding the footprint 50 | MCB Bank Limited . as a result of automation of our payments and collections systems. as a whole.Directors’ Report to Members I am pleased to place before you. With the launch of MCB Privilege. strong policy framework. Commercial Banking Group posted robust growth in 2009 by increasing their deposit volume by Rs. the pass-through of utility subsidies to the consumer placing upward pressure on inflation reinforced by excessive government borrowings from the banking system and increasing level of external debt. improved governance structure. on behalf of the Board of Directors. Bank's Performance in 2009 The objectives were targeted towards our customers. combined with indirect funding of subsidies by the banking sector through the build-up of circular debt to the power sector. However. A key structural challenge for the government is the need to increase the tax/GDP ratio in the country to finance current budgetary expenditure and promote savings to meet the development needs of the economy. The year witnessed a successful restructuring of the SME & Mid market segment with continued optimism of the benefit accruing in the upcoming times. A specialized Investment Services Unit was established to develop and distribute specialized investment products catering to the growth needs of affluent/massaffluent segments.12 %).28 billion (10. Lahore & Islamabad. Economic Review The country continued to face difficulties and the government took some stabilized measures under a stand-by arrangement with the IMF. The banking sector absorbed the build-up of non-performing loans in the system while maintaining profitability and robust balance sheets. The group embarks on 2010 with cautious optimism with strategic thrust being on building fee based income and trade business by cross selling to the existing customer base. Political uncertainty and the law and order situation also hampered the development of a positive investment and growth climate. led to the crowding out of the private sector and tight liquidity in the banking sector. as this is of key importance in placing the country on a sustainable growth path within the framework of relative price stability and external sector validity. MCB also became the first local bank in Pakistan to start a dedicated offering for the affluent segment through three dedicated Privilege Centers in Karachi. This bolstered revenue and consequently the profitability in 2009. which were absorbed to create better control and synergy. 2009. budget and balance of payments. remains healthy despite the economy going through a period of economic difficulty. MCB Mobile. the external account remains susceptible to pressure from global commodity prices and weaker inflows from multinational agencies and FoDP. Much of the credit for this must go to the SBP for the policies it has pursued over the last decade to ensure that banks are adequately capitalized and adhere to prudent risk management. Information technology led changes in Transaction Banking (TB) related Products led to a quantum jump in volumes and income. strategic investment initiatives and implementation of cost effective measure across bank. The group structure of the bank individually worked hard in achieving the milestones under continuous monitoring and supervision of the senior management and Board. The Group enhanced their sales model through the introduction of a direct sales force team and personnel bankers in many branches while continuing to strengthen their customer services quality. the first of its kind. the road to sustainable economic recovery remained slow with the power sector capacity shortfall reducing the productive capacity of the economy. Group Performance Business Groups Corporate Banking Group Corporate Banking Group's scope of work was expanded with the inclusion of International Division and Investment Banking. improved management policies. the Group focuses on revenue growth and profitability while through cross sell and optimization of branch banking platform. Reliance on the banking system to finance the deficit. Commercial Banking Group With its large network of branches. Consumer Banking Group The Consumer Banking Group continued on its path of expanding the product suite and customer base. mobile payment solution was launched enabling customers to access their accounts and make payments using their mobile phones. the 62nd annual report of your Bank for the year ended December 31.

1 Billion. The Foreign Exchange business continued to grow over the course of the year in spite of substantial volatility in the inter-bank markets owing to the turbulent economic situation facing the country. Rawalpindi. Islamic Banking further strengthened its market outreach by increasing its deposit base and equity. Fixed Income sales showed substantial improvement over the past year's performance and remained an area of focus. Faisalabad etc. Training & Quality Assurance Department. Commercial. Alongside aligning the bank with best practices. Support Functions / Services Special Assets Management Group Owing to prolonged dismal economic milieu. strengthening of the Bank's processes through compliance with the COSO based Internal Control Framework. Investment Services and Alternate Distribution Channels. Strong operational support was provided to the businesses to ensure the launch of new products. During the year 2010. the focus remained on collection & recovery and portfolio management during the year. The Treasury followed through on the vision of the Bank's management and deployed a Treasury Marketing Unit in Lahore which supports the bank's client base in key centres such as Islamabad. Trade Products & Cash Management as well as in the migration of core banking application across all branches in the country. With close monitoring of NPLs. Emphasis will be on rapid expansion of the new initiatives such as MCB Privilege. posted cash recovery in excess of Rs. Operations Group Significant progress was made during the year in these areas through centralization. the Group will remain committed to product development & refinement of processes for continuous growth of deposits & customer base. 2009 remained a cautious year for the consumer financing business. this is surely to bring about an efficient and Annual Report 2009 | 51 . Further efforts in this regard are continuing and in the coming year Treasury will add at least one more marketing desk in a major city broadening its coverage even further. Treasury and Forex Group Treasury & FX remained focused on its customer orientation and enhanced its coverage to a broader customer base. channels and services including Bancassurance. for the second consecutive year. It is foreseen that the asset remedial management function would continue to play a visibly pronounced role at least in the medium term scenario. MCB Islamic Banking MCB Islamic Banking managed to maintain its profitability while ensuring quality of its earning assets despite tough market conditions & deterioration in assets quality of banking industry. Business Continuity Management and Staff Training & Development. The portfolio of customers grew not only through the Treasury Marketing Unit's own efforts but also as a result of a better cross-sell platform fully supported by the Wholesale. Strategic initiative for further increase in dedicated branches and capitalizing on existing out reach of MCB Bank has been undertaken for capturing Islamic banking business. The Treasury Money Market business worked towards gradually enhancing the investment portfolio's duration over the course of the year. Human Resource Group The Human Resources Group has worked towards instilling systematic processes to build a performance-based culture based on internal equity. A significant milestone in 2009 was the transformation of the call centre from a service centre to a transactional phone banking facility . penetration of Alternate Delivery Channels was enhanced. The enhanced duration of the portfolio ensured that the deposit-taking areas of the bank were able to pay superior rates of return to customers and was a key support factor in the overall growth of the bank's balance sheet.of Bancassurance. Consumer and Financial Institutions businesses. In parallel. Only selective lending was carried out in segments that have performed well historically. Bancassurance. Functionality. Mobile Banking. ensures that the audit assignments qualify the high standards that have been defined for the Group. Audit Group is now equipped both in terms of human resource and methodology. Audit & RAR Group Audit Group has performed consultative role in addition to the assurance services that it is geared to provide. This effort was granted greater buoyancy by the stable deposit growth shown by the bank during the year and the portfolio was almost entirely funded through the bank's own sources and decreased whatever little dependence there was on the inter-bank money market. as well as. Lahore. reach. Bank's Special Asset Recovery outfit (SAMG) role gained further prominence. Privilege Banking. MCB-IB plans to improve its assets & liability product range. and is committed towards optimization of its operations. Given the high interest rate environment and tight economic conditions. The strategic focus of the Group in 2010 will be to enhance cross sell. developed within the Group. Overall the Treasury & FX Group turned in a very strong performance and ensured its continued support for the rest of the bank's businesses. SAMG during 2009. The Group has strengthened itself to cater to the requirements of Bank's Whistleblowing Program. Phone Banking. strengthen customer propositions and improve customer service.

The Group also set-up a bank-wide Central Business Intelligence Unit responsible for supporting the retail bank in its sales and performance MIS needs. • • • • • These elements of risk management within MCB Bank collectively ensure that the Bank's risk profile is actively monitored and adjusted according to the Bank's strategy and the operating environment in a manner which ensures protection to the depositor and value to the shareholder.. and that our recoveries are actively monitored. The Risk Management framework combines core policies. in close coordination with the Board and senior management. Compliance Group Focus for the financial year 2009 remained on pro-actively identifying and resolving any regulatory gaps.600 staff. Business Development and New Initiatives In 2009. market and operational risk that have been initiated to allow the Bank to adhere to. Market Risk Management ensures that the Bank's exposures in financial markets are actively managed within reasonable limits. by procedures and process design with oversight and is supported by risk monitoring across the bank. Other initiatives were undertaken in the shape of “Compliance News Letter” and “Regulatory & Legal update”. Program Alpha. particularly related to Know Your Customer (KYC) and Anti-Money Laundering (AML). Credit Risk Management identifies our target markets through economic research and data analysis. Basel II Projects monitors the implementation of various projects in the areas of credit. The group controls the review and administration of lending solutions offered to our clients through a dedicated team of experienced professionals. Apart from the roll-out. 52 | MCB Bank Limited . the internationally accepted best practices of Basel II. an initiative tasked with transforming branches into efficient sales and service centers was very active in 2009. our lending is prudently given. To create awareness across the bank regarding KYC & AML regulations.Directors’ Report to Members motivated workforce. and adopt. defines how the Bank lends to its customers through detailed policies and procedural product manuals and coordinates with business units to ensure that targeted lending activity is in line with the Bank's overall risk appetite and strategy. monitoring and delivery of all high value projects. In 2010. the Group will be further developing staff through a focus on career development and training to truly brand MCB as an employee-focused organization. The Bank is now moving towards a solution based monitoring and has already acquired “Name filtering” solution while an AML solution is in the process of being finalized for implementation in 2010 which will better equip the bank in curbing any unscrupulous transaction. • Credit Review and Credit Risk Control ensure that our lending decisions are in line with the Bank's strategy. the Group focused on up gradation of network technology. Elements of risk management framework are reviewed and updated in order to align our long-term strategy in the field with lessons learned through the Bank's own experiences and international best practices also kept compliant with the local regulations and selected international best practices. particularly those relating to implementation of Basel-II. For 2010. led the bank-wide strategic planning exercise to refine and revalidate MCB's 2012 strategy. the Risk Management & Portfolio Review Committee provides oversight and direction to the activities of the Group. The Bank employs the function of risk management as an important tool in implementation of its long term vision. Risk Management Group Prudent and effective risk management is and has always been a significant success factor in steering the Bank's march towards strong profitability and market leadership. the major focus was on the completion of the rollout of the Core Banking System (Symbols) which heralds a new era for the bank. Information Technology Group In 2009. deployment of a new Payments and Collection system moving MCB to the 3rd market position (from 7th) and launched its Mobile Banking platform fully integrated with MCB systems. Specific functions of the group ensuring particular risk management are. over eighty training sessions were conducted by the group in 39 cities / regions training approximately 2. BDNI will continue to ramp up on Program Alpha and BIU coverage and will work closely with all bank groups to ensure strategy delivery. In addition to the internal Compliance unit within the Risk Management Group. revision of security framework and provision of disaster recovery for the critical business applications. In addition. the Group. Information Technology governance model has been introduced to ensure quality selection. Operational Risk Management helps the Bank understand our risks and improve our mitigating controls so as to minimize operational risks that are inherent in almost all areas of the Bank. MCB has successfully created a culture based on modern techniques that allows risk management and business units to create more shareholder value through a better understanding of our Bank and our customers.

609 Financial Review (10.728 1. also simultaneously increased by 37%. With the banking industry recovering at a steady pace since the 2007 crisis.216 (7.000) (20.094 29.779 Interest Income increased by 29% to Rs.932 15.923 36.000 1.975) 10. 7B. 23B and PAT of Rs.690 Annual Report 2009 | 53 13.868 2008 2008 During the year 2009.430 Financial year 2009 continued to be a challenge for the banking sector. MCB ensured availing all possible positive opportunities and delivered substantial profits ensuring sound asset growth. the bank displayed extraordinary results in both financial and non-financial terms. 15B. 30B in 2008.937 1.463 (15.000) Interest income on advances Interest income on investments Other interest income (5.550 1.155) 5.000 19.08 Interest Income Interest Expense NIM NII Admin Other Operating Expenses Provisions PBT Taxation (7. Profitability Profit and Recommended Appropriations The profit before and after taxation.194 22 9. 51. increased by 21% over Rs.495) PAT 15. Interest Expense however.510 (9. in Millions) 40. Income earned on advances.907) (1. owing mainly to the increased cost of deposits with interest expensed on deposits rising by 47% to Rs. MCB stood up to the challenges and pr duced o significant increases in major areas of its business while maintaining higher profitability.728 8.495 9. Despite this.317 1.375 Profit before taxation Taxation 23. The sector also made positive recoveries while heading towards its actual position prior to 2007 and 2008 financial market crisis.955) Interest expense on deposits Other interest expenses 8. over 2008.000 4. (0) Dec 06 (2. with a rise of 6% and 1% respectively.June 2009 Interim dividend . 28B last year.December 2008 Interim dividend . 36B in 2009.224 443.107) Profit after taxation Un-appropriated profit brought forward Transfer from surplus on revaluation of fixed assets (net of tax) 15.March 2009 Interim dividend . 14B in 2009. due to larger proportion of Interest Income.841) (10.660) (690) Profit available for appropriation Appropriations: Statutory reserve Final cash dividend . representing 70% of the total Interest Income. 40B in 2008 owing to increased volume and yields.775 Rs. Interest Income and Expense (Rs. in Million (23. in Millions) 35. 26% rise over Rs.436 2008 21.910) (1.740 58.155 (7.711 1.834 (15.616 Equity including Surplus + 19% 2009 69.December 2008 Issue of bonus shares .376 20. 52B over Rs.155 2009 Total Assets + 15% 509.465) PAT .728 1.660) . by delivering PBT of Rs.Bank’s Financial Performance PBT 2009 + 6% 23. 36B significantly rose by Rs.September 2009 Total appropriations Un-appropriated profit carried forward 24.571 628 1. to Rs. available for appropriation together with recommended appropriation is as under: MCB registered continuous positive performance in 2009.867) (1. the resultant Net Interest Margin (NIM) of Rs.231 30.427) (2. stronger asset base with corresponding increase in equity.000 22.618) Dec 07 Dec 08 Dec 09 1.273 8.134) (13.616 Composition 2009 (Rs.

Effective monitoring at management level ensured managed increase in administrative charge within the approved budgetary limits. Group Wise Structure of Advances Dec 09 Dec 08 100% 90% 80% 70% 60% This has been in line with the Bank's controlled budgeting and diligent monitoring on operating expenditure block.311 2.4% to Rs. 97B in 2008). Balance Sheet Total Assets increased by 15% over 2008 reaching to significant landmark of Rs. insurance & electricity Legal charges Communications Repair & maintenance Printing Advertisement & publicity Depreciation & amortization Travelling & conveyance Cash transportation Others 2. 14B in 2009. However. rates. 5.000 2. and remained dominated by advances with 50% of the total portfolio. in Millions) 4.488 1. in Millions) 1.000 7. Investments emerged as the main contributor to the increase in assets.040 243 844 506 327 197 957 619 399 1. Treasury Bills Pakistan Investment Bonds Term Finance Certificates & Sukuk Bonds Shares & Units Other Investments Administrative Expenses (Rs. however.063 534 240 995 1. 253B. Non Interest Income (Rs.3T (Net Advances 2%) over 2008.000 0 Dec 06 Dividend Income Gain on sale of securities Fee.Directors’ Report to Members Non-interest income (NII). 70B (73% over Rs. -3% over 2008).356 Gross Advances on the other hand slightly reduced by 1% closing at Rs. Out of the total advances portfolio consumer lendings decreased majorly owing to the increased cost of living and introduction of microfinance in the economy.000 812 692 606 571 618 728 637 856 632 693 460 1. Due to rising inflationary pressures coupled with additional expenditure on insurance and security companies. 270B (Net Advances'09:Rs. This was consistent with the continued economic downturn and minor increase in industry lendings. reduced slightly over the year to Rs.000 5. 34B in 2008.332 5% 5% 5% 1% 3. 14.6B bringing the total income (Net Interest Margin plus Non Interest Income) to Rs. 50% 40% 30% 20% 10% 0% Qtr 4 09 Qtr 3 09 Qtr 2 09 Qtr 1 09 Qtr 4 08 Corporate Consumer Islamic Others Commercial 54 | MCB Bank Limited .000 Personnel expenses excluding PF reversal Rent. Commission & Brokerage Income Dec 07 Dec 08 Income from FCY Other Income Dec 09 341 774 736 84% Operating expenses before pension fund (PF) reversal rose by 7.226 330 215 1.000 6. Banking sector's Gross advances grew by only 3% to 3. 509B.687 1. with a remarkable rise of Rs. 13.000 3.000 4.000 2.635 3.000 6.8B in 2008. the administrative expenses rose by only 8.953 2. 41B which increased by 21% over Rs.8% to Rs. Rs.966 6.000 1.9B from Rs.127 589 516 1.

62B). Term deposits also increased by 2% to Rs.000 6% 10% 1% 2% 1% 1% 1% 2% 200. Demand deposits (including margin accounts of Rs.14% 4. 3B) increased by Rs. while simultaneously increased in the public sector by 32%.62% 74% 72% 70% 2006 2007 2008 2009 4% 2% 0% 2006 2007 2008 2009 NPLs to Gross Advances 4. 59B. resulting in the NPLs to increase by 27%. with a 1% decrease in advances and 11% increase in deposits resulted in ADR to drop from 83% to 73% in 2009. 20B to Rs.000 300.The bank's concentration on private sector lendings decr ased e by 11%. Advances by Class of Business 15% 1% 12% Liabilities grew by 14% to Rs. 385B in 2008. 17B (15%) reaching 129B (2008:Rs.112B). 368B.000 100. 63B (Dec 08:Rs. with a rise of 11% to Rs.000 50.269B). was the main contributor to this increase. 156B).67% 6% 6. A major increase was seen in advances made to the transport and storage segment of the industry that now stand at Rs. ADR (Gross) 90% 88% 86% 84% 82% 80% 78% 76% 73% 80% 79% 83% 10% 8.000 350. 176B (Dec 08:Rs. 305B (Dec 08: Rs. Deposits to customers and financial institutions. 22% of the total advances (12% in 2008).000 150. This brought CASA to Rs. in Millions) 400.000 2% 3% 0 14% CURRENT SAVING FIXED 22% 2% 7% Transport & Storage Export /Import Wholesale & Retail Trade Power Contruction Electronics Footwear Automobile Sugar Chemical Cement Textile Agriculture Others Individuals Services Financial Savings deposits significantly rose by Rs. The continued local market pressure on NPLs also affected the quality of advances of the Bank.70% 8% Annual Report 2009 | 55 . This was however a much relieved increase compared to 70% rise in NPLs during 2008.000 250. Deposits Mix (Rs. 440B in 2009 compared to Rs. However.

25% and 27. 126 at Dec 31.35% respectively.06% 5 0 2006 2007 2008 2009 0% 2006 ROA ROE 2007 2008 2009 * Adjusted for issue of bonus shares for prior years The rise in prices of MCB shares and higher EPS calculates a stronger Price to Earnings (P/E) ratio Rs. Earning Per Share 45% 50% (Rupees) 38% 31% 40% 25 22. The share price reached a high of Rs.822 billion which is the highest in the industry at the close of the year ended 2009. 220 at year end 2009.25% 10% 4.5 65 Lowest 75 126 244 150 51 45 AVG 169 368 323 234 108 55 2006 51.79% 3. 169 for the year 2009.60 2007 65.42 per share compared to Rs.60% 3.) 220 126 400 246 168 59 +/. stable market share.71 Year 2009 Share Price (Rs. and attractive share price at the close of the year 2009 combined with a high Break-up Value (before surplus) of 88.37 per share. 22.80.25 in 2008.Directors’ Report to Members Efficiency and Market Share The Bank's outstanding performance resulted in improved efficiency and profitability ratios.09 27% 20 15 17. 75.57 22.66 in 2008. creating an average share price of Rs. 22.37 2008 75. 56 | MCB Bank Limited .25 22.42 30% 20% 10 3. The stock market led a trend of mixed bulls and bears all along the year. 151. Break-up Value (Rupees) During the year. 2008. 244 and also traded as low as Rs. This is a magnificent increase of 75% over it price of Rs.% 75% -69% 63% 47% 186% 14% Highest 244 495 435 285 175. from 5. EPS closed at Rs. MCB continued to serve best to its customers and maintained its establishment as a leading bank as was depicted by its market share price that closed at Rs. 9. Market capitalisation for MCB formulated to Rs. 2009 88.59 2008 2007 80 100 0 20 40 60 2006 2005 2004 Consequent to the average increase in balance sheet footing and equity of 12% and 16% respectively. return on assets and return on equity were reported at 3.

Internal Controls over Financial Reporting may not prevent or detect mis-statements. Keeping in view the risk exposure and identification. wherever feasible and practicable. but also to conform. This is in addition to 75% interim cash dividends announced during the year. setting appropriate internal control policies. the internal auditors reporting significant findings directly to Audit Committee of the Board. and that receipts and expenditures of the Bank are being made only in accordance with authorizations of Management and Directors of the Bank. authority and reporting relationships. Internal Control and Financial Reporting Framework The Bank's internal control structure comprises of the Board of Directors. and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition. as the opinion will be submitted SBP directly in line with the aforementioned circular. In view of the above and based on its supervision the Management has evaluated the effectiveness of the Bank's internal controls that encompassed material matters and reports that the System of Internal Control is sound in design and has been effectively implemented and monitored for material aspects. Senior Management. designed to provide reasonable assurance as to the integrity and reliability of those controls and reports produced there from. maintaining an organizational structure that clearly assigns responsibilities. The Bank's assessment included documenting. 2009. 2009 is annexed with the report. measure. 2009. can now submit their opinion on ICFR directly to SBP for the year ended 31 December. However. the Bank used criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Framework. it needs to be stated that systems are designed to manage. non-publishing of the external auditors' opinion in the financial statements for 2009 does not impair the effectiveness of internal controls over financial reporting designed across the Bank. evaluation and management of significant risks faced by the Bank and based on regular review of internal controls and reports on their soundness. The Management is responsible for establishing and maintaining a system of adequate internal controls and procedures for implementing strategy and policies as appr ved o by the Board of Directors. Compliance & Control Group. Because of its inherent limitations. projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions. developing processes that identify. monitor and control risks incurred by the Bank. Annual Report 2009 | 57 . or that the degree of compliance with the policies or procedures may deteriorate. external auditors and the regulators. and taking timely due cognizance of the observations / recommendations concerning the system of internal controls made by the internal auditors. ensuring that delegated responsibilities are effectively carried out. Also. SBP vide its BSD Circular No 9 of 2009 dated 12 Oct 2009 has decided that the statutory auditors of Banks/ DFIs. evaluating and testing of the design and operating effectiveness of its Internal controls over Financial Reporting (ICFR). use or disposition of the Bank's assets that could have a material effect on the financial statements. Detailed guidelines for reporting on ICFR are in the framing process and would form the basis of external auditors' opinion. Self Assessment Process within business groups and Internal Audit. rather than eliminate the risk of failure to achieve the business objectives and can only provide reasonable and not absolute assurance against material mis-statement or loss. improvements are brought about by the Management with the approval of Board of Directors in the internal controls and policies.Credit Ratings PACRA • Quality Management • Established Franchise • Extensive Outreach Short Term AA + Long Term A1 + Positive Outlook Dividend The Board has recommended a final cash dividend @ 35% and bonus shares @ 10% for the year ended December 31. These are being continually reviewed and updated not only to conform to and achieve full compliance with State Bank of Pakistan's Guidelines on Internal Controls. However. (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with approved accounting standards. The Bank's Internal Controls over Financial Reporting include those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Bank. instead of expressing opinion in audited financial statements on efficacy of Internal Control over Financial Reporting (ICFR) as required under Guidelines on Internal Control. with international best practices and good corporate governance models. Pattern of Shareholding The pattern of shareholding as at December 31. In making this assessment. monitoring the adequacy and effectiveness of the internal control system through evaluation and validation by internal auditors who have been entrusted the supervisory function with respect to review of internal controls. Financial Control Group. Risk Management Group.

Directors’ Report to Members A separate Issues. have been adequately disclosed in the financial statements The Board met on 4 occasions and its meetings were attended by directors as under: Name Mian Mohammad Mansha S. Audit Group has been revamped in terms of quality of staff and audit methodology. 2009. its audit activities expanded and its autonomy enhanced. The Directors are pleased to give following statement in respect of Code of Corporate Governance: • The financial statements. result of its operations. as detailed in the listing regulations Key operating and financial data are made available in the Annual Report All the statutory liabilities. The Bank has a System of Internal Controls which provides reasonable assurance in all material respects of efficient and effective operation of controls. 14. if any. evaluating and managing the significant risks facing the Bank in accordance with the Risk Management Policy and Internal Control System and Audit Policy.805. It is further committed to continuous improvement through quality assurance. These statements present fairly the Company's state of affairs. particular emphasis has been laid on strengthening internal controls and revamping internal audit functions. as applicable in Pakistan have been followed in preparation of financial statements and any departure having material impact there from has been adequately disclosed • • • • • • The system of internal control is sound in design and has been effectively implemented and monitored There is no doubt upon the company's ability to continue as a going concern There has been no material departure from the best practices of corporate governance. In line with improvement in other areas. The staff and professional strength of Internal Audit Group has been improved. 11. • Value of investment including accrued income of provident and pension fund as at 30. as approved by the Board.51 million Rs. After their election/appointment three Board Meetings were held during 2009. Tracking and Monitoring (ITAM) Committee was formed in 2007 with all the Group Heads as part of it.06. cash flow and change in equity Proper books of accounts of the Company have been maintained Appropriate accounting policies have been consistently applied The International Financial Reporting Standards. Muneer Tariq Rafi Shahzad Saleem Sarmad Amin Dr. strengthen its IT Audit Capabilities and leverage technology for optimizing audit operations. With the application of risk centric audit methodology through professional staff. Periodic ITAM meetings are being held with the goal to strengthen internal control processes and proactively identify and resolve identified issues. together with the notes thereon have been drawn up in conformity with the Companies Ordinance. The Board of Directors has responsibility for ensuring that Management maintains an effective System of Internal Controls and for reviewing its effectiveness.065.2009 on the basis of audited accounts is: Provident Fund Pak Staff Pension Fund Pak Staff Rs. The Audit Group now functionally reports to the Audit Committee and administratively to the Chairman of the Board. The Board intends to strengthen further the role of the Audit Group to act as eyes and ears of the Board to ensure integrity of the operations of the Bank. The Board regularly reviews these processes through relevant Board Committees.23 million • • • 58 | MCB Bank Limited . The Audit Group is geared to meet the challenge of carrying out its role in Basel II implementation. Muhammad Yaqub Mian Raza Mansha Mian Umer Mansha * Dato' Mohammed Hussein Abdul Farid Bin Alias * Aftab Ahmad Khan Muhammad Ali Zeb * Atif Bajwa Meetings attended 4 4 4 3 4 3 3 3 4 2 4 2 4 * Mian Umer Mansha. M. Abdul Farid Bin Alias & Muhammad Ali Zeb have been elected as director in AGM held on March 27. 1984. the Audit Department will pave its way for the much desired strategic stature in the organization. Processes are in place for identifying.

CEO.220.790.280 2.526 10. of Pakistan Directors Mian Mohammad Mansha S.836 73. M.270 No. Sami.861. CFO.159 676 Total 3. their spouses and minor children is reported as under: Name Dato' Mohammed Hussein Abdus S.553.420 562 1.497 562 1.916 19.534.000 2.993. Muneer Tariq Rafi Shahzad Saleem Sarmad Amin Dr. Secretary.181 Spouse & Children 3.550 570 1. Company Secretary Purchase 5.611.280 2. are as follows: a) 1 2 3 4 5 6 7 b) c) d) 1 2 3 4 5 6 7 8 9 10 11 12 13 e) Associated Companies.306.077 17.517 47. 2009.905 5.672.242 138.861.• The aggregate shares held by associated and related parties as at December 31.702 1. of shares 31.861.717.186 19.148.100 21.006 21.866 1.181 All the trade in shares carried out by Directors.772 632 7.100 21.550 570 1.589 4.354.026 5.810.772 632 25.919 21. Ltd MCB Employees Pension Fund MCB Provident Fund Pakistan Staff Nishat Mills Limited Mayban International Trust (Labuan) Berhad National Investment Trust Limited Investment Corp.026 5. undertakings & related parties Siddiqsons Denim Mills Din Leather (Pvt) Ltd Adamjee Insurance Co. Muhammad Yaqub Mian Raza Mansha Mian Umer Mansha Dato' Mohammed Hussein Abdul Farid Bin Alias Aftab Ahmad Khan Muhammad Ali Zeb Atif Bajwa Other Executives Self 4.988.500 Annual Report 2009 | 59 .

the Security and Exchange Commission of Pakistan and the Ministry of Finance for their effort to strengthen the banking and financial system of the country and to improve regulatory. We also wish to extend our sincere thanks to all our employees for their significant contributions to the continued growth and success of our Bank. improve service quality and work efficiency. Management and the staff of the Bank remain committed to continuously strive to take new initiatives. we would like to applaud the State Bank of Pakistan.Directors’ Report to Members Auditors The retiring auditor M/S KMPG Taseer Hadi Chartered Accountants and Company. recommended them for appointment till the conclusion of next Annual General Meeting. introduce new products. On behalf of Directors February 25. being eligible for the next term have offered themselves for reappointment. 2010 Mian Mohammad Mansha Chairman 60 | MCB Bank Limited . and strengthen the institutional and control framework to enable MCB to continue to remain a leading and well governed Bank of the country. Acknowledgments In the end. The Board on suggestions of the Audit Committee. The Board of Directors. Lastly. we are most grateful to all our clients and shareholders for their constant trust in our ability to provide best possible services. policy and governance framework for them.

Bancassurance products not only provide financial protection to our customers to face any unforeseen incident but provide them a means to save for their long term financial needs. We are the 1st bank in Pakistan to offer a comprehensive mobile banking solution allows them to perform a host of basic banking transactions around the clock at their convenience. A cumulatively over PKR 9.5 million was disbursed in 2009. the bank has also recently revamped the training centre in Karachi. education and health. Thar Desert & Jhal Magsi Car Rallies. There is a strong emphasis on on-going employee education and training. GOVERNANCE The Bank advocates a culture of excellence. educational seminars. The scheme incorporates cash compensation for the staff in the above mentioned affected areas of Pakistan. internet banking & mobile banking lend continuous support to several NGO's. high degree of good governance. mobile banking and ATMs were activated to collect donations from public at large for the Prime Minister Relief Fund (PMRF) as well as several other NGOs. With its vision to make training & development a core activity. free of services charges as per SBP mandate. significant investments have been made to develop alternate distribution channels. Being a responsible corporate citizen MCB continues to support national development in the area of public interest. internet banking. Our 24/7 call center and Virtual Banking enable the customers to access their account whenever & wherever they choose. act as a guide for our corporate responsibility efforts. over PKR 47 million were invested in training of employees. EMPLOYEE ENGAGEMENT The Bank recognizes the importance of its human capital and invests in their growth and development. These activities include sponsoring national level events like Under 19 Hockey Championship. MCB Bank has an important role in the development of the nation as well as in the community it serves. During 2009. transparency. Controls and Compliance is an integral internal function and care is taken to ensure that all activities are carried out in accordance with prevailing regulations so that the interests of all our stakeholders are protected. MCB bank undertakes its lending function responsibly ensuring customer's financial well being. health workshops and several other initiatives. all the channels including branches. With objective to promote emerging talent. whereby no principal amount will be recovered from them. A total of 103 permanent and 52 outsour ed c staff members have been provided cash compensation. CSR COMMITMENT MCB has always been at forefront in terms of its contribution to society at large especially in the times of need. Annual Report 2009 | 61 . our branches and staff continued to perform their duties and ensured that the Bank and its customers get the requisite services under extremely trying conditions in effected Northern Areas of Pakistan. Its branch operations span urban and rural areas pan Pakistan including remote locations. Our extensive deposit product suite encourages savings in the society at large. integrity and accountability as well as ensuring the highest level of professionalism. demonstrating the priority placed on corporate responsibility. Car Finance and Motorcycle Finance through HR Loans. In line with our goal to facilitate consumers in making their banking experience more convenient. culture. availing the House Building Finance. In addition to this a one year moratorium has also been given to the regular employees in the affected areas. The Bank has also conducted an Employee Satisfaction Survey (ESS) to gauge employees' satisfaction at MCB and to strategize its business as well as human resource policies. Besides the financial contribution. Boldly facing the challenges. the bank supports various activities in the spheres of sports. Currently we serve 155. Our vision to become a leading financial services provider along with our values. The Bank introduced a relief scheme for MCB employees in SWAT and Malakand Division.662 basic banking customers who enjoy banking services. Code of Ethics and Conduct signed by all employees acts as a guide for them in discharging their duties and sets out the standards of good banking practice. In 2009.000 online branches and delivery channels such as ATMs. CORPORATE RESPONSIBILITY IN BUSINESS OPERATIONS As the leading financial services provide. healthy activities and social development.Corporate Social Responsibility In 2009 MCB Bank Limited continued to engage with its stakeholders and the community. Along with this dedicated help desks were also set up in the IDP camps to facilitate people. humanitarian causes and other public interest fund raising campaigns. In addition to this we also serve our as well other bank's customers with over 450 ATMs installed nationwide. MCB showed complete solidarity with Internally Displaced People (IDPs) and contributed PKR25 million towards their relief and rehabilitation efforts. MCB's vast branch network of over 1.

subscribing in aid of. all rights to property and information generated or obtained as part of employment relationship will remain the exclusive property of MCB. State Bank of Pakistan. the same shall be informed to the senior management immediately. superintendence or control. • Report to the Company Secretary about any sale and purchase of MCB shares (own or spouse) in case the annual basic salary exceeds Rs. from being misused by anyone to launder money by violating these guidelines. Buy or sell stock. frauds and other criminal activities or other similar serious incidents that might affect the interests of the Bank. or take part in.500. any political movement in or outside of Pakistan or relating to the affairs of Pakistan. and government officials. However. transfer. regulations and Bank's policies. wherever the bank operates. including any issue. sovereignty or integrity of Pakistan. • ABIDANCE OF LAWS / RULES • Conform to and abide by the Bank rules and policies and obey all lawful orders and directives which may from time to time be given by any person or persons under whose jurisdiction. discovery or work of authorship that may be made or conceived and which may arise out of the employment with MCB. Not canvass or otherwise interfere or use influence in connection with or take part in any election as a candidate to a legislative/local body or issue an address to the electorate or in any manner announce or allowed to be announced publicly as a candidate or prospective candidate whether in Pakistan or elsewhere. the Bank's constituents and the public. be placed. or write letters to the newspapers. Political Participation • Stand firmly against supporting the activities of any Group or individual that unlawfully threatens public order and safety. In case of awareness of any breaches of laws and regulations. Use utmost endeavour to promote the interest and goodwill of the Bank and show courtesy and attention in all transactions/correspondence with officers of Government. improvement. retirement or for any other conditions of service of employment. contribute. • • • 62 | MCB Bank Limited . Comply with the laws and regulations on money laundering and fraud prevention and immediate reporting of all suspicions of money laundering as per the guidelines provided in KYC & AML Procedures Handbook for Management and Staff. Ensure that all customer complaints are resolved quickly. Disclose and assign to MCB all interest in any invention. other establishments dealing with the Bank. INTEGRITY • Conduct the highest standards of ethics. promotion. Not obtain membership of any political party. T undertake at all times o compliance with and observation of all applicable laws. for the time being. in respect of any matter relating to appointment. Not to engage in any act of violation of KYC & AML guidelines given by State Bank of Pakistan and exercising of extreme vigilance in protecting MCB • • • • Financial Interest • Not indulge in any of the following activities: Borrow money from or in any way place myself under pecuniary obligation to a broker or moneylender or any firm or person having dealings with the Bank. fairly and recorded appropriately. State Bank of Pakistan and fellow bankers and non-engagement in acts discreditable to the Bank. customers. professional integrity and dignity in all dealings with the public. other Banks & Financial Institutions. • In case of potential conflict of interest. Not bring or attempt to bring political or other pressure/influence directly or indirectly to bear on the authorities/superior officers or indulge in derogatory pamphleteering. Not express views detrimental to the ideology. with the interest of the Bank or its customers. punishment. investors.000/.Statement of Ethics and Business Practices In line with “Statement of Ethics and Business Practices” prepared in 2002. employees. which may pose a reputational risk. Not use this policy to raise grievances or act in bad faith against colleagues. or assist in any way. shares or securities of any description without funds to meet the full cost in the case of purchase or scripts for delivery in the case of sale. or may appear to be in conflict. • • • • • PROFESSIONALISM • Serve the Bank honestly and faithfully and strictly serve the Bank's affairs and the affairs of its constituents. the persona will. the right to vote can be exercised. profession and nation. action is taken to resolve and manage it in open manner and resolving the conflict of interest on their own would be avoided. the Employees of the bank shall. the same should be declared immediately to senior management. anonymously or in own name with an intent to induce the authority/superior officers to act in a manner inconsistent with rules. CONFLICT OF INTEREST • Avoid all such circumstances in which there is personal interest conflict. In case the employment is terminated.

or to carry on trade union activities during office hours. both the tangible and intangible assets of MCB and its customer(s) that are under personal control and to not use Bank's assets for personal benefits except where permitted by MCB. or carry weapons into Bank premises unless so authorized by the management.Statement of Ethics and Business Practices • • • • • • • However. or subject Bank officials to physical harassment or abuse. Not accept any benefit from the estate of. Not use for self gain. Treat every customer of the Bank with respect and courtesy. Not give any interview in the print/electronic media or have the photograph displayed or an act in television/stage plays or in cinema without having permission from the competent authority. administrator or trustee. Any unauthorized access or updation will hold the person liable for a penal action by the bank in accordance with HR policies. • • • BUSINESS / WORK ETHICS • Respect fellow colleagues and work as a team. technical processes. courteous and to not let any personal differences affect work. or for that of others either directly or indirectly. Not accept any gift. operating manuals. Not use any Bank facilities including a car or telephone to promote trade union activities. Safeguard as a personal responsibility. nor accept such gain if offered. Not disclose that a suspicious transaction or related information is being reported for investigation to the customer or any irrelevant quarter. or a trust created by a customer. favors. Not give or accept bribes or engage in any form of corruption. friends or any other third parties. marketing plans and strategies and other confidential financial and business information of the Bank etc. attempt which in doing so shall hold the person liable to disciplinary action as per Bank's policy. Act as agent for an insurance company otherwise than as agent for or on behalf of the Bank. Undertake part-time work for a private or public body or private person. whilst in possession of non-public price sensitive information. Personal Responsibility • • Demonstrate commitment to the code through words and actions. Government paper or any other securities. of all the information acquired during the course of professional activities and refrain from disclosing the same unless otherwise required by statutory authorities / law. • Not trade in relevant investments or indulge in giving tips to another person or dealing on behalf of relatives. a bona-fide investment of own funds in such stocks. • Communication/ Contact with Media Be truthful in all advertisings and promotional efforts and to publish only accurate information about the Bank's operations under valid authority. or accept fee thereof. or from an estate or trust of which a Bank's Company or business unit is an executor. Not compromise access to system by communicating my identification and /or passwords to others. either on own account or as agent for another or others. at all times. confidential research work. Be responsible for data relating to official responsibilities and to not alter / modify / amend Bank's record so as to obtain any personal benefits. entertainment or other benefit the size or frequency of which exceeds normal business contacts from a constituent or a subordinate employee of the Bank or from persons likely to have dealings with the Bank and candidates for employment in the Bank. • • CONFIDENTIALITY • Maintain the privacy and confidentiality (during the course of employment and after its termination for whatever reason). shares and securities as wished can be made. product manuals. To be. • Data Security • Only access or update the system and data according to the authority given by the bank. Favors Etc. Lend money in private capacity to a constituent of the Bank or have personal dealings with a constituent in the purchase or sale of bills of exchange. • • • Annual Report 2009 | 63 . All such information will remain as a trust and will only be used for the purpose for which it is intended and will not be used for the personal benefit of any individual(s). all inside information about Bank's customers / affairs including customer data. Accept or seek any outside employment or office whether stipendiary or honorary. • Not use the employment status to seek personal gain from those doing business or seeking to do business with MCB. Be connected with the formation or management of a joint stock company. • Gift. Engage in any other commercial business or pursuit.

customer. • • • REPORTING AND ACCOUNTABILITY • Maintain all books. The appearance must inspire confidence and convey a sense of professionalism. • • • • WORK ENVIRONMENT • Help in maintaining a healthy and productive work environment to meet the responsibilities to fellow employees. religion. Not use language. co-worker. Obtain. colour. and to not get engaged in the selling. sexual orientation or disability. emails and telephone provided by the Bank for professional use only.Statement of Ethics and Business Practices • • • Not indulge in any kind of harassment or intimidation whether committed by or against any senior/ junior . USAGE OF COMMUNICATION TOOLS • Ensure strict adherence to the use of internet. written permission of the immediate supervisor. • 64 | MCB Bank Limited . vendor or visitor. using any illegal substance or getting under the influence of illegal drugs while on the job. reflecting in an accurate and timely manner and to ensure that all business transactions are reported and documented correctly according to the business practices. sovereignty or integrity of Pakistan. written or spoken in intra-office or communication(s) with individual(s) outside the office that may contain any statement or material that is offensive to others. for any absence during working hours. nor leave station over night. Intimate Human Resources Management of any changes in the personal circumstances relating to employment or benefits. customers and investors. Placing a fake claim for reimbursement of any expenses. age. manufacturing. Never utilize Bank's system to disseminate any material detrimental to the ideology. Never use the Bank's system to transmit or receive electronic images or text containing ethnic slurs. without having first obtained the permission of the competent authority. gender. Ensure strict adherence to all health and safety policies as may be implemented from time to time by the Bank. data. Not engage in any discrimination against an individual's race. offensive or insulting to others. necessary permission / confirmation to be obtained from the competent authority within 24 hours. social epithets or any thing that might be construed as harassing. Ensure facts are not misinterpreted pertaining to: • Issuing an incorrect account statement / any other information for any customer or staff member. Posting of false. information and records with scrupulous integrity. artificial or misleading entries in the books or record of the Bank. Unrecorded funds or assets of Bank in custody for any reason. Never utilize the Bank's system for supporting any terrorist activity within and/or outside Pakistan. marital status. • • Punctuality • Ensure good attendance and punctuality and demonstrate a consistently good record in this area. if it is not possible to obtain prior permission. Dress Code • Maintain a standard of personal hygiene and dress appropriate for attendance at work. Not absent oneself from assigned duties. distributing. In case of emergency.

as determined by CEO have been appr ved o by the Board. being a member of a stock exchange.Statement of Compliance with the Best Practices of Code of Corpo rate Governance for the Year Ended December 31. that they or any of the partners of the firm. 16. 2009 This statement is being presented to comply with the Code of Corporate Governance (the Code) contained in the Regulation No. The Board has developed a vision / mission statement. All related party transactions entered during the year were at arm's length basis and these have been placed before the Audit Committee and Board of Directors. A complete record of particulars of significant policies along with the dates on which these were approved or amended has been maintained. 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. The terms of reference of the committee have been formulated and advised to the committee for compliance. 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. including appointment and determination of remuneration and terms and conditions of employment of the Chief Executive Officer have been taken by the Board. whereby a listed company is in compliance with the best practices of corporate governance. Salman Zafar Siddiqi has been appointed as Chief Financial Officer replacing Mr. It has been signed by the directors and employees. Written notices of the Board meeting. 21. Atif Bajwa. 18. Kamran Zaffar Muggo has been appointed as Head Internal Audit in place of Mr. 8. The statutory auditors or the persons associated with them have not been appointed to provide services other than approved services and the auditors have confirmed that they have observed IFAC guidelines in this regard. 9. 10. Ali Munir. Mian Mohammad Mansha Chairman Dated: February 25. All the resident directors of the Bank are registered taxpayers and none of them has defaulted in payment of any loan to a banking company. The financial statements of the Bank were duly endorsed by the Chief Executive Officer and Chief Financial Officer before approval of the Board. overall corporate strategy and significant policies of the Bank. The minutes of the meeting were appropriately recorded and circulated. The Board met at least once in every quarter. Personnel of Internal Audit Department are suitably qualified and are involved in the internal audit function on full time basis. 13. 3. a DFI or an NBFI or. along with agenda and working papers. has been declar d e as a defaulter by that stock exchange. 7. During the year Mr. The meetings of the audit committee are held at least once every quarter prior to approval of interim and final results of the Bank. The Bank in year 2002 prepared “Statement of Ethics and Business Practices” for directors and employees. The Bank has complied with all the corporate and financial reporting requirements. The directors have confirmed that none of them is serving as a director in more than ten listed companies. 17. On behalf of Directors 2. were circulated at least seven days before the meetings. Salman Zafar Siddiqi. as required by the Code. chapter XIII and XI of listing regulations of Karachi. 6. including this Bank. 37. 5. Acting CFO and Mr. No casual vacancy occurred in the Board of MCB Bank Limited during the year 2009. 1. Lahore & Islamabad Stock Exchanges (Guarantee) Limited respectively. 4. It comprises of five members. During the year the same has been circulated as required under the code. Both the appointments including their remuneration and terms & conditions of employment. all of them are non-executive directors including the Chairman of the Committee. At present all the directors on the Board are non-executive except for President and CEO Mr. for the purpose of establishing a framework of good governance. 2010 Annual Report 2009 | 65 . The directors. The Board has set up an effective internal audit function. The Board arranged orientation courses for its directors to apprise them of their duties and responsibilities. Chief Executive Officer and executives do not hold any interest in the shares of the Bank other than those disclosed in the annual report. The Company Secretary and Chief Financial Officer attended the meetings of the Board of Directors. 12. We confirm that all other material principles contained in the Code have been complied with. These transactions are duly reviewed and approved by Audit Committee and Board of Directors. The Board has formed an audit committee. The meetings of the Board were presided over by the Chairman. 15. 11. 14. The Bank encourages representation of non-executive directors on its Board of Directors. All the powers of the Board have been duly exercised and decision on material transactions. The directors' report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. 19.

Review Report to the Members on Statement of Compliance with Best Practices of Code of Corporate Governance We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Gover ance n prepared by the Board of Directors of MCB Bank Limited (“the Bank”) for the year ended 31 December 2009. with the best practices contained in the Code of Corporate Governance as applicable to the Bank for the year ended 31 December 2009. which causes us to believe that the Statement of Compliance does not appropriately reflect the Bank's compliance. 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. 37) notified by the Karachi Stock Exchange (Guarantee) Limited vide circular KSE/ N-269 dated January 19. Sub-Regulation (xiii a) of Listing Regulation 35 (previously Regulation No. to the extent where such compliance can be objectively verified. where the Bank is listed. As part of our audit of financial statements. We have not carried out any special review of the internal control system to enable us to express an opinion as to whether the Board's statement on internal control covers all controls and the effectiveness of such internal controls. Based on our review. all such transactions are also required to be separately placed before the Audit Committee. A review is limited primarily to inquiries of the Bank personnel and review of various documents prepared by the Bank to comply with the Code. in all material respects. Lahore Dated: February 25. We are only required and have ensured compliance of requirement to the extent of approval of related party transactions by the Board of Directors and placement of such transactions before the Audit Committee. 2010 KPMG TASEER HADI & CO. nothing has come to our attention Further. Our responsibility is to review. whether the Statement of Compliance reflects the status of the Bank's compliance with the provisions of the Code of Corporate Governance and report if it does not. 2009 requires the Bank to place before the Board of Director for their consideration and approval related party transactions. The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Bank. to comply with the Listing Regulations of the r espective Stock Exchanges. Chartered Accountants (Farid Uddin Ahmed) 66 | MCB Bank Limited . We have not carried out any procedure to determine whether the related party transactions were undertaken at arm's length price. 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 recording proper justification for using such alternative pricing mechanism. Further.

2010 KPMG Taseer Hadi & Co. in our opinion: i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Banking Companies Ordinance. were necessary for the purposes of our audit. as well as. profit and loss account. 1984 (XLVII of 1984). We believe that our audit provides a reasonable basis for our opinion and after due verification. and the business conducted. its comprehensive income. 1962 (LVII of 1962) and the Companies Ordinance. and the Companies Ordinance. on a test basis. evaluating the overall presentation of the financial statements. 1984 (XLVII of 1984). statement of comprehensive income. and in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance. cash flow statement and statement of changes in equity. statement of comprehensive income. 1980 (XVIII of 1980). with which we concur. We conducted our audit in accordance with the International Standards on Auditing as applicable in Pakistan. which in case of loans and advances covered more than sixty per cent of the total domestic loans and advances of the Bank. An audit also includes assessing the accounting policies and significant estimates made by management. in the manner so required and give a true and fair view of the state of the Bank’s affairs as at 31 December 2009 and its true balance of the profit. 1962 (LVII of 1962). d) Lahore February 25. in which are incorporated the unaudited certified returns from the branches except for sixty branches which have been audited by us and seven branches audited by auditors abroad and we state that we have obtained all the information and explanations which. 1984 (XLVII of 1984) and the returns referred to above received from the branches have been found adequate for the purposes of our audit. and are in agreement with the books of account and are further in accordance with accounting policies consistently applied. except for the changes referred to in note 5.1. 1962 (LVII of 1962) and the Companies Ordinance. we report that: a) in our opinion. together with the notes forming part thereof (hereinafter referred to as the ‘financial statements’) for the year then ended. 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. An audit includes examining. 1984 (XLVII of 1984). evidence supporting the amounts and disclosures in the financial statements. proper books of account have been kept by the Bank as required by the Companies Ordinance. Our responsibility is to express an opinion on these statements based on our audit. It is the responsibility of the Bank’s Board of Directors to establish and maintain a system of internal control and prepare and present the financial statements in conformity with approved accounting standards and the requirements of the Banking Companies Ordinance. to the best of our knowledge and belief. together with the notes forming part thereof conform with the approved accounting standards as applicable in Pakistan and give the information required by the Banking Companies Ordinance.Auditors’ Report to the Members We have audited the annexed balance sheet of MCB Bank Limited (“the Bank”) as at 31 December 2009 and the related profit and loss account. cash flow statement and statement of changes in equity. Chartered Accountants Farid ud Din Ahmed Annual Report 2009 I 67 . 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. was deducted by the Bank and deposited in the Central Zakat Fund established under section 7 of that Ordinance. b) ii) iii) c) in our opinion and to the best of our information and according to the explanations given to us the balance sheet. its cash flows and changes in equity for the year then ended. the expenditure incurred during the year was for the purpose of the Bank’s business.

014.196.345.135.081 69.779.079 96.781 385.896 – 23.727 Liabilities Bills payable Borrowings Deposits and other accounts Sub–ordinated loan Liabilities against assets subject to finance lease Deferred tax liabilities – net Other liabilities Net assets Represented by: Share capital Reserves Unappropriated profit Surplus on revaluation of assets – net of tax 14 15 16 8.840 330.476 443.137 21. M.663.193.664.765 9.604.172 4.090 44.470 17.850 58.000 167.551. 2009 Note 2009 (Rupees in ‘000) 2008 Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Operating fixed assets Deferred tax assets – net Other assets – net 6 7 8 9 10 11 – 12 38.179.095 509.615.332 52.040.189 58.768 36.282.483.436.740.407 18.043.874 262.768.100 4.865 6.631.711 – – 3.904 17 18 19 20 6.244. Atif Bajwa President and Chief Executive S.000.249.088 367.624 – – 437.465 253.Balance Sheet As at December 31.054 21 Contingencies and commitments 22 The annexed notes 1 to 46 and Annexures I to V form an integral part of these financial statements.082 439.810.743 15.468 22.714 69.662.201.733 19.100.134.932 8. Muneer Director Dato’ Mohammed Hussein Director Mian Umer Mansha Director 68 I MCB Bank Limited .871 6.054 39.013 10.385.181.740.819.013 6.993 3.774.075.127 61.436.045 38.911.631.760 15.009.263.191.223.

953.492.189 142.322.232.043.953 (Rupees) Basic and diluted earnings per share – after tax 33 22.4.25 The annexed notes 1 to 46 and Annexures I to V form an integral part of these financial statements.154.324 9.198) 855.019.118 5.867.483.824 690.750 21.940.127 – 4.152.332 22.341.374.095.452.994 1.648 15.791.616.837 – 21.429 (103.683.564 740.527 41.218 5.824) 16.576 7.305 (2.526.331.710.319 5.533 6.107.42 22.297 9.824 8.774.963 2.3 10.885 34.841.226) 2.255.135 817.084 2.566 7.642.387.659.656 24.193. 2009 Note 2009 (Rupees in ‘000) 2008 Mark–up / return / interest earned Mark–up / return / interest expensed Net mark–up / interest income Provision for diminution in the value of investments – net Provision against loans and advances – net Bad debts written off directly Net mark–up / interest income after provisions Non–mark–up / interest income Fee.768 – 736.3 29 10.130.740 28.223 3.546. Atif Bajwa President and Chief Executive S.463.069 20.856 459.741 341.878 23.569 30 Profit after taxation Unappropriated profit brought forward Transfer from surplus on revaluation of fixed assets – net of tax Profit available for appropriation 7.5 27 28 12.5.2 10.257 (864.215.007 15.188.335. commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities – net Unrealized loss 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 provision – net Other charges Total non–mark–up / interest expenses Extra ordinary / unusual item Profit before taxation Taxation – Current year – Prior years – Deferred 24 25 51.824 11.495.150 10. M.945 7.703.163 – 23.321 28.402 773.544 40.108 26 9.Profit and Loss Account For the year ended December 31.669 9.484.697 5.796.1 1.463 35.440 30.121 24.403 7.966 15.560.600 5. Muneer Director Dato’ Mohammed Hussein Director Mian Umer Mansha Director Annual Report 2009 I 69 .394 617.554 727.

176.1 29 27 9.576 17.419.100.367 33.218 142.445) 15.864 (479.397 5.129 (2.153.012 815.176 3.175) (10.960 (3.410 (16.542 (1.248 37.554) 21.072 82.5 909.947) 2.058.707) 20.080 (Increase) / decrease in operating assets Lendings to financial institutions Net investments in ‘held for trading’ securities Advances – net Other assets – net Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities 1.465.047.126 (5.735.416. M.086) 826.3 10.796.092 (70.5.841) (49.477 (30.317.685 (4.2 9.177 8.465 1.998.181 (1.272 44.031. Atif Bajwa President and Chief Executive S.693) 43.510) (6.510) 67.777) 103.302.3 10.120 – – (36.429.910.485 (7.234.945 (459.484.445) 3.898.491.198 5.893.402 43.2 11.481) 50.763 (2.005 1.205 142.232) (9.875 9.914.994 10.052.089 11.274) 72.641.884 (3.527 1.878.082 21.674.870 45.127 2.674. Muneer Director Dato’ Mohammed Hussein Director Mian Umer Mansha Director 70 I MCB Bank Limited .986) 93.999) (1.867.087 (6.566 (617.423.272 (72.872 26.683.335.603) 78.812.151) 258.784.317.843) – 621.273 (44.3 12.079 94.148.140) 43.884.048.204 11.Cash Flow Statement For the year ended December 31.407.742.303.407) 230.834.741) 22.991) 38.369.824 41. 2009 Note 2009 (Rupees in ‘000) 2008 Cash flows from operating activities Profit before taxation Less: Dividend income Adjustments for non–cash charges Depreciation Amortization Provision against loans and advances – net Provision for diminution in the value of investments – net Provision against other assets –net Bad debts written off directly Operating fixed assets written off Gain on disposal of fixed assets – net Deficit on revaluation of ‘held for trading’ securities 23.378) 21.965 (641.514.315.107 (394) 446.313.916.154.210.4.250.735.614) – 8.592 44.695.538 The annexed notes 1 to 46 and Annexures I to V form an integral part of these financial statements.110.476 Income tax paid Net cash flows from operating activities Cash flows from investing activities Net investments in ‘available for sale’ securities Net investments in ‘held to maturity’ securities Investment in subsidiary company Dividends received Investments in operating fixed assets Sale proceeds of property and equipment disposed off Net cash flows from investing activities Cash flows from financing activities Redemption of subordinated loan Dividend paid Net cash flows from financing activities Exchange differences on translation of net investment in foreign branches Increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of the year 34 – (6.876 31.667 182.471 153.550.350.

750 45.932 – – 67. 2007 Changes in equity for 2008 Profit after taxation for the year ended December 31.692) (1.600. 2009 – – 628.600 15.600 15.332 21.779.000 5.528 – – – – – – – 256. 2008 Transferred from surplus on revaluation of fixed assets to unappropriated profit – net of tax Transferred to general reserve Transferred to statutory reserve Final cash dividend – December 2007 Interim cash dividend – March 2008 Interim cash dividend – June 2008 Interim cash dividend – September 2008 Balance as at December 31.297 15.762 – – 67.537.319 (1.702.884.884.374.865 Changes in equity for 2009 Profit after taxation for the year ended December 31.600 – – 230.781) (1.460 – – – – 8. The annexed notes 1 to 46 and Annexures I to V form an integral part of these financial statements.727.277) (1. 2009 Exchange differences on translation of net investment in foreign branches Total comprehensive income for the year ended December 31.570.831) (1.537.884.551 – 1.324 – – (1. Atif Bajwa President and Chief Executive S.156 – – – – – 15.460) (3.727.465 – – – – – 15.465 – – – 67.091 17.045 – – – – – – – 9.562.495.000. 2009 Transferred from surplus on revaluation of fixed assets to unappropriated profit – net of tax Transferred to statutory reserve Issue of bonus shares – December 2008 Final cash dividend – December 2008 Interim cash dividend – March 2009 Interim cash dividend – June 2009 Interim cash dividend – September 2009 Balance as at December 31.495.465 – – 15.831) 52.282.727.692) (1.141.244.667 – – 15.600.773) (1.727.831) 9.549.297 15.000 21.831) (1.549.384) (1.075.297 For details of dividend declaration and appropriations.768 – – – – – – – 9.605.081 – – – – – – – 18.702.827.702. please refer note 45 to these financial statements.000 22.000.130.319 – – (3.282. Muneer Director Dato’ Mohammed Hussein Director Mian Umer Mansha Director Annual Report 2009 I 71 .528 (41.267 – – – – – – – 6.000) (1.000 – – – – – 18.981) 6.151 – 1.667 – – 230.773) 15.667 – – – 230.324 (1.884.740.831) (1.374.528 – – – – – – – 188.768 9.600.530) (628.570.384) (1. M.884.773) (1.495.277 – – – – 6.277. 2009 Capital Reserves Share capital Share premium Exchange translation reserve Statutory reserve (Rupees in ‘000) Revenue Reserves General reserve Unappropriated profit Total Balance as at December 31.530 – – – – – 9. 2008 Exchange differences on translation of net investment in foreign branches Total comprehensive income for the year ended December 31.141.193.773) 61.727. 2008 6.414.831) (1.781) (1.727.686 – – 1.Statement of Changes in Equity For the year ended December 31.374.911.127 22.884.

495. 2000 and BSD circular 10 dated 13 July.297 15. 2004 and Companies Ordinance.600 67.562. respectively.605.465 15.Statement of Comprehensive Income For the year ended December 31. 1984.667 15.762 230. M. Atif Bajwa President and Chief Executive S. Muneer Director Dato’ Mohammed Hussein Director Mian Umer Mansha Director 72 I MCB Bank Limited . The annexed notes 1 to 46 and Annexures I to V form an integral part of these financial statements.267 Surplus/ deficit on revaluation of ‘available for sale’ securities and ‘fixed assets’ are presented under a separate head below equity as ‘surplus/ deficit on revaluation of assets’ in accordance with the requirements specified by the State Bank of Pakistan vide its BSD circular 20 dated 04 August.374. 2009 2009 (Rupees in ‘000) 2008 Profit after tax for the year Other comprehensive income Effect of translation of net investment in foreign branches Total comprehensive income for the year 15.

2009 1. Amended IAS 27 – Consolidated and Separate Financial Statements (effective for annual periods beginning on or after July 01. ‘Financial Instruments: Recognition and Measurement’ and International Accounting Standard (IAS) 40. 2. contingent consideration to be measured at fair value.3 3.2 2. any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognized in the profit or loss. Approved Accounting Standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance. provisions of and directives issued under the Companies Ordinance.700) have been used. Accordingly. rates of Rs. IFRIC 15 – Agreement for the Construction of Real Estate (effective for annual periods beginning on or after October 01. The State Bank of Pakistan has deferred the applicability of International Accounting Standard (IAS) 39. The Bank’s ordinary shares are listed on all the stock exchanges in Pakistan whereas its Global Depository Receipts (GDRs) representing two ordinary shares (2008: two ordinary shares) are traded on the International Order Book (IOB) system of the London Stock Exchange.074 branches including 11 Islamic banking branches (2008: 1.1 – Annual Report 2009 I 73 . 1962 shall prevail. 2009) clarifies the recognition of revenue by real estate developers for sale of units. 3.2416 per US Dollar (2008: Rs.2 Standards. STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan.O 411(1) /2008 dated April 28. In case requirements differ. to be recognized as an equity transaction. the provisions and directives given in Companies Ordinance. The financial results of the Islamic Banking branches have been consolidated in these financial statements for reporting purposes. 2002. transaction costs other than share and debt issue costs to be expensed. with the related gain or loss recognised in profit or loss and any noncontrolling (minority) interest to be measured at either fair value. ‘Investment Property’ for Banking Companies through BSD Circular No. 0. after eliminating material inter– branch transactions / balances. 1962. that is. before construction is complete. 3. Key financial figures of the Islamic Banking branches are disclosed in Annexure II to these financial statements. 1984 and Banking Companies Ordinance. However. or at its proportionate interest in the identifiable assets and liabilities of an acquiree. These standards are either not relevant to the Bank’s operations or are not expected to have a significant impact on the Bank’s financial statements other then increase in disclosures in certain cases: – Revised IFRS 3 – Business Combinations (applicable for annual periods beginning on or after July 01. – 2. The consolidated financial statements of the Group are being issued separately. 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 utilized and the appropriate portion of mark–up thereon.040 branches including 11 Islamic banking branches) within Pakistan and 7 branches (2008: 7 branches) outside the country (including the Karachi Export Processing Zone branch).1 BASIS OF PRESENTATION These financial statements represent separate financial statements of MCB Bank Limited. 2008. Islamabad and MCB –15 Main Gulberg. amendments and interpretations to published approved accounting standards that are not relevant and not yet effective The following standards. The Bank operates 1. In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes. on a transaction-by-transaction basis. Lahore. Jinnah Avenue.4 For the purpose of translation.R. ‘off-plan’. 2009) requires accounting for changes in ownership interest by the group in a subsidiary. 2. any pre-existing interest in an acquiree to be measured at fair value.0985) and Rs. 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. 2.0. 2009) broadens among other things the definition of business resulting in more acquisitions being treated as business combinations. 79. The Bank’s Registered Office and Principal Office are situated at MCB Building. the State Bank of Pakistan has issued various circulars from time to time. amendments and interpretations of approved accounting standards will be effective for accounting periods beginning on or after January 01. investments have been classified and valued in accordance with the requirements prescribed by the State Bank of Pakistan through various circulars. When the group loses control of subsidiary. The Securities Exchange Commission of Pakistan (SECP) has deferred applicability of IFRS– 7 “Financial Instruments: Disclosures” on banks through S. 1984. such as apartments or houses. the requirements of these standards have not been considered in the preparation of these financial statements. 10 dated August 26. 2010. respectively. while maintaining control. STATUS AND NATURE OF BUSINESS MCB Bank Limited (the ‘Bank’) is a banking company incorporated in Pakistan and is engaged in commercial banking and related services.Notes to the Financial Statements For the year ended December 31.7364 per SLR (2008: Rs. 1984 and Banking Companies Ordinance. 84.

These amendments result in prepayments of contributions in certain circumstances being recognised as an asset rather than an expense. 2010). The revision amends the definition of a related party and modifies certain related party disclosure requirements for government–related entities. 2011). – Amendments to IFRIC 14 IAS 19 – The Limit on a Defined Benefit Assets. 2010). Amendments to IFRS 5 – Non–current Assets Held for Sale and Discontinued Operations – (effective for annual periods beginning on or after July 01. commitments in respect of certain forward exchange contracts and derivative financial instruments have been marked to market and are carried at fair value. including expectations of future events that are believed to be reasonable under the circumstances. The amounts are rounded off to the nearest thousand.1 BASIS OF MEASUREMENT These financial statements have been prepared under the historical cost convention except that certain fixed assets are stated at revalued amounts and certain investments. options or warrants to acquire a fixed number of the entity’s own equity instruments for a fixed amount of any currency to be classified as equity instruments provided the entity offers the rights. IFRIC – 17 – Distributions of Non–cash Assets to Owners (effective for annual periods beginning on or after July 01. The financial statements are presented in Pak Rupees. The amendment would result in certain changes in disclosures. Currently effective IFRSs require attribution of group share–based payment transactions only if they are equity–settled. and disclosures for discontinued operations are required by the parent when a subsidiary meets the definition of a discontinued operation. This amendment is not likely to have any impact on Bank’s financial statements. 4. – Amendment to IFRS 2 – Share–based Payment – Group Cash–settled Share–based Payment Transactions (effective for annual periods beginning on or after January 01. The effective dates for these amendments vary by standard and most will be applicable to the Bank’s 2010 financial statements. IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments (effective for annual periods beginning on or after July 01. then it would classify all of that subsidiary’s assets and liabilities as held for sale when the held for sale criteria in IFRS 5 are met. the liability for the dividend is measured at fair value. which is the Bank’s functional and presentation currency.Notes to the Financial Statements For the year ended December 31. 2009 – Amendments to IAS 39 – Financial Instruments: Recognition and Measurement – Eligible hedged Items (effective for annual periods beginning on or after July 01. Minimum Funding Requirements and their Interaction (effective for annual periods beginning on or after January 01. 2009). It also requires the management to exercise its judgment in the process of applying the Bank’s accounting policies. The IASB amended IAS 32 to allow rights. If there are subsequent changes in the fair value before the liability is discharged. When the non–cash asset is distributed. the difference between the carrying amount and fair value is recognised in the income statement. IAS 24 – Related Party Disclosures (revised 2009) – effective for annual periods beginning on – or after January 01. Amendment to IAS 32 – Financial Instruments: Presentation – Classification of Rights Issues (effective for annual periods beginning on or after February 01. this is recognised in equity. 2010). The amendments resolve diversity in practice regarding attribution of cash–settled share–based payment transactions and require an entity receiving goods or services in either an equity–settled or a cash– settled payment transaction to account for the transaction in its separate or individual financial statements. This applies regardless of the entity retaining an interest (other than control) in the subsidiary. These amendments remove unintended consequences arising from the treatment of prepayments where there is a minimum funding requirement. – 4. This amendment is not likely to have any impact on Bank’s financial statements. This interpretation provides guidance on the accounting for debt for equity swaps.2 4. options or warrants pro rata to all of its existing owners of the same class of its own non–derivative equity instruments.3 – – 74 I MCB Bank Limited . 2009) clarifies the application of existing principles that determine whether specific risks or portions of cash flows are eligible for designation in a hedging relationship. 2009) states that when a Bank distributes non cash assets to its shareholders as dividend. Estimates and judgments are continually evaluated and are based on historical experiences. The amendments specify that if an entity is committed to a plan to sell a subsidiary. The International Accounting Standards Board made certain amendments to existing standards as part of its second annual improvements project. – 4. Critical accounting estimates and judgments The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. 2011.

the Bank has determined securities which are acquired with an intention to trade by taking advantage of short term market / interest rate movements and are to be sold within 90 days. the management uses the method which reflects the pattern in which economic benefits are expected to be consumed by the Bank. 5. 2009. 2009 The areas where various assumptions and estimates are significant to the Bank’s financial statements or where judgment was exercised in the application of accounting policies are as follows: a) – Classification of investments In classifying investments as ‘held for trading’. the Bank evaluates among other factors. e) Fair value of derivatives The fair values of derivatives which are not quoted in active markets are determined by using valuation techniques. 5. if any. The amount of general provision is determined in accordance with the relevant regulations and management’s judgment as explained in notes 10. Changes in these assumptions in future years may affect the liability / asset under these plans in those years. d) Taxation In making the estimates for income taxes currently payable by the Bank. c) Impairment of ‘available for sale’ equity investments The Bank determines that ‘available for sale’ equity investments are impaired when there has been a significant or prolonged decline in the fair value below its cost. IFAS 2 requires assets underlying ijarah financing to be recorded as operating fixed assets separately from the assets in Bank’s own use. the Bank has changed its accounting policies in respect of ‘Presentation of financial statements’ and ‘Ijarah’.4. financial position of the borrowers and the requirements of the Prudential Regulations are considered. In making this judgment. Annual Report 2009 I 75 – – b) . The valuation techniques g) take into account the relevant interest rates at the balance sheet date and the rates contracted. As a result. 2009. 5. Actuarial assumptions are entity’s best estimates of the variables that will determine the ultimate cost of providing post employment benefits. 2009. the Bank presents in the statement of changes in equity all owner changes in equity. the method is changed to reflect the changed pattern. whereas all non–owner changes in equity are presented in statement of comprehensive income. Since the change in accounting policy only impacts presentation aspects.4. changes in technology and operational/financial cash flows. The determination of what is significant or prolonged requires judgment. Staff retirement benefits Certain actuarial assumptions have been adopted as disclosed in these financial statements (note 36) for the actuarial valuation of staff retirement benefit plans. The method applied is reviewed at each financial year end and if there is a change in the expected pattern of consumption of the future economic benefits embodied in the assets. the Bank estimates the revalued amount of land and buildings on a regular basis. 5. Such change is accounted for as change in accounting estimates in accordance with International Accounting Standard (IAS) 8 “Accounting Policies.1. amortization and revaluation of operating fixed assets In making estimates of the depreciation / amortization method. the normal volatility in share price. the management considers the current income tax laws and the decisions of appellate authorities on certain issues in the past. In classifying investments as ‘held to maturity’.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Change in accounting policies Starting January 01. f) Depreciation.3 and 10.Notes to the Financial Statements For the year ended December 31. These assets are carried at cost less accumulated depreciation and impairment. the Bank evaluates its intention and ability to hold such investment to maturity.1 The Bank has applied Revised IAS 1 Presentation of Financial Statements (2007) which became effective as of January 01. While assessing this requirement various factors including the delinquency in the account. Changes in Accounting Estimates and Errors”. The investments which are not classified as ‘held for trading’ or ‘held to maturity’ are classified as ‘available for sale’. 2009.4. the Bank follows the guidance provided in SBP circulars on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity. In addition. The estimates are based on valuations carried out by independent professional valuers under the market conditions. Further. the impairment may be appropriate when there is an evidence of deterioration in the financial health of the invested industry and sector performance. there is no impact on earning per share. Comparative information has been re-presented so that it is also in conformity with the revised standard.2 The State Bank of Pakistan has notified for adoption of Islamic Financial Accounting Standard – IFAS 2 “Ijarah” which is applicable for accounting periods beginning on or after January 01.1. Provision against advances The Bank reviews its loan portfolio to assess the amount of non-performing advances and provision required there against on regular basis. This presentation has been applied in these financial statements as of and for the year ended on December 31. In making this judgment.

Investments classified as ‘held to maturity’ are carried at amortized cost. which are either acquired for generating profit from short-term fluctuations in market prices. investments in subsidiaries and investments in associates are subsequently re–measured to market value. Surplus / (deficit) arising on revaluation of quoted securities which are classified as ‘held for trading’. The residual values. 5. dealers margin or are securities included in a portfolio in which a pattern of short-term profit taking exists.5 Operating fixed assets and depreciation Property and equipment.2 to these financial statements and after taking into account residual value. is taken to a separate account which is shown in the balance sheet below equity. Investments are initially recognized at cost which in case of investments other than ‘held for trading’ include transaction costs associated with the investment. c) Available for sale These are investments. Advances Advances are stated net of specific and general provisions. Cost of property and equipment of foreign operations includes exchange differences arising on currency translation at year-end rates. computers. Specific provision is determined on the basis of the Prudential Regulations and other directives issued by the State Bank of Pakistan (SBP) and charged to the profit and loss account. Securities purchased under an agreement to resell (reverse repo) are not recognized in the financial statements as investments and the amount extended to the counter party is included in lendings to financial institutions. b) Held to maturity These are securities with fixed or determinable payments and fixed maturity in respect of which the Bank has the positive intent and ability to hold to maturity. is taken to the profit and loss account currently. Surplus / (deficit) arising on revaluation of quoted securities which are classified as ‘available for sale’. if appropriate. The difference between the purchase / sale and re-sale / re-purchase price is recognized as mark-up income / expense on a time proportion basis. that do not fall under the ‘held for trading’ or ‘held to maturity’ categories.4 5. Unquoted equity securities (excluding investments in subsidiaries and associates) are valued at the lower of cost and break–up value. 5. Leases where the Bank transfers substantially all the risks and rewards incidental to ownership of an asset to the lessee are classified as financial leases. Break–up value of equity securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements. Provisions against unidentified losses include general provision against consumer loans made in accordance with the requirements of the Prudential Regulations issued by SBP and provision based on historical loss experience on advances.2 Investments The Bank classifies its investments as follows: a) Held for trading These are securities. if any. Depreciation on all operating fixed assets is charged using the diminishing balance method except for vehicles. Sale and 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. quoted securities. at each balance sheet date. Provisions are held against identified as well as unidentified losses. participation term certificates and term finance certificates) is made currently.3 Provisions for impairment in value of debentures. participation term certificates and term finance certificates are made as per the requirements of the Prudential Regulations issued by the State Bank of Pakistan. are stated at cost or revalued amount less accumulated depreciation and accumulated impairment losses (if any). In accordance with the requirements of the State Bank of Pakistan. All purchases and sales of investments that require delivery within the time frame established by regulation or market convention are recognized at the trade date. carpets and buildings which are depreciated using the straight line method in accordance with the rates specified in note 11. useful lives and depreciation methods are reviewed and adjusted. other than land carrying value of which is not amortized. interest rate movements. Land is carried at revalued amount. Finance lease receivables are included in advances to the customers. Provision for impairment in the values of securities (except debentures. A receivable is recognized at an amount equal to the present value of the lease payments including any guaranteed residual value.Notes to the Financial Statements For the year ended December 31. as the case may be. Trade date is the date on which the Bank commits to purchase or sell the investment. Capital work-in-progress is stated at cost. Investments in subsidiaries and investments in associates are carried at cost. other than those in subsidiaries and associates. 76 I MCB Bank Limited . 2009 5. other than those classified as ‘held to maturity’. Advances are written off when there is no realistic prospect of recovery.

and where the carrying value exceeds the estimated recoverable amount.Notes to the Financial Statements For the year ended December 31. assets are written down to their recoverable amounts. except that the related surplus on revaluation of land and buildings (net of deferred taxation) is transferred directly to unappropriated profit. 5. Annual contributions towards the defined benefit plans and schemes are made on the basis of actuarial advice using the projected unit credit method. the Bank operates the following: an approved non–contributory provident fund introduced in lieu of the contributory provident fund. the related surplus on revaluation of land and buildings (net of deferred taxation) is transferred directly to unappropriated profit. The net cumulative actuarial gains / losses at each balance sheet date are recognized equally over a period of three years or the expected remaining average working lives of employees. the Bank operates the following: an approved non–contributory provident fund introduced in lieu of the contributory provident fund. Gains / losses on sale of property and equipment are credited / charged to the profit and loss account currently.5. 5. d) For executives and officers who joined the Bank on or after January 01. To the extent of the incremental depreciation charged on the revalued assets. Assets under Ijarah are depreciated over the period of lease term. However. 5. using the straight line method. However. if any. 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. whichever is lower. The useful lives are reviewed and adjusted. as appropriate.6 Impairment The carrying amount of assets are reviewed at each balance sheet date for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. 2009 Depreciation on additions is charged from the month the assets are available for use while no depreciation is charged in the month in which the assets are disposed off. – – – b) – – – c) – – e) Annual Report 2009 I 77 . the management has replaced the pension benefits for employees in the officer category with a contributory provident fund for services rendered after December 31. Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does not differ materially from the fair value. If such indication exists. 2000 the Bank operates an approved contributory provident fund.1 Intangible assets Intangible assets are stated at cost less accumulated amortization and accumulated impairment losses.5. if appropriate. an approved gratuity scheme. All other repairs and maintenance are charged to the profit and loss account. The above benefits are payable to staff at the time of separation from the Bank’s services subject to the completion of qualifying period of service. and an approved pension fund. Post retirement medical benefits to entitled employees. the Bank operates the following: an approved contributory provident fund. and a contributory benevolent scheme For clerical / non–clerical staff who joined the Bank after the introduction of the new scheme and for others who opted for the new scheme introduced in 1975. The resulting impairment loss is taken to the profit and loss account except for impairment loss on revalued assets. in the event the asset is expected to be available for re-ijarah. Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset. Surplus on revaluation of land and buildings is credited to the surplus on revaluation account. at each balance sheet date. whereby the cost of the intangible assets are amortized over its estimated useful lives over which economic benefits are expected to flow to the Bank.7 Staff retirement benefits The Bank operates the following staff retirement benefits for its employees: a) For clerical / non–clerical staff who did not opt for the new scheme. 5. Ijarah income is recognized on an accrual basis as and when the rental becomes due. an approved pension fund. Recoverable amount is the greater of net selling price and value in use. and contributory benevolent scheme For officers who joined the Bank after the introduction of the new scheme and for others who opted for the new scheme introduced in 1977. depreciation is charged over the economic life of the asset using straight line basis. Intangible assets are amortized from the month when these assets are available for use. which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of that asset. if any. 2003.2 Leased (Ijarah) Assets leased out under ‘Ijarah’ are stated at cost less accumulated depreciation and accumulated impairment losses.

11 Foreign currencies Transactions in foreign currencies (other than the results of foreign operations discussed in note 5. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.8 Employees’ compensated absences Liability in respect of employees’ compensated absences is accounted for in the year in which these are earned on the basis of actuarial valuation carried out using the Projected Unit Credit Method.11. 5. 5.11. Gains / losses on termination of lease contracts are recognized as income when these are realized. 2009 Past service cost resulting from changes to defined benefit plans to the extent the benefits are already vested is recognized immediately and the remaining unrecognized past service cost is recognized as an expense on a straight line basis over the average period until the benefits become vested. ‘Income Taxes’.2 Foreign operations The assets and liabilities of foreign branches are translated to Rupees at exchange rates prevailing at the balance sheet date. 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. Monetary assets and liabilities in foreign currencies are expressed in Rupee terms at the rates of exchange prevailing at the balance sheet date. 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 balance sheet date. the unearned lease income (excess of the sum of total lease rentals and estimated residual value over the cost of leased assets) is deferred and taken to income over the term of the lease period so as to produce a constant periodic rate of return on the outstanding net investment in lease. are recognized immediately. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates.4 Commitments Commitments for outstanding forward foreign exchange contracts are disclosed in these financial statements at committed amounts. Under this method.10 Provisions Provisions are recognized when the Bank has a legal or constructive obligation as a result of past events and 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.Notes to the Financial Statements For the year ended December 31.2) are translated to Rupees at the foreign exchange rates ruling on the transaction date. The charge for current tax also includes adjustments where considered necessary.12 Revenue recognition – Mark–up / interest on advances and returns on investments are recognized on a time proportion basis using the effective interest method except that mark–up / interest on non–performing advances and investments is recognized on a receipt basis. 5.3 Translation gains and losses Translation gains and losses are included in the profit and loss account. 5. which are taken to the capital reserve (exchange translation reserve).1 Foreign currency transactions – 78 I MCB Bank Limited . where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. The Bank also recognises deferred tax asset / liability on deficit / surplus on revaluation of securities and deferred tax liability on surplus on revaluation of fixed assets which is adjusted against the related deficit / surplus in accordance with the requirements of International Accounting Standard (IAS) 12. The results of foreign operations are translated to Rupees at the average rate of exchange for the year. 5. enacted or substantively enacted by the balance sheet date expected to be applicable at the time of its reversal. 5.11. Financing method is used in accounting for income from lease financing. in accordance with the requirements of the Prudential Regulations issued by the State Bank of Pakistan (SBP) or as permitted by the regulations of the overseas regulatory authorities of the countries where the branches operate. Foreign bills purchased and forward foreign exchange contracts other than those relating to foreign currency deposits are valued at the rates applicable to their respective maturities. The Bank records deferred tax assets / liabilities using the tax rates. Deferred Deferred tax is recognised using the balance sheet liability method on all major temporary differences between the amounts attributed to assets and liabilities for financial reporting purposes and amounts used for taxation purposes. 5. 5.11.11. Deferred tax liability is not recognized in respect of taxable temporary differences associated with exchange translation reserves of foreign operations.9 Taxation Current Provision for current taxation is based on taxable income at the current rates of taxation after taking into consideration available tax credits and rebates. except those arising on the translation of the Bank’s net investment in foreign branches. Actuarial gains or losses if any. relating to prior years which arise from assessments framed / finalized during the year. 5.

5. is recognized as deduction from the share premium account.Notes to the Financial Statements For the year ended December 31. Trading and Sales It includes fixed income. 5. equity.2 Derivative financial instruments Derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at their fair value using valuation techniques. IPO related activities (excluding investments) and secondary private placements. 5. which is subject to risks and rewards that are different from those of other segments.1 Financial assets and financial liabilities 5. or to realize the assets and settle the liabilities. The particular recognition methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with these assets and liabilities. investments (excluding investment in associates and subsidiaries).13 Operating leases Operating lease rentals are recorded in profit and loss account on a time proportion basis over the term of the lease arrangements. 5. where necessary. Annual Report 2009 I 79 . in accordance with the requirements of SBP or overseas regulatory authorities of the country where the foreign branches of the Bank operate. private lending and deposits.2 Geographical segments The Bank operates in three geographic regions being: – – – 5. deposits and other liabilities.17. foreign exchange commodities.3 Off setting Financial assets and financial liabilities are set off and the net amount is reported in the financial statements when there is a legally enforceable right to set off and the Bank intends either to settle on a net basis.14 Cash and cash equivalents Cash and cash equivalents include cash and balances with treasury banks and balances with other banks in current and deposit accounts. trade finance. The Bank’s primary format of reporting is based on business segments. 2009 – Unrealized lease income is held in suspense account. All the derivative financial instruments are carried as an asset when the fair value is positive and liability when the fair value is negative. 5. syndications. banking services. Dividend income is recognized when the Bank’s right to receive dividend is established. securitization. 5. Commission income is recognized on a time proportion basis.17 Segment reporting A segment is a distinguishable component of the Bank that is engaged in providing products or services (business segment) or in providing products or services within a particular economic environment (geographical segment). export finance. Retail and Consumer Banking It includes retail lending and deposits. Dividend distribution and appropriation Dividends (including bonus dividend) and other appropriations (except appropriations which are required by law) are recognized in the period in which these are approved. borrowings. other assets.15 Financial instruments Financial instruments carried on the balance sheet include cash and balances with treasury banks. bills payable.15. lending. Gain / loss on sale of investments is credited / charged to profit and loss account currently. 5. lendings to financial institutions and brokerage debt.15. Any change in the fair value of derivative financial instruments is taken to the profit and loss account currently. leasing.17. guarantees and bills of exchange relating to its corporate customers. simultaneously. lendings to financial institutions. advances. banking services and retail offered to its retail customers and small and medium enterprises. Commercial Banking It includes project finance.15. 5. investment banking.1 Business segments Corporate Finance Corporate Finance includes underwriting.18 Pakistan Asia Pacific (including South Asia) Middle East – – – 5. balances with other banks.16 Share issuance cost Share issuance cost directly attributable to issuance of shares.

530 261.464 3.Notes to the Financial Statements For the year ended December 31.104.287 7.928 11.522. 2009 Note 2009 (Rupees in ‘000) 2008 6. 6.3 6.089 696. 59. Deposits with SBP are maintained to comply with their requirements issued from time to time.489 1.382 million).1 9.990 214. 80.1 Balances with other banks outside Pakistan in deposit account carry interest at the rate ranging from 0.1 5.891 2.2 This includes national prize bonds amounting to Rs.347.399 324.133.011 4.172 6. 1.009.3 6.188 6.156 38.871 19.4 6.059.239.038.591 million (2008: Rs.4 This represents US Dollar settlement account maintained with SBP. Note 2009 (Rupees in ‘000) 2008 7. 2.950.330 6.221.363.663 950.2 & 6.2 17.059.2 6.357 142.306 39.1 6.631. BALANCES WITH OTHER BANKS Outside Pakistan – current account – deposit account 7.742 million) which carry interest rate of Nil per annum (2008: 0.549 million (2008: Rs.20% per annum).12% to 1% (2008: 1. CASH AND BALANCES WITH TREASURY BANKS In hand – local currency – foreign currencies With State Bank of Pakistan (SBP) in: Local currency current account Foreign currency current account Foreign currency deposit account With other central banks in foreign currency current account With National Bank of Pakistan in local currency current account 6. This includes balance of Rs.993 3. 80 I MCB Bank Limited . Deposits with other central banks are maintained to meet their minimum cash reserves and capital requirements pertaining to the foreign branches of the Bank.910 6.694.100 7.90% per annum).774.148 7.043.600.

LENDINGS TO FINANCIAL INSTITUTIONS Call money lendings Repurchase agreement lendings 8. Annual Report 2009 I 81 .124.2 8.532 – 99.946 2.000 – 3.079 4.70% per annum (2008: 15.079 8. 2009 amounted to Rs.000. 2010.000.000 – 3.300.547 99. 8.100.000.532 2.408. 2.2 These carry mark-up rates ranging from 12.000 4. 2009 Note 2009 (Rupees in ‘000) 2008 8.079 8.3 Securities held as collateral against lendings to financial institutions 2009 Held by bank Further given as collateral Total Held by bank 2008 Further given as collateral Total (Rupees in ‘000) Market Treasury Bills Pakistan Investment Bonds – – – – – – – – – 2.000 2.400.079 7.000 1.Notes to the Financial Statements For the year ended December 31. Nil (2008: Rs.000.75% to 21% per annum) and are due to mature latest by February.601 275.079 Market value of securities held as collateral against lendings to financial institutions as at December 31.000 4.3 3.093.400.35% to 12.1 Particulars of lendings In local currency In foreign currencies 3.50% to 14.024.700.100.90% per annum).133 275. These carry mark up at rate of Nil per annum (2008: 9.610 million).946 2.

500 377. 9.Notes to the Financial Statements For the year ended December 31.776.10 9.714 – 13.133.000 1.256.134.588 197.962) 93.588 – – – 31.786 19.287.198) 96.4 & Annexure I (note 3) 108.816 2.874 82 I MCB Bank Limited .831.520) 166.929 684.763.6 9.513.516 4.038 – – – – – – – – 136.771 2.828 661.636 (1.4 & Annexure I (note 1) 9.623.211.500 377.198) 90.532 136.6 9.690 (2.214 442.980 394 27.493.000 1.383 171.387.345.588 197.110 2.300 1.909 515.216 118 870.962) 99.909 515.600 63.753.498.636 70.189.981 513.037 250.5 – – – Available–for–sale securities – Market Treasury Bills – Pakistan Investment Bonds – Shares in listed companies – Units in open ended mutual fund – Shares in unlisted companies – NIT units – Sukuk Bonds – Listed Term Finance Certificates (TFCs) 9.941 7.975 77 299.900 Investments at cost Less: Provision for diminution in value of investments Investments (net of provisions) Surplus / (deficit) on revaluation of available for sale securities – net Deficit on revaluation of ‘held for trading’ securities – net Investments at revalued amounts – net of provisions 21.500 377.774 5.812 392.810 4.786 19. Bonds and Participation Term Certificates (PTCs) – Certificates of Investment 9.172.664 6.843 5.975 77 299.981 513.006.975 77 299.312.2 9.902 2.044.583 118 286.244.109 – 167.384 83.250.384 77.242 1.356 – 31.521.4 & Annexure I (note 2) 9.000 17.006.179.172.287.4 & Annexure I (note 1) 9.465 (103.779.253 400.975 77 299.929 684.926 49.520) 135.260 4.370.044.133.260 4.454) 943.006.600 63.724 5.583 118 286.6 Annexure I (note 4) Annexure I (note 4) Annexure I (note 4) Annexure I (note 4) Annexure I (note 3) 3.771 2.016 (103.351.618) – – – – – – 49.783 64.664 8.649.006.858 – 6.643.563 (26.038 3.926 Associates Adamjee Insurance Company Limited First Women Bank Limited Annexure I (note 6) 9.511.054 (2.557 2.286.980 – 27.600 63.321. 2009 9.287.980 394 27.134 943.204 Subsidiaries MNET Services (Private) Limited MCB Trade Services Limited MCB Asset Management Company Limited “MCB Leasing” Closed Joint Stock Company MCB Financial Services Limited ( Formerly Muslim Commercial Financial Services (Private) Limited) Annexure I (note 5) 49.980 – 27.631.500 377.249 5.761.515.543.374 – – – 177.600 63.216 118 870.000 1.513.152.776.557 2.3 138.189.900 102.620) 943.652 (3.287.768 331.532 – – – – – – 49.374 Held by bank Given as collateral Total Held by bank 2008 Given as collateral Total (Rupees in ‘000) 9.000 17.714 – 13.7 943.259.214 442.152.253 400.250.563 – 31.546 31.816 2.300 1.900 170.056.649.1 INVESTMENTS – NET Investments by types 2009 Note / Annexure Held for trading securities – Shares in listed companies – Market Treasury Bills 9.998) – – – 6.300 1.321.777 123.866.454.829.724 5.525 – – – – – – – 31.312.259.253 400.664 8.969.843 5.525 139.969.538 2.251.831.516 4.686. Debentures.809.454.828 661.300 – – – – – – 177.636 – 6.546 – – – – – – – – – – 1.300 1.5 9.777 155.636 – – – – – – – 6.205.253 400.288 (3.686.569.370.4 & Annexure I (note 3) 9.838.851 (3.753.037 250.383 171.941 7.244.810 4.5 – 135.016 (3.258 Held–to–maturity securities – Market Treasury Bills – Pakistan Investment Bonds – Federal Government Securities – Provincial Government Securities – Government Compensation Bonds – Sukuk Bonds – Euro Bonds – TFCs.812 392.148 2.900 96.331 305.000 1.6 9.

683.810 1.851 9.198) 96.618) (103.000 Annexure I (note 1) Annexure I (note 2) Annexure I (note 1) 7.602 100. 2009 Note / Annexure 2009 (Rupees in ‘000) 2008 9.000 61.503.829.000 70.129.909 9.843 442.533 3.969.134.724 661.324 171.012 415.702 3.000 Overseas Government Securities – Government of Sri Lanka Treasury Bonds – Market Treasury Bills Provincial Government Securities Subsidiaries and Associated Undertakings Fully Paid–up Ordinary Shares / Certificates / Units – Listed companies / mutual funds / modarabas – Unlisted companies / funds Units of Open Ended Mutual Funds Fully Paid–up Preference Shares: – Listed Companies – Unlisted Companies Term Finance Certificates.2 Investments by segments Federal Government Securities: – – – – – – – Market Treasury Bills Pakistan Investment Bonds Federal Government Securities Government Compensation Bonds Euro Bonds Sukuk Bonds Unlisted Term Finance Certificate 9.513. Debentures.569.602 100.763.3 (3.686.874 Annexure I (note 3) Annexure I (note 3) Annexure I (note 3) 1.631.838.071.465 1.543.589 250.981 8.6 Annexure I (note 4) Annexure I (note 4) Annexure I (note 4) Annexure I (note 3 & 4) Annexure I (note 3) 139.044.826 70.652 (3.618 – 1.253 170.520) 166.699.6 9.000.227 5.387.126 4.516 1.650.216 870.774 7.331 21.253 102.583 286.690 (2.962) 99.771 4.384. Bonds and Participation Term Certificates (PTCs) – Certificates of Investment Other Investments: – Sukuk Bonds – NIT Units Total investments at cost Less: Provision for diminution in the value of investments Investments (net of provisions) Surplus / (deficit) on revaluation of available for sale securities – net Deficit on revaluation of held for trading securities – net Investments at revalued amounts – net of provisions Annexure I (note 4) 1.404.498.000. Bonds and Participation Term Certificates: – Listed Term Finance Certificates – Unlisted Term Finance Certificates – Debentures.515.7 & Annexure I (note 5 & 6) – 3.727 5.2 9.5 305.777 1.148 118 1.432 Annual Report 2009 I 83 .000 Annexure I (note 1) Annexure I (note 2) 61.384 897.384.321.000 1.476 322.096 121.134 – 167.612 413.816 118 1.448 129.831.Notes to the Financial Statements For the year ended December 31.337.557 684.306.

538.650 329 1.477 2.636 99.685.4.790 99.985 7.575 3.5 3.Notes to the Financial Statements For the year ended December 31.386 15.197.619 725.484.420 149.309 37.585 11.279 5.510.582.288 2.1 139.686.1 9.402.4.3.293 307.215 (1.475 64.962 1.716 3.981 5. Debentures.320) 3.400 106.607 10.387 186.5 3.370 70.601 Not available AA & A1+ A– & A2 Not available AA & A1+ A– & A2 Not available A+ & A1 AA & A1+ AA & A1+ A– & A2 Not available AA 84 I MCB Bank Limited . Bonds and Participation Term Certificates 104.962 9.151 80.1 Particulars of provision in respect of Type and Segment Available–for–sale securities Listed shares / Certificates / Units Unlisted shares Held–to–maturity securities Unlisted TFCs.391 93.221) 2.910 70.686. 2009 Note 2009 (Rupees in ‘000) 2008 9.109 244.599 Unrated Unrated 435.980 1.3 Particulars of provision Opening balance Charge during the year Reversal made during the year Adjustment on disposal of shares Investment written off against provision Closing balance 9.994 – (107.268 50.603 71.735.044.455 20.531 AA– AA– AA– AA AA A+ AA Shares in Listed Companies Abbott Laboratories Pakistan Limited Allied Bank Limited Arif Habib Limited Arif Habib Securities Limited Askari Bank Limited Atlas Bank Limited Attock Petroleum Limited Azgard Nine Limited – preference shares Bank Alfalah Limited Bank Al–Habib Limited Century Papers and Board Mills Limited Cherat Cement Company Limited EFU General Insurance Company Limited 16.787.962 – 144.175 Not available AA & A1+ Not available Not available AA & A1+ A– & A2 Not available A+ & A1 AA & A1+ AA+ & A1+ A– & A–2 Not available AA 12.044.520 468.111 1.895 (54.331.377 146.319 2.347 62.261.002 178.641 11.544 AA– AA AA– AA AA– A+ AA 201.065 Unrated Unrated 70.840 1.613 75.045 6.218 (772.201 3.4 Quality of ‘available for sale’ securities 2009 Note Market value (Rupees in ‘000) Credit rating Market value 2008 Credit rating 9.677) 1.572 90.463) (70.962 (Rupees in ‘000) Market Treasury Bills Pakistan Investment Bonds Listed Term Finance Certificates Askari Bank Limited Bank Al–Habib Limited Bank Alfalah Limited United Bank Limited Allied Bank Limited Soneri Bank Limited Pak Arab Fertilizers Limited 9.437 167.623 91.366 12.655 – 1.520 9.902.683.197) 3.840 248.044.858.

2009 2009 Note Market value (Rupees in ‘000) Credit rating Market value 2008 Credit rating (Rupees in ‘000) EFU Life Assurance Company Limited Engro Chemical Pakistan Limited Fauji Fertilizer Bin Qasim Company Limited Fauji Fertilizer Company Limited First Al – Noor Modaraba Glaxo Smithkline Pakistan Limited Habib Bank Limited Habib Metropolitan Bank Limited Hub Power Company Limited IGI Insurance Limited Indus Motors Company Limited International Industries Limited JS Bank Limited Jahangir Saddique & Company Limited Kohinoor Energy Limited Kot Addu Power Company Limited Lucky Cement Limited Maple Leaf Cement Company Limited Masood Textile Mills Limited – preference shares Mehr Dastagir Textile Mills Limited Millat Tractors Limited National Bank of Pakistan National Refinery Limited Oil & Gas Development Company Limited Orix Leasing Pakistan Limited Pace Pakistan Limited Packages Limited Pak Suzuki Motor Company Limited Pakistan Cables Limited Pakistan Cement Company Limited Pakistan Oilfields Limited Pakistan Petroleum Limited Pakistan State Oil Company Limited Pakistan Telecommunication Company Limited Pakistan Tobacco Company Limited Rupali Polyester Limited Samba Bank Limited (Formerly Crescent Commercial Bank Limited) Soneri Bank Limited Sui Northern Gas Pipelines Limited** Taj Textile Mills Limited Thal Limited The Bank of Punjab Trust Securities & Brokerage Limited* TRG Pakistan Limited Unilever Pakistan Limited United Bank Limited Zulfiqar Industries Limited 1.779 3.545 13.890 5.305 20.550 2.374 14.715 8.595 7.541 890 60.520 1.700 82.990 86.775 5.759 52.239 80.216 85.544 138.571 Not available Not available Not available Not available Annual Report 2009 I 85 .041 123.237 2.461 82.170 5.850 1.952 67.064 56.244 50.420 21.549 AA– AA & A1+ Not available Not available BBB & A3 Not available AA+ & A1+ AA+ & A1+ Not available AA Not available Not available A– & A2 AA+ & A1+ Not available Not available Not available BBB+ & A2 Not available Not available Not available AAA & A–1+ AAA & A1+ AAA & A1+ AA+ & A1+ A+ & A1 AA & A1+ Not available Not available Not available Not available Not available AAA & A1+ Not available Not available Not available Not available AA– & A1+ AA & A1+ Not available Not available AA– & A1+ Not available BBB+ & A2 Not available AA+ & A–1+ Not available Open Ended Mutual Fund Atlas Islamic Fund MCB Dynamic Allocation Fund MCB Dynamic Cash Fund MCB Dynamic Stock Fund 10.000 323 22.183.785 2.521 11.795 400.663 12.261 1 3.024.001 Not available AM3+ AM3+ AM3+ 7.949 5.794 55.412 4.376 505.918 106.537 38.001 4.683 – 30.705 502.571 60.806 92.991 15.887 50.366 83.Notes to the Financial Statements For the year ended December 31.210 147 81.355 154.655 14.675 – 3.250 948 – 76.644 3.719 3.705 64.592 14.164 17.423 – 97.691 327.658 36.059 28.460 – 34.259 22.155 4.893 102.000 13.414 50.775 1.553 71.855 107.010 14.440 20.397 AA– AA & A1+ Not available Not available BBB & A–3 Not available AA+ & A–1+ AA+ & A–1+ Not available AA Not available Not available A– & A1 AA+ & A1+ Not available Not available Not available Not available Not available Not available Not available AAA & A–1+ AAA & A1+ AAA & A–1+ AA & A1+ A & A1 AA & A1+ Not available Not available Not available Not available Not available AA+ & A1+ Not available Not available Not available A & A–1 AA– & A1+ AA & A1+ Not available Not available AA– & A1+ Not available – Not available AA+ & A–1+ Not available 2.660 52.487 37.847 372 1.960 212.509 38.807 125.460 1.563 24.311.942 516.046 288.487 3.472 50.675 – 3.090 174.161 81.058 84.829 1.421 151.402.744 25.

287 million shares valuing Rs.527 Not available 2.T.247 Not available Not available Not available Not available Not available Other Investment Sukuk Bonds N.500 Not available 100 Not available 10.598 9. 800.689 78.000 700 1.4.I.Notes to the Financial Statements For the year ended December 31.346 152.500 2.738 100.074.137 3.187.000 1.106 2.1 396.500 Not available Not available 2.2 300. 692.879 million) which are held as strategic investment by the Bank.000 736 737 22 442.000 3.718 million (2008: 32.4.527 1. *These are the strategic investments of the Bank. Units 9.287 million shares valuing Rs.4.000 Not available 1. Unrated 5 Star 419.900 Not available 10.106 BBB & A3 2.2 Unlisted companies are stated at carrying value.446 11.297 Unrated 5 Star 86 I MCB Bank Limited .1 These are Government of Pakistan guaranteed securities.400 21 445.500 AM4+ 11. **This includes 32. 9. 2009 2009 Note Market value (Rupees in ‘000) Credit rating Market value 2008 Credit rating (Rupees in ‘000) Shares in Un–listed Companies Khushhali Bank Limited* Equity Participation Fund* National Investment Trust Limited* SME Bank Limited* First Capital Investment (Private) Limited Pak Asian Fund Pakistan Agro Storage and Services Corporation Arabian Sea Country Club* Central Depository Company of Pakistan Limited* National Institutional Facilitation Technologies (Private) Limited* Society for Worldwide Inter Fund Transfer (SWIFT) Fazal Cloth Mills Limited – preference share Lanka Clearing (Private) Limited Lanka Financial Services Bureau Limited Credit Information Bureau of Srilanka 9.000 A– & A–1 1.4.127 A–2 & A– Not available AM–DS A–3 & BBB AM4+ Not available Not available Not available Not available Not available Not available Not available Not available Not available Not available 300.000 – 100 10.993 100.500 715 10.

600 million (2008: Rs.003) (11. 1.Notes to the Financial Statements For the year ended December 31. 3. 8. 3.711 1. In addition.049 million (2008: Rs.04 of 2006 dated February 17. 13. 2009 market value of quoted investments was Rs.696) (6.420 19.198) – – – – – – – – – – – – – – 21.506 19.512) (12.421 million).829 10. Certain approved / Government securities are kept with the SBP to meet statutory liquidity requirements calculated on the basis of domestic demand and time liabilities.220) (5.918 million) while the book value of unquoted investments was Rs.844 1. The market value of the investment in Adamjee Insurance Company Limited as at December 31.863 million (2008: Rs. 2009 amounted to Rs.674 million and Rs.6 (12. Information relating to investments in ordinary shares and preference shares of listed companies and unlisted companies required to be disclosed as part of the financial statements under BSD Circular No.387. 943. 83. 2009 9. 2009 in accordance with the treatment specified in International Accounting Standard (IAS) 28 “Accounting for Investments in Associates”. 1.588 197.322. 2009 amounted to Rs. 5 million) have been pledged with the Controller of Military Accounts on account of Regimental Fund account.310) (706) (4.481 million (2008: Rs. 161.60 million (2008: Rs.425 20.080) (3.867. The market value of Pakistan Investment Bonds and Market Treasury Bills classified as ‘held to maturity’ as at December 31.021) 5 (103. 2006.959. Investments include Pakistan Investment Bonds amounting to Rs. 943.11 9.621) (27.10 9.851 6.4. During the year. is given in Annexure “I”. At December 31.847.600 million) as at December 31. 1. 9.148 million (2008: Pakistan Investment Bonds Rs.60 million) earmarked by the SBP and National Bank of Pakistan against TT / DD discounting facilities and demand note facilities sanctioned to the Bank.12 Annual Report 2009 I 87 . Pakistan Investment Bonds amounting to Rs. 232.085) (16. the Bank has incorporated “MCB Leasing” Closed Joint Stock Company in Azerbaijan to undertake leasing business.7 9.673 million) respectively.659.039.8 9. 232.665 31.526.032.166 million and Market Treasury Bills Rs.374 “Available for sale” Market Treasury Bills and Pakistan Investment Bonds are eligible for rediscounting with the State Bank of Pakistan (SBP).436.116 4.448) (501) (3. Investment of the Bank in Adamjee Insurance Company Limited is carried at cost amounting to Rs.709 42.9 9.159 10. 5 million (2008: Rs.786 million).5 Unrealized gain / (loss) on revaluation of investments classified as ‘held for trading’ Unrealized gain /(loss) 2009 2008 2009 (Rupees in ‘000) Cost 2008 Investee Company Allied Bank Limited Attock Petroleum Limited Bank Alfalah Limited ICI Pakistan Limited Jahangir Siddique and Company Limited Lucky Cement Limited Maple Leaf Cement Company Limited Packages Limited Pakistan Oilfields Limited Pakistan Petroleum Limited Thal Limited United Bank Limited Market Treasury Bills – – – – – – – – – – – – – – 9.551 6.

847 (15.711.2 Net investment in finance lease 2009 Not later than one year Later than one and less than five years Over five years Total Not later than one year 2008 Later than one and less than five years Over five years Total (Rupees in ‘000) Lease rentals receivable Guaranteed residual value Minimum lease payments Finance charge for future periods Present value of minimum lease payments 791.435 811.327.855) 262.943 65.407 (9.1.2 3.340 879.910.2 Short–term Long–term 178.703.282.435 4.575.918 4.512 1.449.122.328.788.253 260.933.234 255.766 1.847.998.733 5.728 94.937 3.250) (3) (877.722) (494.322 6.697 8.678.847.222) (533.358.176 5.873 5.464 3.025.3 General provision against consumer loans 10.470 10.722.449.437.037.037.520 5.633.636) (652.718.689 3.230.915 5.852.325 247.203 90.922.895.233 815.111. etc.176 10.594 8.1.889) 669.139 3.933.867.722.444 252.434) (30.506.475. In Pakistan Outside Pakistan Net investment in finance lease In Pakistan Outside Pakistan Bills discounted and purchased (excluding treasury bills) Payable in Pakistan Payable outside Pakistan Advances – gross Provision against advances 10.240 4.364.051) (10.564 4.297 269.869.604 4.232 11.208 2.760.108 3.847.762.135.210 7.519.059 6.525 2.472.211 4.944 269.760 20.475 90.893 3.097 88 I MCB Bank Limited .475.4.055.144.185 210.492 3.249.176 262. running finances.208 (87.312 10.722. cash credits.562 115.693) (9.501.895) (225. 2009 Note 2009 (Rupees in ‘000) 2008 10.973 269.220.325 10.4 Specific provision General provision 10.348 11.632) (453. ADVANCES – NET Loans.763 272.330 942.769) 253.268) (16.4.325 157.345) (269.403 19.777 10.5 General provision for potential lease losses (in Srilanka operations) Advances – net of provision 10.012.1 In local currency In foreign currencies 10.1 Particulars of advances (gross) 258.066 1.285.270 272.889) (273.775 1.939 981 2.294) (969) (541.821.013 272.Notes to the Financial Statements For the year ended December 31.

329.818.683. 2009 Note Specific General General provision against consumer loans (Rupees in ‘000) Leasing (general) Total 10.1 This represents non–performing portfolio of agricultural financing classified as OAEM as per the requirements of the Prudential Regulation for Agricultural Financing issued by the State Bank of Pakistan.536 2008 Category of Classification Note Classified Advances Domestic Overseas Total Specific Provision Required Domestic Overseas (Rupees in ‘000) Total Specific Provision Held Domestic Overseas Total Other Assets Especially Mentioned (OAEM) Substandard Doubtful Loss 10.649) 9.482.377.796.434 2008 Note Specific General General provision against consumer loans (Rupees in ‘000) Leasing (general) Total 9.447 5.186.061.749.295.596.234 1.889 2.723 14.845 – 691.811.111) 16.895.235 11.447 5.222 – – (3.268 10.889 3.495) 1.506.222 688.683.782 6.740 1.599.076.527 (123.413.494) 5.678.295.500) – 269.259) – 494.268.895.482.930) 3.768 1.051 10.329.649) 10.556 7.063 (1.933.877 10.061.524.1 100.768 1.708.540 1.972) (154.1 76.791 – 897.506 – 1.860 2.665 – – (154.476.287 3.498 7.412 (2.1 7.674.985.238.540 1. 2009 10.098 – – 251 1.235 15.274 204.565 9.217 – 30.953 204.127 (1.370 – 5.809 696.440.593) (2.051 – 21.3. 23.131.855 Annual Report 2009 I 89 .472.722 533.556 7.103 – (2.711.768 1.025 8.382.457.5.595.186.967.238.994) 5.965.693 6.305 6.593) – 273.217 – 21.811.345 273.809 15.111) 15.777 18.098 – – 251 1.370 13.895.482.476.932 1.622 (4.234 1.303 13.609 4.740 1.370 – 691.711.186.500) (3.728 – 76.678.326.841 – 2.210 – 9.011 14.506 – – 696.382.268.845 11.345 Total Specific Provision Held Domestic Overseas Total 3.881 4.972) – 533.3.246.370 – 5.5.920.808 19.933 2.100 – – 501 100.025 8.528 15.210 – 2.693 – (39.920.992.259) – (39.536 1.599.305 6.1 9.815 – 6.3.723 million (2008: Rs.283 – 897.855 87.960.709.769 Opening balance Exchange adjustments Provision made during the year Reversals Amounts written off Closing balance 10.335.345 14.Notes to the Financial Statements For the year ended December 31.336 11.889 – 897.860 2.482 (1.889 87.021 (1.413.276 10.932 3. 18.069 (123.895.186.772.933 2.705.041.440.674.256 23.877 million) which have been placed under the non–performing status as detailed below: 2009 Category of Classification Note Classified Advances Domestic Overseas Total Specific Provision Required Domestic Overseas (Rupees in ‘000) Other Assets Especially Mentioned (OAEM) Substandard Doubtful Loss 10.4 Particulars of provision against advances Opening balance Exchange adjustments Provision made during the year Reversals Amounts written off Closing balance 10.242.920.467 – 24.482.565 9.594.303 1.920.377.3 Advances include Rs.678.791 – 897.242.768 1.498 7.103 6.964.043.

However.4.5 Particulars of write offs: 10.000 10.593) (154.4.295.127 10. 2009 and BSD Circular No.000 and above In terms of sub–section (3) of Section 33A of the Banking Companies Ordinance. other than mortgage and agriculture financing.966 9. this write off does not affect the Bank’s right to recover the debts from these customers.4. 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 December 31.3 10.4. 1962.1 Particulars of provisions against advances In local currency In foreign currencies 14.964.482 (2.769 Note 8.5.1% of gross advances. 10. However.855 2008 10.5.413.791 9.536 1.259) 21.382.809 15.796.5. 90 I MCB Bank Limited . 2009 is given at Annexure – III.424 15.000 and above Write offs of below Rs. 2 dated January 27.1 Against provisions Directly charged to the profit and loss account 10.335.413.972) 2.599.059.5 5.649 10.895. 2009 has allowed benefit of forced sale value (FSV) of pledged stock and mortgaged residential.156 30.3 General provision against advances represents provision maintained at around 0. commercial & industrial properties (land and building only) held as collateral against NPLs for three years from the date of classification.098 1. management has not taken the said benefit in calculation of specific provision.210 1.4.Notes to the Financial Statements For the year ended December 31.4.889 2009 (Rupees in ‘000) 806.3 127.527 10.678. 500.5% of the fully secured performing portfolio and 5% of the unsecured performing portfolio as required by the Prudential Regulations issued by the SBP.649 749.712 849.420 37. 500.2 The following amounts have been charged to the profit and loss account: Specific provision General provision General provision against consumer loans General provision for potential lease losses (in Srilanka operations) 10.818.4 123.711.2 Write offs of Rs.345 764.687 10.491.4.069 (3.599. 2009 2009 Specific General (total) Total Specific 2008 General (total) Total (Rupees in ‘000) 10.687 1.692 1.267 164.472. 10.649 – 1.482.5.217 5. 10 dated October 20.111 41.5 General provision against consumer loans represents provision maintained at an amount equal to 1.077 16.268 794.842 10.013 1.3 Details of loan write offs of Rs.937 1.915 9.476.576 164.051 815.500) (39. Note 2009 (Rupees in ‘000) 2008 3.4 State Bank of Pakistan vide BSD Circular No. 500.599.220.

226 Annual Report 2009 I 91 .226 16. OPERATING FIXED ASSETS Capital work–in–progress Property and equipment Intangible asset 11.1 Capital work–in–progress Civil works Advances to suppliers and contractors Others 871.2 11.217) 3. Debts due by executives or officers of the Bank or any of them either severally or jointly with any other persons Balance at beginning of the year Loans granted during the year Repayments Balance at end of the year Debts due by subsidiary companies.432.732.434.808 147.640 – (499) 1.263.905 3.485 1.181 80.562.844.3 1.1 11.709 198.125 11.198 17.186.733 11.218 (1. managed modarabas and other related parties Balance at beginning of the year Loans granted during the year Repayments Balance at end of the year 3.905 248.309 191.6 Particulars of advances to directors.846.099.484 1. controlled firms.Notes to the Financial Statements For the year ended December 31.141 4.640 3.153 (2.749 16.242 18.051 101.498) 1.666. etc.844.228.482 (502.749 210.466 510.116.663.046 1.485 1.062) 4.090.014. 2009 Note 2009 (Rupees in ‘000) 2008 10.896 510.760 1.099. executives.985 524. associated companies.

726.373 65.183 26.915.980 – – 50 years (Rupees in ‘000) Land – Freehold Land – Leasehold Buildings on freehold land Buildings on leasehold land Furniture and fixture Electrical.947 – 3.184 (34. 2009 Charge for the year / (deprecation on disposals) Accumulated depreciation Write off At December 31.254 2.130 57.471 (60.357 (575.440 96.845 213.700.510 3.905 29.026 – – – 20.231 2.792 9.718 (127.357 29.012) 9.188) 3.045 57.718.719.504 25.049 16.718.408.120 20% (171.674 168. 2008 (deprecation on disposals) Net book value at December 31.567 630.048 16.401 9.412 (3.346.792 40.121.343) – 248.980 – – 89. 2009 Annual rate of depreciation / estimated useful life (191. 2009 11. 2009 Additions/ (disposals) Write off At December 31.166 18.827 – (27.327) 606.683.068 20% to 33% (20.430 4.349) 815.266) 76.645 2.567 672.764 20% 532.318) (209. 2009 Net book value at December 31.177 721.254 1.653 (216.663 70. Computers and Office Equipment Vehicles Ijara Assets Assets held under Ijarah – Car – 19.226 (4.Notes to the Financial Statements For the year ended December 31.841) 5.731) – 541.736.946.717.523.625 20% 1.635 261.954 – 3.725 293.872 (320.085 – – – 9.094.073 10% to 33% 1.210.230 710.037 10% to 33% – – – – – 185.332) 800.736.476 (1.939.718.537) 265.048 909.367 (16.424 – – 50 years 40.284.955 25.939.082 288.430 4.377.188 – 118.2 Property and equipment 2009 Cost/ Revalued amount Description At January 01.238.683.327 4.062 312.505 10 to 50 years 360. 2008 Additions/ At December (disposals) 31. 2009 Annual rate of depreciation / estimated useful life (Rupees in ‘000) Land – Freehold Land – Leasehold Buildings on freehold land Buildings on leasehold land Furniture and fixture Electrical.915) 77.666.137) – – – 89.327 4.226) 687.045 57.430 4.417 57.022 (123.577 2.881 – 70.504 4.630) 4.461) 79.772 – – 89.314 (28.430 3.210.376 3 to 50 years 382.280.183 3.497) 1.401 (181.205 (354.827 213. Computers and Office Equipment Vehicles 9.069 3.567 672.350 (10.840) 2008 Cost/ Revalued amount Description At January 01.885 (227.928 65.640 213.032 2. 2008 Accumulated depreciation At January 01.130 57.034.430 4.062 312.034 104.309 92 I MCB Bank Limited .522) 28.377.928 65.947 – 1.094.107) 20.108) 3.430 4.719.504 – – 97.854 328.207 20% to 33% 318.923. 2009 At January 01.918 47.083) 76.034 532.026 9.941 (15.667 (41.340) 10. 2008 Charge for At December the year / 31.028) 130.046.045 57.980 34.192.562.550 (67.185 19.

035 4. the total carrying amounts of revalued properties as at December 31. 2008 Accumulated amortization At January 01.005 514. 2008 Amortization for the year At December 31. 2008 (Rupees in ‘000) Computer software 555. on the basis of market value.802 705.3 Details of disposal of operating fixed assets 2.198 191.599 372. 2009 Accumulated amortization At January 01.397 668.802 210.33 Annual rate of amortization % Annual Report 2009 I 93 .2.243 514. 2009 Cost Additions At December 31. This valuation was incorporated at December 31. 11.130 705. computers and office equipment Vehicles 11. 2008 Net book value at December 31.802 705.Notes to the Financial Statements For the year ended December 31. 2008 Cost Additions At December 31.441 916.545.104.604 2008 Description At January 01. The information relating to location of revalued assets is given in Annexure V.397 153.604 514.604 191.441 210. 2009 Net book value at December 31.317 260.242 33.942 1.198 33.604 514. The details of revalued amounts are as follows: (Rupees in ‘000) Total revalued amount of land Total revalued amount of buildings 9.005 142.562.33 Annual rate of amortization % 153.228.001 668. 2007.001 248.2. valuation and engineering consultants. 2009 would have been as follows: (Rupees in ‘000) Land Buildings 11.587 Had the land and buildings not been revalued.802 372.242 248.488 2.672 555. 2009 (Rupees in ‘000) Computer software 705. 2009 11.3 Intangible asset 2009 Description At January 01.672 150. 2009 Amortization for the year At December 31.2 The gross carrying amount of fully depreciated assets that are still in use are as follows: Furniture and fixture Electrical.243 916.1 The land and buildings of the Bank were last revalued in December 2007 by independent valuers (Pee Dee Associates & Arch–e–Decon).053 The information relating to disposal of operating fixed assets required to be disclosed as part of the financial statements by the State Bank of Pakistan is given in Annexure IV and is an integral part of these financial statements.130 150.626.599 142.2.754 10.

2009 and December 31. 996.2 Unrealised gain on: Interest rate swaps Cross currency swaps Forward exchange contracts 83.135 (65.779 23.033.574 456.754.112 1.040.2 36.155.222 million (2008: Rs. Unrealised gain on derivative financial instruments Contract / notional amount 2009 2008 2009 (Rupees in ‘000) Unrealised gain 2008 12.1.077 – 5.3 12.831.810.953 513.824 (14.291 35.098 13.252.095 7.969 2008 (Rupees in ‘000) 12.687 million (2008: Based on valuation as of December 31.613 20.222 million) net of provision as per the valuation report dated December 31.098 142.529 23. OTHER ASSETS – NET Income / mark–up accrued on advances and investments – local currency Income / mark–up accrued on advances and investments – foreign currencies Advances.466 319 9.322.232.304 1.400 6.832 1. 2008 Rs. 1.033.592.048 583.809) (14.757) 456.953 23.802 – 1. 2008.625 1.127 35.500.824 – 142.122 1.208 – 44.802 298. 2009 Note 2009 (Rupees in ‘000) 2008 12. 1.667 173.476 12.221 2.019 1.266.605 50.245 million). 2009 amounted to Rs.947 21.1 The market value of non–banking assets with carrying value of Rs.333 124.1 12.Notes to the Financial Statements For the year ended December 31.222 1.845 21.155.608.889. deposits.624.323.451 194.507.125 166.441.098 19.507.068.400 82.969) – 583.677 2.135 – 23.399.901.3 12.832 194. advance rent and other prepayments Advance taxation (payments less provisions) Compensation for delayed income tax refunds Branch adjustment account Non–banking assets acquired in satisfaction of claims Unrealised gain on derivative financial instruments Stationery and stamps on hand Prepaid exchange risk fee Receivable from the pension fund Others Less: Provision held against other assets 7.3 Provision held against other assets Opening balance Charge for the year Reversal during the year Write off during the year Transfer Closing balance 456.085 2009 642 307 193.642 57. 94 I MCB Bank Limited .203 44.969 83. CONTINGENT ASSETS There were no contingent assets of the Bank as at December 31.740 184.

742.088 17.021 17.7 452.840 15.50% per annum (2008: 7. 2009 Note 2009 (Rupees in ‘000) 2008 14.003.525 million (2008: Rs.680 44.1 Particulars of borrowings with respect to currencies In local currency In foreign currencies 43.658.282 44.776 4. the Bank has granted SBP the right to recover the outstanding amount from the Bank at the date of maturity of the finance by directly debiting the current account maintained by the Bank with SBP.513.398 31.291 11.220 2.4 & 15.018.50%).2 Details of borrowings (secured / unsecured) Secured Borrowings from State Bank of Pakistan Export refinance scheme Long term financing facility Long term financing – export oriented projects scheme 15.565 28.064 22. Borrowings from SBP under the export refinance and long term financing for export oriented projects schemes are secured against the Bank’s cash and security balances held by the SBP.090 10.776 15.903 10.5 15.829.5 15.330 10. These carry mark–up at the rate of 12.840 15. 2010.527 80.5 15.986.131.004 2.990 602.146.755 – 6.636 million).003.331 42.663.4 15.064 22.6 15.662.044.8 Annual Report 2009 I 95 .077 Borrowings from other financial institution Repurchase agreement borrowings Unsecured Call borrowings Overdrawn nostro accounts 15. These are repayable latest by January. The amount is due to SBP and have been obtained for providing long term finance to customers for export oriented projects.468 15.418. 15.088 17.408 1.658.325.Notes to the Financial Statements For the year ended December 31.3 The Bank has entered into agreements for financing with the State Bank of Pakistan (SBP) for extending export finance to customers.059 8.921.05% to 12.742.3 & 15.675.663. the Bank has granted SBP the right to recover the outstanding amount from the Bank at the date of maturity of the finance by directly debiting the current account maintained by the Bank with SBP.50% to 14.806 9.031 70.522.190 1.074 5.776 4. These carry mark–up at the rate 5% per annum (2008: NIL ).408 1.8 1.021.928.662. BORROWINGS In Pakistan Outside Pakistan 43. 2010.40% (2008: 15.092 529.201.460 56.680 44.5 8.840 15.663.642.088 4. As per the agreements.6 15.287. BILLS PAYABLE In Pakistan Outside Pakistan 8. These are repayable by January.317.551. 31.90% per annum) and are secured against government securities of carrying value of Rs. 6. These carry mark–up rates ranging between 12. As per the agreements with SBP.921.662.7 15.217.4 & 15.064 22.606.

137.526 9. DEFERRED TAX LIABILITY / (ASSET) – NET The details of the tax effect of taxable and deductible temporary differences are as follows: Taxable temporary differences on: Surplus on revaluation of operating fixed assets Accelerated tax depreciation Receivable from pension fund Net investment in finance lease receivable Others 21.084.862.310.295 2.620.757) (46. based on the projections prepared by the Bank. However the management.828 3.356 367.061 4.057.898.651.346.581 31.577 Deductible temporary differences on: Deficit on revaluation of securities Provision for bad debts Provision for contributory benevolent scheme Provision for post retirement medical benefits 21.823 2. 8.391 330.180.299.655 767 363.587) (1.078 123.16.2 Deposits include deposits from related parties amounting to Rs.124. 96 I MCB Bank Limited .088.743 (661. 2009 2009 (Rupees in ‘000) 2008 16.649 749.926.1 The Finance Act.233 17.355 61.434 563 321.001 – 436.680.121) (455.711 5.196. DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Saving deposits Current accounts – non remunerative Margin accounts Others Financial institutions Remunerative deposits Non–remunerative deposits 2.130 367.495 330.258.759 million (2008: Rs.352.084.757 million on such provisions.262.633.797.624 16.Notes to the Financial Statements For the year ended December 31.862 3.189 – 4.424.196.1 Particulars of deposits In local currency In foreign currencies 336.829.911 301.711 312.834) 3.324 2.531 173.129 16.2 (90. The deduction for provisions for doubtful and loss categories of advances and off balance sheet items is now allowable up to a maximum of 1% of total advances.258.604) (399. The amount of bad debts classified as substandard under Prudential Regulation issued by State Bank of Pakistan would not be allowed as an expense.674) 437.420) (1.811 17.053) (1.181.910.543 678.927. 2001. Note 2009 (Rupees in ‘000) 2008 17.604.197. 1.181.969 3.1 503.817. is of the view that it would be able to get deduction of provision in excess of 1% of total advances and accordingly has recognised deferred tax amounting to Rs.444 1.332 150.938 105.435 million). 2009 has made significant amendments in the Seventh Schedule to Income Tax Ordinance.966) – (79. Provisioning in excess of 1% of total advances can be carried over to succeeding years.604.137 516.624 62.

030 114.947 1.273 27.768 Annual Report 2009 I 97 .982 21.1 Unrealised loss on derivative financial instruments Contract / notional amount 2009 2008 2009 (Rupees in ‘000) Unrealised loss 2008 Unrealised loss on: Interest rate swaps Cross currency swaps Forward exchange contracts 83.073 65.444 1.911.470.781 18.127 101.869 104.350.144.Notes to the Financial Statements For the year ended December 31.041 752.000.582 56.504 – 3.000 1.023.827.827.096.023.000.282.045 – 6.470.2 Issued.276.390 293.161 298.684 691.534.370.450.034 1.048 62.527 197.023.3 18.400.560 68.449 2.277 6.824. OTHER LIABILITIES Mark–up / return / interest payable in local currency Mark–up / return / interest payable in foreign currencies Accrued expenses Unclaimed dividend Staff welfare fund Unrealised loss on derivative financial instruments Provision for employees’ compensated absences Provision for post retirement medical benefits Provision for employees’ contributory benevolent scheme Security deposits received in respect of finance lease Taxation (provision less payments) Retention money Insurance payable against consumer assets Branch adjustment account Others 5.833 1.768 628.3 36.282.104.1 36.000 Ordinary shares of Rs 10 each 2009 2008 (Rupees in ‘000) 10.844.000.825 8.048 628.333 124.636.126 – 307 275. 2009 Note 2009 (Rupees in ‘000) 2008 18.795 – 197.230.116 1.850.327 – 22.403 398.819.276.795 431.932.244.041 19.684 493.768 6.732 628.130 173.795 431.276.591 1.990 2.424 246.756 276.804.3 36.1 SHARE CAPITAL Authorised Capital 2009 2008 (Number of shares) 1.063 541.345.843 Closing balance 6.253.195 275.320.000 10.082 4.063 17.000.271 25.625 8.282.000.350 15.531 8.000.845 25.253. 19.048 – 431.000 19.843 Opening balance Shares issued – during the year 628.138 1.795 – 197.843 62.446 1.369 151. subscribed and paid–up capital 2009 Issued for cash Issued as bonus shares Total Issued for cash 2008 Issued as bonus shares Total 2009 2008 (Rupees in ‘000) (Number of shares) 197.413 274.253.065.244 276.253.041.

101.600.384 516.319) (11.292.497) – – – Transferred to unappropriated profit in respect of incremental depreciation charged during the year – net of deferred tax Related deferred tax liability Surplus on revaluation of fixed assets as at December 31 Less: Related deferred tax liability on: Revaluation as at January 01 Adjustment / surplus during the year Disposal of revalued properties during the year transferred to profit and loss account Incremental depreciation charged during the year transferred to profit and loss account (22.623) (874) (2.810.1 Statutory reserve represents amount set aside as per the requirements of section 21 of the Banking Companies Ordinance.528 256.916 59.959 2008 20.151 9.069 (1.673 Note 2009 (Rupees in ‘000) 19.799) 8.114 265.324) (12.277.081 8.760 9.385.562.702.933 42.268.191.702.1 20.841 98 I MCB Bank Limited .526 47.107 – (11.894 468.000 36.344) 8.894 395.148.543 8.772.242 138.292. Note 2009 (Rupees in ‘000) 2008 21. RESERVES Share premium Exchange translation reserve Statutory reserve General reserve 9.1 21.369 187.809.3 Number of shares held by the associated undertakings as at December 31.652) 6.443.657 125.827.189 21.543 (21.Notes to the Financial Statements For the year ended December 31.655.649 8.686 8.905 207. 1962.2 8.081 18.577.187 8.664.1 Surplus on revaluation of fixed assets–net of tax Surplus on revaluation of fixed assets as at January 01 Adjustment / surplus during the year Surplus realised on disposal of revalued properties – net of deferred tax Related deferred tax liability 8.765 20.268. are as follows: Adamjee Insurance Company Limited Nishat Mills Limited Mayban International Trust (Labuan) Berhad 21. 2009 2009 2008 (Number of shares) 19.841 (2.384 – 8.551 18.543 – (874) (12.528 188.220.020) (34.225.768.020) 503.000 38.809.600.179. SURPLUS ON REVALUATION OF ASSETS – NET OF TAX Surplus / (deficit) arising on revaluation (net of tax) of: – fixed assets – available–for–sale securities 21.480) 516.480) (32.

427) (468.356 25.037.243 18.101.1 & 23.571 54. 22.148.233) 740.730 (96.049.065) (2.530 26.743.1 & 23.3 Trade–related contingent liabilities Other contingencies Claims against the Bank not acknowledged as debts 47.134 90. Note 2009 (Rupees in ‘000) 2008 22.011 23.187 (91.027.030 15.223.183.690 166.421.053 395.254 2.2 249.697 67.618) 661.2 22.2 Surplus / (deficit) on revaluation of available– for–sale securities – net of tax Federal Government Securities – Market Treasury Bills – Pakistan Investment Bonds Listed Securities – Shares / Certificates / Units – Open Ended Mutual Funds – Term Finance Certificates (307.004 – 69.1 CONTINGENCIES AND COMMITMENTS Transaction–related contingent liabilities Guarantees in favour of: Government Banks and financial institutions Others Suppliers’ credit / payee guarantee 6.480 22.2 23.667 – – 346.255.860 5.838 36.286.415 226.876) 690.810 22.692 2.147 (2.827.629) 38.228 557.246 22.966 (2. 2009 Note 2009 (Rupees in ‘000) 2008 21.983.577.516.6 22.Notes to the Financial Statements For the year ended December 31.169 146.666 Sukuk Bonds Add: Related deferred tax asset 17 (3.410.793) (123.238 16.797 20.832.652) 22.214 23.4 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.000 (2.739 2.126) 19.5 Commitments in respect of forward foreign exchange contracts Purchase Sale 23.450 Annual Report 2009 I 99 .037 542.644.476.869.7 Commitments for the acquisition of fixed assets Other commitments Cross currency swaps (notional amount) Interest rate swaps – (notional amount) Forward outright sale of Government Securities Outright purchase of Government Securities from SBP 23.640 24.763.863) 305.

The Bank is providing solutions to this conundrum through derivatives. Risk Limits Before initiating any new derivative transaction. Risk management is performed at: a) Strategic level: By senior management Assets and Liabilities Management Committee (ALCO). For the Tax Years 2003 to 2008. responsible for policy formulation. 722. For Tax Year 2007. 100 I MCB Bank Limited . these corporates may incur higher borrowing costs or higher cash outflows that will adversely affect profitability.) of Interest rate derivative portfolio.682 million out of which an amount of Rs. The Bank is in a better position to hedge that risk. Other Objectives include: – – contribution to the development of Pakistani financial markets. monitoring and reporting. In the event of a shift in interest or foreign exchange (FX) rates. 716. VaR PVBP. the department has amended the assessment on similar issues resulting in additional tax liability of Rs. Treasury Division requests the FIPS & MRM Division for risk limits. It is expected that the pending appeals in this regard in the Honourable Sindh High Court shall be decided in favour of the Bank as allowed in assessment years 1992–1993 and 1993–1994. 244. the department has amended the assessments on certain issues against which the Bank has filed appeal before the Commissioner of Income Tax (Appeals). including: – – Interest Rate Swaps Currency Swaps.781 million as the Bank has been subjected to tax far exceeding its normal tax liability and is hopeful of favourable decisions in appeals. currency options are hedged back to back and thus the risks associated with such transactions are minimal. The risk management system generates marked to market risk numbers (i. The management and the Bank’s legal counsel are of the view that the issues will be decided in the Bank’s favour as and when these are taken up by the appellate authorities. As per the State Bank of Pakistan’s (SBP) regulations. In light of the above the Bank is actively marketing interest rate risk and FX risk management tools. DERIVATIVE INSTRUMENTS Most corporates (counter parties) have either interest rate exposures arising from debt financing or excess liquidity or currency exposures arising out of commercial and business transactions. Total disallowances for the assessment years 1994–95 to 1997–98 on account of interest in suspense amounted to Rs.Notes to the Financial Statements For the year ended December 31. 23. Risk Management Committee (RMC) and the Board of Directors to institute a risk management framework and to ensure provision of all resources and support required for effective risk management on Bank–wide basis.405. 2009 22. Macro Level: By Financial Institution Public Sector (FIPS) & Market Risk Management (MRM) Division.8 Taxation The income tax assessments of the Bank have been finalised upto and including the Tax Year 2009. These numbers are reported to senior management on a daily basis. typically when the counterparty has a concentrated position in the security and is acutely exposed to movements in the underlying risk factors. In respect of the Tax Year 2003 to 2006. Micro Level: Treasury Derivatives & Structured Product Desk and Treasury Operations. b) c) FIPS & MRM Division is responsible for coordinating for risk management of derivatives. Accordingly. no provision has been made in these financial statements for the above amount. the Commissioner of Income Tax (Appeals) vide his orders has decided the matter in favour of the Bank against which the department has filed appeal before the Income Tax Appellate Tribunal (ITAT). the management considers that provision is not necessary for the remaining balance of Rs. Presently the Bank has notional limits (both for the portfolio and the counterparty). duration. and is thus able to provide cost efficient hedging solutions to the counterparties enabling them to concentrate on their business risk.393 million resulting in tax liability for interest in suspense for Rs.713 million against which the legal/appellate course from the Bank has reached ITAT level. counterparties will be hedging exposure to adverse price movements in a security. Through this. procedure development & implementation.e.289 million has been allowed in the assessment years 1998–1999 to 2000–2001. provision of financial solutions to the counterparties. Subsequent to the favourable order of the Honourable Sindh High Court. Limit requests are approved by the appropriate level of authority. 317. etc. where risks are actually created.

of Contracts Notional Principal Mark to Market Negative Positive (Rupees in ‘000) Net – 642 642 Interest rate swaps 1 to 3 months 1 to 2 Years 2 2 2.334 (13. of Contracts Notional Principal (Rupees in ‘000) FX Options No. of Contracts Notional Principal Mark to Market Negative Positive (Rupees in ‘000) Net – 6.222 (13.690 (307) 2008 Remaining Maturity No.666 2008 Remaining Maturity No. of Contracts Notional Principal Mark to Market Negative Positive (Rupees in ‘000) Net 307 – Cross currency swaps 2 to 3 Years 4 346.127 – 2 – 266.210) 2009 Remaining Maturity No.254 (1. of Contracts Notional Principal (Rupees in ‘000) FX Options No.144.127 2 2 2.380) 2.667 – – – – Interest rate swaps 6 months to 1 year 2 166. of Contracts Notional Principal (Rupees in ‘000) 2 – 124.333 – – – – – – 2 – 124.127 173.1 Product analysis 2009 Counter parties Cross Currency Swaps No. of Contracts Notional Principal (Rupees in ‘000) Interest Rate Swaps No.333 83.845 124.845 – 1 – 83. 2009 23.625 – Annual Report 2009 I 101 .333 – – – – With Banks for Hedging Market Making With other entities for Hedging Market Making Total Hedging Market Making 23.845 – 1 – 83.845 1 1 2008 Counter parties Cross Currency Swaps No.012 Cross currency swaps 1 to 2 Years 4 249. of Contracts Notional Principal (Rupees in ‘000) With Banks for Hedging Market Making With other entities for Hedging Market Making Total Hedging Market Making 2 2 124.463 333.Notes to the Financial Statements For the year ended December 31. of Contracts Notional Principal (Rupees in ‘000) Interest Rate Swaps No.077.667 – – – – 2 2 173.130 – – – – – – 2 – 173.380) (4.625) 1.127 – 2 – 2.2 Maturity analysis 2009 Remaining Maturity No.333 – – – – 83.144.130 266. of Contracts Notional Principal Mark to Market Negative Positive (Rupees in ‘000) Net 2 – 173.

929 7.718.725 855.001 11.697 102 I MCB Bank Limited .525 582. 2009 2009 (Rupees in ‘000) 2008 24.397 30.729 773.943 1.173 1.147 13.748 25.661 40.841.124 1.911 202.871.415 335.280 401.703 (16.477 720. MARK–UP / RETURN / INTEREST EARNED On loans and advances to: Customers Financial institutions On investments in: Held for trading securities Available for sale securities Held to maturity securities 10. GAIN ON SALE OF SECURITIES – NET Federal Government Securities – Market Treasury Bills – Pakistan Investment Bonds Overseas Government Securities Shares – Listed – Unlisted Term Finance Certificates 11.614 90.108 734.883 23.052.429 27.011.069 838.426.791 109.212.866.630 22.819 336.162 On deposits with financial institutions On securities purchased under resale agreements On money at call Others 133.944 15.842 12.718 36.724 944.740 26.560.775 5.310 527.869.785 442.711 775. MARK–UP / RETURN / INTEREST EXPENSED Deposits Securities sold under repurchase agreements Other short–term borrowings Sub–ordinated loan Discount.616.463 9.894.768 2.891 519.824 36.011 77.097 – 36.043.228 – – 740.805 29.Notes to the Financial Statements For the year ended December 31.799 722. commission and brokerage Others 13.212.417 18.777 26.097 29.126 – 452.353 51.797 736.007 11.610) 20.564 221.831. OTHER INCOME – NET Rent on property / lockers Net profit on sale of property and equipment Bad debts recovered Others 87.981 – 643.118 71.738 8.741.

563 399.577.319) 98.601 103.000 14.550 327. 2009 (Rupees in ‘000) 2008 28.327. ADMINISTRATIVE EXPENSES Salaries and allowances Charge / (reversal) for defined benefit plans and other benefits: – Approved pension fund – Post retirement medical benefits – Employees’ contributory benevolent scheme – Employees’ compensated absences Contributions to defined contribution plan – provident fund Non–executive directors’ fees Rent.677 – 16.931 55.116 64.410 995.123 799.1 During the year.2 Auditors’ remuneration Annual Audit fee Fee for the audit of branches Fee for audit of overseas branches Fee for half year review Special certifications.129 196. etc.073 46.470 1.205 142. conveyance and fuel Subscription Entertainment Training Expenses Petty Capital items Credit Card Related Expenses Others 28.780 4.793 14.282 10.079 515.546.812 3.906 150.034 844.2 11.107. Out–of–pocket expenses 2.034 54.109 25.399.979 49. electricity Legal and professional charges Communications Repairs and maintenance Stationery and printing Advertisement and publicity Cash transportation charges Instrument clearing charges Donations Auditors’ remuneration Depreciation Amortization of intangible asset Travelling.448 533.486 240.285) 130.650 16.381 911 14.587 3.Notes to the Financial Statements For the year ended December 31.185 243.220 1. 2009 Note 2009 (Rupees in ‘000) 2008 28.152 2.968 28.878 6. Donation was not made to any donee in which the Bank or any of its directors or their spouses had any interest.464 815.7 (3.3 36.471.189 (5.500 1.325 505.7 36.005 618.692) (5.7 36.7 36.102 1. taxes.650 1.488 64.532 24.164 4.963 3.040.779 (3.415 215.384 (75.471 153.903 137.734 10.513 7.888) 135.044 1.397 588.739 48.1 28.923.365 647.464 Annual Report 2009 I 103 .2 11.112) 148.479.935 330. 25 million were paid to Mir Khalil ur Rahman Foundation (MKRF) for internally displaced persons.114 6.078 99.963 909.333 74. donation amounting to Rs.317 112.432 4.356. insurance.

104 I MCB Bank Limited .790 30.703.945 35% 8.707 75.889.824 30.934) (49.659.492.150 – 300.Notes to the Financial Statements For the year ended December 31. OTHER CHARGES Fixed assets written off Penalties of State Bank of Pakistan Workers welfare fund VAT Sri Lanka Others 17.341.566 35% 7.824) 6.659.648 (864.226) 1.000 463.464) 7. CREDIT RATING PACRA through its notification in June 2009.305 298.492.966 7.232.824) – (864.1 Relationship between tax expense and accounting profit Accounting profit for the year Tax rate Tax on income Tax effect on separate block of income (taxable at reduced rate) Tax effect of permanent differences Tax effect of prior years provisions / reversals Reversal of deferred tax liability on incremental depreciation Tax charge for the year 23.935) 24.020) 7.444) (864.112 Prior years Current Deferred (2. has assigned long term credit rating of AA+ [double A plus] and short–term credit rating of A1+ [A one plus] to the Bank (2008: AA+ [Double A plus] for long term and A1+ [A one plus] for short term rating).000 437.824) (11.099 103.867 690.653. 2009 2009 (Rupees in ‘000) 2008 29.104.154.762 (342.966 31.002.473 – 817.257 16.351 80.533 7.357.867.836 (342. TAXATION For the year Current Deferred 7.648 21.464) (12.648 (234.477 30.231 (114.807 8.480) 6.

2009 2009 (Rupees in ‘000) 2008 32.297 15.867. BASIC AND DILUTED EARNINGS PER SHARE PRE TAX Profit before taxation 23. 36.774.207 3.527 Basic and diluted earnings per share – pre tax 33.42 22.160 47 10. Note 2009 (Rupees in ‘000) 2008 34.527 (Rupees) 691.527 (Rupees) 691.Notes to the Financial Statements For the year ended December 31.784.1 DEFINED BENEFIT PLANS AND OTHER BENEFITS General description The Bank operates the following retirement benefits for its employees: – Pension fund (final salary plan) – funded – Benevolent scheme – unfunded – Post retirement medical benefits – unfunded – Employees compensated absence – unfunded Annual Report 2009 I 105 .374.566 (Number of Shares) Weighted average number of shares outstanding during the year 691.154.445 3.993 44.495.600 (Number of Shares) Weighted average number of shares outstanding during the year 691.674.272 2008 35.104.104.100 43.527 Basic and diluted earnings per share – after tax 22.747 13.192 10. STAFF STRENGTH Permanent Temporary/on contractual basis Bank’s own staff strength at the end of the year Outsourced Total staff strength 9.104.172 4.397 48 9.631.934 36.50 31. BASIC AND DILUTED EARNINGS PER SHARE AFTER TAX Profit after taxation 15.864 2009 (Number) 39. CASH AND CASH EQUIVALENTS Cash and balances with treasury banks Balances with other banks 6 7 38.009.727 13.945 21.64 2009 (Rupees in ‘000) 2008 33.043.25 * Weighted average number of shares outstanding for 2008 have been restated to give effect of bonus shares issued during the year.104.871 6.

Notes to the Financial Statements
For the year ended December 31, 2009
36.2 Principal actuarial assumptions The latest actuarial valuations of the approved pension fund, employees’ contributory benevolent scheme, post retirement medical benefits and employee’s compensated absences were carried out at December 31, 2009. The principal actuarial assumptions used are as follows:
Approved pension fund 2009 2008 Employees’ contributory benevolent scheme 2009 2008 (%) Valuation discount rate Expected rate of return on plan assets Salary increase rate Indexation in pension Medical cost inflation rate Exposure inflation rate 14 14 10 – – – 13 13 10 – – – 14 – 10 – – – 13 – 10 – – – 14 – 10 – 8 3 13 – 10 – 8 3 10 – – – 10 – – – 14 13 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008

The expected return on plan assets is based on the market expectations and depends on the asset portfolio of the Bank, at the beginning of the period, for returns over the entire life of the related obligation. 36.3 (Receivable from) / payable to defined benefit plans and other benefits
Approved pension fund Note 2009 2008 Employees’ contributory benevolent scheme 2009 2008 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008

(Rupees in ‘000) Present value of defined benefit obligations Fair value of plan assets Net actuarial gains / (losses) not recognised Unrecognised negative past service cost Unrecognised past service cost Net (receivable) / payable recognised as at the year – end (9,322,304) (5,399,019) 246,444 274,446 1,370,424 1,400,413 541,116 752,947 – – – – – – – – 33,707 – 67,415 (8,576) – – – – 4,860,010 6,258,707 (52,944) (25,716) 49,369 71,952 – – 36.5 4,072,653 4,295,986 299,388 – 300,162 – 1,287,348 – 1,269,622 – 541,116 – 752,947 – 36.6 (18,254,967) (15,953,712)

The effect of increase of one percent and the effect of a decrease of one percent in the medical trend rates on the present value of medial obligation at December 31, 2009 would be Rs.76.348 million (2008: Rs. 61.985 million) and Rs.62.472 million (2008: Rs. 51.799 million) respectively. 36.4 Movement in balance (receivable) / payable
Approved pension fund Note 2009 2008 Employees’ contributory benevolent scheme 2009 2008 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008

(Rupees in ‘000) Opening balance of (receivable) / payable Expense recognised Refunds / (contributions) during the year – Employees’ contribution Benefits paid Closing balance of (receivable) / payable (9,322,304) (5,399,019) 246,444 274,446 1,370,424 1,400,413 541,116 752,947 – – – 10,651,347 – 12,338 (105,246) (55,957) (160,477) (153,461) (362,610) (145,825) – – – – – 36.8 (5,399,019) (10,651,047) (3,923,285) (5,399,319) 274,446 64,906 282,019 48,384 1,400,413 130,488 1,455,135 98,739 752,947 150,779 974,464 (75,692)

106 I MCB Bank Limited

Notes to the Financial Statements
For the year ended December 31, 2009
36.5 Reconciliation of the present value of the defined benefit obligations
Approved pension fund 2009 2008 Employees’ contributory benevolent scheme 2009 2008 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008

(Rupees in ‘000) Present value of obligation as at January 01, Current service cost Interest cost Benefits paid Actuarial (gains) / losses Present value of obligation as at December 31, 4,072,653 4,295,986 299,388 300,162 1,287,348 1,269,622 541,116 752,947 4,295,986 22,223 558,478 (1,172,751) 368,717 4,747,389 34,639 371,093 (689,440) (167,695) 300,162 11,751 39,021 (105,246) 53,700 355,340 13,769 35,533 (69,735) (34,745) 1,269,622 15,253 165,051 (160,477) (2,101) 1,422,918 17,555 142,292 (153,461) (159,682) 752,947 47,209 97,883 (362,610) 5,687 974,464 – – (145,825) (75,692)

36.6

Changes in fair values of plan assets
Approved pension fund Note 2009 2008 Employees’ contributory benevolent scheme 2009 2008 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008

(Rupees in ‘000) Net assets as at January 01, Expected return on plan assets Contributions – Bank Contributions – Employees Benefits paid Actuarial gain / (loss) Net assets as at December 31, 36.9 15,953,712 2,073,983 – – (1,172,751) 1,400,023 18,254,967 25,095,113 2,675,699 (10,651,347) – (689,440) (476,313) 15,953,712 – – – – – – – – – 55,957 13,778 (69,735) – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

36.7

Charge for defined benefit plans and other benefits The following amounts have been charged to the profit and loss account in respect of defined benefit plans and other benefits:
Approved pension fund 2009 2008 Employees’ contributory benevolent scheme 2009 2008 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008

(Rupees in ‘000) Current service cost Interest cost Expected return on plan assets Net actuarial (gain) / loss recognised Contributions employees Recognised past service cost Recognised negative past service cost 22,223 558,478 (2,073,983) (2,430,003) – – – (3,923,285) 34,639 371,093 (2,675,697) (3,129,354) – – – (5,399,319) 11,751 39,021 – 26,472 (12,338) – – 64,906 13,769 35,533 – 12,859 (13,777) – – 48,384 15,253 165,051 – (24,685) – 8,577 (33,708) 130,488 17,555 142,292 – (35,977) – 8,577 (33,708) 98,739 47,209 97,883 – 5,687 – – – 150,779 – – – (75,692) – – – (75,692)

The effect of increase of one percent and the effect of a decrease of one percent in the medical trend rates on the aggregate of the current service cost and interest cost components of net period post – employment medical costs would be Rs. 12.139 million (2008: Rs. 7.316 million) and Rs.9.871 million (2008: Rs. 6.056 million) respectively. 36.8 Actual return on plan assets
Approved pension fund 2009 2008 Employees’ contributory benevolent scheme 2009 2008 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008

(Rupees in ‘000) Actual return on plan assets 3,474,006 2,199,386 – – – – – –

Annual Report 2009 I 107

Notes to the Financial Statements
For the year ended December 31, 2009
36.9 Composition of fair value of plan assets
Approved Pension Fund 2009 Fair Value (Rupees in ‘000) Percentage (%) Fair Value (Rupees in ‘000) 2008 Percentage (%)

Defence saving certificates Term deposit receipts Listed equity shares Open ended mutual funds units Cash and bank balances Fair value of plan total assets 36.9.1 Fair value of the Bank’s financial instruments included in plan assets: Shares of MCB TDRs of MCB Bank balance with MCB

– 12,933,809 3,255,079 127,412 1,938,667 18,254,967

– 70.85 17.83 0.70 10.62 100

4,580,964 8,306,121 1,877,187 89,072 1,100,368 15,953,712

28.71 52.06 11.77 0.56 6.90 100

2,331,026 12,933,809 1,926,220 17,191,055

1,213,610 8,306,121 1,091,138 10,610,869

36.10 Other relevant details of above funds are as follows:
2009 2008 2007 (Rupees in ‘000) 2006 2005

36.10.1 Pension Fund Present value of defined benefit obligation Fair value of plan assets (Surplus) / deficit Actuarial gain / (loss) on obligation Experience adjustment Assumptions gain / (loss) (368,717) – (368,717) Actuarial gain / (loss) on assets Experience adjustment Assumptions gain / (loss) 1,400,023 – 1,400,023 36.10.2 Employees’ Contributory Benevolent Scheme Present value of defined benefit obligation Fair value of plan assets Actuarial gain / (loss) on obligation Experience adjustment Assumptions gain / (loss) Actuarial gain / (loss) on assets Experience adjustment Assumptions gain / (loss) – – – – – – (1,529) – (1,529) (34) – (34) (1) (418) (419) (53,700) – (53,700) 34,745 – 34,745 (60,968) – (60,968) 10,182 – 10,182 (228,823) 107,003 (121,820) 299,388 – 299,388 300,162 – 300,162 355,340 – 355,340 332,677 (20,650) 312,027 407,569 (18,976) 388,593 (476,313) – (476,313) 9,694,483 – 9,694,483 4,634,045 – 4,634,045 5,268,939 (138,502) 5,130,437 167,695 – 167,695 (325,849) – (325,849) 54,320 – 54,320 (304,748) 172,866 (131,882) 4,072,653 4,295,986 4,747,389 4,752,693 5,503,819 (18,254,967) (15,953,712) (25,095,113) (14,810,557) (10,554,024) (14,182,314) (11,657,726) (20,347,724) (10,057,864) (5,050,205)

108 I MCB Bank Limited

Notes to the Financial Statements
For the year ended December 31, 2009
2009 2008 2007 (Rupees in ‘000) 2006 2005

36.10.3 Post Retirement Medical Benefits Present value of defined benefit obligation Fair value of plan assets 1,287,348 – 1,287,348 Actuarial gain / (loss) on obligation Experience adjustment Assumptions gain / (loss) 2,101 – 2,101 36.10.4 Compensated absences Present value of defined benefit obligation Fair value of plan assets 541,116 – 541,116 Actuarial gain / (loss) on obligation (5,687) 752,947 – 752,947 75,692 974,464 – 974,464 (100,729) 1,023,683 – 1,023,683 – 856,213 – 856,213 – 159,682 – 159,682 (40,893) – (40,893) 36,153 (21,846) 14,307 8,743 (21,846) (13,103) 1,269,622 – 1,269,622 1,422,918 – 1,422,918 1,345,357 – 1,345,357 1,456,392 – 1,456,392

36.11. No contribution to the pension fund is expected in the next future year. 37. DEFINED CONTRIBUTION PLAN The Bank operates an approved contributory provident fund for 6,663 (2008: 6,671) employees where contributions are made by the Bank and employees at 8.33% per annum (2008: 8.33% per annum) of the basic salary. During the year, the Bank contributed Rs. 148.734 million (2008: Rs. 135.164 million) in respect of this fund. The Bank also operates an approved non–contributory provident fund for 2,223 (2008: 2,284) employees who have opted for the new scheme, where contributions are made by the employees at 12% per annum (2008: 12% per annum) of the basic salary. 38. COMPENSATION OF DIRECTORS AND EXECUTIVES The aggregate amount charged in the financial statements for compensation, including all benefits, to the Chief Executive, Directors and Executives of the Bank was as follows:
President / Chief Executive 2009 2008 2009 Directors 2008 2009 (Rupees in ‘000) Executive 2008

Fees Managerial remuneration Bonus and others Retirement benefits Rent and house maintenance Utilities Medical Conveyance

– 38,830 8,000 1,759 9,502 2,111 – 417 60,619

– 27,016 12,800 2,161 11,669 2,593 82 – 56,321 1

10,220 1,524 – – – – – – 11,744 12

3,630 1,524 – – – – – – 5,154 10

– 628,210 227,216 383,096 228,536 49,854 14,641 226,273 1,757,826 586

– 582,638 257,099 110,194 209,844 46,180 16,675 178,893 1,401,523 509

Number of persons

1

38.1. The Chief Executive and certain executives are provided with free use of the Bank’s maintained cars and household equipments in accordance with the terms of their employment.

Annual Report 2009 I 109

Notes to the Financial Statements
For the year ended December 31, 2009
39. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of traded investments is based on quoted market prices, except for tradable securities classified by the Bank as ‘held to maturity’. Fair value of unquoted equity investments is determined on the basis of break up value of these investments as per the latest available audited financial statements. Fair value of fixed term loans, other assets, other liabilities and fixed term deposits 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 5.3 to these financial statements. The maturity and repricing profile and effective rates are stated in notes 43.3, 43.4.1 and 43.4.2 respectively. 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 assets and liabilities are either short–term in nature or in the case of customer loans and deposits are frequently re–priced. 40. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES The segment analysis with respect to business activity is as follows:
Corporate Finance Trading and Sales Retail & Consumer Banking (Rupees in ‘000) Commercial Banking Total

2009 Total income Total expenses Income tax expense Net income Segment assets – (Gross of NPL’s provision) Total assets Segment non performing loans Segment specific provision required Segment liabilities Provision for taxation Deferred tax liability Total liabilities – net Segment return on net assets (ROA) (%) Segment cost of fund (%) – – – – – – – – – 81,457 (17,300) – 64,157 12,748,247 – 9,586,291 24,888,397 – 19,540,791 – 57,258,892 (7,659,648) 15,495,297

(3,161,956) (27,806,309)

(3,118,382) (34,103,947)

(2,917,912) 16,422,409

188,753,204 114,468,810 206,001,713 509,223,727 188,753,204 114,468,810 206,001,713 509,223,727 – – 160,878,035 – – 160,878,035 5.08% 1.69% 7,546,222 5,091,169 15,692,501 10,587,176 23,238,723 15,678,345

98,949,781 175,362,882 435,190,698 – – – – 1,096,273 3,196,743

98,949,781 175,362,882 439,483,714 –2.67% 3.78% 8.40% 3.55% 3.14% 3.75%

110 I MCB Bank Limited

Notes to the Financial Statements
For the year ended December 31, 2009
Corporate Finance Trading and Sales Retail & Consumer Banking (Rupees in ‘000) Commercial Banking Total

2008 Total income Total expenses Income tax expense Net income Segment assets – (Gross of NPL’s provision) 72,653 (12,365) – 60,288 – – Total assets Segment non performing loans Segment specific provision required Segment liabilities Provision for taxation Deferred tax liability Total liabilities – net Segment return on net assets (ROA) (%) Segment cost of fund (%) 41. RELATED PARTY TRANSACTIONS AND BALANCES The Bank has related party relationship with its associated undertakings, subsidiary companies, employee benefit plans and its key management personnel (including their associates) and companies with common directors. The detail of investment in subsidiary companies and associated undertakings are stated in Annexure I (note 5 & 6) to these financial statements. Transactions between the Bank and its related parties are carried at arm’s length basis under the comparable uncontrolled price method. However, the transactions between the Bank and one of its subsidiary MNET Services (Pvt) Limited are carried out on “cost plus” method. Details of loans and advances to the companies or firms in which the directors of the Bank are interested as directors, partners or in case of private companies as members, are given in note 10.6 to these financial statements. There are no transactions with key management personnel other than under their terms of employment. Contributions to and accruals in respect of staff retirement and other benefit plans are made in accordance with the actuarial valuation / terms of the contribution plan as disclosed in notes 36 and 37. Remuneration to executives is disclosed in noted 38 to these financial statements. – – – – – – – – 10,515,428 – 6,853,911 19,337,253 – 359,779 15,909,930 – 14,593,588 45,835,264 (6,492,966) 15,374,600

(3,661,517) (18,977,474)

(1,316,342) (23,967,698)

114,183,559 151,896,363 187,374,668 453,454,590 – – – –

114,183,559 151,896,363 187,374,668 453,454,590 – – 7,529,468 4,078,564 10,739,409 5,817,325 18,268,877 9,895,889

107,251,078 117,748,465 159,743,170 384,742,713 – – – – 437,137 107,251,078 117,748,465 159,743,170 385,179,850 6.00% 4.16% 0.24% 2.97% 8.04% 3.72% 3.47% 3.01%

Annual Report 2009 I 111

774 737.189 302.261 (728.719 687.942 78.774 728 8.606.104.655 753.488 110.340 – – – – – – – – – – – – – – – – Mayban International Trust (Labuan) Berhad – Dividend paid – Bonus shares issued – Forward foreign exchange contracts (Notional) – Unrealized loss on forward foreign exchange contracts – – 36.772 12.149 11.350.087 3.869 524.020) (667.979.908 301.909 8.186.263 69.779 64.834 539.613 425.067 692 9.042 486.791 17.876 11.304 1.Notes to the Financial Statements For the year ended December 31.630) (302.424 89.129.431 – – – – – – – – – 1.834 65.898 18.968) 38.929 275.022) – 5.898 4.153 (2.502.482.805 8.661.980.123 895.932 14.795 125.363.640 – (499) 1.695) (63.643 34.305 301. Balances Deposits Deposits at beginning of the year Deposits received during the year Deposits repaid during the year Deposits at end of the year Mark–up expense on deposits Advances (secured) Balance at beginning of the year Loans granted during the year Repayments received during the year Balance at end of the year Receivable from Pension fund B.878.408.213 – – – – – – – 3.578.640 – – – – 9.932 – – – – – – – – – Subsidiary Companies MNET Services (Private) Limited – Dividend received – Outsourcing service charges – Networking service charges – Trade debts – Other expenses paid by MCB – Receivable for other expenses – – – – – – – – – – – – – – – – – – – – – – – – – 103.432 1.613 7.935 29.322.141 14.271 (18. Other transactions (including profit and loss related transactions) Directors 2009 2008 Associated companies 2009 2008 Subsidiary companies 2009 2008 Other related parties 2009 2008 – – – – – – – – – – – – – – – – 1.213 2.826 29.338) (Rupees in ‘000) Associates Adamjee Insurance Company Limited – Insurance premium paid – net of refund – Insurance claim settled – Rent income received – Dividend received – – – – – – – – 182.472.953.104.399.536 – – – – – – – – – – – – – – – 112 I MCB Bank Limited .980 10.190.524 84.917 85.168) (10.929 81.019 425. 2009 Directors 2009 2008 Associated companies 2009 2008 Subsidiary companies 2009 2008 Other related parties 2009 2008 (Rupees in ‘000) A.803.910.998 101.116 – (476) 1.543) (65.480 80.879.311 4.141 2.880) (58.

2009 Directors 2009 2008 Associated companies 2009 2008 Subsidiary companies 2009 2008 Other related parties 2009 2008 (Rupees in ‘000) MCB Financial Services Limited (Formerly Muslim Commercial Financial Services (Private) Limited) – Purchase of fixed asset – – – – – 649 – – MCB Asset Management Company Limited – Dividend received – Markup paid – Proceeds from sale of property – Gain on sale of property – Markup payable – Others – – – – – – – – – – – – – – – – – – – – – – – – 29.315 10.188 51 1.212 17.734 43.475 Others Dividend income Proceeds from sale of vehicles to key management personnel Gain on sale of vehicles to key management personnel Remuneration of key management personnel (other than directors) Contribution / (expense) to provident fund Other miscellaneous expenses – – – – – – – – – – – – – – – – – – 219.482 135.594 162.725 – – – – – – – 583 – – – – – – – 5.001 59.105 The details of director’s compensations are given in note 38 to these financial statements.164 76.694 196.237 MCB Employees Foundation – Stationery expenses – Service expenses – Cash sorting expenses – Cash in transit expenses – – – – – – – – – – – – – – – – – – – – – – – – 111.461 17.998 692 34.169 4.918 – – “MCB Leasing” Closed Joint Stock Company – Capital injection – – – – 394 – – – Other related parties MCB Employees Security System and Services (Private) Limited – Security guard expenses – – – – – – 146.597 801 118.476 – – 362 896 – – – – – – – – – – – – MCB Trade Services Limited – Dividend received – – – – 11.100 16.340 1.508 126.987 – – – – – – 28. Annual Report 2009 I 113 .996 1.Notes to the Financial Statements For the year ended December 31.750 21.228 148.

25 % of risk weighted assets). Basic Indicator Approach (BIA) is used for Operational Risk Capital Adequacy purposes. 2009 . which includes fully paid up capital (including the bonus shares). 2009 42.1 CAPITAL ASSESSMENT AND ADEQUACY Scope of Applications The Basel II Framework is applicable to the bank both at the consolidated level (comprising of wholly/partially owned subsidiaries & associates undertaking) and also on a stand alone basis. 2013. maintain strong ratings and to protect the Bank against unexpected events. etc after deductions for deficit on revaluation of available for sale investments and 50% deduction for investments in the equity of subsidiary companies and significant minority investments in entities engaged in banking and financial activities. 42. Bank’s regulatory capital is analysed into two tiers. 6 billion paid up capital (net of losses) by the end of the financial year 2009. 114 I MCB Bank Limited . In addition the banks are also required to maintain a minimum capital adequacy ratio (CAR) of 10 % of the risk weighted exposure. availability of adequate capital (including the quantum) at a reasonable cost so as to enable the Bank to expand. The adequacy of the capital is tested with reference to the risk–weighted assets of the Bank. foreign exchange translation reserves. Statutory minimum capital requirement and management of capital The State Bank of Pakistan through its BSD Circular No. The Bank’s CAR as at December 31. 2008 and BSD Circular No. whereas. 6. etc after 50% deduction for investments in the equity of subsidiary companies and significant minority investments in entities engaged in banking and financial activities. The raise is to be achieved in a phased manner requiring Rs. – Tier 1 capital. 30 dated November 25. The Capital of the Bank is managed keeping in view the minimum “Capital Adequacy Ratio” required by SBP through BSD Circular No. reserves on revaluation of fixed assets and equity investments up to a maximum of 45 % of the balance. The paid up capital of the Bank for the year ended December 31. – Tier 2 capital.07 % of its risk weighted exposure. balance in share premium account. Standardized Approach is used for calculating the Capital Adequacy for Credit and Market risk. 42. the Bank currently does not have any Tier III capital. as defined by regulatory authorities and comparable to the peers.07 of 2009 dated April 15. which includes general provisions for loan losses (up to a maximum of 1. and achieve low overall cost of capital with appropriate mix of capital elements. general reserves as per the financial statements and net unappropriated profits. 2009 stands at Rs. 2009 requires the minimum paid up capital (net of losses) for all locally incorporated banks to be raised to Rs. Subsidiaries are included while calculating Consolidated Capital Adequacy for the Bank using full consolidation method whereas associates in which the bank has significant influence on equity method. Tier 3 capital has also been prescribed by the State Bank of Pakistan. However.Notes to the Financial Statements For the year ended December 31.07 of 2009 dated April 15.2 Capital Management Objectives and goals of managing capital The objectives and goals of managing capital of the Bank are as follows: – – – – to be an appropriately capitalized institution. 10 billion by the year ending on December 31. 2009 was 19.9 billion and is in compliance with the SBP requirement for the said year.

Notes to the Financial Statements
For the year ended December 31, 2009
The required capital adequacy ratio (10% of the risk–weighted assets) is achieved by the Bank through improvement in the asset quality at the existing volume level, ensuring better recovery management and striking compromise proposal and settlement and composition of asset mix with low risk. Banking operations are categorized 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. The calculation of capital adequacy enables the Bank to assess the long–term soundness. As the bank carry on the business on a wide area network basis, it is critical that it is able to continuously monitor the exposure across entire organization and aggregate the risks so as to take an integrated approach/view. Maximization of the return on risk– adjusted capital is the principal basis to be used in determining how capital is allocated within the Bank to particular operations or activities. The Bank has complied with all externally imposed capital requirements through out the year. Further, there has been no material change in the Bank’s management of capital during the year.
Note 2009 (Rupees in ‘000) 2008

42.3

Capital Structure Tier 1 Capital Shareholders equity /assigned capital Share premium Reserves Unappropriated profits Deductions: Book value of intangible Other deductions 42.3.1 248,242 675,256 923,498 Total Tier 1 capital Tier 2 Capital General provisions subject to 1.25% of total risk weighted assets Revaluation reserves up to 45% Foreign exchange translation reserves Deductions: Other deductions Total Tier 2 Capital Total Regulatory Capital Base A 42.3.1 675,256 4,460,274 64,356,557 677,558 3,047,689 54,235,112 794,424 4,084,955 256,151 5,135,530 815,966 2,720,595 188,686 3,725,247 59,896,283 191,198 677,558 868,756 51,187,423 6,911,045 9,702,528 28,427,081 15,779,127 60,819,781 6,282,768 9,702,528 26,877,551 9,193,332 52,056,179

42.3.1 Other deduction includes investments in equity of financial subsidiaries not consolidated in the balance sheet and significant minority investments in banking, securities and other financial entities.

Annual Report 2009 I 115

Notes to the Financial Statements
For the year ended December 31, 2009
42.4 Capital Adequacy The risk weighted assets to capital ratio, calculated in accordance with the State Bank of Pakistan’s guidelines on capital adequacy was as follows:
Capital Requirements 2009 2008 (Rupees in ‘000) Risk Weighted Assets 2009 2008

Credit Risk Portfolios subject to standardized approach (simple or comprehensive) On–Balance Sheet Corporate portfolio Banks / DFIs Public sector entities Sovereigns / cash & cash equivalents Loans secured against residential property Retail Past due loans Operating fixed assets Other assets Off–Balance Sheet Non–market related Market related Equity Exposure Risk in the Banking Book Listed Unlisted Total Credit Risk Market Risk Capital requirement for portfolios subject to standardized approach Interest rate risk Equity position risk Foreign exchange risk Total Market Risk Operational Risk Capital requirement for operational risks Total B 5,155,801 33,741,710 4,374,044 29,987,779 64,447,511 337,417,070
2009 (Rupees in ‘000)

10,928,917 1,071,254 378,392 642,408 198,943 3,653,858 830,110 1,913,288 2,384,455 22,001,625 4,048,605 23,335 4,071,940 92,259 79,491 171,751 26,245,316

10,090,693 378,563 1,122,499 737,744 204,353 4,539,633 1,029,556 1,604,664 1,701,219 21,408,923 2,336,005 77,419 2,413,424 14,349 78,873 93,222 23,915,569

101,485,148 9,947,588 3,513,725 5,965,352 1,847,383 33,929,470 7,708,344 17,766,654 22,141,877 204,305,541 37,595,057 216,690 37,811,747 856,713 738,152 1,594,865 243,712,153

108,560,409 4,072,758 12,076,366 7,936,991 2,198,534 48,839,497 11,076,451 17,263,733 18,302,507 230,327,246 25,131,841 832,909 25,964,750 154,376 848,549 1,002,925 257,294,921

930,563 644,076 765,954 2,340,593

468,523 432,356 797,287 1,698,166

11,632,039 8,050,949 9,574,418 29,257,406

5,856,540 5,404,454 9,966,089 21,227,083

54,675,545 333,197,549
2008

Capital Adequacy Ratio Total eligible regulatory capital held Total Risk Weighted Assets Capital Adequacy Ratio A B A/B 64,356,557 337,417,070 19.07% 54,235,112 333,197,549 16.28%

* As SBP capital requirement of 10% (2008: 9%) is calculated on overall basis therefore, capital charge for credit risk is calculated after excluding capital requirements against market and operational risk from the total capital required.

116 I MCB Bank Limited

Notes to the Financial Statements
For the year ended December 31, 2009
43 RISK MANAGEMENT MCB defines risk as any deviation from an anticipated outcome that may affect the value, capital or earnings of the Bank. Identifying and managing exposure to risk is an integral part of strategic and operational activities of risk management. Bank’s risk management policy is aimed at setting the best course of action under uncertainty by identifying, prioritizing, mitigating and monitoring risk issues. With the goal of enhancing shareholders’ value, following are the five guiding principles of robust risk management structure: • • • • • Optimizing risk/return in a controlled manner Establishing clear responsibility and accountability Establishing independent and properly resourced risk management function. Promoting open risk culture Adopting international best practices in risk management

Keeping in view dynamics of internal and external environment, the Bank regularly reviews and updates policy manuals / frameworks and procedures in accordance with domestic regulatory environment and international standards. The Bank executes its risk strategy and undertakes controlled risk–taking activities within its risk management framework. This framework combines core policies, procedures and process design with broad oversight and is supported by risk monitoring across the bank. The Board of Directors and its relevant committee, i.e. the Risk Management & Portfolio Review Committee (RM&PRC) and the senior management and its relevant committees, i.e. the Management Committee (MC), Asset Liability Committee (ALCO), etc., are responsible to ensure formulation and implementation of comprehensive Risk Management Framework. This framework is based on prudent risk identification, measurement, management and monitoring process which are closely aligned with the activities of the Bank so as to ensure that risks are kept within an acceptable level. As part of risk assessment process, the Bank ensures that not only the relevant risks are identified but their implications are considered and basis provided for managing and measuring the risks. Through Internal Control units, the Bank ensures that effective controls are in place to mitigate each of the identified risk. Independent from business groups, Head of Risk Management reports functionally to the Risk Management & Portfolio Review Committee (RM&PRC) and administratively to the President; the RM & PRC convenes regularly to evaluate Bank’s risk and portfolio concentrations. The Risk Management Group performs the following critical functions: • • • • • Credit Risk Management Credit Review Credit Risk Control Market Risk Management Operational Risk Management

In line with regulatory guidelines, the Bank has initiated Internal Capital Adequacy Assessment Process (ICAAP). 43.1 Credit Risk Credit risk arises from our dealings with individuals, corporate, financial institutions, sovereigns etc. The Bank is exposed to credit risk through its lending and investment activities. It also stems from activities both on and off–balance sheet activities. Credit risk makes up the largest part of the Bank’s exposure. Purpose of credit risk function is to identify measure, manage, monitor and mitigate credit risk. Organizational structure of this function ensures pre and post–facto management of credit risk. While, Credit Review function provides pre–fact evaluation of counterparties, the Credit Risk Control (CRC) performs post–fact evaluation of financing facilities and review clients’ performance as an ongoing process. The Bank has adopted standardized approach to measure Credit risk regulatory charge in compliance with Basel–II requirements. The approach is reliant upon the assessment of external credit rating agencies. In line with SBP guidelines on Internal Credit Ratings Systems, Bank has developed a system and all its corporate borrowers are internally rated. Bank is in the process of continuously improving the system and bringing it inline with the Basel framework requirements In order to manage bank’s credit risk, the Bank has the following policies and procedures in place: • • • • • Individuals who take or manage risks clearly understand them in order to protect the Bank from avoidable risks; The approval of credit limits to counter parties are subject to pre–fact review; Extension in credit facility or material change to the credit facility is subject to credit review; Approval and review process is reviewed by RM & PRC and internal audit; Management periodically reviews the powers of credit approving and credit reviewing authorities.

Annual Report 2009 I 117

Notes to the Financial Statements
For the year ended December 31, 2009
As a part of credit assessment Bank, uses internal rating framework as well as the ratings assigned by the external credit rating agencies, wherever available. Ongoing administration of the credit portfolio is an essential part of the credit process that supports and controls extension and maintenance of credit. The Bank’s Credit Risk Control, being an independent function from the business and operations groups, is responsible for performing following activities: • • • • Credit disbursement authorization; Collateral coverage and monitoring; Compliance of loan covenants/ terms of approval; Maintenance/ custody of collateral and security documentation.

Credit Risk Monitoring is based on a comprehensive reporting framework, continuous monitoring of the credit portfolio and the risks attached thereto are carried out at different levels including businesses, Audit & Risk Assets Review, Credit Risk Control, Credit Risk Management Division, etc. To ensure a prudent distribution of asset portfolio, the Bank manages its lending and investment activities within a framework of risk profile benchmarks. Per party exposure limit is maintained in accordance with SBP Prudential Regulation R–1. The Bank creates specific provision against Non– Performing Loans (NPLs) in accordance with the Prudential Regulations and other directives issued by the State Bank of Pakistan (SBP) and charged to the profit and loss account. Provisions are held against identified as well as unidentified losses. Provisions against unidentified losses include general provision against consumer loans made in accordance with the requirements of the Prudential Regulations issued by SBP and provision based on historical loss experience on advances. Please refer note No. 10.4 for reconciliation of changes in specific and general provisions. Management of Non–Performing Loans The Bank has a Special Asset Management Group (SAMG), which is responsible for management of non-performing loans. SAMG undertakes restructuring / rescheduling of problem loans, as well as litigation of both civil and criminal cases for collection of debt. Stress Testing The Bank also conducts stress testing of its existing portfolio, which includes all assets, i.e., advances as well as investments. This exercise is conducted on a semi–annual basis through assigning shocks to all assets of the Bank and assessing its resulting affect on capital adequacy inline with SBP requirements.
43.1.1 Segmental information Segmental Information is presented in respect of the class of business and geographical distribution of advances (gross), deposits, contingencies and commitments.
2009 Advances (Gross) (Rupees in ‘000) (%) Deposits (Rupees in ‘000) (%) Contingencies and commitments (Rupees in ‘000) (%)

43.1.1.1 Segments by class of business
Agriculture, forestry, hunting and fishing Mining and quarrying Textile Chemical and pharmaceuticals Cement Sugar Footwear and leather garments Automobile and transportation equipment Electronics and electrical appliances Construction Power (electricity), gas, water, sanitary Wholesale and Retail Trade Exports / imports Transport, storage and communication Financial Insurance Services Individuals Others 2,606,240 611,408 31,377,649 15,197,729 3,886,303 6,328,298 2,279,204 2,293,028 2,204,672 2,785,464 37,940,970 18,565,483 4,257,087 58,748,442 6,866,088 1,285 6,642,802 27,049,649 40,080,375 269,722,176 0.97 0.23 11.63 5.63 1.44 2.35 0.85 0.85 0.82 1.03 14.07 6.88 1.58 21.78 2.55 0.00 2.46 10.03 14.86 100 34,509,866 294,235 1,393,648 1,013,664 14,565 438,319 208,767 539,065 149,539 – 1,461,906 33,909,697 – 285,773 10,026,720 1,344,562 62,135,724 195,463,714 24,414,947 367,604,711 9.39 0.08 0.38 0.28 0.00 0.12 0.06 0.15 0.04 – 0.40 9.22 – 0.08 2.73 0.37 16.90 53.17 6.64 100 1,055,277 24,942 4,741,012 3,689,010 28,633 40,215 54,727 336,712 318,098 238,562 531,536 2,202,054 3,987,621 152,713 44,941,870 2,152 285,914 367,077 56,923,762 119,921,887 0.88 0.02 3.95 3.08 0.02 0.03 0.05 0.28 0.27 0.20 0.44 1.84 3.33 0.13 37.48 0.00 0.24 0.31 47.47 100

118 I MCB Bank Limited

Notes to the Financial Statements
For the year ended December 31, 2009
2008 Advances (Gross) (Rupees in ‘000) (%) Deposits (Rupees in ‘000) (%) Contingencies and commitments (Rupees in ‘000) (%)

Agriculture, forestry, hunting and fishing Mining and quarrying Textile Chemical and pharmaceuticals Cement Sugar Footwear and leather garments Automobile and transportation equipment Electronics and electrical appliances Construction Power (electricity), gas, water, sanitary Wholesale and Retail Trade Exports / imports Transport, storage and communication Financial Insurance Services Individuals Others

10,414,918 1,670,510 35,240,763 13,931,176 4,611,099 6,490,201 2,023,653 2,422,517 2,768,742 – 48,480,574 24,867,705 – 33,182,312 10,490,556 200,000 4,121,252 32,721,115 39,210,232 272,847,325

3.82 0.61 12.92 5.11 1.69 2.38 0.74 0.89 1.01 – 17.77 9.11 – 12.16 3.84 0.07 1.51 11.99 14.37 100

34,461,318 254,075 1,381,008 1,160,792 17,454 663,341 142,938 292,281 319,654 – 532,842 47,715,623 – 358,139 6,531,092 2,593,403 49,397,748 153,817,203 30,542,713 330,181,624

10.44 0.08 0.42 0.35 0.01 0.20 0.04 0.09 0.10 – 0.16 14.45 – 0.11 1.98 0.79 14.96 46.59 9.25 100

679,404 – 8,899,509 7,126,392 5,203,675 2,500,375 491,410 2,407,819 – 2,494,184 3,132,122 6,842,008 – 8,818,563 167,324,013 – 2,147,720 – 48,458,869 266,526,063

0.25 – 3.34 2.67 1.95 0.94 0.18 0.90 – 0.94 1.18 2.57 – 3.31 62.78 – 0.81 – 18.18 100

2009 Advances (Gross)
(Rupees in ‘000) (%)

Deposits
(Rupees in ‘000) (%)

Contingencies and commitments
(Rupees in ‘000) (%)

43.1.1.2 Segment by sector Public / Government Private

79,707,503 190,014,673 269,722,176

29.55 70.45 100

11,100,632 356,504,079 367,604,711

3.02 96.98 100

39,390,760 80,531,127 119,921,887

32.85 67.15 100

2008 Advances (Gross)
(Rupees in ‘000) (%)

Deposits
(Rupees in ‘000) (%)

Contingencies and commitments
(Rupees in ‘000) (%)

Public / Government Private

60,292,476 212,554,849 272,847,325

22.10 77.90 100

16,144,540 314,037,084 330,181,624

4.89 95.11 100

61,587,937 204,938,126 266,526,063

23.11 76.89 100

Annual Report 2009 I 119

854 107.324 3.067 246.298 21.1. 120 I MCB Bank Limited .888.268.120 1.240 869.887 Profit before taxation Total assets Net assets employed employed (Rupees in ‘000) Contingencied & Commitments Pakistan Asia Pacific (including South Asia) Middle East 21.165.699 153.4 Details of non–performing advances and specific provisions by sector Public/ Government Private – 23.647 68.988.014.621 – 3.928 1.913 249.750 349.875 2.355 150.779 – 557.914 192.066.714 118.904 58.686 77.259 150.329.061 133.483 145.008 40.223.434 9.280 44.718 357. 2009 43.999 3.678.658.381 69.467.409 117.727 2.025 408.177.5 Geographical segment analysis 2009 Profit before taxation Total assets Net assets employed employed (Rupees in ‘000) Contingencied & Commitments – 15.775 260.891 79.010.659.778 288.844 7.146 318.268.651.889 43.740. water.039.162 116.945 498.453.231.345 912.538.466 59.268.345 – 18.026 557.094.804.731 49.522 518.490 91.152 101.1.021 3. NIL).238.512 118.862.835 23.727 2008 69.895.636 732.419 321.307 2.728 58.867.397 4.479 295.634 7.236 355.584 2.582 59.393.154.238.Notes to the Financial Statements For the year ended December 31.895.877 18.631. NIL (2008: Rs.511 2.321 442.1.877.3 Details of non–performing advances and specific provisions by class of business segment 2009 Classified Advances Specific Classified Provision Held Advances (Rupees in ‘000) 2008 Specific Provision Held Agriculture.953.889 9.678.306 3.105 5.113 2.934 23.013 115.238. storage and communication Financial Services Individuals Others 713.339 72.712 25.807 304 387.180 443.818 479.877 – 9.875 18.761 4.1.723 23.723 384.018.877 446.671 338. forestry.685 3.1.054 259.123 15.518 3.895.729 180.176 3.889 Pakistan Asia Pacific (including South Asia) Middle East 22.189.1.311.039 – 5.298 Total assets employed include intra group items of Rs.147.231 – 1.921.597 55.996.444.345 15. sanitary Wholesale and retail trade Exports / imports Transport.967 304 135.615.095 266.395 2.974 3.251.436.566 428.650.521 60. gas. hunting and fishing Mining and quarrying Textile Chemical and pharmaceuticals Cement Sugar Footwear and leather garments Automobile and transportation equipment Electronics and electrical appliances Construction Power (electricity).216.921.889 2.678.460 119.723 43.327 9.012 766.184 2.117.361 42.909 509.054 2.

Notes to the Financial Statements For the year ended December 31. A–1 A–2 A–3 Others Annual Report 2009 I 121 .3.1 Credit Risk: Disclosures for portfolio subject to the Standardized Approach Under standardized approach. the credit ratings assigned by the SBP recognized ECAIs. 2009 43. Long – Term Ratings Grades Mapping SBP Rating Grade PACRA JCR–VIS Fitch Moody’s S&P ECA Scores 1 AAA AA+ AA AA– A+ A A– BBB+ BBB BBB– BB+ BB BB– B+ B B– CCC+ and below AAA AA+ AA AA– A+ A A– BBB+ BBB BBB– BB+ BB BB– B+ B B– CCC+ and below AAA AA+ AA AA– A+ A A– BBB+ BBB BBB– BB+ BB BB– B+ B B– CCC+ and below Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3 B1 B2 B3 Caa1 and Below AAA AA+ AA AA– A+ A A– BBB+ BBB BBB– BB+ BB BB– B+ B B– CCC+ and below 1 2 2 3 3 4 4 5 5.8 table 2.1. Exposures JCR–VIS PACRA OTHER (S&P / Moody’s / Fitch) Corporate Banks Sovereigns SME’s Yes Yes – Yes Yes Yes – Yes – Yes Yes – The criteria for transfer public issue ratings onto comparable assets in the banking book and the alignment of the alphanumerical scale of each agency used with risk buckets is the same as specified by the banking regulator SBP in BSD Circular No. 43.2 Credit Risk – General Disclosures The Bank has adopted Standardized approach of Basel II for calculation of capital charge against credit risk in line with State Bank requirements. External Credit Assessment Institutions from which credit rating data for advances is obtained and then mapped to State Bank of Pakistan’s Rating Grades. viz. Moody’s and Standard & Poors . Type of Exposures for which the ratings from the External Credit Rating Agencies are used by the Bank. wherever available. Fitch.1.6 6 7 Short – Term Ratings Grades Mapping SBP Rating Grade PACRA JCR–VIS Fitch Moody’s S&P S1 S2 S3 S4 A–1 A–2 A–3 Others A–1 A–2 A–3 Others F1 F2 F3 Others P–1 P–2 P–3 Others A–1+. PACRA (Pakistan Credit Rating Agency).2. the capital requirement is based on the credit rating assigned to the counterparties by the External Credit Assessment Institutions (ECAIs) duly recognized by SBP for capital adequacy purposes. JCR–VIS (Japan Credit Rating Company– Vital Information Systems). Bank utilizes.

232.238 45. nature of business and economic environment.070 928 4. The Standardized Approach of Basel–II guidelines allows the Bank to take benefit of credit risk mitigation of financial collaterals against total exposures in the related loan facilities.898 43.239.238 45. current assets.435 436. Collaterals are normally held for the life of exposure.094.626.329 6.435 436. Bank has taken only the benefit of Sovereign guarantee.366.010.293 35.063 – – – – 11.278.070 928 4.5 6 Unrated Public Sector Entities in Pakistan 1 2.037 – – 5.352 – – 5.541. 43.023 11.422 – – – – 7. nature and structure of the transaction and also reflect the form and capacity of the obligor.6 Unrated Bank 1 2.936.384.281.3 4.965.113.584.239.108.3.160.615.093 2. 122 I MCB Bank Limited .516 5.654 – – – 16.273.352 – – 5.857.103 – – – 5. As a prudent and conservative measure while calculating capital charge for credit risk of on balance sheet activities.293 – – – – – – – – 33.287 6.1.326 9.626.4 5.527 65.023 – – – – – 14.1.281.927 19.037 – – 5.850.415.415.563 100.806 5.160. as well as cash.926. government securities.506.230 11.828 764.3 Credit Risk: Disclosures with respect to Credit Risk Mitigation for Standardized Approach The Bank does not make use of on and off–balance sheet netting in capital charge calculations under Basel–II’s Standardized Approach for Credit Risk.329 35.069 14.093 2.516 5.806 5.167.103 – – – 5. its operations.936.230 94.3 4.615. Regular monitoring of coverage of exposure by the collateral and lien/ charge registered over the collaterals is carried out besides ensuring that collateral matches the purpose.986.697 – – – – – 14. marketable securities.965. fixed assets.305 – – – 4.351.497.063 94.127 14.891 – – – 27.278.120 17.545 – – – 44.857.991 6.828 764.189 1. and specific equipment.Notes to the Financial Statements For the year ended December 31.757. commercial and personal real estate.858 2.584.658 – – – – – – – 1.305 – – – 75.389 798.152.5 6 Unrated Mortgage Retail 33.991 6.146.497.010.850.422 – – – – 7.5 6 Unrated Sovereigns and on Government of Pakistan or provincial governments or SBP or Cash 1 2 3 4. The Bank mitigates its risk by taking collaterals that may include assets acquired through the funding provided. 2009 Credit Exposures subject to Standardised approach 2009 Exposures Rating Amount Deduction Outstanding CRM Net amount Amount Outstanding 2008 Deduction CRM Net amount (Rupees in ‘000) Corporate 1 2 3.460 394.1 Credit Risk: Disclosures for portfolio subject to the Standardized Approach The Bank has strong policies and processes for collateral valuation and collateral management thus ensuring that collateral valuation happens at regular defined intervals.527 66.232.214 – – – – 71.113.127 – – – – – 11.119.146.108.858 2.541.389 798.986.697 101.326 9.982.

395 million has been charged to profit and loss account. and also reviews exposure to industry sectors and geographical regions on a regular basis. As of December 31. In addition. Surplus / (deficit) arising on revaluation of quoted securities which are classified as ‘held for trading’. Break–up value of equity securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements.496. 22. 836.655 million).116. is taken to the profit and loss account currently. 402.384.900 million (2008: Rs.213.690 million (2008: Rs. The cumulative realized gain of Rs.826 Banks classify its equity investment portfolio in accordance with the directives of SBP as follows: • Investments – Held for trading • Investments – Available for sale • Investments in associates • Investments in subsidiaries Policies. 152.321 million) is held by the Bank with the State Bank of Pakistan and central banks of other countries. Further a provision for impairment in value of equity investments amounting to Rs. Concentration of risk Out of the total financial assets of Rs.915.291 943. Investments amounting to Rs. To manage credit risk the Bank applies credit limits to its customers and obtains adequate collaterals. other than investments in subsidiaries and investments in associates are subsequently re–measured to market value.3.047 million has been recognized in profit & loss account from sale of equity securities. Securities and Exchange Commission of Pakistan and the requirements of approved International Accounting Standards as applicable in Pakistan.916.Notes to the Financial Statements For the year ended December 31. however unrealized gain of Rs. 662. 20.387.75 million (2008: Rs. quoted securities. The surplus / (deficit) arising on these securities is taken to the profit and loss account when actually realized upon disposal. Limits are applied in a variety of forms to portfolios or sectors where the Bank considers it appropriate to restrict credit risk concentrations or areas of higher risk.298 million (2008: Rs. is taken to a separate account which is shown in the balance sheet below equity. 43. 2009 the composition of equity investments subsidiaries and associated companies is as follows: Composition of equity investments Exposures Held for trading Available for Sale Subsidiary and Associates Equity investments – publicly traded Equity investments – others Total value Classification of equity investments – – – 7. Unquoted equity securities are valued at the lower of cost and break–up value. Annual Report 2009 I 123 .843 8. The Bank has invested in its subsidiaries and associated companies to achieve long term strategic objectives. 86.1. an amount of Rs. 468. Surplus / (deficit) arising on revaluation of quoted securities which are classified as ‘available for sale’. or to control the rate of portfolio growth. 1.448 513. In accordance with the requirements of the State Bank of Pakistan.831.095.899 million was recognized in the balance sheet in respect of “AFS” securities. in particular. 2009 MCB manages limits and controls concentrations of credit risk as identified. valuation and accounting of equity investments The accounting policies for equity investments are designed and their valuation is carried out under the provisions and directives of State Bank of Pakistan.200 million) the financial assets which are subject to credit risk amount to Rs. 478.581.600 441.198 million) are guaranteed by the Government of Pakistan.2 Equity position risk in the banking book The Bank takes proprietary equity positions for both trading and strategic purposes.226 1. 414.409. to individual counterparties and groups.

etc. Stress testing of both banking and trading books as per SBP guidelines is a regular feature. Bank has established a specific Market Risk Limit Policy providing guideline for assuming controlled market risk. These reports are presented to the senior management for review on a daily basis. MCB is exposed to market risk primarily through its trading activities. and independent Market Risk Management Division reporting directly to Group Head Risk Management.e. Risk numbers along with the marked to market values of government securities held by the Bank’s treasury are generated on daily basis. facilitation of client business and proprietary positions in equities.1 Foreign Exchange Risk Management Foreign exchange risk represents exposures the Bank has due to changes in the values of current holdings and future cash flows denominated in currencies other than home currency.Notes to the Financial Statements For the year ended December 31. foreign currency–denominated deposits. Market risk is also assumed as a result of Bank’s balance sheet and capital management activities. in its Risk Management policy. market risk measurement and reporting system. As per SBP instructions (BSD Circular 8. its monitoring and management. Hence the bank has clearly defined. Variance co–variance approach of VaR measure for conventional products and Monte Carlo simulation approach for derivative and structured products are being used by the bank. and VaR on individual security basis as well as on portfolio basis. The definition covers the accounting classifications as well as positions booked by different business groups under “Available for Sale” category. The core objective of foreign exchange risk management is to ensure the foreign exchange exposure of the Bank remains within defined risk appetite and insulate Bank against losses that may arise due to volatile movements in foreign exchange rates or interest rates. The Bank’s Market Risk Management structure consists of Risk Management Committee of the Board. future cash flows in foreign currencies arising from foreign exchange transactions. the Bank uses VaR (Value at Risk) technique for market risk assessment of assets booked by its treasury and capital market groups. which exposes Bank to interest rate risk. fixed income and interest rate products and foreign exchange. foreign exchange risk and equity price risk. notional amounts and sensitivity. Market risk authority. foreign currency–denominated loans. 43. 2006) trading book shall consist of positions in financial instruments held with trading intent or in order to hedge other elements of the trading book. which are centered in the Treasury and Foreign exchange and Capital market groups. 124 I MCB Bank Limited . the positions which shall be subject to market risk. The Bank measures and manages Market risk by using conventional methods i. The assets subject to trading book treatment are frequently valued and actively managed. controlling of market risk including monitoring of exposures against limits. including both approval of market risk limits and approval of market risks is vested in the ALCO. assessment of risks in new business. A reasonable number of limits are set and approved.2. The risk numbers include duration. The Bank is exposed to interest rate risk both in trading and banking books. Foreign Exchange Rates and Equity Prices) as well as their correlations and volatilities. The positions which does not fulfill the criteria of Trading book falls under the Banking Book and are treated as per SBP requirements. Besides conventional methods. The types of instruments exposed to this risk include investments in foreign branches. Market Risk Management Division is responsible for policy formulation. In–house and vendor based solutions are used for calculating mark to market value of positions and generating VaR (value at risk) and sensitivity numbers. ALCO. 2009 43.2 Market Risk Management Market risk arises from changes in market rates (such as Interest Rates. Market risk also arises from market–making. developing procedures. PVBP. These Limits are compared with the numbers generated by the market risk management system based on the trading activity and the outstanding position on risk measurement date.

2009 Assets Liabilities Off–balance sheet items Net foregin currency exposure (Rupees in ‘000) Pakistan Rupee United States Dollar Pound Sterling Japanese Yen Euro Other currencies 493.223.926 (83.906 110.610.500. Gap limit for other major currencies will be introduced depending upon the significance of exposure in that currency. 2009 Limit structure to manage foreign exchange risk is in place.410) 13. All these activities are performed on a daily basis.669) 3.727 422.054 43.838 443.540 42.413 58.376) 2.825 762.180) 1. Gap limits on different tenures have been introduced for USD exposures.675 (104.079.850 3.816 118.446 396.2 Equity Price Risk Bank’s proprietary positions in the equity instruments expose it to the equity price risk in its trading and banking books.906 1.526 1.398.231 277. Stress testing of foreign exchange portfolio is also performed and reported to senior management.929.425 385.615.013 2008 Assets Liabilities Off–balance sheet items Net foregin currency exposure (Rupees in ‘000) Pakistan Rupee United States Dollar Pound Sterling Japanese Yen Euro Other currencies 426.779.596. Equity price risk is managed by applying trading limit.566.036. The stress test for equity price risk assesses the impact of the fall in the stock market index.295 – – 58.852.559 9. VaR numbers generation and stress testing of the equity portfolio are also performed and reported to senior management on daily basis. This exercise is done on internal based assumptions in addition to the criteria advised by the State Bank of Pakistan for Stress Testing on Equities.438 1. Risk management system generates VaR and PVBP numbers for foreign exchange portfolio to estimate the potential loss under normal conditions.Notes to the Financial Statements For the year ended December 31. Additionally.152 12.122 35.904 372.483.870.720 1.623 11.260.226 (109.871 (134.472) 1.573.740.828.166 – 439.2.504.031 146.436.030 (290.714 (1. Annual Report 2009 I 125 .442 509.326.849 15.049 111.108.317.310) (2.146. daily reports are generated to evaluate the exposure in different currencies.581 (6.035) – 69. scrip–wise and portfolio wise nominal limits.038 167 3.314. Bank’s net open position and Foreign exchange exposure limit (FEEL) is monitored and reported on daily basis.620 282 2.235 109.582.423 282 55.179.963 14.211.407 69.330) 876.

639 253.381 – – 10.095 2.191.021.553 (3.781 10.845 124.643 – – – – – – – – – – 137.5% to 14.249.900 173.871 6.144 – – – 2.201.897.004 83.713.711 12.315.441.754 (1.588 9.768.906.809 (39.5% Notes to the Financial Statements On–balance sheet gap Off–balance sheet financial instruments 23.644 – – – 2.000.581.210 (36.671 707.201 12.311. 2009 Total Up to 1 month (Rupees in ‘000) Over 1 to 3 months Over 3 to 6 months Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years to Yield/ Interest Risk Exposed to Yield/ Interest risk Not exposed 126 I MCB Bank Limited Effective Yield/ Interest rate On–balance sheet financial instruments 38.793.744 5.649) 90.649.797.670.845 23.275 852.811.945.500 – 11.309.333 – – – 124.333 124.948.287.952 – – – – – – – – – 1.133 – – – – – 2.156 55.709.598.338 38.292) 213.620 – 2.993 3.604.640 – – – – – – – – – 36.945.707 – – 7.733.720.949 1.315 – – 4.882 – – – – 28.749.662.625.000 165.385.376.744 – – 5.691 137.333 – 83.845 124.330 1.037.090 44.637 151.059.495.485 – – – 1.009.411 – – – – 56.454.610.904.133 2.640 2.182 795.439 – – – – – – – – – 360.43.052) 52.223.904.332 1.160 102.139.00% Liabilities 8.620 360.12% to 1% 12.292.516 – – – – – 2.214 83.000 17.605 9.312 – – 4.409.311.832.021.900 69.454.674 2.088 367.084.475 – – 1.099 (91.323) 88.470 – – – – 707.516 2.518. 2009 Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Other assets – net 0% 0.202 432.202 149.292.333 – 31.381 10.549 950.949 – 1.188.522.489 37.333 124.229.332.868.05% to 12.510 105.245.392 23.691 – – – – – – 8.475 For the year ended December 31.442.501 83.252.88% 15.787.720.670.292) 135.990 478.754 137.518.635.322 5.966.000 50.343.372 – 33.468 – – – – – 1.331.501 – – – 83.649) (36.194.70% 4.091 45.553 – – 11.090 – 128.000.332.067 – – – – – – – – – 19.322.760 1.709.643 – – – – – – – – – Foreign exchange contracts purchase Interest rate swaps – long position Cross currency swaps – long position Foreign exchange contracts sale Interest rate swaps – short position Cross currency swaps – short position Off–balance sheet gap Total yield / interest risk sensitivity gap Cumulative yield / interest risk sensitivity gap .126.774.906.322.343.171 179.604 – – 1.562 31.845 – (1.359 11.466 9.100.309.807 12.917 1.734 6.987.744 53.407 11.442 37.201.049.901.997.845 24.625.243.937 66.35% to 12.845 – – 124.662.543.000.490.797.058.624) Bills payable Borrowings Deposits and other accounts Other liabilities 12.787.663 – 5.508.040.450.662.513 – – 1.372 136.949.914.3 Mismatch of Interest Rate Sensitive Assets and Liabilities 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.707 7.814.468 1.333 – 83.144 19.055 50.016.50% 5% to 9.990 58.332 – – 1.194.297.513 136.483 14.

918.000 – – 7.535 19.794.565 – – – – – – – – – – – 980.476.977.920 286.833.926.636 21.275 – – – 48.194 (7.489 – – 7.823 – – – 4.771 73. .627.840.980.365.950.937 54.127 – 173.083.5 % On–balance sheet gap Notes to the Financial Statements Off–balance sheet financial instruments 26.769 980.228 266.180.751 166.213.100 4.937 414.117) 20.100 (7.551.572. 2009 Liabilities 10.282.996 1.667 173.130 (1.618 1.077 147.087 35.325.551 91.079 35.557 – – – – – 674.282 – – – – 45.221.247.144.100.122.20% 15.361) 128.263.055.530 88.260.90% 1.011 4.371 1.039.083.043.470 9.926 – – – – – – – – – – – (1.737 157.158 – – – 13.876 11.50% 5 % to 9.644.437 (1.481.2008 Total Up to 1 month (Rupees in ‘000) Over 1 to 3 months Over 3 to 6 months Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years to Yield/ Interest Risk Exposed to Yield/ Interest risk Not exposed Effective Yield/ Interest rate On–balance sheet financial instruments 39.644.081 12.442 262.365.127 20.275 (6.050.180.368 – 9.191 17.459.037.127 166.572.100.374) 129.055.571.135.823 – – 95.055.008.624 8.590.181.996 129.714.200 199.127 – – 173.127 – (1.865 – – – 35.824 10.561 – – – – – – – – – – 95.137.374) – 9.372.984 42.00% For the year ended December 31.450 21.373 17.646) Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Other assets – net 0.376 26.468 22.502.638.557 674.809) (14.254.549 41.325) 169.983.615.371 – – – 1.559 6.667 17.618.639 67.459.670.386.590.629.263.008 126.130 – – – – – – – – – Bills payable Borrowings Deposits and other accounts Other liabilities 15.086.399.291 – – – – 166.56% 18.612 39.314.450 69.780 18.409.463 – – 12.007.902.451) (1.396 13.057.130 173.097 19.471.310.975.743.042.551 35.617 4.080 24.827.427.629.329.823 131.996 – – – – – 95.172 4.182 13.663.223.361) – 980.315 37.079 95.742 696.127 98.530 19.837.325.794.125.215 44.131.384 – – – – – – – – – – Forward outright purchase – Govt.468 112.988 21.094 – – – – 4.840 330.385 8.024 27.057.437 – – – 4.050.75% to 21% 6% to 17.112 – – – 21.570 – – – – 708.277.158 13.667 173.260) 132.658.121 52.409.708.563.329.651 29.919.552 9.097 – – – 19.100 100.470 (77.591 160.076) 131.975.063 – – – – – 2.063 2.300 – – – – 173.631. securities Foreign exchange contracts purchase Interest rate swaps – long position Cross currency swaps – long position Foreign exchange contracts sale Interest rate swaps – short position Cross currency swaps – short position Forward outright sale – Govt securities Off–balance sheet gap Total yield / interest risk sensitivity gap Cumulative yield / interest risk sensitivity gap Annual Report 2009 I 127 Yield risk is the risk of decline in earnings due to adverse movement of the yield curve.406.927.055.551.656.851 97.375.357.751) (1.524 – – – – 286.752.376.005 – – 20.291 7.667 – – 184.818 – – 5.418 (17.882 2.932 2.617 372.823 129.882 – – – 2.827.769 – – – – – 980.996 – 95.

539 29.223.384. measure and manage in a timely manner the liquidity risk position of the Bank.714 385.904 Balance as per balance sheet Less: Non financial liabilities 439. decline in earnings. deposits concentration. MCB recognizes that liquidity risk can arise from the Bank’s activities and can be grouped into three categories: – Inflows/outflows from on–balance sheet items (other than marketable securities and wholesale borrowings) and off–balance sheet items.4 Liquidity Risk 478.179.813. The level of liquidity reserves as per regulatory requirements also mitigates risks. on its liquidity positions.402. such as reducing assets. Liquidity risk is a risk of not being able to obtain funds at a reasonable price within a reasonable time period to meet obligations as they become due. 2009 Reconciliation to total assets 2009 (Rupees in ‘000) 2008 Reconciliation to total liabilities 2009 (Rupees in ‘000) 2008 Balance as per balance sheet Less: Non financial assets Investments Operating fixed assets Other assets 509.372.880 3.213.623 12. including those caused by liability erosion and explicitly identifying quantifying and ranking all sources of funding preferences.414.384.301 Total financial assets 43. in the normal course of business. Treasury and Investment policy. liquidity management is among the most important activities that MCB conducts.549 Liquidity represents the ability to fund assets and meet obligations as they become due.743 6. Bank has policies to ensure that sufficient cash is maintained during the day to make payments through local payment system.014. MCB maintains borrowing relationships to ensure the continued access to diverse market of funding sources.432 17.672.091 372. to meet obligations.615. The policy of the Bank is to maintain adequate liquidity at all times. Managing Funding Sources Managing funding sources. modifying or increasing liability structure. 128 I MCB Bank Limited . and surplus liquidity has an opportunity cost which needs to be recognized. as per policy MCB maintain a portfolio of marketable securities that can either be sold outright or sold through a repurchase agreement to generate cash flows for meeting unexpected liquidity requirement.704 414.900 Total financial liabilities 432.137 12. Liquidity Management MCB’s liquidity risk management framework is designed to identify. repay depositors and fulfill commitments. Marketability of trading securities. – – Bank monitors and assesses the impact of increase in NPLs. expanded business opportunities.263. The Bank understands that liquidity does not come for free.Notes to the Financial Statements For the year ended December 31. The underlying policies and procedures include: Risk Management policy.200 Other liabilities Deferred tax liability 3. acquisitions and negative reputation.483.850 1. As a part of liquidity management. Because liquidity is critical to the ongoing viability of any financial institution. MCB’s liquidity risk management approach involves intraday liquidity management.754.807.896 11. and Capacity to borrow from the wholesale markets for funding as well as trading activities.164 437. MCB’s sound credit rating together with excellent market reputation has enabled MCB to secure ample call lines with local and foreign banks. managing funding sources and evaluation of structural imbalances in balance sheet structure.827 1. and using other alternatives for controlling balance sheet changes.105 30.811. MCB liquidity risk policy envisages to project the Bank’s funding position during temporary and long–term liquidity changes.826 18.196. deposits withdrawal.727 443.409.475.733 10. MCB’s investment in marketable securities is much higher than the Statutory Liquidity requirements. in all geographical locations and for all currencies and hence to be in a position. Intraday Liquidity Management Intraday liquidity management is about managing the daily payments and cash flows. Contingency Funding Plan and Limit Structure which are reviewed and approved regularly by the senior management /Board members.370.

590 22.779.134.481 1.468 144.610 177.517 – – – 5.434 332.826 257.741 2.225 38.724 40.046 32.088 367.43.949.186 10.431 80.489.365.364.377 – – – 415.600.705 24.762.201.032 12.460.019 2.638 – – – 30.711 4.340 164.033 3.525 – – 2.896 1.767 22.267 5.201.127 8.389 4. 2009 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Operating fixed assets Deferred tax assets Other assets – net Liabilities 8.868 307.839.993 3.269 39.378.687 – – 1.704.330.325.290 6.081 – – – 3.899.229.090.485 219.361.095 510.613.662.060.994.460 11.4.572 9.736 394.263.058.000.000 167.694.275 852.793.659 19.682.604 54.870 1.018.935 260.210.281.040.251.450.580 1.158 4.595.717 26.050 23.669 107.314.164 15.620 167.740.764 30.082 441.045 38.620.385.221 531.000 7.246 30.971 – – – 5.774.615 – – – – 4.998.857 356.145 45.000.013 6.478.817.734 6.1 Maturities of Assets and Liabilities – Based on contractual maturity of the assets and liabilities of the Bank 2009 Total Up to 1 month (Rupees in ‘000) Over 1 to 3 months Over 3 to 6 months Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years Assets 38.261.638.740.081 69.662.768 443.496.745 43.993 1.474 – 21.731 – 1.009.849.194 50.604.335.098.981 12.125.460.346.466 9.777 8.062.541 – – – 1.533.577 15.871 6.454.000 50.189 3.955.878 – – 1.748 – 4.774.146 818.082 4.662.171 308.693 For the year ended December 31.868 341.209.347 36.007 8.579.997.384.911.009.871 6.370.090 44.185.139.104.771 1.014.686 Bills payable Borrowings Deposits and other accounts Deferred tax liabilities Other liabilities Notes to the Financial Statements Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of assets – net of tax Annual Report 2009 I 129 .127 1.516 – 1.749) 91.136.664.548 69.949 3.062.195 201.740.386.315 36.844.441.069 5.119 18.561 90.834 23.744 103.097.678 1.144 113.928 26.090 33.694 869.418 15.013 (266.651 7.819.580 88.483.442 37.424.309.620 – 4.363 – – – 59.249.292.007 – 415.760 15.216 – – 9.028.049.475 109.387.000.465 253.932.679 – – 2.976.161 265.407 18.

558.882 299.162.172 4.436 39.802 – – – 45.667.400 6.735.862 71.668.766.377 12.013. the period in which these are assumed to mature has been taken as the expected date of maturity.794 1.421 8.094.070.868.375 1.818 – 1.888 – – – 1.918 77.283 911.364 4.189 58.374 – – – 4.733 1.100.874 31.997 17.733.050.468 9.817.043.578 95.663.582 46.884 15.043.533.435 20.768 10.100 4.263.255 1.492 1.851 – – – 57.196.767.346.112 91.181.895 106.502 11.258 53.038 – – – – 2.478 12.1 Maturities of Assets and Liabilities – Based on contractual maturity of the assets and liabilities of the Bank 2008 Total Up to 1 month (Rupees in ‘000) Over 1 to 3 months Over 3 to 6 months Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years 130 I MCB Bank Limited Assets 39.196 For the year ended December 31.830.380.631.823.890 1.376 21.172 4.674 19.055.386.343.882 365.741.271.768.453 Bills payable Borrowings Deposits and other accounts Deferred tax liabilities Other liabilities Notes to the Financial Statements Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of assets – net of tax When an asset or liability does not have any contractual maturity date.527.878.325.615 448.332 6.810.895 358.279 – 6.430 12.43.282.399.086.328.448.100 4.145.733.146 – – – 401.765 9.608.929.311 4.749 – – – 5.079 96.054 (205.642.789 77.080 85.893 51.677 – 10.470 17.145 25.048.235 151.860 – – 4.553 101.007.137 4.781 386.373 5.818 62.823.631.214.076 39.313.231 – – – 1.160 984.539.947 31.660 23.909.071.420.564.038 – – – 3.376. 2009 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Operating fixed assets Deferred tax assets Other assets – net Liabilities 10.002 2.530 19.145 5.768 36.743 – 401.191.680 6.050.769.083.461 75.840 330.193.873.624 1.050.730.429 227.551.348.318.731 911.633.812.087.400 1.080 502.253 – – 2.982 7.815 21.743 10.896 3.578 93.524 58.371 182.673 – 1.891 28.874 262.867.656.692 547. .468 22.590 273.152 5.177.135.476 444.551.140 1.079 26.120.475.286 10.406 455.625 – – – 4.054 6.863 – 4.771.436.752.236.436.925 53.018 1.712.746 1.4.002.130 294.145.966) 24.632.945 494.843 12.100.437 147.058.789 79.965 40.290 9.631.345.851 6.811 21.

694.638.452 28.189 3.911.309.572 9.235 58.325.082 4.145 45.269 39.364.060.246 30.460 11.496.678 19.768 443.104.760 15.478.033 16.088 367.460.4.796.082 441.4.600.651 7.387.794 84.095 510.915 – – 6.009.460.545.466 42.870 1.158 4.045.290 6.224.444.687 – – 19.868 341.669 107.993 1.361.098.859.817.771 1.431 80.517 – – – 5.221 531.809 – – 15.019 2.249.046 32.662.774.062.871 6.201. current deposits and saving accounts have been classified between all nine maturities.871 6.693 For the year ended December 31.324.195 201.734 91.450.725 167.134.833. it has been assumed that on a going concern basis.548 69.474 – 21.045 38.385. Current and saving deposits do not have any contractual maturity.844.465 253.659 19.225 38.161 265.108.682.818 219.481 1.668 54.062.868 307.43.000.180.748 – 4.216 – – 9.371.185.171 36.762.014.018.580 1.468 144.664.767 22.270.796 Bills payable Borrowings Deposits and other accounts Deferred tax liabilities Other liabilities Notes to the Financial Statements Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of assets – net of tax Refer the sub–note to note 43.040.039.468.788 126.261.407 18.058.935 260.595.049.580 88.194 50.826 257.620.442 122.986.890 415.283. 2009 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Operating fixed assets Deferred tax assets Other assets – net Liabilities 8.127 1.638 – – – 30.620 – 4.081 69.516 – 1.694 869.146 818.320) 18.615 – – – – 4.640.201.090.000.032 12.489.168.403.013 5.662.646.009.251.263.275 25.541 – – – 1.028.444 8.649.626 9.281.261 2.561 90.000 167.949.662.773 – – 8.090 33.577 15.267 5.741 2.740.386.834 23.050 23.186 10.736 394.721.2 Maturities of Assets and Liabilities – Based on the working prepared by the Asset and Liabilities Management Committee (ALCO) of the Bank 2009 Total Up to 1 month (Rupees in ‘000) Over 1 to 3 months Over 3 to 6 months Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years Assets 38.013 6.441.090 44.604.178 97.512 36.525 – – 2. Further. these deposits are not expected to fall below the current year’s level.579.125.538 109.779.411 3.209.997.014 113.340 164.819.318.483.717 26.774.745 43.000 7.210.081 – – – 3.460 4.434 332.135 18.896 1.875. Therefore.363 – – – 59.610 177.976.731 – 1.434 48.384.2 also.069 12.000 50.567 (54.314.971 – – – 5.127 8.424.897 2.007 – 6.704.993 3.000.714.705 24.740.433. Annual Report 2009 I 131 .452 22.711 4.

461 75.137 4.918 77.348.100 4.139 4.235 151. current deposits and saving accounts have been classified between all nine maturities.420.018.733 1.196 For the year ended December 31.436.631.145 17.325.607 8.100.888 – – – 1.478 12.979) 10.457) 10.896 3.743 – 6.890 6.302 294.997 45.140 1.553 101.079 26.177.508.050.283 911.863 – 4.417 91.929.789 77. Current and saving deposits do not have any contractual maturity.253 – – 17.050.667.925 53.43.429 227.947 31.925.811 21.100 4.631.375 22.953 (20.724) 25.374 – – – 4.390.680 6.080 502.902.386.079 96.376 95.874 95.895 358.965 40.945 494.468 9.054 6.380.623.789 79.862 71.070.502.346.362 61.677 – 10.762.181.677 182.624 1.038 – – – 3.043. Further.255 1.475.781 386.608.812.926.191.768.4.712.332 6.100.231 – – – – 1.692 547.025.271.145.802 – – – 45.633.364 4.840.094.196.827.830.707. 2009 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Operating fixed assets Deferred tax assets Other assets – net Liabilities 10.424.768 36.895 106.313.877 62.551.735.963.018 1.172 4.780.057 Bills payable Borrowings Deposits and other accounts Deferred tax liabilities Other liabilities Notes to the Financial Statements Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of assets – net of tax Refer sub–note to note 43.399.615 448.071.286 10.647.904.731 911.564.152 5.558.086.642.749 – – – 5.947.602 (2.313 (3.551.438.612 57.843 12. these deposits are not expected to fall below the current year’s level.343.058.038 – – – – 2.818 – 1.2 also.788.087.867.376.400 1.868.296 57.530 19.893 51.193.578 93.860 – – 15.982 7.823.817.524 58.4.765 9.625 – – – 4.502 85.873.522 18.448.172 4.048.586 3.662 147.279 – 6.811.590 35.730. .263.430 12.674 19.952.421 8.679 – – 5.436.470 17.840 330.595 31.160 984.965.135.436 39.884 15.043.874 262.189 58.850 – – 5.617 25.769.345.468 22.402 365.054 31.396 401.746 1. Therefore.400 6.794 1.214. it has been assumed that on a going concern basis.803.492 1.631.878.810.282.076 39.145 25.668.2 Maturities of Assets and Liabilities – Based on the working prepared by the Asset and Liabilities Management Committee (ALCO) of the Bank 2008 Total Up to 1 month (Rupees in ‘000) Over 1 to 3 months Over 3 to 6 months Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years 132 I MCB Bank Limited Assets 39.578 95.013.673 – 1.965 97.663.406 455.851 6.105.373 5.476 444.766.823.

2010 has announced a final cash dividend in respect of the year ended December 31. NON–ADJUSTING EVENT The Board of Directors in its meeting held on February 25. commission and brokerage income Other Liabilities Investments Others (Administrative expenses) 45. loss database management. ORMD is independent of revenue generating functions. 2009 43. ORMD has active coordination with audit and compliance for information sharing on Key Risk Indicators (KRIs) with respect to management of various operational risk aspects within the bank. 3.5 Operational Risk Operational Risk is risk of loss resulting from an inadequacy or a failure ascribable to people. 46. enhancing operational risk awareness through workshops and sessions. but excludes strategic and reputational risk.531 375.000 216. M. impact analysis and recommendations for improvement in control / risk mitigation. 2010. The Risk Management Policy and bank–wide Operational Risk Management Framework (ORMF) have been developed in line with international best practices. 44. 43. ORMD initiated the process of collecting loss data on key risk events in the year 2007. Operational Risk Management Division (ORMD) within Risk Management Group (RMG) is primarily responsible for oversight of bank–wide operational risk management. Major processes for operational risk management include. GENERAL Comparative information has been reclassified and rearranged in these financial statements for the purpose of comparison. Although. risk and control self assessment exercises. 2009 do not include the effect of these appropriations which will be accounted for subsequent to the year end. DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue by the Board of Directors of the Bank in their meeting held on February 25. The report covers the significant risk events.Notes to the Financial Statements For the year ended December 31. No significant reclassification has been made except for as follows: Reclassified Description Amount (Rs.5 per share) and bonus shares issue of 10% (2008: 10%). ORMD provides assistance and guidance for proactive operational risk management. 2009 of Rs. a number of initiatives are underway for adoption of The Standardized Approach (TSA) / Alternative Standardized Approach (ASA) like business line mapping.244 Other income Deposits and other accounts Advances Salaries and allowances Fee. ORMD generates reports for senior management and Risk Management and Portfolio Review Committee (RM&PRC) of the Board. respective business and support functions are the risk takers / owners. Muneer Director Dato’ Mohammed Hussein Director Mian Umer Mansha Director Annual Report 2009 I 133 .665 92. However.1 Operational Risk–Disclosures Basel II Specific Currently. Atif Bajwa President and Chief Executive S. These financial statements for the year ended December 31. processes. 2. the Bank is reporting operational risk capital charge under Basic Indicator Approach (BIA). The policy and framework are reviewed periodically so as to incorporate the current changes. but not limited to Risk and Control Self Assessment. technology or external events.5. Based on periodical analysis of loss data.5 per share (2008: Rs. This definition includes legal risk. in 000) From To Exchange income on import / export bills purchased / negotiated Key Deposits Account and collection of Zakat Account Islamic Sukuk Certificates of Maple Leaf Cement Factory Limited Contractual security guard cost 86.

600 175.150 134 I MCB Bank Limited .408 244.000 185.205.024 29.822 30.469 55.253 147.327 300 1.105 191.208 6.761 40.585 34.000.720 918.358 4.410 136.288 309.602 Fully Paid–up Ordinary Shares Abbott Laboratories Pakistan Limited Allied Bank Limited Arif Habib Limited Arif Habib Securities Limited Askari Bank Limited Atlas Bank Limited Attock Petroleum Limited Bank Alfalah Limited Bank Al–Habib Limited Century Papers & Board Mills Limited EFU General Insurance Limited EFU Life Insurance Company Limited Engro Chemical Pakistan Limited Fauji Fertilizer Bin Qasim Company Limited Fauji Fertilizer Company Limited Glaxosmithkline Pakistan Limited Habib Bank Limited Habib Metropolitan Bank Limited Hub Power Company Limited IGI Insurance Company of Pakistan Limited Indus Motor Company Limited International Industries Limited Jahangir Siddiqui and Company Limited Kohinoor Energy Limited Kot Addu Power Company Limited Lucky Cement Limited Mehr Dastagir Textile Mills Limited Maple Leaf Cement Company Limited Millat Tractors Limited National Bank Of Pakistan National Refinery Limited Oil & Gas Development Company Limited Orix Leasing Pakistan Limited Packages Limited Pak Suzuki Motor Company Limited Pakistan Cables Limited Pakistan Oilfields Limited Pakistan Petroleum Limited Pakistan State Oil Company Limited Pakistan Telecommunication Company Limited Pakistan Tobacco Company Limited Rupali Polyester Limited Soneri Bank Limited Sui Northern Gas Pipelines Limited Samba Bank Limited (Formerly Crescent Commercial Bank Limited) 135.081 50.916 48.905 12.515 218.404 298.670 30. 2009 Rupees (Rupees in ‘000) Fully Paid–up Preference Shares Azgard Nine Limited Masood Textile Mills Limited 1.925 440.361 64.406.192 477.902 166.750 16.303 214.927 50.189 219 496 867 4.672 1.803 120 76 6.990 97.920 21.600 4.000 1.098 16.720.911 49.419.011 880.728.741 484.931 24.654 1.106 822 369 177.241 5.546 2.120 5.490 42.1 1.937 1.536 46.083. 2009 1 Annexure I Particulars of Investments in listed companies.040 7.475 119.655 35.600 86.000 1.831 45.066 1.000 10 10 11.837 54.716 420.833.674 5.199 108.602 50.963.437 316.500 59.000 61.443 1.032.566 62.941 18.530 8.774 18.602 50.399 4.149 4.453.847 17.665 5.855 2.754 1.023 322.358.375 1.387 6.731 138.132 10.028 14.275 179.335 590 20.216 22. mutual funds and modaraba – available for sale Investee Entities Note Number of Ordinary and preference shares/ certificates/ units held Paid–up value per share/ certificate/ unit Total paid–up/ nominal value Cost as at December 31.593 217.875 5.432 1.018 23.000 11.840 690.092.644 177.Notes to the Financial Statements For the year ended December 31.006 30.412 8.251 23.700 658.035 2.616.207 9.227 4.188 222.582 15.027 382.630 25.000 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 1.490 25.545 3.512 1.912 3.022.529.169 68.266 6.110 83.172 47.239.181 1.220 1.356 28.169 38.565 550 14.543.828 11.600 2.893.405 420 3.299 53.569 676.004 301.292 109.200 284.156.160.332 5.844.260 12.094 15.

2009 Investee Entities Name of Management Company Number of Ordinary and preference shares/ certificates/ units held Paid–up value per share/ certificate/ unit Annexure I Total paid–up/ nominal value Cost as at December 31.730 502.710) 146.856 6.981 100.000 250. 2009 Rupees (Rupees in ‘000) Thal Limited The Bank of Punjab Trust Securities & Brokerage Limited Unilever Pakistan Limited United Bank Limited Zulfiqar Industries Limited Total Fully Paid–up Modaraba Certificates First Al–Noor Modaraba 44.000 10.000 33.001 Carrying value before revaluation & provision Provision for diminution in value of investments Surplus on revaluation of securities Market value as at December 31. 10 per share plus any accumulated preference dividend.704 305 4. 2009 (Rupees in ‘000) MCB Dynamic Cash Fund Atlas Islamic Fund MCB Dynamic Stock Fund (IPO) MCB Dynamic Allocation Fund (IPO) MCB Asset Management Company Limited Atlas Asset Management Company Limited MCB Asset Management Company Limited MCB Asset Management Company Limited 3.537 5 10 10 50 10 10 224 64.000 82.664 23.606 Carrying value (before revaluation and provision) listed shares ‘available for sale’ Provision for diminution in value of investments Surplus on revaluation of securities Market value as at December 31.000 442.967 833.423.387 100.000 47.256 170.557 7.397 Cost as at December 31.370.270 Management (Private) Limited 10 55. 2009 1.644 3.1 These are redeemable after the end of the fourth year from June 2005 at the option of the issuer either in whole or multiples of 10% of outstanding issue at a price of Rs.133.165.Notes to the Financial Statements For the year ended December 31.400 30.006 Al–Noor Modaraba 5.280 2.231 3.996 3.70 60.484 83. Annual Report 2009 I 135 .402.000.420. 2009 Fully Paid–up Ordinary Certificate/ Units of Mutual Funds Name of Management Company Number of units held Paid–up value per unit Rupees Total paid–up/ nominal value 7.169 4.011.986) 690.981 (87.892 238.874 1.553. Dividend rate is 6 months KIBOR + 200 bps per annum.000 1.000 100 500 100 100 316.204 20.520 10.214 (3.100 300.532.

000 18 300 100.000.500 300. The percentage of holding disclosed is in proportion to the preference share paid up capital.500 197 2. Muzaffar Mahmood Khan Mr.738 22 737 736 1.* 250.638.781 156.60% 10.000.000 19.681 52. 2.500 500.045 26.000 985.500 1.843 (71.000. 2008 June 30.000 321. 2009 June 30. 2009 2 Particulars of Investment held in unlisted companies–available for sale Company Name Percentage of Number of shares / holding certificates held (%) Cost as at December 31.527 100 10.619 2. 2008 March 31.200 1. Chughtai Mr. Berdi Mr.261 2.000 3.490.034 110.446 50.00% 1.000 36.000 30. Kamran Hafeez Mr.150. 2009 December 31.000 – Mr.500 2.Amarasena Mr.P.1 These carry dividend rate of 6 months KIBOR + 2.000 100.* Ayaz Textile Mills Ltd.500 5.604.383 715 5. Chaudhry Abdul Majeed Mr. Asif Ali Khan Abbasi Mr.000 11.106 2.500 Shareholding upto 10% Fully paid up Ordinary Shares/ Certificates/ Units First Capital Investment Limited National Institute of Facilitation Technology Private Limited National Investment Trust Limited SME Bank Limited Pakistan Agro Storage and Services corporation Arabian Sea Country Club Society for Worldwide Inter Fund Transfer (SWIFT) Credit Information Bureau of Srilanka Lanka Clear (Private) Limited Lanka Financial Services Bureau Limited Equity Participation Fund* Al–Ameen Textile Mills Ltd.716) 442. 2009 Mr. 2008 December 31.* Custodian Management Services* Musarrat Textile Mills Ltd.383 92. Tariq Iqbal Khan Mr. Anil Amrasoriya – – – – – – 18. 2007 March 31. Mohammad Hanif Jhakura 40.485 79.Notes to the Financial Statements For the year ended December 31. Ashfaq A. Sarath Silva Mr. 2009 June 30. Sheikh Naseem Ahmed 136 I MCB Bank Limited . N.700 225. 2009 December 31.000 10. R.922 14.127 2. A.000 1.421 June 30.000 5.252 1. 2009 December 31. Ghalib Nishtar Mr.00% 10.000 15.H.* Sadiqabad Textile Mills Ltd. 513. Lazara Campos Mr.1) Fully paid up Ordinary Shares/ Certificates/ Units Pak Asian Fund Limited Khushhali Bank Limited Central Depository Company of Pakistan Limited 10.5% per annum.250 100. 2009 June 30.047 330. 2009 – – – – – – Mr.343 Cost of unlisted shares / certificates / units Provision against unlisted shares Carrying value of unlisted shares / certificates / units * These are fully provided unlisted shares. 2008 December 31. 2009 (Rupees in ‘000) Net Asset Value of total investment Annexure I Based on audited financial statements as at Name of Chief Executive Shareholding more than 10% Fully paid up preference shares Fazal Cloth Mills Limited (2.426 926 – – – – – – June 30.000 100.22% 17.120 429 1.

000 100.000 198.a. 0.7% p. 99. II 39.26% of principal amount in the first 500.740 ––do–– – issue no. Particulars of investments in Term Finance Certificates and Sukuk Bonds– (refer note 9) Investee Number of Paid up certificates value per held certificate (Rupees) LISTED TERM FINANCE CERTIFICATES – available for sale Askari Bank Limited – issue no.600.000 449.000.940 Mr.000 6 months KIBOR + 1.25% each starting from the 84th month from November 2005.548 Mr.000 78 months and remaining principal in three semi –annual installment staring from the 84th month.000 6 months KIBOR + 1. 0.900. Muhammad Shakil Deficit on revaluation of securities Market value of sukuk bonds (3.000 150. III 56. 2009 (Rupees in ‘000) Name of Chief Executive 99.25% each of the issue amount starting from the 84th month from November 2004.25% of principal in the first 78 months 49.000 ––do–– 89.5% p.000. ––do–– 149.137 Annual Report 2009 I 137 .a.720 5.900.R.a.a.000 6 months KIBOR + 1. In 4 semi annual equal installments starting from the 78th month from May 2005. II 10.000 6 months KIBOR + 1.720 748. Sirajuddin Aziz – issue no.5% p.890.000.295 months and remaining in 3 semi annual installments of 33.3% of principal amount in the first 90 months and the remaining principal in the 96th month from February 2005.000 99.5% p. 284.000 100.a.980 Bank Al Habib Limited 20. 99. Bokhari Pak Arab Fertilizers Limited 20. II 19.000 5.5% p.Notes to the Financial Statements For the year ended December 31.a.000 5.000 6 months KIBOR + 1.000 Soneri Bank Limited 30.3% of principal amount in the first 90 months and the remaining principal in the 96th month from October 2005.000 250. 0.a.6% p. 6 months KIBOR + 1.32% of principal amount in the first 96 months and remaining principal in four equal semi annual installments starting from the 102nd month from issue.000 284.000 6 months KIBOR + 2.95% for next five years 250. Mr.000 6 months KIBOR + 2. In six stepped –up semi–annual installments starting from the 30th month from July 2007.730 Mr.904 and remaining principal in 3 semi–annual installments of 33.600. Abbas D.000 5.978 5.000 50.000 Mr. Safar Ali K. III 100.233) 1.a. principal in 3 semi–annual installments from the 84th month from July 2004. Mehakri – issue no.777 (96.02% of total issue in equal installments 99.000 500.5% p. Fawad Ahmed Mukhtar Carrying value before revaluation Deficit on revaluation of securities Market value of listed TFCs (revalued amount) SUKUK BONDS – available for sale Terms of Redemption Principal Interest At maturity Half–yearly Rate of interest 6 Month KIBOR+0.000 6 months KIBOR + 1. Lakhani United Bank Limited – issue no.000 Mr.000 5.25% of the principal in the first 78 198. III 50. 0.000. 0.831.735.5% p.000 5.a.5% in first 78 months and the remaining and 10% per annum respectively. 0. Habib Bank Alfalah Limited – issue no.2% of the principal in the first 60 months and remaining principal in 6 equal semi annual installments from September 2006. I 20.000.980 5.000 100.000 6 months KIBOR + 1. Total Paid up Value (before redemption) Profit Principal Redemption Annexure I Balance as at December 31.000 5. 0. 2009 3. Atif R.5% p.800 with a floor and cap of 3.5% p.a. 0.863) 396.35% Currency 1. ––do–– – issue no.544 WAPDA Sukuk Bonds PKR 400.820 Mr.000 5. 149.000. for first five years & 6 months KIBOR +2.000.

Ahsan Saleem 1.000 Islamabad Electric Supply Company Limited Gujranwala Electric Supply Company Limited Faisalabad Electric Supply Company Limited Carrying value of unlisted TFCs 200.000.000 5.810 At maturity At maturity At maturity In 8 unequal semi–annual installments.000 5.702 400.000 232.30% for next 5 years.15% 6 Month KIBOR+1.a. will be paid at maturity 3 months KIBOR + 1.35% 3 Month KIBOR+1.087.000 280. Details of Bonds.a.23% p.000.500 375.45% p. In 4 equal semi–annual installments starting from November 2009.000 175.50% 3 Month KIBOR+1.88% US$ 8. Quarterly installments starting from March 23.000 1. debentures.000 JDW Sugar Mills Limited Kashaf Foundation Shakarganj Mills Limited 45.85% p.a.000. In 4 equal semi–annual installments starting from November 2009.000 1. Redemption due in two installment falling in April & July 2010 6 Month KIBOR +2. 6 Month KIBOR +0.000 Allied Bank Limited 46.000 Mr.000 200.000 Mr.2% 6 Month KIBOR+0.000 70.85% SLR 135.000 112.a.583 At maturity Half–yearly 21.000 99.000.000 80.a.000 5.25% p.23% p. over 10 years 279.5% to 2.000 16. In 18 unequal quarterly installments. In 4 equal semi–annual installments starting from November 2009. 2009 (Rupees in ‘000) Name of Chief Executive Total Paid up Value (before redemption) Profit Jahangir Siddiqui and Company Limited 56 5. At maturity Half–yearly Half–yearly Quarterly Half–yearly Half–yearly Quarterly Half–yearly Half–yearly 6 Month LIBOR+2.129 684.384 Mr.000 1.25% 6 Month KIBOR+1. 6 months KIBOR + 0.25% p.000 5.000 5. 2009 (Rupees in ‘000) Debentures Singer (Sri Lanka) Plc.727 250.000 5.a.000. bonds and participation term certificates of companies which are fully provided for in these financial statements.000.000 1. 6 Month KIBOR +0.00% PKR – 286.a.Notes to the Financial Statements For the year ended December 31.000 262. In 12 equal semi–annual installments.102 – – – – – – – 13.a.000.000. Munaf Ibrahim 200.W Sugar Mills Limited Sukuk Bonds Sitara Energy Limited Century Paper and Boards Mills Limited Sukuk Bonds Euro Bonds Euro Bonds – OBU Bahrain Treasury At maturity Half–yearly 6. 6 months KIBOR + 1.38% of principal amount in the first for first five years & 6 months 114 months and remaining principal KIBOR+1.D. Jehangir Khan Tareen Roshaneh Zafar Mr. starting from 8–1/2 years from December 2004.557 138 I MCB Bank Limited .000 200.753.714 80.000 500. 2010 3 months KIBOR + 2.000.098 Raja Abdul Ghafoor Muhammad Ibrahim Majoka Tanveer Safder Cheema The above excludes unlisted term finance certificates.000 75. In 5 equal semi–annual installments commencing from the 36th month from June 2005.400 5.35% US$ PKR PKR PKR PKR PKR PKR PKR 13. 3 months KIBOR + 1.000.70% 6 Month KIBOR+1. 6 Month KIBOR +0.000 80.000.414 Government Compensation Bonds Public Sector Enterprises Bonds (PSE–90) Sukuk Bonds Government Sukuk Bonds WAPDA Sukuk Bonds Sui Southern Gas Company Limited Sukuk Bonds Maple Leaf Cement Factory Limited Sukuk Bonds Quetta Textile Mills Limited Sukuk Bonds J. In 10 equal semi–annual installments starting from 18th Month from the date of issue date. In 8 equal semi–annual installments.000.000 4. Aftab Manzoor 225. 4.000. Shamas ul Hasan 232.000 Mr. Federal Government Securities Government of Pakistan Yearly Yearly Barclays Bank’s 3 months USD LIBOR +1% US$ 2.000.000 5.000 Pak Kuwait Investment Company (Private) Limited 100.23% p.000.2% p. 2009 Investee Number of Paid up certificates value per held certificate (Rupees) TERM FINANCE CERTIFICATES – held to maturity Annexure I Principal Redemption Balance as at December 31.929 At maturity Yearly 9.000 In 4 equal semi–annual installments. 0.103.000.25% p.4% 6 Month KIBOR+1.037 171.000 1. Debentures and Federal Government Securities (refer note 9) – held to maturity Description Principal Terms of Redemption Interest Rate of interest Currency Foreign Currency Amount (‘000) Carrying value as at December 31.000 16.000 225.000 2.102 1.a.

13% 2008 First Women Bank Limited (unaudited based on September 30.064 18.421.157.302 9.Notes to the Financial Statements For the year ended December 31.372 ** 5.893.13% Annual Report 2009 I 139 .481.087 32.082 5.491 5.310.463.860.002 20.78% Pakistan 21.263 369.765 26.064.268.882.292 29.482.305 1.817 2.009.868 ** 5.163.561 26.187 3.389 10.085 11.561.472.748 29.187.308.99 * 99.997 123. 2009) Adamjee Insurance Company Limited (unaudited based on September 30.964 2.625.99 95 Pakistan Pakistan Hong Kong Pakistan Azerbaijan 1992 2001 2005 2005 2009 Net assets (Rupees in ‘000) Revenue Profit after tax % of interest held 2009 First Women Bank Limited (unaudited based on September 30. profit and net assets of associated undertakings are as follows: Name of associated undertaking Country of incorporation Assets Liabilities * 99.300 10. liabilities.236 1. 2008) * Represents net mark–up / interest income ** Represents net premium revenue Pakistan 8. 2009) Pakistan 10. 2009 5 Investment in subsidiaries Details of the Bank’s subsidiary companies are as follows: Name % of holding Annexure I Country of incorporation Year of incorporation MCB Financial Services Limited ( Formerly Muslim Commercial Financial Services (Private) Limited) MNET Services (Private) Limited MCB Trade Services Limited MCB Asset Management Company Limited “MCB Leasing” Closed Joint Stock Company * Remaining shares are held by certain individuals as nominees of the Bank.645. revenue.791 10.592 * 7.018 3.95 100 * 99.063.408.307 10.363.228 11.78% Pakistan 21.833. 2008) Adamjee Insurance Company Limited (unaudited based on September 30.646.150 * 94.364.582 29.316.499 7. 6 Summarized financial information of associated undertakings (refer note 9) The gross amount of assets.

2009 Annexure II Islamic Banking Business Report of Shariah Advisor Based on review conducted in terms of Para B (2) of Annexure–I of SBP–IBD Circular No. Dated: February 25. profit sharing ratios. iv) Earnings realized from sources or by means prohibited by Shariah rules and principles have been credited to charity account. the relevant documentation and procedures adopted by MCB Islamic Banking Division. each class of transaction. it is reported that. profits and charging of losses (if any) relating to PLS accounts conform to the basis vetted by me in accordance with Shariah rules and principles. i) I have examined. 2010 Muhammad Zubair Usmani Sharia Advisor MCB– Islamic Banking Division 140 I MCB Bank Limited . SBP regulations and guidelines related to Shariah compliance and other rules as well as with specific fatawa and rulings issued by me from time to time. iii) Allocation of funds. 02 of 2008. on test check basis. weight–ages. ii) Affairs of MCB–Islamic Banking Division have been carried out in accordance with rules and principles of Shariah.Notes to the Financial Statements For the year ended December 31.

064 1.500 5.998 4.573.760 2.553 73.598 7.500) 1.061.700) 2.553 Remuneration to Shariah Advisor / Board CHARITY FUND Opening Balance Additions during the year Payments / utilization during the year Closing Balance 2.227 1. 2009 (2008: 11 branches).130.725.734 1.493 271.200 15.177 1.650 244.991 8.405.766 1.350 1.271 1.779 231.499 75.681 966.368 771.303 – 2.364 1.600.520 1.697 8.000 209.271 185. Balance Sheet As at December 31.073 LIABILITIES Bills payable Deposits and other accounts – Current accounts – Saving accounts – Term deposits – Others Borrowings from SBP Due to head office Deferred tax liability Other liabilities NET ASSETS REPRESENTED BY Islamic banking fund Unappropriated profit Surplus on revaluation of assets – net of tax 850.740 2.671.307 3.064.561.498 1.197.000 6. 2009 Annexure II Islamic Banking Business The Bank is oiperating 11 Islamic banking branches at the end of December 31.921 859.540 175.450.727 2.781.110.000 214.511) 1.405 (1.750.093 1.657 872.061.137.566 (3.239. 2009 2009 (Rupees in ‘000) 2008 ASSETS Cash and balances with treasury banks Investments Financing and receivables – Murabaha – Ijara – Islamic export refinance Deferred Tax Asset Other assets 315.064 (2.352 2.192.790 1.843 9.277.793 1.762 978.928 Annual Report 2009 I 141 .466.921 12.350 872.116 1.093 1.200 650.Notes to the Financial Statements For the year ended December 31.000 – 420.

736 – – 37.430 279.180 652.868 289.263 – 302 107.551 548.927 – 209.403 37.629 107.595 300.683 10. 2009 2009 (Rupees in ‘000) 2008 Income / return / profit earned Income / return / profit expensed 974.446 14.064 6.Notes to the Financial Statements For the year ended December 31.430 – – 10. 2009 Annexure II Islamic Banking Business Profit and Loss Account For the year ended December 31.061 – 866 90.299 – 1. commission and brokerage income Dividend income Income from dealing in foreign currencies Other Income Total other income Other expenses Administrative Expenses Other provisions / write offs Other charges (Penalty paid to SBP) Total other expenses Extra ordinary / unusual items Profit before taxation 37.848 90.414 838.253 Provision against loans and advances – net Provision for diminution in the value of investments Bad debts written off directly Net profit / income after provisions Other income Fees.770 21.526 13.565 – 214.951 321.921 142 I MCB Bank Limited .678 16.102 – 7.736 283.766 321.

Mark up Reliefs Written off Provided Total Sr. P. Mandi bahauddin 270–34–327506 270–41–327507 116–91–995162 Muhammad Ghafoor Mian Ahmed Yar W/O M R Saleem Mian Muhammad Arif 7. Galla Mandi. Ferozepur Road. Rizwan Mehmood 750 3 AMERICAN BEVERAGES CORPORATION 13 Durand Road. Lahore 34401–1652212–7 Mian Muhammad Ramzan Afzaal Sharif 871 – 871 – – 871 871 10 MUHAMMAD ARIF R/O Rukkan. Khas. No NIC No.722 4. R/o Saidu Sharif. Islamabad i) Syed Mohammad Ismail ii) Junaid Ismail i) Syed Yousaf Ali ii) Syed Mohammad Ismail 3. Lahore 289–74–247430 Muhammad Siddique 2.658 12 MR. 35202–3581212–5 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 1 AL REHMAN ENGG WORKS 94 – Fruit Market.610 – 5.937 – – 646 646 Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin.510 Notes to the Financial Statements 8 AFZAAL SHARIF Room NO 214 LSE Building.112 – – Mr.775 4 M IMRAN House No 13. Badi–uz–Zaman 3.797 1.Tehsil & District Narowal 265–89–026787 265–85–026788 265–89–210305 35202–3364893–6 Ch.O.304 657 – 3.151 26. Lahore 35202–2740250–1 Malik Nazeer Hussain 2.841 – – 2. 83 – D. Lahore.610 5. 2009 5 AFZAL & CO.214 – 9.O.011 – – 711 711 11 M R Saleem (PVT) LTD M R Saleem Rehmat Noor 3. Lahore 35202–3364893–6 Ch.359 39.024 1. in ‘000) Father’s/Husband’s Name Principal Intt/Acc/Mup Muhammad Azeem 2. Main Road Salamat Pura. Ijaz Ahmed 2 RIZWAN & CO.151 – 26. Lahore 35201–9241168–9 Muhammad Ashraf 4. Jawad Khurshid Ahmad Hammad Khurshid Ahmad Aitzaz Khurshid Ahmad 39. Badomalhi .531 – – 1. Street No 1. Muhammad Imran 981 981 For the year ended December 31.257 – 6.999 319 45 4.793 – – 750 Mr. Tehsil Malkwal Dist.Muhammad Sharif 657 3.534 – 3.997 1.200 104 3.405 9. Mehmood Ali Ch 1.775 Mr. Allama Iqbal Town.658 2. New Muslim Town Lahore 34501–6155620–3 Muhammad Sharif Bhatti 1.363 – – 588 588 .412 525 – 2.(Rs.510 13.584 3.647 Mian Khurshid Ahmad Mian Khurshid Ahmad Mian Khurshid Ahmad 13.885 3.379 9 AFZAAL PETROLEUM Room NO 214 LSE Building.297 Mr.759 – Mr.089 – 5.015 Annexure III Annual Report 2009 I 143 13 JUNAID ENTERPRISES Attaturk Ave G–6/4.061 298 Sarfraz Mohsin – – 572 572 7 STYLE ENTERPRISES (PVT) LTD Kamahan Road (Off Bus Stop) 16 KM. Airport Swat i) 61101–2348911–5 ii) 61101–1473675–5 Mr. BADI–UZ–ZAMAN.281 479 – 2.993 1. Malik Afzal (Late) – 596 596 6 ARSLAN TRADERS Village Fattoke P. Hafizabad 35202–7710843–7 Mohammad Ali Ch 1.999 793 – 3.245 30 8.Muhammad Sharif – Afzaal Sharif – 4.

Faisalabad Abid Anwar Faiq Javaid Javaid Anwar Farhat Jahan Naggen Faiq Samina Begum Shaiq Javaid 35.870 3. Ahsan Rasheed Rashid Ahmad Faisal Rasheed Muhammad Zeeshan Muhammad Shakeel 15 PAKISTAN SEED SERVICES C Plot Sindihianwali Road.701 19 J K SPINNING MILLS LIMITED Abid Anwar Faiq Javaid Javaid Anwar Farhat Jahan Naggen Faiq Samina Begum Shaiq Javaid 3.140 90 41.230 41.642 – 29.090 Khizar Hayyat For the year ended December 31. 2009 16 AL NOOR PROCESSING & TEXTILE MILLS (PVT) LIMITED.090 14. Muhammad Hanif 3.511 Mian Anwar Elahi Javaid Anwar 5.090 3. Shujaabad Road Multan.701 1.832 22.642 29.(Rs.242 1.511 Mian Anwar Elahi Javaid anwar Mian Anwar Elahi Zahid Anwar Faiq Javaid Mohammad Zakirya Javaid Anwar 10.121 – – 960 960 Annexure III 20 CHENAB COTTON GINNING & OIL MILLS Mauza Jhoke Gamun Lare.872 . Muhammad Rizwan 12.511 13.147 6.701 22. Mark up Reliefs Written off Provided Total Sr.631 6.631 Notes to the Financial Statements 18 J K FIBER MILLS LIMITED 3–1/A. Peoples Colony. Sargodha Road.707 – – – 517 517 Intt/Acc/Mup Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin.158 – – 632 632 465 1.872 12. No NIC No. in ‘000) Father’s/Husband’s Name Principal Rashid Ahmad Nazir Ahmad Rashid Ahmad Mouhammad Yousaf Abdul Rasheed Mian Muhammad Murad 214 861 83 1.044 – – 22. Fsd Riaz Ahmad Shaikh Amir Riaz Shaikh Muhammad Saeed Shaikh Sh Faisal Riaz Muhammad Saad Shaikh Bashir Ahmad Muhammad Hassan Riaz Shaikh Uzair Saeed 17 FINE FABRICS (PVT) LIMITED 3–1/A Peoples Colony. Muhammad Najeeb 4. Pir Mahal 33100–5073801–9 33100–5073801–9 33102–1809203–9 33100–4704334–9 33100–9089265–9 33100–6182504–1 33100–2418142–1 33100–6340341–5 246–44–237624 246–81–329084 246–44–237624 246–81–329084 244–40–669051 244–46–255473 246–89–410204 246–54–237625 244–76–669052 246–44–237624 246–81–329084 244–40–669051 244–46–255473 246–89–410204 246–54–237625 244–76–669052 322–48–764267 322–59–637991 322–62–637986 322–65–637997 Haji Hussain Bux Haji Hussain Bux Haji Hussain Bux Muhammad Ramzan Mian Anwar Elahi Javaid anwar Mian Anwar Elahi Zahid Anwar Faiq Javaid Mohammad Zakirya Javaid Anwar 650 960 1. Nalka Kohala.631 1. Faisalabad Abid Anwar Faiq Javaid 6.289 – – Haji Muhammad Jahanda Riaz Ahmad Shaikh Haji Bashir Ahmad Riaz Ahmad Shaikh Riaz Ahmad Shaikh Haji Mohammad Boota Riaz Ahmad Shaikh Muhammad Saeed Shaikh 11.960 – – 3. Fsd. 1. Ghulam Hussain 2. 33100–6570502–7 33100–3922751–7 33100–8511457–9 33100–5100454–3 33100–0290146–7 335–69–234907 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 144 I MCB Bank Limited 14 SIDIQUE PROCESSING MILLS (PVT) LTD Sargodha Raod.

M. 6/29. Amir Iqbal Mr.638 337 – 648 985 28 SEHAR CORPORATION 105. Kh. Ghulam Rasool 4.724 Annexure III Annual Report 2009 I 145 N/A N/A N/A N/A 30 KASHMIR PLOYTEX LTD Industrial Estate Mirpur Azad Kashmir Mr.867 371 26.990 648 – 2.I Chundrigar Road Karachi 42301–0861540–0 42000–9705786–5 42401–4129606–5 61101–1912023–3 507–28–038572 507–52–038573 507–86–038579 42101–836838–4 S/o Mian M. 345–88–023564 345–77–333783 345–49–069001 345–68–197723 345–75–565389 345–72–023565 345–73–197724 345–25–197719 36302–9279957–9 36302–0458568–3 36302–3799833–7 36302–3953552–9 36302–7531877–7 36302–0458520–5 36302–9514374–1 354–61–163199 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 21 DATA COTTON GINNING PROCESSING & OIL MILLS Tail Wala Road Chak NO 110 DB. Kh. Muhammad Irshad 3.724 20. Zahd Bilal Mr. M.238 26.025 – 139.000 701 27 1. Muhammad Yousaf Kh. Ghulam Dastgir Kh.5 S/o Abdullah Dawood 6.314 27 HAFEEZ RASHEED SONS 82–C. No NIC No. Muhammad Abdullah Abdul Ghani 1.797 43. M. in ‘000) Father’s/Husband’s Name Principal Intt/Acc/Mup Ilam Din Ghulam Sarwar Ali Muhammad Ilam Din Muhammad Younas Muhammad Younas Ilam Din Nawab Din Kh.770 1.376 25. Muhammad Yousaf 3. Ghulam Dastgir Kh. Muhammad Yousaf 13. 5th Floor State Life Building I. Mohammad Younus Khan Mrs. Ahmed Bilal Gul Mr. Javed Iqbal 8. feroz Street Jodia Bazar Karachi N/A N/A N/A N/A Mrs. 11th Commercial Street DHA Phase–II. Muhammad Ali 5.500 Kh.424 23 ZAFFAR CORPORATION Grain Market Chishtian 360–88–439657 Rana Abdul Aziz 2.500 – 21.164 Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin.081 – – 781 781 Notes to the Financial Statements 25 MEHR DASTGIR LEATHER & FOOTWEAR INDUSTRIES PVT. 36302–9279957–9 36302–0458568–3 36302–3799833–7 42301–5704994. Wajid Ali Khan 1. Tariq Aziz 7. Amber Estate Shsahra–e–Faisal Karachi Haji Khushi Muhammad Jawed Iqbal Bhatti Muhammad Khalid 7. Yazman Mandi Distt. M.814 – 28. Muhammad Hussain 6.314 6. Muhammad Ibrahim 21.789 – – 43.814 28. LTD. Hafeez S/o Mian M.399 179 261. 2009 22 MEHR DASTGIR TEXTILE MILLS LTD Mehr Dastgir. Kh. Hafeez S/o Abdur Rasheed S/o Mehtabuddin Bhati S/o Haji Khushi Muhammad Bhati S/o Haji Khushi Muhammad Bhati W/o Qazi Ehteshamul Haq Mr. Muhammad Sarfraz 3.838 139. Shaheed Younas Road Multan 1.797 26 TRADERS IMPEX 5–c. M. Abdul Rehman Jami 346 57. Muhammad yousaf Kh. Muhammad Usman 188. Farooq Khan Mr. Muhammad Mansoor 7. Tahir Iqbal – 534 534 24 WAQAS OIL MILLS Katcha Sadiqabad Road Mauza Tibba Laran. Kh. Dilshad Qazi 20. Ghulam Dastgir Kh. Muhammad Yousaf 3.310 855 – 555 1.673 43. Kh.755 555 – 8.300 692 89 1.416 49. Mohammad Ashraf Khan Mr. Kh.307 69 25.788 – 11. Kh. Bahawalpur. Kh.(Rs. Muhammad Abdullah Kh.728 – 121. Muhammad Yasin 5. Muhammad Abdullah 2. M. Ilam Din For the year ended December 31. Harmeem Ara Hashmi – 690 – 690 – – 690 690 . Hafeez S/o Mian M.410 29 SEA GOLD TRADING M/R. Mark up Reliefs Written off Provided Total Sr.399 13. Muhammad Abdullah 2. Karachi Mr. Rahim Yar Khan. Kh. Abdul Rehman Jami 4. Ghulam Dastgir Kh. Kh.788 11.164 13. Mehr Dastgir Shaheed Younas Road Multan 1. 1. Khalid Mehmood 6.486 – 6. M. Muhammad Yousaf Kh.486 5. Muhammad Younas 2.

Block 5. No NIC No. PECHS.684 Aurangzeb Tunio 1.O.383 – Muhammad Iqbal Bhatti 6. Block–18. Fareeda Khanum Mrs.923 12.610 2. Rizwana Arshad Mrs.144 – – 6. Afshan Shahid Ch. Mohammad Sharif 32 LARR SUGAR MILLS 16–E. Rashid Minhas Street PECHS.500 883 – 3. Arshad Ali Chaudhry Mr.540 – – 4. Asad Ahmed Dr.144 – 6.246 4.097 1.376 – 652 5 656 .379 6.295 1. Kda Kehkashan Clifton. Muhammad Ahmed Mr.(Rs.097 35 MUHAMMAD BACHAL ALLIES KHURARO P.144 Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin.278 – – 802 802 40 NOORANI RICE MILLS Sind Small Industrial Estate Larkana 42301–8385149–1 Riazat Ali Abbasi 1.722 – – 13. N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 42201–9782985–3 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 146 I MCB Bank Limited 31 ATTOCK TEXTILE MILLS Panther Plaza. Advani Street Plaza Quater Karachi 42000–9919707–1 Baboo 2.Area Karachi Syed Muhammad Arif (Late) Syed Husnain Raza Begum Shakira Arif Miss.800 478 – 3.724 652 – 6.712 – – 1. Karachi ANIS AHMED SIDDIQUI 5.013 Farukh – 1. RashidAhmed Mrs. Mark up Reliefs Written off Provided Total Sr. F–8 Markaz Islamabad Mr. Block 6.610 38 LARAIB INDUSTRIES COTTON G/P FACTORY OIL MILLS Khanpur Mehar Road Adilpur Taluka Ghotki 42201–9643141–3 Khusro Alam Khan Asif Ali Kalwar Shumails Subhan 852 – 3. Mirokhan Dist: Larkana 427–77–129000 S/o Ahmed Khan 1. Arjumand Arif – 14. Block–2.144 6. in ‘000) Father’s/Husband’s Name Principal Intt/Acc/Mup N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A S/o Ellahi Bhatti 24. Karachi Mr.501 487 25 2.246 – 6.034 4.343 34 NINE STAR INTER NATIONAL 123–Princes Street Chand Bibi Road Nanakwara Karachi.343 6.113 599 – 1.B. Nursery Main Shahra–e–Faisal Karachi 423–85–084621 Rustam Ali Azhar Alam Khan Haideri 2. Syed Rafique Mustafa Shah For the year ended December 31.437 – – 2.180 Notes to the Financial Statements 37 SEAMLINE GARMENTS (PVT) LTD WSA–3.180 1.775 – – 645 645 39 AZHAR SERVICES 1/5–D.295 Annexure III 41 RAFAT YAZDAN SIDDIQUI House No A–17.S. 427–93–000141 Muhammad Punhal Tunio 1.343 – 30. Abdul Rauf Mr. 2009 33 BHATTI CORPORATION H. (St–16). F.000 323 25 Muhammad Bachal Aliias Kuraro – – 722 722 36 AURANGZEB TUNIO Arzi Bhutto Road Miro Khan Dist: Larkana Syed Muqadas Hussain Syed Husnain Raza W/o Syed Muhammad Arif (Late) D/o Syed Muhammad Arif (Late) 45102–5187012–9 42201–9854186–4 Abdukl Fateh W/o Subhan Ali 2.753 1. Said Begum Mrs.348 – – 1.506 – 17.

Salamat Pura. Khayaban–E–Rahat. No NIC No.016 For the year ended December 31.724 705 – 6.376 – 6.944 379 157 536 46 SHEIKH KHALID PERVAIZ 15/B. Faisalabad 42101–8228717–5 14. Touheed Park.053 538 – 5.H.043 369 3.721 – 15. Karachi 42000–1372861–9 AKHTER BAGUM 17. Kda Kehkashan Clifton.230 2. 2009 45 MUHAMMAD BULAND IQBAL KHAN House No A–117.(Rs. Fatah Garh. Haseeb Block. New Muslim Town.379 2. Karachi 35202–6908260–3 SH MUHD AASHIQ 19.571 Annexure III Annual Report 2009 I 147 53 SYED ASHRAF ALI House No 246 Qasimabad Liaquatabad Karachi SYED NAFASAT ALI 10.034 . Block 5.510 – – 2.347 321 – 430 3. 35202–1528069–3 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 42 MUHAMMAD YOUSAF House No 66.654 – 154 364 518 51 SYED HAROON AZIZ 102/ 2. Gt Road Lahore 35201–3813646–7 MUHAMMAD DIN RAO 5.842 47 MUNIR AHMAD 390/15–16 Rehmani Street. Lahore 35201–0806707–5 CH NAZIR AHMED 3. Darogawala.081 343 1. Stno 6.591 – 597 174 770 Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin.549 – 1. Block–2.668 – 572 194 766 Notes to the Financial Statements 48 RAO MUHAMMMAD AKRAM H No 5.302 – 815 1. Park Chak No 204.829 50 MUHAMMAD SHAHID 130 Raza Block Ait. Lahore 35202–2778768–9 GHULAM MUHAMMAD 1.097 – 2. Canal Bank Scheme.192 462 – 12. Lahore 42301–4299539–1 AZIZ AHMED 12.208 621 2.429 – 705 114 43 RAFAT YAZDAN SIDDIQUI House No A–17.384 553 – 10.019 378 – 4.A.424 49 MOHAMMMAD SOHAIL IKHLAQ House No 122.397 – 712 140 852 52 ASAD NASEER P–11/3. Kanal Road. D.938 – 553 481 1. Abn–E–Saeed Road. in ‘000) Father’s/Husband’s Name Principal Intt/Acc/Mup SARAAJ DIN 5. (St–16).131 – 16. Multan Road. Phase Vii. Aazam Garden. Lahore 42301–8385149–1 ANIS AHMED SIDDIQUI 5.923 379 – 8.571 2.911 639 3. Mark up Reliefs Written off Provided Total Sr. North Nazimabad.714 – 21. Lane–12. Lahore 35202–8701430–3 MOHAMMAD IKHLAQ CH 13.879 – 201 819 44 KHALIL USMAN B–304 Rufi Paradise Block 18 Gulistan E Johar Karachi 42101–5538260–7 WAHID ALI KHAN 7. Karachi 33100–2904569–3 NASEER AHMED 4. Bus Stop.678 201 – 17.

No NIC No. Laneno 7.938 365 103 680 59 Syed Ashraf Ali House No 246 Qasimabad Liaquatabad Karachi 35201–1514624–9 CHOUDHRY PALTOO KHAN 13. Choohar Harpal. Ali Market.268 73 – 4. Sector–Ii.202 346 – – 553 414 968 Notes to the Financial Statements 60 MOHAMMAD AKHTER CHOUDHRY House No 7212 Block N Dha Cantt Lahore 35200–1429490–6 MOHAMMAD JAMAL BUTT 9.650 468 – 4. Rawalpindi 56 AMIR ALI 269 H Block Gulshan E Ravi Lahore 37405–0266981–5 HAJI MUHAMMAD SULEMAN 1.341 – 572 148 720 64 ILLYAS QURESHI House No 525.166 500 165 For the year ended December 31.062 486 617 116 1.960 – 576 415 991 63 MANSOOR HUMAYON H–1/25. Mark up Reliefs Written off Provided Total Sr.296 – 229 505 734 62 SYED ASHRAF ALI House No 246 Qasimabad Liaquatabad Karachi 37405–0153130–1 ABDUL HAQ 576 – 10.212 235 – 2. Lahore 42101–8228717–5 SYED NAFASAT ALI 10.219 35200–1419640–9 MIAN ZULFIQAR ALI 6. Omer Block. 37405–9543346–1 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 148 I MCB Bank Limited 37405–9543346–1 MOAZ ULLAH KHAN 3.151 Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin.468 553 – 6.295 – 611 374 986 54 ASMAT ULLAH KHAN House No 874.384 553 – 10.566 496 – 4.548 – 346 581 927 61 TABINDA ALKAN JAFFERY House No 11.(Rs. Firdus Park Ghazi Road. Satellite Town. Rawalpindi 35201–0771511–4 MALIK RIASAT ALI 2. Allama Iqbal Town. Rawalpindi 55 ASMAT ULLAH KHAN House No 874.447 212 35 700 58 SANIA RIASAT House No 19–E. Lahore 42101–8228717–5 7. in ‘000) Father’s/Husband’s Name Principal Intt/Acc/Mup MAZ ULLAH KHAN 3. Satellite Town.809 486 – 7.181 115 13. Lahore 42101–8228717–5 SYED NAFASAT ALI 10.022 – 553 415 968 . Johar Town. L Block. Khayaban–E–Sirsyed.171 207 – 7. 2009 57 NADEEM SHEHZAD House No Cb–509. Rawalpindi 35202–4059736–7 M YOUSAF QURESHI 4.384 – 9.117 449 582 120 1.378 – 289 332 621 Annexure III 65 SYED ASHRAF ALI House No 246 Qasimabad Liaquatabad Karachi MUHAMMAD AKBAR 5.050 116 – 1.

Block–10. East Roras Road. G 10/2.Muhallah Satellite Town.002 376. 2009 70 WAJAHAT ALI Sector 5A–2L–160. Sialkot 37405–0282847–3 MUHAMMAD IQBAL KHAN 788 94 – 219 145 143 506 72 MUHAMMAD TAHIR IQBAL House No F–550. Back Technical College. Kohat Road.745 518.438 127. in ‘000) Father’s/Husband’s Name Principal Intt/Acc/Mup M BASHIR LONE 12.856 2.(Rs. Multan Road. Karachi 61101–5157357–3 CH SANAULLAH 4.243 371.420 19. Township.199 348 162 120 630 75 MUHAMMAD SALEEM KHAN Mahmand Abad. St 18.408 Annual Report 2009 I 149 .236 348 – 12. Mark up Reliefs Written off Provided Total Sr.777 113 – 4. North Karachi. Islamabad 35202–2726742–6 AMNA BIBI 7. Lahore 17301–1618197–7 FAREED KHAN 969 151 – 1.584 – 348 222 570 Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin. Lahore 42201–1683122–3 MUHAMAD JAVED 1. 42301–2836738–5 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 66 ASHGAR OQBAL 1–H.122 6.048 – 706 328 98 118 544 Notes to the Financial Statements 74 AMIR JAVED Shair Shah Str Muhalla.003 Annexure III Total 577.Block–F.314 959. Babu Sabu. Karachi. Lahore 2. Stno 1.003 – – 2. 112. 34603–8903076–3 MUHAMMAD HUSSAIN BUTT 721 140 – 861 77 56 530 71 WARIS MEHMOOD BUTT New Miana Pura. Johar Town. Rawalpindi 34101–2586245–7 ZAKA ULLAH 688 18 882 223 188 96 507 73 ZULQARNAIN 22 Km.084 367 130 260 756 76 TOUSEEF UL HAQ SIDDIQUI 233–C.856 – – 2.492 – 1.889 – 418 188 67 MUHAMMAD NAJEEB House No 298. Lahore 42101–0395342–5 MUHAMMAD JAWAID KHAN 732 73 – 805 407 116 1. Baker Mandi. Bund Road. Paf Falcon Complex.243 257 606 68 SHAFQAT 26–B1.692 800 – 8. Peshawar 35202–5024520–1 TOYBGHAT ULLA SAADIQUE 115 – 1. No NIC No.500 69 MUHAMMAD FAREH KHAN House No A 444 Block Dnorth Nazimabad 42201–6976969–3 MUHAMMAD MUSTAFA 552 50 – 602 397 69 592 For the year ended December 31.

200 1.693 Other Vehicles having book value of less than Rs.000.821 – 497 Under Claim Adam Jee Insurance Company 18.672 2. 1.634 62.410 1.426 15.359 4.000.196 150 I MCB Bank Limited .939 7.000” Vehicles Toyota Land Cruiser Mercedes Benz Mercedes Benz Toyota Hilux Honda Civic Toyota Corola Honda Civic Honda Civic Honda Civic 7.318 589.000 Buildings 8th Floor Techno City Karachi 34.248 1.679 3.650 3.037 1. 1.921 60.A Qazi Auction Mr.038 3.047 Amir Shahid Riaz Ali Mohammad Junaid Amir Shahid Khurram Imtiaz Adam Jee Insurance Company Retirement Benefit Mr N. computers and office equipment Items having book value in aggregate more than Rs.363 1.Notes to the Financial Statements For the year ended December 31.000 or cost of more than Rs.478 347.062 1. 1. 250.000 or cost of less than Rs.526 3.340 Sale MCB Asset Management Company Ltd.840 242.821 2.487 2.144 882 184 445 498 561 11.000 or cost of less than Rs.152 34. 250.116 2.340 1.599 1.163 1. 2009 Disposal of operating fixed assets (refer note 11.250 2. electrical.313 Auction/Quotation Different Buyers 2009 2008 123.000 Items having book value of less than Rs. 45.455 366 878 598 539 441 11.028 15.895 36.000.665 29.2.3) Description Cost Accumulated depreciation Book value Sales proceeds/ insurance claim Annexure IV Mode of disposal/ settlement Particulars of buyers (Rupees in ‘000) Furniture and fixture.043 1.156 2.526 2.950 987 964 612 926 850 14.978 1.002 22.188 33. 250.Farhan Abdul Karim Auction Ali Murtaza Auction Auction Auction Auction Auction Under Claim 2.287 93.092 434.

711 12.231 28.439 23.200 43.000 667 9.061 4.836 3.862 4.924 1.945 1.070 3.981 48.077 43.970 21.577 7.322 88.223 17.380 25.G.300 23.803 18.372 14.051 5.600 915 – 11.885 50.085 818 3.044 8.449 57.332 5.150 15.935 3.445 3.256 7.2.484 10.988 7.323 13.433 5.582 9.081 16.740 89.400 15.505 7.125 6.407 14.000 11.128 7.000 18.800 – 9.305 16.738 1.489.000 20.1) City Land Annexure V Building (Rupees in ‘000) Total Karachi Hyderabad Sukkur Moro Nausheroferoz Mirpurkhas Larkana Gawadar Mianwali Jehlum Muree Jhang Quetta Islamabad Abbottabad Rawalpindi Lahore Kasur Faisalabad Gujrat Gujranwala Wazirabad Muridke Hafizabad Sargodha Okara Sheikhupura Vehari Sialkot Sahiwal Chakwal Azad Kashmir Peshawar Tandoallahyar Muzaffarabad Shadadpur Haripur Dir Mingora Rahim Yar Khan Sadiqabad Haroonabad Chistian Khanpur Bahawalpur D.189.120 1.500 4.507 3.750 20.000 51.860 150.104 8.582 4.667 5.260 1.461.380 13.500 21.035 2.053 477.118 26.505 19.531 84.150 8.794 16.849 21.352 67.874 33.071 3.591 5.591 49.765 23. Khan Shujabad Overseas Grand total 3.065.006 132.936 6.531 385.Notes to the Financial Statements For the year ended December 31.049 1.562.054 800 6.000 49.104.445 6.666.340.931 8.396 16.681 3.739 6.228 4.100 15.397 6.190 2.009 1.937 275.849 3.764 – 57.535 5.579 20.391 7.266 42.201 21.113 54.837 35.047 305 2.120 7.635 21.988 65.231 8.687 21.200 41.640 7.587 5.104 32.047 10.986 30.332 1.063 241.084 28.000 3.128 58.735 1.075.386.600 1.000 14.555.000 300.622 Annual Report 2009 I 151 .673 81.461 33.061 13.637 35.574 4.000 24.000 10.336 21.534 12.388 62. 2009 Summarized detail of the valuation of owned properties (refer note 11.674 486 9.017 2.380 396.698 4.

Notes 152 I MCB Bank Limited .

MCB Bank Limited and Subsidiary Companies Consolidated Financial Statements .

MCB Financial Services Limited.374 11. 2009.665.146 7.781 1.) Limited .065.826 17.097 26. On behalf of Directors Mian Mohammad Mansha Chairman 154 I MCB Bank Limited .753.Director’s Report on Consolidated Financial Statements The Board of Directors present the report on consolidated financial statements of MCB Bank Ltd and its subsidiaries namely MCB Asset Management Company Limited.570. MNET Services (Pvt.727.277 1.088. 2009 is annexed in annual report.743 15. in ‘000) Profit before taxation Taxation Profit attributable to minority interest Profit attributable to ordinary share holders Un–appropriated profit brought forward Transfer from surplus on revaluation of fixed assets (net of tax) Profit available for appropriation Appropriations Statutory reserve Final cash dividend– December 2008 Issue of bonus shares– December 2008 Interim dividend– March 2009 Interim dividend– June 2009 Interim dividend– September 2009 Total appropriations 23.67 earning per share for the year under review.22.665.727.670 Pattern of Shareholding The pattern of shareholding as at December 31. Earnings per Share The Consolidated financial statements reflect Rs.399 11. The following appropriation of profit has been recommended by the Board of Directors: (Rs.683.931.530 1. MCB Trade Services and “MCB Leasing” Closed Joint Stock Company for the year ended December 31.723 22.549.692 628.403 (4) 15.727.349.496 1.773 1.621.773 8.

An audit includes examining. consolidated cash flow statement and consolidated statement of changes in equity together with the notes forming part thereof. 2010 KPMG Taseer Hadi & Co. its cash flows and changes in equity for the year then ended in accordance with the approved accounting standards as applicable in Pakistan. Lahore February 25. Our responsibility is to express our opinion on these consolidated financial statements based on our audit. 2009 and the related consolidated profit and loss account. We believe that our audit provides a reasonable basis for our opinion. We have also expressed separate opinions on the financial statements of MCB Bank Limited and MNET Services (Private) Limited. whose report has been furnished to us and our opinion. on a test basis. evaluating the overall presentation of the above said statements. as well as. 2009 and the results of its operations. evidence supporting the amounts and disclosures in the above said statements. The financial statements of subsidiary companies MCB Financial Services Limited. In our opinion the consolidated financial statements present fairly the financial position of MCB Bank Limited as at December 31. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These consolidated financial statements are responsibility of the Bank’s management. An audit also includes assessing the accounting policies and significant estimates made by management. for the year then ended. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. is based solely on the report of such other auditors. MCB Asset Management Company Limited and MCB Trade Services Limited were audited by another firm of auditors. These consolidated financial statements include unaudited certified returns from the branches except for sixty branches which have been audited by us and seven branches audited by auditors abroad.Auditors’ Report to the Members We have audited the annexed consolidated financial statements comprising consolidated balance sheet of MCB Bank Limited (“the Bank”) and its subsidiary companies as at December 31. consolidated statement of comprehensive income. in so far as it relates to the amounts included for such companies. Chartered Accountants Farid ud Din Ahmed Annual Report 2009 I 155 .

252 60.551.881 6. M.581.840 330.526 4.057.280 10.090 44.371 71 63.731 511.000 169.631.741.821.871 6.106.133 39.320.282.133.828.387.265 18.549 – – 440. Atif Bajwa President and Chief Executive S.911.011.774.120.485 – 19.000.120.228 445.077.132.758 17 18 19 20 6.656 17.192.100.772.442 9.663.099.152.248.473 385.838 72.484.756 15.428.782. Muneer Director Dato’ Mohammed Hussein Director Mian Umer Mansha Director 156 I MCB Bank Limited .647 253.165.768 36.295 21.280 6.133 Contingencies and commitments 22 The annexed notes 1 to 46 and Annexures I to V form an integral part of these financial statements.670 63.201.132.345.075 – – 3.120. 2009 Note 2009 (Rupees in ‘000) 2008 Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Operating fixed assets Deferred tax assets – net Other assets – net 6 7 8 9 10 11 12 38.625 60.830 17.878 Liabilities Bills payable Borrowings Deposits and other accounts Sub–ordinated loan Liabilities against assets subject to finance lease Deferred tax liabilities – net Other liabilities Net assets Represented by: Share capital Reserves Unappropriated profit Minority interest Surplus on revaluation of assets – net of tax 21 14 15 16 8.354 3.285.219 4.598 72.120.010 – 23.Consolidated Balance Sheet As at December 31.313.662.313.321 11.391 262.079 98.088 367.153.045 38.065.201.723 54.589 439.468 22.812 69 54.

4.723 22.3 29 9.911 15.097 26.335.190.065.665.17 The annexed notes 1 to 46 and Annexures I to V form an integral part of these financial statements.049.214.054.583 2.5.740 7.511.345 (865.115.344) 16.Consolidated Profit and Loss Account For the year ended December 31.743 15.843 – 21.348 25.399.868 3.373 7.621.164 6.312 727.227 (12) 15.374 11.576 7.754.782.387.845 22.075.853 34.725.670.665.127 – 4.721 26 9.454 23.513 15.787 (2.019.867 451.3 10.564 748.349.121 24.337.403 (4) 15.5 27 28 12. commission and brokerage income Income earned as trustee to various funds Dividend income Income from dealing in foreign currencies Gain on sale of securities – net Unrealized loss 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 provision – net Other charges Total non–mark–up / interest expenses Share of profit of associated undertaking Extra ordinary / unusual item Profit before taxation Taxation – Current year – Prior years – Deferred Share of tax of associated undertaking 24 25 51.796.563.310 7.922 28.135 817.218 5.388 11. Atif Bajwa President and Chief Executive S.413 30.029 342.484.462 2.215 7.683.231.527 41.824 691.848 30.065.7 10.824 8.088.399 11.994 1.232.472 21.965.496 (Rupees) Basic and diluted earnings per share – after tax 33 22.505 11.402 806.322.225 142.189 40. Muneer Director Dato’ Mohammed Hussein Director Mian Umer Mansha Director Annual Report 2009 I 157 .321 28.1 1.683.531) 1.771 200.169 5.839.109 5.67 22.282 18.367.323.722 35. M.929.060 9.2 10.592.722 11. 2009 Note 2009 (Rupees in ‘000) 2008 Mark–up / return / interest earned Mark–up / return / interest expensed Net mark–up / interest income Provision for diminution in the value of investments – net Provision against loans and advances – net Bad debts written off directly Net mark–up / interest income after provisions Non–mark–up / interest income Fee.511 898.139 (99.437.456.132 341.753.459.146 7.425 464 30 Profit after taxation Profit attributable to minority interest Profit attributable to ordinary share holders Unappropriated profit brought forward Transfer from surplus on revaluation of fixed assets – net of tax Profit available for appropriation 7.886.933) 2.196 – 23.328 21.323.

900) (49.150.737.141 (2.107 407.824 41.120 – – (36.855) 99. M.598) 78.351.994 10.551.462 (3.4.770 10.271 45.3 10.806.733 11.843) 544.156.991) 38.100.693) 43.115.447) 3.410.105) 93.405.218 142.585 822.745 44.683.511) 8.852.484.531 5.232) (9.737.079 103.561 Cash flows from investing activities Net investments in ‘available for sale’ securities Net investments in ‘held to maturity’ securities Dividends received Investments in operating fixed assets Sale proceeds of property and equipment disposed off Net cash flows from investing activities (72.2 11.480 44.513.510) (6.438 (641.550.224 (7.527 1.462.3 10.140) 43.3 12.893.409.223) 72.048.934 186.614 (1.092 (70.582) 258.038.648 154.114.058.467.303.Consolidated Cash Flow Statement For the year ended December 31.445) (44.670.977 5.122 31.248 37.302.735.834.429.864) 15.155) 21.830) 50.710 143.146 (542.410 (16.335.225 (479.5.566 Income tax paid Net cash flows from operating activities 82.189 Cash flows from financing activities Redemption of subordinated loan Dividend paid Net cash flows from financing activities Exchange differences on translation of net investment in foreign branches Increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of the year 34 – (6.186 3.092 26.379.931.160. 2009 Note 2009 (Rupees in ‘000) 2008 Cash flows from operating activities Profit before taxation Less: Dividend income and share of profit from associate Adjustments for non–cash charges Depreciation Amortization Provision against loans and advances – net Provision for diminution in the value of investments – net Provision against other assets –net Bad debts written off directly Operating fixed assets written off Gain on disposal of fixed assets – net Deficit on revaluation of ‘held for trading’ securities 23.923.796.805 1.586) 840.510) 65.663) 2.2 9.818 11.047.884.474 43.526 (6.313.413) 233.627 8.465 1.576 17.126 (5.058.745 The annexed notes 1 to 46 and Annexures I to V form an integral part of these financial statements.404.922.049 21.181) (10.350.940 (Increase) / decrease in operating assets Lendings to financial institutions Net investments in ‘held for trading’ securities Advances – net Other assets – net Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities 1.349.1 29 27 9.861 (2.998.834.740 (482.171) (1.378) 21.677 (3.319.565.742.916.5 917. Atif Bajwa President and Chief Executive S.428.328) 22.647 (4.614) (11.886.618 33.707) (7.477 (30.489 (1.127 2.214. Muneer Director Dato’ Mohammed Hussein Director Mian Umer Mansha Director 158 I MCB Bank Limited .735.

884.323.831) (1. 2007 Changes in equity for 2008 Profit after taxation for the year ended December 31.277.323.723 54.884.141.282.403 (4) (4) – 4 15.215 15.530 – – – – – – 9.528 (41. 2008 Profit attributable to minority interest Profit after taxation for the year ended December 31.884.781) (1. 2008 Changes in equity for 2009 Profit after taxation for the year ended December 31.227 15.884.442 – – 65.692) 6. Atif Bajwa President and Chief Executive S.384) (1.338.773) 22.665.530) (628.399 15.773) – – – (2) – – – – 71 22.727. 2008 attributable to ordinary shareholders of the group Exchange differences on translation of net investment in foreign branches Total comprehensive income for the year ended December 31.Consolidated Statement of Changes in Equity For the year ended December 31.831) 54.141. in ‘000) Balance as at December 31.702.727.065.773) 63.374 – – – (1.884.702.460) – (3.323.740.000.227 (12) (12) – 12 15.120.665.537. 2008 Transferred from surplus on revaluation of fixed assets to unappropriated profit – net of tax Transferred to statutory reserve Issue of bonus shares – December 2008 Dividend attributable to minority shareholders Final cash dividend – December 2008 Interim cash dividend – March 2009 Interim cash dividend – June 2009 Interim cash dividend – September 2009 Balance as at December 31.403 15.208 – – 65.727. 2008 Transferred from surplus on revaluation of fixed assets to unappropriated profit – net of tax Transferred to general reserve Transferred to statutory reserve Dividend attributable to minority shareholders Final cash dividend – December 2007 Interim cash dividend – March 2008 Interim cash dividend – June 2008 Interim cash dividend – September 2008 Balance as at December 31.805 – – – 65.827.242 – – 1.323.215 15.000 – – – – – – 21.727.821.472 47.600.731.045 – – – – – – – – 9.665.081 – – – – – – – – 22.399 15.000 7.384) (1.884. 2009 Profit attributable to minority interest Profit after taxation for the year ended December 31.204 4 15.120.812 18.000 11. refer note 45 to these financial statements.537.374 – – (2) (1.781) (1.768 9.570.277) – (1.399 4 15.665.934 – – – – – 15.161 – – 233.805 – 65.120.551 – 1.773) (1.570.338.805 – – 15.731.727.781) (1.665.277 – – – – – 6.727.215 12 15.167 63 47.665.091 17.528 – – – – – – – – 258.557.600.934 – – 15.727.773) (1.120.773) (1.460 – – – – – 8.227 – – – – – 15.323.373 – – – (3.141.000.384) (1.831) – – – (6) – – – – 69 21.054.692) (1.670 63.549.702.727.831) (1.371 For details of dividend declaration and appropriations.911.884.831) 21.692) (1.403 – – – – – 15. 2009 – – 628.282.934 – – – 233.557. Muneer Director Dato’ Mohammed Hussein Director Mian Umer Mansha Director Annual Report 2009 I 159 .373 – – (6) (3. M. 2008 attributable to ordinary shareholders of the group Exchange differences on translation of net investment in foreign branches Total comprehensive income for the year ended December 31.692) (1.570.403 – – – – – – – – 6.881 – – 233.934 – 233.230 Minority Interest Total 18.831) (1. The annexed notes 1 to 46 and Annexures I to V form an integral part of these financial statements.528 – – – – – – – – 192.000 17.600.831) (1.805 – – – – – 15.323.373 (1.884.047 – 1. 2009 Attributable to shareholders of the bank Capital reserves Share capital Share premium Exchange translation reserve Statutory reserve Revenue reserves General Unappropriated Subtotal reserve profit (Rs.665.374 (1.323.831) (1.831) (1.000) (1.549.727.884.768 – – – – – – – – 9.149 12 15.227 6.

Consolidated Statement of Comprehensive Income
For the year ended December 31, 2009
2009 (Rupees in ‘000) 2008

Profit after tax for the year Other comprehensive income Effect of translation of net investment in foreign branches Total comprehensive income for the year

15,665,403

15,323,227

65,805 15,731,208

233,934 15,557,161

Surplus/ deficit on revaluation of ‘available for sale’ securities and ‘fixed assets’ are presented under a separate head below equity as ‘surplus/ deficit on revaluation of assets’ in accordance with the requirements specified by the State Bank of Pakistan vide its BSD circular 20 dated 04 August, 2000 and BSD circular 10 dated 13 July, 2004 and Companies Ordinance, 1984, respectively. The annexed notes 1 to 46 and Annexures I to V form an integral part of these financial statements.

Atif Bajwa
President and Chief Executive

S. M. Muneer
Director

Dato’ Mohammed Hussein
Director

Mian Umer Mansha
Director

160 I MCB Bank Limited

Notes to the Consolidated Financial Statements
For the year ended December 31, 2009
1. THE GROUP AND ITS OPERATIONS The “Group” consists of: Holding company – MCB Bank Limited
Subsidiary companies Percentage holding of MCB Bank Limited %

Building, Beaumount Road, Karachi respectively. The core objective of the company is to provide services in Information Technology and to develop computer software and other data processing equipment for planning, designing, management and execution of all types of financial, personal, organizational and institutional activities. MCB Trade Services Limited (subsidiary company) The company was incorporated under the laws of Hong Kong on February 25, 2005. The registered office of the company is located at 28 / F, BEA Harbour View Centre 56 Gloucester Road, Wan Chai, Hong Kong. The principal activity of the company is to provide agency services. MCB Asset Management (subsidiary company) Company Limited

– MCB Financial Services Limited (formerly Muslim Commercial Financial Services (Private) Limited) – MNET Services (Private) Limited – MCB Trade Services Limited – MCB Asset Management Company Limited – “MCB Leasing” Closed Joint Stock Company MCB Bank Limited (holding company)

99.999

99.950 100.000 99.990 95.000

MCB Bank Limited (the ‘Bank’) is a banking company incorporated in Pakistan and is engaged in commercial banking and related services. The Bank’s ordinary shares are listed on all the stock exchanges in Pakistan whereas its Global Depository Receipts (GDRs) representing two ordinary shares (2008: two ordinary shares) are traded on the International Order Book (IOB) system of the London Stock Exchange. The Bank’s Registered Office and Principal Office are situated at MCB Building, Jinnah Avenue, Islamabad and MCB –15 Main Gulberg, Lahore, respectively. The Bank operates 1,074 branches including 11 Islamic banking branches (2008: 1,040 branches including 11 Islamic banking branches) within Pakistan and 7 branches (2008: 7 branches) outside the country (including the Karachi Export Processing Zone branch). MCB Financial Services Limited (subsidiary company)
(formerly Muslim Commercial Financial Services (Private) Limited)

The company was incorporated in Pakistan under the Companies Ordinance 1984 on September 14, 2005 as a public limited company. The registered office and principal place of business of the company is located at 8th Floor, Technocity, Corporate Tower, Hasrat Mohani Road, Karachi. The company is registered as an asset management company under the Non–Banking Finance Companies (Establishment and Regulation) Rules, 2003 to carry on the business of an asset management company under the said rules. The principal activity of the company includes asset management, investment advisory, portfolio management, equity research and underwriting. “MCB Leasing” Closed Joint Stock Company (subsidiary company) The Bank incorporated a Closed Joint Stock Company under the laws of Azerbaijan on October 15, 2009 with 95% holding. The registered office of the company is located at AZ 1001, Baku, Sabil District, 11 Jafarov Shlari, Baku, Azerbaijan. The principal activity of the company is to undertake leasing business. 2. 2.1 BASIS OF PRESENTATION The consolidated financial statements include the financial statements of MCB Bank Limited and its subsidiary companies and associates. 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

The company was incorporated on February 12, 1992 under the Companies Ordinance, 1984 as a private limited company. The principal object of the company is to float, administer and manage modaraba funds and modarabas under Modaraba Companies & Modaraba (Floatation and Control) Ordinance 1980. The company’s registered office is situated at 16th Floor, MCB Tower, I.I. Chundrigar Road, Karachi. The company also acts as a trustee of certain mutual funds. MNET Services (Private) Limited (subsidiary company) MNET Services (Private) Limited is a private limited company incorporated in Pakistan under the Companies Ordinance, 1984 on September 7, 2001. The company’s registered office and principal place of business are situated at MCB Building, F–6 / G–6, Jinnah Avenue, Islamabad and Sheikh Sultan Trust

2.2

Annual Report 2009 I 161

Notes to the Consolidated Financial Statements
For the year ended December 31, 2009
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 utilized and the appropriate portion of mark–up thereon. 2.3 The financial results of the Islamic Banking branches have been consolidated in these financial statements for reporting purposes, after eliminating material inter–branch transactions / balances. Key financial figures of the Islamic Banking branches are disclosed in Annexure II to these financial statements. For the purpose of translation, rates of Rs. 84.2416 per US Dollar (2008: Rs. 79.0985) and Rs. 0.7364 per SLR (2008: Rs.0.70) have been used. STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan. Approved Accounting Standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984 and Banking Companies Ordinance, 1962. In case requirements differ, the provisions and directives given in Companies Ordinance, 1984 and Banking Companies Ordinance, 1962 shall prevail. 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 August 26, 2002. The Securities Exchange Commission of Pakistan (SECP) has deferred applicability of IFRS–7 “Financial Instruments: Disclosures” on banks through S.R.O 411(1) /2008 dated April 28, 2008. Accordingly, the requirements of these standards have not been considered in the preparation of these financial statements. However, investments have been classified and valued in accordance with the requirements prescribed by the State Bank of Pakistan through various circulars. 3.2 Standards, amendments and interpretations to published approved accounting standards that are not relevant and not yet effective The following standards, amendments and interpretations of approved accounting standards will be effective for accounting periods beginning on or after January 01, 2010. These standards are either not relevant to the Group operations or are not expected to have a significant impact on the Group financial statements other than increase in disclosures in certain cases: – Revised IFRS 3 – Business Combinations (applicable for annual periods beginning on or after July 01, 2009) broadens among other things the definition of business resulting in more acquisitions being treated as business combinations, contingent consideration to be measured at fair value, transaction costs other than share and debt issue costs to be expensed, any pre–existing interest in an acquiree to be measured at fair value, with the related gain or loss recognised in profit or loss and any non–controlling (minority) interest to be measured at either fair value, or at its proportionate interest in the identifiable assets and liabilities of an acquiree, on a transaction–by–transaction basis. Amended IAS 27 – Consolidated and Separate Financial Statements (effective for annual periods beginning on or after July 01, 2009) requires accounting for changes in ownership interest by the group in a subsidiary, while maintaining control, to be recognized as an equity transaction. When the group loses control of subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognized in the profit or loss. IFRIC 15 – Agreement for the Construction of Real Estate (effective for annual periods beginning on or after October 01, 2009) clarifies the recognition of revenue by real estate developers for sale of units, such as apartments or houses, ‘off–plan’, that is, before construction is complete. Amendments to IAS 39 – Financial Instruments: Recognition and Measurement – Eligible hedged Items (effective for annual periods beginning on or after July 01, 2009) clarifies the application of existing principles that determine whether specific risks or portions of cash flows are eligible for designation in a hedging relationship. IFRIC – 17 – Distributions of Non–cash Assets to Owners (effective for annual periods beginning on or after July 01, 2009) states that when a bank distributes non cash assets to its shareholders as dividend, the liability for the dividend is measured at fair value. If there are subsequent changes in the fair value before the liability is discharged, this is recognised in equity. When the non–cash asset is distributed, the difference between the carrying amount and fair value is recognised in the income statement. The International Accounting Standards Board made certain amendments to existing standards as part of its second annual improvements project. The effective dates for these amendments vary by standard and most will be applicable to the Bank’s 2010 financial statements.

2.4

3. 3.1

162 I MCB Bank Limited

Notes to the Consolidated Financial Statements
For the year ended December 31, 2009
– Amendment to IFRS 2 – Share–based Payment – Group Cash–settled Share–based Payment Transactions (effective for annual periods beginning on or after January 01, 2010). Currently effective IFRSs require attribution of group share–based payment transactions only if they are equity–settled. The amendments resolve diversity in practice regarding attribution of cash–settled share–based payment transactions and require an entity receiving goods or services in either an equity–settled or a cash– settled payment transaction to account for the transaction in its separate or individual financial statements. Amendment to IAS 32 – Financial Instruments: Presentation – Classification of Rights Issues (effective for annual periods beginning on or after February 01, 2010). The IASB amended IAS 32 to allow rights, options or warrants to acquire a fixed number of the entity’s own equity instruments for a fixed amount of any currency to be classified as equity instruments provided the entity offers the rights, options or warrants pro rata to all of its existing owners of the same class of its own non–derivative equity instruments. IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments (effective for annual periods beginning on or after July 01, 2010). This interpretation provides guidance on the accounting for debt for equity swaps. IAS 24 – Related Party Disclosures (revised 2009) – effective for annual periods beginning on or after January 01, 2011. The revision amends the definition of a related party and modifies certain related party disclosure requirements for government–related entities. The amendment would result in certain changes in disclosures. Amendments to IFRIC 14 IAS 19 – The Limit on a Defined Benefit Assets, Minimum Funding Requirements and their Interaction (effective for annual periods beginning on or after January 01, 2011). These amendments remove unintended consequences arising from the treatment of prepayments where there is a minimum funding requirement. These amendments result in prepayments of contributions in certain circumstances being recognised as an asset rather than an expense. This amendment is not likely to have any impact on Bank’s financial statements. Amendments to IFRS 5 – Non–current Assets Held for Sale and Discontinued Operations – (effective for annual periods beginning on or after July 01, 2009). The amendments specify that if an entity is committed to a plan to sell a subsidiary, then it would classify all of that subsidiary’s assets and liabilities as held for sale when the held for sale criteria in IFRS 5 are met. This applies regardless of the entity retaining an interest (other than control) in the subsidiary; and disclosures for discontinued operations are required by the parent when a subsidiary meets the definition of a discontinued operation. This amendment is not likely to have any impact on Bank’s financial statements. 4. 4.1 BASIS OF MEASUREMENT These financial statements have been prepared under the historical cost convention except that certain fixed assets are stated at revalued amounts and certain investments, commitments in respect of certain forward exchange contracts and derivative financial instruments have been marked to market and are carried at fair value. The financial statements are presented in Pak Rupees, which is the Group’s functional and presentation currency. The amounts are rounded off to the nearest thousand. Critical accounting estimates and judgments The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Bank’s accounting policies. Estimates and judgments are continually evaluated and are based on historical experiences, including expectations of future events that are believed to be reasonable under the circumstances. The areas where various assumptions and estimates are significant to the Bank’s financial statements or where judgment was exercised in the application of accounting policies are as follows: a) – Classification of investments In classifying investments as ‘held for trading’, the Group has determined securities which are acquired with an intention to trade by taking advantage of short term market / interest rate movements and are to be sold within 90 days. In classifying investments as ‘held to maturity’, the Group follows the guidance provided in SBP circulars on classifying non–derivative financial assets with fixed or determinable payments and fixed maturity. In making this judgment, the Group evaluates its intention and ability to hold such investment to maturity. The investments which are not classified as ‘held for trading’ or ‘held to maturity’ are classified as ‘available for sale’.

4.2

4.3

Annual Report 2009 I 163

Notes to the Consolidated Financial Statements
For the year ended December 31, 2009
b) Provision against advances The Group reviews its loan portfolio to assess amount of non–performing advances and provision required there against on regular basis. While assessing this requirement various factors including the delinquency in the account, financial position of the borrowers and the requirements of the Prudential Regulations are considered. The amount of general provision is determined in accordance with the relevant regulations and management’s judgment as explained in notes 10.4.3 and 10.4.4. c) Impairment of ‘available for sale’ equity investments The Group determines that ‘available for sale’ equity investments are impaired when there has been a significant or prolonged decline in the fair value below its cost. The determination of what is significant or prolonged requires judgment. In making this judgment, the Group evaluates among other factors, the normal volatility in share price. In addition, the impairment may be appropriate when there is an evidence of deterioration in the financial health of the invested industry and sector performance, changes in technology and operational/financial cash flows. d) Taxation In making the estimates for income taxes currently payable by the Group, the management considers the current income tax laws and the decisions of appellate authorities on certain issues in the past. e) Fair value of derivatives The fair values of derivatives which are not quoted in active markets are determined by using valuation techniques. The valuation techniques take into account the relevant interest rates at the balance sheet date and the rates contracted. f) Depreciation, amortization and revaluation of operating fixed assets In making estimates of the depreciation / amortization method, the management uses the method which reflects the pattern in which economic benefits are expected to be consumed by the Group. The method applied is reviewed at each financial year end and if there is a change in the expected pattern of consumption of the future economic benefits embodied in the assets, the method is changed to reflect the changed pattern. Such change is accounted for as change in accounting estimates in accordance with International Accounting Standard (IAS) 8 “Accounting Policies, Changes in Accounting Estimates and Errors”. Further, the Group 5. 5.1 estimates the revalued amount of land and buildings on a regular basis. The estimates are based on valuations carried out by independent professional valuers under the market conditions. g) Staff retirement benefits Certain actuarial assumptions have been adopted as disclosed in these financial statements (note 36) for the actuarial valuation of staff retirement benefit plans. Actuarial assumptions are entity’s best estimates of the variables that will determine the ultimate cost of providing post employment benefits. Changes in these assumptions in future years may affect the liability / asset under these plans in those years. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Change in accounting policies Starting January 01, 2009, the Bank has changed its accounting policies in respect of ‘Presentation of financial statements’ and ‘Ijarah’. 5.1.1 The Bank has applied Revised IAS 1 Presentation of Financial Statements (2007) which became effective as of January 01, 2009. As a result, the Bank presents in the statement of changes in equity all owner changes in equity, whereas all non–owner changes in equity are presented in statement of comprehensive income. This presentation has been applied in these financial statements as of and for the year ended on December 31, 2009. Comparative information has been re–presented so that it is also in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earning per share. 5.1.2 The State Bank of Pakistan has notified for adoption of Islamic Financial Accounting Standard – IFAS 2 “Ijarah” which is applicable for accounting periods beginning on or after January 01, 2009. IFAS 2 requires assets underlying ijarah financing to be recorded as operating fixed assets separately from the assets in Bank’s own use. These assets are carried at cost less accumulated depreciation and impairment, if any. 5.2 Basis of consolidation a) The consolidated financial statements include the financial statements of MCB Bank Limited and its subsidiary companies and share of the profit / reserves of an associate accounted for under the equity basis of accounting.

164 I MCB Bank Limited

Material intra–Group balances and transactions have been eliminated. Investments in associates are accounted for by the equity method of accounting and are initially recognised at cost. Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired associate at the date of acquisition. In accordance with the requirements of the State Bank of Pakistan. Investments are initially recognized at cost which in case of investments other than ‘held for trading’ include transaction costs associated with the investment. thereafter for the post–acquisition change in the Group’s share of net assets of the associate. c) d) 5. Surplus / (deficit) arising on revaluation of quoted securities which are classified as ‘held for trading’. is taken to the profit and loss account currently.Notes to the Consolidated Financial Statements For the year ended December 31. Gains and losses on the disposal of an associate include the carrying amount of goodwill relating to the associate sold. interest rate movements. quoted securities. They are de–consolidated from the date when control ceases / the subsidiaries disposed off. Unquoted equity securities (excluding investments in subsidiaries and associates) are valued at the lower of cost and break–up value. participation term certificates and term finance certificates) is made currently. 2009 b) Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies accompanying a shareholding of more than one half of the voting rights. Provisions for impairment in value of debentures. other than those classified as ‘held to maturity’. The Group’s share in an associate has been accounted for on the basis of the financial statements for the year ended December 31. 2009. Goodwill on acquisitions of associates is included in ‘investments in associates’. Investments classified as ‘held to maturity’ are carried at amortized cost. Accounting policies of the associate have been changed where necessary to ensure consistency with the policies adopted by the Group. investments in subsidiaries and investments in associates are subsequently re–measured to market value. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.3 Investments The Group classifies its investments as follows: a) Held for trading These are securities. participation term certificates and term finance certificates are made as per the requirements of the Prudential Regulations issued by the State Bank of Pakistan. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. b) Held to maturity These are securities with fixed or determinable payments and fixed maturity in respect of which the Group has the positive intent and ability to hold to maturity. Minority interest is that part of the net results of operations and of net assets of subsidiary companies attributable to interests which are not owned by the Group. All purchases and sales of investments that require delivery within the time frame established by regulation or market convention are recognized at the trade date. Provision for impairment in the values of securities (except debentures. dealers margin or are securities included in a portfolio in which a pattern of short–term profit taking exists. Annual Report 2009 I 165 . Investments in subsidiaries and investments in associates are carried at cost. c) Available for sale These are investments. The assets and liabilities of subsidiary companies have been consolidated on a line by line basis based on the financial statements as at December 31. the cumulative post–acquisition movements are adjusted in the carrying amount of the investment. Surplus / (deficit) arising on revaluation of quoted securities which are classified as ‘available for sale’. that do not fall under the ‘held for trading’ or ‘held to maturity’ categories. Associates are all entities over which the Group has significant influence but not control. is taken to a separate account which is shown in the balance sheet below equity. The existence and effect of potential voting rights that are currently exercisable are considered when assessing whether the Group controls another entity. other than those in subsidiaries and associates. which are either acquired for generating profit from short–term fluctuations in market prices. Trade date is the date on which the Group commits to purchase or sell the investment. Break–up value of equity securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements. 2008 and the carrying value of investments held by the Bank is eliminated against the subsidiaries’ shareholders’ equity in these consolidated financial statements.

5. 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. Provisions against unidentified losses include general provision against consumer loans made in accordance with the requirements of the Prudential Regulations issued by SBP and provision based on historical loss experience on advances. 5. 2009 5. using the straight line method. except that the related surplus on revaluation of land and buildings (net of deferred taxation) is transferred directly to unappropriated profit. whereby the cost of the intangible assets are amortized over its estimated useful lives over which economic benefits are expected to flow to the Bank. Specific provision is determined on the basis of the Prudential Regulations and other directives issued by the State Bank of Pakistan (SBP) and charged to the profit and loss account. if appropriate. All other repairs and maintenance are charged to the profit and loss account. as appropriate. Depreciation on additions is charged from the month the assets are available for use while no depreciation is charged in the month in which the assets are disposed off. are stated at cost or revalued amount less accumulated depreciation and accumulated impairment losses (if any). in the event the asset is expected to be available for re–ijarah. 5. useful lives and depreciation methods are reviewed and adjusted. at each balance sheet date. and where the carrying value exceeds the estimated recoverable amount. The residual values. Gains / losses on sale of property and equipment are credited / charged to the profit and loss account currently. Finance lease receivables are included in advances to the customers. If such indication exists.6. Impairment The carrying amount of assets are reviewed at each balance sheet date for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable.Notes to the Consolidated Financial Statements For the year ended December 31. Recoverable amount is the greater of net selling price and value in use. Ijarah income is recognized on an accrual basis as and when the rental becomes due. However. A receivable is recognized at an amount equal to the present value of the lease payments including any guaranteed residual value. To the extent of the incremental depreciation charged on the revalued assets.7 Surplus on revaluation of land and buildings is credited to the surplus on revaluation account. The resulting impairment loss is taken to the profit and loss account except for impairment loss on revalued assets. if any. which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of that asset. Depreciation on all operating fixed assets is charged using the diminishing balance method except for vehicles. Advances are written off when there is no realistic prospect of recovery.5 Advances Advances are stated net of specific and general provisions. assets are written down to their recoverable amounts. Capital work–in–progress is stated at cost.2 to these financial statements and after taking into account residual value. 166 I MCB Bank Limited 5.2 Leased (Ijarah) Assets leased out under ‘Ijarah’ are stated at cost less accumulated depreciation and accumulated impairment losses. if any. as the case may be. Cost of property and equipment of foreign operations includes exchange differences arising on currency translation at year–end rates. Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset. other than land carrying value of which is not amortized. depreciation is charged over the economic life of the asset using straight line basis. Assets under Ijarah are depreciated over the period of lease term. computers. if appropriate. The difference between the purchase / sale and re–sale / re– purchase price is recognized as mark–up income / expense on a time proportion basis. Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does not differ materially from the fair value. if any. Intangible assets are amortized from the month when these assets are available for use. 5. The useful lives are reviewed and adjusted. Land is carried at revalued amount. at each balance sheet date. Provisions are held against identified as well as unidentified losses. the related surplus on revaluation of land and buildings (net of deferred taxation) is transferred directly to unappropriated profit.4 Sale and 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.6 Operating fixed assets and depreciation Property and equipment. carpets and buildings which are depreciated using the straight line method in accordance with the rates specified in note 11. Securities purchased under an agreement to resell (reverse repo) are not recognized in the financial statements as investments and the amount extended to the counter party is included in lendings to financial institutions.6.1 Intangible assets Intangible assets are stated at cost less accumulated amortization and accumulated impairment losses. . Leases where the Bank transfers substantially all the risks and rewards incidental to ownership of an asset to the lessee are classified as financial leases.

– – – b) – – – c) – – e) Annual contributions towards the defined benefit plans and schemes are made on the basis of actuarial advice using the projected unit credit method. 5. Post retirement medical benefits to entitled employees. Minimum qualifying period for entitlement to gratuity is five years continuous service with the Company. Actuarial gains or losses if any. 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. However. 5. MNET Services (Private) Limited (subsidiary company) The company operates an unfunded gratuity scheme for its eligible employees. Accrual of charge for the year is made on the basis of actuarial valuations carried out under the projected unit credit method. Employees’ compensated absences MCB Bank Limited (holding company) Liability in respect of employees’ compensated absences is accounted for in the year in which these are earned on the basis of actuarial valuation carried out using the Projected Unit Credit Method. an approved gratuity scheme. and a contributory benevolent scheme For clerical / non–clerical staff who joined the Group after the introduction of the new scheme and for others who opted for the new scheme introduced in 1975. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. an approved pension fund. are recognized immediately. enacted or substantively enacted by the balance sheet date expected to be applicable at the time of its reversal. Deferred Deferred tax is recognised using the balance sheet liability method on all major temporary differences between the amounts attributed to assets and liabilities for financial reporting purposes and amounts used for taxation purposes. The Group also recognises deferred tax asset / liability on deficit / surplus on revaluation of securities and deferred tax liability on surplus on revaluation of fixed assets which is adjusted against the related deficit / surplus in accordance with the requirements of International Accounting Standard (IAS) 12. the management has replaced the pension benefits for employees in the officer category with a contributory provident fund for services rendered after December 31. d) For executives and officers who joined the Group on or after January 01. and contributory benevolent scheme For officers who joined the Group after the introduction of the new scheme and for others who opted for the new scheme introduced in 1977.Notes to the Consolidated Financial Statements For the year ended December 31. Annual Report 2009 I 167 . the Bank operates the following: an approved non–contributory provident fund introduced in lieu of the contributory provident fund. The net cumulative actuarial gains / losses at each balance sheet date are recognized equally over a period of three years or the expected remaining average working lives of employees.10 Taxation Current Provision for current taxation is based on taxable income at the current rates of taxation after taking into consideration available tax credits and rebates.9 Past service cost resulting from changes to defined benefit plans to the extent the benefits are already vested is recognized immediately and the remaining unrecognized past service cost is recognized as an expense on a straight line basis over the average period until the benefits become vested. The Group records deferred tax assets / liabilities using the tax rates. ‘Income Taxes’.8 Staff retirement benefits MCB Bank Limited (holding company) The Bank operates the following staff retirement benefits for its employees: a) For clerical / non–clerical staff who did not opt for the new scheme. Actuarial gains and losses are amortized over the expected future service of employees to the extent of the greater of ten percent of the present value of the defined benefit obligations at that date. relating to prior years which arise from assessments framed / finalized during the year. 2000 the Group operates an approved contributory provident fund. the Bank operates the following: an approved non–contributory provident fund introduced in lieu of the contributory provident fund. and an approved pension fund. The charge for current tax also includes adjustments where considered necessary. 2009 5. whichever is lower. 2003. The above benefits are payable to staff at the time of separation from the Bank’s services subject to the completion of qualifying period of service. the Bank operates the following: an approved contributory provident fund.

168 I MCB Bank Limited . Commission income is recognized at the time of sale of units by the Asset Management Company.1 Foreign currency transactions – – – – – – 5. Dividend income is recognized when the Group’s right to receive dividend is established. Gain / loss on sale of investments is credited / charged to profit and loss account currently. Unrealized lease income is held in suspense account. Premium on foreign currency options and commission income is recognized on a time proportion basis. where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.3 Translation gains and losses Translation gains and losses are included in the profit and loss account.12. in accordance with the requirements of SBP or overseas regulatory authorities of the country where the foreign branches of the Bank operate. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates. Monetary assets and liabilities in foreign currencies are expressed in Rupee terms at the rates of exchange prevailing at the balance sheet date. Outsourcing and networking service revenue is recognized on an accrual basis. where necessary. the unearned lease income (excess of the sum of total lease rentals and estimated residual value over the cost of leased assets) is deferred and taken to income over the term of the lease period so as to produce a constant periodic rate of return on the outstanding net investment in lease. Gains / losses on termination of lease contracts are recognized as income when these are realized.13 Revenue recognition – Mark–up / interest on advances and returns on investments are recognized on a time proportion basis using the effective interest method except that mark–up / interest on non–performing advances and investments is recognized on a receipt basis. 5. except those arising on the translation of the Bank’s net investment in foreign branches. Revenue for acting as trustee is recognized on net asset value (NAV) of respective funds. Under this method. Foreign bills purchased and forward foreign exchange contracts other than those relating to foreign currency deposits are valued at the rates applicable to their respective maturities. 5. 5.11 Provisions Provisions are recognized when the Group has a legal or constructive obligation as a result of past events and 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.2) are translated to Rupees at the foreign exchange rates ruling on the transaction date.12. 2009 Deferred tax liability is not recognized in respect of taxable temporary differences associated with exchange translation reserves of foreign operations. which are taken to the capital reserve (exchange translation reserve). – 5.12.Notes to the Consolidated Financial Statements For the year ended December 31. Financing method is used in accounting for income from lease financing.4 Commitments Commitments for outstanding forward foreign exchange contracts are disclosed in these financial statements at committed amounts. The results of foreign operations are translated to Rupees at the average rate of exchange for the year. 5.2 Foreign operations The assets and liabilities of foreign branches are translated to Rupees at exchange rates prevailing at the balance sheet date.12 Foreign currencies Transactions in foreign currencies (other than the results of foreign operations discussed in note 5. – 5. 5.12. in accordance with the requirements of the Prudential Regulations issued by the State Bank of Pakistan (SBP) or as permitted by the regulations of the overseas regulatory authorities of the countries where the branches operate.12. 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 balance sheet date.14 Operating leases Operating lease rentals are recorded in profit and loss account on a time proportion basis over the term of the lease arrangements.

syndications. Annual Report 2009 I 169 .16. 5. investments (excluding investment in associates and subsidiaries). lendings to financial institutions and brokerage debt. foreign exchange commodities. balances with other banks. bills payable. advances.18. equity. export finance. banking services and retail offered to its retail customers and small and medium enterprises. 2009 5. leasing. investment banking. which is subject to risks and rewards that are different from those of other segments. is recognized as deduction from the share premium account.16. 5. other assets. 5.19 5.2 Derivative financial instruments Derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at their fair value using valuation techniques.1 Financial assets and financial liabilities Dividend distribution and appropriation Dividends (including bonus dividend) and other appropriations (except appropriations which are required by law) are recognized in the period in which these are approved. Commercial Banking It includes project finance. securitization.15 Cash and cash equivalents Cash and cash equivalents include cash and balances with treasury banks and balances with other banks in current and deposit accounts.2 Geographical segments The Group operates in three geographic regions being: – – – Pakistan Asia Pacific (including South Asia) Middle East 5. borrowings. The particular recognition methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with these assets and liabilities. guarantees and bills of exchange relating to its corporate customers.16 Financial instruments Financial instruments carried on the balance sheet include cash and balances with treasury banks.1 Business segments Corporate Finance Corporate Finance includes underwriting. trade finance.18 Segment reporting A segment is a distinguishable component of the Group that is engaged in providing products or services (business segment) or in providing products or services within a particular economic environment (geographical segment). 5. All the derivative financial instruments are carried as an asset when the fair value is positive and liability when the fair value is negative. simultaneously. or to realize the assets and settle the liabilities. IPO related activities (excluding investments) and secondary private placements. lendings to financial institutions.16. private lending and deposits. Any change in the fair value of derivative financial instruments is taken to the profit and loss account currently. The Group’s primary format of reporting is based on business segments. 5. 5.Notes to the Consolidated Financial Statements For the year ended December 31. Trading and Sales It includes fixed income.3 Off setting Financial assets and financial liabilities are set off and the net amount is reported in the financial statements when there is a legally enforceable right to set off and the Group intends either to settle on a net basis.18. banking services. Retail and Consumer Banking It includes retail lending and deposits.17 Share issuance cost Share issuance cost directly attributable to issuance of shares. lending. deposits and other liabilities. 5.

694. 59.287 7.2 17.464 3.950.426 7.1 Balances with other banks outside Pakistan in deposit account carry interest at the rate ranging from 0.20% per annum).526 67.059.1 6.399 324.354 3.774.330 6. BALANCES WITH OTHER BANKS Inside Pakistan – current account Outside Pakistan – current account – deposit account 7. 2.891 2.910 6. 2009 Note 2009 (Rupees in ‘000) 2008 6.600.990 214. CASH AND BALANCES WITH TREASURY BANKS In hand – local currency – foreign currencies With State Bank of Pakistan (SBP) in: Local currency current account Foreign currency current account Foreign currency deposit account With other central banks in foreign currency current account With National Bank of Pakistan in local currency current account 6.363.2 This includes national prize bonds amounting to Rs.106.549 million (2008: Rs. Deposits with SBP are maintained to comply with their requirements issued from time to time.221.361 63.4 This represents US Dollar settlement account maintained with SBP. 1.1 5.631.104.871 19. 6.077.742 million) which carry interest rate of Nil per annum (2008: 0.3 6. 80.347.156 38.089 696.530 261.133.591 million (2008: Rs.12% to 1% (2008: 1. 170 I MCB Bank Limited .4 6.219 6.90% per annum).011 4.148 7.928 11.489 1.Notes to the Consolidated Financial Statements For the year ended December 31. This includes balance of Rs.059.188 6.038.3 6.522.382 million).663 950.2 6.306 39.1 9.404 142.2 & 6. Note 2009 (Rupees in ‘000) 2008 7. Deposits with other central banks are maintained to meet their minimum cash reserves and capital requirements pertaining to the foreign branches of the Bank.239.

700.100.1 Particulars of lendings In local currency In foreign currencies 3.75% to 21% per annum) and are due to mature latest by February. 2009 Note 2009 (Rupees in ‘000) 2008 8.000. LENDINGS TO FINANCIAL INSTITUTIONS Call money lendings Repurchase agreement lendings 8.3 Securities held as collateral against lendings to financial institutions 2009 Held by group Further given as collateral Total Held by group 2008 Further given as collateral Total (Rupees in ‘000) Market Treasury Bills Pakistan Investment Bonds – – – – – – – – – 2.000 4.079 8.079 7. 2010.000 4.000 – 3.300.024.079 Market value of securities held as collateral against lendings to financial institutions as at December 31.Notes to the Consolidated Financial Statements For the year ended December 31.946 2. These carry mark up at rate of Nil per annum (2008: 9.400. Nil (2008: Rs. 2009 amounted to Rs.601 275.100.90% per annum).408.079 8.610 million). Annual Report 2009 I 171 .2 8.000 2. 2.532 – 99.50% to 14.35% to 12.2 These carry mark–up rates ranging from 12.000.3 3.532 2.70% per annum (2008: 15.000 – 3.946 2. 8.400.133 275.124.000 1.000.079 4.093.000.547 99.

000 1.12 3.287.172.969.831.962) 94.518.511. 9.300 2.Notes to the Consolidated Financial Statements For the year ended December 31.574.538 2.531) 98.557 2.763.843 5.969.588 325.6 9.037 250.4 & Annexure I (note 4) 9.828 676.789 104.786 19.5 9.636 70.513.216 118 870.574.2 331.321.981 513.4 & Annexure I (note 3) 108.777 155.824.742.489 63.134 (2.588 (26.510 137.664 8.831 523.253 400.902 2.854.010 172.489 63.401.6 9.258 Held–to–maturity securities – Market Treasury Bills – Pakistan Investment Bonds – Federal Government Securities – Provincial Government Securities – Government Compensation Bonds – Sukuk Bonds – Euro Bonds – TFCs.636 (3.6 9.287.710 63.636 2.370.205 – – – – 177.787.488 – – – – – – 320.312.168.563 3.636 – – – – – – – 6.583 118 286.000 1.1 INVESTMENTS – NET Investments by types 2009 Note / Annexure Held by group Given as collateral Total Held by group 2008 Given as collateral Total (Rupees in ‘000) Held for trading securities – Shares in listed companies – Market Treasury Bills – Units in open ended mutual funds 9.783 64.516 – – – – – – – 1.214 442.686.152.623.454.110 2.204.493.242 4.387.546 Annexure I (note 5) Annexure I (note 5) Annexure I (note 5) 9.401.588 325.189.838.538 – 31.774 5.777 123.000 1.786 19.287.300 Associates Adamjee Insurance Company Limited First Women Bank Limited 172 I MCB Bank Limited .771 2.523 2.000 17.5 11.647 (99.4 & Annexure I (note 1) 9.812 392.879.753.779.929 684.204 Annexure I (note 6) 9.253 400.569.172.546 – – – 4.383 171.724 5. 2009 9.525 – – – – – – – 31.165.000 17.941 7.391 21. Debentures.300 3.375 – 6. Bonds and Participation Term Certificates (PTCs) – Certificates of Investment Annexure I (note 4) 4.513.300 3.205.516 31.810 136.771 2.810 1.956) 9.878 141.816 2.056.250.714 – 13.244.5 9.038 – – – – – – 3.7 9.074.520) 169.909 515.3 (3.440 – 31.583 118 286.214 442.189.831 523.044.510 169.383 171.620) (2.339.109 11.260 4.714 – 13.520) 137.4 & Annexure I (note 4) 9.204 – – – 6.960 – – – 31.664 6.488 320.634.962) 101.286.816 2.941 7.152.724 5.488 177.029.5 & Annexure I (note 2) – – 320.843 5.511.384 77.205 Available–for–sale securities – Market Treasury Bills – Pakistan Investment Bonds – Shares in listed companies – Units in open ended mutual fund – Shares in unlisted companies – NIT units – Sukuk Bonds – Listed Term Finance Certificates (TFCs) 9.250.351.981 513.242 – 6.016 (99.010 Investments at cost Less: Provision for diminution in value of investments Investments (net of provisions) Surplus / (deficit) on revaluation of available for sale securities – net Surplus / (deficit) on revaluation of ‘held for trading’ securities – net Investments at revalued amounts – net of provisions 9.148 2.249 5.133.000 1.828 676.339.531) 91.557 2.634.403.6 Annexure I (note 5) 3.003 (3.336) (1.038 4.812 392.710 63.251.764.525 139.260 4.488 320.649.789 97.686.4 & Annexure I (note 1) 9.403.563 (3.370.133.909 515.044.536.321.300 2.253 400.244.454) 305.287.649.384 83.840 – – 136.643.753.037 250.929 684.216 118 870.831.861.312.454.484.664 8.253 400.

838.148 118 3.686.612 413. 2009 Note / Annexure 2009 (Rupees in ‘000) 2008 9.6 Annexure I (note 5) Annexure I (note 5) Annexure I (note 5) Annexure I (note 4 & 5) Annexure I (note 4) 139.724 1.764.337.000 61. Bonds and Participation Term Certificates: – Listed Term Finance Certificates – Unlisted Term Finance Certificates – Debentures.727 5.574.569.531) 98.129.2 Investments by segments Federal Government Securities: – – – – – – – Market Treasury Bills Pakistan Investment Bonds Federal Government Securities Government Compensation Bonds Euro Bonds Sukuk Bonds Unlisted Term Finance Certificate 9.003 21.771 4.391 Annexure I (note 4) Annexure I (note 4) Annexure I (note 4) 1.000 70.3 (3.683.602 100.484.702 3.074.000.253 104.843 763.854.000.306.969.165.404.831.000 1. Debentures.403. Bonds and Participation Term Certificates (PTCs) – Certificates of Investment Other Investments: – Sukuk Bonds – NIT Units Total investments at cost Less: Provision for diminution in the value of investments Investments (net of provisions) Surplus / (deficit) on revaluation of available for sale securities – net Surplus / (deficit) on revaluation of held for trading securities – net Investments at revalued amounts – net of provisions Annexure I (note 5) 1.324 171.520) 169.740 9.384 897.602 100.523 9.503.533 3.476 322.6 9.840 (3.777 1.962) 101.650.126 4.071.227 5.699.647 1.000 Annexure I (note 1) Annexure I (note 3) Annexure I (note 1 & 2) 7.448 129.387.134 11.168.774 7.589 250.878 (2.557 684.469 8.956) (99.029.Notes to the Consolidated Financial Statements For the year ended December 31.044.000 Overseas Government Securities – Government of Sri Lanka Treasury Bonds – Market Treasury Bills Provincial Government Securities Associated Undertakings Fully Paid–up Ordinary Shares / Certificates / Units – Listed companies / mutual funds / modarabas – Unlisted companies / funds Units of Open Ended Mutual Funds Fully Paid–up Preference Shares: – Listed Companies – Unlisted Companies Term Finance Certificates.513.583 286.253 172.789 Annual Report 2009 I 173 .2 9.096 121.618 – 1.516 1.216 870.010 70.321.510 169.810 1.012 415.816 118 2.5 305.002.7 & Annexure I (note 6) – 3.000 Annexure I (note 1) Annexure I (note 3) 61.

962 1.613 75. Debentures.572 90.3 Particulars of provision Opening balance Charge during the year Reversal made during the year Adjustment on disposal of shares Investment written off against provision Closing balance 9.320) 3.636 99.858.197) 3.962 9.520 468.288 2.366 12.538.994 – (107.218 (772.477 2.391 93.319 2.197.5 3.463) (70.683.575 3.309 37.402.111 1.840 1.5 3.962 (Rupees in ‘000) Market Treasury Bills Pakistan Investment Bonds Listed Term Finance Certificates Askari Bank Limited Bank Al–Habib Limited Bank Alfalah Limited United Bank Limited Allied Bank Limited Soneri Bank Limited Pak Arab Fertilizers Limited 9.787.420 149.531 AA– AA– AA– AA AA A+ AA Shares in Listed Companies Abbott Laboratories Pakistan Limited Allied Bank Limited Arif Habib Limited Arif Habib Securities Limited Askari Bank Limited Atlas Bank Limited Attock Petroleum Limited Azgard Nine Limited – preference shares Bank Alfalah Limited Bank Al–Habib Limited Century Papers and Board Mills Limited Cherat Cement Company Limited EFU General Insurance Company Limited 16. 2009 Note 2009 (Rupees in ‘000) 2008 9.437 167.331.002 178.4.4 Quality of ‘available for sale’ securities 2009 Note Market value (Rupees in ‘000) Credit rating Market value 2008 Credit rating 9.582.650 329 1.1 Particulars of provision in respect of Type and Segment Available–for–sale securities Listed shares / Certificates / Units Unlisted shares Held–to–maturity securities Unlisted TFCs.221) 2.735.677) 1.151 80.1 9.619 725.981 5.686.544 AA– AA AA– AA AA– A+ AA 201.1 139.980 1.347 62.387 186.377 146. Bonds and Participation Term Certificates 104.655 – 1.455 20.962 – 144.279 5.520 9.790 99.599 Unrated Unrated 435.601 Not available AA & A1+ A– & A2 Not available AA & A1+ A– & A2 Not available A+ & A1 AA & A1+ AA & A1+ A– & A2 Not available AA 174 I MCB Bank Limited .686.895 (54.386 15.840 248.510.045 6.065 Unrated Unrated 70.475 64.685.044.607 10.3.109 244.293 307.4.044.215 (1.268 50.400 106.902.603 71.370 70.175 Not available AA & A1+ Not available Not available AA & A1+ A– & A2 Not available A+ & A1 AA & A1+ AA+ & A1+ A– & A–2 Not available AA 12.261.641 11.910 70.585 11.623 91.484.716 3.201 3.Notes to the Consolidated Financial Statements For the year ended December 31.044.985 7.

161 81.545 13.759 52.237 2.644 3.960 212.460 1.595 7.990 86.250 948 – 76.775 5.662 55.233 Annual Report 2009 I 175 Not available Not available Not available Not available Not available .397 AA– AA & A1+ Not available Not available BBB & A–3 Not available AA+ & A–1+ AA+ & A–1+ Not available AA Not available Not available A– & A1 AA+ & A1+ Not available Not available Not available Not available Not available Not available Not available AAA & A–1+ AAA & A1+ AAA & A–1+ AA & A1+ A & A1 AA & A1+ Not available Not available Not available Not available Not available AA+ & A1+ Not available Not available Not available A & A–1 AA– & A1+ AA & A1+ Not available Not available AA– & A1+ Not available – Not available AA+ & A–1+ Not available 2.918 106.942 516.461 82.423 – 97.155 4.571 60.691 327.700 82.402.059 28.164 17.775 1.785 2.058 84.259 22.952 67.090 174.460 – 34.420 21.660 52.705 502.991 15.064 56.210 147 81.807 125.305 20.887 50.170 5.376 519.239 80.550 2.850 1.521 11. 2009 2009 Note Market value (Rupees in ‘000) Credit rating Market value 2008 Credit rating (Rupees in ‘000) EFU Life Assurance Company Limited Engro Chemical Pakistan Limited Fauji Fertilizer Bin Qasim Company Limited Fauji Fertilizer Company Limited First Al – Noor Modaraba Glaxo Smithkline Pakistan Limited Habib Bank Limited Habib Metropolitan Bank Limited Hub Power Company Limited IGI Insurance Limited Indus Motors Company Limited International Industries Limited JS Bank Limited Jahangir Saddique & Company Limited Kohinoor Energy Limited Kot Addu Power Company Limited Lucky Cement Limited Maple Leaf Cement Company Limited Masood Textile Mills Limited – preference shares Mehr Dastagir Textile Mills Limited Millat Tractors Limited National Bank of Pakistan National Refinery Limited Oil & Gas Development Company Limited Orix Leasing Pakistan Limited Pace Pakistan Limited Packages Limited Pak Suzuki Motor Company Limited Pakistan Cables Limited Pakistan Cement Company Limited Pakistan Oilfields Limited Pakistan Petroleum Limited Pakistan State Oil Company Limited Pakistan Telecommunication Company Limited Pakistan Tobacco Company Limited Rupali Polyester Limited Samba Bank Limited (Formerly Crescent Commercial Bank Limited) Soneri Bank Limited Sui Northern Gas Pipelines Limited** Taj Textile Mills Limited Thal Limited The Bank of Punjab Trust Securities & Brokerage Limited* TRG Pakistan Limited Unilever Pakistan Limited United Bank Limited Zulfiqar Industries Limited 1.421 151.414 50.549 AA– AA & A1+ Not available Not available BBB & A3 Not available AA+ & A1+ AA+ & A1+ Not available AA Not available Not available A– & A2 AA+ & A1+ Not available Not available Not available BBB+ & A2 Not available Not available Not available AAA & A–1+ AAA & A1+ AAA & A1+ AA+ & A1+ A+ & A1 AA & A1+ Not available Not available Not available Not available Not available AAA & A1+ Not available Not available Not available Not available AA– & A1+ AA & A1+ Not available Not available AA– & A1+ Not available BBB+ & A2 Not available AA+ & A–1+ Not available Open Ended Mutual Fund Atlas Islamic Fund KASB Liquid Fund MCB Dynamic Allocation Fund MCB Dynamic Cash Fund MCB Dynamic Stock Fund 10.658 36.563 24.311.663 12.890 5.472 50.487 3.592 14.655 14.046 288.041 123.440 20.541 890 60.000 13.244 50.829 1.001 Not available AM3+ AM3+ AM3+ 7.010 14.537 38.001 4.487 37.893 102.705 64.855 107.847 372 1.779 3.544 138.355 154.719 3.675 – 3.795 400.553 71.683 – 30.183.715 8.366 83.374 14.949 5.024.675 – 3.000 323 22.261 1 3.794 13.412 4.520 1.744 25.806 92.216 85.509 38.Notes to the Consolidated Financial Statements For the year ended December 31.

500 Not available Not available 2.500 Not available 100 Not available 10.T.500 BBB & A3 AM4+ 11.527 Not available 2. 9.4.993 Not available 100.074.346 152.959 Unrated 5 Star 176 I MCB Bank Limited .000 Not available 1.4.200.000 736 737 22 442.000 A– & A–1 1.I. Units 9.287 million shares valuing Rs. *These are the strategic investments of the Bank. 2009 2009 Note Market value (Rupees in ‘000) Credit rating Market value 2008 Credit rating (Rupees in ‘000) Shares in Un–listed Companies Khushhali Bank Limited* Equity Participation Fund* National Investment Trust Limited* SME Bank Limited* First Capital Investment (Private) Limited Pak Asian Fund Pakistan Agro Storage and Services Corporation Arabian Sea Country Club* Central Depository Company of Pakistan Limited* National Institutional Facilitation Technologies (Private) Limited* Society for Worldwide Inter Fund Transfer (SWIFT) Fazal Cloth Mills Limited – preference share Lanka Clearing (Private) Limited Lanka Financial Services Bureau Limited Credit Information Bureau of Srilanka 9.2 300.1 396.1 These are Government of Pakistan guaranteed securities.900 Not available 10.106 2.500 715 10.000 – 100 10.446 11. 692.2 Unlisted companies are stated at carrying value.4.000 3.718 million (2008: 32.598 9.879 million) which are held as strategic investment by the Group. 800.689 78.Notes to the Consolidated Financial Statements For the year ended December 31.127 A–2 & A– Not available AM–DS A–3 & BBB AM4+ Not available Not available Not available Not available Not available Not available Not available Not available Not available Not available 300.527 1.4.247 Other Investment Sukuk Bonds N.137 3.000 Not available 700 Not available 1. Unrated 5 Star 419.106 2.500 2.000 1. **This includes 32.287 million shares valuing Rs.738 100.400 Not available 21 Not available 445.

937 million (2008: Rs.436.667 5 (99.11 9.489 At December 31. Investment in Adamjee Insurance Company Limited under equity method – holding 29.10 9.8 9.488 21.867.831 19.165 – 11.159 10.604 269. The market value of Pakistan Investment Bonds and Market Treasury Bills classified as ‘held to maturity’ as at December 31.406 3.164) (83. Investments include Pakistan Investment Bonds amounting to Rs. is given in Annexure “I”.425 20.709 42.277. Investment of the Group in Adamjee Insurance Company Limited has been accounted for under the equity method of accounting based on its financial statements as at December 31. 3. 232. Certain approved / Government securities are kept with the SBP to meet statutory liquidity requirements calculated on the basis of domestic demand and time liabilities. 8.13% 2009 (Rupees in ‘000) 2008 9.786 million). In addition.511. Pakistan Investment Bonds amounting to Rs.007) 2.196 (78.9 2. 3.039. 83.080) (3.166 million and Market Treasury Bills Rs.959.5 Unrealized gain / (loss) on revaluation of investments classified as ‘held for trading’ Unrealized gain /(loss) 2009 2008 2009 (Rupees in ‘000) Cost 2008 Investee Company Allied Bank Limited Attock Petroleum Limited Bank Alfalah Limited ICI Pakistan Limited Jahangir Siddique and Company Limited Lucky Cement Limited Maple Leaf Cement Company Limited Packages Limited Pakistan Oilfields Limited Pakistan Petroleum Limited Thal Limited United Bank Limited MCB Cash Management Optimizer Fund MCB Dynamic Cash Fund Market Treasury Bills – – – – – – – – – – – – 1.116 4. 2009 in accordance with the treatment specified in International Accounting Standard 28. 1.659.506 19.918 million) while the book value of unquoted investments was Rs. 13.851 6.Notes to the Consolidated Financial Statements For the year ended December 31.421 million).696) (6. 2009 9.7 Opening Balance Share of profit for the year before tax Dividend from associate Share of tax Share of unrealized deficit on assets –net of tax Closing Balance 9. 1.148. 2009 amounted to Rs.510 9.345 10. 5 million (2008: Rs.340) (25.531) – – – – – – – – – – – – 50. (IAS 28) ‘Accounting for Investments in Associates’.420 – 325.387.489 200.512) (12. 161.829 10. 9.844 1.661) (682.003) (11. 2006.479 million (2008: Rs. 232.032.710 3.339.674 million and Rs.551 6.220) (5.6 (12.711 1.085) (16.511.021) – 3.60 million) earmarked by the SBP and National Bank of Pakistan against TT / DD discounting facilities and demand note facilities sanctioned to the Bank.588 523.843 (89.665 31.60 million (2008: Rs.205 “Available for sale” Market Treasury Bills and Pakistan Investment Bonds are eligible for rediscounting with the State Bank of Pakistan (SBP). 5 million) have been pledged with the Controller of Military Accounts on account of Regimental Fund account.917) (464) 120.673 million) respectively.448) (501) (3.815 707. 2009 amounted to Rs. 1.04 of 2006 dated February 17. 2009 market value of quoted investments was Rs.148 million (2008: Pakistan Investment Bonds Rs. The Group’s investment in First Women Bank Limited is being carried at cost and have not been accounted for under equity method as the group does not have significant influence over the entity. The market value of the investment in Adamjee Insurance Company Limited as at December 31.4.654.310) (706) (4.157 30.621) (27. Information relating to investments in ordinary shares and preference shares of listed companies and unlisted companies required to be disclosed as part of the financial statements under BSD Circular No.12 Annual Report 2009 I 177 .847.049 million (2008: Rs.884 – 320.

210 7.855) 262.111.866.229.728 94.889) 669.464 3.108 3.763 272.034 262.265 (9.240 4.682 6.835 90.248.915 5.759. 2009 Note 2009 (Rupees in ‘000) 2008 10.568 (87.474.261 19.722) (494.457 178 I MCB Bank Limited .998.895) (225.519.922. In Pakistan Outside Pakistan Net investment in finance lease In Pakistan Outside Pakistan Bills discounted and purchased (excluding treasury bills) Payable in Pakistan Payable outside Pakistan Advances – gross Provision against advances 10.733 5.624 1.293 811.012.356.436.769) 253.3 General provision against consumer loans 10.348 11.889) (273.034 10.270 272.284.568 2.037. running finances.034 5.447.847 (15.821.520 5.142.678. in ‘000) Lease rentals receivable Guaranteed residual value Minimum lease payments Finance charge for future periods Present value of minimum lease payments 791.220.049 3.922 115.297 269.506.868. cash credits.325.932.293 4.037.830 10.762.188 942.5 General provision for potential lease losses (in Srilanka operations) Advances – net of provision 10.632) (453.703.500.845.845.932.345) (269.340 879.632.326.294) (969) (541.444 252.845.574.250) (3) (877.447.253 260.222) (533.1 In local currency In foreign currencies 10.604 4.2 3.4.775 1.525 2.636) (652.685 247.233 5.918 4.090 11.1.472.895.718.055.1.721.185 210.475.282.852.555 8.788.721.760 20.061 90.059 6.564 4.685 10.434) (30.364.133.492 3.1 Particulars of advances (gross) 258.051) (10.685 157.299 981 2.672 10.893 3.013 272.139 3. ADVANCES – NET Loans. etc.2 Short–term Long–term 178.4 Specific provision General provision 10.4.937 3.268) (16.721.121.234 255.211 4.801 65.777 10.910.693) (9.066 1.711.Notes to the Consolidated Financial Statements For the year ended December 31.2 Net investment in finance lease 2009 Not later than one year Later than one and less than five years Over five years Total Not later than one year 2008 Later than one and less than five years Over five years Total (Rs.023.091 815.973 269.594 8.512 1.944 269.

711.527 (123.370 11.932 14.186.283 10.011 14.476.889 – 897.295.540 1.960.528 3.412 (2.1 76.482 (1.494) 5.382.920.061.881 4.377.495) 1.1 7.498 7.845 15.235 15.649) 9.556 7.305 6.222 688.678. 2009 10.722 533.565 9.540 1.728 – 3.111) 16.818.440.217 – 21.705.791 – 897.345 Total Specific Provision Held Domestic Overseas Total 10.841 – 2.370 13.041.889 2.100 – – 501 3.964.259) – 494.3.768 1.723 – 691.506 – 1.268.920.472.933 2.855 Annual Report 2009 I 179 .025 8.536 – 5. 2009 Note Specific General General provision against consumer loans (Rupees in ‘000) Leasing (general) Total 10.234 1.210 – 2.985.457.536 – 5.186.305 6.768 1.933.708.772.336 23.246.434 2008 Note Specific General General provision against consumer loans (Rupees in ‘000) Leasing (general) Total 9.895.693 – (39.500) – 269.345 273.259) – (39.051 – 21.768 1.103 – (2.972) (154.1 9.678.845 11.860 2.930) 3.889 87.556 7.098 – – 251 1.025 8.043.933 2.217 – 30.768 1.295.749. 23.256 76.782 6.932 14.895.967.051 10.131.3.377. 18.3 Advances include Rs.855 87.860 2.021 (1.674.711.596.238.326.222 – – (3.877 – 897.769 Opening balance Exchange adjustments Provision made during the year Reversals Amounts written off Closing balance 10.683.303 1.274 204.447 5.498 7.599.186.594.061.447 5.524.920.335.370 13.127 (1.345 – 691.809 696.3.953 204.476.063 (1.210 – 9.895.593) (2.965.5.599.877 million) which have been placed under the non–performing status as detailed below: 2009 Category of Classification Note Classified Advances Domestic Overseas Total Specific Provision Required Domestic Overseas (Rupees in ‘000) Other Assets Especially Mentioned (OAEM) Substandard Doubtful Loss 10.287 18.069 (123.595.683.992.777 100.242.186.238.268.329.609 4.506 – 1.809 2008 Category of Classification Note Classified Advances Domestic Overseas Total Specific Provision Required Domestic Overseas (Rupees in ‘000) Other Assets Especially Mentioned (OAEM) Substandard Doubtful Loss 10.709.972) – 533.440.791 – 897.740 1.103 6.4 Particulars of provision against advances Opening balance Exchange adjustments Provision made during the year Reversals Amounts written off Closing balance 10.303 1.674.111) 15.920.Notes to the Consolidated Financial Statements For the year ended December 31.895.506.1 This represents non–performing portfolio of agricultural financing classified as OAEM as per the requirements of the Prudential Regulation for Agricultural Financing issued by the State Bank of Pakistan.622 (4.723 million (2008: Rs.382.889 Total Specific Provision Held Domestic Overseas Total – 696.268 10.808 19.994) 5.665 – – (154.234 1.482.678.815 – 6.467 – 24.811.811.276 3.329.593) – 273.1 100.076.482.413.098 – – 251 1.740 1.649) 10.482.482.235 15.500) (3.693 6.413.370 11.242.5.565 9.796.

536 1.972) 2.4.059.4 State Bank of Pakistan vide BSD Circular No.915 9.895.259) 21.220.599.420 37.678.476.791 9. 2009 has allowed benefit of forced sale value (FSV) of pledged stock and mortgaged residential.687 10.000 and above In terms of sub–section (3) of Section 33A of the Banking Companies Ordinance. 10.3 Details of loan write offs of Rs.842 10.4.5 Particulars of write offs: 10.000 and above Write offs of below Rs.413.482. 2009 2009 Specific General (total) Total Specific 2008 General (total) Total (Rupees in ‘000) 10.649 10. 500.649 – 1.889 2009 (Rupees in ‘000) 806.5 5.966 9.217 5.5.156 30.1 Particulars of provisions against advances In local currency In foreign currencies 14. 1962.2 The following amounts have been charged to the profit and loss account: Specific provision General provision General provision against consumer loans General provision for potential lease losses (in Srilanka operations) 10.295.964.482 (2.937 1.5% of the fully secured performing portfolio and 5% of the unsecured performing portfolio as required by the Prudential Regulations issued by the SBP. this write off does not affect the Bank’s right to recover the debts from these customers.599. management has not taken the said benefit in calculation of specific provision.593) (154.210 1.711.4.4.855 2008 10.472.1 Against provisions Directly charged to the profit and loss account 10. 500. Note 2009 (Rupees in ‘000) 2008 3. 10.267 164.527 10.4. 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 December 31. 180 I MCB Bank Limited .127 10.1% of gross advances.500) (39.3 10.4.013 1.818.069 (3.687 1.Notes to the Consolidated Financial Statements For the year ended December 31.3 127.5.576 164.345 764.382.712 849. However.268 794. 2009 is given at Annexure– III.424 15.051 815.077 16.5.599.769 Note 8.4. 500.4 123.335. However.3 General provision against advances represents provision maintained at around 0. commercial & industrial properties (land and building only) held as collateral against NPLs for three years from the date of classification.5 General provision against consumer loans represents provision maintained at an amount equal to 1. other than mortgage and agriculture financing.692 1.5.000 10.2 Write offs of Rs. 10 dated October 20.491.111 41. 2 dated January 27.809 15.796. 2009 and BSD Circular No.098 1.413.649 749.

2 11.844.028 195.485 – – – – 4.090.485 11.482 (502.062) 4. Debts due by executives or officers of the Bank or any of them either severally or jointly with any other persons Balance at beginning of the year Loans granted during the year Repayments Balance at end of the year Debts due by controlled firms.134.661.148 147.218 (1.217) 3.046 1.174 250.134.615.869 524. 2009 Note 2009 (Rupees in ‘000) 2008 10.226 16.186.Notes to the Consolidated Financial Statements For the year ended December 31.844.484 1.320.6 Particulars of advances to directors.732.116.226 Annual Report 2009 I 181 .760 1.181 115.466 510. etc.1 11.022) – 3.747 18.905 3.844. managed modarabas and other related parties Balance at beginning of the year Loans granted during the year Repayments Balance at end of the year 3. executives.485 11.051 101.153 (2.432.1 Capital work–in–progress Civil works Advances to suppliers and contractors Others 871.089 16.485 1.231 17.434.010 510.714.089 210.099.228. associated companies. OPERATING FIXED ASSETS Capital work–in–progress Property and equipment Intangible asset 11.3 1.709 198.

615.082 289.430 4.495 (4.056.376 3 to 50 years 386.674 168.458 20% (171.710 4.247. 2008 Additions/ At December (disposals) 31.385) – – – 92.719.417 57.792 41.183 26.810 9.107) 20.550 (67.726.731) 550.226) 691.391.121 20% 1.327) 609.697 – – 9.181 – – 99.487 (28.174 540.523 – – 50 years 40.597) 822.292 294.108) 3.497) 1.202 4.710 4.032 – – 91.085 – 104.430 4.718.318) – 29.198.741.764 20% 4.854 331.998 540.746 264.548 – – 92.183 917.2 Property and equipment 2009 Cost/ Revalued amount Description At January 01.607 218.067 2.704 65.718.872 (320.188 – 118.028) 130.648 (60.720 3.083) 78.181 25.567 636. 2008 Annual rate of depreciation / estimated useful life 29.136 9.155.461) 82. 2009 Additions/ (disposals) Write off At December 31.567 678. Computers and Office Equipment Vehicles Ijarah Assets Assets held under Ijarah – Car – 20.045 57.731.881 – 70.006.357 3.069 3.718.663 70.947 (209.607 – (27.143 (1.385 – 2008 Cost/ Revalued amount Description At January 01. 2009 Net book value at December 31.770.841) 5.357 16.096. Computers and Office Equipment Vehicles 9.585.408.697 2.697.960.691 18.045 57.697.430 4.998 1.714.230 717.391 20% to 33% 322.430 3.343) 256.062 313.440 96.915) 77. 2009 At January 01.505 10 to 50 years 365.825 (41.131 47.980 34.127.632) 9. 2008 Charge for At December the year / 31.704 65.424 (227.710 (354.391.246.317.013 10% to 33% 1.523 (15.229 (127.576 213.430 4.430 4.741.567 678.045 57.178 2. 2008 Accumulated depreciation At January 01.302.939 2.977 (10.947 1. 2009 Charge for the year / (deprecation on disposals) Accumulated depreciation Write off At December 31. 2009 Annual rate of depreciation / estimated useful life (Rupees in ‘000) Land – Freehold Land – Leasehold Buildings on freehold land Buildings on leasehold land Furniture and fixture Electrical.130 57.149 65.055.184 (34.476 10% to 33% – – 190.047 2.062 313.749 (123.956.412 – – 50 years (Rupees in ‘000) Land – Freehold Land – Leasehold Buildings on freehold land Buildings on leasehold land Furniture and fixture Electrical.128 20% to 33% (20.810 (181.247.348.130 57.266) 76.340) 10.322 (216.709 – 3.332) 802.182 (3.Notes to the Consolidated Financial Statements For the year ended December 31.931 – – 979 20.719.630) 3.750 218.006.385 (576.522) 28.897 20.840) (191.028 182 I MCB Bank Limited .602 730.931 9.825 (16. 2008 (deprecation on disposals) Net book value at December 31.157) 265.607 25.188) 3. 2009 11.535 16.923.

The information relating to location of revalued assets is given in Annexure V.488 2.828 671.942 1. 2007.228.977 671. 2009 Net book value at December 31.233 151. 2009 (Rupees in ‘000) Computer software 712.139.Notes to the Consolidated Financial Statements For the year ended December 31.916 10.386 143. 2009 Amortization for the year At December 31.035 4.747 250.3 Intangible asset 2009 Description At January 01.082 712.2.33 Annual rate of amortization % Annual Report 2009 I 183 .2. 2009 Accumulated amortization At January 01.2. 2009 11. 2008 Accumulated amortization At January 01.053 The information relating to disposal of operating fixed assets required to be disclosed as part of the financial statements by the State Bank of Pakistan is given in Annexure IV and is an integral part of these financial statements.3 Details of disposal of operating fixed assets 2. 2009 would have been as follows: (Rupees in ‘000) Land Buildings 11. 2008 Cost Additions At December 31.082 373.233 560.849 712.465 143.2 The gross carrying amount of fully depreciated assets that are still in use are as follows: Furniture and fixture Electrical.231 33. 2008 Amortization for the year At December 31.757 516. 2008 (Rupees in ‘000) Computer software 560. The details of revalued amounts are as follows: (Rupees in ‘000) Total revalued amount of land Total revalued amount of buildings 9.977 154. 2008 Net book value at December 31.514.405 Had the land and buildings not been revalued.747 33.386 373.851 195. This valuation was incorporated at December 31. 11.465 516. on the basis of market value.231 195.33 Annual rate of amortization % 154.828 250.849 151.317 260.1 The land and buildings of the Bank were last revalued in December 2007 by independent valuers (Pee Dee Associates & Arch–e–Decon).851 2008 Description At January 01.562.851 516. 2009 Cost Additions At December 31.493 922. valuation and engineering consultants. computers and office equipment Vehicles 11. the total carrying amounts of revalued properties as at December 31.493 210.757 922.626.082 712.851 516.082 210.

098 142.232. 2008.832 194.507. 1.769.802 – 1.969 83.1.592.221 2.245 million).322.068.969) – 583.Notes to the Consolidated Financial Statements For the year ended December 31.284. 2008 Rs.1 The market value of non–banking assets with carrying value of Rs.222 million (2008: Rs.667 173.953 23.033.077 – 5. 2009 and December 31.959 20.969 2008 (Rupees in ‘000) 12.342. Unrealised gain on derivative financial instruments Contract / notional amount 2009 2008 2009 (Rupees in ‘000) Unrealised gain 2008 12.432 51.757) 456.085 2009 642 307 193.304 1.033.832.684 583.098 13.2 36.3 12.441.122 1.3 Provision held against other assets Opening balance Charge for the year Reversal during the year Write off during the year Transfer Closing balance 456.125 Note 166. 1.828.252.1 12.228 12. 2009 Note 2009 (Rupees in ‘000) 2008 12.687 million (2008: Based on valuation as of December 31.451 194.194 – 44.112 1.641.824 – 142.947 21. deposits.400 82.155.612.740 184.953 513.507. 184 I MCB Bank Limited .135 (65.326 456.222 million) net of provision as per the valuation report dated December 31.155. 996.3 12.466 319 9.809) (14.861 23.135 – 23.173 50. OTHER ASSETS – NET Income / mark–up accrued on advances and investments – local currency Income / mark–up accrued on advances and investments – foreign currencies Advances.2 Unrealised gain on: Interest rate swaps Cross currency swaps Forward exchange contracts 83.500.802 298.731 7.019 1.127 35.399. advance rent and other prepayments Advance taxation (payments less provisions) Compensation for delayed income tax refunds Branch adjustment account Non–banking assets acquired in satisfaction of claims Unrealised gain on derivative financial instruments Stationery and stamps on hand Prepaid exchange risk fee Receivable from the pension fund Others Less: Provision held against other assets 7.625 1.291 35.333 124.845 21.222 1.819 44.529 23.677 2.400 6.057.891.901. 2009 amounted to Rs.824 (14. CONTINGENT ASSETS There were no contingent assets of the Group as at December 31.098 19.832 1.

90% per annum) and are secured against government securities of carrying value of Rs.092 529. 2010.217.840 15. 15.776 15.7 452.776 4.5 15.003.3 The Bank has entered into agreements for financing with the State Bank of Pakistan (SBP) for extending export finance to customers.680 44.088 17.40% (2008: 15.5 15.220 2.986.418.551.146.50% to 14.018.776 4.331 42. These carry mark–up at the rate of 12.088 17.527 80.317.675.408 1.663.8 Annual Report 2009 I 185 . These carry mark–up rates ranging between 12. 2009 Note 2009 (Rupees in ‘000) 2008 14.4 & 15. The amount is due to SBP and have been obtained for providing long term finance to customers for export oriented projects.829.680 44.742.642.5 15.755 – 6.004 2.1 Particulars of borrowings with respect to currencies In local currency In foreign currencies 43.4 15.658.064 22. These are repayable by January.330 10.064 22. BORROWINGS In Pakistan Outside Pakistan 43. the Bank has granted SBP the right to recover the outstanding amount from the Bank at the date of maturity of the finance by directly debiting the current account maintained by the Bank with SBP.Notes to the Consolidated Financial Statements For the year ended December 31.077 Borrowings from other financial institution Repurchase agreement borrowings Unsecured Call borrowings Overdrawn nostro accounts 15. These carry mark–up at the rate 5% per annum (2008: NIL ). 31.190 1.287. As per the agreements.990 602.50%).636 million).5 8.003.921.325.513.663.6 15.074 5.398 31.525 million (2008: Rs. BILLS PAYABLE In Pakistan Outside Pakistan 8.662.044.2 Details of borrowings (secured / unsecured) Secured Borrowings from State Bank of Pakistan Export refinance scheme Long term financing facility Long term financing – export oriented projects scheme 15.663.522. the Bank has granted SBP the right to recover the outstanding amount from the Bank at the date of maturity of the finance by directly debiting the current account maintained by the Bank with SBP.658.021 17.565 28.05% to 12.408 1.031 70.806 9.021.131. 6.6 15.903 10.840 15.840 15.606.4 & 15. As per the agreements with SBP.50% per annum (2008: 7.201.090 10.742.8 1.662.291 11.088 4.921.282 44.064 22.460 56. 2010.468 15.7 15.059 8.3 & 15. Borrowings from SBP under the export refinance and long term financing for export oriented projects schemes are secured against the Bank’s cash and security balances held by the SBP.928. These are repayable latest by January.662.

2 Deposits include deposits from related parties amounting to Rs.622.945 31.966) – (2.346.234.156.838 – 436.719 61.295 2.053) (1.581.905) 3.391 330.549 16.352.823 1.800.084.781 17.198. Note 2009 (Rupees in ‘000) 2008 17. 2001. DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Saving deposits Current accounts – non remunerative Margin accounts Others Financial institutions Remunerative deposits Non–remunerative deposits 2. The deduction for provisions for doubtful and loss categories of advances and off balance sheet items is now allowable up to a maximum of 1% of total advances.1 The Finance Act.356 367.166 4.581.1 504.910. based on the projections prepared by the Bank.455) (1.926.075 312.1 Particulars of deposits In local currency In foreign currencies 336.442 123.549 62.526 9. The amount of bad debts classified as substandard under Prudential Regulation issued by State Bank of Pakistan would not be allowed as an expense.075 5.158 17.152.201.531 173.974) (399) (46. Provisioning in excess of 1% of total advances can be carried over to succeeding years.757 million on such provisions.911 301.604) (399.137.061 4.587) (552) (1.495 330. 186 I MCB Bank Limited .384 3.773.16.054 16.503 105.680. However the management. is of the view that it would be able to get deduction of provision in excess of 1% of total advances and accordingly has recognised deferred tax amounting to Rs.639.197.Notes to the Consolidated Financial Statements For the year ended December 31.332 150.2 (90.130 367. 8.324 2. 1.424.284.258.925.262. 2009 Note 2009 (Rupees in ‘000) 2008 16. 2009 has made significant amendments in the Seventh Schedule to Income Tax Ordinance.773.756 (661.661 Deductible temporary differences on: Deficit on revaluation of securities Provision for bad debts Provision for gratuity Provision for contributory benevolent scheme Provision for post retirement medical benefits Others 21.222 3.200 756.420) (1.434 563 321.897 million (2008: Rs.486) 440.898.651. DEFERRED TAX LIABILITY / (ASSET) – NET The details of the tax effect of taxable and deductible temporary differences are as follows: Taxable temporary differences on: Surplus on revaluation of operating fixed assets Accelerated tax depreciation Receivable from pension fund Net investment in finance lease receivable 21.824.084.121) (455.152.260) (79.295 517.028.124.655 767 363.138 million).120 685.088.199.969 3.

470.795 431.424 246.000 Ordinary shares of Rs 10 each 2009 2008 (Rupees in ‘000) 10.023.562.795 – 197. OTHER LIABILITIES Mark–up / return / interest payable in local currency Mark–up / return / interest payable in foreign currencies Accrued expenses Unclaimed dividend Staff welfare fund Unrealised loss on derivative financial instruments Provision for employees’ compensated absences Provision for post retirement medical benefits Provision for employees’ contributory benevolent scheme Provision for gratuity Security deposits received in respect of finance lease Taxation (provision less payments) Retention money Insurance payable against consumer assets Branch adjustment account Others 5. 2009 Note 2009 (Rupees in ‘000) 2008 18.369 151.959 Annual Report 2009 I 187 .089.179.253.850.276.244 276.684 691.220.911.732 628.493 21.869 104.825 8. subscribed and paid–up capital 2009 Issued for cash Issued as bonus shares Total Issued for cash 2008 Issued as bonus shares Total 2009 2008 (Rupees in ‘000) (Number of shares) 197.000 1.229.244.242 138.843 Opening balance Shares issued – during the year 628.470.589 4.655.400.320.000.827.276.048 – 431.526 47.333 124.000 10.443.3 18.449 2.041 19.527 197.148.041.684 493.063 17.281 275.277 6.905 207.844.782.845 25.253.000 19.475.768 2009 2008 (Number of shares) 19.071.282.127 101.795 – 197.023.475 18.625 8.034 1.130 173.833 1.582 56.2 Issued.446 6.048 62.000.369 187.345.657 125.636.104.444 1.023.1 SHARE CAPITAL Authorised Capital 2009 2008 (Number of shares) 1.932.000.204 15.282.370.457 1.768 628.504 – 3.852.403 398.225.063 541.Notes to the Consolidated Financial Statements For the year ended December 31.253.126 – 307 275.990 2. are as follows: Adamjee Insurance Company Limited Nishat Mills Limited Mayban International Trust (Labuan) Berhad 21.3 36.843 Closing balance 6.843 62.450.3 36.045 6.768 – 6.350.073 65.000.000.740 293.1 Unrealised loss on derivative financial instruments Contract / notional amount 2009 2008 2009 (Rupees in ‘000) Unrealised loss 2008 Unrealised loss on: Interest rate swaps Cross currency swaps Forward exchange contracts 83. 19.792.138 1.1 36.116 1.000.271 25.139 1.673 19.144.756 276.668 114.276.253.827.591 1.947 1.413 274.327 – 22.810.3 Number of shares held by the associated undertakings as at December 31.161 298.048 628.531 8.933 42.282.795 431.560 68.437 27.041 752.

656 9.252 21.187 527. SURPLUS ON REVALUATION OF ASSETS – NET OF TAX Surplus / (deficit) arising on revaluation (net of tax) of: – fixed assets – available–for–sale securities Surplus / (deficit) arising on revaluation of assets of associated undertaking (net of tax) 21.293.277.774.054 (21. Note 2009 (Rupees in ‘000) 2008 21.551 18. RESERVES Share premium Exchange translation reserve Statutory reserve General reserve 9.772.971 – – – 8.609) 6.373) (11.578.600.269.1 Surplus on revaluation of fixed assets–net of tax Surplus on revaluation of fixed assets as at January 01 Adjustment / surplus during the year Surplus realised on disposal of revalued properties – net of deferred tax Related deferred tax liability (1.374) (12.623) (874) (2.269.482 59.497) Transferred to unappropriated profit in respect of incremental depreciation charged during the year – net of deferred tax Related deferred tax liability (22.990) (179.046) (34.1 20.854 395.046) 504.047 9.810.528 192.242 8.2 8.851 (874) – 517.102.120 8.200 8.797 9.119 188 I MCB Bank Limited .120 – 469.702.081 18.838 8.011.851 (2.387.1 Statutory reserve represents amount set aside as per the requirements of section 21 of the Banking Companies Ordinance.321 20. 2009 Note 2009 (Rupees in ‘000) 2008 20.506) 517.1 21.854 (11.827.192.000 36.731 265.879) 8.000 38.420) Surplus on revaluation of fixed assets as at December 31 Less: Related deferred tax liability on: Revaluation as at January 01 Adjustment / surplus during the year Disposal of revalued properties during the year transferred to profit and loss account Incremental depreciation charged during the year transferred to profit and loss account (12.528 258.506) (32.600.293.144 8.702. 1962.Notes to the Consolidated Financial Statements For the year ended December 31.810.971 – 8.

7 Commitments for the acquisition of fixed assets Other commitments Cross currency swaps (notional amount) Interest rate swaps – (notional amount) Forward outright sale of Government Securities Outright purchase of Government Securities from SBP 23.692 2.743.004 – 69.183.876) 690.832.4 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.983.224.577.480 22.5 Commitments in respect of forward foreign exchange contracts Purchase Sale 23.427) (468. 2009 Note 2009 (Rupees in ‘000) 2008 21.410.011 23.464) 19.810 22.450 Annual Report 2009 I 189 .3 Trade–related contingent liabilities Other contingencies Claims against the Bank not acknowledged as debts 47.666 Sukuk Bonds Add: Related deferred tax asset 17 (3.2 23.134 90.243 18.187 (91.147 (2.1 & 23.238 16.571 54.690 166.838 36.629) 37.860 5.730 (96.516.169 146.1 CONTINGENCIES AND COMMITMENTS Transaction–related contingent liabilities Guarantees in favour of: Government Banks and financial institutions Others Suppliers’ credit / payee guarantee 6.869.966 (2.2 22.053 395.530 26.644.049.000 (2.255.102.214 23.2 Surplus / (deficit) on revaluation of available– for–sale securities – net of tax Federal Government Securities – Market Treasury Bills – Pakistan Investment Bonds Listed Securities – Shares / Certificates / Units – Open Ended Mutual Funds – Term Finance Certificates (307.228 557.286.037 542.030 15. Note 2009 (Rupees in ‘000) 2008 22.415 226.956) 661.246 22.233) 740.2 249.640 24.018 25.667 – – 346.Notes to the Consolidated Financial Statements For the year ended December 31.697 67.148.764.990) 22.1 & 23.739 2.827.065) (2.6 22.421.797 20. 22.863) 305.476.793) (123.254 2.027.037.

393 million resulting in tax liability for interest in suspense for Rs. b) c) FIPS & MRM Division is responsible for coordinating for risk management of derivatives. duration. Presently the Bank has notional limits (both for the portfolio and the counterparty). Other Objectives include: – – contribution to the development of Pakistani financial markets. 722. Macro Level: By Financial Institution Public Sector (FIPS) & Market Risk Management (MRM) Division. and is thus able to provide cost efficient hedging solutions to the counterparties enabling them to concentrate on their business risk. In the event of a shift in interest or foreign exchange (FX) rates. 2009 22. 190 I MCB Bank Limited . It is expected that the pending appeals in this regard in the Honourable Sindh High Court shall be decided in favour of the Bank as allowed in assessment years 1992–1993 and 1993–1994. Total disallowances for the assessment years 1994–95 to 1997–98 on account of interest in suspense amounted to Rs. Accordingly. provision of financial solutions to the counterparties. including: – – Interest Rate Swaps Currency Swaps. procedure development & implementation.8 Taxation The income tax assessments of the Bank have been finalised upto and including the Tax Year 2009. where risks are actually created. Treasury Division requests the FIPS & MRM Division for risk limits. Through this. 317. the department has amended the assessments on certain issues against which the Bank has filed appeal before the Commissioner of Income Tax (Appeals). responsible for policy formulation. VaR PVBP.Notes to the Consolidated Financial Statements For the year ended December 31.) of Interest rate derivative portfolio. etc. the Commissioner of Income Tax (Appeals) vide his orders has decided the matter in favour of the Bank against which the department has filed appeal before the Income Tax Appellate Tribunal (ITAT). Micro Level: Treasury Derivatives & Structured Product Desk and Treasury Operations. The Bank is in a better position to hedge that risk. Limit requests are approved by the appropriate level of authority. currency options are hedged back to back and thus the risks associated with such transactions are minimal. The Bank is providing solutions to this conundrum through derivatives. typically when the counterparty has a concentrated position in the security and is acutely exposed to movements in the underlying risk factors.289 million has been allowed in the assessment years 1998–1999 to 2000–2001. The management and the Bank’s legal counsel are of the view that the issues will be decided in the Bank’s favour as and when these are taken up by the appellate authorities. These numbers are reported to senior management on a daily basis. Risk Limits Before initiating any new derivative transaction. Risk Management Committee (RMC) and the Board of Directors to institute a risk management framework and to ensure provision of all resources and support required for effective risk management on Bank–wide basis. no provision has been made in these financial statements for the above amount. 23. counterparties will be hedging exposure to adverse price movements in a security. the management considers that provision is not necessary for the remaining balance of Rs. these corporates may incur higher borrowing costs or higher cash outflows that will adversely affect profitability.e. 716. For Tax Year 2007.781 million as the Bank has been subjected to tax far exceeding its normal tax liability and is hopeful of favourable decisions in appeals.682 million out of which an amount of Rs. As per the State Bank of Pakistan’s (SBP) regulations. Risk management is performed at: a) Strategic level: By senior management Assets and Liabilities Management Committee (ALCO).405. DERIVATIVE INSTRUMENTS Most corporates (counter parties) have either interest rate exposures arising from debt financing or excess liquidity or currency exposures arising out of commercial and business transactions. Subsequent to the favourable order of the Honourable Sindh High Court. monitoring and reporting. For the Tax Years 2003 to 2008. 244. the department has amended the assessment on similar issues resulting in additional tax liability of Rs. In light of the above the Bank is actively marketing interest rate risk and FX risk management tools. In respect of the Tax Year 2003 to 2006. The risk management system generates marked to market risk numbers (i.713 million against which the legal/appellate course from the Bank has reached ITAT level.

2009 23. of Contracts Notional Principal Mark to Market Negative Positive (Rupees in ‘000) Net 307 – Cross currency swaps 2 to 3 Years 4 346.1 Product analysis 2009 Counter parties Cross Currency Swaps No. of Contracts Notional Principal (Rupees in ‘000) With Banks for Hedging Market Making With other entities for Hedging Market Making Total Hedging Market Making 2 2 124.667 – – – – Interest rate swaps 6 months to 1 year 2 166.127 – 2 – 266.130 – – – – – – 2 – 173.130 266.144.333 83.463 333.380) (4.127 173.144.Notes to the Consolidated Financial Statements For the year ended December 31.012 Cross currency swaps 1 to 2 Years 4 249.210) 2009 Remaining Maturity No.845 – 1 – 83.845 1 1 2008 Counter parties Cross Currency Swaps No.333 – – – – – – 2 – 124. of Contracts Notional Principal Negative Mark to Market Positive (Rupees in ‘000) Net 2 – 173. of Contracts Notional Principal (Rupees in ‘000) FX Options No. of Contracts Notional Principal (Rupees in ‘000) Interest Rate Swaps No.333 – – – – 83. of Contracts Notional Principal (Rupees in ‘000) FX Options No.845 – 1 – 83. of Contracts Notional Principal (Rupees in ‘000) Interest Rate Swaps No.077.127 – 2 – 2.666 2008 Remaining Maturity No.667 – – – – 2 2 173.127 2 2 2.690 (307) 2008 Remaining Maturity No. of Contracts Notional Principal Negative Mark to Market Positive (Rupees in ‘000) Net – 6.845 124.625 – Annual Report 2009 I 191 .222 (13.334 (13.625) 1.380) 2. of Contracts Notional Principal Negative Mark to Market Positive (Rupees in ‘000) Net – 642 642 Interest rate swaps 1 to 3 months 1 to 2 Years 2 2 2.2 Maturity analysis 2009 Remaining Maturity No. of Contracts Notional Principal (Rupees in ‘000) 2 – 124.254 (1.333 – – – – With Banks for Hedging Market Making With other entities for Hedging Market Making Total Hedging Market Making 23.

740 26.388 2. MARK–UP / RETURN / INTEREST EXPENSED Deposits Securities sold under repurchase agreements Other short–term borrowings Sub–ordinated loan Discount.505 36.429 25. commission and brokerage Others 13.560.718.661 40.001 29. OTHER INCOME – NET Rent on property / lockers Net profit on sale of property and equipment Bad debts recovered Others 87.875.894.842 12. MARK–UP / RETURN / INTEREST EARNED On loans and advances to: Customers Financial institutions On investments in: Held for trading securities Available for sale securities Held to maturity securities 10.353 51.785 442.839.218.624 1.058 722.614 90.855 26.119 1.621.109 71.477 980.775 5.788 898.052.173 1.938 – – 748.722 9.169 192 I MCB Bank Limited .741.124 1.115.147 13.011 77.911 11.718 36.139 27.729 806.703 (16.011.108 741.911 202.877.819 336.126 – 452.791 109.218.280 401.724 944.981 – 676.001 11.310 689. 2009 Note 2009 (Rupees in ‘000) 2008 24.711 775.397 30.883 23.944 15.426.525 582.805 29.415 335.069 838.Notes to the Consolidated Financial Statements For the year ended December 31.162 On deposits with financial institutions On securities purchased under resale agreements On money at call Others 133.929 7.891 519.610) 20. GAIN ON SALE OF SECURITIES – NET Federal Government Securities – Market Treasury Bills – Pakistan Investment Bonds Overseas Government Securities Shares – Listed – Unlisted Term Finance Certificates 11.831.865.001 – 36.037 18.049.564 221.738 8.630 22.

779 628 (3.123 829.102 443 561 1.555 16.576.977 590.730 207.670.057 49. insurance.824 245.903 137.7 36.225 539.7 36. ADMINISTRATIVE EXPENSES Salaries and allowances Charge / (reversal) for defined benefit plans and other benefits: – Approved pension fund – Post retirement medical benefits – Employees’ contributory benevolent scheme – Employees’ compensated absences – Gratuity scheme Contributions to defined contribution plan – provident fund Non–executive directors’ fees Rent.034 54.295 3.326.164 4.587 3.152 2.231.648 154.2 11.670 55.967 74.294 102.395 399.750 47.2 11.000 16.221 998.044.739 48.116 64.063 (5. conveyance and fuel Subscription Entertainment Training Expenses Petty Capital items Credit Card Related Expenses Others 28.825) 135. etc. 25 million were paid to Mir Khalil ur Rahman Foundation (MKRF) for internally displaced persons.399.7 36.468 822.579 510.571 332. Out–of–pocket expenses 2.325 10.225 (5.112 28.317 112.470 1.1 During the year.906 150.384 (75. Note 2009 (Rupees in ‘000) 2008 28.554.365 648.581 933 16.044 1.209 10.418 329.Notes to the Consolidated Financial Statements For the year ended December 31.1 28. taxes.484) 151.285) 130. donation amounting to Rs. 2009 Note 2009 (Rupees in ‘000) 2008 28.650 17.812 3.500 1.556 6.432 516 594 4.601 103.295 917. Donation was not made to any donee in which the Bank or any of its directors or their spouses had any interest.692) 1.367.3 36.468 Annual Report 2009 I 193 .923.465 621.486 246.628 849.7 (3.780 4.109 25.237 7.516.488 64.842 216.677 – 17.319) 98.220 1.636 515.650 1.710 143.2 Auditors’ remuneration Annual Audit fee Fee for the audit of branches Fee for the audit of subsidiaries Fee for the audit of overseas subsidiary Fee for audit of overseas branches Fee for half year review Special certifications.454 6. electricity Legal and professional charges Communications Repairs and maintenance Stationery and printing Advertisement and publicity Cash transportation charges Instrument clearing charges Donations Auditors’ remuneration Depreciation Amortization of intangible asset Travelling.465 25.

740 35% 7.743 21. has maintained long term credit rating of AA+ [double A plus] and short– term credit rating of A1+ [A one plus] to the Bank (2008: AA+ [Double A plus] for long term and A1+ [A one plus] for short term rating).707 77.563.097 691.722 – 300.513 7.359 (234.172.345 16.762 (343.660.935) (18.663 8.889.349.387.886.171) Share of tax of associated undertaking 464 7.933) 1.450 Prior years Current Deferred (2.171) (12.693 30.348 7.306) (343.743 (865.473 – 817.480) 6.026.477 30.Notes to the Consolidated Financial Statements For the year ended December 31.201 (114.824) (11.000 437. CREDIT RATING PACRA through its notification in June 2009. OTHER CHARGES Fixed assets written off Penalties of State Bank of Pakistan Workers welfare fund VAT Sri Lanka Others 17.403.441 103.1 Relationship between tax expense and accounting profit Accounting profit for the year Tax rate Tax on income Tax effect on separate block of income (taxable at reduced rate) Tax effect of permanent differences Tax effect of prior years provisions / reversals Reversal of deferred tax liability on incremental depreciation Tax charge for the year 23. 194 I MCB Bank Limited .164 6.683.351 80.232.000 463. TAXATION For the year Current Deferred 7.787 300.563.344) – (865.392 (864.046) 7.146 35% 8.725.344) 25.824 30.683. 2009 Note 2009 (Rupees in ‘000) 2008 29.513 31.934) 14.

077 36. BASIC AND DILUTED EARNINGS PER SHARE PRE TAX Profit before taxation 23. 36.527 Basic and diluted earnings per share – pre tax 33.1 DEFINED BENEFIT PLANS AND OTHER BENEFITS General description The Bank operates the following retirement benefits for its employees: – Pension fund (final salary plan) – funded – Benevolent scheme – unfunded – Post retirement medical benefits – unfunded – Employees compensated absence – unfunded Annual Report 2009 I 195 . CASH AND CASH EQUIVALENTS Cash and balances with treasury banks Balances with other banks 6 7 38.745 2008 35.704 75 9.740 (Number of shares) Weighted average number of shares outstanding during the year 691.17 *Weighted average number of shares outstanding for 2008 have been restated to give effect of bonus shares issued during the year.595 3. Note 2009 (Rupees in ‘000) 2008 34.146 21. BASIC AND DILUTED EARNINGS PER SHARE AFTER TAX Profit after taxation 15.852.488 107 10.527 691.104.871 6.104.665.774.225 2009 (Number) 39.631.79 2009 (Rupees in ‘000) 31.529 10.104.482 14.67 22.077.737.354 44.399 15.106.886. STAFF STRENGTH Permanent Temporary/on contractual basis Bank’s own staff strength at the end of the year Outsourced Total staff strength 9.219 4.527 (Rupees) 691.Notes to the Consolidated Financial Statements For the year ended December 31.750 13.323.779 3.67 2008 33. 2009 2009 (Rupees in ‘000) 2008 32.215 (Number of shares) Weighted average number of shares outstanding during the year 691.349.527 (Rupees) Basic and diluted earnings per share – after tax 22.526 43.104.

779 974.304) (5.424 1.712) The effect of increase of one percent and the effect of a decrease of one percent in the medical trend rates on the present value of medial obligation at December 31.947 – – – – – – – 33.947 – – – 10.967) (15. employees’ contributory benevolent scheme.464 (75.413 541.400.369 71.707 (52.322.944) (25.399.415 (8.472 million (2008: Rs.072. post retirement medical benefits and employee’s compensated absences were carried out at December 31.692) 196 I MCB Bank Limited .400.825) – – – – 36.319) 274.610) (145.Notes to the Consolidated Financial Statements For the year ended December 31.116 752. 36.347 – 12.947 – 36.348 million (2008: Rs.461) (362.6 (18.019) (10.444 274.413 130.860.269.135 98.399.3 (Receivable from) / payable to defined benefit plans and other benefits Approved pension fund Note 2009 2008 Employees’ contributory benevolent scheme 2009 2008 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008 (Rupees in ‘000) Present value of defined benefit obligations Fair value of plan assets Net actuarial gains / (losses) not recognised Unrecognised negative past service cost Unrecognised past service cost Net (receivable) / payable recognised as at the year – end (9.799 million) respectively.446 1.116 752.446 1.444 274.338 (105.322.653 4.019) 246.116 – 752. 61.399.986 299.651.258.370.446 64.399.923.254.010 6.370.348 – 1.488 1.162 – 1.400.2 Principal actuarial assumptions The latest actuarial valuations of the approved pension fund.957) (160.413 541.7 (5.285) (5.985 million) and Rs.622 – 541.304) (5.62. 2009.477) (153.019) 246. 2009 36. at the beginning of the period.947 150. 2009 would be Rs.716) 49.047) (3. 36. for returns over the entire life of the related obligation.4 Movement in balance (receivable) / payable Approved pension fund Note 2009 2008 Employees’ contributory benevolent scheme 2009 2008 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008 (Rupees in ‘000) Opening balance of (receivable) / payable Expense recognised Refunds / (contributions) during the year – Employees’ contribution Benefits paid Closing balance of (receivable) / payable (9.424 1.906 282.576) – – – – 4.739 752.76.953.384 1.651.707 – 67.455.287.388 – 300.246) (55. 51.019 48. The principal actuarial assumptions used are as follows: Approved pension fund 2009 2008 Employees’ contributory benevolent scheme 2009 2008 (%) Valuation discount rate Expected rate of return on plan assets Salary increase rate Indexation in pension Medical cost inflation rate Exposure inflation rate 14 14 10 – – – 13 13 10 – – – 14 – 10 – – – 13 – 10 – – – 14 – 10 – 8 3 13 – 10 – 8 3 10 – – – 10 – – – 14 13 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008 The expected return on plan assets is based on the market expectations and depends on the asset portfolio of the Bank.5 4.952 – – 36.295.

287.388 300.739 47.610) 5.073.223 558.751 39.675. Expected return on plan assets Contributions – Bank Contributions – Employees Benefits paid Actuarial gain / (loss) Net assets as at December 31.708) 130.338) – – 64.384 15.246) 53.095.717 4.692) – – – (75.751 39.769 35.9.478 (2.139 million (2008: Rs.622 541.474. Current service cost Interest cost Benefits paid Actuarial (gains) / losses Present value of obligation as at December 31.639 371.533 – 12.751) 368.953.555 142.254.708) 98.682) 752.093 (2.389 34.162 11.947 47.023 18.5 Reconciliation of the present value of the defined benefit obligations Approved pension fund 2009 2008 Employees’ contributory benevolent scheme 2009 2008 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008 (Rupees in ‘000) Present value of obligation as at January 01. 36.639 371.430.977) – 8.577 (33.101) 1.7 Charge for defined benefit plans and other benefits The following amounts have been charged to the profit and loss account in respect of defined benefit plans and other benefits: Approved pension fund 2009 2008 Employees’ contributory benevolent scheme 2009 2008 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008 (Rupees in ‘000) Current service cost Interest cost Expected return on plan assets Net actuarial (gain) / loss recognised Contributions employees Recognised past service cost Recognised negative past service cost 22.923.692) 36.699 (10.292 – (35.348 1.555 142.209 97.651. 6.675.533 (69.400.172.073.8 Actual return on plan assets Approved pension fund 2009 2008 Employees’ contributory benevolent scheme 2009 2008 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008 (Rupees in ‘000) Actual return on plan assets 3.269.399.735) – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 36.871 million (2008: Rs.472 (12.986 22.295.253 165.093 (689.006 2.883 (362.983 – – (1.9 15.056 million) respectively.021 (105.695) 300.172.292 (153.745) 1.316 million) and Rs.6 Changes in fair values of plan assets Approved pension fund Note 2009 2008 Employees’ contributory benevolent scheme 2009 2008 Post retirement medical benefits 2009 2008 Employees’ compensated absences 2009 2008 (Rupees in ‘000) Net assets as at January 01.953.285) 34.116 752.747.464 – – (145.051 (160.957 13.735) (34.478 (1.422.440) (167.003) – – – (3.712 – – – – – – – – – 55.313) 15.319) 11.687 974.751) 1.162 1.072. 36.113 2.859 (13. 4.778 (69.440) (476.386 – – – – – – Annual Report 2009 I 197 .354) – – – (5.488 17.918 17.700 355.947 4.906 13.967 25.269.Notes to the Consolidated Financial Statements For the year ended December 31.825) (75.692) The effect of increase of one percent and the effect of a decrease of one percent in the medical trend rates on the aggregate of the current service cost and interest cost components of net period post – employment medical costs would be Rs.983) (2.223 558.712 2.477) (2.051 – (24. 7.295.021 – 26.461) (159.622 15.199.687 – – – 150.779 – – – (75.769 35. 2009 36.577 (33.129.340 13.883 – 5.347) – (689.697) (3.986 299.777) – – 48.209 97.685) – 8. 12.253 165.653 4.

306.77 0.650) 312.095.313) 9.003 (121.83 0.055 1.569 (18.877.529) (34) – (34) (1) (418) (419) (53.1 Fair value of the Bank’s financial instruments included in plan assets: Shares of MCB TDRs of MCB Bank balance with MCB – 12.045 5.320 – 54.849) 54.695 – 167.091.933.554.388 – 299.695 (325.314) (11.130.964 8.483 4.079 127.024) (14.182 – 10.717) – (368.976) 388.100.2 Employees’ Contributory Benevolent Scheme Present value of defined benefit obligation Fair value of plan assets Actuarial gain / (loss) on obligation Experience adjustment Assumptions gain / (loss) Actuarial gain / (loss) on assets Experience adjustment Assumptions gain / (loss) – – – – – – (1.809 1.503.700) 34.191.820) 299.724) (10.819 (18.313) – (476.027 407.026 12.968) – (60.926.483 – 9.745 – 34.62 100 4.057.610.694.9 Composition of fair value of plan assets Approved Pension Fund 2009 Fair Value (Rupees in ‘000) Percentage (%) Fair Value (Rupees in ‘000) 2008 Percentage (%) Defence saving certificates Term deposit receipts Listed equity shares Open ended mutual funds units Cash and bank balances Fair value of plan total assets 36.389 4.677 (20.138 10.340 332.694.213.882) 4.162 – 300.810.712) (25.967 – 70.072 1.71 52.400.368 15.657.205) 198 I MCB Bank Limited .745 (60. 2009 36.717) Actuarial gain / (loss) on assets Experience adjustment Assumptions gain / (loss) 1.9.56 6.295.255.864) (5.968) 10.10 Other relevant details of above funds are as follows: 2009 2008 2007 (Rupees in ‘000) 2006 2005 36.653 4.593 (476.953.10.712 28.023 36.809 3.953.557) (10.Notes to the Consolidated Financial Statements For the year ended December 31.162 355.182 (228.747.182.121 1.320 (304.726) (20.10.986 4.412 1.050.331.254.667 18.634.045 – 4.306.70 10.849) – (325.1 Pension Fund Present value of defined benefit obligation Fair value of plan assets (Surplus) / deficit Actuarial gain / (loss) on obligation Experience adjustment Assumptions gain / (loss) (368.939 (138.121 1.90 100 2.85 17.700) – (53.437 167.388 300.347.340 – 355.400.693 5.254.023 – 1.610 8.933.823) 107.869 36.866 (131.938.752.06 11.967) (15.748) 172.268.187 89.529) – (1.113) (14.634.580.502) 5.220 17.072.

744 12 3.211 616 – 606. MCB Asset Management Company Limited (subsidiary company) MCB Asset Management Company operates a recognized contribution fund for the permanent employees of the company.759 9.103) 1. 37.692 974.3 Post Retirement Medical Benefits Present value of defined benefit obligation Fair value of plan assets 1.357 – 1.1.687) 752.101 36.456.193 385. DEFINED CONTRIBUTION PLAN The Bank operates an approved contributory provident fund for 6.33% per annum (2008: 8.502 2.800 2.893) 36.622 – 1.456.116 – 541.918 1. During the year. COMPENSATION OF DIRECTORS AND EXECUTIVES The aggregate amount charged in the financial statements for compensation. Directors and Executives of the Group was as follows: President / Chief Executive 2009 2008 Directors 2009 2008 (Rupees in ‘000) 2009 Executive 2008 Fees Managerial remuneration Bonus and others Retirement benefits Rent and house maintenance Utilities Medical Conveyance – 38.464 – 974.016 12.269.918 – 1. 148. The Chief Executive and certain executives are provided with free use of the Group’s maintained cars and household equipments in accordance with the terms of their employment.822 52.10.683 – 856.11.33% per annum are made both by the Company and employees to the fund.682 (40. Contribution at the rate of 8.619 – 27.213 – 856.909 184.663 (2008: 6.348 – 1.345.269.422.622 1.161 11.284) employees who have opted for the new scheme.66% of the basic salary per annum are made both by the Company and employees to the fund. 38. the Bank contributed Rs.524 – – – – – – 5.223 (2008: 2.Notes to the Consolidated Financial Statements For the year ended December 31. Contribution at the rate of 8.321 1 10.213 – 159. The Bank also operates an approved non–contributory provident fund for 2.023.399 111.1. 2009 2009 2008 2007 (Rupees in ‘000) 2006 2005 36. 135.116 Actuarial gain / (loss) on obligation (5.630 1.3.671) employees where contributions are made by the Bank and employees at 8.734 million (2008: Rs.394 231.000 1.593 82 – 56. MCB Financial Services Limited (formerly Muslim Commercial Financial Services (Private) Limited) (subsidiary company) The company operates the provident fund scheme covering all permanent employees. where contributions are made by the employees at 12% per annum (2008: 12% per annum) of the basic salary. MCB Bank Limited (holding company) 37.830 8. 37.604 532 Number of persons 1 38.846) (13. No contribution to the pension fund is expected in the next future year.582 16.743 (21.947 75.362 16.524 – – – – – – 11.392 – 1.802 48. including all benefits.111 – 417 60.287.669 2.120 239.154 10 – 664.729) 1.846) 14.682 – 159.220 1.464 (100.947 – 752.287.164 million) in respect of this fund.683 – 1.10.345.307 8.993 269. to the Chief Executive.459.325 1.422.819.153 (21. Annual Report 2009 I 199 .023. 37.357 1.101 – 2.936 1.4 Compensated absences Present value of defined benefit obligation Fair value of plan assets 541.392 36.995 229.2.983 220.33% per annum) of the basic salary.348 Actuarial gain / (loss) on obligation Experience adjustment Assumptions gain / (loss) 2.893) – (40.

223 Segment non performing loans Segment specific provision required – – – – 7.3 to these financial statements.238.627) – 62.420. Fair value of fixed term loans. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of traded investments is based on quoted market prices. other liabilities and fixed term deposits 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.876.480.707.880.934) – 16.626) 527.700 120.176 – – – – 23.137.143 (545.546.756 (545.4.089. 2009 39. the fair value of the remaining financial assets and liabilities are not significantly different from their carrying values since assets and liabilities are either short–term in nature or in the case of customer loans and deposits are frequently re–priced.172.049.143 – – 14.045 14.4. Fair value of unquoted equity investments is determined on the basis of break up value of these investments as per the latest available audited financial statements.201.96% 3.403 Segment assets – (Gross of NPL’s provision) Total assets – – 189. The maturity and repricing profile and effective rates are stated in notes 43.327) 19.208 12.418 173.345 Segment liabilities Provision for taxation Deferred tax liability Total liabilities – net – – – – 161.75% 200 I MCB Bank Limited .2 respectively.626) 527.700 189.598 Segment return on net assets (ROA) (%) Segment cost of fund (%) – – 5.3.06% 3.637.501 10.300 217.437 3.162.018 99.50% 3. other assets. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES The segment analysis with respect to business activity is as follows: Corporate Finance Trading and Sales Retail & Consumer Banking Commercial Banking (Rupees in ‘000) Asset Management Eliminations Total 2009 Total income Total expenses Income tax expense Net income 100.618.780.814) (7.637.587.324 24.55% – – 3.707. 43.523 (126.049.678.061.11% 3.992 (545. except for tradable securities classified by the Bank as ‘held to maturity’.992 442.626) 439.723 15.78% 7.511) – (2.576.743) 15.613 (32.857 120.665.184 (27. The provision for impairment of loans and advances has been calculated in accordance with the Bank’s accounting policy as stated in note 5.169 15.943 – – 57.428.825 175.352 (3.222 5.943) 126.227.960 (34.07% 1.558.653.177.420.55% 14.692.604 (3.300 442.150 (110.405 – – 1.1 and 43.280) – 9.Notes to the Consolidated Financial Statements For the year ended December 31. 40.558.177.69% –2.996.857 217.683.825 – – 99.045 – – 175.223 (545.061.626) 435.091.018 – – 161.405) – 68. In the opinion of the management.

793 (33.109) – 50.427 210.684 10.98% 4.Notes to the Consolidated Financial Statements For the year ended December 31.333.939) 455.828 51.673.456) (6.314 – 152.524.323 – (523.97% 7.939) 455.6 to these financial statements.648.526.227 Segment assets – (Gross of NPL’s provision) Advance taxation Total assets – – – 114.831 – 117.078.020 – 159.295 – 107.800) – 6.129.850.289 (143.891 (103.01% 41. Transactions between the Group and its related parties are carried at arm’s length basis under the comparable uncontrolled price method.706 (523.123.852 – 188.358 15.373.468 10.16% 0. There are no transactions with key management personnel other than under their terms of employment.889 Segment liabilities Provision for taxation Deferred tax liability Total liabilities – net – – 107.913.913.180 (3.817.095 13.937. Remuneration to executives is disclosed in noted 38 to these financial statements.44% 3. are given in note 10.630 (19.268.895. Details of loans and advances to the companies or firms in which the directors of the Bank are interested as directors.380 19.325 – – 9.937.564 5.939) 384.72% 16.706 – 397.877 Segment specific provision required – – 4.563.23% 2.390.153.780) 103. RELATED PARTY TRANSACTIONS AND BALANCES The Group has related party relationship with its associated undertakings.398) – 66.82% – – – 3.373.323 (523.895 152.513) 15.831 117.010.852 397.095 – 13.526.819 (523.571.080.196 (24.625 Segment return on net assets (ROA) (%) Segment cost of fund (%) – – 5. The detail of investment in associated undertakings are stated in Annexure I (note 6) to these financial statements.99% 3.330 – – 440.084 (1.529.314 188.181.272) – 347.080.409 – – 18. Contributions to and accruals in respect of staff retirement and other benefit plans are made in accordance with the actuarial valuation / terms of the contribution plan as disclosed in notes 36 and 37.657) – 14. partners or in case of private companies as members.713.043.939) 385.895 – 114.905.780 – – 46. 2009 Corporate Finance Trading and Sales Retail & Consumer Banking Commercial Banking (Rupees in ‘000) Asset Management Eliminations Total 2008 Total income Total expenses Income tax expense Net income 83.020 159. employee benefit plans and its key management personnel (including their associates) and companies with common directors.647 Segment non performing loans – – 7.648.739.323. Annual Report 2009 I 201 .

654) (54.488 110. 2009 Directors 2009 2008 Associated companies 2009 2008 (Rupees in ‘000) A.431 36.980 10.637 1.461 17.695) (63.661.045.363.249.340 – – – – – – – – Other related parties 2009 2008 – – – – – – – – – – – – – – – – – – – – 9.932 – – – – – – – – – – – – – – – – – – – 182.305 301.304 1.153 (2.042 486.212 17.980 14.543.630) (302.929 81.129.100 16.826 8.917 85.655 3.910.869 524.087 3.597 801 118.123 895.918 8.311 44.Notes to the Consolidated Financial Statements For the year ended December 31.908 301.791 17.750 21.022) – 5.168) (10.186.805 8.105 11.454 58.019 425.480 80.213 753.929 275.350.189 302.061) The details of director’s compensations are given in note 38 to these financial statements.734 43.424 89.594 196.502.311 539.408.779 64.942 78.898 18.164 76.750.524 84.508 126.613 7.228 148.472.810.953.613 425.271 Other related parties 2009 2008 (18.537 267 162.169 4.399.482 135.694 – – 219.725 – – – – – – – – – – – – – – – – 111.237 – – – – – – – – 1.878. Balances Deposits Deposits at beginning of the year Deposits received during the year Deposits repaid during the year Deposits at end of the year Mark–up expense on deposits Advances (secured) Balance at beginning of the year Loans granted during the year Repayments received during the year Balance at end of the year Receivable from pension fund B.045.475 – – – – 146. 202 I MCB Bank Limited . Other transactions (including profit and loss related transactions) Directors 2009 2008 Associated companies 2009 2008 (Rupees in ‘000) Associates Adamjee Insurance Company Limited – Insurance premium paid – net of refund – Insurance claim settled – Rent income received – Dividend received Mayban International Trust (Labuan) Berhad – Dividend paid – Bonus shares issued – Forward foreign exchange contracts (Notional) – Unrealized loss on forward foreign exchange contracts Other related parties MCB Employees Security System and Services (Private) Limited – Security guard expenses MCB Employees Foundation – Stationery expenses – Service expenses – Cash sorting expenses – Cash in transit expenses Others Dividend income Proceeds from sale of vehicles to key management personnel Gain on sale of vehicles to key management personnel Remuneration of key management personnel (other than directors) Contribution / (expense) to provident fund Other miscellaneous expenses – – – – – – – – – – – – – – – – – – – – – – – – 28.190.772 12.898 4.020) (38.322.039.795 125.979.816.

However.25 % of risk weighted assets). Statutory minimum capital requirement and management of capital The State Bank of Pakistan through its BSD Circular No. The Capital of the Bank is managed keeping in view the minimum “Capital Adequacy Ratio” required by SBP through BSD Circular No. 2009 . Bank’s regulatory capital is analysed into two tiers. reserves on revaluation of fixed assets and equity investments up to a maximum of 45 % the balance. 2008 and BSD Circular No.07 of 2009 dated April 15. Subsidiaries are included while calculating Consolidated Capital Adequacy for the Bank using full consolidation method whereas associates in which the bank has significant influence on equity method. maintain strong ratings and to protect the Bank against unexpected events. 42. 2009 was 19. Standardized Approach is used for calculating the Capital Adequacy for Credit and Market risk.9 billion and is in compliance with the SBP requirement for the said year. 30 dated November 25. The raise is to be achieved in a phased manner requiring Rs. as defined by regulatory authorities and comparable to the peers. balance in share premium account. and achieve low overall cost of capital with appropriate mix of capital elements. foreign exchange translation reserves. 2009 42. availability of adequate capital (including the quantum) at a reasonable cost so as to enable the Bank to expand.1 CAPITAL ASSESSMENT AND ADEQUACY Scope of Applications The Basel II Framework is applicable to the bank both at the consolidated level (comprising of wholly/partially owned subsidiaries & associates undertaking) and also on a stand alone basis. – Tier 2 capital. 42.07 of 2009 dated April 15. The bank currently does not have any Tier III capital. 6.2 Capital Management Objectives and goals of managing capital The objectives and goals of managing capital of the Bank are as follows: – – – – to be an appropriately capitalized institution. etc after deductions for deficit on revaluation of available for sale investments and 50% deduction for investments in the equity of subsidiary companies and significant minority investments in entities engaged in banking and financial activities. whereas. 6 billion paid up capital (net of losses) by the end of the financial year 2009. etc after 50% deduction for investments in the equity of subsidiary companies and significant minority investments in entities engaged in banking and financial activities. The Bank’s CAR as at December 31. which includes general provisions for loan losses (up to a maximum of 1. Basic Indicator Approach (BIA) is used for Operational Risk Capital Adequacy purposes. Annual Report 2009 I 203 . 2009 stands at Rs. The paid up capital of the Bank for the year ended December 31.Notes to the Consolidated Financial Statements For the year ended December 31. – Tier 1 capital. Tier 3 capital has also been prescribed by the State Bank of Pakistan. The adequacy of the capital is tested with reference to the risk–weighted assets of the Bank. 10 billion by the year ending on December 31. general reserves as per the financial statements and net unappropriated profits.10% of its risk weighted exposure. 2013. which includes fully paid up capital (including the bonus shares). In addition the banks are also required to maintain a minimum capital adequacy ratio (CAR) of 10 % of the risk weighted exposure. 2009 requires the minimum paid up capital (net of losses) for all locally incorporated banks to be raised to Rs.

3 Capital Structure Tier 1 Capital Shareholders equity /assigned capital Share premium Reserves Unappropriated profits Minority interest 6. The total risk–weighted exposures comprise the credit risk.021.841. The calculation of capital adequacy enables the Bank to assess the long–term soundness.911.877.681.183 1.297.862.702.528 26.045 9.362 192.551 11.709. Banking operations are categorized 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.297.374.528 28.047 5. 204 I MCB Bank Limited .635. Note 2009 (Rupees in ‘000) 2008 42.335 2.3. Maximization of the return on risk– adjusted capital is the principal basis to be used in determining how capital is allocated within the Bank to particular operations or activities.424 4.451.306.596.578 815.570 60.670 71 62.928.699 1.065. securities and other financial entities.1 1.604.3.395 Deductions: Book value of intangible and goodwill Other deductions 42.3.487 Deductions: Other deductions Total Tier 2 Capital Total Regulatory Capital Base A 42.034 Total Tier 1 capital Tier 2 Capital General provisions subject to 1.732 6.361 256. it is critical that it is able to continuously monitor the exposure across entire organization and aggregate the risks so as to take an integrated approach/view.907 52.724 1.553. market risk and operational risk. As the Bank carry on the business on a wide area network basis.1 Other deduction includes investments in equity of financial subsidiaries not consolidated in the balance sheet and significant minority investments in banking.Notes to the Consolidated Financial Statements For the year ended December 31.152 64.966 2.1 311. The Bank has complied with all externally imposed capital requirements through out the year.016 258.709.724 2.081 17.768 9.335 3.282.639 42. 2009 The required capital adequacy ratio (10% of the risk–weighted assets) is achieved by the Bank through improvement in the asset quality at the existing volume level. Further. ensuring better recovery management and striking compromise proposal and settlement and composition of asset mix with low risk.503.242 3.821.513 1.702.427.846 54.794.25% of total risk weighted assets Revaluation reserves up to 45% Foreign exchange translation reserves 794.723 69 53. there has been no material change in the Bank’s management of capital during the year.

057 216.402.029.470 7.838 2009 (Rupees in ‘000) 10.929.913 64.714.929.025 230.966.846 737.025.277 2.403 5.991 2.112 334.778 101.382.443 2.336.865 243.747 856.002.594.371.122.4 Capital Adequacy The risk weighted assets to capital ratio.681.263 22.416 4.076 797.811.366 7.131.936.523 485.371.088 21.183 4.549 1.350 4.383 33.750.635.728 77. Annual Report 2009 I 205 .875 1.185 10.152 1.381 16.750 154.560. capital charge for credit risk is calculated after excluding capital requirements against market and operational risk from the total capital required.541 171.051.838 19.595.10% 54.713 738.032.708.814 378.422.563 697.354 78.272.381 2008 Capital Adequacy Ratio Total eligible regulatory capital held Total Risk Weighted Assets Capital Adequacy Ratio A B A/B 64.287 1.965.320.886 11.286 33.071.414.935.947.171 14.157.451 17.632.37% * As SBP capital requirement of 10% (2008: 9%) is calculated on overall basis therefore.964.947 9.134 23.514 25.925 257.198.485.513 338.629 1.909 25.032.171.062.072.254 204.841 832.417 29.249 30.542 6.251 23.387.039 8.839.743 37.758 12.972 204.076.610.712 468.068 3.541.601 22.141 830. 2009 42.376 848.357 2.400.344 17.725 5.946 378.281 21.703.886.093.Notes to the Consolidated Financial Statements For the year ended December 31.063.680 1.484 92.574.578 334.317 79.856.690 37.744 1.641.809 199.921.148 9.393.809.074.923.368.076. calculated in accordance with the State Bank of Pakistan’s guidelines on capital adequacy was as follows: Capital Requirements 2009 2008 (Rupees in ‘000) Risk Weighted Assets 2009 2008 Credit Risk Portfolios subject to standardized approach (simple or comprehensive) On–Balance Sheet Corporate portfolio Banks / DFIs Public sector entities Sovereigns / cash & cash equivalents Loans secured against residential property Retail Past due loans Operating fixed assets Other assets Off–Balance Sheet Non–market related Market related Equity Exposure Risk in the Banking Book Listed Unlisted Total Credit Risk Market Risk Capital requirement for portfolios subject to standardized approach Interest rate risk Equity position risk Foreign exchange risk Total Market Risk Operational Risk Capital requirement for operational risks Total B 5.037 1.629 642.450 9.080 54.804 3.497 11.656.858 26.409 4.355 108.778.843 4.847.848.513.483 18.534 48.954 2.319.195 765.189 930.080 338.837.897 93.352 1.437 1.

The Bank has adopted standardized approach to measure Credit risk regulatory charge in compliance with Basel–II requirements. sovereigns etc. With the goal of enhancing shareholders’ value. 206 I MCB Bank Limited . the Management Committee (MC). management and monitoring process which are closely aligned with the activities of the Bank so as to ensure that risks are kept within an acceptable level. the Credit Risk Control (CRC) performs post–fact evaluation of financing facilities and review clients’ performance as an ongoing process. i. 2009 43 RISK MANAGEMENT MCB defines risk as any deviation from an anticipated outcome that may affect the value. capital or earnings of the Bank. the Bank ensures that effective controls are in place to mitigate each of the identified risk. procedures and process design with broad oversight and is supported by risk monitoring across the bank. the RM & PRC convenes regularly to evaluate Bank’s risk and portfolio concentrations. are responsible to ensure formulation and implementation of comprehensive Risk Management Framework. Promoting open risk culture Adopting international best practices in risk management Keeping in view dynamics of internal and external environment. the Bank has the following policies and procedures in place: • • • • • Individuals who take or manage risks clearly understand them in order to protect the Bank from avoidable risks. corporate.1 Credit Risk Credit risk arises from our dealings with individuals.. This framework is based on prudent risk identification. The approach is reliant upon the assessment of external credit rating agencies. the Bank has initiated Internal Capital Adequacy Assessment Process (ICAAP). This framework combines core policies. Bank’s risk management policy is aimed at setting the best course of action under uncertainty by identifying. Head of Risk Management reports functionally to the Risk Management & Portfolio Review Committee (RM&PRC) and administratively to the President. the Bank regularly reviews and updates policy manuals / frameworks and procedures in accordance with domestic regulatory environment and international standards. Credit Review function provides pre–fact evaluation of counterparties. Bank is in the process of continuously improving the system and bringing it inline with the Basel framework requirements In order to manage bank’s credit risk. Through Internal Control units.e. Purpose of credit risk function is to identify measure.Notes to the Consolidated Financial Statements For the year ended December 31. Independent from business groups. The Board of Directors and its relevant committee. measurement. manage. Bank has developed a system and all its corporate borrowers are internally rated. the Bank ensures that not only the relevant risks are identified but their implications are considered and basis provided for managing and measuring the risks. the Risk Management & Portfolio Review Committee (RM&PRC) and the senior management and its relevant committees. The approval of credit limits to counter parties are subject to pre–fact review. Organizational structure of this function ensures pre and post–facto management of credit risk. etc. As part of risk assessment process. While. prioritizing. It also stems from activities both on and off–balance sheet activities. following are the five guiding principles of robust risk management structure: • • • • • Optimizing risk/return in a controlled manner Establishing clear responsibility and accountability Establishing independent and properly resourced risk management function. The Bank executes its risk strategy and undertakes controlled risk–taking activities within its risk management framework. Identifying and managing exposure to risk is an integral part of strategic and operational activities of risk management. The Risk Management Group performs the following critical functions: • • • • • Credit Risk Management Credit Review Credit Risk Control Market Risk Management Operational Risk Management In line with regulatory guidelines. Credit risk makes up the largest part of the Bank’s exposure. financial institutions. mitigating and monitoring risk issues. Management periodically reviews the powers of credit approving and credit reviewing authorities. In line with SBP guidelines on Internal Credit Ratings Systems. i. Asset Liability Committee (ALCO). 43. Extension in credit facility or material change to the credit facility is subject to credit review.e. The Bank is exposed to credit risk through its lending and investment activities. Approval and review process is reviewed by RM&PRC and internal audit. monitor and mitigate credit risk.

408 31.63 1.729 3.215 54.767 539.464 37.562 531.257.098 238.941.240 611.31 47.84 3.328.95 3. 2009 As a part of credit assessment.010 28.649 40. hunting and fishing Mining and quarrying Textile Chemical and pharmaceuticals Cement Sugar Footwear and leather garments Automobile and transportation equipment Electronics and electrical appliances Construction Power (electricity). Collateral coverage and monitoring. gas.055.870 2.077 56.866 294.391.86 100 34.66 100 1.82 1.1.03 14. Please refer note No.44 2.73 0.923.727 336. 43.18 6.311 367. is responsible for performing following activities: • • • • Credit disbursement authorization. contingencies and commitments.377.35 0.58 21.298 2.393.08 0.46 10. the Bank manages its lending and investment activities within a framework of risk profile benchmarks.03 0.344.581.672 2.724 195.741.40 9.1 Segmental information Segmental Information is presented in respect of the class of business and geographical distribution of advances (gross).27 0.20 0. continuous monitoring of the credit portfolio and the risks attached thereto are carried out at different levels including businesses.942 4.23 11.279.509. Stress Testing The Bank also conducts stress testing of its existing portfolio. Management of Non–Performing Loans The Bank has a Special Asset Management Group (SAMG).921.697 – 285. which includes all assets. Provisions are held against identified as well as unidentified losses.689. Credit Risk Management Division.664 14.079.633 40.054 3.970 18. Maintenance/ custody of collateral and security documentation..303 6. as well as litigation of both civil and criminal cases for collection of debt. advances as well as investments.1 Segments by class of business Agriculture.026.00 0. Ongoing administration of the credit portfolio is an essential part of the credit process that supports and controls extension and maintenance of credit.748.539 – 1.987.034 0.235 1.940.906 33. sanitary Wholesale and Retail Trade Exports / imports Transport.721. This exercise is conducted on a semi–annual basis through assigning shocks to all assets of the Bank and assessing its resulting affect on capital adequacy inline with SBP requirements.562 62. SAMG undertakes restructuring / rescheduling of problem loans.23 – 0.233 269. Credit Risk Control.065 149.12 0.78 2.88 0.02 0.197.15 0.39 0. Bank uses internal rating framework as well as the ratings assigned by the external credit rating agencies. The Bank creates specific provision against Non– Performing Loans (NPLs) in accordance with the Prudential Regulations and other directives issued by the State Bank of Pakistan (SBP) and charged to the profit and loss account. which is responsible for management of non–performing loans.85 0.621 152.483 4.536 2.285 6. Audit & Risk Assets Review.152 285.37 16. being an independent function from the business and operations groups.886. deposits.55 0. Compliance of loan covenants/ terms of approval.012 3. The Bank’s Credit Risk Control.38 0.909.07 6.785.28 0.02 3.087 58.4 for reconciliation of changes in specific and general provisions.319 208. To ensure a prudent distribution of asset portfolio.24 0. 2009 Advances (Gross) (Rupees in ‘000) (%) Deposits (Rupees in ‘000) (%) Contingencies and commitments (Rupees in ‘000) (%) 43.13 37. water.712 318.85 0.06 0.202.075 9. i.648 1.63 5.762 119. 10.44 1.049.442 6.013.028 2.802 27. wherever available.714 24.642.97 0.088 1.463.33 0. etc. Per party exposure limit is maintained in accordance with SBP Prudential Regulation R–1.1.914 367.e.00 2.47 100 Annual Report 2009 I 207 .293.606.204 2.713 44.565.28 0.1.887 0. Provisions against unidentified losses include general provision against consumer loans made in accordance with the requirements of the Prudential Regulations issued by SBP and provision based on historical loss experience on advances.08 0.00 0.866. forestry.277 24.90 53.135.204.720 1.Notes to the Consolidated Financial Statements For the year ended December 31.48 0.565 438. Credit Risk Monitoring is based on a comprehensive reporting framework.88 1.461.04 – 0. storage and communication Financial Insurance Services Individuals Others 2.05 0.03 14.649 15.773 10.08 2.

574 24. hunting and fishing Mining and quarrying Textile Chemical and pharmaceuticals Cement Sugar Footwear and leather garments Automobile and transportation equipment Electronics and electrical appliances Construction Power (electricity).721.556 200.707.549 4.16 14.281 319.921.1.845.581.25 – 3.10 – 0.075 1.517 2.57 – 3.82 0.503 190.18 0.490.81 – 18.01 – 17.623 – 358.553.89 95.18 2.509 7.74 0.312 10.152.51 11.11 – 12.90 – 0.611.252 32.292.122 6.11 1.45 100 11.85 67.20 0.092 2.176 4.1.715.02 96.126.685 3.98 100 39.931.918 1.318 254.121.008 1.01 0.04 0.38 0.59 9.410 2.675 2.563 167.184 3.381.403 49.144.720 – 48.341 142.240.013.69 2.182.203.78 – 0.075 3.008 – 8.526.670.549 10. sanitary Wholesale and Retail Trade Exports / imports Transport.31 62.490.79 14.10 77.208.209 272.480.023.16 3.375 491.685 22.013 – 2.152.513.90 100 16.454 663.94 0.422.42 0.009 330.94 1.632 356.132.654 – 532.407.07 1.526.100.147.127 119.819 – 2.34 2.721.494.392 5.160.203 30.476 212.45 – 0.818.938 292.638 330.84 0.115 39.063 23.531.404 – 8.61 12.408.08 0. gas.37 100 34.500.15 100 2008 Advances (Gross) (Rupees in ‘000) (%) Deposits (Rupees in ‘000) (%) Contingencies and commitments (Rupees in ‘000) (%) Public / Government Private 60. storage and communication Financial Insurance Services Individuals Others 10. 2009 2008 Advances (Gross) (Rupees in ‘000) (%) Deposits (Rupees in ‘000) (%) Contingencies and commitments (Rupees in ‘000) (%) Agriculture.390.748 153.842 47.443 367.760 80.18 100 2009 Advances (Gross) (Rupees in ‘000) (%) Deposits (Rupees in ‘000) (%) Contingencies and commitments (Rupees in ‘000) (%) 43.842.938.531 269.792 17.817.89 100 208 I MCB Bank Limited .Notes to the Consolidated Financial Statements For the year ended December 31.95 0.008.55 70.510 35.11 76.000 4.397.531.458.705 – 33.24 100 679.44 0.099 6.867.869 266.845.99 14.77 9.768.139 6.937 204.887 32.96 46.92 5.89 1.324.11 100 61.35 0.11 1. forestry.09 0.587.653 2.67 1.063 0.763 13.540 314.592 272. water.201 2.98 0.899.126 266.593.034 29.414.461.742 – 48.2 Segment by sector Public / Government Private 79.

460 119.240 869.723 43.280 115.307 2.010.877 446.621 – 3.327 9.1.686 77.854 107.699 153.162 116.877 – 9.678.176 3.887 Profit before taxation Total assets Net assets employed employed (Rupees in ‘000) Contingencied & Commitments Pakistan Asia Pacific (including South Asia) Middle East 21.018.147.650.133 259.877.761 4.985 357. 2009 43.298 21.741.184 2.895.238.651.3 Details of non–performing advances and specific provisions by class of business segment 2009 Classified Advances Specific Classified Provision Held Advances (Rupees in ‘000) 2008 Specific Provision Held Agriculture.345 15.723 23.132.775 260.039 – 5.995 7.487.321 442.634 7.479 295.012 766. NIL (2008: Rs.008 40.778 288.268.731 49.678.1.659.021 3.889 43.729 180.381 72.146 318.521 60.522 518.728 60.1.311.490 91.306 3.727 2.177.313.349.658.671 338.685 3.921.268.180 445.251.734.895.268.953.483 145.324 3. sanitary Wholesale and retail trade Exports / imports Transport.238.597 55.999 3.280 44. Annual Report 2009 I 209 .889 2.750 349.804.437 355.113 2.732.339 72.453.818 479.355 150.105 5.512 118.251 4. water.094.758 59.117.120 1. NIL).5 Geographical segment analysis 2009 Profit before taxation Total assets Net assets employed employed (Rupees in ‘000) Contingencied & Commitments – 15.238.889 Pakistan Asia Pacific (including South Asia) Middle East 22.762.231 – 1.444.419 321.146 246.735.Notes to the Consolidated Financial Statements For the year ended December 31.345 – 18.466 59.1. hunting and fishing Mining and quarrying Textile Chemical and pharmaceuticals Cement Sugar Footwear and leather garments Automobile and transportation equipment Electronics and electrical appliances Construction Power (electricity).066.967 304 135.1.087 249.988.714 118. forestry.298 Total assets employed include intra group items of Rs.636 732.740 430.862.123 15.878 2008 71.888.409 117.4 Details of non–performing advances and specific provisions by sector Public/ Government Private – 23.807 304 387.393.582 59.395 2.712 25.095 266.678.165.025 408.723 384.875 2.921.026 557.1.835 23.889 9.909 511.301.329.434 9.886.877 18.891 79.914 192.875 18.014.584 2.345 912. storage and communication Financial Services Individuals Others 713.061 133.518 3.511 2. gas.361 42.285.779 – 557.895.231.146 500.996.928 1.647 68.152 101.934 23.259 150.974 3.054 2.

the capital requirement is based on the credit rating assigned to the counterparties by the External Credit Assessment Institutions (ECAIs) duly recognized by SBP for capital adequacy purposes. Type of Exposures for which the ratings from the External Credit Rating Agencies are used by the Bank.Notes to the Consolidated Financial Statements For the year ended December 31.8 table 2.3. wherever available. Exposures JCR–VIS PACRA OTHER (S&P / Moody’s / Fitch) Corporate Banks Sovereigns SME’s Yes Yes – Yes Yes Yes – Yes – Yes Yes – The criteria for transfer public issue ratings onto comparable assets in the banking book and the alignment of the alphanumerical scale of each agency used with risk buckets is the same as specified by the banking regulator SBP in BSD Circular No. Long – Term Ratings Grades Mapping SBP Rating Grade PACRA JCR–VIS Fitch Moody’s S&P ECA Scores 1 AAA AA+ AA AA– A+ A A– BBB+ BBB BBB– BB+ BB BB– B+ B B– CCC+ and below AAA AA+ AA AA– A+ A A– BBB+ BBB BBB– BB+ BB BB– B+ B B– CCC+ and below AAA AA+ AA AA– A+ A A– BBB+ BBB BBB– BB+ BB BB– B+ B B– CCC+ and below Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3 B1 B2 B3 Caa1 and Below AAA AA+ AA AA– A+ A A– BBB+ BBB BBB– BB+ BB BB– B+ B B– CCC+ and below 1 2 2 3 3 4 4 5 5.1 Credit Risk: Disclosures for portfolio subject to the Standardized Approach Under standardized approach. 2009 43.2.6 6 7 Short – Term Ratings Grades Mapping SBP Rating Grade PACRA JCR–VIS Fitch Moody’s S&P S1 S2 S3 S4 A–1 A–2 A–3 Others A–1 A–2 A–3 Others F1 F2 F3 Others P–1 P–2 P–3 Others A–1+. 43. Fitch. viz.1. JCR–VIS (Japan Credit Rating Company– Vital Information Systems).2 Credit Risk – General Disclosures The Bank has adopted Standardized approach of Basel II for calculation of capital charge against credit risk in line with State Bank requirements. Moody’s and Standard & Poors . A–1 A–2 A–3 Others 210 I MCB Bank Limited . the credit ratings assigned by the SBP recognized ECAIs. Bank utilizes. External Credit Assessment Institutions from which credit rating data for advances is obtained and then mapped to State Bank of Pakistan’s Rating Grades. PACRA (Pakistan Credit Rating Agency).1.

037 – – 5.615.516 5.697 101. its operations.160.238 45.1.1.389 798.278.1 Credit Risk: Disclosures for portfolio subject to the Standardized Approach The Bank has strong policies and processes for collateral valuation and collateral management thus ensuring that collateral valuation happens at regular defined intervals.023 – – – – – 14. and specific equipment.986.858 2.435 436.238 45. nature and structure of the transaction and also reflect the form and capacity of the obligor.936.113.305 – – – 75.093 2.506.986.3 4. marketable securities.415.3 Credit Risk: Disclosures with respect to Credit Risk Mitigation for Standardized Approach The Bank does not make use of on and off–balance sheet netting in capital charge calculations under Basel–II’s Standardized Approach for Credit Risk.037 – – 5.927 19.305 – – – 4.230 11.3 4.329 6. as well as cash. The Bank mitigates its risk by taking collaterals that may include assets acquired through the funding provided.113.214 – – – – 71.103 – – – 5.697 – – – – – 14.120 17.070 928 4. fixed assets.093 2.293 – – – – – – – – 33.108.4 5.857.010. Regular monitoring of coverage of exposure by the collateral and lien/ charge registered over the collaterals is carried out besides ensuring that collateral matches the purpose.326 9.991 6.069 14.384.828 764.806 5. Annual Report 2009 I 211 .658 – – – – – – – 1.352 – – 5.497.563 100.891 – – – 27.6 Unrated Bank 1 2.326 9.898 43.103 – – – 5.152.273.857.626.654 – – – 16.063 – – – – 11.189 1.232.167.389 798.230 94. government securities.626.063 94.422 – – – – 7.023 11.858 2.936.281.545 – – – 44.435 436.239.232.293 35.287 6.108.850.516 5.281.146.965.965.828 764.119.584.Notes to the Consolidated Financial Statements For the year ended December 31.422 – – – – 7.415.541. 2009 Credit Exposures subject to Standardised approach 2009 Exposures Rating Amount Deduction Outstanding CRM Net amount Amount Outstanding 2008 Deduction CRM Net amount (Rupees in ‘000) Corporate 1 2 3.366.352 – – 5.584.3.239.5 6 Unrated Public Sector Entities in Pakistan 1 2.757.329 35.278. 43.497.351.094.991 6.146.527 66.127 14.982.127 – – – – – 11.527 65. Collaterals are normally held for the life of exposure. commercial and personal real estate. current assets.541.460 394.926.5 6 Unrated Mortgage Retail 33.806 5. nature of business and economic environment.850.5 6 Unrated Sovereigns and on Government of Pakistan or provincial governments or SBP or Cash 1 2 3 4.070 928 4.160.010.615.

86. Surplus / (deficit) arising on revaluation of quoted securities which are classified as ‘available for sale’. 468.095. in particular. Break–up value of equity securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements.2 Equity position risk in the banking book The Group takes proprietary equity positions for both trading and strategic purposes.690 million (2008: Rs.291 3.300 3. quoted securities.321 million) is held by the Bank with the State Bank of Pakistan and central banks of other countries. In addition.831. Concentration of risk Out of the total financial assets of Rs. Investments amounting to Rs. or to control the rate of portfolio growth.298 million (2008: Rs. 212 I MCB Bank Limited . 402.75 million (2008: Rs. As of December 31.488 – 320.843 8. Unquoted equity securities are valued at the lower of cost and break–up value. an amount of Rs. 414.655 million).581. 22. 2009 the composition of equity investments subsidiaries and associated companies is as follows: Composition of equity investments Exposures Held for trading Available for Sale Associates Equity investments – publicly traded Equity investments – others Total value Classification of equity investments 320.488 7. other than investments in subsidiaries and investments in associates are subsequently re–measured to market value.448 513. 478.339. Limits are applied in a variety of forms to portfolios or sectors where the Bank considers it appropriate to restrict credit risk concentrations or areas of higher risk. to individual counterparties and groups. Surplus / (deficit) arising on revaluation of quoted securities which are classified as ‘held for trading’.116.387. 2009 The Standardized Approach of Basel–II guidelines allows the Bank to take benefit of credit risk mitigation of financial collaterals against total exposures in the related loan facilities. To manage credit risk the Bank applies credit limits to its customers and obtains adequate collaterals. Securities and Exchange Commission of Pakistan and the requirements of approved International Accounting Standards as applicable in Pakistan. The Bank has invested in its subsidiaries and associated companies to achieve long term strategic objectives. and also reviews exposure to industry sectors and geographical regions on a regular basis. 20. MCB manages limits and controls concentrations of credit risk as identified. is taken to the profit and loss account currently.710 63.403. The surplus / (deficit) arising on these securities is taken to the profit and loss account when actually realized upon disposal.1 52.1.3.753 million (2008: Rs.200 million) the financial assets which are subject to credit risk amount to Rs.915. is taken to a separate account which is shown in the balance sheet below equity. 43.198 million) are guaranteed by the Government of Pakistan. valuation and accounting of equity investments The accounting policies for equity investments are designed and their valuation is carried out under the provisions and directives of State Bank of Pakistan.916. As a prudent and conservative measure while calculating capital charge for credit risk of on balance sheet activities.213. In accordance with the requirements of the State Bank of Pakistan.Notes to the Consolidated Financial Statements For the year ended December 31. Bank has taken only the benefit of Sovereign guarantee.010 Banks classify its equity investment portfolio in accordance with the directives of SBP as follows: • Investments – Held for trading • Investments – Available for sale • Investments in associates Policies.825.

foreign currency–denominated deposits.e. Market risk authority. Market risk is also assumed as a result of Bank’s balance sheet and capital management activities. future cash flows in foreign currencies arising from foreign exchange transactions. 836. and VaR on individual security basis as well as on portfolio basis.667 million has been recognized in profit & loss account from sale of equity securities. Variance co–variance approach of VaR measure for conventional products and Monte Carlo simulation approach for derivative and structured products are being used by the bank. controlling of market risk including monitoring of exposures against limits. foreign currency–denominated loans. its monitoring and management. notional amounts and sensitivity. 694. 2009 The cumulative realized gain of Rs.1 Foreign Exchange Risk Management Foreign exchange risk represents exposures the Bank has due to changes in the values of current holdings and future cash flows denominated in currencies other than home currency. As per SBP instructions (BSD Circular 8. The positions which does not fulfill the criteria of Trading book falls under the Banking Book and are treated as per SBP requirements. etc. facilitation of client business and proprietary positions in equities. The definition covers the accounting classifications as well as positions booked by different business groups under “Available for Sale” category. ALCO. The risk numbers include duration. developing procedures. Bank has established a specific Market Risk Limit Policy providing guideline for assuming controlled market risk. 2006) trading book shall consist of positions in financial instruments held with trading intent or in order to hedge other elements of the trading book.2 Market Risk Management Market risk arises from changes in market rates (such as Interest Rates. 43.2. 1. Further a provision for impairment in value of equity investments amounting to Rs.395 million has been charged to profit and loss account. market risk measurement and reporting system.Notes to the Consolidated Financial Statements For the year ended December 31. In–house and vendor based solutions are used for calculating mark to market value of positions and generating VaR (value at risk) and sensitivity numbers. These Limits are compared with the numbers generated by the market risk management system based on the trading activity and the outstanding position on risk measurement date. Annual Report 2009 I 213 .496. Market risk also arises from market–making. The types of instruments exposed to this risk include investments in foreign branches. The assets subject to trading book treatment are frequently valued and actively managed. the Bank uses VaR (Value at Risk) technique for market risk assessment of assets booked by its treasury and capital market groups. and independent Market Risk Management Division reporting directly to Group Head Risk Management. foreign exchange risk and equity price risk. Risk numbers along with the marked to market values of government securities held by the Bank’s treasury are generated on daily basis. assessment of risks in new business. The Bank measures and manages Market risk by using conventional methods i. which exposes Bank to interest rate risk. These reports are presented to the senior management for review on a daily basis. Market Risk Management Division is responsible for policy formulation. PVBP. however unrealized gain of Rs. The Bank’s Market Risk Management structure consists of Risk Management Committee of the Board. which are centered in the Treasury and Foreign exchange and Capital market groups. Besides conventional methods. including both approval of market risk limits and approval of market risks is vested in the ALCO. A reasonable number of limits are set and approved. 43. in its Risk Management policy. MCB is exposed to market risk primarily through its trading activities. Hence the bank has clearly defined. the positions which shall be subject to market risk. The Bank is exposed to interest rate risk both in trading and banking books. fixed income and interest rate products and foreign exchange. Foreign Exchange Rates and Equity Prices) as well as their correlations and volatilities. Stress testing of both banking and trading books as per SBP guidelines is a regular feature.899 million was recognized in the balance sheet in respect of “AFS” securities.

297 (290.620 282 2.114 14.838 445.828.317.870.669) 3. 214 I MCB Bank Limited .779.314. VaR numbers generation and stress testing of the equity portfolio are also performed and reported to senior management on daily basis. Risk management system generates VaR and PVBP numbers for foreign exchange portfolio to estimate the potential loss under normal conditions. Additionally.211.502.906 110.423 282 55. Limit structure to manage foreign exchange risk is in place.504.596.675 (104.231 277.226 (109.334 9.741.152 12.816 118.180) 1.122 35.260.376) 2.442 511.132.438 1. 2009 Assets Liabilities Off–balance sheet items (Rupees in ‘000) Net foregin currency exposure Pakistan Rupee United States Dollar Pound Sterling Japanese Yen Euro Other currencies 496.2 Equity Price Risk Bank’s proprietary positions in the equity instruments expose it to the equity price risk in its trading and banking books.330) 876.326.166 – 439.425 385. Bank’s net open position and Foreign exchange exposure limit (FEEL) is monitored and reported on daily basis.038 167 3. Stress testing of foreign exchange portfolio is also performed and reported to senior management.472) 1. This exercise is done on internal based assumptions in addition to the criteria advised by the State Bank of Pakistan for Stress Testing on Equities.950 (134.500.540 42.407 72.507 11.Notes to the Consolidated Financial Statements For the year ended December 31. Gap limit for other major currencies will be introduced depending upon the significance of exposure in that currency. daily reports are generated to evaluate the exposure in different currencies.625 3.518.285. All these activities are performed on a daily basis.079. Equity price risk is managed by applying trading limit.235 109.313.252.133 43. scrip–wise and portfolio wise nominal limits.153.146.926 (83.031 146.878 422.129.758 372.410) 13.413 60.310) (2.2.108.703 15.280 2008 Assets Liabilities Off–balance sheet items (Rupees in ‘000) Net foregin currency exposure Pakistan Rupee United States Dollar Pound Sterling Japanese Yen Euro Other currencies 428.526 1. 2009 The core objective of foreign exchange risk management is to ensure the foreign exchange exposure of the Bank remains within defined risk appetite and insulate Bank against losses that may arise due to volatile movements in foreign exchange rates or interest rates.446 396.825 762.581 (6.720 1.049 111.566.010.295 – – 60.428.906 1. Gap limits on different tenures have been introduced for USD exposures.035) – 72.094. The stress test for equity price risk assesses the impact of the fall in the stock market index.598 (1.852.

292.543.104) 88.450.049.332 1.906.017.392 23.322.845 23.754 213.663 – 5.707 – – 7.156 55.662.075 12.052) 52.252.229.265.287.879.322.430) (36.588 90.385.520.861) Bills payable Borrowings Deposits and other accounts Other liabilities 12.787.562 31.306.332.581.948.275 835.470 – – – – 707.004 83.987.090 44.610.513 136.649.475 – – 1. 2009 Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Other assets – net 0% 0.734 6.662.495.322 5.177.460.904.670.744 53.774.707 7.311.970 (90.311.315 – – 4.05% to 12.845 124.709 432.832.441.333 124.791 (39.00% Liabilities 8.058.691 137.144 19.948.021.522.862 – – – – – – – – – – 137.793.891.917 1.109 For the year ended December 31.201.084.637 253.620 – 2.516 2.333 – 83.171 179.862 – – – – – – – – – Foreign exchange contracts purchase Interest rate swaps – long position Cross currency swaps – long position Notes to the Consolidated Financial Statements Foreign exchange contracts sale Interest rate swaps – short position Cross currency swaps – short position Off–balance sheet gap Total yield / interest risk sensitivity gap Annual Report 2009 I 215 Cumulative yield / interest risk sensitivity gap .581.792.834.454.553 (3.381 10.635.133 2.000 166.720.781 10.3 Mismatch of Interest Rate Sensitive Assets and Liabilities 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.338 38.021.309.201 12.637 151.640 – – 2.825.510 105.265 11.5% On–balance sheet gap Off–balance sheet financial instruments 23.760 (1.750.824 11.080.055 50.074.709 149.245.372 – – 2.177.037.720.490.670.498 – 11.744 – – 5.000 17.962 46.088 367.691 1.604 – – 1.792.626 478.309.578 – – 124.032.733.000 50.640 – – – – – – – 36.50% 5% to 9.398.754 137.292.934.100.814.5% to 14.914.040.243.845 124.077.314 9.354 3.333 – 31.139.949 1.12% to 1% 12.549 1.223.518.000.43.286 – – – – – – – – – 19.797.691 – – – – – – 8.753 174.090 – 128.133 – – – – – 2.671 707.662.744 9.787.257.081.906.333 – 83.884.332.312 – – 4.171 – – – – – – – – – 1.099.171 12.845 – (1.248.797.059.306.182 795.501 11.900 69.476.214 83.922.292) 136.442 37.643. 2009 Total Up to 1 month (Rupees in ‘000) Over 1 to 3 months Over 3 to 6 months Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years Exposed to Yield/ Interest risk Not exposed to Yield/ Interest Risk Effective Yield/ Interest rate On–balance sheet financial instruments 38.620 360.845 – – 124.430) 2.879.454.518.88% 15.513 – – 1.508.501 – – – 83.379 102.000.674 2.949 – 1.468 1.201.144 – 1.333 124.000.333 – 83.297.658 – – – – – – – – – 360.713.292) – 33.502 – – – 2.485 – – – 1.466 9.845 24.372 136.483 14.904.35% to 12.937 66.626 58.871 6.516 – – – – – 2.411 – – – – 56.553 – – 5.332 – – 1.643.381 – – 10.210 (36.468 – – – – – 1.70% 4.882 – – – – 28.489 37.

983.401.427.122.658.291 – – – – 166.557 – – – – – 674.365.260.882 2.551.127 20.339.106.968.988 21.086.057.414 – – 7.275 7.137.705 (77.420.996 129.097 100.361) 128.663.780 18.450 21.471.010.926.005 24.158 – – – 13.591 160.823 – – 37.667 173.837. Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market interest rates.412 126.667 – – 184.50% 5 % to 9.656.751) (1.055.497 42.182 13.980.371 – – – 1.932 2.347.418 (17.158 13.570 – – – – 708.663.100.295. securities Foreign exchange contracts purchase Interest rate swaps – long position Cross currency swaps – long position Foreign exchange contracts sale Interest rate swaps – short position Cross currency swaps – short position Forward outright sale – Govt securities Notes to the Consolidated Financial Statements Off–balance sheet gap Total yield / interest risk sensitivity gap Cumulative yield / interest risk sensitivity gap Yield risk is the risk of decline in earnings due to adverse movement of the yield curve.468 112.191 17.833.129.549 8.008.245 – – – – – – – – – – Forward outright purchase – Govt.254.325) (1.977.039.615.371 1.125.840 330.155 199.076) 131.437 – – – 4.396 13.927.063 – – – – – 2.899 54.274.263.005 – – 20.069.399.620.552 9.523.830 9.827.420 91.639 67.055.291 166.629.852 372.127 – 173.037.228 266.089 4.094 – – – – 4.024 27.557 674.357.450 69.530 88.823 131.882 – – – 2.968.152.422 – – – – – – – – – – 95.100 – – – 48.221.097 19.663.050.827.90% 1. 2009 Liabilities 10.751 166.161 26.524 – – – – 286.642 – – – – 45.667 17.876 11.374) 169.618 1.375.315 37.282.809) (14.127 – – 173.526 4.476.571.823 129.56% 18.050.20% 15.993 10.215 44.920 286.787 – – – – – – – – – – – (1.385 8.629.899 414.502.081 12.361) 980.535 19.437 4.468 22.069.121 52.083.769 – – – – – 980.481.100.426 – – – – – – – – – – – 980.680.042.590.742 759.618.373 17.420.996 – – – – – 95.127 – – – – 173.180.117) 20.631.794.00% For the year ended December 31.2008 Total Up to 1 month (Rupees in ‘000) Over 1 to 3 months Over 3 to 6 months Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years to Yield/ Interest Risk Exposed to Yield/ Interest risk Not exposed Effective 216 I MCB Bank Limited 39.632.077 147.632 73.602 262.685.823 1.057.127 – (1.818 – – 5.737 157. .365.376.459.794.127 98.000 – – 19.130 – – – – – – – – – Bills payable Borrowings Deposits and other accounts Other liabilities 15.865 – – – 35.260) 132.100 (7.5 % On–balance sheet gap Off–balance sheet financial instruments 26.590.644.063 2.412 35.314.459.528 – 9.477.530 19.144.75% to 21% 6% to 17.409.996 – 95.079 95.743.325.463 – – 12.079 35.918.374) 130.984 (6.950.008 6.194 (7.237 21.275 – – – 7.130 – 9.314.112 – – – 21.708.083.590.219 4.336.409.446 29.667 173.133.087 35.451) (1.709 42.007.598.477 3.654.712) Yield/ Interest rate On–balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Other assets – net 0.670.497.769 980.130 173.637 97.843.996 95.437 4.551.612 39.852 – (1.325.895.644.

153. in all geographical locations and for all currencies and hence to be in a position. Liquidity Management MCB’s liquidity risk management framework is designed to identify measure and manage in a timely manner the liquidity risk position of the Bank.636 12.632.753 Total financial liabilities 432.285. decline in earnings. Liquidity risk is a risk of not being able to obtain funds at a reasonable price within a reasonable time period to meet obligations as they become due. in the normal course of business. – – Bank monitors and assesses the impact of increase in NPLs. The Bank understands that liquidity does not come for free.475.320. MCB’s investment in marketable securities is much higher than the Statutory Liquidity requirements.099.758.4 Liquidity Risk 478. repay depositors and fulfill commitments. as per policy MCB maintain a portfolio of marketable securities that can either be sold outright or sold through a repurchase agreement to generate cash flows for meeting unexpected liquidity requirement. As a part of liquidity management MCB maintains borrowing relationships to ensure the continued access to diverse market of funding sources. such as reducing assets.916.878 445. Managing Funding Sources Managing funding sources. Bank has policies to ensure that sufficient cash is maintained during the day to make payments through local payment system. MCB’s liquidity risk management approach involves intraday liquidity management. Marketability of trading securities. Because liquidity is critical to the ongoing viability of any financial institution.329 30.677.962 372.201. deposits withdrawal. including those caused by liability erosion and explicitly identifying quantifying and ranking all sources of funding preferences.Notes to the Consolidated Financial Statements For the year ended December 31.155 Other liabilities Deferred tax liability 3. The policy of the Bank is to maintain adequate liquidity at all times.916 Total financial assets 43.414. MCB’s sound credit rating together with excellent market reputation has enabled MCB to secure ample call lines with local and foreign banks. Treasury and Investment policy. on its liquidity positions.825.376.603 414. MCB recognizes that liquidity risk can arise from the Bank’s activities and can be grouped into three categories: – Inflows/outflows from on–balance sheet items (other than marketable securities and wholesale borrowings) and off–balance sheet items.428. deposits concentration.756 6. Contingency Funding Plan and Limit Structure which are reviewed and approved regularly by the senior management /Board members.485 – 10. managing funding sources and evaluation of structural imbalances in balance sheet structure.403.621 440.010 – 11. modifying or increasing liability structure.625 3.598 385.336.750.125 1. and Capacity to borrow from the wholesale markets for funding as well as trading activities. Intraday Liquidity Management Intraday liquidity management is about managing the daily payments and cash flows. and using other alternatives for controlling balance sheet changes.880 3. expanded business opportunities. MCB liquidity risk policy envisages to project the Bank’s funding position during temporary and long–term liquidity changes. to meet obligations. The underlying policies and procedures include: Risk Management policy. and surplus liquidity has an opportunity cost which needs to be recognized. The level of liquidity reserves as per regulatory requirements also mitigates risks.010 18. acquisitions and negative reputation.714. Annual Report 2009 I 217 .816.384.653.709 Liquidity represents the ability to fund assets and meet obligations as they become due.758 Balance as per balance sheet Less: Non financial liabilities 439.105 32. 2009 Reconciliation to total assets 2009 (Rupees in ‘000) 2008 Reconciliation to total liabilities 2009 (Rupees in ‘000) 2008 Balance as per balance sheet Less: Non financial assets Investments Operating fixed assets Deferred tax assets – net Other assets 511. liquidity management is among the most important activities that MCB conducts.432 17.295 12.

638.275 852.019 2.662.050 23.489.999.430.1 Maturities of Assets and Liabilities – Based on contractual maturity of the assets and liabilities of the Bank 2009 Total Up to 1 month (Rupees in ‘000) Over 1 to 3 months Over 3 to 6 months Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years 218 I MCB Bank Limited Assets 38.363 – – – 59.251.736 394.082 4.678 – – 2.241.622.309.189 3.503 72.330.020 10.991 For the year ended December 31.442 37.710.743 43.315 36.032 12.229.077.340 164.192.438 88.405.010 1.450.058.470.075 4.694.186 10.976.4.346. 2009 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Operating fixed assets Deferred tax assets Other assets – net Liabilities 8.139.762 30.478.192 50.296.572 9.776 24.460.43.045 38.225 21.871 6.483 18.000 169.130.403.313.330 – – 11.777 356.171.524 107.838 72.136.460 11.693 26.899.670 71 9.387.782.638 – – – 30.049.000.694 869.269 39.020 – 420.077.292.267 5.552 1.354 3.485 221.000.431 80.878 – – 1.731 513.354 1.593.971 Bills payable Borrowings Deposits and other accounts Deferred tax liabilities Other liabilities Net assets Notes to the Consolidated Financial Statements Share capital Reserves Unappropriated profit Minority interest Surplus on revaluation of assets – net of tax .364.687 – – 1.069 5.774.911.099.010 257.824.610 177.290 6.018.313.541 38.125 15.905 23.221 531.051.679 8.171 308.604 54.981 12.821.871 6.767 22.468 144.662.651 7.474 – – – – 3.146 818.949.033 3.060.246 30.088 367.006 260.741 2.620 – 4.158 4.057.762.000 7.734 6.441.185.768 443.601) 92.161 – – 2.793.347 36.127 1.579.581.744 103.062.483.656 17.466 9.971 – – – 5.774.377 – – – 420.081 – – – 3.475 109.195 201.000 50.553 4.868 341.484.164 15.955.144 113.280 6.495.994.265 18.445.999 1.090.724 40.370.280 (266.647 253.509.615 – – – – 4.771 1.620 167.932.949 3.991.580 1.849.517 – – – 5.590 22.460.682.542.895 – 1.704.248.161 265.201.091 – 4.145 45.434 332.870 1.090 33.783 90.364.209.062.662.661 15.263.090 44.281.717 26.589 441.099.046 32.659 19.424.000.201.454.335.516 – 1.595.314.868 310.261.687.125.372.

478 28.459 40.132.852.729 10.321 11.013.660 23.690 – – 2.038 – – – 3.080 502.733.502 11.106.665.241 19.615 448.755.137 4.400 6.485 1.096.772.065.905.343.877 494.973.238.002 46.112 91.743 11.199.472 106.152 5.926.145.753 77.460 12.252 60.437 147.133 (205. 2009 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Operating fixed assets Deferred tax assets Other assets – net Liabilities 10.140 1.219 4.746 1.925 39.341 12.050.377 358.815 21.427) 25.177.018 1.594 39.743 – 401.875.551.553 For the year ended December 31.590 272.749 – – – 5.860 2.843 12.214.377 12.420.371 53.490 – – – 57.328.821 76.577.485.087.429 230.271.058.632.765.888 – – – 1.526 4.551.447.650 6.781 21.375 1.670.111 60.160 984.380.055.570.526 4.882 365.861.353.971 – 6.485.639.877 1.818 62.486 19.43.228 446.325.642.398.533.219 4.020 25.1 Maturities of Assets and Liabilities – Based on contractual maturity of the assets and liabilities of the Bank 2008 Total Up to 1 month (Rupees in ‘000) Over 1 to 3 months Over 3 to 6 months Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years Assets 39.415.050.421 8.007.823.374 – – – 4.4.554 – – – 46. Annual Report 2009 I 219 .625 – – – 4.079 26.218 3.692 547.623 71.050.898.818 – 1.612 1.997 17.863 – 4.677 – 11.760.231 – 11.657 85.435 20.753 79.313.079 98.038 – – – – 2.011.473 386.244 93.400 – – – 401.631.145.631.366 15.468 22.282.136 51.130 294.283 920.772.656.371 182.768 36.867.083.663 6.165.890 1.432.364 4.506 95.051 53.162.311 4.086.290 9.643 – – 4.188 31.391 262.152.608.373 5.376 21.425 101.841.253 – – 2.364 10.100.132.320.859.400 1.133.492 1.100.364.673 – 1.830 17.020.731 920.060.564.663.667.318.825 299.810 Bills payable Borrowings Deposits and other accounts Deferred tax liabilities Other liabilities Net assets Share capital Reserves Unappropriated profit Minority interest Surplus on revaluation of assets – net of tax Notes to the Consolidated Financial Statements When an asset or liability does not have any contractual maturity date.345.031 77.723 69 6.887.828.235 153.048.094.468 9. the period in which these are assumed to mature has been taken as the expected date of maturity.097.549 1.840 330.593.106.386.011.406 460.145 5.799 37.133 6.828.

014 113.478.468.371.340 164.687 – – 19.032.620 – 4.161 – – 2.572 9.364.783 90.646.4.910 4.281.991 For the year ended December 31.774.263.209.682.662.694.091 – 4.445.717 26.524 107.332 19.767 22.434 332.364.450.538 109.057.460.668 54.248.622.971 – – – 5.032 12.331.018.659 19.483.776 24.077.821.000 7.999.049.796.741 2.731 513.296.616 28.499 18.503 72.662. it has been assumed that on a going concern basis.125.489.330 – – 11.186 10.670 71 9.411 3.383 59.868 341.438 88.145 45.441.000.045.006 260.405.088 367.610 177.060.773 – – 8.890 420.280 5.033 16.661 15.171 36.656 17.270.474 – – – – 3.678 – – 15.075 4.824.833.363 – – – 59.267 5.354 1.045 38.127 1.108.146 818.2 Maturities of Assets and Liabilities – Based on the working prepared by the Asset and Liabilities Management Committee (ALCO) of the Bank 2009 Total Up to 1 month (Rupees in ‘000) Over 1 to 3 months Over 3 to 6 months Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years 220 I MCB Bank Limited Assets 38.725 167.818 221.516 – 1.192 50.069 12.626 9. Current and saving deposits do not have any contractual maturity.809 8. .090.579.062.484.158 4.589 441.870 1.185.517 – – – 5.275 25.871 6.019 2.587.430. Therefore.195 201.871 6.290 6. current deposits and saving accounts have been classified between all nine maturities.647 253.269 39.716.868 310.313.545.178 97.000.141 48.224.000 50.895 – 1.782.905 23.915 – – 6.949.452 22.911.976.444.466 42.734 91.565 (54.201.768 443.090 33.431 80. 2009 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Operating fixed assets Deferred tax assets Other assets – net Liabilities 8.541 38.442 122.225 21.468 144.762.651 7.2 also.077.051.593.630 2.010 1. these deposits are not expected to fall below the current year’s level.694 869.354 3.318.180.251.387.580 1.046 32.743 43.309.424.189 3.050 23.43.403.403.314.460.581.313.090 44.320) 18.201.552 1.788 126.542.221 531.774.000 169.266.595.4.020 – 6.736 394.081 Bills payable Borrowings Deposits and other accounts Deferred tax liabilities Other liabilities Net assets Share capital Reserves Unappropriated profit Minority interest Surplus on revaluation of assets – net of tax Notes to the Consolidated Financial Statements Refer the sub–note to note 43.460 11.280 6.010 257.704.246 30.130.875.858.864.444 84.838 72.470.081 – – – 3.000.192.283.460 4.662.409.771 1.318.099.161 265.261.062.265 18. Further.615 – – – – 4.638 – – – 30.649.058.638.512 36.082 4.495.

874 95.228 446.673 – 1.473 386.590 35.607 8.400 1.231 – 11.729 10.905.553 For the year ended December 31.414 Bills payable Borrowings Deposits and other accounts Deferred tax liabilities Other liabilities Net assets Share capital Reserves Unappropriated profit Minority interest Surplus on revaluation of assets – net of tax Notes to the Consolidated Financial Statements Refer sub–note to note 43.623.760.821 76.888 – – – 1.050.877 494.013.038 – – – – 2.662 147.615 448.429 230.302 294.086.788.011.472 106.861.877 62.111 60.670.051 53.066 (20.391 262.050.160 984.058.743 – 6.781 21.218 3.768 36.459 40.486 19.364 4.320.087.926.946.926.018.811.199 57.396 401.018 1.570.353.199.485.867.623 71.080 502.746 1.965 97.43.753 79.214.692 547.020 25.100.2 Maturities of Assets and Liabilities – Based on the working prepared by the Asset and Liabilities Management Committee (ALCO) of the Bank 2008 Total Up to 1 month (Rupees in ‘000) Over 1 to 3 months Over 3 to 6 months Over 6 months to 1 year Over 1 to 2 years Over 2 to 3 years Over 3 to 5 years Over 5 to 10 years Above 10 years Assets 39.421 8.132.772. current deposits and saving accounts have been classified between all nine maturities.731 920.145.551.060.133.485.830 17.345.677 182.364.398.504.133 31.755.522 25.841.219 4.828.283 920.823.845.650 6.502 85.325.586 4.890 6.971 – 6.313.321 11.343.244 93.468 9.860 18.065.564.219 4.612 1.800.420.707.639.677 – 11.602 (2.341 12.594 39.136 51.432.828.852 (3. 2009 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments – net Advances – net Operating fixed assets Deferred tax assets Other assets – net Liabilities 10.780.296 57.361.485 1.375 22.625 – – – 4.526 4.425 101. Current and saving deposits do not have any contractual maturity.417 91.887.827.772. it has been assumed that on a going concern basis.106.139 5.862.079 26.095.631.152 5.038 – – – 3. these deposits are not expected to fall below the current year’s level.608.749 – – – 5.020.132.631.253 – – 17.582) – – 15.4.492 1.366 15.554 – – – 46.2 also.177.840 330.271.400 6. Further.997 45.104 – – 5.690 – – – 2.140 1. Therefore.152.252 60.402 365.753 77.593.376 95.663 6.468 22.438.460 12.031 77.380.282.386.506 95.412.877 1.526 4.667.663.188 31.048.415.094.377 358.603.241 19.100.105.863 – 4.165.647. Annual Report 2009 I 221 .373 5.318 – – 5.4.642.925.079 98.723 69 6.803.145 17.617 25.551.852.447.025.133 6.106.843 12.374 – – – 4.235 153.137 4.818 – 1.925 39.481) 61.844 10.406 460.402) 10.902.968.520 37.549 1.011.

GENERAL Comparative information has been reclassified and rearranged in these financial statements for the purpose of comparison. ORMD has active coordination with audit and compliance for information sharing on Key Risk Indicators (KRIs) with respect to management of various operational risk aspects within the bank. technology or external events.Notes to the Consolidated Financial Statements For the year ended December 31. This definition includes legal risk. the Bank is reporting operational risk capital charge under Basic Indicator Approach (BIA). However. ORMD provides assistance and guidance for proactive operational risk management. in 000) From To Exchange income on import / export bills purchased / negotiated Key Deposits Account and collection of Zakat Account Islamic Sukuk Certificates of Maple Leaf Cement Factory Limited Contractual security guard cost 86.5 Operational Risk Operational Risk is risk of loss resulting from an inadequacy or a failure ascribable to people.1 Operational Risk–Disclosures Basel II Specific Currently.5 per share) and bonus shares issue of 10% (2008: 10%). Muneer Director Dato’ Mohammed Hussein Director Mian Umer Mansha Director 222 I MCB Bank Limited . processes.5 per share (2008: Rs. loss database management. Based on periodical analysis of loss data. 3. Atif Bajwa President and Chief Executive S.5.665 92. 43. NON–ADJUSTING EVENT The Board of Directors in its meeting held on February 25.531 375. These consolidated financial statements for the year ended December 31. The Risk Management Policy and bank–wide Operational Risk Management Framework (ORMF) have been developed in line with international best practices. but excludes strategic and reputational risk. M.244 Other income Deposits and other accounts Advances Salaries and allowances Fee. Although. 44. The report covers the significant risk events. enhancing operational risk awareness through workshops and sessions. respective business and support functions are the risk takers / owners. 2. commission and brokerage income Other Liabilities Investments Others (Administrative expenses) 45. risk and control self assessment exercises.000 216. impact analysis and recommendations for improvement in control / risk mitigation. a number of initiatives are underway for adoption of The Standardized Approach (TSA) / Alternative Standardized Approach (ASA) like business line mapping. The policy and framework are reviewed periodically so as to incorporate the current changes. but not limited to Risk and Control Self Assessment. 2010. No significant reclassification has been made except for as follows: Reclassified Description Amount (Rs. 46. Major processes for operational risk management include. 2010 has announced a final cash dividend in respect of the year ended December 31. ORMD initiated the process of collecting loss data on key risk events in the year 2007. DATE OF AUTHORIZATION FOR ISSUE These consolidated financial statements were authorized for issue by the Board of Directors of the Bank in their meeting held on February 25. Operational Risk Management Division (ORMD) within Risk Management Group (RMG) is primarily responsible for oversight of bank–wide operational risk management. 2009 of Rs. ORMD generates reports for senior management and Risk Management and Portfolio Review Committee (RM&PRC) of the Board. ORMD is independent of revenue generating functions. 2009 do not include the effect of these appropriations which will be accounted for subsequent to the year end. 2009 43.

399 4.566 62.022.000 1.644 177.260 12.593 217.546 2.251 23.728.149 4.963. 2009 1 Annexure I Particulars of Investments in listed companies.410 136.169 38.266 6.855 2.847 17.490 25.200 284.375 1.094 15.1 1.916 48.000.754 1.469 55.035 2.602 Fully Paid–up Ordinary Shares Abbott Laboratories Pakistan Limited Allied Bank Limited Arif Habib Limited Arif Habib Securities Limited Askari Bank Limited Atlas Bank Limited Attock Petroleum Limited Bank Alfalah Limited Bank Al–Habib Limited Century Papers & Board Mills Limited EFU General Insurance Limited EFU Life Insurance Company Limited Engro Chemical Pakistan Limited Fauji Fertilizer Bin Qasim Company Limited Fauji Fertilizer Company Limited Glaxosmithkline Pakistan Limited Habib Bank Limited Habib Metropolitan Bank Limited Hub Power Company Limited IGI Insurance Company of Pakistan Limited Indus Motor Company Limited International Industries Limited Jahangir Siddiqui and Company Limited Kohinoor Energy Limited Kot Addu Power Company Limited Lucky Cement Limited Mehr Dastagir Textile Mills Limited Maple Leaf Cement Company Limited Millat Tractors Limited National Bank Of Pakistan National Refinery Limited Oil & Gas Development Company Limited Orix Leasing Pakistan Limited Packages Limited Pak Suzuki Motor Company Limited Pakistan Cables Limited Pakistan Oilfields Limited Pakistan Petroleum Limited Pakistan State Oil Company Limited Pakistan Telecommunication Company Limited Pakistan Tobacco Company Limited Rupali Polyester Limited Soneri Bank Limited Sui Northern Gas Pipelines Limited Samba Bank Limited (Formerly Crescent Commercial Bank Limited) 135.181 1.404 298.199 108.018 23.453.822 30.875 5.406.239.000 10 10 11.189 219 496 867 4.833.172 47.937 1.227 4.000 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 1.220 1.083.332 5.000 185.092.207 9.405 420 3.700 658.941 18.600 4.600 2.475 119.327 300 1. mutual funds and modaraba – available for sale Investee Entities Note Number of Ordinary and preference shares/ certificates/ units held Paid–up value per share/ certificate/ unit Total paid–up/ nominal value Cost as at December 31.023 322.358 4.Notes to the Consolidated Financial Statements For the year ended December 31.028 14.828 11.156.098 16.241 5.720 918.911 49.032.432 1.761 40.335 590 20.582 15.437 316.188 222.292 109.920 21.925 440.931 24.192 477.253 147.720.803 120 76 6.358.902 166.844.408 244.106 822 369 177.585 34.512 1.616.654 1.545 3.006 30.990 97.081 50.105 191.536 46.000 61.150 Annual Report 2009 I 223 .655 35.024 29.000 11.040 7.927 50.672 1.774 18.912 3.565 550 14.831 45.066 1.412 8.356 28.893.905 12.110 83.303 214.840 690.443 1.216 22. 2009 Rupees (Rupees in ‘000) Fully Paid–up Preference Shares Azgard Nine Limited Masood Textile Mills Limited 1.670 30.004 301.011 880.387 6.160.530 8.205.500 59.750 16.741 484.602 50.600 86.837 54.120 5.288 309.543.674 5.529.515 218.132 10.630 25.716 420.000 1.600 175.299 53.361 64.275 179.419.027 382.602 50.208 6.665 5.490 42.569 676.169 68.731 138.

704.604 269.445 321.644 3.000 442.604 270.488 224 I MCB Bank Limited .986) 690.370. 2009 (Rupees in ‘000) MCB Dynamic Cash Fund Atlas Islamic Fund MCB Dynamic Stock Fund (IPO) MCB Dynamic Allocation Fund (IPO) MCB Asset Management Company Limited Atlas Asset Management Company Limited MCB Asset Management Company Limited MCB Asset Management Company Limited 3.397 Cost as at December 31. 2009 1.000 82.874 1.000 1.730 502.664 23.884 320.000.996 3.557 7.100 300.553.387 100. 2009 Investee Entities Name of Management Company Number of Ordinary and preference shares/ certificates/ units held Paid–up value per share/ certificate/ unit Annexure I Total paid–up/ nominal value Cost as at December 31.214 (3.006 First Al–Noor Modaraba Al–Noor Modaraba 5.165.520 10.423.000 10. 2009 (Rupees in ‘000) MCB Cash Management Optimizer Funds MCB Dynamic Cash Fund 506.256 170.537 5 10 10 50 10 10 224 64.420. Dividend rate is 6 months KIBOR + 200 bps per annum.001 Carrying value before revaluation & provision Provision for diminution in value of investments Surplus on revaluation of securities Market value as at December 31.892 238.000 100 500 100 100 316.402.231 3. 10 per share plus any accumulated preference dividend.049 50.133.70 60.000 47.000 33.856 6.035 2.981 100.169 4.204 20.270 Management (Private) Limited 10 55.967 833.532. 2 Particulars of Investment in mutual funds – held for trading Number of units held Paid–up value per unit Rupees Total paid–up/ nominal value Cost as at December 31. 2009 Fully Paid–up Ordinary Certificate/ Units of Mutual Funds Name of Management Company Number of units held Paid–up value per unit Rupees Total paid–up/ nominal value 7.280 2.1 These are redeemable after the end of the fourth year from June 2005 at the option of the issuer either in whole or multiples of 10% of outstanding issue at a price of Rs. 2009 Rupees (Rupees in ‘000) Thal Limited The Bank of Punjab Trust Securities & Brokerage Limited Unilever Pakistan Limited United Bank Limited Zulfiqar Industries Limited Total Fully Paid–up Modaraba Certificates 44.011.484 83.448 100 100 50.000 250.981 (87.710) 146.Notes to the Consolidated Financial Statements For the year ended December 31.400 30.606 Carrying value (before revaluation and provision) listed shares ‘available for sale’ Provision for diminution in value of investments Surplus on revaluation of securities Market value as at December 31.704 305 4.

The percentage of holding disclosed is in proportion to the preference share paid up capital.500 5. 2007 March 31.716) 442. 2009 3 Particulars of Investment held in unlisted companies–available for sale Company Name Percentage of Number of shares / holding certificates held (%) Cost as at December 31. Lazara Campos Mr.P. Chughtai Mr.781 156.127 2.200 1. 2009 December 31. R.527 100 10.000 10. Berdi Mr.106 2.000 321. Tariq Iqbal Khan Mr. 2008 December 31.261 2.Amarasena Mr. A. 513.000 11.700 225.343 Cost of unlisted shares / certificates / units Provision against unlisted shares Carrying value of unlisted shares / certificates / units * These are fully provided unlisted shares.034 110.22% 17.000 3.500 197 2.485 79.000 18 300 100. 2009 December 31. 2009 June 30.Notes to the Consolidated Financial Statements For the year ended December 31.681 52.421 June 30. Chaudhry Abdul Majeed Mr. 2009 – – – – – – Mr.5% per annum.252 1.000 15.1 These carry dividend rate of 6 months KIBOR + 2. 2008 March 31.500 2.00% 10.* 250. 3.* Custodian Management Services* Musarrat Textile Mills Ltd.000 – Mr. Sarath Silva Mr. N.426 926 – – – – – – June 30.383 92. Asif Ali Khan Abbasi Mr.000 985. Muzaffar Mahmood Khan Mr.000 100.000 19.619 2. 2009 (Rupees in ‘000) Net Asset Value of total investment Based on audited financial statements as at Annexure I Name of Chief Executive Shareholding more than 10% Fully paid up preference shares Fazal Cloth Mills Limited (2.000 5.045 26. Kamran Hafeez Mr.000 1.922 14.60% 10.000 30.00% 1.604.H.843 (71.120 429 1.383 715 5.150.446 50. Ashfaq A.000.000.738 22 737 736 1.000 100.500 300. Anil Amrasoriya – – – – – – 18. Mohammad Hanif Jhakura 40. 2009 June 30. Sheikh Naseem Ahmed Annual Report 2009 I 225 . 2009 December 31. 2008 December 31.1) Fully paid up Ordinary Shares/ Certificates/ Units Pak Asian Fund Limited Khushhali Bank Limited Central Depository Company of Pakistan Limited 10. 2009 Mr. 2009 June 30.* Sadiqabad Textile Mills Ltd.250 100.500 Shareholding upto 10% Fully paid up Ordinary Shares/ Certificates/ Units First Capital Investment Limited National Institute of Facilitation Technology Private Limited National Investment Trust Limited SME Bank Limited Pakistan Agro Storage and Services corporation Arabian Sea Country Club Society for Worldwide Inter Fund Transfer (SWIFT) Credit Information Bureau of Srilanka Lanka Clear (Private) Limited Lanka Financial Services Bureau Limited Equity Participation Fund* Al–Ameen Textile Mills Ltd.500 500.* Ayaz Textile Mills Ltd.000.000 36.638.047 330.490. 2008 June 30.500 1. Ghalib Nishtar Mr.

––do–– – issue no. Sirajuddin Aziz – issue no. III 100.940 Mr.a.900.000.a.a.3% of principal amount in the first 90 months and the remaining principal in the 96th month from February 2005. In six stepped –up semi–annual installments starting from the 30th month from July 2007.5% p.735.980 Bank Al Habib Limited 20.720 748.6% p. Atif R.000 449.544 WAPDA Sukuk Bonds PKR 400. Habib Bank Alfalah Limited – issue no.25% each of the issue amount starting from the 84th month from November 2004.000 150. Bokhari Pak Arab Fertilizers Limited 20.295 months and remaining in 3 semi annual installments of 33.863) 396.a.000.000 99.a.800 with a floor and cap of 3. ––do–– 149.000 5.a.000 5.5% p.95% for next five years 250.978 5.904 and remaining principal in 3 semi–annual installments of 33. Mr.720 5.000 500.35% Currency 1. 284.000 6 months KIBOR + 2.5% p.a.000.000 284. principal in 3 semi–annual installments from the 84th month from July 2004.000 50. III 56. III 50.5% p.000.000 ––do–– 89.a.000 78 months and remaining principal in three semi –annual installment staring from the 84th month. 2009 (Rupees in ‘000) 99.000 6 months KIBOR + 1. 0. 99.740 ––do–– – issue no.000 6 months KIBOR + 1.890.000 6 months KIBOR + 1. Fawad Ahmed Mukhtar Carrying value before revaluation Deficit on revaluation of securities Market value of listed TFCs (revalued amount) SUKUK BONDS – available for sale Terms of Redemption Principal Interest At maturity Half–yearly Rate of interest 6 Month KIBOR+0. Total Paid up Value (before redemption) Profit Principal Redemption Annexure I Balance as Name of at December Chief Executive 31.7% p.02% of total issue in equal installments 99. Muhammad Shakil Deficit on revaluation of securities Market value of sukuk bonds (3.000 5.000 6 months KIBOR + 1.000 250. In 4 semi annual equal installments starting from the 78th month from May 2005.730 Mr.000 6 months KIBOR + 2. 0.000 5.600.000 6 months KIBOR + 1.25% of principal in the first 78 months 49. Mehakri – issue no. Abbas D. for first five years & 6 months KIBOR +2. II 39.R.000 5.26% of principal amount in the first 500.831.820 Mr. Safar Ali K. 6 months KIBOR + 1.000 100.600. II 19.25% each starting from the 84th month from November 2005. 0.000 5. 2009 4.980 5. 0.000 Mr.000 6 months KIBOR + 1.2% of the principal in the first 60 months and remaining principal in 6 equal semi annual installments from September 2006.233) 1.5% p.000. 0.5% in first 78 months and the remaining and 10% per annum respectively.5% p. Particulars of investments in Term Finance Certificates and Sukuk Bonds– (refer note 9) Investee Number of Paid up certificates value per held certificate (Rupees) LISTED TERM FINANCE CERTIFICATES – available for sale Askari Bank Limited – issue no.a. I 20.32% of principal amount in the first 96 months and remaining principal in four equal semi annual installments starting from the 102nd month from issue.000. 149.000.000 Soneri Bank Limited 30. Lakhani United Bank Limited – issue no.548 Mr.137 226 I MCB Bank Limited .000 100.900. II 10.000 6 months KIBOR + 1.000 Mr. 0. 0.000 198.Notes to the Consolidated Financial Statements For the year ended December 31. 99.a.777 (96.000 100.000 5. 0.25% of the principal in the first 78 198.5% p.3% of principal amount in the first 90 months and the remaining principal in the 96th month from October 2005.5% p.

a.929 At maturity Yearly 9. In 4 equal semi–annual installments starting from November 2009.000 Islamabad Electric Supply Company Limited Gujranwala Electric Supply Company Limited Faisalabad Electric Supply Company Limited Carrying value of unlisted TFCs 200.810 At maturity At maturity At maturity In 8 unequal semi–annual installments.30% for next 5 years. 2009 Investee Number of Paid up certificates value per held” certificate (Rupees) TERM FINANCE CERTIFICATES – held to maturity Annexure I Balance as at December 31. 6 Month KIBOR +0.000.000 225.000 80. in ‘000) Name of Chief Executive Total Paid up Value (before redemption) Profit Principal Redemption Jahangir Siddiqui and Company Limited 56 5. bonds and participation term certificates of companies which are fully provided for in these financial statements.23% p.23% p.000 280. In 4 equal semi–annual installments starting from November 2009.557 Annual Report 2009 I 227 .35% 3 Month KIBOR+1.a. In 12 equal semi–annual installments.a.5% to 2.000 75.000 In 4 equal semi–annual installments.087.727 250.753.000 JDW Sugar Mills Limited Kashaf Foundation Shakarganj Mills Limited 45. Redemption due in two installment falling in April & July 2010 6 Month KIBOR +2. In 4 equal semi–annual installments starting from November 2009.45% p.000.129 684.000 5.000 Allied Bank Limited 46.000 5.000 5. In 18 unequal quarterly installments. over 10 years 279.000.000 500.000.000.384 Mr.702 400.000 5. 6 months KIBOR + 1.000.583 At maturity Half–yearly 21. Shamas ul Hasan 232.Notes to the Consolidated Financial Statements For the year ended December 31.000 80.000.000.23% p.000 Mr.a.000 262.88% US$ 8.500 375. Ahsan Saleem 1.000 16.15% 6 Month KIBOR+1.102 – – – – – – – 13.037 171. Details of Bonds.000 1.414 Government Compensation Bonds Public Sector Enterprises Bonds (PSE–90) Sukuk Bonds Government Sukuk Bonds WAPDA Sukuk Bonds Sui Southern Gas Company Limited Sukuk Bonds Maple Leaf Cement Factory Limited Sukuk Bonds Quetta Textile Mills Limited Sukuk Bonds J.2% p.000 1.35% US$ PKR PKR PKR PKR PKR PKR PKR 13.103.000 99.25% p.000 200.2% 6 Month KIBOR+0.000 4.00% PKR – 286.000 175.000.a.85% p.000 200.000 2.098 Raja Abdul Ghafoor Muhammad Ibrahim Majoka Tanveer Safder Cheema The above excludes unlisted term finance certificates. debentures.000 5.a.000.50% 3 Month KIBOR+1. In 8 equal semi–annual installments.38% of principal amount in the first for first five years & 6 months 114 months and remaining principal KIBOR+1. 2009 (Rupees in ‘000) Debentures Singer (Sri Lanka) Plc.4% 6 Month KIBOR+1.000.70% 6 Month KIBOR+1.25% p.000 1. 0.a.000. 6 Month KIBOR +0.W Sugar Mills Limited Sukuk Bonds Sitara Energy Limited Century Paper and Boards Mills Limited Sukuk Bonds Euro Bonds Euro Bonds – OBU Bahrain Treasury At maturity Half–yearly 6.85% SLR 135.000 Mr.000 1.102 1.000 5. Aftab Manzoor 225.000. 6 Month KIBOR +0.000 16. will be paid at maturity 3 months KIBOR + 1. 2009 (Rs. Quarterly installments starting from March 23.000 Pak Kuwait Investment Company (Private) Limited 100. 6 months KIBOR + 0.a. Federal Government Securities Government of Pakistan Yearly Yearly Barclays Bank’s 3 months USD LIBOR +1% US$ 2.000 Mr.000. Munaf Ibrahim 200.000 70. Debentures and Federal Government Securities (refer note 9) – held to maturity Description Principal Terms of Redemption Interest Rate of interest Currency Foreign Currency Amount (‘000) Carrying value as at December 31.000. 3 months KIBOR + 1.000 232.000.a.714 80.000 112. At maturity Half–yearly Half–yearly Quarterly Half–yearly Half–yearly Quarterly Half–yearly Half–yearly 6 Month LIBOR+2. starting from 8–1/2 years from December 2004.000 5.25% p. In 10 equal semi–annual installments starting from 18th Month from the date of issue date . 2010 3 months KIBOR + 2. 5.400 5. Jehangir Khan Tareen Roshaneh Zafar Mr. In 5 equal semi–annual installments commencing from the 36th month from June 2005.25% 6 Month KIBOR+1.D.000 1.

13% 228 I MCB Bank Limited .363.063.064.646.833.78% Pakistan 21.421.085 11.765 26.645.561.082 5.791 10.187.018 3.263 369. 2009) Pakistan 10.964 2.463.364. profit and net assets of associated undertakings are as follows: Name of associated undertaking Country of incorporation Assets Liabilities Net assets (Rupees in ‘000) Revenue Annexure I Profit after tax % of interest held 2009 First Women Bank Limited (unaudited based on September 30.292 29.310.009.408.389 10.997 123.157.300 10. 2009 6 Summarized financial information of associated undertakings (refer note 9) The gross amount of assets.187 3. 2009) Adamjee Insurance Company Limited (unaudited based on September 30.481.087 32.305 1.307 10.13% 2008 First Women Bank Limited (unaudited based on September 30.561 26.860.868 ** 5.150 * 94.592 * 7.893.882.308.499 7.372 ** 5.491 5. 2008) * Represents net mark–up / interest income ** Represents net premium revenue Pakistan 8.163.78% Pakistan 21. liabilities.302 9.316.268.002 20.482.625.228 11.064 18. revenue.Notes to the Consolidated Financial Statements For the year ended December 31.236 1.582 29.817 2.748 29. 2008) Adamjee Insurance Company Limited (unaudited based on September 30.472.

profits and charging of losses (if any) relating to PLS accounts conform to the basis vetted by me in accordance with Shariah rules and principles. weight–ages. each class of transaction. it is reported that. 2009 Annexure II Islamic Banking Business Report of Shariah Advisor Based on review conducted in terms of Para B (2) of Annexure–I of SBP–IBD Circular No. the relevant documentation and procedures adopted by MCB Islamic Banking Division. i) I have examined. iv) Earnings realized from sources or by means prohibited by Shariah rules and principles have been credited to charity account. 02 of 2008. Dated: February 25. 2010 Muhammad Zubair Usmani Sharia Advisor MCB– Islamic Banking Division Annual Report 2009 I 229 . on test check basis. profit sharing ratios. ii) Affairs of MCB–Islamic Banking Division have been carried out in accordance with rules and principles of Shariah.Notes to the Financial Statements For the year ended December 31. iii) Allocation of funds. SBP regulations and guidelines related to Shariah compliance and other rules as well as with specific fatawa and rulings issued by me from time to time.

110.307 3.405.740 2. 2009 2009 (Rupees in ‘000) 2008 ASSETS Cash and balances with treasury banks Investments Financing and receivables – Murabaha – Ijara – Islamic export refinance Deferred Tax Asset Other assets 315.671.921 859.998 4.727 2.239.561.064 1.000 214.511) 1.566 (3.499 75.520 1.061.600.760 2.405 (1.553 Remuneration to Shariah Advisor / Board CHARITY FUND Opening Balance Additions during the year Payments / utilization during the year Closing Balance 2.466.197.350 872.991 8.064.843 9.500 5.177 1.064 (2.352 2.303 – 2.368 771.498 1.192.271 185.450.650 244.700) 2.928 230 I MCB Bank Limited .762 978.657 872.779 231.073 LIABILITIES Bills payable Deposits and other accounts – Current accounts – Saving accounts – Term deposits – Others Borrowings from SBP Due to head office Deferred tax liability Other liabilities NET ASSETS REPRESENTED BY Islamic banking fund Unappropriated profit Surplus on revaluation of assets – net of tax 850.227 1.200 650.766 1.130.493 271.200 15.093 1.790 1.697 8.553 73.000 – 420.137.781.364 1. Balance Sheet As at December 31.540 175. 2009 (2008: 11 branches).598 7.277.093 1.921 12.000 6.573. 2009 Annexure II Islamic Banking Business The Bank is oiperating 11 Islamic banking branches at the end of December 31.Notes to the Consolidated Financial Statements For the year ended December 31.793 1.000 209.681 966.725.350 1.061.734 1.500) 1.750.271 1.116 1.

2009 2009 (Rupees in ‘000) 2008 Income / return / profit earned Income / return / profit expensed 974. commission and brokerage income Dividend income Income from dealing in foreign currencies Other Income Total other income Other expenses Administrative Expenses Other provisions / write offs Other charges (Penalty paid to SBP) Total other expenses Extra ordinary / unusual items Profit before taxation 37.736 – – 37.414 838.253 Provision against loans and advances – net Provision for diminution in the value of investments Bad debts written off directly Net profit / income after provisions Other income Fees.430 279.565 – 214.Notes to the Consolidated Financial Statements For the year ended December 31.064 6.180 652.678 16.921 Annual Report 2009 I 231 .551 548.403 37.683 10.927 – 209.848 90.263 – 302 107. 2009 Annexure II Islamic Banking Business Profit and Loss Account For the year ended December 31.629 107.061 – 866 90.736 283.102 – 7.430 – – 10.446 14.951 321.595 300.868 289.299 – 1.770 21.526 13.766 321.

Ijaz Ahmed 2 RIZWAN & CO. Mark up Reliefs Written off Provided Total Sr.658 2. Islamabad i) Syed Mohammad Ismail ii) Junaid Ismail i) Syed Yousaf Ali ii) Syed Mohammad Ismail 3.999 319 45 4. Lahore 35202–3364893–6 Ch.510 8 AFZAAL SHARIF Room NO 214 LSE Building. R/o Saidu Sharif.151 – 26.775 35201–9241168–9 Muhammad Ashraf 4. Malik Afzal (Late) 596 596 6 ARSLAN TRADERS Village Fattoke P. Mandi bahauddin 270–34–327506 270–41–327507 116–91–995162 Muhammad Ghafoor Mian Ahmed Yar W/O M R Saleem Mian Muhammad Arif 1.997 1.647 Mian Khurshid Ahmad Mian Khurshid Ahmad Mian Khurshid Ahmad 13.722 4. Tehsil Malkwal Dist.775 1.281 479 – 2.Muhammad Sharif 657 3.Tehsil & District Narowal 265–89–026787 265–85–026788 265–89–210305 35202–3364893–6 Ch. in ‘000) Father’s/Husband’s Name Principal Intt/Acc/Mup Muhammad Azeem 2.O.200 104 3.937 – – 646 646 Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin. Hafizabad Mr. Main Road Salamat Pura. Ferozepur Road.610 5. Lahore. Airport Swat i) 61101–2348911–5 ii) 61101–1473675–5 Mr. Khas.797 Afzaal Sharif 871 – 871 – – 871 871 Notes to the Consolidated Financial Statements 10 MUHAMMAD ARIF R/O Rukkan.610 – 5. 2009 5 AFZAL & CO.304 657 – 3. Lahore 34401–1652212–7 Mian Muhammad Ramzan 7.510 Sarfraz Mohsin – 572 572 7 STYLE ENTERPRISES (PVT) LTD Kamahan Road (Off Bus Stop) 16 KM.405 9.993 1.151 26.793 – – 750 750 35202–7710843–7 Mohammad Ali Ch 1.015 Annexure III 13 JUNAID ENTERPRISES Attaturk Ave G–6/4. P.214 – 9.999 793 – 3.257 – 6. Badi–uz–Zaman 3. BADI–UZ–ZAMAN. Street No 1.584 3. Lahore Mr.412 525 – 2.359 39.245 30 8.841 – – 2. Mehmood Ali Ch 4 M IMRAN House No 13.089 – 5.379 9 AFZAAL PETROLEUM Room NO 214 LSE Building. Lahore Mr. Galla Mandi.Muhammad Sharif – Afzaal Sharif – 4.658 12 MR. Rizwan Mehmood 3 AMERICAN BEVERAGES CORPORATION 13 Durand Road. 35202–3581212–5 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 232 I MCB Bank Limited 289–74–247430 Muhammad Siddique 2. New Muslim Town Lahore 34501–6155620–3 Muhammad Sharif Bhatti 1.531 – – 1. Allama Iqbal Town.885 3.363 – – 588 588 . Muhammad Imran For the year ended December 31. Jawad Khurshid Ahmad Hammad Khurshid Ahmad Aitzaz Khurshid Ahmad 13. Badomalhi .(Rs. No NIC No.011 – – 711 711 11 M R Saleem (PVT) LTD M R Saleem Rehmat Noor 3.759 – – Mr.O.297 – Mr. Lahore 35202–2740250–1 Malik Nazeer Hussain 2.112 – – 981 981 1 AL REHMAN ENGG WORKS 94 – Fruit Market.061 298 39.534 – 3. 83 – D.024 1.

Mark up Reliefs Written off Provided Total Sr. Fsd.121 – – 960 960 20 CHENAB COTTON GINNING & OIL MILLS Mauza Jhoke Gamun Lare.642 – 29.872 Annexure III Annual Report 2009 I 233 .289 – Haji Muhammad Jahanda Riaz Ahmad Shaikh Haji Bashir Ahmad Riaz Ahmad Shaikh Riaz Ahmad Shaikh Haji Mohammad Boota Riaz Ahmad Shaikh Muhammad Saeed Shaikh 11.707 – – – 517 517 Intt/Acc/Mup Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin.090 17 FINE FABRICS (PVT) LIMITED 3–1/A Peoples Colony.230 41. 1. Faisalabad Abid Anwar Faiq Javaid Javaid Anwar Farhat Jahan Naggen Faiq Samina Begum Shaiq Javaid 35.642 29.631 18 J K FIBER MILLS LIMITED 3–1/A.701 1. Nalka Kohala.090 Khizar Hayyat For the year ended December 31.631 6.147 6. Faisalabad Abid Anwar Faiq Javaid – 6. Ghulam Hussain 2.701 Notes to the Consolidated Financial Statements 19 J K SPINNING MILLS LIMITED Abid Anwar Faiq Javaid Javaid Anwar Farhat Jahan Naggen Faiq Samina Begum Shaiq Javaid 1.872 12. Pir Mahal 33100–5073801–9 33100–5073801–9 33102–1809203–9 33100–4704334–9 33100–9089265–9 33100–6182504–1 33100–2418142–1 33100–6340341–5 246–44–237624 246–81–329084 246–44–237624 246–81–329084 244–40–669051 244–46–255473 246–89–410204 246–54–237625 244–76–669052 246–44–237624 246–81–329084 244–40–669051 244–46–255473 246–89–410204 246–54–237625 244–76–669052 322–48–764267 322–59–637991 322–62–637986 322–65–637997 Haji Hussain Bux Haji Hussain Bux Haji Hussain Bux Muhammad Ramzan Mian Anwar Elahi Javaid anwar Mian Anwar Elahi Zahid Anwar Faiq Javaid Mohammad Zakirya Javaid Anwar 650 960 Mian Anwar Elahi Javaid anwar Mian Anwar Elahi Zahid Anwar Faiq Javaid Mohammad Zakirya Javaid Anwar 10.511 3. No NIC No.511 13. Muhammad Najeeb 4.090 14. Ahsan Rasheed Rashid Ahmad Faisal Rasheed Muhammad Zeeshan Muhammad Shakeel 15 PAKISTAN SEED SERVICES C Plot Sindihianwali Road.701 22. Peoples Colony. Shujaabad Road Multan.158 – – 632 632 465 1.140 90 41. Muhammad Hanif 3. 2009 16 AL NOOR PROCESSING & TEXTILE MILLS (PVT) LIMITED.511 Mian Anwar Elahi Javaid Anwar 5. Muhammad Rizwan 12.631 1.832 22.960 – – 3. in ‘000) Father’s/Husband’s Name Principal Rashid Ahmad Nazir Ahmad Rashid Ahmad Mouhammad Yousaf Abdul Rasheed Mian Muhammad Murad 214 861 83 1.044 – – 22.(Rs.870 3. Sargodha Road. Fsd Riaz Ahmad Shaikh Amir Riaz Shaikh Muhammad Saeed Shaikh Sh Faisal Riaz Muhammad Saad Shaikh Bashir Ahmad Muhammad Hassan Riaz Shaikh Uzair Saeed 3. 33100–6570502–7 33100–3922751–7 33100–8511457–9 33100–5100454–3 33100–0290146–7 335–69–234907 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 14 SIDIQUE PROCESSING MILLS (PVT) LTD Sargodha Raod.242 1.

345–88–023564 345–77–333783 345–49–069001 345–68–197723 345–75–565389 345–72–023565 345–73–197724 345–25–197719 36302–9279957–9 36302–0458568–3 36302–3799833–7 36302–3953552–9 36302–7531877–7 36302–0458520–5 36302–9514374–1 354–61–163199 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 234 I MCB Bank Limited 21 DATA COTTON GINNING PROCESSING & OIL MILLS Tail Wala Road Chak NO 110 DB.164 13. Tariq Aziz 7. M. Abdul Rehman Jami 57. Muhammad Abdullah Abdul Ghani 1.797 43.310 855 – 555 1.788 11. Wajid Ali Khan 648 – 2.300 692 89 3. Muhammad Yasin 5. Muhammad Irshad – – 781 781 25 MEHR DASTGIR LEATHER & FOOTWEAR INDUSTRIES PVT. Muhammad Abdullah 2.424 13. Muhammad Hussain 6. Mark up Reliefs Written off Provided Total Sr. M. in ‘000) Father’s/Husband’s Name Principal Intt/Acc/Mup Ilam Din Ghulam Sarwar Ali Muhammad Ilam Din Muhammad Younas Muhammad Younas Ilam Din Nawab Din Kh. Amber Estate Shsahra–e–Faisal Karachi Haji Khushi Muhammad Jawed Iqbal Bhatti Muhammad Khalid 7. Kh. Muhammad yousaf Kh. Ghulam Dastgir Kh.770 346 1.486 5. Abdul Rehman Jami 4. M. Ghulam Dastgir Kh. M. Kh. Muhammad Younas 2.5 S/o Abdullah Dawood 6.399 179 261. Khalid Mehmood 6. Ahmed Bilal Gul Mr.486 – 6.755 555 – 8. Muhammad Yousaf Kh. 36302–9279957–9 36302–0458568–3 36302–3799833–7 42301–5704994. Kh.410 29 SEA GOLD TRADING M/R. Muhammad Mansoor 7. Zahd Bilal Mr.788 – 11. Mohammad Younus Khan Mrs.789 – – 43. LTD. Amir Iqbal Mr. Karachi Mr. Kh. Muhammad Sarfraz 3. Bahawalpur.307 69 25.728 – – 121. No NIC No.238 26. Muhammad Yousaf Kh.000 701 27 1. Muhammad Yousaf 3. Muhammad Ali 5. Muhammad Ibrahim – 28.314 Notes to the Consolidated Financial Statements 27 HAFEEZ RASHEED SONS 82–C.673 43.314 6.724 Annexure III 30 KASHMIR PLOYTEX LTD Industrial Estate Mirpur Azad Kashmir Mr. Yazman Mandi Distt. Hafeez S/o Abdur Rasheed 1. 11th Commercial Street DHA Phase–II.638 337 – 648 985 28 SEHAR CORPORATION 105.797 26 TRADERS IMPEX 5–c. 6/29. Muhammad Abdullah Kh. Kh.025 – 139. feroz Street Jodia Bazar Karachi N/A N/A N/A N/A N/A N/A N/A N/A Mrs. Kh.399 188.724 20. Shaheed Younas Road Multan 1. Kh. Kh.I Chundrigar Road Karachi 42301–0861540–0 42000–9705786–5 42401–4129606–5 61101–1912023–3 507–28–038572 507–52–038573 507–86–038579 42101–836838–4 S/o Mehtabuddin Bhati S/o Haji Khushi Muhammad Bhati S/o Haji Khushi Muhammad Bhati W/o Qazi Ehteshamul Haq S/o Mian M. Kh.081 1. Mehr Dastgir Shaheed Younas Road Multan 1. 5th Floor State Life Building I. Ghulam Dastgir Kh. Hafeez S/o Mian M. Ghulam Rasool 4.500 21. 1.990 Mr. Mohammad Ashraf Khan Mr. Ghulam Dastgir Kh. Harmeem Ara Hashmi – 690 – 690 – – 690 690 . M. M.416 49.376 25.(Rs. M. Hafeez S/o Mian M. Ilam Din For the year ended December 31.814 28. Dilshad Qazi 20. Rahim Yar Khan. Javed Iqbal 8. Muhammad Usman 23 ZAFFAR CORPORATION Grain Market Chishtian 360–88–439657 Rana Abdul Aziz 2. Tahir Iqbal 534 534 24 WAQAS OIL MILLS Katcha Sadiqabad Road Mauza Tibba Laran.867 371 26. Muhammad Yousaf 13.814 Kh. Muhammad Abdullah 2. Muhammad Yousaf 3. Kh. 2009 22 MEHR DASTGIR TEXTILE MILLS LTD Mehr Dastgir.838 139.500 – 21. Farooq Khan Mr.164 Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin.

800 478 – 3. F–8 Markaz Islamabad Mr. RashidAhmed Mrs.113 599 – 1. 2009 33 BHATTI CORPORATION H. Mark up Reliefs Written off Provided Total Sr.724 652 – 6.013 – – 722 722 36 AURANGZEB TUNIO Arzi Bhutto Road Miro Khan Dist: Larkana Syed Muqadas Hussain Syed Husnain Raza W/o Syed Muhammad Arif (Late) D/o Syed Muhammad Arif (Late) 45102–5187012–9 42201–9854186–4 Abdukl Fateh W/o Subhan Ali 12.722 – 13.246 4. Arshad Ali Chaudhry Mr.500 883 – 3.144 6.379 6.097 35 MUHAMMAD BACHAL ALLIES KHURARO P. 427–93–000141 Muhammad Punhal Tunio 1. Block 5.923 852 – 3.343 6.000 323 Muhammad Bachal Aliias Kuraro 2.144 – 6. Block 6. Asad Ahmed Dr.712 – – 1.684 – 14.144 Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin.376 – 652 5 656 . Mohammad Sharif 32 LARR SUGAR MILLS 16–E.246 – 6. Kda Kehkashan Clifton.295 Annexure III Annual Report 2009 I 235 41 RAFAT YAZDAN SIDDIQUI House No A–17. Fareeda Khanum Mrs. Karachi Mr. (St–16).(Rs. in ‘000) Father’s/Husband’s Name Principal Intt/Acc/Mup N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A S/o Ellahi Bhatti 24. Afshan Shahid Ch. PECHS.753 Aurangzeb Tunio 25 1. Rizwana Arshad Mrs.295 1. Syed Rafique Mustafa Shah For the year ended December 31.O. Advani Street Plaza Quater Karachi 42000–9919707–1 Baboo 2.775 – – 645 645 39 AZHAR SERVICES 1/5–D.343 34 NINE STAR INTER NATIONAL 123–Princes Street Chand Bibi Road Nanakwara Karachi. Block–18.180 37 SEAMLINE GARMENTS (PVT) LTD WSA–3. Karachi ANIS AHMED SIDDIQUI 5.S. Nursery Main Shahra–e–Faisal Karachi 423–85–084621 Rustam Ali Azhar Alam Khan Haideri 2.383 Muhammad Iqbal Bhatti – 6. Abdul Rauf Mr.Area Karachi Syed Muhammad Arif (Late) Syed Husnain Raza Begum Shakira Arif Miss. No NIC No.501 487 25 Farukh – – 1.B.343 – 30.034 4. Mirokhan Dist: Larkana 427–77–129000 S/o Ahmed Khan 1.610 Notes to the Consolidated Financial Statements 38 LARAIB INDUSTRIES COTTON G/P FACTORY OIL MILLS Khanpur Mehar Road Adilpur Taluka Ghotki 42201–9643141–3 Khusro Alam Khan Asif Ali Kalwar Shumails Subhan 2. Block–2.610 2. Rashid Minhas Street PECHS. Said Begum Mrs. Arjumand Arif 1.437 – – 2. F.180 1.540 – – 4.506 – 17. Muhammad Ahmed Mr.097 1.278 – – 802 802 40 NOORANI RICE MILLS Sind Small Industrial Estate Larkana 42301–8385149–1 Riazat Ali Abbasi 1.144 – – 6. N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 42201–9782985–3 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 31 ATTOCK TEXTILE MILLS Panther Plaza.348 – – 1.

Lahore 42301–4299539–1 AZIZ AHMED 462 – 12. Lahore 35201–0806707–5 CH NAZIR AHMED 3.A.208 621 2. North Nazimabad.192 – 15.302 – 379 For the year ended December 31. Block 5.053 538 – 5. Phase Vii.230 2.019 378 – 4. Lahore 35202–8701430–3 MOHAMMAD IKHLAQ CH 13.(Rs. Bus Stop. Mark up Reliefs Written off Provided Total Sr. Block–2. Lane–12. D. Canal Bank Scheme.081 343 1.911 639 – – 572 194 766 48 RAO MUHAMMMAD AKRAM H No 5.571 Annexure III 53 SYED ASHRAF ALI House No 246 Qasimabad Liaquatabad Karachi 10.510 – – 2.376 1.571 2. Multan Road.131 – 16.668 3. Karachi 44 KHALIL USMAN B–304 Rufi Paradise Block 18 Gulistan E Johar Karachi 42101–5538260–7 WAHID ALI KHAN 7. No NIC No.424 49 MOHAMMMAD SOHAIL IKHLAQ House No 122.654 – 154 364 518 51 SYED HAROON AZIZ 102/ 2.591 – 597 174 770 Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin.097 – 2. Lahore 35202–2778768–9 GHULAM MUHAMMAD 12. (St–16). Faisalabad 42101–8228717–5 SYED NAFASAT ALI 14.397 – 712 140 852 52 ASAD NASEER P–11/3.678 201 – 17.379 2. Salamat Pura.384 553 – 10.879 – 201 815 1. in ‘000) Father’s/Husband’s Name Principal Intt/Acc/Mup SARAAJ DIN 5.549 – 1. Karachi 33100–2904569–3 NASEER AHMED 4.714 – 21.842 47 MUNIR AHMAD 390/15–16 Rehmani Street.347 321 – 3. Haseeb Block.724 705 – 6. Aazam Garden.938 – 553 481 1. Stno 6. Darogawala.721 6.923 379 – 8.829 Notes to the Consolidated Financial Statements 50 MUHAMMAD SHAHID 130 Raza Block Ait.H. Park Chak No 204.016 42 MUHAMMAD YOUSAF House No 66. Abn–E–Saeed Road. Khayaban–E–Rahat. Lahore 43 RAFAT YAZDAN SIDDIQUI House No A–17. 35202–1528069–3 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 236 I MCB Bank Limited 42301–8385149–1 ANIS AHMED SIDDIQUI 5. Karachi 35202–6908260–3 SH MUHD AASHIQ 19. Kanal Road.034 .043 369 3. Gt Road Lahore 35201–3813646–7 MUHAMMAD DIN RAO 5. Fatah Garh.944 430 157 536 46 SHEIKH KHALID PERVAIZ 15/B. Kda Kehkashan Clifton. Touheed Park.429 – 705 114 819 42000–1372861–9 AKHTER BAGUM 17. New Muslim Town. 2009 45 MUHAMMAD BULAND IQBAL KHAN House No A–117.

Sector–Ii.212 235 – 2. Johar Town.166 500 374 986 For the year ended December 31. Khayaban–E–Sirsyed. Mark up Reliefs Written off Provided Total Sr. Allama Iqbal Town.296 – 229 505 734 Notes to the Consolidated Financial Statements 62 SYED ASHRAF ALI House No 246 Qasimabad Liaquatabad Karachi 37405–0153130–1 ABDUL HAQ 10.809 486 – 7. Rawalpindi 35200–1419640–9 MIAN ZULFIQAR ALI 6. Ali Market. Rawalpindi 35201–0771511–4 MALIK RIASAT ALI 2.219 55 ASMAT ULLAH KHAN House No 874. Satellite Town.341 – 572 148 720 64 ILLYAS QURESHI House No 525.548 – 346 581 927 61 TABINDA ALKAN JAFFERY House No 11.447 165 35 700 58 SANIA RIASAT House No 19–E.181 – 13. Lahore 42101–8228717–5 M YOUSAF QURESHI 7. Choohar Harpal.295 – 611 56 AMIR ALI 269 H Block Gulshan E Ravi Lahore 37405–0266981–5 HAJI MUHAMMAD SULEMAN 1. Laneno 7. Rawalpindi 37405–9543346–1 MOAZ ULLAH KHAN 3.566 496 – 4.(Rs. Satellite Town.151 Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin.022 – 553 415 968 .384 553 – 212 365 103 680 59 Syed Ashraf Ali House No 246 Qasimabad Liaquatabad Karachi 35201–1514624–9 CHOUDHRY PALTOO KHAN 13.960 – 576 415 991 63 MANSOOR HUMAYON H–1/25. Lahore 42101–8228717–5 SYED NAFASAT ALI 10. L Block. No NIC No. 37405–9543346–1 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 54 ASMAT ULLAH KHAN House No 874. Rawalpindi 35202–4059736–7 4.378 – 289 332 621 Annexure III Annual Report 2009 I 237 65 SYED ASHRAF ALI House No 246 Qasimabad Liaquatabad Karachi MUHAMMAD AKBAR 5. Firdus Park Ghazi Road.117 449 582 120 1.062 486 617 116 1. 2009 57 NADEEM SHEHZAD House No Cb–509.468 553 – 6.202 346 10.938 – 553 414 968 60 MOHAMMAD AKHTER CHOUDHRY House No 7212 Block N Dha Cantt Lahore 35200–1429490–6 MOHAMMAD JAMAL BUTT 9.650 468 – 4. Omer Block.268 73 – 4.171 207 – 7.384 576 – 10.050 116 – 1. in ‘000) Father’s/Husband’s Name Principal Intt/Acc/Mup MAZ ULLAH KHAN 3. Lahore 42101–8228717–5 SYED NAFASAT ALI 115 – 9.

East Roras Road. Bund Road.236 348 – 12.745 518. Peshawar 35202–5024520–1 TOYBGHAT ULLA SAADIQUE 115 – 1. No NIC No.584 – 348 222 570 Others Total Outstanding Liabilities at Beginning of Year Principal Written off Interest/ Other Fin.199 348 162 120 630 Notes to the Consolidated Financial Statements 75 MUHAMMAD SALEEM KHAN Mahmand Abad. Johar Town. Multan Road. Lahore 42201–1683122–3 MUHAMAD JAVED 1. St 18. Babu Sabu.438 127. 112.314 959. Lahore 17301–1618197–7 FAREED KHAN 969 – 1.420 19. Sialkot 37405–0282847–3 MUHAMMAD IQBAL KHAN 788 94 – 882 145 143 506 72 MUHAMMAD TAHIR IQBAL House No F–550. 34603–8903076–3 MUHAMMAD HUSSAIN BUTT 721 140 – 861 219 56 530 71 WARIS MEHMOOD BUTT New Miana Pura. Township.084 367 130 260 756 76 TOUSEEF UL HAQ SIDDIQUI 233–C.003 – – 2. Karachi 67 MUHAMMAD NAJEEB House No 298. Mark up Reliefs Written off Provided Total Sr.889 – 418 188 606 35202–2726742–6 AMNA BIBI 7.408 Annexure III . Lahore 2. Baker Mandi.500 42101–0395342–5 MUHAMMAD JAWAID KHAN 732 73 – 805 407 116 69 592 66 ASHGAR OQBAL 1–H.122 6.Block–F. Back Technical College.048 151 706 328 98 118 544 74 AMIR JAVED Shair Shah Str Muhalla.492 – 1.002 376. North Karachi. G 10/2. Block–10. 2009 70 WAJAHAT ALI Sector 5A–2L–160. 42301–2836738–5 Name & Address of the Borrower Name of Individuals/Partners/ Directors Name 238 I MCB Bank Limited 61101–5157357–3 CH SANAULLAH 4.856 – – 2.777 113 – 4. Karachi.692 800 – 8. Lahore 69 MUHAMMAD FAREH KHAN House No A 444 Block Dnorth Nazimabad 42201–6976969–3 MUHAMMAD MUSTAFA 552 50 – 602 397 77 For the year ended December 31. Islamabad 68 SHAFQAT 26–B1.003 Total 577.(Rs. Paf Falcon Complex.856 2. Kohat Road. Stno 1. in ‘000) Father’s/Husband’s Name Principal Intt/Acc/Mup M BASHIR LONE 12. Rawalpindi 34101–2586245–7 ZAKA ULLAH 688 18 – 223 188 96 507 73 ZULQARNAIN 22 Km.Muhallah Satellite Town.243 371.243 257 1.

599 1.340 1.092 434. electrical.250 2.196 Annual Report 2009 I 239 .679 3.156 2.Farhan Abdul Karim Auction Ali Murtaza Auction Auction Auction Auction Auction Under Claim 2.2. 1.455 366 878 598 539 441 11.895 36.038 3.000 or cost of less than Rs. 2009 Disposal of operating fixed assets (refer note 11.144 882 184 445 498 561 11.410 1.921 60.037 1.313 Auction/Quotation Different Buyers 2009 2008 123.426 15.665 29. 250.950 987 964 612 926 850 14.000.939 7.526 3.821 – 497 Under Claim Adam Jee Insurance Company 18.693 Other Vehicles having book value of less than Rs.000 Buildings 8th Floor Techno City Karachi 34. 250.A Qazi Auction Mr.002 22.340 Sale MCB Asset Management Company Ltd.3) Description Cost Accumulated depreciation Book value Sales proceeds/ insurance claim Mode of disposal/ settlement Annexure IV Particulars of buyers (Rupees in ‘000) Furniture and fixture.672 2.359 4. 45.116 2.047 Amir Shahid Riaz Ali Mohammad Junaid Amir Shahid Khurram Imtiaz Adam Jee Insurance Company Retirement Benefit Mr N.000” Vehicles Toyota Land Cruiser Mercedes Benz Mercedes Benz Toyota Hilux Honda Civic Toyota Corola Honda Civic Honda Civic Honda Civic 7.028 15.478 347.062 1.978 1.000 Items having book value of less than Rs.287 93.163 1.821 2. 1. 1.000 or cost of less than Rs.650 3. computers and office equipment Items having book value in aggregate more than Rs.000 or cost of more than Rs.363 1.Notes to the Consolidated Financial Statements For the year ended December 31.000.188 33. 250.200 1.318 589.487 2.634 62.000.248 1.840 242.152 34.526 2.043 1.

849 3.256 7.077 43.305 16.711 12.063 241.936 6.125 6.009 1.794 16.000 667 9.531 385.000 3.1) City Land Building Annexure IV Total (Rupees in ‘000) Karachi Hyderabad Sukkur Moro Nausheroferoz Mirpurkhas Larkana Gawadar Mianwali Jehlum Muree Jhang Quetta Islamabad Abbottabad Rawalpindi Lahore Kasur Faisalabad Gujrat Gujranwala Wazirabad Muridke Hafizabad Sargodha Okara Sheikhupura Vehari Sialkot Sahiwal Chakwal Azad Kashmir Peshawar Tandoallahyar Muzaffarabad Shadadpur Haripur Dir Mingora Rahim Yar Khan Sadiqabad Haroonabad Chistian Khanpur Bahawalpur D.600 915 – 11.128 7.860 150.189.081 16.988 7.Notes to the Consolidated Financial Statements For the year ended December 31.739 6.988 65.924 1.591 49.440 240 I MCB Bank Limited .075.323 13.484 10.380 13.120 7.049 1.104 8.051 5.534 12.118 26.017 2.701.698 4.635 21.937 275.000 14.150 15.113 54.574 4.449 57.201 21.000 300.935 3.104 32.035 2.735 1.874 33.445 3.407 14.582 9.836 3.332 5.885 50.380 25.260 1.397 6.591 5.085 818 3.386.322 88.352 67.190 2.818 13.228 4.740 89.681 3.986 30.765 23.862 4.500 21.764 – 57.505 7.000 18.223 17.006 132.555.000 20.439 23.G.738 1.500 4.396 16.047 305 2.200 43.070 3.970 21.139.000 51.061 34.800 – – 9.150 8.2.231 8.372 14.461.849 21.637 35.837 35.047 10.100 15.000 24.577 7.931 8.000 10.071 3.535 5.531 84.981 48.640 7.674 486 9.065.231 28.667 5.818 4.300 23.803 18.461 33.053 477.507 3.400 15.054 800 6. 2009 Summarized detail of the valuation of owned properties (refer note 11.200 41.380 396.336 21.433 5.128 58.445 6.061 34.332 1.391 7.044 8.340.266 42.687 21.084 28.582 4.945 1.562.120 1.489.388 62.750 20.579 20.673 81.000 49.405 5.000 11.600 1.505 19. Khan Shujabad Overseas MCB Assets Management Company (subsidiary Company) Grand total 3.

02. 05. 3. 11. Lahore City Lahore East Lahore West Faisalabad City Faisalabad Region Sheikhupura Gujranwala Gujrat Sialkot Jhang Mianwali Sargodha 29 25 19 31 31 24 23 32 32 28 28 30 332 2 – – – 1 – – 1 – 1 – 1 06 COMMERCIAL BRANCH BANKING GROUP – EAST Circle/ No. Regions No of Brs. ISLAMABAD 83 2. 04. of Brs. Regions No of Brs. 06. of Sub–Brs. 07. Swat 23 18 20 22 20 24 22 23 26 23 18 239 – – – 1 – – – – – – – 01 TOTAL CBBG – NORTH Annual Report 2009 I 241 . 2. 10. 06. of Brs. 10. 06. 3. 04. PESHAWAR 66 ABBOTTABAD 90 3. 09. 02. 12.K. 09. Bahawalpur Rahim Yar Khan Vehari Dera Ghazi Khan Multan Sahiwal Larkana Sukkur 29 27 27 30 25 35 29 29 231 – – – – – – – – – COMMERCIAL BRANCH BANKING GROUP – NORTH Circle/ No. 04. 07. 06. 2009 COMMERCIAL BRANCH BANKING GROUP – SOUTH Circle/ No. of Sub–Brs. 4. 01. 03. Regions No of Brs. of Sub–Brs. 27 29 28 26 32 28 28 07 205 – 1 – – – – – – 01 COMMERCIAL BRANCH BANKING GROUP – CENTRAL Circle/ No. Makran 01. No. Regions No of Brs. LAHORE 73 FAISALABAD 86 GUJRANWALA 87 SARGODHA 86 TOTAL CBBG – CENTRAL 2. Chakwal Islamabad Jhelum Rawalpindi Kohat Mardan Peshawar Abbottabad Attock Muzaffarabad A. 1. 08. 11. 4. of Brs. 3. 02. 1. 05. BAHAWALPUR 83 MULTAN 90 SUKKUR 58 TOTAL CBBG – EAST 2. 05. of Brs. No. No. 1. 03. 03.Branch Network As on December 31. 02. 08. 07. 01. 1. 01. 03. No. 04. KARACHI EAST 56 KARACHI WEST 54 HYDERABAD 60 QUETTA 35 TOTAL CBBG – SOUTH Karachi East Karachi North Karachi South Karachi West Hyderabad Nawabshah Quetta Circle 07. of Sub–Brs. 05. 08.

No.F. Colombo Kandy Maradana Pettah Wellawatte Offshore Banking Unit (OBU) – Bahrain TOTAL NO. Balochistan Azad J.P. Total Overseas WBOD (EPZ Br) Grand Total 4 3 4 3 – – – 14 – – 14 7 8 12 11 3 – – 41 – – 41 205 231 332 239 45 21 1 1.074 6 1 1. of Brs.074 6 1 1.089 242 I MCB Bank Limited . Office) WHOLESALE BANKING OPERATIONS EPZ NO. CBBG–South CBBG–East CBBG–Central CBBG–North Consumer Banking Group Operations Group WBG–Transaction Banking Div.W.081 7 1 – – – 8 – – 8 672 249 106 37 18 1. TRANSACTION BANKING DIVISION OVERSEAS OPERATIONS 1 No of Brs. 2009 CONSUMER BANKING GROUP Regions No of Brs. of Sub–Brs.082 6 1 1. OF ATMs SUMMARY Group Circles Regions 1 1 1 1 1 1 6 1 1 495 No.Branch Network As on December 31. OF BRANCHES Dubai (Rep. Kashmir Domestic Total Overseas EPZ Grand Total 665 248 106 37 18 1.081 PROVINCE –WISE Province Branches Sub – Brs. Total Punjab Sindh N. Wholesale Banking Operations Islamic Banking Operations TOTAL WHOLESALE BANKING GROUP Circle 10 11 21 No of Brs. Consumer Liability Central– Lahore Consumer Liability North – Islamabad Consumer Liability South– Karachi Privilege Banking Karachi TOTAL CBG OPERATIONS GROUP Circle 15 10 16 04 45 – – – – – No of Brs.

1141 0.207 583.000 230.001 200.0332 0.0266 0.1009 0.001 310.964 266.001 100.000 170.001 10.907 292.1909 0.0844 0.0260 0.0385 0.001 15.922 944.001 120.001 30.699 6.0151 0.2733 0.001 170.602 177.001 175.001 140.001 255.117 246.000 155.000 10.310 172.000 35.014 698.886 3.000 60.0361 0.0441 0.000 95.792 305.001 35.0450 0.584 457.000 85.144 767.246 117.833.000 125.000 150.861 615.0758 0.000 275.900 105.000 5.000 80.0450 0.1367 0.001 45.001 75.0890 0.492 311.372 788.066 270.000 200.927 524.135 531.000 325.010 733.257.000 184.222 164.0928 0. of Shareholders Having Share From To Shares Held Percentage 17.597.000 205.193 451. 2009 No.0790 0.Pattern of Shareholding As of December 31.000 120.001 275.001 150.001 250.001 240.685 220.001 20.001 325.230 311.1010 0.001 90.000 245.588 289.842 546.933 261 67 53 31 21 11 12 13 16 10 5 4 8 6 6 2 2 2 7 1 3 1 3 2 2 1 2 2 2 1 1 1 1 1 1 1 1 1 3 1 1 1 2 1 1 1 2 1 2 4 1 2 1 1 101 501 1.000 70.251 249.000 680.001 85.001 50.001 115.551 165.889.001 165.768 698.484 3.0489 0.200 180.0207 0.097 230.000 20.000 25.0423 0.001 130.001 305.505 297.001 40.176 259.0522 0.0984 0.0256 0.0291 0.001 65.864 1.0636 0.000 340.000 315.0289 0.000 0.0653 0.0376 0.000 130.001 100 500 1.000 65.000 40.000 50.403 250.9888 0.0169 0.0332 0.001 245.001 55.0811 0.000 100.000 310.001 320.001 125.139 439.0769 0.734 561.0239 0.000 135.001 270.735 252.595 1.001 220.001 260.0513 Annual Report 2009 I 243 .001 230.024 8.001 195.001 80.001 105.001 25.000 201.425 369.1010 0.000 190.000 230.0391 0.001 350.000 255.0249 0.0360 0.000 145.000 55.0418 0.0357 0.000 350.000 225.814 6.000 15.0661 0.001 185.9546 0.001 5.000 280.001 335.588 361.0366 0.000 110.0238 0.000 250.0534 0.4713 0.001 70.000 265.000 355.101 143.000 295.0464 0.000 175.581 13.001 345.000 321.000 75.001 60.320.000 200.001 225.0430 0.1110 0.000 30.000 90.001 155.0405 0.001 290.000 235.000 180.780 279.000 260.000 45.000 338.0318 0.300 641.000 160.001 145.1060 0.000 105.400 355.000 330.001 95.000 190.0274 0.410 697.

321 500.0404 0.144 985.001 495.000 2.000 755.000 1.045.503.606 466.271 7.001 1.000 1.850 2.0724 0.001 485.7300 0.253 1.000 685.046 3.000 460.000 580.000 1.001 505.874.000 708.740 2.000 395.2336 0.985.000 1.000 1.995.718 1.190.0540 0.395.170 958.000 1.0625 0.492 903.001 705.000 420.1418 0.279 619.2920 0.1307 0.362 506.000 1.109 1.405.0706 0.001 1.989.0535 0.001 1.2561 0.985.770.000 1.000 730.1142 0.265.000 710.145.000 625.001 765.000 1.1056 0.875.0902 0.000 1.000 1.001 980.490.000 1.980.2570 0.1355 0.001 565.001 865.0819 0.965.2579 0.465.000 2.001 1.750 5. 2009 No.1894 0.000 570.001 475. of Shareholders Having Share From To Shares Held Percentage 1 1 1 1 1 1 1 2 1 1 1 1 7 1 1 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 4 2 1 2 1 1 1 1 1 1 5 1 1 1 1 6 1 1 1 1 1 1 1 1 1 3 1 365.614.966.2879 0.0660 0.001 600.000 650.000 895.544 456.001 530.000 690.3478 244 I MCB Bank Limited .0954 0.990.005.2885 0.1331 0.000 600.000 1.5409 0.500 419.1025 0.001 750.775.310.000 985.770.867 1.325.0868 0.823 753.001 655.001 590.0895 0.2845 0.001 620.3277 1.288 566.001 1.000 920.649 766.000 1.103 1.001 370.525 600.0990 0.206.850 1.000 500.1656 0.0606 0.659 867.1109 0.077 432.000 500.001 935.001 430.330.983.0723 0.2175 0.000 810.497 1.000 905.613 789.121 623.000 490.000 630.000 620.001 1.000 1.2604 0.000 375.000 770.0565 0.2712 0.970.000 510.001 1.001 985.001 685.001 1.001 455.000 480.808 390.001 2.123 578.000 1.001 1.0996 0.0732 0.2870 0.000 595.893 729.425 659.462.145.800.001 645.400.4639 0.001 990.001 2.100 1.738.267 1.0867 0.000 605.993.001 1.1386 0.001 415.399 3.000 1.000 2.001 785.001 595.000 995.001 625.001 465.926 0.0909 0.140.000 790.645 8.001 1.245 488.929.305.000 940.001 615.1090 0.001 800.795.001 500.000 535.1254 0.0939 0.001 390.842 649.001 805.001 680.270.608 994.000 990.1439 0.001 900.001 1.800.Pattern of Shareholding As of December 31.1924 0.644 628.460.000 870.001 1.801 980.001 370.000 369.870.000 1.001 725.330.000 805.529 684.990.403.001 915.001 890.265.001 2.782.2116 1.776.301 920.400.000 936.897 373.823 599.500.000 435.485.0674 0.010.001 575.505.523 1.000 1.000 505.1426 0.309.000 470.000 660.281 689.001 1.0836 0.

4068 1.001 7.981.501.000 3.001 24.823 13.810.000 7.360.512 2.865.001 2.770.8738 3.769.001 38.723.5571 2.000 4.305.785.352 8.139 17.001 5.517 24.960.000 34.001 17.919 4.9999 100 Annual Report 2009 I 245 .001 3.360 2.285.7036 0.586 4.400.001 40.000 19.740.860.5453 0.800.929 7.000 5.4749 0.001 138.413.001 2.000 2.0076 3.098 9.076 34.4553 0.765.000 4.270 19.804.4336 0.420.089 20.001 4.225.181 3.410.001 3.980. of Shareholders Having Share From To Shares Held Percentage 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 44. 2009 No.805.000 6.001 2.0727 1.720.001 47.7942 2.6404 5.465.000 3.000 7.605 3.878 2.5461 0.0128 1.840.585.7005 0.001 4.738.001 5.001 21.325.5946 0.000.985.000 3.001 4.445.282.672.466.001 19.911.675.150.131 2.600.000 2.001 691.365.080 2.1885 1.212 38.000 20.000 3.6392 0.105 12.450.350.280.595.001 20.109.000 2.001 21.527 2.3544 0.000 5.001 2.001 3.000 12.000 21.526 21.000 4.836 4.555.000 17.588.418.255 3.861.9871 5.815.001 4.001 20.988.000 3.110.788 5.000 20.590.8345 6.560.5592 4.000 38.001 8.000 8.148.0601 3.145.145.639 3.774.775.790.6231 0.3698 0.108 47.400.000 2.975.835 4.810.865.598.088 5.000 24.990.860.001 7.242 138.841.670.210.8303 2.220.001 12.470.975.000 138.818 3.415.0103 3.505.334 21.555.5771 0.000 47.449.001 9.000 9.215.0854 1.355.000 4.104.405.146.996.000 40.001 34.863.786.040 4.845.360.985.354.415.310.306.214.001 3.150.001 4.725.735.323.000 4.220.619 40.500.001 6.Pattern of Shareholding As of December 31.9179 19.026 20.955.079 7.7756 0.000 3.995.0899 3.4305 0.000 21.105.905 0.980.001 3.320.3744 0.770.

663 246.400.3240 6.167.819 2.00 246 I MCB Bank Limited .239.835 2.3473 6.0008 0.307 46.6194 100.703 131.057 7.843.009.111 3.Catagories of Shareholders As at December 31. & CORP. GENERAL PUBLIC (LOCAL) GENERAL PUBLIC (FOREIGN) OTHERS FOREIGN COMPANIES Company Total 20 5 2 40 19 54 24 40.7364 0.0431 19.0636 14. 2009 Description Shareholders Shareholding Percentage DIRECTORS.375 691.527 7.208.4010 35.052.034 5.104.731 101.6635 1.877 57.131 52.5518 8.533 237 86 44.237.190.126 44. CEO & CHILDREN ASSOCIATED COMPANIES NIT & ICP BANKS.2490 0.749. DFI & NBFI INSURANCE COMPANIES MODARABAS & MUTUAL FUNDS PUBLIC SECTOR COS.

2nd & 3rd quarters) interim cash dividends already paid. are approved herewith as “Remuneration paid to the Chairman. However. Chartered Accountants being eligible have offered themselves for re-appointment.” b) “RESOLVED that the Directors residing abroad may be allowed reimbursement of traveling expenses for the spouses while accompanying for attending the board meetings subject to a maximum limit of twice in a financial year. By order of the Board ABDUS S. KPMG Taseer Hadi & Co. Any other business with the permission of the Chair. 2010. and paid by the Bank. to transact the following business: Ordinary Business 1. travel expenses on chartered planes already undertaken during 2006-2009. To approve that in the event of any member holding shares which were not an exact multiple of his/her entitlement. 4.25 million to aid IDPs of Swat. The retiring auditors namely M/s. To appoint auditors for 2010 and fix their remuneration. reported at notes 28 & 38 of annual report respectively. and its subsidiaries for the year ended 31st December 2009 together with the Directors’ and Auditors’ reports thereon including post facto approval of (a) donations of Rs. 7. in addition to the cost of boarding & lodging payments/reimbursements to the board members in connection with attending the meetings with effect from January 2007. To approve as recommended by directors dividend @10 % in the form of bonus shares and final cash dividend @ 35 % i. the Company Secretary be authorized to sell such entitlements in the Stock Market and to pay the proceeds of sale when realized to any recognized charitable institution. To consider and.” “FURTHER RESOLVED that the details of the four chartered plane round trips (domestic and/ or International) by the Chairman. A corporation being a member may appoint as its proxy any of its official or any other person whether a member of the bank or not. if deemed fit. Islamabad on Friday. Any member entitled to attend and vote at the Annual General Meeting is entitled to appoint another member as a proxy to attend and vote on his/her behalf. in addition to 75% (25% each 1st.524 million remuneration to the Chairman. as required under SBP Prudential Regulations. Notes: 1. 2010 (both days inclusive) for entitlement of cash dividend/bonus shares to those members whose name appear on the register of members as at the close of business on March 18. & consolidated accounts of MCB Bank Ltd.Notice of Annual General Meeting Notice is hereby given that 62nd Annual General Meeting of the members of MCB BANK LIMITED will be held at Islamabad Hotel (Holiday Inn).” Islamabad: February 25. G-6. To confirm the minutes of last Annual General Meeting held on March 27. Rs 3. allowed by the Board on annual basis and approved by AGM. 2010 to March 26. pass the following special resolutions: a) “RESOLVED that the existing fees and facilities provided to the members of the Board for attending the Board and Board Committee meetings shall remain unchanged until those are reviewed and revised subsequently. 2010. 2010 at 3:00 p. Statement required under section 160(1)(b) of Companies Ordinance. To receive. March 26. However.5 per share. 5. consider and adopt the audited accounts of MCB Bank Ltd. “ALSO RESOLVED that the chartered plane round trips (domestic and/or International) by the Chairman for Bank business will be limited to four in a calendar year starting January 2010 and any additional such trips may be paid by the Chairman out of his annual compensation. Annual Report 2009 I 247 . 2009. 2009.” 2. be placed before the Board for its information and record. (b) Rs 1. 1984 is attached with this notice. SAMI Secretary 2.m.. Civic Centre.e. Special Business 6. the Board Chairman shall be paid a fixed annual remuneration of Rs 25 million with effect from January 2010 as per the amendment by the State Bank of Pakistan in its Prudential Regulations G-1 vide BPRD Circular 14 dated August 07. 3. The share transfer books of the Bank will remain closed from March 19.

) along with the participant’s I. 2009.C.C.D. Members whose shares are deposited with Central Depository Company of Pakistan Limited are requested to bring their original Computerized National Identity Cards (C. the Board of Directors’ resolution/power of attorney with specimen signature of the nominee shall be produced at the time of the meeting (unless it has been provided earlier).N.N. 4.3. State Life Building No. and prevalent national and international practices of compensating the members of the Board. In case of corporate entity.I. 2009. in order to be valid. Karachi not less than 48 hours before the time of meeting. Since Non-resident Board members are arriving from abroad.I. it is obligatory on the bank to reimburse the cost of spouse ticket as well with a maximum limit of twice in a financial year in terms of State Bank of Pakistan BPRD Circular No 14 of August 07. on bank’s official business and required to stay longer period of time. Number and their account numbers in Central Depository Company of Pakistan Limited to facilitate identification at the time of Annual General Meeting. THK Associates (Pvt.) Limited of any change in their addresses to ensure delivery of mail. THK Associates (Pvt. Members are requested to promptly notify Bank’s Registrar M/s. Dr. For Item 6 (b) The Non-resident Board members required to stay in Pakistan longer period of time to attend Board of Directors’ and Board Committees Meetings and.3.. an attested copy of proxy’s Identity Card (C. 248 I MCB Bank Limited .) Ltd.Ziauddin Ahmed Road. Statement under Section 160(1)(b) of Companies Ordinance. at times. spouses accompany them.1984: For Item 6 (a) The remuneration to the Chairman needs to be revised in line with the amendments made by the State Bank of Pakistan in its Prudential Regulations G-1 through BPRD Circular No 14 of August 07. In case of proxy. Proxies. must be deposited at the office of Share Registrar. Account & Participant’s ID number be enclosed. Ground Floor.).

As witness my/our hand this ________________ day of __________________ 2010.Form of Proxy Folio No. No person shall act as proxy unless he/she is a member of the company except a corporation being a member may appoint as its proxy any officer of such corporation whether a member of the company or not. Dr. as soon as possible but not less than 48 hours before the time of holding the meeting and in default Proxy Form will not be treated as valid. speak and vote for me/us and on my/our behalf at the 62nd Annual General Meeting of the Company to be held on Friday. No. Civic Centre. March 26.m. Notes: 1. A/C. at Islamabad Hotel (Holiday Inn). Ground Floor. G – 6. Ziauddin Ahmed Road. 2010 at 3:00 p. vide Registered Folio No. I/We _____________________________________________of ________________________________________________________ a member / members of MCB Bank Limited. Annual Report 2009 I 249 . The Proxy Form should be deposited in the office of THK Associates (Pvt. and holder of __________________________________________________________ shares do hereby appoint ____________________________________________of ________________________________________ or failing him / her ______________________________ of _____________________________ who is also a member of the Company.. 2. CDC Participants Identity Card No. Karachi.3. State Life Building No. Dated: Place: Signature on Five–Rupees Revenue Stamp The signature should agree with the specimen registered with the Company.) Ltd. Islamabad and at any adjournment thereof. ________________________ as my/our proxy to attend.

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pakistan.com .Principal Office MCB 15-Main Gulberg. Lahore UAN: (042) 111-000-111 PABX: (042) 36041998-9 www.pk Printed by: www.mcb.com.

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