.

14 20 21 23 24 27 29 30 31 32 33 34 84 140 141 142 147 .

Ali Raza Siddiqui Mr. Abdulla Abdulkarim Abdulla Showaiter * Mr. Fazlur Rahman Mufti Irshad Ahmad Aijaz Audit Committee Mr. Ali Hussain Mr. Bilgrami Human Resource & Compensation Committee Mr. Fawad Anwar *** Mr. Fawad Anwar Mr. Ali Raza Siddiqui Mr. Hasan A. Bilgrami Mr.Corporate Information Board of Directors Chief Justice (Retd. Shabir Ahmed Randeree Executive Committee Chief Justice (Retd. Bilgrami Chairman Chief Executive Officer Chairman Acting Chairman Member & Sharia'h Adviser Chairman Member Member Member Member Chairman Member Member Member Chairman Member Member Chairman Member Member Member Company Secretary Mr. Khawaja Ehrar ul Hassan . Ali Raza Siddiqui Mr. Fawad Anwar Mr.Acting Auditors A. Abdulhakim Habib Mansoor Binherz Mr.) Muhammad Taqi Usmani**** Professor Dr. Shabir Ahmed Randeree Sharia'h Supervisory Board Justice (Retd. Fawad Anwar Mr. Chartered Accountants Legal Advisers 1. Fawad Anwar Mr. Hasan A. Ferguson & Co.Mohsin Tayebaly & Co.) Mahboob Ahmed Mr. Abdulhakim Habib Mansoor Binherz Mr. Abdulhakim Habib Mansoor Binherz Mr. Abdulhakim Habib Mansoor Binherz Mr. Ali Hussain Mr. Bilgrami Risk Management Committee Mr. Hasan A. F. Hasan A. 2013 *** Co-opted on March 04. Corporate Legal Consultants / Barristers & Advocates High Courts & Supreme Court * Subject to SBP approval ** Resigned on March 04.) Mahboob Ahmed Mr. Ahmed Goolam Mahomed Randeree ** Mr. Barrister at Law 2. Abdulhakim Habib Mansoor Binherz Mr.Haidermota & Co. . 2013 **** Justice ® Taqi Usmani has resigned from his position which is pending approval of the Board of Directors.

Syed Akhtar Ausaf Mr. Arshad Wahab Zuberi Mr.H. P. Branch Operations Head. Karachi. Muhammad Shoaib Khan Mr. Hasan A. Consumer & Retail Banking Head. Information Systems Head.E.Management (in alphabetical order) Mr. Muhammad Furqan Mr.C. Block-2. Risk Policy & Analytics Head. 241-C. Product Development Head.bankislami. Finance Head. Muhammad Imran Mr. Sheba Matin Khan Mr. Human Resources Head. Off: Shahra-e-Qaideen. Operations Chief Executive Officer Head.S. Credit Administration Head. Asad Alim Mr. Dolmen City. Muhammad Faisal Shaikh Mr. Treasury & Financial Institutions Head. Ahmed Mustafa Mr. Karachi. Trade Finance Head. Administration and General Service Head. Arsalan Vohra Mr. Phone (92-21) 111-247(BIP)-111 Fax: (92-21) 35378373 Email: info@bankislami. Internal Audit Head. Khawaja Ehrar ul Hassan Mr.pk Share Register Technology Trade (Private) Limited Dagia House. Syed Mujtaba H. Block-4. Corporate Finance Registered Office 11th Floor.pk .com. Marine Drive. Kazmi Head. Shamshad Ahmed Ms.com. Rehan Shuja Zaidi Mr. Phone: (92-21) 34387960-61 Fax: (92-21) 34391318 Website: www. Executive Tower. Clifton. Bilgrami Mr. Farooq Anwar Mr. Risk Management Head. Compliance & Legal / Acting Head.

855               2.725 1% 0% 82% 0% 3% 86% 14%                 354                 246            12.750                    (4)              1.280                     9                (555)                  ‐                   32              4.572 2% 2% 87% 0% 2% 92% 8%                 799                 800            50. 994 27.019               6.067                 402              1.036 7% 1% 10% 30% 43% 5% 1% 3% 100%               4.864              4. 433 1.572 7% 0% 0% 0% 0% 8%              5.766)                 (580)                    90                 (490) 86% ‐ 49% 38% ‐ 4% 33% 14% ‐ 70% ‐ 23% 4% ‐ 19%              1.913 87 1.096              1.911                 267                 967            19.621                64.21% 26% 34% 10% 1% 5% 100%              1.813             10. 468                      (91)                  2.502             (2.664                  5.939 806 8.269              4.06% 27% Profit  &  Loss  Accoun t Profit  / return   ear ned Profit  / return  expensed Net  Spread   ear ned Provisions   Net  Spread  after provision s Other    i ncom e Other   expenses Profit  before tax T ax ati on Profit  after  taxation                  5.152)                 609                (199)                 410 96% ‐ 50% 46% ‐ 1% 44% 4% ‐ 38% 11% ‐ 3% 7%              3.060               4.433              2.575                68.29% 9%              5.280                  ‐                (102)                  ‐                   10              5.313 1% 1% 86% 0% 2% 91% 9%                 563                 353            38.313 9% 0.987                   ‐                  917             29.685                 549              4.507)                  2.067            24.058)              1.934                  ‐                 513            10.603              3.419            58.272 12% 6% 12% 20% 32% 7% 1% 10% 100%              2.02% ‐ 1% 0% 0.436            21.216                      ‐                  1.665              1.732            19.16% 0% 0% 0.566              2.  In  Ml n 2007 % 4.Six Years' Vertical Analysis Corporate Information 2012 Rs.534                 227             (2.188 2% 1% 65% 0% 4% 73% 27%                   85                   70              9.577                 625              3.377                     534                 (2.020              6.093                   91                 666            14.285)                     626                    ( 216)                     411 92% ‐ 54% 38% ‐ 1% 37% 8% ‐ 35% 10% ‐ 3% 6%              5.907)                   45                     2                   47 95% ‐ 51% 44% 0% 43% 5% ‐ 48% 1% 0% 1%               2.251                  1.151            45.341            53.446 10% 18% 4% 27% 28% 8% 1% 5% 100% Liabilities Bills  payabl e Due  to financial  institution s Deposits  and other accounts Deferred  tax liabilitie s Other  Liabilitie s                  1.  In  Ml n Statement of Finanacial  Position Assets Cash  and balances with  treasury  bank s Balances  with  other bank s Due  form  financial   i nsti tu ti ons I nv estm ents F i nanci ngs Operating  fixed  assets Deferred  tax assets Other  assets % Rs.035                 570              4. 476 28.177              (1.843 1% 0% 69% 0% 4% 73% 27% Net  Assets Represented  by Share   C api tal Reserve s Unappropriate  Profit/(Accumulated  Losses) Advance  against  future  issue  of share  capita l Surplus  on revaluation  of assets ‐ net of deffered  tax                  5.280                   ‐                 (592)                   ‐                    38               4.619                  (85)              2.11% 14%              5.746                 206             (1.085 11% 12% 0.05% 27%              3. 975                 (3.395                  355               3.  In  Ml nt 2009 % Rs.  In  Ml n % Rs.33% 5% 0.236 7% 1% 11% 39% 37% 3% 0% 2% 100%              4.843 22% 0% ‐ 0.513            13.175              2.188 28% 0% ‐ 1% 0% 0.034)                (233)                 178                  (55) 88% ‐ 44% 44% ‐ 8% 36% 12% ‐ 62% ‐ 14% 11% ‐ 3%                 600                (304)                 296                  (28)                 267                 140                (511)                (103)                   64                  (39) 81% ‐ 41% 40% ‐ 4% 36% 19% ‐ 69% ‐ 14% 9% ‐ 5% 06 .812                 188              1.  In  Ml n 2011 % 2010 Rs. 280                     173                     101                      ‐                      18                  5.280                   91                (227)                  ‐                 169              5.200                  ‐                  (47)                 681                     9              3.588                74.569                  ‐              1.766 12% 0.478                  ‐                 819            13.222)                  955                 (111)                  844                  343              (1.807             (2.198                  ‐              1.546               4.509              5.558             34.725 15% 0% ‐ 2% 0% 0.07% 11%               5.883)              2.766 1% 1% 85% 0% 3% 89% 11%                  486                  156             27.496              1.465                (730)                 735                (131)                 605                 196             (1.  In  Ml n 2008 % Rs.897              5.155            40.821 8% 1% 8% 36% 42% 3% 0% 2% 100%              3.207                   40              5.218               2.

280                  ‐                (102)                  ‐                   10              5.465                (730)                 735                (131)                 605                 196             (1.216                    ‐                1.572 57% 103% 27% 0% 17% 28% 5%                 799                 800            50.621              64.085 52% ‐ 14% ‐ 94% 30% 59% 75% 193% 45% 32%              1.813             10.  In  Ml n 2009 % Rs. 433                1.569                  ‐              1.218               2.093                   91                 666            14.222)                  955                 (111)                  844                  343              (1.096              1.188 65% 0% 118% ‐ 100% 20% 35%              3.766 0% 0% ‐ 6% 0% ‐ 14% 1%               5.036 ‐ 28% ‐ 72% 12% 102% 80% ‐ 14% 13% ‐ 68% 31%               4.746                 206             (1.843 60% 0% 462% 100% ‐ 23% 92% 9% 22% ‐ 6% 8% ‐ 6% 136% 6% 3% 8% 0%              5.280                     9                (555)                  ‐                   32              4.725 0% 0% 478% 0% 262% ‐ 9%              5.534                 227             (2.  In  Mlnt 2010 % Rs.496              1.313 0% 880% ‐ 59% 0% 422% 11%              5.812                 188              1.478                  ‐                 819            13.588              74.269              4.Six Years' Horizontal Analysis 2012 Rs.911                 267                 967            19.572 Profit  &  Loss  Accoun t Profit  / return   ear ned Profit  / return  expensed Net  Spread   ear ned Provisions   Net  Spread  after provision s Other    i ncom e Other   expenses Profit  before tax T ax ati on Profit  after  taxation                5.377                   534               (2.864              4.939                   806                8.  In  Ml n % Rs.188 316% 251% 26% 0% 60% 31% 35%                   85                   70              9. 975               (3. 280 Reserve s                   173 UnappropriateProfit/(AccumulatedLosses)                   101 Advance  against  future  issue  of share  capita l                    ‐                     18 Surplus  on revaluation  of assets ‐ net of deffered  tax                5.897              5.067                 402              1.558             34.575              68.272 94% ‐ 7% 9860% 36% 67% 25% 33% 268% 80%              2.152)                 609                (199)                 410 45% 40% 50% 1965% 45% 10% 13% 1266% ‐ 10017% 780%              3. 468                    (91)                2.175              2.341            53.907)                   45                     2                   47 75% 68% 83% ‐ 96% 107% ‐ 40% 8% 108% ‐ 98% ‐ 110%               2.058)              1.766 16% 126% 36% 0% 26% 36% 1%                  486                  156             27.236 5% 47% 91% 38% 11% 6% ‐ 54% 12% 26%              4.577                 625              3.  In  Ml n 2008 % Rs.446 324% 226% 52% 684% 224% 148% 236% 159% 259% Liabilities Bills  payabl e Due  to financial  institution s Deposits  and other accounts Deferred  tax liabilitie s Other  Liabilitie s                1.502             (2.034)                (233)                 178                  (55) 144% 140% 149% 360% 126% 40% 102% 126% 176% 44%                 600                (304)                 296                  (28)                 267                 140                (511)                (103)                   64                  (39) 500% 1528% 264% 2734% 233% 215% 221% 199% 147% 362% 07 .280                   91                (227)                  ‐                 169              5.546               4.883)              2.198                  ‐              1.035                 570              4.200                  ‐                  (47)                 681                     9              3.019               6.151            45.665              1.020              6.821 54% ‐ 4% ‐ 2% 53% 26% ‐ 12% ‐ 53% 23% 31%              3.750                    (4)              1.934                  ‐                 513            10.685                 549              4.285)                   626                  ( 216)                   411 0% 90% ‐ 145% 0% ‐ 89% 5%              5. 994              27.566              2.603              3.807             (2.313 42% 127% 32% 0% 16% 33% 11%                 563                 353            38.177              (1.  In  Ml n 2007 % Statement of Finanacial  Position Assets Cash  and balances with  treasury  bank s Balances  with  other bank s Due  form  financial   i nsti tu ti ons I nv estm ents F i nanci ngs Operating  fixed  assets Deferred  tax assets Other  assets                4.507)                2.913                     87                1.067            24.619                  (85)              2.280                   ‐                 (592)                   ‐                    38               4.436            21.855               2.732            19.664                5.766)                 (580)                    90                 (490) 49% 68% 30% ‐ 15% 40% 75% 71% 149% ‐ 49% 783%              1.509              5.987                   ‐                  917             29.395                  355               3.060               4.725 37% ‐ 37% 124% 0% 12% 113% ‐ 9%                 354                 246            12.  In  Ml n 2011 % Rs.419            58.155            40.251                1.513            13.433              2. 476              28.843 257% 40% 459% 0% 202% 424% 92% Net  Assets Represented  by Share   C api tal                5.207                   40              5.

66% 11.29% 100.619 227 (955) (85) 1.Statement of Value Added 2012 Rs.72% To Society Donations To Shareholders Depreciation Amortisation Retained during the year - - - - 276 24 411 711 1.70% 11. In Mln % 2.806 41.96% 13 199 212 0.51% 13 216 228 0. provident fund and other benefits To government Worker Welfare Fund Income tax % 2011 Rs.75% 840 46.02% 11.00% 311 34 410 754 1.468 534 (1.907 2.004) (91) 1.76% 100. In Mln Value Added Net Spread earned Other income Operating expenses excluding staff cost.907 37. donations and WWF Provision against financings. depreciation. amortisation.31% 11.806 968 50. investments & others Value added available for distribution Distribution of value added To employees Remuneration.00% 08 .

177 10 5.72% 3.11) 54.22% 1.934 5.25 -25.72% 1.31 50.393 8.030 1.058 1.35% 11.84% -2.37 11.7782 43.155 9 3.31% 16.280 (592) 4.895 19.732 40.566 660 13. Times Times Times Rs.335 156 20.238 5.78% 9.51 8.22% 8.600 1.08% 51.59% 49.33% -1.502 2.280 173 101 5.15 54.85 -1.56 15.68% 0.465 730 735 141 33 22 196 931 1.956 1.766 (490) 111 (580) (490) 1.69 2.280 9 (555) 4.603 9.20% 18.841 6.565 1.595 5.83% 52.surplus on rev.272 23.446 Financial Ratios Profit before tax ratio(PBT/total income) Net Spread earned/Profit Earned Other income to total income income/ expense ratio (excl.509 50.7757 49.10% 7.468 282 220 32 534 3.263 5.198 19.83 17.846 2.994 68.39% 47.86 9.55 88.31 5.41 39.390 4.036 38.55% 48.21 52.28% 45.50% -0.44 9.15 37.750 153 0.285 718 91 626 411 5.33% 31.95 69.020 13.58 3.47% 3.50% 42.29% (0.236 65.864 10.572 74.79% 3.410 102 1448 102 1347 102 1471 102 1188 36 563 09 .91% 2.402 353 29.89 77.845 14.687 38 4.12% 0.83 72.commission.621 54.79% 1.79% 7. provisions) Return on average equity (ROE) Return on average assets (ROA) Return on Capital Employed (ROCE) Earning per share (EPS after tax) Gross advances/ deposit ratio Net Advances /deposit ratio Breakup value per share (excl.25 -23.821 50.934 27.99% 0.313 58.478 5. of assets) Breakup value per share (incl.162 4.546 27.33% -0.665 838 21.907 49 4 45 47 2.188 19.468 5. Rs.06% 9.125 4.18% 3.055 24.38% 1.298 1.90 -1.63 -44.87% 41.104 10.034 (102) 131 (233) (55) 600 304 296 71 65 4 140 436 511 (75) 28 (103) (39) Statement of Finanacial Position Paid up capital Reserves Unappropriated profit/(loss) Shareholder's equity Surplus on revaluation of assets-net of tax Net Assets Total Assets Earning Assets Gross Financings Financings-net of provisions Non-performing Loans (NPLs) Investments Total Liabilities Deposits & other accounts Current & Saving Deposits (CASA) Borrowing Profit bearing Liabilities Contingencies and commitments 5.96% 7.725 34.60% 6.Six Years' Financial Summary 2007-2012 2012 2011 2010 2009 2008 2007 ----------------(Rupees in Millions)----------------Profit & Loss Account Profit/return Earned Profit /return Expensed Net Spread earned Fee.764 6.152 693 85 609 410 3.746 11.13% 0.32% 9.03 0.067 53.03 85.718 25.83% 7.01% 50.446 11.32 8.84% 1.22% 1.92% 16.29% 1.93% -1.12) 41.002 39 227 2.987 15.269 38.25% 9.766 45.brokerage & exchange Income Dividend and capital gains Other Income Total Other Income Total Income Other expenses Profit/(loss) before tax and provisions Provisions Profit/(loss) before tax Profit/(loss) after tax 5.177 1.81 9.52% 40.001 53 206 1.04% 0.74 10.381 19.68% 38.57% (0.23 51.978 246 9.144 169 5. Rs.78% 8.619 187 0.123 4.72% 10.507 2.12% 1.1 2.31% 0.668 1.813 29.42% -0.21 21.855 789 6.31% 0.496 186 5.67% 43.222 955 316 2 24 343 1.58% 1.280 91 (227) 5.99% 4.002 2.028 800 41.645 3.807 2.97 18.2 Non Finanacial Information Number of branches Total number of employees 141 1.97 9.554 18 5.710 27.88 8.86% 24.50% 3.30 50.09 52.51% 1.93) 39.07 19.83% (0.72% 0.883 2.91% 9.216 34.31% 13. of assets) Earning assets to total assets ratio Earning assets to profit bearing Liabilities CASA to Total Deposits NPLs to Gross Financings ratio Assets to Equity Deposit to share holder equity Capital Adequacy Ratio Market value per share-Dec 31 Rs.200 (45) 3.31 7.24% 7.280 (102) 5.62% 1.52 10.27% 1.73 -9.433 1.surplus on rev.90% 4.664 64.29% 0.005 70 8.53% 0.42 47.205 28.06 86.897 12.734 32 4.975 3.064 78 3. Times 20.085 13.569 26.

941 1.86 11.25% 0.507 1.18% 10 . 31 Market Cap i t al i sat i on Price/Earning Rat i o Return on Equ i t y Return on Assets Capital Adequacy Ratio % / Times Rs.879 7. In Ml n “ “ “ “ “ “ “ “ “ 27.410 196. “ “ Rs.74 3.076 3.7782 10. of cu st om er s No.52 9.619 227 2.447 179.40% 0.Key Performance Indicators Variance 2012 2011 Amount Financial Gross Fi nanci ngs Investments Deposits Shareholders Equity Net Spread Earned Other Income Other Expenses Pr ov i si ons Profit Before Taxat i on Profit after Taxat i on Non Financial No.055 21.62% 15.216 5.566 (38) 16% 2% 3% ‐ Rs.468 534 2.152 85 609 410 2.067 50.21 4. In Bln Ti m es % “ “ 0.84 7. of ATM cards and debit cards issued Total number of employees Key Financial Ratios Earning per Shar e Bookvalue Per Share Share Price ‐ Dec.554 2.7757 9.144 2.64 4.285 91 626 411 25.10 1.648 411 (150) 307 132 7 18 1 11% 38% 27% 8% 6% ‐ 136% 6% 8% 3% 0% A bsol u t e “ “ 228.934 28.569 5.79% 17.448 32.371 175.96% 0.00 7.927 13.994 64.

11 .

Notice of Annual General Meeting
Notice is hereby given that the 9th Annual General Meeting of the Members of BankIslami Pakistan Limited will be held Inshallah on Saturday, March 30, 2013 at 8:00: a.m. at Hotel Regent Plaza, Shahra-e-Faisal, Karachi, to transact the following business: ORDINARY BUSINESS 12To confirm minutes of the 8th Annual General Meeting held on March 30, 2012. To receive, consider and adopt the Audited Financial Statements (separate and consolidated) for the year ended December 31, 2012 together with the Auditors' and Directors' Reports thereon. To appoint auditors of the bank for the year ending December 31, 2013 and to fix their remuneration. The present auditors M/s. A. F. Ferguson & Co., Chartered Accountants, retire and being eligible, offer themselves for re-appointment.

3-

ANY OTHER BUSINESS 4To transact any other business with the permission of the Chair. By Order of the Board

Khawaja Ehrar ul Hassan Acting Company Secretary Karachi: March 09, 2013

12

Notes: i ii The Members' Register will remain closed from March 25 , 2013 to March 31 , 2013 (both days inclusive). A member eligible to attend and vote at this meeting may appoint another member as proxy to attend and vote in the meeting. Proxies in order to be effective must be received at the registered office not less than 48 hours before the holding of the meeting.

iii An individual beneficial owner of the Central Depository Company, entitled to vote at this meeting must bring his/her Computerized National Identity Card with him/her to prove his/her identity, and in case of proxy must enclose an attested copy of his/her Computerized National Identity Card. Representatives of corporate members should bring the usual documents required for such purposes. iv Members are requested to promptly notify Share Registrar, M/s. Technology Trade (Pvt.) Ltd., Dagia House, 241-C, PECHS Society, Karachi, of any change in their address. v

In pursuance with the Securities and Exchange Commission of Pakistan (“SECP”) Notification No SRO.831(1)/2012 of July 5,2012 in supersession of earlier notification No. SRO 779 (1)/2011 of August 18, 2011, SECP directed all listed companies to mention Computerized National Identity Card (CNIC) / NTN numbers of the registered members on the dividend warrant. The shareholders having physical shares are once again requested to immediately send a copy of their valid computerised national identity card (C.N.I.C) to our Registrar Office, M/s. Technology Trade (Pvt) Ltd. Dagia House,241-C, Block-2, P.E.C.H.S, Off Shahrah-e-Quaideen, Karachifor printing/insertion on dividend warrants. In case of non-receipts of copy of valid C.N.I.C (unless it has been provided earlier) and non-compliance of the above requirement the Bank will be constrained to withhold dispatch of dividend warrants to such shareholders as per S.E.C.P. SRO and directives. The corporate entities has also advised to submit the NTN number to the above given address.

13

Directors’ Report
On behalf of the Board, I am pleased to present the Ninth Annual Report of BankIslami Pakistan Limited. Highlights are: Dec-12 Dec-11 Growth (%) ---------Rupees in million--------Total Deposits Total Assets Total Financing Total Investments Shareholder's Equity (excluding revaluation) Branches Basic Earnings/(loss) per share - rupees 64,216 74,236 27,433 28,994 5,554 141 0.778 50,569 58,821 24,665 21,067 5,144 102 0.775 26.98% 26.20% 11.22% 37.62% 7.98% 38% 0.32%

It gives me great pleasure to share with you the milestones we achieved in the financial year 2012 and the strategy for 2013: The Bank started its network expansion this year after three years of consolidation. 39 new branches and sub branches were added taking the network to 141 branches and sub branches in 66 cities of the Country. This network expansion is expected to continue, Insha'Allah, till 2015 taking the network to 300 branches and sub-branches. The Bank has received permission for an additional 60 branches/subbranches for 2013 which we shall be adding towards the end of the year. We expect BankIslami to have presence in more than 90 cities with a network of 200 branches and sub branches by end of 2013 retaining its position as the second largest Islamic Banking network; BankIslami has almost 9% of the Islamic Banking market share, which again is the second largest amongst Islamic Banks. Our market share has steadily increased over the years starting from 2.1% in 2006. Importantly, the entire growth has been organic. Our aggressive network expansion, roll out of products and services, investment in technology and re-engineering of delivery model is geared to ensure that we consistently increase our market share by 1% to 1.5% every year which is a challenge in its own right. It is also a matter of immense satisfaction for us that BankIslami is seen as a premium brand which in the presence of internationally acclimated Islamic Banks in Pakistan is an achievement in its own right; Total Deposits of the Bank grew by 26.98%. Almost 84% of the growth came from old branches as most of the network expansion took place towards the later part of the year. The growth was mainly driven by 48% growth in the Saving accounts, 12% growth in the Current accounts while the balance 50% was accounted for in the Fixed Term Deposits and other relationships. Aggressive growth in the Current and Saving account relationships helped the Bank reduce the Cost of Fund by 119 basis points which to some extent reduced the impact of declining spreads. Despite of reduction in rates and discontinuation of the 10 year Monthly profit payment, Mahana Munafa Account, growth in Fixed Term Deposits was above our expectation. At the end of the year, the Bank had almost 228,000 depository relationships as against approximately 196,000 last year;

14

While our Mortgage Finance Business. Administrative Expenses increased by 6. One of the reasons was aggressive pre-payments made by the customers in markets such as Karachi. b) Efficient operations at Branch level lead to further decrease in cash holding.In 2013. While we expect the KIBOR to start to increase towards the later part of the year. Islamabad and Quetta in addition to Karachi.62%. offered under the brand name Muskun. Nevertheless. we will continue to focus aggressively on investment opportunities in the Sovereign Market with sporadic interest in the private Sukuk Market. growth in the consumer segment was also somewhat subdued. In 2013. Pakistan Remittance Initiative as well as increasing focus on charged services. c) Processes were re-aligned or re-engineered to ensure staff at the Branch spends more time in customer handling without any compromise on the quality. The initiative was extended to Lahore. BancaTakaful. The Bank has reached a size and age where it has started reaping the benefits of investments in the technology and processes it made in the past. We are cautiously hopeful this year we may get this facility as well as a Treasury Paper at the short end of the yield curve. Our Corporate Financing business did exceptionally well by a 45% increase in the Trade Finance as well as increasing its thrust in the Small and Medium segment which thus far was not the forte of the Bank. Steps such as these have ensured BakIslami continues to grow despite of reduction in spreads and low credit off take. Conservatively 33% reduction under this head was achieved. 15 . growth in top line was restricted to 8. almost exclusively due to increased investments in the Sovereign Sukuk Bonds. Visa Card. The Bank is ideally poised to benefit from increase in the policy rate as and when it happens. Investment portfolio recorded a growth of 37.13% in line with the slow credit off-take in the Country despite of aggressive cuts in the policy rate. Owing to fewer quality financing opportunities. Worthwhile initiatives on the operations side which have contributed to excellent cost control were: a) 20% reduction in Head Count was achieved by centralizing back end processing. our strong spreads are a testament of our basic Banking business being vibrant and competitive. due to reduction in the policy rate. has grown in absolute terms. the Bank will focus on deepening its depository franchise in the existing and new branches. we feel our Cost of Fund has still room for reduction by another 20 to 30 basis points. Contribution was also made by Trade Finance. The Bank is all set to centralize the Term Deposit receipt handling making it probably the most centralized operation in the entire Banking industry. Other Income grew by 135%. Unlike previous years. Total Classified portfolio of the Bank was only 4. Specifically. The Bank has taken provision against AgriTech in line with the requirements of the Prudential Regulations. our hopes of having access to the Shariah Compliant Repo market could not materialize.59% which is satisfactory in the current economic environment. Unfortunately. Reduction in both Gross and Net spread was also noted. we shall continue to focus on the new markets and reassess the strategy.37% despite of addition of 39 branches and sub branches which is commendable. We expect post elections credit off-take will pick up accordingly therefore the targeted ADR of the Bank for 2013 is at around 50% as against 43% for the year under review. Financing grew by 11. The Bank is also expecting to do well in the cross sell initiative launched in 2012.42% of the Financing making it one of the best financing portfolio's in the Banking industry. These measures will significantly boast the Treasury revenues. Asset quality across the board remained good. Despite of increase in earning assets. bulk of which came from Capital Gains realized in Trading in the Ijarah Sukuk. The Bank is actively looking to have a time and motion study done to take the re-engineering initiative to a new level. the Bank is targeting to increase its deposit base by another 30% driven equally by CASA and Fixed Term Deposits. we did not get anticipated response from the new markets we tapped during the year. monitoring and investment in training also helped us to achieve better compliance status which is reflected in our accounts. however we expect the trend to start reversing from the mid of 2013. d) Centralization.

Head Count per branch was 10 as against 14 in 2011. The Bank actually exceeded the target which was set at one person per 160 relationships. I am pleased to report BankIslami has built the largest Linux based Thin Client network in the Country which in the years to come will contribute to superior earnings. 90% of cash withdrawals and deposits were within 10 minutes.778. 6 Billion. further relaxation may be allowed. Not only our software costs are one of the lowest in the industry. Total complaints lodged were less than 4% which is evident of a superior standard.54% of the Administrative Expenses which is one of the lowest in the Industry. The following statements are a manifestation of its commitment towards high standards of Corporate Governance and continuous organizational improvement: 16 . The Board of Directors of the Bank is expected to take a decision soon in this respect. 0. 95% of the accounts were opened within the assigned time. This reduction was achieved despite of addition of 39 branches. Our quality of service also improved further. BankIslami should already be firmly in the first quartile within the Banking Industry in Pakistan. The Earning per share worked out to be Rs. The Board of Directors last year had agreed in principle to issue right shares at discount to increase the Paid up Capital to Rs. a structured career path which is built around training. Increased focused on Training. 6 Billion. Average up time for ATMs was 93% while the success rate increased to 97% for the Bank customers and 94% for other Banks. However. Employment cost was 42. however no representation is made in this respect as the final decision rests with the State Bank of Pakistan. shifting of an additional 19 branches on the optic fiber and leveraging further the investment in Thin Clients by removing servers from the Branches. Thin Clients have a longer life. Head Count at the end of the year was 1. State Bank of Pakistan advised to reassess the issue price in light of the prevailing market price. launch of in-house built NADRA e-sahulat system for utility bill payments. We expect a slight increase due to increased business and further network expansion. the Bank had invested in the Thin Clients equipment as well as Linux based software since its inception. inshallah. Our investment in Human Resources continued with several new initiatives. experience and testing has ensured better service quality at all levels. Other notable initiatives include successful prototype testing of 'first in the world' card less Biometric ATM. introduction of Multi-Protocol Local Switching. " " " " Minimum Capital Requirement State Bank of Pakistan was kind enough to grant us extension till March 31. A total of 28 (2011: 22) Internal Service Measures were monitored in 2012. Corporate and Financial Reporting Framework The Board of Directors is fully cognizant of its responsibility under the Code of Corporate Governance issued by the Securities and Exchange Commission of Pakistan and adopted by the State Bank of Pakistan. while personalized cheque books were processed within stipulated time 90% of the time. There are indications that subject to our increasing the Paid up Capital net of losses to Rs. fewer resources requirement and need a fraction of maintenance compared to other alternatives." On the technology side. Head count per relationship was 162 as against 135 in 2011. it requires minimal maintenance fees as well. 2013.410 as against 1448 in 2011. The results of these and other initiatives have started becoming evident. We expect to take it to 200 by end of 2013. Similar improvements were noted in other areas as well. Similarly. The quality of earnings was high as the bulk of it is from sustainable and recurring operations.

Committees related to the management of risks at BankIslami form the main layer of the framework. accountability. International Accounting Standards. but it brings about the basic function of being informed. The Head of Credit and Risk management.229. and is as critical in fulfilling the institution's financial objectives as one of its main objectives. with a view to refine processes. and the development of a control framework. The value of investments of the Bank's Provident Fund and gratuity fund based on audited and unaudited accounts at December 31. the results of its operations. There has been no material departure from the best practices of Corporate Governance as detailed in the listing regulations. controls and guidelines to not only mitigate. along with the magnitude of their impact and likelihood of occurrence.856 million and 107. it has to be run on an enterprise level. It is not just a function to foretell adverse future events. in order to be effective.5 and accounting estimates are based on reasonable and prudent judgment. the inflow and outflow of information is through the dedicated function of risk management. but also to effectively manage risk.105 million respectively. Operations. as applicable in Pakistan have been followed in the preparation of financial statements and any departure there from has been adequately disclosed and explained. Our framework comprises of a separate department. There are no doubts upon the Bank's ability to continue as a going concern. The purchase and sale of shares by the Directors and the Chief Executive during the year is given in enclosed annexure. Treasury and other related functions review the critical risk areas of operational. The risks when identified and analyzed are further weighed against the applicable risk weights and its impact reviewed on a periodic basis. cash flow and changes in equity. being informed of what can or may happened. credit and market risk as well as other risks being faced by the organization. The system of internal control is sound in design and has been effectively implemented and monitored. 2012 have been adopted by the Bank and have been duly complied with. Ideas and decisions are heavily based on the risk and reward trade-off some of the ideas which never see the light of the day are usually the ones which have been shelved due to an unacceptable risk level. Risk Management Framework The Risk Management function has now taken its root within the financial institutions on a worldwide basis. with clearly defined roles and responsibilities permits a higher level of articulation of the Bank's risk mandate. This pro-active approach helps in outlining the organization's risk tolerance level vis-à-vis BankIslami's risk appetite in relation to its size. establishment of a structure that provides for authority. Appropriate accounting policies have been consistently applied in preparation of financial statements except as disclosed in note 3. Finance.123456789- The financial statements prepared by the Management of the Bank present fairly its state of affairs. Proper books of account of the Bank have been maintained. A statement to this effect is annexed with the report. Risk Management cannot live in a vacuum. current position and market standing. being informed of what steps and controls need to be taken to reduce and mitigate the level of risk and to be informed and to be reasonably prepared to deal with any undesired event and circumstances. with a dedicated and growing team. 17 . 2012 amounted to Rs. delegation. Compliance with Code of Corporate Governance The requirements of the Code of Corporate Governance set out by The Karachi Stock Exchange is its listing regulations relevant for the year ended December 31. BankIslami perceives the management of risk not to be limited to a department or a function. which share our core strategic values including an effective Shariah compliance. but rather should read into daily business routine. Decisions emanating from this basic understanding form the cornerstone of our Risk Management Framework. A strong organizational set-up.

2012 is annexed with the report. We are also thankful to our employees for their kind dedication and commitment during the year under review. Acknowledgments The Board would like to place on record its deep appreciation for the State Bank of Pakistan for all the assistance and guidance. As required under the Code of Corporate Governance. Ferguson & Co. Ferguson & Co. 2013 18 . 2013. as Auditors for the year ending December 31. On behalf of the Board. reflecting BankIslami well conceived business strategy and establishment of an effective operating platform to execute the business strategy.F.F. Auditors The present Auditors A. the Audit Committee has recommended the appointment of A. Pattern of Shareholding The Pattern of shareholding as at December 31.. Hasan A Bilgrami Chief Executive Officer March 04.Credit Rating The Bank has been assigned a long term entity of 'A' and short term rating of 'A-1' by Pakistan Credit Rating Agency Limited (PACRA). retire and being eligible offer themselves for re-appointment..

Ahmed Goolam Mahomed Randeree Mr.till February 28. **** Subject to SBP approval. ** he resignedeffective from April 26. Shabir Ahmed Randeree Mr. Shabir Ahmed Randeree Mr.079 Chief Justice (Retd. 201 2 purchased during the Year 130. 2012 130.423.829 51. Ahmed GoolamMahomedRanderee Mr. Ali Raza Siddiqui Mr. 31. Hasan A. 19 . Hicham Hammoud ** Mr. 2012 two board meetings were held.423.till April 26.) Mahboob Ahmed Mr.829 51. 2012. of Shares as at Jan . Abdulla Abdulkarim Abdulla Showaiter **** Total 7 7 7 7 7 7 1 3 2 0 Attended 7 2 7 7 6 7 0 3 1 0 Leave of Absence 0 5 0 0 1 0 0 0 1 0 * he resignedeffective from February 28. 01. CEO Mr. afterAugust 29.079 Shares No.000 51.883 5.) MahboobAhmed Mr. Ali Raza Siddiqui Mr.883 5. Marwan Hassan Ali Elkhatib * Mr.423.883 499. 2012one boardmeetingwas held. 2012.ANNEXURE TO DIRECTORS' REPORT The purchase and sale of shares by Directors and Chief Executive Officer during the year are given below: Name Designation No.000 51. 2012three boardmeetingswere held. Abdulhakim Habib Mansoor Binherz *** Mr.423. Bilgrami. Hasan A Bilgrami Chairman Director Director Director CEO Attendance of Board of Directors for the Year 2012: Director Name Chief Justice (Retd. *** he was appointedas director effective from March 20.SBP approval was received on August 29. 2012.883 499. of Shares subscribed/ as at Dec . Ali Hussain Mr. 2012subject to SBP approval.

Management Evaluation of the Effectiveness of the Bank Internal Control System During the year under review efforts have been made for an effective and efficient internal control system. 7 of 2004. and can only provide reasonable and not absolute assurance against material misstatement or loss. The Audit Committee of the Board reviews the audit function quarterly which includes program as well as surprise audits. The Board of Directors is ultimately responsible for the internal control system and the Board endorses the above management evaluation. Internal control system in the Bank is designed to manage. While formulating such policies clear line of authority and responsibility have been established in order to ensure an effective internal control system. evaluation and management of significant risks faced by the Bank. 2013 20 .Statement Of Internal Control Statement of Management's Responsibility It is the responsibilityof the Bank's management to: Establish and maintain an adequate and effective system of internal controls and procedures for an efficient working environment for obtaining desired objectives. In accordance with SBP-BSD Circular No. For and On Behalf of the Board Hasan A Bilgrami Chief Executive Officer March 04. rather than to eliminate the risk of failure to achieve the business objective. However. it is an on going process that includes identification. which covers all banking activities in general and key risk areas in particular. reviewing significant policies and procedures and establishing relevant control procedures. Evaluate the effectiveness of the Bank's internal control system that encompasses material matters by identifying control objective. the Bank formulated all the key policies and procedures for its different lines of business. The Bank has established an audit function independent of line management. The control activities are being closely monitored across the Bank through audit group / compliance & control.

The meetings of the board were presided over by the Chairman and. The Bank has applied the principles contained in the Code in the following manner: 1. 2013. Written notices of the board meetings. 7. overall corporate strategy and significant policies of the Bank. All the powers of the board have been exercised and decisions on material transactions. has been declared as a defaulter by that stock exchange. 5. Abdulla Abdulkarim Abdulla Showaiter*** The independent director meets the criteria of independence under clause i(b) of the CCG. 3. The Bank has prepared a "Code of Conduct" and has ensured that appropriate steps have been taken to disseminate it throughout the Bank along with its supporting policies and procedures. ** Resigned on March 4.) Mahboob Ahmed Mr. . Fawad Anwar* Mr. * Approved in 51st st Board meeting held on March 4. along with agenda and working papers materially. 8. 6.35 of Chapter XI contained in the Listing Regulations issued by the Karachi Stock Exchange (Guarantee) Limited for the purpose of establishing a framework of good governance. 21 4. Ali Hussain Mr. by a director elected by the board for this purpose and the board met at least once in every quarter. whereby a listed bank is managed in compliance with the best practices of corporate governance. a DFI or an NBFI or. were circulated at least seven days before the meetings whenever possible. 2012 This statement is being presented to comply with the Code of Corporate Governance contained in the regulation G-1 of the Prudential Regulations for Corporate / Commercial Banking issued by the State Bank of Pakistan and Regulation No. 2. In one of the cases the nomination was received within the stipulated period however co-option took place after 90 days as no meeting of the Board was held. being a member of a stock exchange. in his absence. including appointment and determination of remuneration and terms and condition of employment of the CEO. Two casual vacancies occurred on the board during the period under review. At present the board includes: Category Independent Director Executive Director Non-Executive Directors Names Mr. other executive and non-executive directors. Hasan A Bilgrami Chief Justice (Retd. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained.Statement of Compliance With the Code of Corporate Governance (CCG) For the year Ended December 31. Ahmed Goolam Mahomed Randeree** Mr. All the resident directors of the Bank are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company. Abdulhakim Habib Mansoor Binherz Mr. 2013 *** Subject to SBP approval. The directors have confirmed that none of them is serving as a director on more than ten listed companies including this bank. The board has developed a vision/mission statement. The minutes of the meetings were appropriately recorded and circulated. Shabir Ahmed Randeree Mr. Ali Raza Siddiqui Mr. have been taken by the board/shareholders.

The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. It comprises of 4 members. The directors' report for this year has been prepared in compliance with the requirements of the CCG and fully describes the salient matters required to be disclosed. of whom all are nonexecutive directors and the Chairman of the Committee. The appointment of CFO and Company Secretary is under process. It comprises of five members. The board has formed an Audit Committee. 2012. 17. The board will arrange trainings for the directors that are not exempted in CCG. The Chief Financial Officer (CFO) and Company Secretary has resigned during the year with effect from December 6. employees and stock exchange. that they or any of the partners of the firm. 14. 21. their spouses and minor children do not hold shares of the Bank and that the firm and all its partner are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP. Mr.9. 22. 12. The terms of reference of the committee have been formed and advised to the committee for compliance. including their remuneration and terms and conditions of employment. 10. The financial statements of the Bank were duly endorsed by CEO and Acting CFO before approval of the board during the year. 11. 16. 23. The board has approved appointment of Head of Internal Audit. 20. Material / price sensitive information has been disseminated among all market participants at once through stock exchange. Bilgrami Chief Executive Officer March 04. The directors. and business decisions. The board has set up an effective internal audit function. In the meantime an acting CFO & Company Secretary has been nominated. CEO and executives do not hold any interest in the shares of the Bank other than that disclosed in the pattern of shareholding. which may materially affect the market price of the Bank's securities was determined and intimated to directors. 15. 19. The statutory auditors of the Bank have confirmed that they have been given a satisfactory rating under the quality control review program of the ICAP. The board has formed an HR and Compensation Committee. Hasan A. The 'closed period' prior to the announcement of interim/final results. of whom 3 are non-executive directors and the chairman of the committee is a non-executive director. 2013 22 . 18. The Bank has complied with all the corporate and financial reporting requirements of the CCG. The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of the Bank and as required by the CCG. Fawad Anwar is an independent director as mentioned in point 1 above. 13. We confirm that all other material principles enshrined in the CCG have been complied except as mentioned above towards which reasonable progress is being made by the Bank to seek compliance by the end of next accounting year.

in all material respects. with the best practices contained in the Code of Corporate Governance as applicable to the Bank for the year ended December 31. to the extent where such compliance can be objectively verified. The responsibility for compliance with the Code of Corporate Governance is that o f the Board of Directors of Bank Islami Pakistan Limited . 2013 23 . Our responsibility is to review. related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price s recording proper justification for using such alternate pricing mechanism. A review is limited primarily to inquiries of the Bank’s personnel and review of various documents prepared by the Bank to comply with the Code. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price s or not. Further. We draw attention to paragraph s 1 and 4 of the annexed statement which highlights the fact regarding the appointment of an independent director on the Board of Directors subsequent to the year end and matter pertaining to filling of casual vacancy. which causes us to believe that the Statement of Compliance does not appropriately reflect the Bank’s compliance. 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. 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.REVIEW REPORT TO THE MEMBERS ON THE STATEMENT OF COMPLIANCE WITH THE BEST PRACTICES OF THE CODE OF CORPORATE GOVERNANCE We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of Bank Islami Pakistan Limited to comply with the Listing Regulations No 35 (Chapter XI) of the Karachi Stock Exchange Limited where the Bank is listed. Chartered Accountants Karachi Dated: March 08. 2012. all such transactions are also required to be separately placed before the audit committee. 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. Based on our review . As part of our audit of the financial statements. nothing has come to our attention. R egulation ( x) of Listing Regulation No 35 notified by the Karachi Stock Exchange Limited requires the Bank to place before the Board of Directors for their consideration and approval. We are only required and have ensured compliance of the above requirement s to the extent of approval of related party transactions by the Board of Directors and placement of such transactions before the Audit Committee.

An amount of Rs.253 has been found as impure income in a recent Shari'ah audit due to some irregularities in a transaction undertaken in 2012. the allocation of funds.01Mn was received from customers in respect of charity on delays in payments and credited to Charity Account. An amount of Rs. Shari'ah Compliance: The two wings of the bank are deposits acceptance and investment of these funds. 624. SBP regulations and guidelines related to Shari'ah compliance and other rules as well as specific Fatwas and rulings issued by Shari'ah Board and myself from time to time. Assignment of profit sharing ratio and weightages and allocation of assets to the pool of deposits is done under S har 'iah supervision. In my opinion. Since the case came to light after the finalization of accounts the amount will be credited to Charity Account in 2013.Shari'ah Adviser’s Annual Report This report which forms part of the 9th annual report of the bank provides me the opportunity to discuss Shari'ah compliance in affairs of the Institution as well as accessory factors which contribute to the former like training and product development. 959. Since charity funds are kept under investment accounts at the bank. We will briefly discuss this too. profit sharing ratios. I report: Each class of transactions with respect to the relevant documentation and procedures adopted by BankIslami has been examined on test check basis. In my opinion. Executed transactions are reviewed and audited on sample basis to check their conformity to the structured modus operandi. and profit relating to PLS accounts conform to the basis vetted by Shari'ah Board and myself in accordance with Shari'ah rules and principles. Shari'ah compliance needs to be ensured at both ends. Assets generation from the deposits and other funds is carried out through pre approved mode of investments. Based on the above. During the year under review an important progress in the industry was issuance of guidelines from the regulator on pool management function of Islamic banks. Remuneration of deposits is based on profit and loss sharing arrangement between the bank and depositors. the business affairs of BankIslami have been generally carried out in accordance with rules and principles of Shari'ah.893 accrued to Charity fund in respect of Mudarabah profit. a return is given to this amount as a part of Mudarabah pool. 12. 24 . weightages. During the year Rs.

23% and 26. In this regard amendments which seemed necessary from Shari'ah perspective were made in the Master Agreement. At BankIslami every employee is provided a basic course in Islamic banking. By training and educating the employees risk of non-compliance can be mitigated to a large extent. Sound knowledge of processes is critical for the execution of any transaction. fixing the maximum gap between lowest and highest weightage and increased disclosure requirements are all part of an overall endeavor towards a better deposits management practice across the board.10%. For 2013 a plan "Train the Trainer" is also under consideration for more frequent training sessions specially in remote areas.03% of the total financing while Istisna and finished goods purchase financing (Karobar financing) together stand at 37. Limitations on Hiba (gift) practice. We think this is a step forward in the industry and in future the system will improve further. Islamic Banking Training: Human resource is a key determinant in success or failure of any organization and when it comes to service industry its importance increases manyfold. the Central Bank issued a detailed and comprehensive guidelines for pool management. An agreement with International Finance Corporation.Disbursements during the year from the Charity fund amounted to Rs. Ijarah and Diminishing Musharakah respectively account for 6. The guidelines which cover different aspects of deposits are meant to standardize the practices and improve the transparency. Issuance of Pool Management Guidelines by SBP: In the last quarter of the preceding year. An analysis of the instructions reveals that the regulator has moved one step ahead from Shari'ah compliance to Shari'ah governance through administrative measures. Short term Sukuks thus will be able to replace conventional commercial papers in the coming years. Specialized product trainings are also conducted for the relevant staff. 25 . a World Bank group concern.57%. Composition of the Bank's Portfolio: As of December 31st the outstanding position of the booked assets reveals that Murabahah comprises 27.2 Mn. specially designed Shari'ah training was held during the year for the Shari'ah Audit staff. During the year the bank made arrangement with Mashreq Bank for Shari'ah compliant Wad based forward transactions. During the year under review twenty two sessions were conducted which trained over four hundred employees. The main reason for most of the deviations and irregularities is lack of awareness. Product and New Relations Development: The Product Development team undertook structuring of Shari'ah compliant Istisna based short term Sukuks. These Sukuks were designed in a way that allows tradability throughout the substantial period before maturity. was inked for guaranteeing BankIslami's international LCs by the former. As Shari'ah Audit is conducted by Internal Audit department. 8.

Recommendations: Based on the observations made through Shari'ah review. Irshad Ahmad Aijaz Shari'ah Adviser 26 . reports and feedback from several areas I recommend the following: Penalty clauses in the agreements with institutions other than Islamic financial institutions is a recurring problem. Liquidity instruments should be developed which should enhance dealing between Islamic banks and reduce dependence on conventional interbank market. Islamic banks should collectively develop a code of good practices whereby certain quantitative checks should be placed on less preferred financing. I end this report with best wishes to the Islamic finance industry. Cooperation from SBP and SECP in this regard will be of much worth. Some efforts on collective basis should be done to introduce Charity imposition arrangement in the businesses and corporations. investments and deposits products.

and prepare and present the financial statements in conformity with the approved accounting standards and the requirements of the Banking Companies Ordinance. 1962 (LVII of 1962). and the Companies Ordinance. (ii) the expenditure incurred during the year was for the purpose of the Bank's business. as well as. proper books of account have been kept by the Bank as required by the Companies Ordinance. which in the case of Islamic financing and related assets covered more than sixty percent of the total Islamic financing and related assets of the Bank. in which are incorporated the unaudited certified returns from the branches except for eight branches which have been audited by us and we state that we have obtained all the information and explanations which. we report that: (a) in our opinion. 1984 (XLVII of 1984). and are in agreement with the books of account and are further in accordance with accounting policies consistently applied except for the change as stated in note 3. An audit also includes assessing the accounting policies and significant estimates made by management. to the best of our knowledge and belief. evidence supporting the amounts and disclosures in the financial statements. evaluating the overall presentation of the financial statements. cash flow statement and statement of changes in equity together with the notes forming part thereof (herein-after referred to as the 'financial statements') for the year then ended. We conducted our audit in accordance with the International Standards on Auditing as applicable in Pakistan. (b) in our opinion: (i) the statement of financial position and profit and loss account together with the notes thereon have been drawn up in conformity with the Banking Companies Ordinance. and the returns referred to above received from the branches have been found adequate for the purposes of our audit.5 with which we concur. on a test basis. 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. 1962 (LVII of 1962). statement of comprehensive income. 1984 (XLVII of 1984). and the Companies Ordinance. An audit includes examining. 2012 and the related profit and loss account. 1984 (XLVII of 1984). and 27 .AUDITORS’ REPORT TO THE MEMBERS AUDITORS' REPORT TO THE MEMBERS We have audited the annexed statement of financial position of BankIslami Pakistan Limited (the Bank) as at December 31. were necessary for the purposes of our audit. It is the responsibility of the Bank's management to establish and maintain a system of internal control. Our responsibility is to express an opinion on these statements based on our audit. We believe that our audit provides a reasonable basis for our opinion and after due verification.

and the Companies Ordinance.The State Bank of Pakistan has given extension in timeline to the Bank till March 31. (c) in our opinion and to the best of our information and according to the explanations given to us the statement of financial position. 2012. Chartered Accountants Audit Engagement Partner: Rashid A. 2013 Karachi 28 . profit and loss account. Emphasis of matter paragraph We draw attention to note 1. 2013 to meet this requirement. 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.(iii)the business conducted. and (d) in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance. statement of comprehensive income. cash flow statement and statement of changes in equity together with the notes forming part thereof conform with the approved accounting standards as applicable in Pakistan. 1962 (LVII of 1962). 2012. Jafer Dated: March 8. its cash flows and changes in equity for the year then ended. its comprehensive income. in the manner so required and give a true and fair view of the state of the Bank's affairs as at December 31. 1980 (XVIII of 1980) was deducted by the Bank and deposited in the Central Zakat Fund established under section 7 of that Ordinance.2 to the accompanying financial statements which describes the matter relating to shortfall in minimum capital requirements of the Bank as at December 31. Our opinion is not qualified in respect of this matter. 1984 (XLVII of 1984). and give the information required by the Banking Companies Ordinance. and its true balance of profit.

317 4.638 563.4 1 8 .8 2 6 5 4 9 .7 3 8 74.2 7 9 .0 7 8 5.5 7 4 .732.6 6 6 68.710 2.6 2 1 .0 1 0 1 .4 8 5 1 .2 5 1 .314 3.663.020 353.312.4 6 2 2 7 .0 0 0 5 0 .1 1 0 8 .net of tax 20 CONTINGENCIES AND COMMITMENTS 21 The annexed notes 1 to 43 and Annexure 1 form an integral part of these financial statements.000 38.198.8 5 3 8 0 0 .9 1 3 .030 4 .net Operating fixed assets Deferred tax assets Other assets 6 7 8 9 10 11 12 13 4 .066.0 6 7 .035.6 7 2 2 8 .4 3 6 .279.4 1 5 6 4 .454 7 9 8 .2 1 6 .0 3 8 53.6 7 9 9 1 . 3 4 0 ) 5.4 7 5 .1 3 0 1 .320 1.454 5 .9 7 3 1 .5 6 8 .8 1 1 .734.269.703 LIABILITIES Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loans L i a b i l i ti e s a g a i n s t a s s e ts s u b j e c t to fi n a n c e l e a s e Deferred tax liabilities Other liabilities NET ASSETS 14 15 16 1 .5 8 7 .312.560 1 6 9 .6 6 5 .638 5.3 8 2 4.576 5.565.985) 4.766.132 13.622 4.2 2 1 (2 2 7 .183 1. 2012 Note 2011 2010 (Restated) (Restated) --------------------.4 5 9 1 .7 8 5 1 .132 19.3 9 2 1 0 1 .2 6 4 2 1 .2 6 2 1 .6 8 4 .0 8 2 2 4 .3 4 2 5.Statement of Financial Position AS AT DECEMBER 31.9 9 4 .572.6 7 9 1 7 3 .676 5.554.4 3 3 .508.413 1 8 .004 3 2 .Rupees in '000 -----------------------2012 ASSETS Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets .151.148 569.1 0 6 8 6 .572.679 9 .236. Chairman President / Chief Executive Director Director 29 .9 3 8 .2 7 7 4 .035.6 2 8 1 8 8 .6 4 8 58.821.513.096 45.7 0 7 8 0 6 .154.0 4 1 5.143.2 7 9 .977 40.3 1 0 (554.386 17 REPRESENTED BY Share capital Reserves Unappropriated profit / (accumulated losses) 18 19 5 .680 402.386 Surplus on revaluation of assets .3 4 1 .766.

072 2 .4 4 9 199.9 6 5 2 .7 9 9 60.Profit and Loss Account For the Year Ended december 31.587 608.5 5 8 .Rupees in ‘000 ------5 .589 410.7 5 9 626.7757 0. commission and brokerage income Dividend Income Income from dealing in foreign currencies Gain on sale of securities Unrealised gain on revaluation of investments classified as held for trading Other income Total other income 22 23 10.340) 183.556 (554.6 1 8 . 0 0 0 ) 96.8 8 3 .0 8 6 2 6 3 .2 7 9 .7782 0.9 7 5 .2 1 0 1 3 .3 3 6 2 2 6 .3 5 5 2 . 2012 Note 2011 (Restated) ------.754) 1 2 .0 6 0 2 .853 (227.8 9 2 3 1 .072 (1 5 .1 3 9 .1 5 4 2 .523 60.442 2 .906.3 7 2 .513 5 7 .587 28 28 28 3 2 .8 7 1 2 .5 0 6 .442 626.3 9 8 608.985 OTHER EXPENSES Administrative expenses Other (reversals) / provisions / write offs Other charges Total other expenses Extra ordinary / unusual items PROFIT BEFORE TAXATION Taxation Current Prior years Deferred 26 27 2 .2 8 5 3 9 .523 2 .7 25 24 1 8 1 .7782 0.031 409. Chairman 30 President / Chief Executive Director Director .7 1 0 1 8 2 .9 5 7 2 1 9 .784.4 6 8 .Rupees --------Basic earnings per share Diluted earnings per share 29 29 0.14 9 .429) PROFIT AFTER TAXATION Accumulated loss brought forward --------.2 4 2 1 .6 4 2 (4.2 6 9 5 .201 1 2 4 .8 7 9 215.7 0 9 2.985) (145.3 4 0 1 4 0 .7757 The annexed notes 1 to 43 and Annexure 1 form an integral part of these financial statements.2 3 7 2 1 0 0 .3 4 1 111.9 3 2 2.1 7 6 .net Reversal of provision for diminution in the value of investments Bad debts written off directly Net spread after provisions / (reversals) OTHER INCOME Fee.1 2 8 2 4 .3 0 6 3 .8 4 4 5 3 3 .2 7 1 .2 7 6 2012 Profit / return earned Profit / return expensed Net spread earned Provision against non-performing Islamic financing and related assets .5 0 2 .

556 2012 Profit after taxation for the year Comprehensive income transferred to equity Components of comprehensive income not reflected in equity : Surplus on revaluation of available for sale investments . Chairman President / Chief Executive Director Director 31 .853 4 0 9 .8 5 3 410.252 The annexed notes 1 to 43 and Annexure 1 form an integral part of these financial statements.5 5 6 409.2 4.987 415.net of tax Total comprehensive income for the year 20. 2012 Note 2011 (Restated) ------.696 546.Statement of Comprehensive Income For the Year Ended december 31.840 136.Rupees in ‘000 ------4 1 0 .

1 5 7 8 2 1 . 2012 Note 2011 (Restated) -------.7 0 0 2 3 3 .440 26 2 6 .6 8 8 (8.1 0 3 5.033) 2 3 5 .5 2 3 2 4 .145. 2 1 3 ) (2 9 6 .7 24 1 3 . 0 0 0 ) (4 .6 4 7 .039.817 (7 .154.404.884.143) 510.636.5 7 1 1 1 1 . 9 4 2 ) 9.6 2 8 15.742) 8.334 (57.857 (4.239.4 1 5 1 3 .0 0 0 1 2 .826.958) 4 5 2 .104) (7. 6 8 8 ) (5.140) 2 (4 0 3 .786) 3 2 .1 4 9 .900 9. 7 8 7 ) 4 .259) 1.3 7 0 .2 (Increase) / decrease in operating assets Due from financial institutions Islamic financing and related assets Others assets (excluding advance taxation and deferred cost) Increase / (decrease) in operating liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities (excluding current taxation) In c o m e ta x p a i d Net cash generated from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investments in available for sale securities Dividend received Investments in operating fixed assets Proceeds from disposal of operating fixed assets Net cash used in investing activities Increase / (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year (8. 7 5 4 ) (4 .281.9 2 7 3 9 1 .092.2 1 0 (1 2 .0 8 6 672.7 7 0 5.585 3 1 0 .9 4 1 6 0 . 6 4 9 ) 2 (104.n e t Reversal of provision for diminution of in value of investments Other (reversals) / provisions / write offs Gain on sale of property and equipment Deferred cost amortised 6 2 6 .052. 6 5 4 ) 778.197.0 6 1 13.4 6 5 1 8 6 .423 1.799 (3 9 .4 4 2 (2) 626.2 3 4 .234.2 2 7 6 .592 1 0 .714 5 .446) (157.744.359 8.857 6 0 8 .270.2 5 5 2 3 .7 4 5 2 9 .466.8 6 8 (5 .417 1. 1 2 4 .103 30 30 The annexed notes 1 to 43 and Annexure 1 form an integral part of these financial statements.333 3 .629.5 8 7 (2) 608. Chairman 32 President / Chief Executive Director Director .408) (3.6 0 4 . 4 1 6 .008 7 6 .542.0 7 2 (1 5 .1 7 4 (7.Cash Flow Statement For the Year Ended december 31.8 3 3 4 4 7 .7 0 5 2 5 5 . 6 9 3 ) 6 .Rupees in '000 --------------2012 CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Less: Dividend Income Adjustments: Depreciation Amortisation Depreciation on operating Ijarah assets Provision / (reversal of provision) against non-performing I s l a m i c f i n a n c i n g a n d re l a t e d a s s e t s .

171 173. 2011 Profit after taxation for the year transferred from Statement of Comprehensive Income Transfer to statutory reserve Balance as at December 31.679 82.911 91.279.985) 4.556 5.8 5 3 5.556 (81.279.279. Chairman President / Chief Executive Director Director 33 . 2011 5.Rupees in '000 ------------------Statutory reserve Balance as at January 01.554.171) 101.340) 409.004 5.310 (554.221 409.143.342 4 1 0 .392 4 1 0 .Statement of Changes in Equity For the Year Ended december 31.560 Profit after taxation for the year transferred from Statement of Comprehensive Income Transfer to statutory reserve Balance as at December 31.8 5 3 (82.679 9. 2012 Share capital Unappropriated profit / Total (Accumulated loss) -----------------------. 2012 5.911) (227.679 81.734.413 The annexed notes 1 to 43 and Annexure 1 form an integral part of these financial statements.

on receiving Certificate of Commencement of Business from the State Bank of Pakistan (SBP) under section 37 of the State Bank of Pakistan Act. 2009 has increased the Minimum Capital Requirement (MCR) for banks upto Rs. 1962 or directives issued by the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP). the Pakistan Credit Rating Agency (Private) Limited (PACRA) determined the Bank's long-term rating as 'A' and the short-term rating as 'A1'. Istisna.1 BASIS OF PRESENTATION The Bank provides financing mainly through Murabaha. received which does not comply with the principles of Islamic Shariah is recognised as charity payable as directed by the Shariah Advisor.2 The State Bank of Pakistan (SBP) vide circular no.1 34 . 2012 (2011: 102 branches including 32 sub branches). 10 billion to be achieved in a phased manner by December 31. The shares of the Bank are quoted on the Karachi Stock Exchange (Guarantee) Limited. However. 2012 amounts to Rs 5. 1984 to carry out the business of an Islamic Commercial Bank in accordance with the principles of Islamic Shariah. Wherever the requirements of the Companies Ordinance. 2006. The Bank is operating through 141 branches including 53 sub branches as at December 31. the paid up capital of the Bank (free of losses) as at December 31. issued by the Institute of Chartered Accountants of Pakistan. The consolidated financial statements of the Group are being issued separately. 2. the SBP vide its letter no. 3 3.3. Clifton. BSD/BAI3/608/2773/2011 dated March 7. 1984. Dolmen City. 1956. if any. the Banking Companies Ordinance. 1984. 1962 or the requirements of the directives issued by SECP and SBP prevail.280 billion although its CAR stands at 15. 2005. the Banking Companies Ordinance. the Bank has also been advised by the SBP to submit concrete time bound capital plan by March 31. consumer. Marine Drive. Based on the financial statements of the Bank for the year ended December 31. However income. Ijarah. The registered office of the Bank is situated at 11th Floor. 2012 is Rs 9 billion (2011: Rs 8 billion) and 10 percent (2011: 10 percent) respectively. 2011 had given extension to the Bank in timeline for meeting MCR (free of losses) amounting to Rs 6 billion till June 30. BPRD/CSD/2407/13 dated March 1. Karachi. 2013 to comply with the future and prevailing regulatory capital requirements. the requirements of the Companies Ordinance. the Banking Companies Ordinance.Notes to And Forming Part of The Financial Statement For the Year Ended december 31. 2012 1 1. 2013. 2011. The MCR (free of losses) and Capital Adequacy Ratio (CAR) requirements as at December 31. 6 billion. 1984. 2011. commercial. 2011 had in principle agreed to issue right shares to increase its paid up capital (free of losses) to Rs. as are notified under the Companies Ordinance. 2013 has further extended the timeline for meeting the paid up capital (free of losses) of Rs 6 billion and to submit the reassessed issue price of right shares till March 31. 2013.2 These financial statements are the separate financial statements of the Bank in which investments in subsidiaries are carried at cost and are not consolidated.19 percent. The Board of Directors (BOD) of the Bank in their meeting held on February 07. 1984. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board and Islamic Financial Accounting Standards. STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. the requirements of the Companies Ordinance. Diminishing Musharka. The purchases and sales arising under these arrangements are not reflected in these financial statements as such but are restricted to the amount of facility actually utilised and the appropriate portion of profit thereon. The State Bank of Pakistan granted a ‘Scheduled Islamic Commercial Bank’ license to the Bank on March 18. The income on such financing is recognised in accordance with the principles of Islamic Shariah. 2004 under the Companies Ordinance.1 STATUS AND NATURE OF BUSINESS BankIslami Pakistan Limited (the Bank) was incorporated in Pakistan as a public limited company on October 18. 2 2. The Bank is principally engaged in corporate. 07 of 2009 dated April 15. Recently. The SBP vide its letter no. The Bank commenced its operations as a Scheduled Islamic Commercial Bank with effect from April 07. Musawama and other Islamic modes as breifly explained in note 5. retail banking activities and investment activities. Block-4. 1962 or directives issued by the SECP and SBP differ with the requirements of IFRSs. 1. Moreover.

two statement approach shall be adopted i. All banking companies in Pakistan are required to prepare their annual financial statements in line with the format prescribed under BSD Circular No.5 5 5 . However. and Balance Sheet shall be renamed as 'Statement of Financial Position'.e. the above requirements have been adopted in the preparation of these financial statements. Changes in Accounting Estimates and Errors' and accordingly the comparative figures have been restated. 2012.058) 4 .O 411(I)/2008 dated April 28.5 8 5 Impact on Profit and Loss Account Decrease in other provisions / write offs Increase in provisioning against Islamic financing and related assets (8.8 1 6 (39. Further. 2009.816) 8 . Accordingly. effective from the accounting year ended December 31. As required under the directive issued by the SBP.0 5 8 (2 .2 The SBP has deferred the applicability of International Accounting Standard (IAS) 39. All financing.100) 3 9 . Accordingly. December 31.R. 07 dated April 20.1 0 0 - 35 .3. December 31.555. 3. 5 0 7 . the SECP has deferred the applicability of International Financial Reporting Standard (IFRS) 7 ' Financial Instruments: Disclosures' through its notification S. 4 dated February 17. 'Accounting Policies. the SBP requirements prevail over the requirements specified in IFRS 8. 10 dated August 26.3 3. which have been made effective from December 31. Accordingly. the Bank has changed its accounting policy in respect of presentation and disclosure of Islamic financing and related assets as under: a) The head 'Financings' in the Statement of Financial Position has been renamed as 'Islamic financing and related assets'.5 b) The change in accounting policy has been accounted for retrospectively in accordance with the requirements of IAS 8.4 3. 5 8 5 ) 2 . inventories and related assets previously being reported under 'other assets' have now been made part of 'Islamic financing and related assets'. the requirements of these standards have not been considered in the preparation of these financial statements. SBP through its BSD Circular No. 2002 till further instructions. 03 of 2013 dated January 22. investments have been classified and valued in accordance with the requirements prescribed by the SBP through various circulars. Change in accounting policies and disclosure The SBP vide BSD Circular Letter No. 'Revised Forms of Annual Financial Statements'. advances (against murabaha etc). 2010 has clarified that for the purpose of preparation of financial statements in accordance with International Accounting Standard .4 6 9 (4. 'Investment Property' for banking companies through BSD Circular Letter No. 8 9 5 . 4 6 9 ) 4 . 2006. 2013 has made certain changes to the 'Revised Forms of Annual Financial Statements' as applicable to the Bank. 2006. 'Financial Instruments: Recognition and Measurement' and International Accounting Standard (IAS) 40.1 (Revised) 'Presentation of Financial Statements'. 2012 2011 2010 ----------------------(Rupees in '000)---------------------Impact on Statement of Financial Position Decrease in other assets (net of provisions) Increase in Islamic financing and related assets (4 . the Surplus / (Deficit) on revaluation of Available-For-Sale Securities (AFS) only may be included in the 'Statement of Comprehensive Income' but will continue to be shown separately in the Statement of Financial Position. IFRS 8 'Operating Segments' is effective for the Bank's accounting period beginning on or after January 1. separate 'Profit and Loss Account' and 'Statement of Comprehensive Income' shall be presented. The management of the Bank believes that as the SBP has defined the segment categorisation in the above mentioned circular.8 9 5 . The effect of change in the accounting policy on the current and prior period financial statements have been summarised below: December 31. Furthermore.5 0 7 . 2008. segment information disclosed in these financial statements is based on the requirements laid down by SBP.

The Bank is yet to assess IFRS 12’s full impact.6 and 32 to the financial statements have been carried at present values as determined under International Accounting Standard 19. The amendment may impact the financial statements of the Bank which has not yet been quantified. ‘Employee benefits’ was amended in June 2011 applicable for periods beginning on or after January 1. Interpretations and amendments to published approved accounting standards that are not yet effective: Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) . in this limited circumstance. "Employee Benefits. is based on a rebuttable presumption that the carrying amount of the investment property will be recovered entirely through sale. The requirements of other IFRSs continue to apply in this regard. interpretations and amendments to published approved accounting standards that are effective in the current year: Amendments to IAS 12 – deferred tax on investment property (effective for annual periods beginning on or after January 1. 3. IFRS 10. 2012). The 2010 amendment provides an exception to the measurement principle in respect of investment property measured using the fair value model in accordance with IAS 40 Investment Property.2 Functional and Presentation Currency These financial statements are presented in Pakistani Rupees.7 Standards. except that certain investments. to immediately recognise all past service costs.8 Early adoption of standards The Bank has not early adopted any new or amended standard in 2012. IAS 19. 'Consolidated financial statements’. Further. The amendment has no impact on the financial statements of the Bank. associates. 2013 but are considered not to be relevant or do not have any significant effect on the Bank's operations and are therefore not detailed in these financial statements. IFRS 12. builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. foreign currency balances and commitments in respect of foreign exchange contracts have been marked to market and are carried at fair value. which is the Bank's functional and presentation currency. 2012).6 Other standards. special purpose vehicles and other off balance sheet vehicles. and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability / asset.1 BASIS OF MEASUREMENT Accounting convention These financial statements have been prepared under the historical cost convention. staff retirement benefits as disclosed in notes 5. These amendments will have no impact on financial statements of the Bank. 2013. The impact on the Bank will be as follows: to eliminate the corridor approach and recognise all actuarial gains and losses in other comprehensive income as they occur. The Bank is yet to assess IFRS 10’s full impact. - - - There are other new and amended standards and interpretations that are mandatory for the Bank's accounting periods beginning on or after January 1. The amendments do not address which items are presented in other comprehensive income or which items need to be reclassified." 4. 36 . The presumption can be rebutted only if the investment property is depreciable and held within a business model whose objective is to consume substantially all of the asset’s economic benefits over the life of the asset. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. ‘Disclosures of interests in other entities’. 3. includes the disclosure requirements for all forms of interests in other entities.(effective for annual periods beginning on or after July 1. 4 4. The measurement of deferred tax assets and liabilities. including joint arrangements. The amendments require that an entity present separately the items of other comprehensive income that would be reclassified to profit or loss in the future if certain conditions are met from those that would never be reclassified to profit or loss.3.

2.14). 5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set out below. (b) (c) (d) (e) (f) (g) Estimates and judgments are continually evaluated and are based on historical experience and other factors.3 and 10. (b) Held.14. Depreciation and amortization methods of operating fixed assets (notes 5.3 Rounding off Figures have been rounded off to the nearest thousand rupees unless otherwise stated. 5. 5. other than those in subsidiaries and associates. 12 and 28).2 5. 4.1).4. Determination of forced sales value of underlying securities of non performing Islamic financing and related assets (note 10. which do not fall under the 'held for trading' or 'held to maturity' categories.to-maturity These are investments with fixed or determinable payments and fixed maturity and the Bank has the positive intent and ability to hold them till maturity. 37 . These have been consistently applied to all the years presented.1 Investments Classification Investments of the Bank.1 Cash and cash equivalents Cash and cash equivalents for the purpose of cash flow statement comprise of cash and balances with treasury banks and balances with other banks in current and deposit accounts. Staff retirement benefits (notes 5. (c) Available-for-sale These are investments. including expectation of future events that are believed to be reasonable under the circumstances. associates and non associate entities (notes 5.5 and 9).4 and 11). Impairment of investments in equity instruments of subsidiary.4 Critical accounting estimates and judgments The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. Provision for non-performing Islamic financing and related assets (notes 5. unless otherwise specified.2. It also requires management to exercise its judgment in the process of applying the Bank’s accounting policies.5. other than investments in associates and subsidiaries are classified as follows: (a) Held-for-trading These are investments which are either acquired for generating profits from short-term fluctuations in market prices or are securities included in a portfolio for which there is evidence of a recent actual pattern of short-term profit taking.2.6 and 32). The areas involving a higher degree of judgment or complexity. Actual results may differ from these estimates. or areas where assumptions and estimates are significant to the financial statements are as follows: (a) Critical judgment in classification and valuation of investments in accordance with the Bank’s policy (notes 5.2 and 9). Assumption and estimation in recognition of provision for taxation (current and prior years) and deferred taxation (notes 5.

Investments classified as 'held for trading' are initially recognised at fair value and transaction costs are expensed in the profit and loss account. Provision for diminution in the value of sukuk certificates is made as per the Prudential Regulations issued by the State Bank of Pakistan. The surplus / (deficit) arising on these securities is taken to the profit and loss account when actually realized upon disposal.2. if any. Investments in other unquoted securities are valued at cost less impairment losses.2 Regular way contracts All purchases and sales of investments that require delivery within the time frame established by regulation or market convention are recognised at the trade date. Surplus / (deficit) arising on remeasurement is included in the statement of comprehensive income but is kept in a separate account shown in the statement of financial position below equity. 5. Premium or discount on debt securities classified as available for sale is amortised using the effective profit rate method and taken to the profit and loss account. 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. 5.4 Subsequent measurement Subsequent to initial recognition investments are valued as follows: (a) Held-for-trading These are measured at subsequent reporting dates at fair value. less any impairment loss recognized to reflect irrecoverable amount. (c) Available for sale Quoted / Government securities are measured at fair value. which is the date on which the Bank commits to purchase or sell the investments.5 Impairment Available for sale and Held to maturity investments Impairment loss in respect of investments classified as available for sale and held to maturity (except sukuk certificates) is recognised based on management's assessment of objective evidence of impairment as a result of one or more events that may have an impact on the estimated future cash flows of the investments. 5. Unquoted equity securities are valued at the lower of cost and break-up value. In case of impairment of available for sale securities. the impairment loss is recognised in the profit and loss account. (d) Investments in associates Associates are all entities over which the Bank has significant influence but not control.2. if any.3 Initial recognition and measurement Investments other than those categorised as 'held for trading' are initially recognised at fair value which includes transaction costs associated with the investment.2. (e) Investments in subsidiaries Subsidiaries are all entities over which the Bank has significant control. the cumulative loss that has been recognised directly in surplus on revaluation of securities on the Statement of Financial Position below equity is removed therefrom and recognised in the profit and loss account. Investments in associate is carried at cost less accumulated impairment losses.5. Investments in subsidiary is carried at cost less accumulated impairment losses. For investments classified as held to maturity. 38 . (b) Held-to-maturity These are measured at amortised cost using the effective profit rate method.2. A significant or prolonged decline in fair value of an equity investment below its cost is also considered an objective evidence of impairment. Gains and losses on remeasurement are included in the net profit and loss for the year. if any.

financing are recorded at the deferred sale price net of profit. Management also takes into account that these investments are held for long term and therefore considers decline of upto 40% in value (applying significant decline criteria) and upto 12 months (for applying prolonged criteria) for the purposes of assessing significant and prolonged decline for listed investments. Murabaha financing is extended to all types of trade transactions i. On culmination. Murabaha to the purchase orderer is a sale transaction wherein the first party (the Bank) sells to the client / customer Shariah compliant assets / goods for cost plus a pre-agreed profit after getting title and possession of the same.3.. However.3. Goods purchased but remaining unsold at the statement of financial position date are recorded as inventories. used to finance a commercial transaction which consists of purchase by the Bank (generally through an undisclosed agent) the goods from the foreign supplier and selling them to the customer after getting the title to and possession of the goods. 5. carrying amount of net assets in excess of market capitalisation etc. Musawama and Diminishing Musharaka financing and the related assets. 5. General provision The Bank also maintains general provision at the rate of 5% against unsecured consumer portfolio and at the rate of 1. The net provision made / reversed during the year is charged to the profit and loss account and accumulated provision is netted off against Islamic financing and related assets. Istisn’a. under Documentary Credits (LCs).2 The rentals received / receivable on Ijarahs are recorded as income / revenue.Investment in associates and subsidiaries In respect of investment in associates. the Bank reviews their carrying values at each reporting date to assess whether there is an indication of impairment. it sells it to the client at cost plus the profit agreed upon in the promise. under financing arrangements for purchase of goods / assets are recorded as advance. Ijarah is a contract in which the Bank buys and rents a productive asset to a person short of funds and in need of that asset. In principle on the basis of an undertaking (Promise-to-Purchase) from the client (the purchase orderer). significant changes with an adverse impact on the entity. The amount of impairment loss would be determined based on the higher of value in use and fair value less cost to sell.5% against secured consumer portfolio in accordance with the Prudential Regulations issued by the SBP. Islamic financing and related assets Islamic financing and related assets are financial products originated by the Bank and principally comprise Murabaha. Istisn’a is an order to manufacture or construct some assets. Specific provision The Bank maintains specific provision for doubtful debts based on the requirements specified in the Prudential Regulations issued by the SBP. Salam. Depreciation on Ijarah assets is charged to profit and loss account by applying the accounting policy consistent with the policy for depreciation of operating fixed assets.3 Gains or losses on sale of investments are included in profit and loss for the year.1 Islamic financing and related assets are stated net of specific and general provisions against non-performing Islamic financing and related assets which are charged to the profit and loss account. 5. Documentary Collections and Open Accounts.e.6 5. Such indication may include significant and prolonged decline in the market value. Thereafter. Impairment loss is recognised in the profit and loss account. Funds disbursed. However the Bank can appoint the client as its agent to purchase the assets / goods on its behalf. the Bank purchases the assets / goods subject of the Murabaha from a third party and takes the possession thereof.2. These are stated net of general and specific provisions. Istisn'a has two legs: first the Bank acquires the described goods by way of Istisna to be manufactured by the customer from raw material of its own and once the goods are delivered to the Bank. 39 . the customer through an independent agency contract. any threshold should be justifiable in view of other factors present for the entity. Islamic financing and related assets are written off when there are no realistic prospects of recovery. Import Murabaha is a product. will sell the same to various end-users as the agent of the Bank. Ijarah.

Depreciation is computed using the straight-line method by taking into consideration the estimated useful life of the related assets at the rates specified in note 11. Depreciation on additions / deletions during the year is charged for the proportionate period for which the asset remained in use. 40 .4. Depreciation on Ijarah assets is charged by applying the straight line method over the Ijarah period which is from the date of delivery of respective assets to mustajir upto the date of maturity / termination of Ijarah agreement. if appropriate. thereafter all Ijarah financing are accounted for under IFAS-2. Intangible assets having an indefinite useful life are stated at acquisition cost. less impairment losses. (a) Under finance method. Musawama is a sale transaction in which price of a commodity to be traded is bargained between the seller and the purchaser without any reference to the cost incurred by the seller. if any. if appropriate. Subsequent costs are included in the assets' carrying amount or are recognised as a separate asset.3 Intangible assets Intangible assets having a finite useful life are stated at cost less accumulated amortisation and accumulated impairment losses. are taken to the profit and loss account. if any. 5.4. 2008 have been accounted for under finance method. The unearned income i. assets underlying Ijarah financing have been carried at cost less accumulated depreciation and impairment. 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.e. as appropriate. The useful lives and amortisation method are reviewed and adjusted. so as to produce a constant rate of return on net investment in the Ijarah. An item of property and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. if any. and are shown under Islamic financing and related assets. the present value of minimum Ijarah payments have been recognised and shown under Islamic financing and related assets. Gains / losses on termination of Ijarah contracts are recognised as income on a receipt basis. Maintenance and normal repairs are charged to the profit and loss account as and when incurred. Diminishing Musharaka represents an asset in joint ownership whereby a partner promises to buy the equity share of the other partner until the title to the equity is totally transferred to him. Such intangible assets are amortised using the straight-line method over the estimated useful lives. if any. Gains and losses on disposal of property and equipment if any. Residual values.4. at each reporting date. the excess of aggregate Ijarah rentals over the cost of the asset and documentation charges under Ijarah facility is deferred and then amortised over the term of the Ijarah. Musharaka / Modaraba are different types of partnerships in business with distribution of profit in agreed ratio and distribution of loss in the ratio of capital invested. (b) 5. useful lives and depreciation methods are reviewed and adjusted. if any.2 to the financial statements. 5. Income on Ijarah is recognised from the date of delivery of the respective assets to the mustajir (lessee). at each reporting date. Under IFAS-2 method. 5.2 Capital work in progress These are stated at cost less accumulated impairment losses.1 Operating fixed assets and depreciation Property and equipment These are stated at cost less accumulated depreciation and accumulated impairment losses.3 Ijarah Financing Ijarah financing executed on or before December 31.Salam is a sale transaction where the seller undertakes to supply some specific goods to the buyer at a future date against an advance price fully paid on spot. Rentals accrued from Ijarah financing net of depreciation charged are taken to the profit and loss account. The partner using the asset pays the proportionate rental of such asset to the other partner (the Bank).3.4 5.

If the recoverable amount of an asset is estimated to be less than its carrying amount.4 Impairment At each reporting date. 2012. the Bank also records deferred tax asset on available tax losses. the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. The last valuation was conducted as on December 31. which is adjusted against related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of that asset. so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. Contributions to the fund are made on the basis of actuarial recommendations. 2001. the Bank reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. In addition. A reversal of an impairment loss is recognized as income immediately except for impairment loss on revalued assets which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of assets. The charge for current tax also includes adjustments.5. Recoverable amount is the greater of net selling price and value in use. together with adjustments for unrecognized actuarial gains or losses and past service costs. 5. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Where an impairment loss reverses subsequently. The defined benefit obligation is calculated periodically by an independent actuary using the projected unit credit method. If any such indication exists. the carrying amount of the asset is reduced to its recoverable amount.2 Deferred Deferred tax is recognised using the balance sheet liability method on all major temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and amounts used for taxation purposes. 5. Deferred tax is calculated using the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted by the reporting date. The Bank also recognises deferred tax asset / liability on deficit / surplus on revaluation of securities which is adjusted against the related deficit / surplus in accordance with the requirements of the International Accounting Standard 12 .4. Impairment loss is recognised as an expense immediately in the financial statements except for impairment loss on revalued assets. The carrying amount of the deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilised.Income Taxes. 5. 5. which arises from assessments / developments made during the year. after taking into consideration available tax credits.1 Staff retirement benefits Defined benefit plan The Bank operates an approved funded gratuity scheme for its permanent employees.6 5. Actuarial gains and losses are recognised as income or expense over the average remaining working lives of the employees.1 Taxation Current The provision for current taxation is based on taxable income for the year at current rates of taxation.Amortization on additions / deletions during the year is charged for the proportionate period for which the asset remained in use. is the present value of the defined benefit obligation at the statement of financial position date less the fair value of plan assets. rebates and tax losses as allowed under the seventh schedule to the Income Tax Ordinance. The liability recognised in the statement of financial position in respect of defined benefit gratuity fund.5.5 5.6. Software and other development costs are only capitalised to the extent that future economic benefits are expected to be derived by the Bank. the carrying amount of the asset is increased to the revised estimate of its recoverable amount. where considered necessary relating to prior years. 41 . if the net cumulative unrecognised actuarial gains or losses for the fund at the end of the previous financial year exceed 10% of the higher of defined benefit obligation and the fair value of the plan assets.

8 5.7.4 5. The same is then recognised as revenue on a time proportionate basis. The particular recognition methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with them. Any loss on derecognition of the financial assets and financial liabilities is taken to income directly.7. Fee on guarantees. Profit from Istisn’a is recorded on accrual basis commencing from the time of sale of goods till the realisation of proceeds by the Bank. excess of aggregate Ijarah rentals over the cost of the asset and documentation charges under Ijarah facility is deferred and then amortised over the term of the Ijarah.8.7. 5. Profit from Diminishing Musharaka. Gains and losses on sale of investments are included in the profit and loss account. 42 .7.7. 2009 is recognized in the profit and loss account over the term of the contract net of depreciation expense relating to the Ijarah assets. using the effective yield method. 5. or to realise the assets and to settle the liabilities simultaneously.7 5.6 5. is recognised over the period of guarantee. 5.1 Financial Instruments Financial assets and financial liabilities All financial assets and liabilities are recognised at the time when the Bank becomes a party to the contractual provisions of the instrument. Income and expense items of such assets and liabilities are also off-set and the net amount is reported in the financial statements. i. The Bank follows the finance method in recognising income on Ijarah contracts written upto December 31.e. due from financial institutions. Under this method the unearned income i. 5. profit on the portion of revenue not due for payment is deferred by accounting for unearned Murabaha income with a corresponding credit to deferred Murabaha income which is recorded as a liability. due to financial institutions. Financial assets carried on the statement of financial position includes cash and balances with treasury banks.5.6. Actual profit / loss on Musharaka and Modaraba financing is adjusted for declaration of profit by Musharaka partner / mudarib or at liquidation of Musharaka / Modaraba. Profit from Ijarah contracts entered on or after January 01. Equal monthly contributions are made both by the Bank and the employees at the rate of 10 % of the basic salary. Financial liabilities are derecognised when they are extinguished. cancelled or expired. Islamic financing and related assets and certain receivables and financial liabilities include bills payable. Where Sukuks (excluding held for trading securities) are purchased at a premium or discount. investments. Fee on issuance of letter of credit and acceptance is recognised on receipt basis as generally the transaction consummates within an accounting period. those premiums / discounts are amortised through the profit and loss account over the remaining maturity.e. Salam and Musawama are recognised on a time proportionate basis.10 Profit on Sukuks is recognised on an accrual basis. Dividend income is recognised when the right to receive the dividend is established. Financial assets are derecognised when the Bank loses control of the contractual rights that comprise the financial assets.1 Revenue recognition Profit from Murabaha is accounted for on consummation of Murabaha transaction. Gains / losses on termination of Ijarah contracts are recognised as income on a receipt basis.7. 5. The contributions made by the Bank are recognised as employee benefit expense when they are due. when the obligation specified in the contract is discharged.9 5.7 5. so as to produce a constant rate of return on net investment in the Ijarah. 2008.7.8. The Bank has no further payment obligations once the contributions have been paid. However.2 5.7. deposits and other payables. balances with other banks.2 Defined contribution plan The Bank operates a recognised contributory provident fund for all the permanent employees. Profit on classified financing is recognised on receipt basis.7.7. if considered material.3 5. Income on Ijarah is recognised from the date of delivery of the respective assets to the mustajir (lessee).8 5.2 Offsetting of financial instruments Financial assets and financial liabilities are off-set and the net amount is reported in the financial statements only when there is a legally enforceable right to set-off the recognised amount and the Bank intends either to settle on a net basis.5 Profit on Diminishing Musharaka is recognised on an accrual basis. Provisional profit of Musharaka / Modaraba financing is recognised on an accrual basis.

The resultant gains and losses are taken to profit and loss account currently.12 Provisions and contingent assets and liabilities Provisions are recognized when the Bank has a present legal or constructive obligation arising as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. In the case of equity futures. 5. Forward exchange promises are revalued using forward exchange rates applicable to their respective remaining maturities. Contingent assets are not recognised.14 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). Charge to the profit and loss account is stated net of expected recoveries.5. The Bank's primary format of reporting is based on business segments. Contingent liabilities are disclosed unless the probability of an outflow of resources embodying economic benefit is remote. Translation gains and losses Translation gains and losses are included in the profit and loss account. The financial statements are presented in Pakistani Rupees. 43 . Provisions for guarantee claims and other off balance sheet obligations are recognised when intimated and reasonable certainty exists for the Bank to settle the obligation.3 Derivatives Derivative financial instruments are recognised at fair value.11 Fiduciary assets Assets held in a fiduciary capacity are not treated as assets of the Bank in the financial statements.10 Acceptances Acceptances comprise promises by the Bank to pay bills of exchange drawn on customers. 5. Acceptances are accounted for as off balance sheet transactions and are disclosed as contingent liabilities.8.13 Deferred costs As allowed by SBP pre-operating / preliminary expenses are included in deferred costs and these are amortized over a maximum period of five years on straight line basis from the date of commencement of business. 5. 5. The Bank expects most acceptances to be simultaneously settled with the reimbursement from the customers. Commitments Commitments for outstanding forward foreign exchange contracts are disclosed at contracted rates. Monetary assets and liabilities in foreign currencies are translated into rupees at the exchange rates prevailing at the statement of financial position date. Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in rupee terms at the exchange rates ruling on the reporting date. which is the Bank's functional and presentation currency. 5. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimates.9 Foreign currencies Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the Bank operates. the fair value is calculated with reference to quoted market price. and are also not disclosed unless an inflow of economic benefits is probable. 5. Derivatives with positive market values (unrealised gains) are included in other receivables and derivatives with negative market values (unrealised losses) are included in other liabilities in the statement of financial position. which is subject to risks and rewards that are different from those of other segments. Foreign currency transactions Foreign currency transactions are translated into local currency at the exchange rates prevailing on the date of transaction.

These assets are disclosed in other assets as specified by the SBP. Commercial banking It includes project finance. Diluted EPS is determined by adjusting the profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.3 6. Basic EPS is calculated by dividing the profit attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the year. deposits and banking services offered to its retail customers and small and medium enterprises.8 5 7 .1 This represents Rs. The local currency current account is maintained with the State Bank of Pakistan (SBP) as per the requirements of Section 36 of the State Bank of Pakistan Act.184 million (2011: Rs. Ijarah.local currency current account . export finance.0 1 0 4.2 Geographical segment The Bank has 141 branches including 53 sub branches (2011: 102 branches including 32 sub branches) and operates only in Pakistan.local currency .828 7 8 4 .15 Assets acquired in satisfaction of claims Assets acquired in satisfaction of claim are stated at the lower of the financed amount and their market value at the time of acquisition.096.1 8 9 1 6 .2 6 . placements and islamic financing and related assets.2 9 6 167.0 0 5 5 0 .foreign currency With the State Bank of Pakistan in . 5.1 2 1 1 5 8 .2 2 8 8 0 .995 million) held against Cash Reserve Requirement and Statutory Liquidity Requirement.5. commodities.393 2 .850.foreign currency deposit accounts Cash Reserves Account Special Cash Reserve Account US Dollar Clearing Account With National Bank of Pakistan in .14.9 9 5 4 2 .6 1 0 4. 2. Support Centre It includes the assets and liabilities relating to support functions at Head Office and their related income and expenses. Note 6 CASH AND BALANCES WITH TREASURY BANKS In hand .16 Earnings per share The Bank presents basic and diluted earnings per share (EPS) for its shareholders. foreign exchanges.2.9 9 0 9 7 .064 6 . 5. guarantees and bills of exchange relating to its corporate customers. This section requires banking companies to maintain a local currency cash reserve in the current account opened with the SBP at a sum not less than such percentage of its time and demand liabilities in Pakistan as may be prescribed by SBP.1 8 4 6 7 .857.6 3 4 108. trade finance.local currency current account 2012 2011 ------.826 6.1 6 . The Bank carries out periodic valuation of these assets and any decline in their value below the recognized amount is charged to the profit and loss account.684.1 Business segments Trading and sales It includes equity.4 2 .707 8 3 5 . 1956.9 2 5 1 9 . if any. Retail banking It includes retail islamic financing and related assets. 44 . funding. own position securities. credit.8 5 0 .4 0 3 933.9 4 3 1.Rupees in '000 ------- 9 3 7 .938. 5.449 8 2 5 .14.

6.2

As per BSD Circular No. 15 dated June 21, 2008, cash reserve of 5% is required to be maintained with the State Bank of Pakistan on deposits held under the New Foreign Currency Accounts Scheme (FE-25 deposits). Special cash reserve of 6% is required to be maintained with SBP on FE-25 deposits as specified in BSD Circular No. 15 dated June 21, 2008. During the year this deposit was not remunerated (2011: Nil). This includes Rs.136.352 million (2011: Rs.70.883 million) held against Cash Reserve Requirement and Special Cash Reserves Requirement. The balance amount is available to the Bank for its operations. These deposits do not carry any return. Note 2012 2011 ------- Rupees in '000 -------

6.3

6.4

7

BALANCES WITH OTHER BANKS In Pakistan - on current accounts - o n d e p o s i t a c c o u n ts Outside Pakistan - on current accounts - o n d e p o s i t a c c o u n ts

7 .1

7 ,9 1 5 121 8,036 7 9 8 ,0 7 4 798,074 806,110

1 5 ,2 0 6 113 15,319 5 3 3 ,9 5 8 533,958 549,277

7.1

Represents deposits with various Islamic commercial banks under Musharaka and Modaraba arrangements with maturities less than 3 months. The expected profit rate on these arrangements is 6% (2011: 5 %) per annum. Note 2012 2011 ------- Rupees in '000 ------6 ,4 1 8 4 ,9 7 5 ,6 7 2 4,982,090 3 ,5 0 0 ,0 0 0 8,482,090 (6,418) 8,475,672 6 ,4 1 8 3 ,9 1 1 ,2 6 4 3,917,682 5 2 5 ,0 0 0 4,442,682 (6,418) 4,436,264

8

DUE FROM FINANCIAL INSTITUTIONS Sukuk Murabaha Commodity Murabaha - local currency Musharaka Placement Provision against Sukuk Murabaha 8 .1 8 .2 & 8 .3 8 .4 8.5 8 .1

8.1

The Bank entered into Sukuk Murabaha arrangement under which the Bank appointed its client as an agent under asset purchase agreements to purchase the underlying sukuk from the open market on its behalf and later sell them on deferred Murabaha basis. The maturity date of the deal was February 08, 2009. The Bank is making efforts to recover the outstanding balance and has made a provision against the outstanding amount. The Bank has entered into Commodity Murabaha agreements under which the Bank purchases an underlying commodity from the open market through an agent and sells it to a financial institution on credit with profit. The profit rates on the agreement range between 6.95% to 9.75% (2011: 10.75% to 12.5%) per annum and the agreements have a maturity ranging from 2 days to 63 days. 2012 2011 ------- Rupees in '000 -------

8.2

8.3

Commodity Murabaha sale price Purchase price Deferred Commodity Murabaha income Opening balance Deferred during the year Recognised during the year Commodity Murabaha Opening balance Sales during the year Received during the year

4 4 2 ,1 1 6 ,5 3 0 (441,486,000) 630,530

5 2 9 ,1 9 6 ,2 1 7 (5 2 8 , 4 6 6 , 0 0 0 ) 730,217

7 ,3 9 9 6 3 0 ,5 3 0 (6 0 4 , 7 8 4 ) 33,145

1 0 ,4 7 4 7 3 0 ,2 1 7 (733,292) 7,399

3 ,9 1 1 ,2 6 4 4 4 2 ,1 1 6 ,5 3 0 (441,052,122) 4,975,672

4 ,5 1 3 ,1 3 2 5 2 9 ,1 9 6 ,2 1 7 (529,798,085) 3,911,264

45

8.4

The Bank has entered into Musharaka arrangements under which the Bank contributes money with other financial institutions for profit and loss sharing based on predetermined ratio. The profit rates on these arrangements range between 9% to 9.5% (2011: 11.90%) per annum and the arrangements have a maturity ranging from 2 to 35 days. 2012 2011 ------- Rupees in '000 -------

8.5

Particulars of amounts due from financial institutions with respect to currencies: - In local currency - In foreign currency

8 ,4 8 2 ,0 9 0 8,482,090

4 ,4 4 2 ,6 8 2 4,442,682

9 9.1

INVESTMENTS Investments by types
Note ------------------2012-----------------------------------2011-----------------Held by Given as Total Held by Given as Total the Bank collateral the Bank collateral -------------------------------------------------- (Rupees in '000) -------------------------------------------------

Available for sale securities Sukuk / Certificates Units of Open-end mutual fund Units of Closed-end mutual fund Subsidiary Unlisted Company Total investments at cost Less: Provision for diminution in value of investments Investments - net of Provisions Surplus on revaluation of available-for-sale securities Total investments at market value 20 27,360 28,994,462 27,360 28,994,462 260,120 21,067,082 260,120 21,067,082 9.7 28,967,102 28,967,102 (15,000) 20,806,962 (15,000) 20,806,962 191,015 28,967,102 191,015 28,967,102 191,015 20,821,962 191,015 20,821,962 9.2 9.2 9.2 27,816,066 960,015 6 28,776,087 27,816,066 960,015 6 28,776,087 20,630,926 15 6 20,630,947 20,630,926 15 6 20,630,947

Note 9.2 Investments by segments Federal Government Securities GOP Ijarah Sukuks Sukuk certificates Sukuks - unlisted Fully paid up ordinary shares / Units Unlisted subsidiary company Units of Open-end Mutual Funds Units of Closed-end Mutual Funds Total investments at cost Less: Provision for diminution in value of investments Investments - net of provisions Surplus on revaluation of available-for-sale securities Total investments at market value

2012 2011 ------- Rupees in '000 -------

9.3

25,658,151

18,300,248

9.3

2,157,915

2,330,678

9.6 9.4 9.4

191,015 960,015 6 28,967,102 28,967,102 27,360 28,994,462

191,015 15 6 20,821,962 (15,000) 20,806,962 260,120 21,067,082

9.7

20

46

9.3

Available for sale securities Name of the investee company Sukuk Certificates Federal Government Ijarah GOP Sukuk - 3 Ijarah GOP Sukuk - 5 Ijarah GOP Sukuk - 6 Ijarah GOP Sukuk - 7 Ijarah GOP Sukuk - 8 Ijarah GOP Sukuk - 9 Ijarah GOP Sukuk - 10 Ijarah GOP Sukuk - 12 Ijarah GOP Sukuk - 11 Others First WAPDA Sukuk Second WAPDA Sukuk Pak Electron Sukuk Amtex Sukuk Engro Fertilizer Sukuk Security Leasing Sukuk Third Sitara Chemicals Sukuk Sitara Energy Sukuk - 1 Sitara Energy Sukuk - 2 New Allied Electronics (LG) - Sukuk Sui Southern Gas Company Sukuk Kohat Cement Sukuk Eden Housing Sukuk Optimus Sukuk HBFC Sukuk Note 2012 2011 Number of Certificates Face Value (Rupees) 2012 2011 Cost Cost --------- Rupees in '000 --------

9.3.1 9.3.2 9.3.3 9.3.4 9.3.5 9.3.6 9.3.7 9.3.8 9.3.9

58,550 25,000 31,500 22,500 36,250 25,750 25,000 30,000

20,000 50,000 25,000 30,500 22,500 35,000 -

100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000

5,890,393 2,518,702 3,184,701 2,271,420 3,661,790 2,575,663 2,525,452 3,030,030 25,658,151 557,562 128,571 221,250 323,105 3,691 3,333 55,000 600,000 30,984 107,750 104,169 22,500 2,157,915 27,816,066

2,000,000 5,000,000 2,500,000 3,050,000 2,250,248 3,500,000 18,300,248 299,737 668,903 128,571 221,250 322,511 4,219 16,667 6,247 4,028 55,000 168,000 95,310 156,900 145,835 37,500 2,330,678 20,630,926

9.3.10 9.3.11 9.3.12 9.3.13 9.3.14 9.3.15 9.3.16 9.3.17 9.3.18 9.3.19 9.3.20 9.3.21 9.3.22 9.3.23 9.3.24

134,000 60,000 59,000 65,000 2,000 8,000 11,000 120,000 27,000 50,000 50,000 15,000

60,000 134,000 60,000 59,000 65,000 2,000 8,000 6,000 4,000 11,000 84,000 27,000 50,000 50,000 15,000

5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000

9.3.1

The profit rate on these sukuks comprises of six months weighted average yield of market treasury bills. The principal is redeemable on maturity in March 2012. These are backed by Government of Pakistan’s Sovereign Guarantee. The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills. The principal is redeemable on maturity in November 2013. These are backed by Government of Pakistan’s Sovereign Guarantee. The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills. The principal is redeemable on maturity in December 2013. These are backed by Government of Pakistan’s Sovereign Guarantee. The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills. The principal is redeemable on maturity in March 2014. These are backed by Government of Pakistan’s Sovereign Guarantee. The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills. The principal is redeemable on maturity in May 2014. These are backed by Government of Pakistan’s Sovereign Guarantee. The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills. The principal is redeemable on maturity in December 2014. These are backed by Government of Pakistan’s Sovereign Guarantee. The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills. The principal is redeemable on maturity in March 2015. These are backed by Government of Pakistan’s Sovereign Guarantee.

9.3.2

9.3.3

9.3.4

9.3.5

9.3.6

9.3.7

47

9.3.8

The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills. The principal is redeemable on maturity in June 2015. These are backed by Government of Pakistan’s Sovereign Guarantee. The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills. The principal is redeemable on maturity in April 2015. These are backed by Government of Pakistan’s Sovereign Guarantee.

9.3.9

9.3.10 These carried profit at the rate of six months KIBOR plus 35 basis points (2011: six months KIBOR plus 35 basis points) receivable on semi-annual basis. The sukuk matured in October 2012 and the principal and profit were repaid on maturity. The purchase price and rentals were backed by Government of Pakistan’s Sovereign Guarantee. The Bank had purchased 10,000 certificates on June 25, 2009 of WAPDA – 1 Sukuk through a negotiated transaction for a cash consideration of Rs. 50.228 million having face value of Rs. 50 million. These certificates were available in the seller’s Central Depository Company (CDC) account and on completion of the transaction were transferred to the Bank’s CDC account. However, the periodic Ijarah Rental dues were not paid to the Bank on the plea that there exists certain discrepancy with respect to ownership of the asset. The amount has been reclassified to other assets. 9.3.11 These carry profit at the rate of six months KIBOR minus 25 basis points (2011: six months KIBOR minus 25 basis points) receivable on semi-annual basis with maturity in July 2017. The principal is repayable in 12 equal semiannual installments with first installment falling due in the 54th month from the first drawdown date. The issue amount and rentals are backed by Government of Pakistan’s Sovereign Guarantee. 9.3.12 These Sukuks have been restructured last year. These Sukuks carry profit at the rate of three months KIBOR plus 175 basis points (2011: three months KIBOR plus 175 basis points) receivable quarterly based on Diminishing Musharaka mechanism with maturity in September 2014. The outstanding principal will be redeemed in 6 equal quarterly installments starting from June 2013. 9.3.13 These carry profit at the rate of three months KIBOR plus 200 basis points (2011: three months KIBOR plus 200 basis points) receivable quarterly based on Diminishing Musharaka mechanism. The sukuks matured in October 2012. As per the terms, principal was due to be redeemed in 12 consecutive quarterly installments with the first such installment falling due not later than the end of 27 months from the last draw down. These Sukuk are backed by guarantee of Rs. 740 million from the Bank of Punjab. During 2010, Amtex defaulted in its principal repayment. Consequently, the Bank suspended the accrual of profit from the Sukuk. In 2011, the Bank called the guarantee provided by the Bank of Punjab. During the year, the guarantee expired however the legal advisor of the Bank is of the opinion that the amount will be recovered as the guarantee for the same had been called before its expiry. 9.3.14 These carry profit at the rate of six months KIBOR plus 150 basis points (2011: six months KIBOR plus 150 basis points) receivable semi annually based on Diminishing Musharaka mechanism with maturity in September 2015. Principal repayment to be made in two consecutive, equal semi annual installments, the first such installment falling due on the 90th month from the date of the first contribution under the facility. As a security first pari passu charge has been provided on all present and future fixed assets of the Company with margin. 9.3.15 These Sukuks have been further restructured w.e.f. March 2011. After restructuring these Sukuks carry profit at the rate of 0%, (2011: 6% (3% Cash + 3% accrual) upto September 2011 receivable monthly and thereafter at the rate of 1 month KIBOR upto maturity. The accrued profit amount to be repaid in six equal monthly installments staring from 43rd month. Principal to be repaid in 48 months starting from April 2010). As per the new restructured plan principal will be repaid in 36 monthly installments and the accrued portion of profit upto March 2011 has also been waived. However, the issuer was unable to comply with the above restructuring plan and has executed a revised restructuring plan which has been approved by the minority sukuk holders. Currently, the customer is making payments as per the restructuring plan approved by the minority sukuk holders. 9.3.16 These carry profit at the rate of three months KIBOR plus 100 basis points (2011: three months KIBOR plus 100 basis points) receivable quarterly based on Diminishing Musharaka mechanism with maturity in December 2012. The principal will be redeemed in 12 equal quarterly installments the first such installment falling due on the 27th month from the date of first draw down. As a security specific and exclusive hypothecation charge in respect of the Musharaka assets in favour of the investors to the extent of entire legal ownership rights of the company (covering the entire amount of Sukuk along with an 18.22% margin) is provided. There is an early purchase option available to the issuer after 2 years of disbursement with “No Early Payment Penalty”.

48

5% margin) and a charge over the mortgaged property of the company amounting to Rs. As a security first pari passu charge over all present and future fixed assets amounting to Rs. 9.18 These carry profit at the rate of six months KIBOR plus 195 basis points (2011: six months KIBOR plus 195 basis points) receivable semi-annually with maturity in July 2012. 800 million of the company.21 These sukuks have been restructured last year. The sukuk matured in December 2012 and the principal and profit was repaid on maturity. 2014) receivable quarterly based on Diminishing Musharaka mechanism with maturity in June 2014. 9.445 million (inclusive of approximately 33. As a security first charge over specific assets of the Company with 25% security margin has been provided. 9. The purchase price and rentals are backed by Government of Pakistan’s Sovereign Guarantee. 1.23 These carry profit at the rate of six months KIBOR plus 125 basis points (2011: six months KIBOR plus 125 basis points) receivable quarterly based on Diminishing Musharaka mechanism with maturity in April 2015. The principal will be redeemed in ten equal semi-annual installments commencing from the 6th month from the date of issue. 9.820 million (inclusive of 10% margin) has been created by the issuer in favour of the trustee. 2013 and June 29.9. 9. the first such installment falling due not later than the end of the 15th month from the last drawdown.3.3. These sukuks were restructured in 2010.3. no provision has been recognised by the Bank. the first such installment falling not later than the end of 30th month from the date of issue. The principal will be redeemed in ten equal semi-annual installments commencing from the 6th month from the date of issue. These Sukuks carry profit at the rate of three months KIBOR plus 150 basis points (2011: three months KIBOR plus 150 basis points) receivable quarterly based on Diminishing Musharaka mechanism with maturity in September 2016. Accordingly the principal redemption started from September 2010 till June 2014 and will be calculated using the percentage as mentioned in the “Restructuring Agreement”.24 These carry profit at the rate of six months KIBOR plus 100 basis points (2011: six months KIBOR plus 100 basis points) receivable semi annually and the first such profit payment will fall due after six months from the issue date with maturity in May 2014. As a security first charge over present and future assets of the company with 25% margin has been provided. The principal will be redeemed in 10 equal semi-annual installments starting from 18th month of the date of issue of Sukuk.22 These Sukuks carry profit at the rate of three months KIBOR plus 250 basis points upto June 29. As a security. 2014. principal to be redeemed with revised mechanism and profit for the first four quarters will go into a frozen account. An amount of Rs. 9. 250 million of the company (on market value to be established every year by approved valuator) and a 25% margin over the principal amount in the form of first floating charge on the company’s present and future current assets has been provided.3. As a security first pari passu charge over fixed assets of the company or equitable mortgage on selected land and building with 25% margin had been provided. The purchase price and rentals were backed by Government of Pakistan’s Sovereign Guarantee. 49 .3. As per the new “Restructuring Agreement”. 2013 and three months KIBOR plus 300 basis points for the period between June 30.17 These carry profit at the rate of six months KIBOR plus 195 basis points (2011: six months KIBOR plus 195 basis points) receivable semi-annually with maturity in July 2012.19 These carry profit at the rate of three months KIBOR plus 220 basis points (2011: three months KIBOR plus 220 basis points) receivable semi-annually with maturity in December 2012. which will be retired through payments made from the 13th quarter to the 20th quarter.3. As a security first charge over present and future assets of the company with 25% margin has been provided.3. (2011: three months KIBOR plus 250 basis points upto June 29.3. 2013 and three months KIBOR plus 300 basis points for the period between June 30. first specific charge on specified vehicles amounting to Rs. along with 25% margin and first ranking mortgage over all present and future immoveable properties of the Company with a 25% margin over the facility amount has been provided. Hence. As a security first ranking hypothecation charge over all present and future fixed assets of the company equivalent to the facility amount.20 These carry profit at the rate of three months KIBOR plus 20 basis points (2011: three months KIBOR plus 20 basis points) receivable on quarterly basis. 9. The customer has defaulted in its payments towards the Bank. 2013 and June 29. As a security first pari passu charge over fixed assets of the company or equitable mortgage on selected land and building with 25% margin had been provided. irrevocable guarantee of a Financial Institution and Personal Guarantee of sponsoring directors has been provided. 2. As a security charge over hypothecated assets amounting to Rs. 55 million has been deposited with the Bank over which lien in favour of the Bank has been marked. These carry profit at the rate of three months KIBOR plus 75 basis points receivable on quarterly basis. The principal will be repaid in 24 consecutive quarterly installments. The principal was to be repaid in 6 consecutive semi-annual installments.

389.5 Quality of Available for Sale Securities 2012 2011 Long / Medium Term Rating (Where available) Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated A D (SO) A Unrated A+ Unrated Unrated Default AAWithdrawn D A A Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated A D (SO) AA Unrated A+ Unrated Unrated Default AA Withdrawn D A A -----------.742 2.Sukuk Optimus .050 3.691 3.000 3.232 128.000 168.571 221.3 Ijarah GOP Sukuk .6 Ijarah GOP Sukuk .7 Ijarah GOP Sukuk .027.389.803.000 240.992.397.876.087 2.000 95.039 6 7 6 9 28 20.Sukuk House Building Finance Corporation .327 2.881 128.000 2.ended mutual funds Meezan Cash Fund Meezan Islamic Fund Meezan Islamic Income Fund ABL Islamic Income Fund UBL Islamic Sovereign Fund Askari Islamic Income Fund MCB Islamic Income Fund Closed end mutual funds Meezan Balanced Fund 2012 2011 Number of units 2012 2011 Cost (Rupees in '000) 5 5 5 15 6 21 2011 141 199 131 23.067 AA(f) MFR 5-Star A+(f) A+(f) AAAAA-(f) AM2 AA+(f) 5 Star A+(f) AM2 Less: Provision for diminution in the value of investments 50 .Sukuk Amtex Sukuk .015 6 960.Sukuk Sui Southern Gas Company Limited .563.183 240.067 (15.000 240.Sukuk Kohat Cement .11 WAPDA First Sukuk Certificates WAPDA Second Sukuk Certificates Pak Elektron Limited Sukuk .Third Sukuk Sitara Energy Limited .219 16.523.066 2.12 Ijarah GOP Sukuk .524.825 3.250 3.500 20.4 Details of investments in Mutual Funds Name of investee fund Open .307 240.5 Ijarah GOP Sukuk .Sukuk Units of open-end mutual funds (at market value) Meezan Cash Fund Meezan Islamic Fund Meezan Islamic Income Fund ABL Islamic Income Fund UBL Islamic Sovereign Fund Askari Islamic Income Fund MCB Islamic Income Fund Units of closed-end mutual funds (at market value) Meezan Balanced Fund 888 5.9.447 28.000 240.028 55.247 4.333 55.Rupees in '000 ------------ Sukuks / Certificates .900 145.512.335 2.000 960.447 2.169 22.179.000 1.000 3.250 323.891.105 3.757 28.610 2.984 107.750 104.802 2.603.667 6.310 156.231 12 960.10 Ijarah GOP Sukuk .Sukuk New Allied Electronics (LG) .Sukuk Eden Housing .000) 20.842.Sukuk Security Leasing .000 240.835 37.Sukuk Sitara Energy Limited .Sukuk Sitara Chemical Industries Limited .9 Ijarah GOP Sukuk .000 9.(at market value / cost) Ijarah GOP Sukuk .950 301.021 2012 1.272.571 221.123 128 166 115 - 5 5 5 240.410 672.655.897.300 560.000 600.500 27.8 Ijarah GOP Sukuk .803.250 322.000 30.690 7 10 7 240.055.962 2.891.600 5.280.Sukuk Engro Chemicals Pakistan Limited .017.125.511 4.

0 0 0 1 5 .Post Due Acceptance .000) Ordinary shares of Rs.580 6 6 1 .345 1 5 6 .1 0 (4 6 7 .4 1 0 .3 8 1 17.262 (360.0 0 0 (15.1.690 27.6 & 10.2 8 5 8 0 6 .000) 1 5 .10/. 10.433.1 9 2 4.Istisn'a financing and related assets .2 7 7 706.699.1 1 1 371.3 10.Available for sale securities 1 5 .920.156.459 (296. Zulfiqar Ali 8.7 1 0 .000.5 7 5 2 .000 9 .6 Details of investment in unlisted subsidiary BankIslami Modaraba Investments Limited Chief Executive Mr.202 5.General Financing and related assets – net of provisions 10.5 & 10.0 0 0 2012 2011 --------.Against Bills .Housing .8 10.291) 19.4 6 1 .7 Particular of provision for diminution in the value of investments Opening balance Charge for the year Reversal during the year Closing balance 9.878.676.954 7.933.434 19.6 3 7 180.015 Breakup value per share is based on the financial statements of the subsidiary for the half year ended December 31.681) (32. 0 0 2 ) (3 3 .9 5 0 6 .Others .682 2012 In Pakistan .389.4 5 2 5 3 .6 4 6 .602 6 .561.0 8 1 7.5 0 5 3 8 .1 1 Housing finance portfolio Net investment in Ijarah financing in Pakistan Ijarah financing under IFAS 2 and related assets Gross financing and related assets Less: Provision against non-performing Financing and related assets .797 25.2 4 7 7.100.Musawama . 2012.366 51 .2 5 0 .785 1 .each Breakup Value Per Share Cost 2012 2011 --------.665.8 7 0 .6 4 0 4 0 0 .Holding % 9.Financing to employees 10.11 10.000.Rupees in '000 --------- 10 ISLAMIC FINANCING AND RELATED ASSETS Note 2011 2010 Restated Restated --------------------Rupees in '000-------------------7.Rupees in '000 ---------- 100 1 8 .4 5 8 5 .202 6 .550.Musawama financing and related assets .7 1 8 9 .710 6 .Against Bills .701 1.Diminishing Musharka financing and related assets . 5 6 5 ) 27.3 4 3 .8 3 7 26.1 Particulars of provision in respect of type and segment Sukuk certificates .602 5.015 191.7 6 5 5 .037.358 701.3 2 1 1 .0 0 0 15.2 8 1 7.168 9 4 6 .677.591 1.894.676.2 & 10.613 8 0 9 .Murabaha financing and related assets .1 Murabaha financing and related assets Murabaha financing Advance against Murabaha financing 10.5 6 2 .565.Murabaha .3 0 0 .573.829 7.054.155 1 .7.760 5 1 1 .911 1 5 3 .1 1 2 6 5 .9 & 1 0 .1 1 0 .12.550.Sp e c i f i c .6 4 5 .Diminishing Musharka .1 1 5 .6 2 191.137. Note 9.972) 24.6 8 7 23.7 .000 (2011: 8.5 8 2 1 .3 9 7 1.699.3 5 5 .366 3.9 5 5 1 .523) (28.5 4 1 .

255.9 5 5 2 0 .4 4 3 5 .098 5 4 .0 0 0 2 .7 0 9 7 .920.9 5 4 1 7 .7 1 8 3 8 0 .1 6 8 3.1 10.573.8 9 4 .955 4 .7 1 0 (2 2 .1 0 6 .894.1 4 1 2 .3 6 2 .9 10.646.2 6 0 1.8 9 4 1.4 4 0 (807.596.250.9.561.4 2 7 .7 3 5 (6 3 2 .3 Diminishing Musharka financing and related assets Diminishing Musharka financing Advance against Diminishing Musharka financing 5 .4 4 1 .785 1 .054. 0 8 7 .285 10.5 3 2 1.8 2 9 1 9 .3 0 6 .8.100.137.797 647.015 million (2011: Rs 350 million) against Istisna under Islamic Export Refinance Scheme.461. 6 0 1 .2 Murabaha receivable Opening balance Sales during the year Received during the year 6 .122 8 1 .5 Ijarah financing under IFAS 2 and related assets Net book value of assets / investment in Ijarah under IFAS 2 Advance against Ijarah financing 10.2 4 5 25.8 7 0 .8 2 9 .8 2 9 .141 10.1 Deferred Murabaha income Opening balance Arising during the year Recognised during the year 1 2 5 .6 0 0 4.1 6 1 . 1 3 9 .878.7 7 8 1 8 0 .3 1 2 7 1 1 .9.580 1 .5 6 2 8 .829 52 .541.718 10.321 2012 6 .6 3 0 .870.2 Particulars of Islamic financing and related assets In local currency Short -Term ( for upto one year) Long.112 5 . 2012 2011 2010 ----------------------Rupees in '000---------------------Murabaha sale price Purchase price 2 0 .5 0 8 .5 0 8 .2 8 5 2 2 .2 8 0 .582 6 .8 10.785) 799.12.155 2 .796 2 2 1 .682 2 7 .1 2 2 7 9 9 .6 Murabaha financing and related assets includes financing amounting to Rs.6 8 2 1 4 .6 8 7 (1 5 .685) 116.7 1 0 (21.3 4 3 .7 10.9 8 6 8 . 0 4 0 ) 6.4 Musawama financing and related assets Musawama financing Advance against Musawama financing Musawama inventories 4 .8.0 0 0 1 .999 million) against Murabaha under Islamic Export Refinance Scheme.7 8 4 .5 2 6 .440 2 2 .2 2 5 (19.731) 844.5 9 6 5.1 8 9 .Rupees in '000 ------2 5 .708.241 million (2011: Rs 99.8 4 6 .998) 125.979 1 7 .4 4 1 .1 3 0 5.8 6 5 .339.2 Istisn'a financing and related assets Istisn'a financing Advance against Istisn'a financing Istisn'a inventories 2011 2010 Restated Restated --------------------------Rupees in '000----------------3 .1 4 1 8 4 4 .10.2 3 9 19.5 0 0 4 5 1 .3 3 4 6.434 10. 8 5 9 ) 6.2 6 7 27.057.690 1.9 7 9 (879.7 8 5 5. 1 1 7 .6 5 5 .Term ( for over one year) 2011 2010 Restated Restated ------. 8 7 3 ) 6.933.4 4 5 .265 8 0 .2 2 5 (2 0 .6 8 7 (1 7 .9 3 3 .168 2012 10.343. 9 5 2 ) 711. 138.877 1 6 0 .4 7 1 1 7 .0 0 0 5.0 5 4 .6 3 7 . Istisna financing and related assets amounting to Rs.8 8 4 1 6 0 .735 10.1 1 0 . 9 6 8 .760 - 10.3 3 6 701.954 1 9 .156.9 8 0 5 5 7 .1 1.1 8 0 . 9 0 6 ) 160.

851 253.586 1.518) 239.215 77.331 116.204 151.12 Net investment in Ijarah financing .195 896.181 (17.391 524.320 72.008 916.174) 180.440 1.796 20-33.IFAS 2 2012 Not later than one year Later than one and Over five less then years five years Not later than one year 2011 Later than one and Over five less then years five years Total Total -------------------------------------------------------.765 (33.584 1. 2011 ` Book Rate of value as at As at Depreciation Charge / December December % (deletions) 31.204 388.636 (150.383 87.052 399. 2012 --------------------------------------------------. 2012 Book Rate of value as at As at Depreciation Charge / December December % (deletions) 31.057.628 10.486) 197.656) 174.944.854 (12.714 106.908 (141.259 67.198 207. 2011 --------------------------------------------------.584 (15.1 Ijarah Assets 2012 Accumulated depreciation As at January 01.620 119.33 20-33.643 1.084 790.544 (292.445 213.591 71.332 141.622 668.142) 371.701 10.765 (67. 2011 2011 Accumulated depreciation As at January 01.11 Total Total -------------------------------------------------------.469 (101.929) 758.929) 29.502 186.764 227.354 63.10. Net investment in Ijarah financing in Pakistan 2012 Not later than one year Later than one and Over five less then years five years Not later than one year 2011 Later than one and Over five less then years five years 10.490 162.304.212 1.386 896.083 1.503 278.405 1.33 Cost As at January 01.365) 135.817 763.425 1.Rupees in '000 ---------------------------------------------------------Ijarah rentals receivable Residual value Minimum Ijarah payments Profit for future periods Present value of minimum Ijarah payments 73.849) 59.489 797.440 363.469 107.440 363.006 million (2011: Rs 2.386 415.806 (82. 2012 31.420.748 275.274 million) markup free financing to employees advanced under the Bank's Human Resource Policy.083 (101.696 604.33 53 .989 (56.451) 255.352 115.(Rupees in '000) -----------------------------------------Plant and Machinery Vehicles 524.10 This includes Rs 2.381 149.230 136. 2011 31.600) 816.941 (9.812 343.265 20-33.064.463. 2011 As at Addition / December (deletions) 31.995 582.(Rupees in '000) -----------------------------------------Plant and Machinery Vehicles 180.339.571 (150.509) 391.Rupees in '000 ---------------------------------------------------------Ijarah rentals receivable 514.765) 709.764 227.560 (9. 2012 Cost As at January 01.451) 135.843 (69.420.33 20-33.353 440.015 480.12.027) 205.138 46.966 9.325) 121. 2012 As at Addition / December (deletions) 31.

002 33.171 318.956 660.523 1.890 408.205.816 848 357.072) (9.495 296.523 389.047 53.226 296.350 283.816 848 357.049 11.008 8.Rupees in '000 ------------------------------------------------------------89.681 296.967 1.890 408.570 52. 10.473) 75.047 5.14.1 The Bank has maintained a general reserve (provision) in accordance with the applicable requirements of the Prudential Regulations for Consumer Financing issued by SBP and for potential losses on financing.523 360.956 660.084 797.291 32.628 (76.101 71.781 2.072 500.323 296.567 360.816 848 357.002 560 57.648 (79.972 140.495 134.319) (3.687 328.002 28. 1.10.681 5.440 (23.593 4.567 296.552 467.008 8.847 (23.972 328.552 467.008 8.205.049 2.523 1.681 32.084 797.101 million) which have been placed under non-performing status as follows: 2012 Classified financing and related Provision Required Provision Held assets Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total -----------------------------------------------------------.786) 63.205.461 32.323 296.222 million (2011: Rs.570 52.323 296.291 249.523 1.859 360.593 33.368) 106.648 698.681 5.928 69.972 28.643 838.859 360.681 18.648 698.101 1.628 (80.521 553.681 140.565 389.2 Particulars of provision against non-performing Islamic financing and related assets: 2011 (Restated) 2010 (Restated) 2012 Specific General Total Specific General Total Specific General Total --------------------------------------------------------(Rupees in '000)-------------------------------------------------------In local currency In foreign currency 467.002 560 57.890 408.424) 86.002 Category of Classification Substandard Doubtful Loss Category of Classification 2011 (Restated) Classified financing and related Provision Required Provision Held assets Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total -----------------------------------------------------------.967 1.972 389.552 467.323 296.810 67.565 500.859 360.523 28.859 360.523 32.810 67.972 10.816 848 357.13 Islamic financing and related assets include Rs.523 Substandard Doubtful Loss Category of Classification 2010 (Restated) Classified financing and related Provision Required Provision Held assets Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total -----------------------------------------------------(Rupees in '000)----------------------------------------------------53.643 838.14.291 (3.368) 111.521 553.222 89.495 389.479 467.681 5.222 560 57.008 8.Rupees in '000 ------------------------------------------------------------71.495 230.105) 60.890 408.523 129.002 467. 838.350 283.972 328.565 33.842 360.599 (79.552 467.14 Particulars of provision against non-performing Islamic financing and related assets: 2010 (Restated) 2012 2011 (Restated) Specific General Total Specific General Total Specific General Total -----------------------------------------------------(Rupees in '000)----------------------------------------------------Opening balance Charge for the year Reversals Transferred during the year Closing balance 360.002 560 57.072) (7.350 283.709 71.681 Substandard Doubtful Loss 10.319) 28.567 500.972 4.171 318.291 328.972 54 .350 283.

75%. 100. is not available for distribution as cash and stock dividend to share holders. 2 dated January 27.6 8 7 11 OPERATING FIXED ASSETS Capital work-in-progress Property and equipment In ta n g i b l e a s s e ts 1 1 . 175 million disbursed to Agritech Limited. March 31.913. BPRD / BRD .3 2 3 .360 55 .10.5 5 0 4 7 .8 1 3 4 0 0 . The Bank has already recorded provision amounting to Rs. 2012 in accordance with the requirements of the Prudential Regulations of the State Bank of Pakistan against Gulshan Weaving Mills Limited amounted to Rs. BPRD / BRD .14. 2013 has provided relaxation to the Bank. 2013.732.360 1. the specific provision against non-performing financing and related assets would have been higher and consequently profit before taxation and Islamic financing and related assets (net of provisions) as at December 31. September 30.2 1 1 . the Bank has availed the benefit of Forced Sales Value (FSV) of collaterals against the non-performing financing.1 Capital work-in-progress Equipment Advances to suppliers and contractors 78 2 3 . 2009 issued by the State Bank of Pakistan. However. due to availing of the benefit.5 8 0 3 . June 30. the Bank has maintained total provision of Rs.5 million. March 31.49 million.6 8 7 2 6 9 . executives or officers of the Bank Financing due by directors. 2013 has provided relaxation to the Bank.3 8 1 2 0 2 . 2013 and December 31.2 5 2 1 . 2012. 2013. whereby the Bank is allowed to recognise provision in a phased manner against outstanding exposure and maintain at least 25%. June 30. 50%. 2013. 2012. 2012 amounts to Rs 79 million (2011: Rs 231 million). 75%.15 Particulars of financing to directors. the State Bank of Pakistan vide its letter no. and 100% of the required provision as at December 31. 2013. 25%.14.2.638 73.7 8 0 5. subject to the condition that the provision already recorded before relaxation shall not be reversed. 10. 2012 would have been lower by approximately Rs 23 million (2011: 68 million). 50%. 2012 in accordance with the requirements of the Prudential Regulations of the State Bank of Pakistan against Agritech Limited amounted to Rs 87. the State Bank of Pakistan vide its letter no.04 / Faysal / 2013 / 1695 dated February 13.478) 6 6 1 .6 0 4 (119. However. 43. Note 10.252 1 .630 1.783) 5 1 1 .497 million in respect of outstanding exposure of Gulshan Weaving Mills Limited. 12.1 1 1 .2.1 In accordance with BSD Circular No.2.106 5. The accumulated benefit availed as at December 31. 2013.98 million disbursed to Gulshan Weaving Mills Limited. executives or officers of the bank or any of them either severally or jointly with any other persons Balance at beginning of year Financing granted during the year Repayments Balance at end of year 2012 2011 --------Rupees in '000-------- 5 1 1 .8 4 2 .628 11. The required provision as at December 31. 2013 and September 30.75 million in respect of outstanding exposure of Agritech Limited as at September 30.(Policy) / 2013-1857 dated February 15. 2012. The required provision as at December 31. the Bank has recorded total provision of Rs.1 7 4 23.3 The non performing Islamic financing and related assets include Rs. Had the benefit of FSV not been availed by the Bank. The increase in profit.14. 43.3 0 4 1. whereby the Bank is allowed to recognise provision in a phased manner against outstanding exposure and maintain at least 10%.2 The non performing Islamic financing and related assets include Rs.0 8 9 (90.75 million in respect of outstanding exposure of Agritech Limited. and 100% of the required provision as at December 31. Therefore. 10.811. 50. Following relaxation provided by the SBP.

398.084. (disposals) / 2012 adjustments ---------------------------------------------------Rupees in '000 --------------------------------------------------- Freehold Land 275.540) 4.360 310.367 6.474 889.241.128 - 45.550 COST As at Additions/ January 01.070 621.495 1.472 6.631 20 2. 2012 Charge for As at the year / January 01.455 25 Vehicles 50.356) 1.128 - 45.074 728. 2012 Rate of Depreciation % COST Additions/ As at January 01.294 196.577 (5.209 (12.659 (10. 2011 Net book value as at December 31.407) - - 275. 2010 2011 DEPRECIATION Charge for As at the year / January 01.024 10 Electrical.131 (257) (6.830 1.323) 68.074 228.893) 1.031 907.294 488.1 Details of property and equipment disposed-off The details of property and equipment disposed-off during the year are disclosed in 'Annexure I' 56 .296) 1.148 1.367 25.520) - 275.132.825) 5.638 11.496 3.475 (56) 185.214) - 1.586 (1.091) 83.823 269.731) 275.776 (1.875) 199.643 672. (disposals) / 2012 adjustments As at December 31.397 5 Furniture and fixture 777.171 (55) (6.842.825.891 (23.839 818.950 (1.000 266.529 (42.957 5 Furniture and fixture 770.031 913.818 10.467 10 Electrical.094 269.745 1.602) (628) 845.032 (21.732.759 678.150 2.031 138.657 672.2.839 216.128 - Building on lease hold land 913. (disposals) / 2011 adjustments As at December 31. 2011 Rate of Depreciation % ---------------------------------------------------Rupees in '000 --------------------------------------------------- Freehold Land 275.422 184.242 349.520) (8.174 (5.609 83.695 69 (40.865.158 777.174 25 Vehicles 10.132.242 508.768) - - 275.827 20 2.891 288.310 830 (6.128 14.446) 157.11.736 2. office and computer equipment 889.487) (11.2 Property and equipment 2012 DEPRECIATION As at December 31.709 970. office and computer equipment 816.652 76.529 396.865.390) 3.128 - Building on lease hold land 913.156 184.060) (7.501 (5.294 (20) (3.128 (5.709 192.925) 4.736 3. (disposals) / 2011 adjustments As at December 31. 2012 Net book value as at December 31.

575.11.062 million).304 20 2011 COST AMORTISATION Charge for As at the year / January 01.8 6 0 1 4 6 .Rupees in ‘000 ------------------------------------------------- Computer software 170. (disposals) / 2012 adjustments As at December 31. 5 7 5 ) (91.Rupees in ‘000 ------------------------------------------------- Computer software 148.569 million) in respect of tax losses as at December 31.429) (9.545) 86.319) (219.630 20 11.1 1 5 9 .25.9 9 9 1 1 8 .130 12.421 67. (disposals) / adjustments 2011 As at December 31. potential provision against assets and branch expansion plan. as at December 31.973 4 0 1 .1 The Bank has an aggregate amount of Rs.5 9 2 66 306.044 - 170.775 million (2011: Rs 244. product mix of financing. 2011 As at December 31. (disposals) / 2011 adjustments Net book value as at December 31. as at December 31.539 (14. 2012 Rate of amortization % As at Additions / January 01.999 million) on the entire available losses. Based on this assessment the management has recognised deferred tax debit balance amounting to Rs. growth of deposits and financing. The cost of fully amortised intangible assets that are still in the Bank’s use.4 3 3 525.747 (2 4 6 .347 million (2011: 16.718 47. amounted to Rs.74 million (2011: Rs. 2012.042) (337.4 Cost of fully depreciated properties and equipment that are still in the Bank’s use.938) 168. 1. The amount of this benefit has been determined based on the projected financial statements for the future periods. investment returns. 401.Rupees in '000 ---- 12 DEFERRED TAX ASSETS Deferred tax debits arising in respect of: Ac c u m u l a t e d t a x l o s s e s Tax credit against minimum tax paid Provision against non-performing financing and related assets Ijarah financing and related assets Deferred tax credits arising due to: Ijarah financing and related assets Accelerated tax depreciation Surplus on revaluation of investment 1 2 . 2012.518 (27.022 96.617) 188. Any significant change in the key assumptions may have an effect on the realisibility of the deferred tax asset.791 73. kibor rates.705 - 96.791 24.797) (182. deposit composition. 2011 ------------------------------------------------. The determination of future taxable profit is most sensitive to certain key assumptions such as cost to income ratio of the Bank. (disposals) / 2012 adjustments Net book value as at December 31.7 5 3 3 .148. 456.377 22.5 6 2 1 . 2012 As at December 31. 2012 amounted to Rs. 57 .3 Intangible assets 2012 COST AMORTISATION Charge for As at the year / January 01.164 million). The management carries out periodic assessment to assess the benefit of these losses as the Bank would be able to set off the profit earned in future years against these carry forward losses. Note 2012 2011 ---.421 12.048 (121) 120.860 million (2011: Rs. 2011 Rate of amortization % Additions / As at January 01. 159.086 29. 2012 ------------------------------------------------.

5% per annum (2011: 10% per annum) and are secured against collateral.2 Deferred costs Opening balance Less: Amortised during the year Closing balance 13.3 1 9 104.621.984) 1 .5 2 8 1 1 .086) 2 0 .1 8 8 1.6 4 8 6 4 3 .851 9 .1 6 4 4 .062 8 .1. This carries profit rate of 8.Rupees in '000 --------- 14 BILLS PAYABLE I n Pa k i s t a n Outside Pakistan 1 .4 1 5 8 0 0 .2 5 1 .0 0 0 1.251.853 15 DUE TO FINANCIAL INSTITUTIONS In Pakistan Outside Pakistan 1.0 8 6 (4.621.410 1 .410 2 .7 3 8 1 1 .7 3 8 9 6 2 .7 6 9 85.415 1.2 3 4 5 0 .0 1 0 1.528) 1 .2 9 .415 800.3 8 5 5 0 . 58 .Rupees in '000 -------------------Restated Restated 1 .5 2 8 2 4 .454.621.4 7 3 5 0 .754) 3 0 .Note 13 OTHER ASSETS Profit / return accrued in local currency Profit / return accrued in foreign currency Advances.6 8 6 308.0 9 6 13.1 6 9 (16.3 .1 . advance rent and other prepayments Advance taxation (payments less provision) Non-banking assets acquired in satisfaction of claims Branch adjustment account Unrealised gain on forward foreign exchange promises Deferred costs Banca takaful Income receivable Insurance claim receivable Car Ijarah repossession Receivable against First W APDA Sukuk Other receivables Less: Provision held against other assets Other assets (net of provisions) 13.2 1 0 3 5 .0 0 0 .9 8 4 Note 1 1 .2 2 7 7 .3 The market value of Non-Banking assets acquired in satisfaction of claims is Rs 344.9 1 8 308.0 8 6 13.1 2012 2011 2010 --------------------.8 8 1 1 .000 800.3 Provision held against other assets Opening balance Charge for the year Reversals Closing balance 3 5 .5 2 8 2012 2011 ---------. 2012 2011 2010 --------------------.1.0 0 0 1 5 .1 5 1 .1 .8 5 3 798. These carry expected profit rate ranging from 8.934 million (2011: Rs 317.1 1 3 .624 (11.2 1 .1 6 2 1 .0 4 5 .618.410 3 9 .0 0 0 3 0 . deposits.3 9 9 2 .0 9 2 1 7 .083) 4 .738) 1 .812 million).386 (35.412 1 5 . 15.2 Represents Wakala acceptance by the Bank Alfalah Limited (Islamic Banking Branches).Rupees in '000 -------------------Restated Restated 4 .4 7 9 1.722 (30.8 8 8 600 1 5 .415 800.1 0 1 3 .95% per annum (2011: Nil).5 2 6 308.6 3 9 1 .1 8 4 1.1 Details of due to financial institutions secured / unsecured Secured Borrowings from State Bank of Pakistan under Islamic Export Refinance Scheme Unsecured Call borrowings 1 5 .7 3 8 (4.5 8 7 .4 1 8 .010 7 9 8 .0 0 9 31 148.000 15.0 8 6 1 2 .000 15.1 Represents Musharaka contributions by the State Bank of Pakistan against Islamic Export Refinance Scheme.162.

1 5 1 1 0 7 .0 0 0 500 8.1 8 6 .1 0 1 .574.0 0 0 1 .175 1 .0 0 0 800.1 8 .0 0 0 1 .0 0 0 1 .785 1 0 .5 1 7 3 4 .185 1 .1.1 2 2 7 .621.0 0 0 1 .0 0 0 1 .8 8 7 64.485 2 4 .6 0 8 409 2 .2 9 3 .3 6 5 1 1 6 .1 Charity in excess of Rs 100.9 24 .2 3 9 .435 1 .6 6 6 1 3 .666 5.0 2 7 1 4 .038 9.8 6 7 6 9 .2 5 4 723 1 .1 9 7 2 2 .1 17.8 .717.8 7 7 3 3 .3 2 5 1 4 2 .6 7 4 1 .0 0 0 1 .1 9 7 5 1 8 .0 0 0 1 .185) 1 0 .6 2 1 .0 0 0 1 .5 5 6 1 1 .1 5 7 3 .6 7 7 3 .7 4 7 17.6 5 7 1 2 5 .747 12.2 2 8 2 6 .2 5 7 .0 3 2 4 8 4 .Note 15.500 17.6 2 8 9 7 .5 4 1 .500) 5 .785 6 2 .3 7 8 1 0 .2 7 0 48.806 (8.9 7 6 .0 0 0 2 .1.4 1 5 1.1 Opening balance Additions during the year Payments during the year Closing balance 17.0 0 0 185 8.8 9 4 50.0 3 8 29 1 .1.Commodity Murabaha Payable to defined benefit plan Payable to defined contribution plan Unearned rent Security deposits against ijarah Branch adjustment account Sundry creditors Charity payable Retention money W ithholding tax payable W W F payable Others 2012 2011 ---------.341.1 8 0 1 1 7 .0 0 0 1 .568.non-remunerative Margin accounts – non-remunerative Financial Institutions Remunerative deposits Non-remunerative deposits 16.2 0 9 4 3 4 .2 3 3 2 .000 3 0 . 59 .8 1 1 64.2 Particulars of due to financial institutions with respect to currencies In local currency In foreign currencies 16 DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Savings deposits Current accounts .1 Particulars of deposits In local currency In foreign currencies 17 OTHER LIABILITIES Profit / return payable in local currency Profit / return payable in foreign currencies Unearned fees and commission Accrued expenses Deferred Murabaha Income .3 9 9 241 879 1 .0 9 0 .5 2 4 .3 8 7 50.3 9 8 6 4 4 .6 2 3 1.000 was paid to the following: Alamgir W elfare Trust International The Citizen Foundation The Indus Hospital The Memon Medical Akhuwat Charity Jamiat Taleem Ul Quran Mrs Saba Zulfiqar Shoukat Khanum Memorial Kharadar General Hospital Bait Ul Sukoon Dining Chairs to Juvenile Prisoners 1 .2 5 0 1 0 .3 7 5 1 .2 Charity was not paid to any staff of the Bank or to any individual / organisation in which a director or his spouse had any interest at any time during the year.Rupees in '000 --------1 .3 9 6 4 6 .7 4 7 7 .216.1 4 5 2 .0 0 0 1 .7 1 6 4 6 .4 4 7 1.0 0 0 2 .485 4 9 .997.635 (8.4 3 2 5 .6 5 8 2 1 .2 7 8 1 .216.Financing and IERS Deferred Murabaha Income .1 6 3 4 .3 0 7 62.415 8 0 0 .4 9 4 .9 1 4 1 4 6 .441 4.568.3 32 1 7 .

6 7 9 5 .Rupees in '000 ------13.0 7 8 1 5 6 .9 6 7 .1 20 20.078 20.9 7 8 4 3 260. bid bonds.2 7 9 .2 7 9 .9 6 7 .300. 2012.000. 2013 to comply with the future and prevailing regulatory capital requirements.319) 18.6 7 9 18.8 9 8 5 2 7 .000.8 9 8 52 7 .Units of Open end Mutual Funds . subscribed and paid-up capital (free of losses) of Rs. Note RESERVES Statutory Reserves 1 9 . 0 4 2 ) 169.Number of Shares ------1. 2011.041 2 5 6 .360 (9. 9 6 7 .9 6 7 .1 3 5 3 .1 2012 2011 ------. 9 billion by December 31. BSD/BAI3/608/2773/2011 dated March 7.000 18.2 to these financial statements the SBP vide its letter no.net of tax Opening balance Reversals during the year Closing balance Net Surplus / (Deficit) arising during the year 1 6 9 .1 SHARE CAPITAL Authorised capital 2012 2011 ------. 5.000 1.000.10 each 2012 2011 ------.Sukuks unlisted Fully paid up ordinary shares / Units .280 billion at December 31.1 0 5 1. an amount of not less than 10% of the profit is required to be transferred to such reserve fund.Others 1 2 7 .5 1 1 . 10 each Fu l l y p a i d i n c a s h 2012 2011 ------. The SBP vide its letter No.639.Number of Shares ------5 2 7 . the Bank has been advised by SBP to submit concrete time bound capital plan by March 31.2 Surplus on revaluation of available for sale securities .Ijara Sukuk Bonds Sukuk certificates .0 2 4 1 8 . 7 dated April 2009 had revised the Minimum Capital Requirement (MCR) for banks.2 7 9 . The paid-up capital (free of losses) of the Bank amounted to Rs.1 8 0 . etc.6 7 0 730 5 27.9 8 7 3 2 . subscribed and paid up capital 2012 2011 ------.665 1 4 1 . 2013. 1962 an amount of not less than 20% of the profit is to be transferred to create a reserve fund till such time the reserve fund and the share premium account equal the amount of the paid up capital. 2012 and is required to raise it to Rs.2 7 9 .1 CONTINGENCIES AND COMMITMENTS Transaction-related contingent liabilities Contingent liabilities in respect of performance bonds. given favoring . 2011 had given extension to the Bank in timeline for meeting MCR (free of losses) amounting to Rs 6 billion till June 30. BPRD/CSD/2407/13 dated March 1.2 2 1 19 19.6 9 6 21 21.Units of Closed end Mutual Funds Related deferred tax liability 2 3 .1 Under section 21 of the Banking Companies Ordinance.300.321.Government .000 13. As more fully explained in note 1. 8 9 8 5 2 7 .18 18.0 4 1 4 .Rupees in '000 ------5 .Rupees in '000 ------SURPLUS ON REVALUATION OF ASSETS Surplus on revaluation of available for sale securities Federal Government Securities .000 Ordinary shares of Rs.3 8 2 1 6 9 .120 (9 1 .Rupees in '000 ------1 7 3 .000. 10 billion by December 31.6 7 9 5 . Moreover.3 9 2 9 1 .9 5 5 2 .7 9 7 1 .6 7 9 5 .0 4 0 1 .145 60 . 2012 2011 ------.0 7 8 1 3 6 . 2013 has further extended the timeline for meeting paid up capital (free of losses) of Rs 6 billion by March 31. 2013.3 The State Bank of Pakistan through its BSD Circular No.8 9 8 Ordinary shares of Rs.2 Issued.8 6 8 1. warranties. As per the circular the Bank was required to have a minimum issued. Thereafter.

575 244.154 23 PROFIT / RETURN EXPENSED Deposits Other short term fund generation Others 3 .Fi n a n c i a l i n s ti tu ti o n s On investments in available for sale securities On deposits / placements with financial institutions Others 2 .5 7 4 1 2 7 .8 Other commitments Bills for collection 22 PROFIT / RETURN EARNED On financing to: .975.1 9 0 .6 3 7 .4 7 9 5.4 The Deputy Commissioner Inland Revenue (DCIR) has passed certain assessment orders against the bank vide letter no 06/97/2012.4 9 5 4 6 .883 9 3 .590 1 .2 Trade-related contingent liabilities Import letter of Credit Ac c e p t a n c e s 4 .7 Commitments for the acquisition of operating fixed assets Commitments in respect of financing facilities The Bank makes commitments to extend financing 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. pending in the High Court.506.6 6 7 5 5 .596 21. 21.3.8 1 1 .1 1 4 . which the Bank has not acknowledged as debt 846.690 2 .5 Commitments in respect of promises Purchases Sa l e s 2012 2011 ------.8 2 3 2 3 5 . all dated September 25.883.6 0 7 4.6 8 1 3.4 8 3 6 4 . wherein aggregate demand of federal excise duty of Rs.Rupees in '000 ------276.264.502.3 0 7 2 4 .3 0 4 5.8 5 1 1 5 .Rupees in '000 ------4 5 9 . The stay applications were heard on February 23.631 2 .284. cases where Bank was proforma defendant for defending its interest in the underlying collateral kept by it at the time of financing.8 6 1 128.8 3 7 2.2012 2011 ------.0 2 7 3. 69. 07/97/2012 and 08/97/2012.0 2 4 1 8 .677.391 842.5 4 6 .8 8 9 2 1 .9 8 7 3. 2012 under Section 33 of the Federal Excise Duty Act 2005.1 These mainly represents counter claims filed by the borrowers for restricting the Bank for disposal of assets (such as mortgaged / pledged assets kept as security).052 21.9 5 0 6 2 6 . 2012 2011 ------. 21.961.3 9 5 .355 61 . 2013.6 7 7 5 6 2 .7 2 5 .000 was raised against the Bank mainly in respect of income from dealing in foreign currencies and certain dispute regarding deposit of the amount amongst Federal and Provincial government.431. The Bank has duly filed appeals for stay of the above demand before the Appellate Tribunal Inland Revenue (ATIR) after the assessment orders were confirmed by the Commissioner Inland Revenue (Appeals).9 1 3 4.6 21. The ATIR has accepted the stay application of the Bank and has verbally directed that no recovery of demand should be initiated against the bank till the decision of the main case by the ATIR.Customers .Rupees in '000 ------21.3 Suit filed by customers for recovery of alleged losses suffered.779 21.6 6 3 7 3 8 .6 6 4 .1 3 6 9 .707 21.1 9 7 2 0 9 .306 2 .965 2 .2 2 9 1.

electricity.3 2 5 8 3 .5 7 7 1 5 .7 4 5 3 3 .892 - 2 6 .7 0 3 250 8 0 . and other benefits Charge for defined benefit plan Contribution to defined contribution plan Non-executive directors' fees.2 4 9 8 4 .1 2 0 5 . 19.9 2 7 4 .9 1 3 1 . Legal and professional charges Communications Repairs and maintenance Stationery and printing Advertisement and publicity Auditors' remuneration Depreciation Amortisation CDC and share registrar services Entertainment expense Security service charges Brokerage and commission Travelling and conveyance Remuneration to Shariah Board Fees and subscription Vehicle running and maintenance Others 26.233 1 .271.5 4 6 1 9 .844 8 .7 3 7 3 1 0 .2 2 6 .3 During the year.0 7 6 2 1 . taxes.7 0 0 1 3 .2 6 8 1 0 .6 5 4 1 .292 million).3 3 4 3 1 2 .9 0 0 600 900 833 4.1 0 6 4 2 3 .9 3 4 258 219.9 5 6 1 0 .139.7 7 3 250 7 8 .3 5 2 1 5 0 .1 2 8 2 5 .2 7 0 4 .1 3 3 1 8 .5 3 6 9 .705 4.1 0 3 3 3 . Securities: Sukuk Certificates Unlisted Securities: Mutual funds Listed Securities: Shares 26 ADMINISTRATIVE EXPENSES Salaries.0 9 7 4 . 10.4 7 6 6 7 . The amount under LSA relating to Key Management Personnel of the Bank amounted to Rs.336 1 1 .5 5 0 3 5 .0 0 5 3 8 .927 29. allowances.1 8 8 6 6 .791 26.642 7 8 7 . insurance.2 .3 32 33 2012 2011 ------.7 4 9 2.110 million (2011: Rs.4 0 9 5 1 .9 4 4 2 6 . Only those employees were eligible for LSA who fulfilled time based condition. the Bank has paid Long Service Award (LSA) to eligible employees.927 23.Rupees in '000 ------6 .0 7 2 6 0 .2 5 5 2 3 .5 6 6 1 .4 8 5 1 2 .7 9 1 3 .7 5 1 8 3 . etc.1 Auditors' remuneration Audit fee Fee for the review of half yearly financial statements Special certifications and sundry advisory services Tax services Out-of-pocket expenses 26.128 1 .2 7 2 4 .3 7 4 31.737 23.5 5 0 3 1 .9 9 4 2 4 .6 9 9 39.2 Amortisation Intangible assets Deferred cost 11.2 3 3 2 7 6 .6 2 1 2 8 .5 7 4 5 .2 2 6 .7 8 7 3 .8 2 8 1 9 .1 1 1 .2 0 3 3 .3 2 2 2 5 .3 13.4 2 1 2 5 . 62 .2 9 1 3 .2 0 9 2.2 2 9 7 7 .7 5 0 600 900 487 3.5 0 1 2 4 . allowances and other expenses Insurance on consumer car ijarah Rent.8 8 4 6 .086 33.Note 24 OTHER INCOME Rent on property Gain on termination of Ijarah financing Gain on sale of property and equipment Amount recovered from staff Reversal of SBP penalty 25 GAIN / LOSS ON SALE OF SECURITIES Federal Govt.

8 9 8 ------.5 5 6 29 ------. the Bank has filed the return of income for the tax years 2006. The present value of obligation under the scheme at the Statement of Financial Position date were as follows: 63 .103 30 CASH AND CASH EQUIVALENTS Cash and balances with treasury banks Balances with other banks 6 7 31 STAFF STRENGTH Permanent Contractual basis Bank's own staff strength at the end of the year Outsourced Total staff strength 2012 2011 -----.589 5 7 .8 5 3 4 0 9 .basic / diluted 29.744. 2011 Note 2012 2011 ------.8 2 6 5 4 9 .8 9 8 5 2 7 .6 4 8 1 .3 4 0 1 4 0 .6 8 4 . 2012 and December 31.1 DEFINED BENEFIT PLAN General description The Bank has a gratuity fund for its employees ( members of the fund ).1 29.234.Prior .Deferred 3 2 . Permanent staff are eligible for such benefits starting from three years of service.7 1 0 1 8 2 .5 2 9 12. Note 2012 2011 BASIC AND DILUTED EARNINGS PER SHARE ------.27 OTHER CHARGES Penalties imposed by the State Bank of Pakistan W orker's W elfare Fund 2012 2011 ------.6 4 8 13.The fund entitles the members to lumpsum payment at the time of retirement.122 (2011: 1.031 The numerical reconciliation between average tax rate and the applicable tax rate has not been presented in these financial statements due to available tax losses brought forward from prior years.7757 There were no convertible / dilutive potential ordinary shares outstanding as at December 31.Number of employees----1 . resignation or death.Number of shares ------W eighted average number of ordinary shares in issue 5 2 7 . 2010.6 6 6 32 32.1 1 2 336 1 .8 7 9 215.Rupees in '000 ------4 .1 0. 2008.9 3 8 .Rupees ------Earning per share .817 4 .Rupees in '000 ------342 1 2 . The said returns were deemed completed under the provisions of the prevailing income tax laws as applicable in Pakistan during the relevant accounting years. 9 6 7 .871 412 1 2 .Rupees in '000 ------Profit after taxation for the year 4 1 0 .060 28 TAXATION For the year . 2001 (Ordinance).2 4 2 1 .4 1 0 238 1 . 2011and 2012 on due dates.112). The provision for current year income tax has been made under section 113 of the Income Tax Ordinance 2001 (minimum tax on turnover).2 7 7 5.7782 0.Current .4 4 8 218 1 .4 4 9 199. The number of employees covered under the following defined fund scheme are 1.7 0 7 8 0 6 .1 2 2 288 1 . 2009. Under Section 114 of the Income Tax Ordinance. 2007.9 6 7 .1 1 0 5.

5 Movement in the liability recognised in the Statement of financial position Opening balance Expense for the year Benefits paid Contributions during the year Closing balance 32.6 2 1 (2 2 .9 6 8 (185) 1 8 .4 6 1 7 .621 1 9 .2 8 8 5 .1 1 8 7 .5 4 0 11 958 5 .8 Unrecognised actuarial gains Unrecognised actuarial gains / (losses) at the beginning of the year Actuarial gains on obligation Actuarial gains on Plan assets Subtotal Actuarial gain recognised Unrecognised actuarial gains at the end of the year 3 2 .426) 1 8 .2 4 0 (1 0 7 .726) 2 41 6 3 .0 1 2 (185) 25.2 4 0 5 0 .2 1 4 12 185 1 8 .6 8 0 1 8 .0 7 4 2 .7 8 3 8 .0 7 4 5 .8 8 4 (82.0 2 3 2 5 . 5 6 6 ) (958) 24.4 6 1 7 .7 8 3 1 .3 8 8 8 .0 7 6 (958) 2 2 .6 8 4 (4.9 6 3 2 . 6 0 8 ) 2 .6 3 2 .7 2 6 (1 .6 0 8 4 .4 3 2 .4 2 6 241 2 4 .8 8 4 2 2 .0 7 4 7 .3 3 0 2 3 .6 Movement in present value of defined benefit obligation Opening balance Current service cost Fi n a n c e c o s t Be n e f i t s p a i d Actuarial gain Closing balance 32.963) 8 7 .826) (1.0 1 2 (1 .7 3 5 1 9 .1 1 8 2 .2 4 3 8 .8 8 4 6 .1 1 7 7 .6 8 4 (4 .9 4 4 (83.5 6 6 (4.7 8 3 241 2 2 .7 Actuarial loss to be recognised Corridor limit The limits of the corridor at the beginning of the year 1 0 % o f o b l i g a ti o n s 1 0 % o f p l a n a s s e ts W hich works out to Unrecognised actuarial gains at the beginning of the year Limit of corridor as at 1 January 2012 Excess Average expected remaining working lives in years Actuarial loss to be recognised 32.2 5 4 6 3 .2 8 8 1 1 .4 Movement in fair value of plan assets Opening balance Contributions Expected return on plan assets Benefits paid Actuarial gain / (loss) on assets Closing balance 32.680) 6 3 .3 Amount charged to the profit and loss account Current service cost Fi n a n c e c o s t Expected return on plan assets Actuarial losses recognised 32.4 2 6 2 2 .2 4 3 1 8 . 3 0 0 ) 8 2 .2 4 3 1 0 .3 3 0 1 0 7 .7 8 3 64 .1 0 4 8 3 .944 8 2 .2 5 4 5 8 . 1 0 4 ) 2 2 .1 1 7 7 . 3 0 0 ) (11.2 Reconciliation of payable to defined benefit plan Present value of defined benefit obligations Fair value of plan assets Net actuarial gains not recognised Liability recognised in the statement of financial position 32.Note 32.826) 2 .8 2012 2011 (Rupees in '000) 8 7 .

Principal actuarial assumptions used are as follows: Expected rate of increase in salary level Valuation discount rate Expected return on plan assets

2012 2011 (Rupees in '000) 11% 1 1 .5 % 8% 12% 1 2 .5 % 5%

32.9

Historical information
As at December 31 Present value of defined benefit obligation Fair value of plan assets Deficit Experience adjustments on plan liabilities

2012 2011 2010 2009 2008 -------------------------- (Rupees in '000) -------------------------87,240 87,240 (1,962) 63,884 63,884 (11,680) 50,735 50,735 (4,632) 34,755 34,755 (2,928) 19,092 19,092 (357)

33

DEFINED CONTRIBUTION PLAN (PROVIDENT FUND) The Bank operates a contributory provident fund scheme for all permanent employees. The employer and employee both contribute 10% of basic salary to the funded scheme every month. Equal monthly contributions by employer and employees during the year amounted to Rs.28.913 million (2011: Rs. 26.566 million) each.

34

COMPENSATION OF DIRECTORS AND EXECUTIVES
President / Chief Executive Directors Executives 2012 2011 2012 2011 2012 2011 ----------------------------------------- Rupees in '000 -----------------------------------------

Fees Managerial remuneration* Bonus Charge for defined benefit plan Salary in lieu of provident fund* Contribution to defined contribution plan Rent and house maintenance* Utilities* Medical* Increment allowance Others

11,835 1,309 1,184 1,184 327 1,184 1,184 18,207 1

14,183 1,181 1,418 391 1,418 1,418 20,009 1

1,550 1,550 4

1,550 1,550 4

102,144 13,860 6,568 9,369 37,173 10,214 10,214 38,780 228,322 114

94,279 8,500 8,894 29,691 9,428 9,428 36,535 1,633 198,388 106

Number of persons

* Included in this amount are arrears amounting to Rs. Nill (2011: 3.571)

34.1

The Bank's President / Chief Executive is provided with free use of Bank's maintained car in accordance with the Bank’s service rules. In addition to the above all eligible Executives, including the Chief Executive Officer of the Bank are also entitled to certain short term employee benefits which are disclosed in note 26.3 to these financial statements.

35

FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm's length transaction. The fair value of quoted investments is based on quoted market prices. Unquoted equity securities are valued at cost less impairment losses. The provision for impairment in the value of investments has been determined in accordance with accounting policy as stated in note 5.2.5 to these financial statements. The fair values of islamic financing and related assets cannot be determined with reasonable accuracy due to absence of current and active market. The provisions against financing and related assets have been calculated in accordance with the accounting policy as stated in note 5.3 to these financial statements. The repricing, maturity profile and effective rates are stated in note 39 to these financial statements. Fair values of all other financial assets and liabilities cannot be calculated with sufficient accuracy as active market does not exist for these instruments. In the opinion of the management, fair value of these assets and liabilities are not significantly different from their carrying values since assets and liabilities are either short term in nature and in case of financing and deposits these are frequently repriced.

65

35.1

Off-balance sheet financial instruments

2012 2011 Book value Fair value Book value Fair value ----------------------------------- Rupees in '000 ----------------------------------

Forward purchase of foreign currencies Forward sale of foreign currencies 36

4 5 8 ,6 5 4 212,206

4 5 9 ,1 9 7 . 209,861

9 3 ,5 7 9 127,887

9 3 ,5 7 4 127,607

SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES The segment analysis with respect to business activities is as follows:

Trading & Sales 2012 Total income Total expenses Net income / (loss) Segment Assets (Gross) Segment non - performing Assets Segment Provision required Segment Liabilities Segment Return on Assets (ROA) (%) Segment Cost of funds (%)

Retail Commercial Support Total Banking Banking Centre ------------------------------------Rupees in '000 --------------------------------3,771,073 3,327,862 443,211 4,992,045 405,223 186,718 42,197,845 8.88% 6.54% 2,002,290 1,609,786 392,504 26,216,312 817,610 331,461 25,234,017 1.50% 7.69% 50,090 891,955 (841,865) 2,297,073 182,838 6,509,238 5,882,796 626,442 74,773,999 1,297,623 537,969 68,663,576 -

685,785 53,193 632,592 41,268,569 74,790 19,790 1,048,876 1.53% 10.14%

Trading & Sales 2011 Total income Total expenses Net income (loss) Segment Assets (Gross) Segment non - performing Assets Segment Provision required Segment Liabilities Segment Return on Assets (ROA) (%) Segment Cost of funds (%)

Retail Commercial Support Total Banking Banking Centre --------------------------------------Rupees in '000 ----------------------------------3,355,587 2,860,545 495,042 7,122,755 324,240 183,848 34,973,402 6.95% 6.81% 1,757,459 1,328,808 428,651 18,773,042 536,214 228,000 17,859,572 2.28% 8.33% 44,127 884,254 (840,127) 2,139,706 12 12 56,782 5,728,863 5,120,276 608,587 59,267,964 935,256 446,650 53,508,676 -

571,690 46,669 525,021 31,232,461 74,790 34,790 618,920 1.68% 12.76%

37

RELATED PARTY TRANSACTIONS Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions and include a subsidiary company, associated companies with or without common directors, principal shareholders, retirement benefit funds, directors and their close family members, and key management personnel. The related parties of the Bank comprise related group companies, principal shareholders, key management personnel, companies where directors of the Bank also hold directorship, directors and their close family members and staff retirement funds. A number of banking transactions are entered into with related parties in the normal course of business. These include financing and deposits transactions. These transactions are executed substantially on the same terms including profit rates and collateral, as those prevailing at the time for comparable transactions with unrelated parties and do not involve more than a normal risk. Contributions to staff retirement benefit plan are made in accordance with the terms of the contribution plan. Remuneration to the executives are determined in accordance with the terms of their appointment. Transactions with related parties other than remuneration and benefits to key management personnel including Chief Executive Officer under the terms of the employment as disclosed in note 34 are as follows:

66

Subsidiary Deposits At beginning of the year Deposits during the year Withdrawals during the year At the end of the year Transactions, income and expenses Return on deposit expensed Associates Financing and related assets At beginning of the year Accrued during the year Repayments At the end of the year Deposits At beginning of the year Deposits during the year Withdrawals during the year At the end of the year Transactions, income and expenses Return on deposits expensed Administrative expense Advance against financing Sale of investment Key management personnel Financing and related assets At beginning of the year Disbursements Repaid during the year At the end of the year Deposits At beginning of the year Deposits Withdrawals during the year At the end of the year Transactions, income and expenses Profit earned on financing Return on deposits expensed Remuneration Disposal of vehicle Employee benefit plans Contribution to Employees Gratuity Fund Contribution to Employees Provident Fund

2012 2011 ----------- Rupees '000 ----------

99,434 2,836,209 (2,829,774) 1 0 5 ,8 6 9

88,555 1,433,972 (1,423,093) 99,434

9 ,4 9 1

1 0 ,2 3 6

14,982 30,901 (20,512) 2 5 ,3 7 1

26,168 31,810 (31,004) 26,974

127,794 618,268 (658,771) 8 7 ,2 9 1

131,268 595,662 (599,136) 127,794

4,437 67,848 -

5,989 49,468 4,215 248,148

76,944 29,020 (5,718) 1 0 0 ,2 4 6

61,167 21,149 (4,232) 78,084

4,525 71,975 (71,442) 5 ,0 5 8

16,563 94,531 (106,529) 4,565

3,134 295 51,120 294

2,769 364 58,929 2,115

24,621 28,913

25,944 26,566

Balances pertaining to parties that were related at the beginning of the year but ceased to be so related during any part of the current period are not reflected as part of the opening balance of the current year.

67

As more fully explained in note 1. 2012. etc after deductions for deficit on revaluation of available for sale investments and 50% deduction for investments in the equity of subsidiary companies being commercial entities and book value of goodwill and intangibles.25% of risk weighted assets). 5. 2013.3 Statutory minimum capital requirement and management of capital The State Bank of Pakistan through its BSD Circular No.280 billion at December 31.e. BSD/BAI3/608/2773/2011 dated March 7. - - The total of Tier II and Tier III capital has to be limited to Tier I capital. 2013 to comply with the future and prevailing regulatory capital requirements. general reserves as per the financial statements and net unappropriated profits. calculated in accordance with the SBP guidelines on capital adequacy using Basel II Standardised approach for credit and market risk and basic indicator approach for operational risk is presented below: 68 . 38.e. Tier 3 capital has also been prescribed by the State Bank of Pakistan. the Bank has been advised by SBP to submit concrete time bound capital plan by March 31. foreign exchange translation reserves. creditor and market confidence and to sustain future development of the business. 10 billion by December 31. The SBP vide its letter No.5 Capital adequacy ratio The capital to risk weighted assets ratio. As per the circular the Bank was required to have a minimum issued. However the Bank is not eligible for the Tier 3 capital. The impact of the level of capital on shareholders’ return is also recognised and the Bank recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position. BPRD/CSD/2407/13 dated March 1. The objective of ALCO is to derive the most appropriate strategy in terms of the mix of assets and liabilities given its expectations of the future and the potential consequences of interest rate movement.4 Capital Structure The Bank's Regulatory Capital has been analysed into three tiers i. liquidity constraints and capital adequacy and its implication on risk management policies. maximizing growth on continuing basis. 2012 and is required to raise it to Rs. The paid-up capital (free of losses) of the Bank amounted to Rs.: Tier 1 capital. 2013 has further extended the timeline for meeting paid up capital (free of losses) of Rs 6 billion by March 31. which includes fully paid up capital.2 to these financial statements the SBP vide its letter no. 2011. 2011 had given extension to the Bank in timeline for meeting MCR (free of losses) amounting to Rs 6 billion till June 30.38 38. This process is managed by the Asset Liability Committee (ALCO) of the Bank. 7 dated April 2009 had revised the Minimum Capital Requirement (MCR) for banks. For that the Bank ensures strong capital position and efficient use of capital as determined by the underlying business strategy i. 38.2 Goals of managing capital The goals of managing capital of the Bank are as follows: The objectives for a sound capital management are: 1) to ensure that the Bank complies with the regulatory Minimum Capital Requirement (MCR) 2) maintain a strong credit rating 3) maintain healthy capital ratios to support business and to maximize shareholder value and 4) to operate with a Revolving Planning Horizon and be able to take advantage of new investment opportunities when they appear. 38. 38. 9 billion by December 31. etc after 50% deduction for investments in the equity of subsidiary companies being commercial entities. Moreover. Banking operations are categorised in either the trading book or the banking book and risk weighted assets are determined according to specified requirements that seek to reflect the varying levels of risk attached to assets and off balance sheet exposures. which includes general provisions for loan losses (up to a maximum of 1. 2013. The Bank maintains a strong capital base so as to maintain investor. subscribed and paid-up capital (free of losses) of Rs.1 CAPITAL ASSESSMENT AND ADEQUACY Capital management Capital Management aims to safeguard the Bank's ability to continue as a going concern so that it could continue to provide adequate returns to shareholders by pricing products and services commensurately with the level of risk. market risk and operational risk. reserves on revaluation of fixed assets and equity investments up to a maximum of 45% of the balance. Tier 2 capital. The total risk weighted exposures comprise the credit risk.

862 93.372 29.980 3.444.390.784 4.266 173.912 24.539 220.074 56 473.836 22.18% 69 .158 68.979 28.053.340 381.382 81.383 162.911 1.340) 5.518 5.739.207 6 165.098 1.765 195.024.737.802 2.118 56.505.810.506 222.651 1.388 2.304) 5.913 1.491 2.658 1.50% Shortfall in provisions required against classified assets irrespective of any relaxation allowed Book value of goodwill and intangibles Total Tier I Capital Tier II Capital General provisions for loan losses-up to maximum of 1.631) 5.565 12.392 101.582 688.924.797 Portfolios subject to off balance sheet exposure –non market/market related Market risk Capital requirement for portfolios subject to standardized approach Foreign Exchange risk Interest Rate Risk Equity Risk Operational risk Capital Requirement for operational risks subject to Basic Indicator Approach Total Capital adequacy ratio Total eligible regulatory capital held Total risk weighted assets Capital adequacy ratio (a) (b) [(a / b) x 100] (b) 163.150 6.451 22.176 563.865.977 11.991) (47.622.287 1.50% Total Tier II Capital Eligible Tier III Capital Total Regulatory Capital Base Risk-weighted exposures Credit risk Portfolios subject to standardized approach (Simple Approach for CRM) Corporate Portfolio Retail non mortgages Mortgages – residential Past due Islamic financing and related assets Claims on Banks Fixed assets Others 1.279.Rupees in '000 --------- 5.800 616.024.921.323.445.824 819.054 (95.247.957.795 641.729 186.800 35.054.402 3.828 1.143.679 91.25% of Risk W eighted Assets Revaluation Reserves up to 45% Less: Cost of Investment in Subsidiary .280 64.221 (227.106 16.247.972 117.560 (95.143 216.633.Rupees in '000 ------------------------------ 16.940 Capital Requirements Risk Weighted Assets 2012 2011 2012 2011 ---------------------------.162.615 937.19% 5.513 44.940 29.323.201.413 (95.500 61.979 35.644.439.373.128 441.161.191 192.342 5.037 2.184 2.679 173.508) (49.144.554.053.312 (95.279.429 2.580 205.508) (73.834 17.834 ---------.422 33.630) 4.508) (37.402 15.239.998 6.610 5.Rupees in '000 ---------5.480 (a) 2012 2011 --------.Regulatory Capital Base Tier I Capital Shareholders Capital Reserves as disclosed on the Statement of Financial Position Unappropriated profit / (accumulated losses) Other deductions: Cost of investment in subsidiary .394.974.508) 50.

In accordance with Revised Capital Framework under Basel II issued by the SBP. 2013. and covers a wide spectrum of financial business risk class. RISK MANAGEMENT FRAMEWORK A well formulated policy and procedure is critical to an effective Risk Management framework. Operational etc. ascertaining the institutions risk appetite.991 million has been deducted from Bank's Tier-I Capital. that: To be effective. Macro Level It encompasses risk management within a business area or across business lines. for operational and other risk related assessments. This function if performed with diligence and understanding. the Basel Committee (Internationally) is raising the resilience of the banking sector by strengthening the regulatory capital framework. As more fully explained in note 10. Market. it then needs to be reinforced through a strong control culture that promotes sound risk governance. application of statistical tools and information in time series for developing strong inferences are all performed at this level. the risk related functions are approved by the senior management and the Board. 70 . control activities should be an integral part of the regular activities of the Bank. Detailed review of various processes and operating procedures. and Critical decision making should be based on relevant research. The Bank adheres to the regulatory requirement in this respect. Liquidity. Micro Level Risk management at micro level.14. Every loss or near miss event should provide some Key Learning Outcome (KLO). is reviewing the impact of Basel III (B3) guidelines on the capital structure and CAR (Capital Adequacy Ratio) through quantitative impact studies. Micro level risk management includes: Business line acquisition. The risk management function is one of the most important areas of the banking business. The Bank's Risk Management Framework has been developed keeping in mind.6 In accordance with the Revised Regulatory Capital Framework under Basel II issued by the SBP. stress test and scenario analysis for portfolio resilience. RISK MANAGEMENT The objective of Risk Management is to effectively manage uncertainties that arise in the normal course of business activities. including Credit. As a prelude to countering the financial debacle of the recent past. The Bank follows effective risk governance which commensurate well with its current size and structure. The SBP (State Bank of Pakistan) while being cognizant of the various reforms in the offing. While the reward may well commensurate the level of risk. setting parameters. Middle Office monitoring function for a sound risk assessment of various risks inherent in treasury operations. The reforms raise both the quality and quantity of the regulatory capital base and enhance the risk coverage of the capital framework. The implementation of Basel II (B2) provides for a risk-based capital requirement. helping and promoting a better risk identification and mitigation. essentially building on the three pillars of the Basel II structure. These include: defining risks. Banks are required to deduct from Tier-I Capital any shortfall in provision required against classified assets irrespective of any relaxation allowed by the SBP. Banks are required to deduct from Tier I Capital any shortfall in provisions required against classified assets irrespective of any relaxation allowed by the SBP.7 39 Strategic Level At the strategic level. is of critical importance. Generally the risk management activities performed by middle management or units devoted to risk reviews fall into this category.2. strong adherence to the credit and other related criteria. However. Periodical review of various portfolios. Accordingly an amount of Rs 37. the Bank has not made deductions on account of shortfall in provision against outstanding facilities extended to Agritech Limited based on the relaxation provided by the SBP vide its letter BPRD/BRD-(Policy) / 2013-1857 dated February 15.3 to these financial statements. and conducts its business accordingly. can be of maximum benefit to the organization.38. it has to be viewed in entirety and not in isolation. 38. the SBP has given a relaxation to the Bank in maintaining provision against outstanding facilities extended to Gulshan Weaving Mills Limited. proper analysis and effective communication within the Bank. formulating strategy and policies for managing risks and establishing adequate systems and controls to ensure that overall risk remains within acceptable level and the reward compensates' for the risk taken.

reputation risk affects the entire banking business and is not limited to one business line or the other. The risk management function at the Bank. Risk organization A strong organizational set-up. Ijarah etc. The Bank believes in a cautious yet steady approach towards its business objectives and takes a holistic view of its investment and financing requirement.). Deposits. political and social scenario which affects the ability of the country (or a borrower in that country) to repay its obligations. 39. Business line accountability One of the most important features of the risk management process is the business line accountability.1. Business lines are equally responsible for the risks they are taking. This approach is primarily based on a viable portfolio build-up with a long-term view. Country risk may be a combination of Transfer Risk and Sovereign Risk. Credit Risk has certain sub-categories as follows: i) Price risk There is a risk that the asset repossessed due to default of the lessee may be sold or leased out to another party at a price lower than the original contract price. Risk governance must involve all relevant parties and should be sanctioned by the Bank's leadership. ii) Counter party risk The risk that the counter-party defaults during the term of a transaction (Murabaha. Risk management cannot live in a vacuum. Lack of an understanding of this by the line management may lead to risk management in isolation. key consideration being the health of various portfolios. The management of risk is as much a line function as it is supports'. internal credit risk rating system. At BIPL. in order to be effective. Some specific risks e. the controls. Contingencies and Commitments. limit structures. with an explicit aim to mitigate/ manage risk in line with the Bank’s objectives. responsibility comes with accountability. iii) Settlement risk The risk that the counter-party does not meet its commitments at the maturity of the transaction after the Bank has already met its commitments.1 Segmental information Segmental Information is presented in respect of the class of business and geographical distribution of Islamic financing and related assets. available resources (size and business life cycle) and most significantly. iv) Country risk Country Risk can be defined as the risk of adverse impact of certain factors on a country’s specific economic. Because line personnel understand the risks of the business. collateral management and post disbursement monitoring so as to ensure prudent financing activities and sound financing portfolio under the umbrella of a comprehensive Credit Policy approved by the Board of Directors. approving and reviewing authorities. it has to be run at an enterprise level. Business has to understand the risk implication of specific transaction on the business / portfolio. delegation and accountability. Each business segment is responsible for the profit / loss of the business. as in any other reputable organization. with clearly defined roles and responsibilities permits a higher level of articulation of the Banks risk mandate.g. along with the different committees including ALCO (Asset Liability Committee) and MCC (Management Credit Committee).Risk appetite of the bank The risk appetite of the Bank is an outcome of its corporate goal.1 Credit Risk The Bank manages credit risk by effective credit appraisal mechanism. establishment of a structure that provides for authority. RMC (Risk Management Committee of the Board) manage and adhere to the risk management policies and procedures. 39. and development of control framework. 71 . economic profitability.

086 1.582 639.218 685.05% 10.593 0.999 57.046 30.40% 0.17% 0.037 3.088 1. 2011 Islamic financing and related assets Restated Percent Rupees in '000 Agriculture.674 27.00% 0.56% 0.00% 0.965 364.726.733 2.499.505 293.14% 2.05% 0.292 3.01% 3.11% 0.00% 1.335 25.395 2.510 4.97% 0.977.536 1.216.059 451.00% Contingencies and Commitments Rupees in '000 39.820 3.460 Percent 15% 85% 100% Percent 5% 95% 100% Contingencies and Commitments Rupees in '000 Percent 1.82% 4.131.176.118.58% 5.216.74% 0.582.171 49.34% 0. Forestry.054.795 803.08% 6.00% * Others include Sole Proprietors.542 55.829 Percent 10.950 2.38% 0.632 355.344 69.095.121.983 4.99% 0.97% 10.00% 3.50% 4.455.393 64.716 514.80% 3.605.42% 5.318 49.916 11. Water.37% 11.230 1.68% 0.22% 100.639 440.59% 2.959 1.000 1.276 10.918 2. Sanitary Wholesale and Retail Trade Exports/Imports Transport.08% 0.984 50.92% 0.225 6.595.306.50% 1.13% 100.695 1.1.744.11% 0.614 50.593 18% 82% 100% Public / Government Private 1.805 432. Storage and Communication Financial Insurance Services Individuals Food and beverages Private Trust & NGO Packing and Paper products Others* 2.829 Percent 9% 91% 100% 2012 Deposits Rupees in '000 3.00% Contingencies and Commitments * Rupees in '000 Percent 2.33% 0.00% Deposits Rupees in '000 2.16% 1.34% 1.188 52.78% 0.998.01% 0.384 8.965 61.083 677.86% 0.520 64. fund accounts and Govt deposits etc.11% 1. Gas.627.785 Percent 4.61% 12.213 25.568.571.763 309.55% 0.019.00% 0.00% 13.596 226.86% 40.67% 0.950 3.00% 7.161.273 3.067 111.39% 13.151.03% 2.67% 0.52% 0. Hunting and Fishing Mining and Quarrying Textile Chemical and Pharmaceuticals Cement Sugar Footwear and Leather garments Automobile and transportation equipment Education Electronics and electrical appliances Production and transmission of energy Construction Power (electricity).44% 1.021 8.704.595.950 16.123 4.743 421.72% 0.198 7.832.70% 0.15% 0.283 1.100 12.55% 2.128.358.17% 0.928 15. 39.00% 25.220 969.46% 0.69% 0.304 1.556 79.69% 0.528 947.52% 3.588 375.168 325.732.03% 2.718 543.00% 3.327 965.954 11.043 1.706 2.035 16 27.412 25.57% 2.508 150.135 144.969 25.350.26% 0.646 341.54% 3.158.274 25.00% 13.53% 0.810.682 5.47% 0.485 Percent 4.716 1.384 234.00% 1.315 15.13% 0.05% 7.00% 5.442.425.378.549 706.02% 1.1.60% 0.799 900.307.23% 9.16% 0.02% 1.508.44% 0.59% 6.489 2.585 1.933.33% 1.91% 11.61% 100.19% 0. Storage and Communication Financial Insurance Services Individuals Food and Beverages Private Trust & NGO Packing and Paper products Others* 2.458.39.00% 3.888 97.954 8% 92% 100% 72 .050 48.89% 0.25% 2.211 212.789 1.340.67% 100.518 1.781 1.054.00% 9.83% 0.135 373.441 67.783.485 2011 Islamic financing and related assets Restated Percent Rupees in '000 Deposits Rupees in '000 1.00% 34.795 274.087.619 23.98% 0.48% 0.625 1.30% 4.610 69.23% 1. Hunting and Fishing Mining and Quarrying Textile Chemical and Pharmaceuticals Cement Sugar Footwear and Leather garments Automobile and transportation equipment Education Electronics and electrical appliances Production and transmission of energy Construction Power (electricity).82% 2.13% 0.889 25.21% 0.403 18.01% 0.377 271.446.129 1.17% 7.218.118 404.55% 0.365.60% 5.933.148 130.21% 1.66% 2.304 242.2 Segment by sector Islamic financing and related assets Rupees in '000 Public / Government Private 2.528.491 727.926 90.872 136.572.905.140 248.460 Percent 0.064.81% 12. Water.11% 7.616 27.96% 2. Forestry.000 1.436 900.84% 0.026 217.568.89% 3.02% 1.05% 100.1 Segments by class of business Islamic financing and related assets Rupees in '000 Agriculture.49% 3.837 139.22% 4.852.712 152.000 86. fund accounts and Govt deposits etc.296.15% 0.02% 8.70% 1.09% 1.45% 0.965 27. Gas.08% 18.318 500.522 5.1.591.33% 0.03% 0.435 1.26% 1.131 1.00% 2012 Deposits Rupees in '000 2.85% 0.940.768 20.575.98% 0.785 Percent 2% 98% 100% Contingencies and Commitments Rupees in '000 689.84% 2.00% 0.950 551.083 1.080 571. Sanitary Wholesale and Retail Trade Exports/Imports Transport.455 81.348.02% 27.00% 2.42% 0.323 35.933 203.04% 26.00% * Others include Sole Proprietors.467 46.966.328 2.082.894.1.363 13.00% 0.49% 2.223 162.83% 100.889 561.340 245.520 547.177 6.92% 0.990.03% 0.11% 0.96% 0.430 203.82% 39.00% 29.08% 2.22% 0.54% 1.302 2.02% 0.307.859.572 6.747 3.

980 800 581 10.205.1.595.363 150.821.1.460 5.598 161.3 Details of non-performing Islamic financing and related assets and specific provisions by class of business segment: 2012 2011 Classified Classified Specific Specific financing and financing and provisions held provisions held related assets related assets Restated ------------------------------------. 39.523 * Provision has been made under subjective evaluation 39.757 98.299 123. Storage and Communication Individuals Others 22.638 4.593 838.236.523 360.139 1.205.222 1.1.2.554 2. It uses CRM (Credit Risk Mitigation) technique where applicable.2 Credit risk .750 148.980 1.101 360. which will support the Bank in internally rating the credit clients. The Bank has also recently employed a credit rating model.796 1.1. W ater.971 18.Rupees In ‘000 ------------------------------------Public / Government Private 1.001 838.4 Details of non-performing Islamic financing related assets and specific provisions by sector: 2012 2011 Classified Classified Specific Specific financing and financing and provisions held provisions held related assets related assets Restated ------------------------------------.Rupees In ‘000 ------------------------------------Profit before taxation Total assets employed Net assets employed Pakistan 626.222 10.030 2011 Contingencies and commitments* ------------------------------------.307. Forestry.1.750 3.105 586 9.454 8.750 5.587 58.523 360.1 Credit Risk: Disclosures for portfolio subject to the Standardised Approach and supervisory risk weights in the IRB Approach The Bank uses reputable and SBP approved rating agencies for deriving risk weight to specific credit exposures.250 125.791 295 5.007 467. The Bank carries a strong desire to move towards the FIRB and Advanced approach.274 23.1.838 160.997 2. which is compatible to the rating guidelines of SBP. 73 .068 2.312.002 467.326 8.391 459.Rupees In ‘000 ------------------------------------W holesale and Retail trade Agriculture.002 2012 Contingencies and commitments* ------------------------------------.523 39. The Bank has currently employed standardized approach for evaluation of credit risk.314 5.753 70 11.000 261.767 13.333 70.1.Rupees In ‘000 ------------------------------------Profit before taxation Total assets employed Net assets employed Pakistan 608. Gas.217 43.442 74.339 1.572.101 2.598 175.703 137.773 703 23.586 63. Sanitary Cement Automobile & Transportation equipment Construction Services Financial Paper Product* Transport. where available.205.222 467.950 19. Hunting and Fishing Textile Chemical and Pharmaceuticals Power (electricity).Standardized Approach Credit risk arises due to the risk of a borrower defaulting on his commitment either in part or as a whole.101 838.096 14.313 374.002 22.5 Geographical segment analysis 39.848 200 73 17.1.006 57.39.

if any. 301.268 Corporate Retail Total CRM = Credit Risk Mitigation 39.22.473 3.592 14.140.847.465.208 297. Provision for diminution in the value of securities is made after considering impairment.737 2.221 3.Investment in equities for generating revenue in short term These equity investments are accounted for and disclosed as per the provisions and directives of SBP.347 465.831.398.027 million (2011: Rs. The Bank takes the benefit of CRM against its claims on corporate and retail portfolio.820. they generally do not pose risk to the Bank in terms of change in their valuation due to changes in the market conditions.Strategic investments . During the year.123. 895.84 million (2011: Rs.287 3. 15.473 3.244 million in year 2011.370.867 609.414 312. non-market related exposures.259 320. Under off-balance sheet.023 million).441.393 million (2011: Rs. Hence total benefit of Rs 140.637.344.The difference in the value of cash collateral is due to the changes in the exposure amounts and resultant amount of cash collateral obtained.774. 159. Valuation and management of eligible collaterals for CRM is being done in line with the conditions laid down by the SBP.525.423. 609.441.185.582 266. 266.173 21.347 million (2011: Rs.867 million) is subject to CRM of Rs 306.74 million (2011: Rs.084.445 211.807 312.776 21.488 14. 7.2.412 1.259 320.123 895.3.740 3.136 million (2011: Rs. 74 .2 Equity Position Risk in the Banking book –Basel II Specific Equity position includes the following: .565.277 211.831.123 22.240. The total benefit of Rs.904 895. in their value and charged to the profit and loss account.580 million as against amount of Rs 586.136 million (2011: Rs. 301.511 588.344.347 306.221 million) was availed through CRM against total onbalance sheet exposure of Rs. Under the standardized approach for on-balance sheet exposures.904 million (2011: Rs. 7. 21. total amount of cash collateral used for CRM purposes was Rs.832 111.023 million) was availed by the Bank through CRM against total off-balance sheet.174 14.862.622 609.Rupees in '000 --------------------------------------3.820.412 1.807 579.027 28.84 million (2011: Rs. Under the standardized approach the Bank has taken advantage of the cash collaterals available with the Bank in the form of security deposits and cash margins. the corporate portfolio of Rs. Off-balance sheet items under the simplified standardized approach are converted into credit exposure equivalents through the use of credit conversion factors.776 588.060 14.VIS 3 3 2012 PACRA 3 3 Others N/A 3 JCR .240. The Bank obtains capital relief for both on and off-balance sheet non-market related exposures by using simple approach for Credit risk mitigation (CRM).489 154. SECP and the requirements of approved International Accounting Standards as applicable in Pakistan.489 million). the corporate portfolio of Rs 3.423.622 million) is subject to the CRM of Rs.992.867 15.206 21.393 306. 39.299 61 131.438 2.033 159. nonmarket related exposure of Rs.414 million) whereas a claim on retail portfolio of Rs.807 million).500 9.2 Credit Risk Disclosures with respect to Credit Risk Mitigation for Standard and IRB Approaches.VIS 3 3 2011 PACRA 3 3 Others N/A 3 Credit Exposures subject to Standardised approach Exposures Rating Category 0% 20% 50% 100% 150% Unrated 0% 20% 50% 75% 2012 2011 Amount Deduction Net amount Amount Deduction Net amount Outstanding CRM Outstanding CRM ---------------------------------------.427 13.239.060 297.039 million). Since eligible collaterals for CRM purposes are all in the form of cash collaterals.123 million (2011: Rs.606.847. 312.Basel II Specific.039 million) is subject to the CRM of Rs.500 9.Types of Exposures and ECAI's used Exposures Corporate Banks JCR .1. 579. 14.

738 84.030 67. the Bank primarily uses notional principal limits at various levels to control the open position.676 34.211 83.521 1.615 5.875 3.517 901.508.211 244 23. 2012 Net foreign currency exposure --------------------------------. It also assesses yield rate risk on earnings of the bank by applying upward and downward shocks. scenario analysis.063.777 840 1.034 (16.39.314 52.454 ` 75 .1 Foreign Exchange Risk Currency risk is the risk of loss arising from the fluctuations of exchange rates.236.474 562. It includes current balances and contractual yield rates.524 3.111.429) 5.4.438.336 5. the impact of the above risks will be very minimal. The Bank uses various tools and techniques to assess market risk including but not limited to full valuation.806 2. The Bank does not have positions or forward exchange contracts giving mismatches of maturity unless such risks have been taken care of through some other mechanism.480 71.869 58.694 86.086 118.638 (249.248 43. Following is the summary of the assets of the Bank subject to foreign exchange risk.985 2. These positions expose the Bank to foreign exchange risk.998 833 1.336) 249. 39. the Bank purchases or sells currencies in today / ready and gives or receives unilateral promises for sale or purchase of FX at future dates in a long or short position in different currency pairs.663.605) (17. Moreover.556 426 7. which ranges from intermediation only to taking on principal risk as dealer or as counterparty.629 53.081.615 74.869 5. marketable or leasable assets.171 3. stress testing. These assessment methods enable the Bank to estimate changes in the value of the portfolio.089 244 23. 39. The risks relate to the current and future volatility of market values of specific assets and of foreign exchange rates and benchmark yields. To control this risk.171 3. and ultimately the residual foreign exchange risk of the Bank.312. In the normal course of conducting commercial banking business.480 11. the Bank understands that its Islamic financing and related assets shall be repriced as per their respective contracts. if exposed to various risk factors.487 1.128 1. The Bank also strictly adheres to all associated regulatory limits.260 502.g.616 116.423.576 58.998 833 1.864. fluctuations in values in tradable.Rupees in '000 -------------------------------Assets Liabilities Off-balance Sheet Pakistan rupee United States dollar Great Britain pound Deutsche mark Japanese yen Euro UAE Dirham ACU CHF AUD Saudi Riyal 58. The Bank estimates changes in the economic value of equity due to changes in the yield rates on on-balance sheet positions by conducting duration gap analysis.498 426 7.Rupees in '000 -------------------------------Assets Liabilities Off-balance Sheet Pakistan rupee United States dollar Great Britain pound Deutsche mark Japanese yen Euro USE Dirham ACU CHF AUD Saudi Riyal 73.4 Market Risk Market risk is defined as the risk of losses in on-and-off balance sheet positions arising from movements in market prices e.576 2011 Net foreign currency exposure --------------------------------. since the Bank does not deal in interest based products.3 Yield / Profit Rate Risk in the banking book – Basel II specific It includes all material yield risk positions of the Bank taking into account all repricing and maturity data.251.351 60.821.922 552 1.777 840 1.985 2.572.122 68.521 77.

969.428 14.778 (8.010 11.591.229 2.487) 76 .938.542 1.700.826 549.883 2.251 1.591.431.181.317 (4.700.108.700.445.473.104.889 1.542 4.436.196 13.177 (10.853 800.202 3.620) 1.808.379.433.148.913.685) 19.621.632 11.349) 113.487) (461.111.769.862 (11.945 5.475.013.000 2.579) (3.681.770) (3.216.994.425.853 10.358) 30.907 350.521 (461.034.266 8.565 27.938.857 56.518.266 113.866.663.765 13.350.277 5.711 4.674 13.275 5.586.39.534.888 17.680) 10.255 1.701.427 9.264 3.349) 27.060 4.522 450.994.600 11.264 13.508 (1.145.379.112) 3.415.939.963.939.643 32.389 68.249 8.602.148 10.637 (4.106 86.680) 392.542 4.486 3.606.264 21.189 18.685 1.586 11.811.190.476 3.724 (1.902.190.586 798.588.065 (2.838.362 1.600 908.052.299 3.77% 12.264 4.461.415 64.130 404.585 163.046.628 188.093 12.039 1.545.108.693 20.152 6.938.568.225.207.060 4.337 17.791 2.82% On-balance sheet gap NON FINANCIAL ASSETS Operating fixed assets Deferred tax assets Other assets NON FINANCIAL LIABILITIES Other liabilities TOTAL NET ASSETS Total Yield / Profit Risk Sensitivity Gap Cumulative Yield/Profit Risk Sensitivity Gap (2.621.840.724.054.367 12.637 4.348.668.054.705.889 3.816.179 163.164 191.672 8.251.Rupees in '000 ------------------------------------------------------------------------------------------------------ On-balance sheet financial instruments Assets Cash and balances with Treasury Banks Balances with other Banks Due from financial institutions Investments Islamic financing and related assets Other assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities 6.148 8.110 121 8.149.148.353.684.347 10.412.288 4.580.068.466.989 1.519.404.638 Total Yield / Profit Risk Sensitivity Gap Cumulative Yield/Profit Risk Sensitivity Gap 9.376.367 (10.071.939.864.00% 4.776 304.963.586 3.588.454 8.586 5.04% 9.152 9.672 28.290 392.175.724.767.255 12.769.693.427 2.415 3.663.794.771 2.034.707 805.109 1.288 50.073.600 3.485 1.827) 8.00% 9.659.098 8.449.377.056.179 6.866.145.108 6.487) - 10.327.312.304) 6.939.600 6.586.152 9.813.396 (4.738 (461.429.304) 1.353.291 1.643 50.082 965.902.968 (8.534.707 806.251.441.549 159.834 197.778 8.963) 19.898.376.000 50.459 8.765.325.229 7.229 (8.005 (8.078 1.325 (4.685) 1.665.436.245.983 12.148.938.377.28% - 4.816.883 36.Rupees in '000 ------------------------------------------------------------------------------------------------------ On-balance sheet financial instruments Assets Cash and balances with Treasury Banks Balances with other Banks Due from financial institutions Investments Islamic financing and related assets Other assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities On-balance sheet gap NON FINANCIAL ASSETS Operating fixed assets Deferred tax assets Other assets NON FINANCIAL LIABILITIES Other liabilities TOTAL NET ASSETS 5.093 53.702.00% 7.769.148 8.148.983 71.770) (3.898.181.792 1.949 16.416.681.974.098 132.731 3.025.462 563.285 11.037.41% 13.473 13.229 8.826 549.973 441.000 2.425.220 (5.536 1.681 1.560.755 2.191.633.290 304.396 4.010 1.292 24.00% 11.379.013.785 1.112) 9.034 3.277 113 4.2 MISMATCH OF YIELD / PROFIT RATE SENSITIVE ASSETS AND LIABILITIES 2012 Exposed to Yield / Profit risk Effective Yield / Profit rate Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Over 5 to 10 Years Years Above 10 Years Non-profit bearing financial instruments ------------------------------------------------------------------------------------------------.827) (1.389 14.776 4.77% 5.587 (5.379.042 1.620) 6.827) 2011 (Restated) Exposed to Yield / Profit risk Effective Yield / Profit rate Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Over 5 to 10 Years Years Above 10 Years Non-profit bearing financial instruments ------------------------------------------------------------------------------------------------.62% 12.587 7.358) 908.046.067.915.767.572.932 4.262 4.182 1.542 1.734.397 1.857 1.579) (3.935 1.705.4.475.232.897 5.529.207.764.534.285 (11.701.522 18.189 18.232.684.249 5.354 798.888 2.555 2.811.202 9.232.01% - 4.585 3.963) 132.104.175.813.

428 6.437 953.100 721.710.360 19.352 293.662 800.938.979 1.674 440.110 4.280.572 1.507.306 86.025.420.755 191.499 7.420.648 58.600 10.176. monitoring and maintaining key liquidity ratios.1 MATURITIES OF ASSETS AND LIABILITIES Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year 2012 Over 1 to 2 Years Expected Maturity Contractual Maturity Over 2 to 3 Years Expected Maturity Over 3 to 5 Years Over 5 to 10 Years Above 10 Years Expected Contractua Expected Contractual Expected Contractual Expected Contractual Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Contractual Expected Contractual Expected Contractual Expected Contractual Maturity Maturity Maturity Maturity Maturity Maturity Maturity ----------------------------------------------------------------------.833.265 125.369.251.6 Operational Risk Operational Risk is defined as the risk of loss resulting from inadequate or failed internal processes.279.873.024 621.186 26.679 173.191.341.195.769.524 1.320.716 188.261.581.534 46.072 8.068 5. which is one of the most important management level committees.757.650.000 781.077. Its role cannot be overemphasized here.268 18.572.862.823 7.264 40.244 (867.842.340 621.187.718 4.982 781.807 2. At a more formal level.043 6.190 1.415.524 953.415 2.277 4.568.948 (3.703 319.606.708 708.352 1.338.181. since it has a greater level of uncertainty and may be termed as a little difficult to measure.486 1.000 24.631 (2.462 4.826 549.837 6.672 28.378 (57.358 6.010 27.546 190.067.Rupees in '000 -----------------------------------------------------------Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Operating fixed assets Deferred tax assets Other assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities Net assets Share capital Reserves Accumulated loss Surplus on revaluation of assets 169.860.864.090) 1.354.325 2.589 908.491 3.749 4.038 492.444.757.139.968 7.793 (618.269 95.251.878.754 8.309.793 1.419.883.679 91. Operational Loss Database (OLD) records all the internal / external potential operational losses which helps the management understand the causes and impact of these risks.888 176.875 7.147 181.024 (2.265.269 69.369.853 49.628 188. Operational and other risk assessment tool e.037.355 4.222.320.913.642 1.738 74.889 548 3.100 1.Rupees in '000 -----------------------------------------------------------Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Operating fixed assets Deferred tax assets Other assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities Net assets Share capital Reserves Accumulated loss Surplus on revaluation of assets 18.122. ORAF is being effectively used to assess. mitigate and monitor possible risk that may arise in any of the Bank’s financial product or department.948 721.387 (868.674 4.751.932 102.376 8.106) 1.620 1.665.092 165. BIPL’s liquidity at various levels (day to day.847.859 1.868 23.600 279. it serves as a part of the critical trio with risk management and treasury department.312.g.017.462 2.475.078 5.485 1.134.621.973 306.353 3.837 492.394 1.089.106 (3.236.507.918.004.992 9.379) 1.587. guidelines and manuals.454 1.882) 621.661 41.425 96.521.862 10. long term) is managed by the Treasury along with the Asset and Liability Management Committee (ALCO).244 1.327.174.048 396.937.127 14.993 2.770.117.684.707 806.973 1.918.574.785 1.432 11.073 31.241 953.138) 609.662 1. people and systems or from external / internal events.821.085 1.338.676 5.264 21.414.262) 11.279.261.106 11.107 (2.811.616 31.205 525.587 77. a viable funding mix.277 4.620 109.615 2.221 (227.5.216.207.853 798.312.130 1.436.378) 1.150 (1.179 47.216 960.000 350.885 7.466 8.100 46.022.130 4.369.458.050.707 806.896.918.774 2.667) 24.567.671 8.000 50.060 4.139.866.117.466 2.560 10.432 34.404.000 2.668 2.666 68.342 216.353.296 107.369.433.283.472) 39.491 7.227 274.601.600 846.252 1.340) 3.037 12.767.754 1.39.341.913 137.312.845.618.442. depositor concentration.909 191.277.633 24.030 26.866.918.024 124.720 109. reviewing contingency plans etc.000 8.918.270 249.041 5.583 3.259 8.342 4.616.106.807 (1.508.826 549.637 11. The risk is different from the others.357 1.728 1.481 3.765.341. 77 . short term.418.371.222 3.436.150.090 14.649.082 4.528 11.5 Liquidity Risk Liquidity risk is the potential loss to the Bank arising from its inability either to meet its obligations (financial) or to fund increases in assets as they fall due without incurring unacceptable costs or losses.975 3.922 721.196) Total Upto 1 Month Over 1 to 3 Months 2011 (Restated) Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Expected Maturity Contractual Maturity Over 2 to 3 Years Expected Maturity Over 3 to 5 Years Over 5 to 10 Years Above 10 Years Expected Contractua Expected Contractual Expected Contractual Expected Contractual Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Contractual Expected Contractual Expected Contractual Expected Contractual Maturity Maturity Maturity Maturity Maturity Maturity Maturity ----------------------------------------------------------------------. the Bank has strengthened its risk management framework by developing polices.939.485.175.015 - 84.684.000 9.416 5.207.369.994.000 450.117.728 563.394 4.523 13.100 1.459 1.638 5.414.085.357 4.649.014 50.110 8.314 798.320.353 508.428 2.663.681 9. The Bank believes that (prudence) should be lived and breathed through the organizational culture.010 1.106 86.297 34.982 9.170 5. 39.311.504 315.572.638 50.618.000 3.262 1.015 1.342 9.463 4.113 5.523 261.993 2.930 24.483 14.868 341.278 2.524 1.198 2.989 4.637 4.576 5.217 6.092 (14.122 3.633.415 64.714 69.769.662 4.392 101.174 7.743.922 1.133.195.269.555.251.992 165.090 (14.441) 440.938.707) 1.092 14.989 24.107 11.467 233.454 5.918.092 2.987 3.092) 2.060 4.038 53.378 107.656 672.

'Trading' ' Consumer Finance' and GOP Ijarah Sukuks'. Profit is shared among Mudarabah partners (Bank and depositors) as per pre-agreed profit sharing ratio. Following is the list of assets held under trust: Category Insurance Companies Asset Management Companies Employee Funds / NGO's Individuals Others Type Sukuks Su k u k s Su k u k s Sukuks Su k u k s No. Since there are more than one Rabb-ul-Maal (depositor). The Bank follows a deliberate low-risk strategy. therefore. 39. 2012: i) ii) iii) General Deposit Mudarabah Pool (PKR. USD.1 6 5 3 1 1 . Musharakah investments from the SBP under Islamic Export Refinance Scheme (IERS) are channeled towards the export sector of the economy via different Islamic financing modes such as Murabaha.9 Shariah Non-compliance Shariah non-compliance risk is the risk that arises from an Islamic bank's failure to comply with the Shariah rules and principles prescribed by the State Bank of Pakistan and / or the Shariah Advisor of the Bank.710. ' Energy'. of IPS Face Value account (Rs in '000) 1 22 8 8 21 60 2 2 0 . The Bank actively supports these organizations through its membership of the relevant banking industry association i. is borne by the Rabb-ul-Maal as per the principles of Mudarabah. Such a collapse could be due to technical factors or market driven (psychological reasons). Key features and risk & reward characteristics of all pools The 'General Deposit Mudarabah Pool' for both local and foreign currency is catered for all depositors of BIPL and provide profit / loss based on actual returns earned by the Pool.4 5 0 . 40 TRUST ACTIVITIES Banks commonly act as trustees and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals. profit sharing among the depositors is based on pre-assigned weightages. The Bank has a well established strategic planning and evaluation process which involves all levels of management and which is subject to regular review. 39. 'Fertilizer'. if any. Systemic risk is reduced by the activities of both national and international regulatory authorities. Within the general constraints of its niche market the Bank is aware of the need of reducing risk. retirement benefit plans and other institutions.39. Whereas. Istisn’a etc.4 6 5 5.0 0 0 1 .000 41 PROFIT / (LOSS) DISTRIBUTION TO DEPOSITOR'S POOL The Bank maintained following pools for profit declaration and distribution during the year ended December 31. EUR & GBP).6 4 1 .7 Strategic Risk Strategic risk arises due to wrong assumptions in strategic decision making or the failure to react correctly to longterm changes in strategic parameters. and Treasury Special Pools The deposits and funds accepted under the General Deposit Mudarabah Pool is provided to different sectors of economy mainly' to 'Textile and Allied'. Pakistan Banks Association (“PBA”). The Bank also takes account of systemic risk by means of careful management of counter party risks in the inter-bank market. trusts. Compliance of shariah guidelines must permeate throughout the organization and its adherence should be reflected in the products and activities.8 Systemic Risk Systemic risk is the risk of a total or partial collapse of the financial system. These are not assets of the bank and. Loss. are not included in statement of financial position. 78 . their mutual relationship is that of Musharakah.0 0 0 8 7 . Depositors are Rabb-ul-Maal as they are the provider of capital while Bank acts as Mudarib by investing these funds in business.e.3 7 0 3 . It remains' the most important operational risk for an Islamic bank. Musharaka Pool under SBP's Islamic Export Refinance Scheme.

The Pools were dissolved after maturity of respective Treasury transaction.00% 213. 888 79 .510 - Specific Pool Profit rate and Profit rate weightage return announcement earned period SBP Share Bank share Bank share % % Profit rate return distributed Amount of Percentage of Mudarib share Mudarib Share transferred transferred through Hiba through Hiba (Rupees in '000) (Rupees in '000) (i) Islamic Export Refinance (IERS) Pool Monthly 12. Istisna. 2 Parameters used for allocation of profit.1 to these financial statements.37% 11. The review is done by experienced team of professional having considerable experience in the field of Islamic Banking and finance.117. Credit Risk: Financial Risk is the risk which is associated with financing that is mitigated through safeguards through available standards within Shariah guidelines as disclosed in note 39. generated from relevant assets is calculated at the end of the month.34% 50.24% 64.99% 1. The allocation of income and expenses to different pools shall be made based on pre-defined basis and accounting principles / standards.77% 0. The Bank also analyze transaction structure of each customer to further ensure proper safeguard of depositors' interest.e.84% 1. wherein BIPL and partner (Financial Institution) share actual return earned by the pool according to pre-defined profit sharing ratio. Direct expenses are charged to respective pool. Diminishing Musharka. Nevertheless since Islamic Banking is a nascent industry we believe that the process of further improvement will continue as the business grows. The income is shared between Bank and the depositors as per agreed profit sharing ratio after deduction of commingled Bank's equity share on pro rata basis. The general and specific provisions created against non-performing islamic financing and related assets and diminution in the value of investments as under prudential regulations and other SBP directives have been borne by BankIslami as Mudarib. The direct expenses charged to the pool are direct cost in financing / investment transactions (i. SBP enters into a Musharakah arrangement with BankIslami for onward financing to exporters and other blue chip companies on the basis of Shariah compliant modes such as Murabaha. The risk characteristic of each pool mainly depends on the asset and liability profile of each pool.53% 29. Ijarah.76% 70. Under the scheme.368 8. The Bank has prepared detailed product manuals in order to identify and properly mitigate such risk. IERS Pool consists of blue chip companies to whom BankIslami has provided financing facilities on Shariah compliant modes including IERS facility. Salam. Istisn’a. SBP is required to share in profit and loss of the BankIslami's IERS Musharakah pool.813. The pool is exposed to following kinds of risks: 1 Asset Risk: The pool is exposed to Asset Risk which is the risk that is associated with Islamic mode of finance(s) applied / used under the transaction structure(s).46% 0.35% 63. along with a brief description of their major components: Gross income (Revenue less cost of goods sold and after deduction of other direct expenses).542 1.00% - (ii) In addition to the above 85 short term Treasury Pools were created to meet liquidity management requirement of Treasury Department. Profit is shared according to an agreed weightage and loss is shared according to the investment ratio.9 11.The IERS Pool caters to the 'Islamic Export Refinance Scheme' requirements based on the guidelines issued by the SBP. charging expenses and provisions etc. The Pools were managed under the Shariah approved guidelines. while indirect expenses are borne by BankIslami as Mudarib. etc.01% 36. etc. Profit rate return Percentage of Amount of distributed to Mudarib share Mudarib Share remunerative transferred transferred deposits through Hiba through Hiba (Savings and Term) (Rupees in '000) General Deposit Mudarabah Pool Profit rate and Profit rate weightage return announcement earned period Depositor Share % Mudarib share % Mudarib share (Rupees in '000) PKR Pool USD Pool Monthly Monthly 12.66% 49. Carbora Financing.20% 0. The residual is shared among depositors as per agreed weightages. Treasury Pools are managed on the basis of Musharakah.) and depreciation of Ijarah assets. Murabaha. These weightages and profit sharing ratios are declared by the Bank in compliance with the requirements of the SBP and Shariah. In this Scheme.

except for captions of the Statement of Financial Position and profit and loss account.Repairs and maintenance Administrative Expense .others Rupees in '000 12.2 Corresponding figures Corresponding figures have been re-arranged and reclassified.other Other Charges .42 42.Worker's Welfare Fund Administrative Expense .968 4. Fee. wherever necessary.249 43 DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on March 04. insurance. The figures in the financial statements have been rounded off to the nearest thousand rupee. 42.others Reclassified to Other charges . commission and brokerage income Administrative expense . taxes.Repairs and maintenance Other Income . 2006 issued by the SBP. 2013 by the Board of Directors of the Bank. No significant reclassifications were made during the current year except for the following: Reclassified from Administrative Expense .953 52. and other benefits Administrative Expense . 04 of 2006 dated February 17.W orker's W elfare Fund Administrative Expense . have not been reproduced in these financial statements.648 19.Rent.1 GENERAL Captions. in respect of which there are no amounts. electricity. allowances. to facilitate comparisons.039 13. Chairman 80 President / Chief Executive Director Director . as prescribed by BSD Circular No.Salaries. etc.

Server Power Supply .Rupees in thousand --------------------------------------44 34 10 44 34 14 9 5 14 9 14 14 14 14 14 12 2 14 12 14 10 4 14 10 28 19 9 28 19 9 9 9 9 13 13 13 13 28 16 12 28 16 21 19 2 21 19 8 8 8 8 14 14 14 14 273 273 273 273 693 546 147 693 546 2 2 2 2 5 5 5 5 8 8 8 8 55 20 35 55 20 143 117 26 143 117 9 1 8 9 1 8 8 8 8 35 2 33 35 2 10 9 1 9 8 14 13 1 14 13 84 84 5 5 26 19 7 7 74 74 5 5 74 74 5 5 74 74 5 5 81 81 5 5 74 74 5 5 83 83 5 5 84 84 5 5 81 81 5 5 84 84 5 5 84 84 5 5 81 81 5 5 84 84 5 5 83 83 5 5 74 74 5 5 84 84 5 5 84 84 5 5 83 83 5 5 83 83 5 5 83 83 5 5 74 74 5 5 2 2 2 2 2 2 2 2 16 16 10 10 37 37 38 38 22 22 23 23 70 3 67 66 (1) 21 20 1 22 21 22 21 1 22 21 21 21 22 22 22 19 3 3 22 19 3 4 1 23 19 4 4 25 25 25 25 26 26 26 26 26 26 26 26 43 36 7 43 36 55 55 54 54 21 21 21 21 10 8 2 9 7 40 39 1 40 39 27 26 1 27 26 27 26 1 27 26 25 20 5 25 20 27 26 1 27 26 25 25 25 25 12 12 12 12 22 2 20 22 2 78 54 24 78 54 699 375 324 525 201 813 429 384 684 300 852 743 109 488 379 852 793 59 511 452 52 44 8 18 10 577 81 496 577 81 81 81 5 5 74 74 5 5 74 74 5 5 3.Naveed Rauf Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Hasan A Bilgrami Pak Qatar General Takaful Limited 888 81 . are as follows.203 3.022 181 294 113 11 11 11 11 Mode of disposal Particulars of Buyer Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Bank's policy Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Negotiation Negotiation Negotiation Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Employment terms Employment terms Employment terms Auction Auction Takaful Claim Takaful Claim Takaful Claim Takaful Claim Employment terms Takaful Claim Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Ahmed Mobeen Ahmed Mustafa Aleem Azimi Arbab Wadood Arsalan Vohra Ata Hussain Atika Khan Bilal Zuberi Farman Ahmed Farooq Anwar Hasan A Bilgrami Khawaja Ehrar ul Hasan M Faisal Sheikh M Furqan Mujtaba Hussain Rehan Shuja Sajid Hussain Sarfaraz Waris Sheba Matin Khan Syed Akhtar Ausaf Syed Tanveer Zahid Karim Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited AS Electronics AS Electronics AS Electronics Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Ayaz Chaudhry S Hamid Jawad Bukhari Fesal Omar Auction .Server Refrigerator Refrigerator Refrigerator Server Server Server Server Server Server Server Server Server Server Server Server Server Server Server Power Supply Split AC Suzuki Cultus Suzuki Cultus Suzuki Liana Suzuki Liana Suzuki Sprinter Switch Toshiba Note Book Toshiba Note Book Toshiba Note Book Toyota Camry UPS WDV Sale proceeds Gain/ (loss) on Accumulated disposal depreciation ---------------------------------------. Asset description Asset Cost ATM Machine Mother Board CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CISCO Router CISCO Router Desktop Desktop Desktop Electrical Work E-Queue Management System Hard Drive HP Server HP Server Motherboard IP Phones IP Phones Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop LCD Monitor LCD Monitor LCD Monitor Main Board of UPS Main Board of UPS Motorcycle Power Supply .Annexure 1 Details of amounts disposed off during the year including assets disposed off to Cheif Executive Ofiicer or to a Director or to Executives or to any related parties irrespective of the value.Naveed Rauf Auction .Server Power Supply .

520 10.687 4.Rupees in thousand --------------------------------------15 15 15 15 10 10 10 10 11 11 11 11 17 17 17 17 425 399 26 425 399 10 8 2 10 8 19 18 1 20 19 265 265 265 265 26 26 26 26 473 473 473 473 12.487 2.654 Mode of disposal Particulars of Buyer Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited 82 .Asset description Asset Cost UPS UPS UPS UPS UPS UPS UPS UPS UPS Video Conferencing Equipment Total WDV Sale proceeds Gain/ (loss) on Accumulated disposal depreciation ---------------------------------------.033 6.

22% and total Assets by 26.138 102 Dec-11 Rupees 0.77 1.717 24.Directors' Report On behalf of the Board.892 5.553 141 Dec-12 Basic Earnings/(loss) per share 0.665 20.03% 26.78 50.25%.433 28.22% 37. Hasan A Bilgrami Chief Executive Officer March 04. for the period ended December 31.468 58. 2013 83 . The Group has been able to post growth in its deposits by 27. Gratitude is also due to the Securities and Exchange Commission of Pakistan.818 5.03%.08% 38% Our group performance remained satisfactory. The highlights of the year under review are: Dec-12 Dec-11 Rupees in ‘000’ Total Deposits Total Assets Total Financing-net Total Investments Shareholder's Equity Branches 64.94% 8.25% 11. we are thankful to our employees and customers for their patronage and support. Finally. Financings by 11.30% Growth (%) 27.132 27. The Board would like to place on record its deep appreciation to the State Bank of Pakistan which has supported us with an un-wavering commitment.111 74. On behalf of the Board. I am pleased to present the consolidated Annual Results of the Bank along with its subsidiary BankIslami Modaraba Investment Ltd. 2012.

the consolidated financial statements present fairly the financial position of BankIslami Pakistan Limited and its subsidiary company as at December 31. Jafer Dated: March 8. 2012 Karachi 84 . their cash flows and changes in equity for the year then ended in accordance with the approved accounting standards as applicable in Pakistan. We have also expressed a separate opinion on the separate financial statements of BankIslami Pakistan Limited and have performed a limited scope review under the International Standard on Review Engagements 2410.The State Bank of Pakistan has given extension in timeline to the Bank till March 31. Our opinion is not qualified in respect of this matter. Chartered Accountants Engagement Partner: Rashid A. 2012. evidence supporting the amounts and disclosures in the consolidated financial statements. These consolidated financial statements include the unaudited certified returns from the branches of the Holding Company. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of any material misstatement. on a test basis. 2013 to meet this requirement. evaluating the overall presentation of the consolidated financial statements. BankIslami Modaraba Investments Limited as at December 31. In our opinion. An audit includes examining. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.AUDITORS’ REPORT TO THE MEMBERS We have audited the annexed consolidated financial statements comprising the consolidated statement of financial position of BankIslami Pakistan Limited (the Holding Company) and its subsidiary company. 2012 and the results of their operations. An audit also includes assessing the accounting policies and significant estimates made by the management. as well as. Emphasis of matter paragraph We draw attention to note 1.2 to the accompanying consolidated financial statements which describes the matter relating to shortfall in minimum capital requirements of BankIslami Pakistan Limited as at December 31. for the year then ended. We believe that our audit provides a reasonable basis for our opinion. their comprehensive income. consolidated statement of comprehensive income. consolidated cash flow statement and consolidated statement of changes in equity together with the notes forming part thereof (here-in-after referred to as the 'consolidated financial statements'). 2012 and the related consolidated profit and loss account. These consolidated financial statements are the responsibility of the Holding Company's management. except for eight branches. which have been audited by us. "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" of the subsidiary company. We conducted our audit in accordance with the auditing standards as applicable in Pakistan.

559.764.572.760 5.679 91.238.392 100.339 1.411 4.020 353.679 173.459 1. 2012 Note 2011 2010 (Restated) (Restated) --------------------.382 4.515 4.493 5.163 17 REPRESENTED BY Share capital Reserves Unappropriated profit / (accumulated losses) 18 19 5.000 50.409.938.533 3.513 87.279.283 5.491 68.695 169.310 (557.773 5.731.264 20.705 40.251.817.532 5.773 563.153 570.156.182.665.000 38.415 64.908 24.716.790 1.279.946.442 1.Rupees in '000 ------------------------ 2012 ASSETS Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets .132.616 1.710 2.781 32.674 1.282 8.816.858 4.208) 4.679 9.109.833 44.379 4.483.433.306.342.764.621.855 409.483 1.355 58.475.net of tax 20 CONTINGENCIES AND COMMITMENTS 21 The annexed notes 1 to 43 and Annexure 1 form an integral part of these consolidated financial statements.468.653.684.010 1.513.163 Surplus on revaluation of assets .306.564.678 LIABILITIES Bills payable Due to financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities Other liabilities NET ASSETS 14 15 16 1.847 5.078 5.831 549.048.436.132 13.035.137.671 74. Chairman President / Chief Executive Director Director 85 .279.572.654 19.672 28.Consolidated Statement of Financial Position as at DECEMBER 31.354 19.853 800.565.553.221 (233.863 188.928 27.110.919.net Operating fixed assets Deferred tax assets Other assets 6 7 8 9 10 11 12 13 4.233 53.891.712 806.847 798.262 1.576.205) 5.

425 111.443 2.436 182.921 2.796.072 (15.182.554 OTHER EXPENSES Administrative expenses Other (reversals) / provisions / write offs Other charges Total other expenses Extra ordinary / unusual items PROFIT BEFORE TAXATION Taxation Current Prior years Deferred 26 13.195 61.506 28 28 28 34.7873 0.284.7873 0.592 405.072 2.754) 12.718 2.497.119 2.7 25 24 181.210 13.436 208. Chairman 86 President / Chief Executive Director Director .000) 96.506 614.826 217.net Reversal of provision for diminution in the value of investments Bad debts written off directly Net spread after provisions / (reversals) OTHER INCOME Fee.816 1.479.892 31.921 632. commission and brokerage income Dividend Income Income from dealing in foreign currencies Gain on sale of securities Unrealised gain on revaluation of investments classified as held for trading Other income Total other income 22 23 10.902 2012 Profit / return earned Profit / return expensed Net spread earned Provision against non-performing Islamic financing and related assets .957 219.7688 The annexed notes 1 to 43 and Annexure 1 form an integral part of these consolidated financial statements.523 1.237 2 100.631.739 2.958 2.652 2.917.3 27 2.279 226.14 9.340 147.285 39.Consolidated Profit and Loss Account For the Year Ended december 31.311 124.631 24.Rupees in ‘000 ------5.390 632.620 60.144.262 415.873.383.659 59.207 2.Rupees --------Basic earnings per share Diluted earnings per share 29 29 0.870 533.086 2 63.7688 0.969 2.048 614.976.276.353 5.914 PROFIT AFTER TAXATION --------. 2012 Note 2011 (Restated) ------.868 3.504.175 (4.569.

659 405.439 422.Consolidated Statement of Comprehensive Income For the Year Ended december 31.696 542. Chairman President / Chief Executive Director Director 87 .098 136.2 6.Rupees in ‘000 ------415.914 2012 Profit after taxation for the year Comprehensive income transferred to equity Components of comprehensive income not reflected in equity : Surplus on revaluation of available for sale investments . 2012 Note 2011 (Restated) ------.610 The annexed notes 1 to 43 and Annexure 1 form an integral part of these consolidated financial statements.net of tax Total comprehensive income for the year 20.914 405.659 415.

903.829) 8.258 15.467.234.1 10.474 29.927 391.058 614.234.328) 2 (403.862) 32.358.000 12.919 26 26.680) 777.415 13.606 (60.842.506 (2) 614.148) 2 (128.752 5.772 9.039.195 24.941 60.504 311.994 (7.242 30 30 The annexed notes 1 to 43 and Annexure 1 form an integral part of these consolidated financial statements.705 255.744.410.868 (5.641.083 23.777 (Increase) / decrease in operating assets Due from financial institutions Islamic financing and related assets Others assets (excluding advance taxation and deferred cost) Increase / (decrease) in operating liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities (excluding current taxation) Income tax paid Net cash generated from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investments in available for sale securities Dividend received Investments in operating fixed assets Proceeds from disposal of operating fixed assets Net cash used in investing activities Increase / (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year (8. Chairman 88 President / Chief Executive Director Director .693) 6.231 3.14 9.884 185.606.612.288.546) 1.306) 510.408) (3.213) (273.851 76.227.Consolidated Cash Flow Statement For the Year Ended december 31.242 5.157 821.2 10.386) (7.149.245 8.145) (5.219 1.462 (7.270.7 13 24 13.670 (42. 2012 Note 2011 (Restated) -----------.528 13.754) (4.142.011 5.628.833 447.072 (15.214.000) (4.787) 4.921 (2) 632.086 674.446) (157.347 1.210 (12.092.713 (8.490) 235.Rupees in '000 ----------2012 CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Less: Dividend Income Adjustments: Depreciation Amortisation Depreciation on operating Ijarah assets Provision / (reversal of provision) against non-performing Islamic financing and related assets .612) 9.539.12.240) 452.050.942 234.416.net Reversal of provision for diminution of in value of investments Other (reversals) / provisions / write offs Gain on sale of property and equipment Deferred cost amortised 632.523 1.2 275.138 (4.118.571 111.

283 415.221 405.310 (557. 2012 5.354 The annexed notes 1 to 43 and Annexure 1 form an integral part of these consolidated financial statements.679 81.914 (81.731.781 5.279.208) 4. 2012 Unappropriated profit / Total (Accumulated loss) -----------------------.911) (233.659 5.171 173.279.553.279.137.659 (82.679 9.171) 100.695 Profit after taxation for the year transferred from Statement of Comprehensive Income Transfer to statutory reserve Balance as at December 31.911 91.Rupees in '000 ------------------Statutory reserve Share capital Balance as at January 01. 2011 5. Chairman President / Chief Executive Director Director 89 . 2011 Profit after taxation for the year transferred from Statement of Comprehensive Income Transfer to statutory reserve Balance as at December 31.392 415.679 82.Consolidated Statement of Changes in Equity For the Year Ended december 31.205) 405.914 5.

The Bank commenced its operations as a Scheduled Islamic Commercial Bank with effect from April 07. Hence. 2012. The State Bank of Pakistan granted a ‘Scheduled Islamic Commercial Bank’ license to the Bank on March 18. The Bank is operating through 141 branches including 53 sub branches as at December 31. the financial statements of "Modaraba Al-Mali" are not required to be consolidated in the Group's consolidated financial statements. 2013.280 billion although its CAR stands at 15. 6 billion. 07 of 2009 dated April 15. Block-4. 2004 under the Companies Ordinance. 90 .Bankislami pakistan limited and its subsidiary company notes to And forming part of the Consolidated Financial Statements For the Year Ended december 31. 2013. 10 billion to be achieved in a phased manner by December 31. Based on the financial statements of the Bank for the year ended December 31. on receiving Certificate of Commencement of Business from the State Bank of Pakistan (SBP) under section 37 of the State Bank of Pakistan Act. 2006.100 percent holding The subsidiary company was incorporated in Pakistan on January 22. the paid up capital of the Bank (free of losses) as at December 31. consumer. Recently. Intra group balances or transactions have been eliminated. 2013 to comply with the future and prevailing regulatory capital requirements. Later on it was registered as a Modaraba Company with the Registrar of Modaraba Companies and Modaraba (Flotation and Control) Ordinance. The Bank is principally engaged in corporate. Shahrah-e-Faisal. The SBP vide its letter no. 1956. Marine Drive. BSD/BAI3/608/2773/2011 dated March 7. BankIslami Modaraba Investments Limited (Subsidiary Company) . the Pakistan Credit Rating Agency (Private) Limited (PACRA) determined the Bank's long-term rating as 'A' and the short-term rating as 'A1'. 2013 has further extended the timeline for meeting the paid up capital (free of losses) of Rs 6 billion and to submit the reassessed issue price of right shares till March 31. The MCR (free of losses) and Capital Adequacy Ratio (CAR) requirements as at December 31. 2011. 1984 to carry out the business of an Islamic Commercial Bank in accordance with the principles of Islamic Shariah. 2012 (2011: 102 branches including 32 sub branches). 1984 as a public limited company.1 STATUS AND NATURE OF BUSINESS The Group comprises of: BankIslami Pakistan Limited (Holding Company) BankIslami Pakistan Limited (the Bank) was incorporated in Pakistan as a public limited company on October 18. retail banking activities and investment activities.2 The State Bank of Pakistan (SBP) vide circular no. 1. Dolmen City. The management of the Group is of the view that consolidated financial statements are required to be prepared only for subsidiaries as defined in the Companies Ordinance. The subsidiary company is managing its Modaraba with the name of Modaraba-AlMali. Moreover. 2011 had given extension to the Bank in timeline for meeting MCR (free of losses) amounting to Rs 6 billion till June 30. commercial.19 percent. The principal activity of the subsidiary company is to float and operate Modaraba. "Modaraba Al-Mali" is a modaraba floated under the Modaraba Companies and Modaraba (flotation and control) Ordinance. 1984. the Bank has also been advised by the SBP to submit concrete time bound capital plan by March 31. 1984. The financial statements of the subsidiary company have been consolidated on the basis of reviewed condensed interim financial statements for the half year ended December 31. 2012 1 1. Progressive Square. The financial statements of the subsidiary company have been consolidated on a line-by-line basis and the carrying value of the investments held by the holding company has been eliminated against the shareholder's equity in the subsidiary company. 2011 had in principle agreed to issue right shares to increase its paid up capital (free of losses) to Rs. The Board of Directors (BOD) of the Bank in their meeting held on February 07. 2009 has increased the Minimum Capital Requirement (MCR) for banks upto Rs. The shares of the Bank are quoted on the Karachi Stock Exchange (Guarantee) Limited. The principal place of business of the subsidiary company is situated at 10th Floor. The financial statements of "Modaraba Al-Mali". a modaraba floated by the subsidiary company in which it has 13 percent holding. Clifton. However. Karachi. 1980 and does not fall under the definition of subsidiary as defined under the Companies Ordinance. the SBP vide its letter no. 2012 amounts to Rs 5. 2005. 2011. The registered office of the Bank is situated at 11th Floor. Karachi. have not been consolidated although the Group has control over Modaraba Al-Mali by virtue of management rights. 1980. 1986 under the Companies Ordinance. 2012 is Rs 9 billion (2011: Rs 8 billion) and 10 percent (2011: 10 percent) respectively. BPRD/CSD/2407/13 dated March 1.

Furthermore. Istisna. The effect of change in the accounting policy on the current and prior period consolidated financial statements have been summarised below: 91 . 1984. inventories and related assets previously being reported under 'other assets' have now been made part of 'Islamic financing and related assets'.1 (Revised) 'Presentation of Financial Statements'.1 BASIS OF PRESENTATION The Group provides financing mainly through Murabaha. 1984. the Banking Companies Ordinance. Ijarah. the Banking Companies Ordinance. 'Financial Instruments: Recognition and Measurement' and International Accounting Standard (IAS) 40. 2002 till further instructions. the Surplus / (Deficit) on revaluation of Available-For-Sale Securities (AFS) only may be included in the 'Statement of Comprehensive Income' but will continue to be shown separately in the Statement of Financial Position. the SBP requirements prevail over the requirements specified in IFRS 8.e. 1962 or the requirements of the directives issued by SECP and SBP prevail. received which does not comply with the principles of Islamic Shariah is recognised as charity payable as directed by the Shariah Advisor. 1984. the requirements of the Companies Ordinance.O 411(I)/2008 dated April 28. Diminishing Musharka. Change in accounting policies and disclosure The SBP vide BSD Circular Letter No.1 STATEMENT OF COMPLIANCE These consolidated financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. All banking companies in Pakistan are required to prepare their annual financial statements in line with the format prescribed under BSD Circular No.2 2. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board and Islamic Financial Accounting Standards. 1962 or directives issued by the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP). investments have been classified and valued in accordance with the requirements prescribed by the SBP through various circulars. The income on such financing is recognised in accordance with the principles of Islamic Shariah. As required under the directive issued by the SBP. Wherever the requirements of the Companies Ordinance. segment information disclosed in these consolidated financial statements is based on the requirements laid down by SBP. effective from the accounting year ended December 31. All financing. 3 3. the SECP has deferred the applicability of International Financial Reporting Standard (IFRS) 7 ' Financial Instruments: Disclosures' through its notification S.R. 1984. 2009. The SBP has deferred the applicability of International Accounting Standard (IAS) 39. However income. 2013 has made certain changes to the 'Revised Forms of Annual Financial Statements' as applicable to the Group. 'Revised Forms of Annual Financial Statements'. which have been made effective from December 31. 2006. and Balance Sheet shall be renamed as 'Statement of Financial Position'. the Group has changed its accounting policy in respect of presentation and disclosure of Islamic financing and related assets as under: a) The head 'Financings' in the Consolidated Statement of Financial Position has been renamed as 'Islamic financing and related assets'. Accordingly. 4 dated February 17.5 b) The change in accounting policy has been accounted for retrospectively in accordance with the requirements of IAS 8. 'Accounting Policies.3 3. SBP through its BSD Circular No. Further. 03 of 2013 dated January 22. 2012. Changes in Accounting Estimates and Errors' and accordingly the comparative figures have been restated. The management of the Group believes that as the SBP has defined the segment categorisation in the above mentioned circular. 07 dated April 20. the requirements of the Companies Ordinance. issued by the Institute of Chartered Accountants of Pakistan. Accordingly. if any. The purchases and sales arising under these arrangements are not reflected in these consolidated financial statements as such but are restricted to the amount of facility actually utilised and the appropriate portion of profit thereon. 10 dated August 26. two statement approach shall be adopted i. as are notified under the Companies Ordinance. the above requirements have been adopted in the preparation of these consolidated financial statements.4 3.3. 2008. 'Investment Property' for banking companies through BSD Circular Letter No. However. the Banking Companies Ordinance. the requirements of these standards have not been considered in the preparation of these consolidated financial statements. 3. 1962 or directives issued by the SECP and SBP differ with the requirements of IFRSs. Accordingly. Musawama and other Islamic modes as briefly explained in note 5.2 3. IFRS 8 'Operating Segments' is effective for the Group's accounting period beginning on or after January 1. 2006. advances (against murabaha etc). 2010 has clarified that for the purpose of preparation of financial statements in accordance with International Accounting Standard . separate 'Profit and Loss Account' and 'Statement of Comprehensive Income' shall be presented.

585) 2. The amendments require that an entity present separately the items of other comprehensive income that would be reclassified to profit or loss in the future if certain conditions are met from those that would never be reclassified to profit or loss.507. ‘Employee benefits’ was amended in June 2011 applicable for periods beginning on or after January 1. includes the disclosure requirements for all forms of interests in other entities.100 - Other standards. The impact on the Group will be as follows: to eliminate the corridor approach and recognise all actuarial gains and losses in other comprehensive income as they occur. except that certain investments. 3.6 (4.469) 4. IFRS 12.895. The Group is yet to assess IFRS 10’s full impact. ‘Disclosures of interests in other entities’. December 31. December 31. Interpretations and amendments to published approved accounting standards that are not yet effective: Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) . associates.058 (2. including joint arrangements. IAS 19. IFRS 10. in this limited circumstance." 92 .555.100) 39. The presumption can be rebutted only if the investment property is depreciable and held within a business model whose objective is to consume substantially all of the asset’s economic benefits over the life of the asset.8 Early adoption of standards The Group has not early adopted any new or amended standard in 2012. 3.555. These amendments will have no impact on consolidated financial statements of the Group.7 Standards.507. 2013 but are considered not to be relevant or do not have any significant effect on the Group's operations and are therefore not detailed in these consolidated financial statements. interpretations and amendments to published approved accounting standards that are effective in the current year: Amendments to IAS 12 – deferred tax on investment property (effective for annual periods beginning on or after January 1.(effective for annual periods beginning on or after July 1. 2012).816 (39. 4 4.058) 4. builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. is based on a rebuttable presumption that the carrying amount of the investment property will be recovered entirely through sale. 2012). Further. to immediately recognise all past service costs.585 (8. The 2010 amendment provides an exception to the measurement principle in respect of investment property measured using the fair value model in accordance with IAS 40 Investment Property. "Employee Benefits.816) 8.7 and 32 to the consolidated financial statements have been carried at present values as determined under International Accounting Standard 19. The measurement of deferred tax assets and liabilities. The amendments do not address which items are presented in other comprehensive income or which items need to be reclassified. The amendment may impact the consolidated financial statements of the Group which has not yet been quantified. and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability / asset. The Group is yet to assess IFRS 12’s full impact.469 (4. special purpose vehicles and other off balance sheet vehicles. 2013. staff retirement benefits as disclosed in notes 5.December 31. - - - There are other new and amended standards and interpretations that are mandatory for the Group's accounting periods beginning on or after January 1.1 BASIS OF MEASUREMENT Accounting convention These consolidated financial statements have been prepared under the historical cost convention. foreign currency balances and commitments in respect of foreign exchange contracts have been marked to market and are carried at fair value. 'Consolidated financial statements’. The amendment has no impact on the consolidated financial statements of the Group. The requirements of other IFRSs continue to apply in this regard. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. 2012 2011 2010 ----------------------(Rupees in '000)---------------------Impact on Consolidated Statement of Financial Position Decrease in other assets Increase in Islamic financing and related assets Impact on Consolidated Profit and Loss Account Decrease in Other provisions / write offs Increase in provisioning against Islamic financing and related assets 3.895.

6. 4. Staff retirement benefits (notes 5. 4. The areas involving a higher degree of judgment or complexity.14.4 Critical accounting estimates and judgments The preparation of consolidated financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. (b) (c) (d) (e) (f) Estimates and judgments are continually evaluated and are based on historical experience and other factors. Provision for non-performing Islamic financing and related assets (notes 5.14). 5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.2 5.1 Cash and cash equivalents Cash and cash equivalents for the purpose of cash flow statement comprise of cash and balances with treasury banks and balances with other banks in current and deposit accounts. including expectation of future events that are believed to be reasonable under the circumstances.2.3 and 10. 5. or areas where assumptions and estimates are significant to the consolidated financial statements are as follows: (a) Critical judgment in classification and valuation of investments in accordance with the Group’s policy (notes 5. Determination of forced sales value of underlying securities of non performing Islamic financing and related assets (note 10. 5. These have been consistently applied to all the years presented. unless otherwise specified.1). Actual results may differ from these estimates.4 and 11). Depreciation and amortization methods of operating fixed assets (notes 5.to-maturity These are investments with fixed or determinable payments and fixed maturity and the Group has the positive intent and ability to hold them till maturity.2 and 9).2 Functional and Presentation Currency These consolidated financial statements are presented in Pakistani Rupees. (b) Held.3 Rounding off Figures have been rounded off to the nearest thousand rupees unless otherwise stated. Assumption and estimation in recognition of provision for taxation (current and prior years) and deferred taxation (notes 5.1 Investments Classification Investments of the Group are classified as follows: (a) Held-for-trading These are investments which are either acquired for generating profits from short-term fluctuations in market prices or are securities included in a portfolio for which there is evidence of a recent actual pattern of short-term profit taking.2. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. 12 and 28). 93 . (c) Available-for-sale These are investments which do not fall under the 'held for trading' or 'held to maturity' categories. which is the Group's functional and presentation currency.7 and 32).4.

(b) Held-to-maturity These are measured at amortised cost using the effective profit rate method.2 Regular way contracts All purchases and sales of investments that require delivery within the time frame established by regulation or market convention are recognised at the trade date. For investments classified as held to maturity. which is the date on which the Group commits to purchase or sell the investments.4 Subsequent measurement Subsequent to initial recognition investments are valued as follows: (a) Held-for-trading These are measured at subsequent reporting dates at fair value. (d) Investments in associates Associates are all entities over which the Group has significant influence but not control. Istisn’a. Unquoted equity securities are valued at the lower of cost and break-up value.2. Musawama and Diminishing Musharaka financing and the related assets. Provision for diminution in the value of sukuk certificates is made as per the Prudential Regulations issued by the State Bank of Pakistan. if any. These are stated net of general and specific provisions. A significant or prolonged decline in fair value of an equity investment below its cost is also considered an objective evidence of impairment. Surplus / (deficit) arising on remeasurement is included in the consolidated statement of comprehensive income but is kept in a separate account shown in the consolidated statement of financial position below equity. (c) Available for sale Quoted / Government securities are measured at fair value. The surplus / (deficit) arising on these securities is taken to the consolidated profit and loss account when actually realized upon disposal. the impairment loss is recognised in the consolidated profit and loss account.3 Gains or losses on sale of investments are included in consolidated profit and loss account for the year.2.5 Impairment Available for sale and Held to maturity investments Impairment loss in respect of investments classified as available for sale and held to maturity (except sukuk certificates) is recognised based on management's assessment of objective evidence of impairment as a result of one or more events that may have an impact on the estimated future cash flows of the investments.6 5. Salam. 5. 5. 5. Gains and losses on remeasurement are included in the net profit and loss for the year. 5. the cumulative loss that has been recognised directly in surplus on revaluation of securities on the Consolidated Statement of Financial Position below equity is removed therefrom and recognised in the consolidated profit and loss account. Investments classified as 'held for trading' are initially recognised at fair value and transaction costs are expensed in the consolidated profit and loss account. Islamic financing and related assets Islamic financing and related assets are financial products originated by the Group and principally comprise Murabaha. Ijarah.2. 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. 94 .5.2. less any impairment loss recognized to reflect irrecoverable amount. In case of impairment of available for sale securities. Investments in other unquoted securities are valued at cost less impairment losses. Premium or discount on debt securities classified as available for sale is amortised using the effective profit rate method and taken to the consolidated profit and loss account.3 Initial recognition and measurement Investments other than those categorised as 'held for trading' are initially recognised at fair value which includes transaction costs associated with the investment.2.

Goods purchased but remaining unsold at the consolidated statement of financial position date are recorded as inventories. 2008 have been accounted for under finance method. under financing arrangements for purchase of goods / assets are recorded as advance. Istisn'a has two legs: first the Group acquires the described goods by way of Istisna to be manufactured by the customer from raw material of its own and once the goods are delivered to the Group. thereafter all Ijarah financing are accounted for under IFAS-2. Documentary Collections and Open Accounts.e. under Documentary Credits (LCs). Depreciation on Ijarah assets is charged to consolidated profit and loss account by applying the accounting policy consistent with the policy for depreciation of operating fixed assets. it sells it to the client at cost plus the profit agreed upon in the promise. Import Murabaha is a product. 5.3. The partner using the asset pays the proportionate rental of such asset to the other partner (the Group).3 Ijarah Financing Ijarah financing executed on or before December 31.Specific provision The Group maintains specific provision for doubtful debts based on the requirements specified in the Prudential Regulations issued by the SBP. On culmination. the customer through an independent agency contract.3.3. financing are recorded at the deferred sale price net of profit.. will sell the same to various end-users as the agent of the Group. Musawama is a sale transaction in which price of a commodity to be traded is bargained between the seller and the purchaser without any reference to the cost incurred by the seller.2 The rentals received / receivable on Ijarahs are recorded as income / revenue. The net provision made / reversed during the year is charged to the consolidated profit and loss account and accumulated provision is netted off against Islamic financing and related assets. Salam is a sale transaction where the seller undertakes to supply some specific goods to the buyer at a future date against an advance price fully paid on spot. Islamic financing and related assets are written off when there are no realistic prospects of recovery. 5. Funds disbursed. Diminishing Musharaka represents an asset in joint ownership whereby a partner promises to buy the equity share of the other partner until the title to the equity is totally transferred to him. used to finance a commercial transaction which consists of purchase by the Group (generally through an undisclosed agent) the goods from the foreign supplier and selling them to the customer after getting the title to and possession of the goods. 5. However the Group can appoint the client as its agent to purchase the assets / goods on its behalf.1 Islamic financing and related assets are stated net of specific and general provisions against non-performing Islamic financing and related assets which are charged to the consolidated profit and loss account. Thereafter. Murabaha to the purchase orderer is a sale transaction wherein the first party (the Group) sells to the client / customer Shariah compliant assets / goods for cost plus a pre-agreed profit after getting title and possession of the same. General provision The Group also maintains general provision at the rate of 5% against unsecured consumer portfolio and at the rate of 1. Ijarah is a contract in which the Group buys and rents a productive asset to a person short of funds and in need of that asset. the Group purchases the assets / goods subject of the Murabaha from a third party and takes the possession thereof. Murabaha financing is extended to all types of trade transactions i. 95 . Istisn’a is an order to manufacture or construct some assets. Musharaka / Modaraba are different types of partnerships in business with distribution of profit in agreed ratio and distribution of loss in the ratio of capital invested. In principle on the basis of an undertaking (Promise-to-Purchase) from the client (the purchase orderer).5% against secured consumer portfolio in accordance with the Prudential Regulations issued by the SBP.

Residual values. if any. assets underlying Ijarah financing have been carried at cost less accumulated depreciation and impairment. 5. Software and other development costs are only capitalised to the extent that future economic benefits are expected to be derived by the Group.1 Operating fixed assets and depreciation Property and equipment These are stated at cost less accumulated depreciation and accumulated impairment losses. Impairment loss is recognised as an expense immediately in the consolidated financial statements except for impairment loss on revalued assets. Subsequent costs are included in the assets' carrying amount or are recognised as a separate asset. and are shown under Islamic financing and related assets. the excess of aggregate Ijarah rentals over the cost of the asset and documentation charges under Ijarah facility is deferred and then amortised over the term of the Ijarah. Under IFAS-2 method. Depreciation on Ijarah assets is charged by applying the straight line method over the Ijarah period which is from the date of delivery of respective assets to mustajir upto the date of maturity / termination of Ijarah agreement. Maintenance and normal repairs are charged to the profit and loss account as and when incurred. (b) 5. only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. if appropriate.4.4 Impairment At each reporting date. If any such indication exists. 5.e.4. are taken to the consolidated profit and loss account.4. at each reporting date.2 to the consolidated financial statements.4. Gains / losses on termination of Ijarah contracts are recognised as income on a receipt basis. less impairment losses.2 Capital work in progress These are stated at cost less accumulated impairment losses. Such intangible assets are amortised using the straight-line method over the estimated useful lives. useful lives and depreciation methods are reviewed and adjusted.4 5. so as to produce a constant rate of return on net investment in the Ijarah. the carrying amount of the asset is reduced to its recoverable amount. If the recoverable amount of an asset is estimated to be less than its carrying amount. which is adjusted against related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of that asset. if any.(a) Under finance method. Recoverable amount is the greater of net selling price and value in use. 5. Amortization on additions / deletions during the year is charged for the proportionate period for which the asset remained in use. if any. Income on Ijarah is recognised from the date of delivery of the respective assets to the mustajir (lessee). The unearned income i.3 Intangible assets Intangible assets having a finite useful life are stated at cost less accumulated amortisation and accumulated impairment losses. if any. Intangible assets having an indefinite useful life are stated at acquisition cost. the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. the present value of minimum Ijarah payments have been recognised and shown under Islamic financing and related assets. 96 . if appropriate. The useful lives and amortisation method are reviewed and adjusted. if any. as appropriate. at each reporting date. the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. Depreciation on additions / deletions during the year is charged for the proportionate period for which the asset remained in use. Rentals accrued from Ijarah financing net of depreciation charged are taken to the consolidated profit and loss account. Depreciation is computed using the straight-line method by taking into consideration the estimated useful life of the related assets at the rates specified in note 11. An item of property and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposal of property and equipment if any.

Contributions to the fund are made on the basis of actuarial recommendations. 2012.7. The defined benefit obligation is calculated periodically by an independent actuary using the projected unit credit method.6 5. if the net cumulative unrecognised actuarial gains or losses for the fund at the end of the previous financial year exceed 10% of the higher of defined benefit obligation and the fair value of the plan assets. In addition.2 Deferred Deferred tax is recognised using the balance sheet liability method on all major temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and amounts used for taxation purposes. 5. The carrying amount of the deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilised. Goodwill is measured at cost less any accumulated impairment losses.7. The Group has no further payment obligations once the contributions have been paid.6. together with adjustments for unrecognized actuarial gains or losses and past service costs. A reversal of an impairment loss is recognized as income immediately except for impairment loss on revalued assets which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of assets. 5.1 Staff retirement benefits Defined benefit plan The Group operates an approved funded gratuity scheme for its permanent employees.Income Taxes. rebates and tax losses as allowed under the seventh schedule to the Income Tax Ordinance. 97 .Where an impairment loss reverses subsequently.5 Goodwill Goodwill represents the difference between the cost of acquisition and the fair value of the Group's share of net identifiable assets of the acquired entity at the date of acquisition. the carrying amount of the asset is increased to the revised estimate of its recoverable amount. 2001. so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. after taking into consideration available tax credits.2 Defined contribution plan The Group operates a recognised contributory provident fund for all the permanent employees. 5.1 Taxation Current The provision for current taxation is based on taxable income for the year at current rates of taxation. The contributions made by the Group are recognised as employee benefit expense when they are due. Following initial recognition. which arises from assessments / developments made during the year. the Group also records deferred tax asset on available tax losses. 5. Equal monthly contributions are made both by the Group and the employees at the rate of 10 % of the basic salary. annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. The liability recognised in the consolidated statement of financial position in respect of defined benefit gratuity fund. The Group also recognises deferred tax asset / liability on deficit / surplus on revaluation of securities which is adjusted against the related deficit / surplus in accordance with the requirements of the International Accounting Standard 12 . where considered necessary relating to prior years. The last valuation was conducted as on December 31. Actuarial gains and losses are recognised as income or expense over the average remaining working lives of the employees.6. 5.7 5. Goodwill is reviewed for impairment. Deferred tax is calculated using the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted by the reporting date. The charge for current tax also includes adjustments. is the present value of the defined benefit obligation at the consolidated statement of financial position date less the fair value of plan assets.

Where Sukuks (excluding held for trading securities) are purchased at a premium or discount. Provisional profit of Musharaka / Modaraba financing is recognised on an accrual basis. the fair value is calculated with reference to quoted market price.7 5.9. 5.5.9 5.3 5. is recognised over the period of guarantee.8.8.10 Profit on Sukuks is recognised on an accrual basis.e. Any loss on derecognition of the financial assets and financial liabilities is taken to income directly. The Group follows the finance method in recognising income on Ijarah contracts written upto December 31. 98 .9. 5. due to financial institutions. Gains and losses on sale of investments are included in the consolidated profit and loss account.1 Financial Instruments Financial assets and financial liabilities All financial assets and liabilities are recognised at the time when the Group becomes a party to the contractual provisions of the instrument. Profit on classified financing is recognised on receipt basis. Profit from Ijarah contracts entered on or after January 01.3 Derivatives Derivative financial instruments are recognised at fair value. The resultant gains and losses are taken to the consolidated profit and loss account currently. Income and expense items of such assets and liabilities are also off-set and the net amount is reported in the consolidated financial statements. 5.8.9. Income on Ijarah is recognised from the date of delivery of the respective assets to the mustajir (lessee).8 5.8.8 5. or to realise the assets and to settle the liabilities simultaneously. 5. cancelled or expired.8. deposits and other payables.8. Fee on guarantees. Financial liabilities are derecognised when they are extinguished. if considered material. profit on the portion of revenue not due for payment is deferred by accounting for unearned Murabaha income with a corresponding credit to deferred Murabaha income which is recorded as a liability.8. Financial assets carried on the consolidated statement of financial position includes cash and balances with treasury banks. so as to produce a constant rate of return on net investment in the Ijarah. investments. Salam and Musawama are recognised on a time proportionate basis. Under this method the unearned income i. 2008.5 Profit on Diminishing Musharaka is recognised on an accrual basis.9 5. Derivatives with positive market values (unrealised gains) are included in other receivables and derivatives with negative market values (unrealised losses) are included in other liabilities in the consolidated statement of financial position. In the case of equity futures. The same is then recognised as revenue on a time proportionate basis. Profit from Diminishing Musharaka.1 Revenue recognition Profit from Murabaha is accounted for on consummation of Murabaha transaction. Profit from Istisn’a is recorded on accrual basis commencing from the time of sale of goods till the realisation of proceeds by the Group.4 5. Gains / losses on termination of Ijarah contracts are recognised as income on a receipt basis. i. excess of aggregate Ijarah rentals over the cost of the asset and documentation charges under Ijarah facility is deferred and then amortised over the term of the Ijarah. Actual profit / loss on Musharaka and Modaraba financing is adjusted for declaration of profit by Musharaka partner / modarib or at liquidation of Musharaka / Modaraba. due from financial institutions.e.2 Offsetting of financial instruments Financial assets and financial liabilities are off-set and the net amount is reported in the consolidated financial statements only when there is a legally enforceable right to set-off the recognised amount and the Group intends either to settle on a net basis.8. Islamic financing and related assets and certain receivables and financial liabilities include bills payable. Fee on issuance of letter of credit and acceptance is recognised on receipt basis as generally the transaction consummates within an accounting period.6 5. using the effective yield method. Dividend income is recognised when the right to receive the dividend is established.8. Financial assets are derecognised when the Group loses control of the contractual rights that comprise the financial assets. 2009 is recognized in the consolidated profit and loss account over the term of the contract net of depreciation expense relating to the Ijarah assets. 5.8. those premiums / discounts are amortised through the consolidated profit and loss account over the remaining maturity. However.2 5. when the obligation specified in the contract is discharged. The particular recognition methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with them. balances with other banks.

5. The Group expects most acceptances to be simultaneously settled with the reimbursement from the customers. Monetary assets and liabilities in foreign currencies are translated into rupees at the exchange rates prevailing at the consolidated statement of financial position date. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimates. 5. 5. Contingent assets are not recognised. 5. Acceptances are accounted for as off balance sheet transactions and are disclosed as contingent liabilities. Foreign currency transactions Foreign currency transactions are translated into local currency at the exchange rates prevailing on the date of transaction.5.14 Deferred costs As allowed by SBP pre-operating / preliminary expenses are included in deferred costs and these are amortized over a maximum period of five years on straight line basis from the date of commencement of business.15 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). 99 . which is the Group's functional and presentation currency. Charge to the consolidated profit and loss account is stated net of expected recoveries. Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in rupee terms at the exchange rates ruling on the reporting date.13 Provisions Provisions are recognized when the Group has a present legal or constructive obligation arising as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. 5. and are also not disclosed unless an inflow of economic benefits is probable. Contingent liabilities are disclosed unless the probability of an outflow of resources embodying economic benefit is remote.11 Acceptances Acceptances comprise promises by the Group to pay bills of exchange drawn on customers. The Group's primary format of reporting is based on business segments. Translation gains and losses Translation gains and losses are included in the consolidated profit and loss account. The consolidated financial statements are presented in Pakistani Rupees. Forward exchange promises are revalued using forward exchange rates applicable to their respective remaining maturities.10 Foreign currencies Functional and presentation currency Items included in the consolidated financial statements are measured using the currency of the primary economic environment in which the Group operates.12 Fiduciary assets Assets held in a fiduciary capacity are not treated as assets of the Group in the consolidated financial statements. which is subject to risks and rewards that are different from those of other segments. Provisions for guarantee claims and other off balance sheet obligations are recognised when intimated and reasonable certainty exists for the Group to settle the obligation. Commitments Commitments for outstanding forward foreign exchange contracts are disclosed at contracted rates.

2.3 6.5.228 80. credit. Retail banking It includes retail Islamic financing and related assets. Ijarah.foreign currency deposit accounts Cash Reserves Account Special Cash Reserve Account US Dollar Clearing Account With National Bank of Pakistan in .010 4.069 6.005 50. 5. guarantees and bills of exchange relating to its corporate customers. The Group carries out periodic valuation of these assets and any decline in their value below the recognized amount is charged to the consolidated profit and loss account.17 Earnings per share The Group presents basic and diluted earnings per share (EPS) for its shareholders.684. if any.foreign currency With the State Bank of Pakistan in .449 825.1 Business segments Trading and sales It includes equity. funding. trade finance.398 2.296 167.2.Rupees in '000 ------- 937. Diluted EPS is determined by adjusting the profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.096.2 6.1 This represents Rs.local currency current account .local currency current account 2012 2011 ------. Commercial banking It includes project finance.850.local currency . foreign exchanges. own position securities.15.403 933. 1956.15.4 2. 100 .2 Geographical segment The Group has 141 branches including 53 sub branches (2011: 102 branches including 32 sub branches) and operates only in Pakistan. The local currency current account is maintained with the State Bank of Pakistan (SBP) as per the requirements of Section 36 of the State Bank of Pakistan Act. 5.828 784.995 million) held against Cash Reserve Requirement and Statutory Liquidity Requirement.857. Basic EPS is calculated by dividing the profit attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the year. deposits and banking services offered to its retail customers and small and medium enterprises.634 108.610 4.184 67. Note 6 CASH AND BALANCES WITH TREASURY BANKS In hand .925 19.126 158.850.189 16. 5. These assets are disclosed in other assets as specified by the SBP.938.995 97.1 6.995 42. This section requires banking companies to maintain a local currency cash reserve in the current account opened with the SBP at a sum not less than such percentage of its time and demand liabilities in Pakistan as may be prescribed by SBP. export finance. Support Centre It includes the assets and liabilities relating to support functions at Head Office and their related income and expenses.712 835.831 6. commodities.943 1.184 million (2011: Rs.857.16 Assets acquired in satisfaction of claims Assets acquired in satisfaction of claim are stated at the lower of the financed amount and their market value at the time of acquisition. placements and Islamic financing and related assets.

418) 4.2 As per BSD Circular No.883 million) held against Cash Reserve Requirement and Special Cash Reserves Requirement.958 549.982. Note 2012 2011 ------. 15 dated June 21. The profit rates on the agreement range between 6. The Group is making efforts to recover the outstanding balance and has made a provision against the outstanding amount.136.2 & 8. 2012 2011 ------.264 3.475.Rupees in '000 ------- 6.917.442.on current accounts .196.95% to 9.Rupees in '000 ------6.975.264 101 . 2008. Special cash reserve of 6% is required to be maintained with SBP on FE-25 deposits as specified in BSD Circular No.217 (528.on deposit accounts 7. This includes Rs.399 630.145 10.217 7.122) 4.784) 33.75% (2011: 10. 15 dated June 21.436.75% to 12.418 4.682 (6.208 798.116.4 8.418 3.530 (441.672 4.074 798.052.911.000 4.5%) per annum and the agreements have a maturity ranging from 2 days to 63 days.474 730.132 529. The Group has entered into Commodity Murabaha agreements under which the Group purchases an underlying commodity from the open market through an agent and sells it to a financial institution on credit with profit.264 8 DUE FROM FINANCIAL INSTITUTIONS Sukuk Murabaha Commodity Murababa .3 Commodity Murabaha sale price Purchase price Deferred Commodity Murabaha income Opening balance Deferred during the year Recognised during the year Commodity Murabaha Opening balance Sales during the year Received during the year 442.1 8.000) 630.2 8. Note 2012 2011 ------. These deposits do not carry any return.682 525. 2008.090 3.958 533.on deposit accounts Outside Pakistan .911.672 6.4 7 BALANCES WITH OTHER BANKS In Pakistan . cash reserve of 5% is required to be maintained with the State Bank of Pakistan on deposits held under the New Foreign Currency Accounts Scheme (FE-25 deposits).352 million (2011: Rs.530 529.1 The Group entered into Sukuk Murabaha arrangement under which the Group appointed its client as an agent under asset purchase agreements to purchase the underlying sukuk from the open market on its behalf and later sell them on deferred Murabaha basis.local currency Musharaka Placement Provision against Sukuk Murabaha 8.1 8.6.217 (733. The maturity date of the deal was February 08. 2009.418) 8.486.530 (604.466.217 (529.798.264 442.513.1 7.5 8.672 4.074 806.3 8.911. The balance amount is available to the Group for its operations.411 7.282 15.Rupees in '000 ------- 8.000) 730.3 6.085) 3.482.399 3.292) 7. The expected profit rate on these arrangements is 6% (2011: 5 %) per annum.500.116.090 (6.on current accounts .530 (441.196.70.917 291 8.453 533.1 Represents deposits with various Islamic commercial banks under Musharaka and Modaraba arrangements with maturities less than 3 months. During the year this deposit was not remunerated (2011: Nil).206 247 15.000 8.975.

90%) per annum and the arrangements have a maturity ranging from 2 to 35 days.248 9.654 (28.928 Note 9.682 4.unlisted Fully paid up ordinary shares / Units Modaraba Certificates Units of Open-end Mutual Funds Units of Closed-end Mutual Funds Total investments at cost Less: Provision for diminution in value of investments Investments .442.786.151 18.208 28.442.344.908 9.2 9.446 16.6 9.631.Rupees in '000 ------- 8.891.4 16.446 16.7 20 102 .In local currency .1 INVESTMENTS Investments by types ------------------2012-----------------------------------2011-----------------Held by Given as Total Held by Given as Total Note the Group collateral the Group collateral -------------------------------------------------.net of provisions Surplus on revaluation of available-for-sale securities Total investments at market value 2012 2011 ------.425 15 6 20.net of Provisions Surplus on revaluation of available-for-sale securities Total investments at market value 9. The profit rates on these arrangements range between 9% to 9.2 Investments by segments Federal Government Securities GOP Ijarah Sukuks Sukuk certificates Sukuks .5% (2011: 11.774 16.826.116 28.2 9.5 Particulars of amounts due from financial institutions with respect to currencies: .631.8.4 9.208 960.482.866) 20.774 16.682 9 9.090 4.982 (13.3 25.812 28.908 9.788 260.660.644.802.660.982 - 27.826.(Rupees in '000) ------------------------------------------------Available for sale securities Sukuk / Certificates Units of Open-end mutual fund Units of Closed-end mutual fund Modaraba Modaraba-Al-Mali Total investments at cost Less: Provision for diminution in value of investments Investments .908 - 20.660.802.928 20.120 20.866) 20.866) 28.015 6 28.753 960.644.788 260.168.658.644.654 (28.789.2 9.2 27.982 (13.788 260.654 (28.In foreign currency 8.866) 28.Rupees in '000 ------- 9.7 (13.786.866) 20.120 20.812 28. 2012 2011 ------.208 20.116 28.644.015 6 28.812 28.928 16.482.891.789.300.4 The Group has entered into Musharaka arrangements under which the Group contributes money with other financial institutions for profit and loss sharing based on predetermined ratio.602 2.866) 28.120 20.3 2.015 6 28.116 20 28.817.753 960.891.208 28.090 8.817.208 20.817.177 9.425 15 6 20.802.208 15 6 20.789.631.

3.903 128. The principal is redeemable on maturity in March 2014.000 600.000 11.23 9.3.000 2.7 9.000 27.3. The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills.000 5.500 35.437 104. The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills.000 27.452 3.16 9.168.000 134.3 Ijarah GOP Sukuk .2 9.000 100.11 Others First WAPDA Sukuk Second WAPDA Sukuk Pak Electron Sukuk Amtex Sukuk Engro Fertilizer Sukuk Security Leasing Sukuk Third Sitara Chemicals Sukuk Sitara Energy Sukuk . The principal is redeemable on maturity in March 2012.15 9.000 30.5 Ijarah GOP Sukuk .790 2.3.000 5.3.737 668.14 9.219 16. These are backed by Government of Pakistan’s Sovereign Guarantee.3.602 27.550 25.000 50.250 322.3 9. These are backed by Government of Pakistan’s Sovereign Guarantee.984 118.22 9.890.835 37.3.000 18.3.000 50.000 50. The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills.3.3.Rupees in '000 -------- 9.000 65.184.425 9.511 4.420 3.000 5.4 9.000 6.575.500 36.000 50. These are backed by Government of Pakistan’s Sovereign Guarantee.20 9.3.000 5.18 9.3.333 55.7 103 .000 100.4 9.5 9.Sukuk Sui Southern Gas Company Sukuk Kohat Cement Sukuk Eden Housing Sukuk Optimus Sukuk HBFC Sukuk Note 2012 2011 Number of Certificates Face Value (Rupees) 2012 2011 Cost Cost --------.030 25.000 95.000 100. The principal is redeemable on maturity in December 2014.3.000 59.000 31.028 55.000 2.000 5.000 5.000 11.000 4.271.000 59.3.3.000 5.3.000 100.393 2.661. The principal is redeemable on maturity in May 2014.000 15.6 Ijarah GOP Sukuk .500. These are backed by Government of Pakistan’s Sovereign Guarantee.3 Available for sale securities Name of the investee company Sukuk Certificates Federal Government Ijarah GOP Sukuk . The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills. The principal is redeemable on maturity in November 2013. These are backed by Government of Pakistan’s Sovereign Guarantee.10 9.000 9.000 2.518. 9.3.9 Ijarah GOP Sukuk .000 100.151 557.050.344.571 221.500.3. These are backed by Government of Pakistan’s Sovereign Guarantee.500 22.571 221.3.000 - 100.000 65.1 9.753 2.000 5.000 84.3 9.562 128.10 Ijarah GOP Sukuk .248 3.399 145.000 20.500 2.000 8.12 Ijarah GOP Sukuk .000 100.000 5.030.3.105 3.000 100.644.663 2.3.250 25.6 9.3.826.000 50.500 22.000 60.691 3.300.000 5.701 2.525.000 5.3.19 9.1 The profit rate on these sukuks comprises of six months weighted average yield of market treasury bills.000 2.1 Sitara Energy Sukuk .11 9.667 6.000 8.7 Ijarah GOP Sukuk .500 2.000 25.000 5.3.3.000 60.177 20.750 25.2 9. These are backed by Government of Pakistan’s Sovereign Guarantee. The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills.9.000 5.310 170.169 22.000 120.000. The principal is redeemable on maturity in March 2015.247 4. The principal is redeemable on maturity in December 2013.000 30.3.6 9.250 323.000 30.9 58.000 168.5 9.000 100.000 15.000 5.13 9.000 5.3.8 Ijarah GOP Sukuk .12 9.702 3.250.000 5.17 9.000 60.3.248 299.2 New Allied Electronics (LG) .3.3.24 134.21 9.658.000 5. The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills.000.000 3.3.8 9.

The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills. As a security specific and exclusive hypothecation charge in respect of the Musharaka assets in favour of the investors to the extent of entire legal ownership rights of the company (covering the entire amount of Sukuk along with an 18.3.12 These Sukuks have been restructured last year. The sukuks matured in October 2012. Consequently. However.3. 9. March 2011. The issue amount and rentals are backed by Government of Pakistan’s Sovereign Guarantee.9 9.3. The principal will be redeemed in 12 equal quarterly installments the first such installment falling due on the 27th month from the date of first draw down. These Sukuk are backed by guarantee of Rs. the customer is making payments as per the restructuring plan approved by the minority sukuk holders. 9. There is an early purchase option available to the issuer after 2 years of disbursement with “No Early Payment Penalty”.3.3. 9. During the year. 9. 9.228 million having face value of Rs. The principal is redeemable on maturity in April 2015. The amount has been reclassified to other assets. These are backed by Government of Pakistan’s Sovereign Guarantee. Principal to be repaid in 48 months starting from April 2010). These certificates were available in the seller’s Central Depository Company (CDC) account and on completion of the transaction were transferred to the Group’s CDC account.16 These carry profit at the rate of three months KIBOR plus 100 basis points (2011: three months KIBOR plus 100 basis points) receivable quarterly based on Diminishing Musharaka mechanism with maturity in December 2012. Amtex defaulted in its principal repayment. The purchase price and rentals were backed by Government of Pakistan’s Sovereign Guarantee.11 These carry profit at the rate of six months KIBOR minus 25 basis points (2011: six months KIBOR minus 25 basis points) receivable on semi-annual basis with maturity in July 2017. 740 million from the Bank of Punjab. 9. 2009 of WAPDA – 1 Sukuk through a negotiated transaction for a cash consideration of Rs. These Sukuks carry profit at the rate of three months KIBOR plus 175 basis points (2011: three months KIBOR plus 175 basis points) receivable quarterly based on Diminishing Musharaka mechanism with maturity in September 2014.3.9. 50 million. 104 . principal was due to be redeemed in 12 consecutive quarterly installments with the first such installment falling due not later than the end of 27 months from the last draw down. The outstanding principal will be redeemed in 6 equal quarterly installments starting from June 2013.e. The principal is redeemable on maturity in June 2015.f.3. the Group suspended the accrual of profit from the Sukuk. These are backed by Government of Pakistan’s Sovereign Guarantee.10 These carried profit at the rate of six months KIBOR plus 35 basis points (2011: six months KIBOR plus 35 basis points) receivable on semi-annual basis. (2011: 6% (3% Cash + 3% accrual) upto September 2011 receivable monthly and thereafter at the rate of 1 month KIBOR upto maturity.8 The profit rate on these sukuks comprises of six months weighted average yield of six month market treasury bills. 9.The sukuk matured in October 2012 and the principal and profit were repaid on maturity. 50. equal semi annual installments.22% margin) is provided. However.3. Principal repayment to be made in two consecutive. the first such installment falling due on the 90th month from the date of the first contribution under the facility. During 2010. In 2011. The Group had purchased 10. the guarantee expired however the legal advisor of the Group is of the opinion that the amount will be recovered as the guarantee for the same had been called before its expiry.15 These Sukuks have been further restructured w.000 certificates on June 25.13 These carry profit at the rate of three months KIBOR plus 200 basis points (2011: three months KIBOR plus 200 basis points) receivable quarterly based on Diminishing Musharaka mechanism.3. As a security first pari passu charge has been provided on all present and future fixed assets of the Company with margin. The principal is repayable in 12 equal semiannual installments with first installment falling due in the 54th month from the first drawdown date. the issuer was unable to comply with the above restructuring plan and has executed a revised restructuring plan which has been approved by the minority sukuk holders.14 These carry profit at the rate of six months KIBOR plus 150 basis points (2011: six months KIBOR plus 150 basis points) receivable semi annually based on Diminishing Musharaka mechanism with maturity in September 2015. After restructuring these Sukuks carry profit at the rate of 0%. The accrued profit amount to be repaid in six equal monthly installments starting from 43rd month. the periodic Ijarah Rental dues were not paid to the Group on the plea that there exists certain discrepancy with respect to ownership of the asset. As per the new restructured plan principal will be repaid in 36 monthly installments and the accrued portion of profit upto March 2011 has also been waived. As per the terms. the Group called the guarantee provided by the Bank of Punjab. Currently.

The purchase price and rentals were backed by Government of Pakistan’s Sovereign Guarantee. As a security. which will be retired through payments made from the 13th quarter to the 20th quarter.820 million (inclusive of 10% margin) has been created by the issuer in favour of the trustee. the first such installment falling not later than the end of 30th month from the date of issue.18 These carry profit at the rate of six months KIBOR plus 195 basis points (2011: six months KIBOR plus 195 basis points) receivable semi-annually with maturity in July 2012.3. The sukuk matured in December 2012 and the principal and profit was repaid on maturity. 2013 and June 29.20 These carry profit at the rate of three months KIBOR plus 20 basis points (2011: three months KIBOR plus 20 basis points) receivable on quarterly basis. 2014. Accordingly the principal redemption started from September 2010 till June 2014 and will be calculated using the percentage as mentioned in the “Restructuring Agreement”. 1. 105 . 9. The principal will be redeemed in ten equal semi-annual installments commencing from the 6th month from the date of issue. irrevocable guarantee of a Financial Institution and Personal Guarantee of sponsoring directors has been provided.5% margin) and a charge over the mortgaged property of the company amounting to Rs. (2011: three months KIBOR plus 250 basis points upto June 29. 800 million of the company. The principal was to be repaid in 6 consecutive semi-annual installments. The purchase price and rentals are backed by Government of Pakistan’s Sovereign Guarantee. 9. 55 million has been deposited with the Group over which lien in favour of the Group has been marked. 2013 and three months KIBOR plus 300 basis points for the period between June 30. The principal will be redeemed in 10 equal semi-annual installments starting from 18th month of the date of issue of Sukuk. first specific charge on specified vehicles amounting to Rs. As a security first pari passu charge over fixed assets of the company or equitable mortgage on selected land and building with 25% margin had been provided.21 These sukuks have been restructured last year.23 These carry profit at the rate of six months KIBOR plus 125 basis points (2011: six months KIBOR plus 125 basis points) receivable quarterly based on Diminishing Musharaka mechanism with maturity in April 2015. 2013 and June 29. As a security first pari passu charge over fixed assets of the company or equitable mortgage on selected land and building with 25% margin had been provided. 2.3. As a security first ranking hypothecation charge over all present and future fixed assets of the company equivalent to the facility amount. 2014) receivable quarterly based on Diminishing Musharaka mechanism with maturity in June 2014.445 million (inclusive of approximately 33. As a security first charge over specific assets of the Company with 25% security margin has been provided. 250 million of the company (on market value to be established every year by approved valuator) and a 25% margin over the principal amount in the form of first floating charge on the company’s present and future current assets has been provided.3. These sukuks were restructured in 2010. Hence. 9. 9. 2013 and three months KIBOR plus 300 basis points for the period between June 30. The principal will be redeemed in ten equal semi-annual installments commencing from the 6th month from the date of issue. along with 25% margin and first ranking mortgage over all present and future immoveable properties of the Company with a 25% margin over the facility amount has been provided. the first such installment falling due not later than the end of the 15th month from the last drawdown.3. These Sukuks carry profit at the rate of three months KIBOR plus 150 basis points (2011: three months KIBOR plus 150 basis points) receivable quarterly based on Diminishing Musharaka mechanism with maturity in September 2016. The principal will be repaid in 24 consecutive quarterly installments.22 These Sukuks carry profit at the rate of three months KIBOR plus 250 basis points upto June 29.3.3.9. As a security first pari passu charge over all present and future fixed assets amounting to Rs. 9. As a security charge over hypothecated assets amounting to Rs.24 These carry profit at the rate of six months KIBOR plus 100 basis points (2011: six months KIBOR plus 100 basis points) receivable semi annually and the first such profit payment will fall due after six months from the issue date with maturity in May 2014. These carry profit at the rate of three months KIBOR plus 75 basis points receivable on quarterly basis. As a security first charge over present and future assets of the company with 25% margin has been provided. As per the new “Restructuring Agreement”. principal to be redeemed with revised mechanism and profit for the first four quarters will go into a frozen account.3. As a security first charge over present and future assets of the company with 25% margin has been provided. 9. no provision has been recognised by the Group. 9. An amount of Rs.17 These carry profit at the rate of six months KIBOR plus 195 basis points (2011: six months KIBOR plus 195 basis points) receivable semi-annually with maturity in July 2012.19 These carry profit at the rate of three months KIBOR plus 220 basis points (2011: three months KIBOR plus 220 basis points) receivable semi-annually with maturity in December 2012.3. The customer has defaulted in its payments towards the Group.

000 1.655.105 3.250 323.500 20.055.000 168.6 Ijarah GOP Sukuk .250 322.134 (13.897.027.300 560.866) 20.9 Ijarah GOP Sukuk .800.000 95.017.250 3.247 4.000 960.(at market value / cost) Ijarah GOP Sukuk .Sukuk New Allied Electronics (LG) .603.Third Sukuk Sitara Energy Limited .000 240.950 301.000 240.Sukuk Units of open-end mutual funds (at market value) Meezan Cash Fund Meezan Islamic Fund Meezan Islamic Income Fund ABL Islamic Income Fund UBL Islamic Sovereign Fund Askari Islamic Income Fund MCB Islamic Income Fund Units of closed-end mutual funds (at market value) Meezan Balanced Fund 5.814.000 2.377 7 10 7 240.389.000 600.179.Sukuk Sitara Chemical Industries Limited .10 Ijarah GOP Sukuk .000 3.000 240.691 3.610 2.511 4.066 2.962 2.563.881 128.992.Sukuk Sui Southern Gas Company Limited .399 145.310 170.500 27.389.268 2.5 Ijarah GOP Sukuk .4 Details of investments in Mutual Funds Name of investee fund Open .7 Ijarah GOP Sukuk .015 6 960.600 5.272.307 240.757 28.000 30.524.231 12 960.232 128.875.904.397.169 22.853.Sukuk Engro Chemicals Pakistan Limited .984 118.000 240.3 Ijarah GOP Sukuk .566 (28.742 2.571 221.11 WAPDA First Sukuk Certificates WAPDA Second Sukuk Certificates Pak Elektron Limited Sukuk .571 221.8 Ijarah GOP Sukuk .904.333 55.021 2012 1.9.12 Ijarah GOP Sukuk .Rupees in '000 ------------ Sukuks / Certificates .ended mutual funds Meezan Cash Fund Meezan Islamic Fund Meezan Islamic Income Fund ABL Islamic Income Fund UBL Islamic Sovereign Fund Askari Islamic Income Fund MCB Islamic Income Fund Closed end mutual funds Meezan Balanced Fund 2012 2011 Number of units 2012 2011 Cost (Rupees in '000) 5 5 5 15 6 21 2011 141 199 131 23.028 55.825 3.280.Sukuk Security Leasing .5 Quality of Available for Sale Securities 2012 2011 Long / Medium Term Rating (Where available) Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated A D (SO) A Unrated A+ Unrated Unrated Default AAWithdrawn D A A Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated Unrated A D (SO) AA Unrated A+ Unrated Unrated Default AA Withdrawn D A A -----------.000 3.123 128 166 115 - 5 5 5 240.538 6 7 6 9 28 20.410 672.050 3.866) 28.183 240.000 9.Sukuk Eden Housing .Sukuk Kohat Cement .335 2.Sukuk House Building Finance Corporation .700 AA(f) MFR 5-Star A+(f) A+(f) AAAAA-(f) AM2 AA+(f) 5 Star A+(f) AM2 Less: Provision for diminution in the value of investments 106 .523.125.802 2.Sukuk Sitara Energy Limited .667 6.087 2.835 37.219 16.512.327 2.Sukuk Amtex Sukuk .Sukuk Optimus .437 104.

4 10.9.342.Diminishing Musharka .100.565.3 10.878.397 1.797 25.950 6.1 28.281 7.676.565) 27.5 10.866 13.954 7.573.972) 24.137.9 & 10.866 2012 2011 -------.866 10 ISLAMIC FINANCING AND RELATED ASSETS Note 2011 2010 Restated Restated --------------------Rupees in '000---------------7.Rupees in '000 ---Cost 2012 2011 ---.381 17.6 Details of investment in modaraba certificates Percentage Holding 2012 2011 Number of Certificates 2012 2011 Market Value 2012 2011 ---.112 65.11 Housing finance portfolio Net investment in Ijarah financings in Pakistan Ijarah financing under IFAS 2 and related assets Gross financings and related assets Less: Provision against non-performing financing and related assets .1 Particulars of provision in respect of type and segment Sukuk certificates Sukuks .562.613 809.Musawama financing and related assets .177 2.458 5.870.168 946.Financings to employees 10.Rupees in '000 ---- Name of investee Certificates Modaraba Al-Mali (related party) 13 13 2.202 6.645.202 5.250.Musawama .192 4.Others .665.760 511.General Financings and related assets – net of provisions 10.8 10.785 1.343.955 1.Istisn'a financing and related assets .580 661.358 701.794 2.550.195 28.208 16.933.602 6.541.300.866 (15.920.Diminishing Musharka financing and related assets .342.701 1.277 706.7.081 7.676.452 53.7 10.866 27.646.156.Against Bills .640 400.208 Breakup value per share is based on the financial statements of the subsidiary for the half year ended December 31.1.550.342 16.262 (360.285 806.894.710 6.002) (33.10 (467.2 & 10.718 9.Specific .000) 13.Housing .366 3.690 27.366 107 .155 1.355.699.681) (32. 10.687 23.837 26.7 Particulars of provision for diminution in the value of investments Opening balance Charge for the year Reversals Closing balance 9.911 153.561.602 5.Rupees in '000 -------- - 15.434 19.037.unlisted Fully paid up ordinary shares / Units Modaraba Certificates 9. Note 9.291) 19.389.575 2.247 7.829 7.682 2012 In Pakistan .6 & 10.866 13.765 5.000 13. 2012.054.11 10.Murabaha financing and related assets .591 1.345 156.461.111 371.7.699.321 1.433.459 (296.582 1.Murabaha .671 1.866 28.637 180.Post Due Acceptance .Against Bills .677.523) (28.177 3.505 38.1 Murabaha financing and related assets Murabaha financing Advance against Murabaha financing 10.

12.2 Istisn'a financing and related assets Istisn'a financing Advance against Istisn'a financing Istisn'a inventories 2011 2010 Restated Restated --------------------------Rupees in '000----------------3.906) 160.796 221.731) 844.336 701.054.682 27.894 1.161.920.112 5.870.573.952) 711.999 million) against Murabaha under Islamic Export Refinance Scheme.122 81.362.244 25.561.098 54.106.000 5.130 5.998) 125.859) 6.884 160.687 (15.117.445.785 1.110.087.690 1.682 14.141 2.434 10.596 5.312 711.735 10.933.508.040) 6.601.239 19.508.784. 2012 2011 2010 ----------------------Rupees in '000---------------------Murabaha sale price Purchase price 20.968.6 Murahaba financing and related assets includes financing amounting to Rs.955 20.Rupees in '000 ------25.9.710 (22.343.156.265 80.440 (807.441.637.735 (632.285 10.980 557.580 1.100.687 (17.685) 116.015 million (2011: Rs 350 million) against Istisna under Islamic Export Refinance Scheme.1 10.141 10.582 6.526.168 3.180.1 Advance against Ijarah financing 1.265.137.829.646.708.122 799.139.829 108 .797 647.5 Ijarah financing under IFAS 2 and related assets Net book value of assets / investment in Ijarah under IFAS 2 10.979 (879.630.9.873) 6.8.979 17.541.596.339.718 380.427.600 4. 138.2 Murabaha receivable Opening balance Sales during the year Received during the year 6.141 844.954 19.829 19.3 Diminishing Musharka financing and related assets Diminishing Musharka financing Advance against Musharka financing 5.155 2.954 16.718 10.000 2.878.267 27.760 - 10.8.2 Particulars of Islamic financing and related assets In local currency Short -Term ( for upto one year) Long.471 17.877 160.562 8.9 10.710 8.778 180.870.789.500 451.785 5.933.986 8.4 Musawama financing and related assets Musawama financing Advance against Musawama financing Musawama inventories 4.Term ( for over one year) 2011 2010 Restated Restated ------.334 6.894.000 1.260 1.655.8 10.10.168 2012 10.225 (19.894.250.241 million (2011: Rs 99.306.343.461.710 (21.321 2012 6.846.280.1 Deferred Murabaha income Opening balance Arising during the year Recognised during the year 125.285 22.054.057.532 1.7 10.441. 255.225 (20. Istisna financing and related assets amounting to Rs.443 5.955 4.785) 799.829.440 22.

142) 371.849) 59.(Rupees in '000) -------------------------------------------Plant and Machinery Vehicles 524.764 227.440 363.420.352 115.405 1.445 213.714 106.Rupees in '000 -----------------------------------------------------------Ijarah rentals receivable 514.544 (292.854 (12.006 million (2011: Rs 2. December December % (deletions) (deletions) 31.230 136. 2011 2011 31.10 This includes Rs 2. 2011 01.015 480.584 (15.259 67. 2011 ---------------------------------------------------.084 790.265 20-33.489 797.331 116.339.Rupees in '000 -----------------------------------------------------------Ijarah rentals receivable Residual value Minimum Ijarah payments Profit for future periods Present value of minimum Ijarah payments 73.620 119.812 343.064.765 (67.656) 174.989 (56.440 363.057.12 Net investment in Ijarah financings .083 (101.181 (17.354 63.215 77.(Rupees in '000) -------------------------------------------Plant and Machinery Vehicles 180.386 896.204 388.941 (9.765) 709.701 10. 2011 31.796 20-33.929) 29.995 582.365) 135.386 415.198 207.420.502 186.11 Total Total --------------------------------------------------------.33 Cost 2011 Accumulated depreciation 109 .560 (9.584 1.33 Cost ` Book Rate of value as at Depreciation As at As at As at As at Addition / Charge / January December January 01.817 763.908 (141.274 million) markup free financing to employees advanced under the Group's Human Resource Policy. December December % (deletions) (deletions) 31.571 (150.843 (69.212 1.12.586 1.138 46.381 149.027) 205.451) 255.425 1.509) 391.IFAS 2 2012 Later than Not later one and Over five than one less then years year five years Not later than one year 2011 Later than one and Over five less then years five years Total Total --------------------------------------------------------.929) 758. 2012 31.765 (33.353 440.391 524.332 141.463. 2012 ---------------------------------------------------.622 668.083 1.451) 135.052 399.748 275.696 604.518) 239.304.195 896.636 (150.174) 180.204 151.851 253.33 20-33.383 87.320 72.469 (101.764 227.503 278. 2012 01.469 107.806 (82. Net investment in Ijarah financing in Pakistan 2012 Not later than one year Later than one and Over five years less then five years Not later than one year 2011 Later than one and Over five years less then five years 10.1 Ijarah Assets 2012 Accumulated depreciation Book Rate of value as at As at As at As at As at Depreciation Addition / Charge / January December January 01.591 71.600) 816.33 20-33.325) 121.008 916.440 1.944. 2012 2012 31.628 10.486) 197.490 162.643 1.966 9.10.

552 467.479 467.Rupees in '000 ------------------------------------------------------------89.816 848 357.599 (79.008 8.681 18.567 296.890 408.084 797.681 32.523 1.002 Category of Classification Substandard Doubtful Loss Category of Classification 2011 (Restated) Classified financing and related Provision Required Provision Held assets Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total -----------------------------------------------------------.972 110 .002 28.523 Substandard Doubtful Loss Category of Classification 2010 (Restated) Classified financing and related Provision Required Provision Held assets Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total -----------------------------------------------------(Rupees in '000)----------------------------------------------------53.072) (9.495 296.495 230.972 140.816 848 357.350 283.291 328.565 500.368) 111.687 328.628 (80.495 389.105) 60.008 8.681 296.681 140.205.521 553.709 71.972 10.972 389.049 2.567 500.972 28.593 33.495 134.350 283.681 5.002 33.319) (3.565 389.972 328.523 1.967 1.319) 28.222 89. 1.323 296.967 1. 10.523 32.523 389.781 2.002 560 57.816 848 357.681 Substandard Doubtful Loss 10.222 560 57.350 283.859 360.786) 63.002 560 57.440 (23.14 Particulars of provision against non-performing financings: 2012 2011 (Restated) 2010 (Restated) Specific General Total Specific General Total Specific General Total -----------------------------------------------------(Rupees in '000)----------------------------------------------------Opening balance Charge for the year Reversals Transferred during the year Closing balance 360.842 360.956 660.291 249. 838.523 360.072) (7.047 5.323 296.101 1.13 Islamic financings and related assets include Rs.368) 106.002 560 57.681 5.859 360.890 408.523 28.552 467.323 296.648 (79.291 32.205.681 5.171 318.1 The Group has maintained a general reserve (provision) in accordance with the applicable requirements of the Prudential Regulations for Consumer Financing issued by SBP and for potential losses on financing.847 (23.593 4.222 million (2011: Rs.570 52.101 71.10.523 129.14.291 (3.2 Particulars of provision against non-performing financings and related assets: 2012 2011 (Restated) 2010 (Restated) Specific General Total Specific General Total Specific General Total --------------------------------------------------------(Rupees in '000)-------------------------------------------------------In local currency In foreign currency 467.084 797.565 33.523 1.424) 86.049 11.628 (76.643 838.890 408.972 4.008 8.205.570 52.643 838.14.890 408.323 296.226 296.859 360.171 318.521 553.552 467.461 32.859 360.552 467.101 million) which have been placed under non-performing status as follows: 2012 Classified financing and related Provision Required Provision Held assets Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total -----------------------------------------------------------.648 698.567 360.928 69.072 500.002 467.810 67.047 53.350 283.810 67.473) 75.008 8.816 848 357.956 660.Rupees in '000 ------------------------------------------------------------71.648 698.972 328.

919. 2013. Had the benefit of FSV not been availed by the Group. the State Bank of Pakistan vide its letter no. 2013.2 The non performing Islamic financing and related assets include Rs. The accumulated benefit availed as at December 31.000 1.75 million in respect of outstanding exposure of Agritech Limited. The Group has already recorded provision amounting to Rs.1 Capital work-in-progress Civil works Equipment Advances to suppliers and contractors 30. However.687 53. and 100% of the required provision as at December 31.252 1.15 Particulars of financings to directors. 100. the Group has maintained total provision of Rs. 10. 75%.2.497 million in respect of outstanding exposure of Gulshan Weaving Mills Limited.2.580 3. 2012. due to availing of the benefit. 2013.98 million disbursed to Gulshan Weaving Mills Limited. 2012 would have been lower by approximately Rs 23 million (2011: 68 million).5 million. However. Following relaxation provided by the SBP. the State Bank of Pakistan vide its letter no. 2012.863 11. June 30.75 million in respect of outstanding exposure of Agritech Limited as at September 30. is not available for distribution as cash and stock dividend to share holders.816. 2013 has provided relaxation to the Group. 50%. 50%. 43. 2012 in accordance with the requirements of the Prudential Regulations of the State Bank of Pakistan against Agritech Limited amounted to Rs 87.3 The non performing financing and related assets include Rs.604 (119.780 35. The required provision as at December 31. Therefore.089 (90. subject to the condition that the provision already recorded before relaxation shall not be reversed. March 31.304 1. BPRD / BRD . 2009 issued by the State Bank of Pakistan. and 100% of the required provision as at December 31. executives or officers of the group or any of them either severally or jointly with any other persons Balance at beginning of year Financing granted during the year Repayments Balance at end of year 11 OPERATING FIXED ASSETS Capital work-in-progress Property and equipment Intangible assets 11.513 35. June 30. BPRD / BRD .49 million. the Group has availed the benefit of Forced Sales Value (FSV) of collaterals against the non-performing financing. 2013 and December 31.174 53. whereby the Group is allowed to recognise provision in a phased manner against outstanding exposure and maintain at least 25%.2 11.14.1 11.252 30. the Bank has recorded total provision of Rs.360 1. The increase in profit. the specific provision against non-performing financing and related assets would have been higher and consequently profit before taxation and Islamic financing and related assets (net of provisions) as at December 31. 75%.707. Note 10. 10. 2013 has provided relaxation to the Group. 25%.783) 511.3 2012 2011 --------Rupees in '000-------- 511.873 73.10. 2012 in accordance with the requirements of the Prudential Regulations of the State Bank of Pakistan against Gulshan Weaving Mills Limited amounted to Rs. 12. September 30.818. 2013 and September 30.813 400. 2 dated January 27.14. whereby the Group is allowed to recognise provision in a phased manner against outstanding exposure and maintain at least 10%. March 31.1 In accordance with BSD Circular No. 43.000 78 23.687 269. 2012 amounts to Rs 79 million (2011: Rs 231 million). 175 million disbursed to Agritech Limited.360 111 .14. executives or officers of the Group Financings due by directors.630 1. 50.478) 661.04 / Faysal / 2013 / 1695 dated February 13.(Policy) / 2013-1857 dated February 15. 2013.381 202. 2013. The required provision as at December 31.957 47. 2012.

394 970.091) 83.128 - 44. office and computer equipment 889.028 10 Electrical.533 1.2 Property and equipment COST As at January 01.244 6.873 11.763 889.876 (5. office and computer equipment 816.825) 5.330 3.012) 4.453 25 Vehicles 51.376 (6.129.858 882. 2011 Additions/ (disposals) / adjustments As at December 31.310 830 (6.129.128 - Building on lease hold land 869. 2012 ---------------------------------------------------Rupees in '000 --------------------------------------------------- Freehold Land 275.574) (11.623 - 275.446) 157.128 - 43.751 621.571 275.294 (20) (3.885 673.481 12.057 133.199 14.731) 275.502 269.619 222.590) 2.183) 85.394.837.891) 1.477 (56) 185.974 1. 2011 Net book Rate of value as at Depreciation December % 31.131 (257) (6.837.957 COST As at January 01.861 3.354) 1.144) 308.923 349.607) (8.999 (12.438 5 Furniture and fixture 770.296) 1.11.073 2.182 179.583 196.406 396.503 179.695 1.623 76.228 (1.950 (1.084.265) 11.2.205 266.027 (43. 2012 Charge for the year / (disposals) / adjustments As at December 31.784.923 508.576 (5.946 (41.042 (10.128 12.171 25 Vehicles 12.493 2.583 488. 2011 Charge for the year / (disposals) / adjustments As at December 31.649 1.759 6.407) - - 275.619 702.861 5.534 673.495 1.540) 6. 2012 2012 DEPRECIATION As at January 01.147) (7.635 (1.130 216. 2011 ---------------------------------------------------Rupees in '000 --------------------------------------------------- Freehold Land 275.244 25.875) 199.394 193.128 - Building on lease hold land 882.406 841. 2012 Additions/ (disposals) / adjustments As at December 31.128 (5.779 269.390) 3.246 (22.756 653.323) 68.843 778.212.204 20 2.471 10 Electrical.426 5 Furniture and fixture 778. 2012 Net book Rate of value as at Depreciation December % 31.707.496 3.533 286.383 20 2.171 (55) (6.130 818.818.057 876.1 Details of property and equipment disposed-off The details of property and equipment disposed-off during the year are disclosed in 'Annexure I' 112 .851 (23. 2010 2011 DEPRECIATION As at January 01.

753 3.11.25. (disposals) / 2012 adjustments As at December 31.4 Cost of fully depreciated properties and equipment that are still in the Group’s use. as at December 31. kibor rates. The amount of this benefit has been determined based on the projected financial statements for the future periods.304 20 2011 COST AMORTISATION Charge for As at the year / January 01.630 20 11.775 million (2011: Rs 244.319) (219.042) (337.022 96. deposit composition. The cost of fully amortised intangible assets that are still in the Group’s use.339 402. product mix of financing.884 (27.048 (121) 120. Based on this assessment the management has recognised deferred tax debit balance amounting to Rs.222 118.Rupees in ‘000 ------------------------------------------------- Computer software 148.3 Intangible asset 2012 COST AMORTISATION Charge for As at the year / January 01. The management carries out periodic assessment to assess the benefit of these losses as the Bank would be able to set off the profit earned in future years against these carry forward losses.592 66 306.226 146. 457.433 525.164 million). 160. (disposals) / 2011 adjustments As at December 31.791 73.226 million (2011: Rs.377 22. 2011 Rate of amortization % As at Additions / January 01.Rupees in ‘000 ------------------------------------------------- Computer software 170. (disposals) / 2011 adjustments Net book value as at December 31.539 (14. potential provision against assets and branch expansion plan. Any significant change in the key assumptions may have an effect on the realisibility of the deferred tax asset. 2012 ------------------------------------------------. 113 . 2011 As at December 31.429) (9.486) (91. Note 2012 2011 ---. 1.222 million) on the entire available losses. 2012 Rate of amortization % As at Additions / January 01.421 67. 575.938) 168.086 29. growth of deposits and financing.044 - 170. amounted to Rs.528) 188. 2012.789 million (2011: Rs.206 million) in respect of tax losses as at December 31.Rupees in '000 ---- 12 DEFERRED TAX ASSETS Deferred tax debits arising in respect of: Accumulated tax losses Tax credit against minimum tax paid Provision against non-performing financings and related assets Ijarah financings and related assets Deferred tax credits arising due to: Ijarah financings and related assets Accelerated tax depreciation Surplus on revaluation of investment 12. as at December 31.545) 87.347 million (2011: 16.797) (182.421 12.442 12.062 million). The determination of future taxable profit is most sensitive to certain key assumptions such as cost to income ratio of the Group. 2012 amounted to Rs. 2012 As at December 31.718 47. 2012. investment returns.791 24.562 1. 2011 ------------------------------------------------.705 - 96.149. 402.1 The Bank has an aggregate amount of Rs.1 160. (disposals) / 2012 adjustments Net book value as at December 31.970 (246.

984) 1.charged during the year Net book value as at December 31 Impairment testing of goodwill Goodwill acquired through business combination has been allocated to the following Cash Generating Unit (CGU): BankIslami Modaraba Investments Limited 59.684.671 962.639 1.189 6.086 13.627 108.606 308.232 59.093 (35.888 59.754) 30.355 645.164 59.738 11.528 24.528) 1.086) 20.210 35.250.232 59.3 The market value of Non-Banking assets acquired in satisfaction of claims is Rs 344.Rupees in '000 -------------------Restated Restated 1.092 59.613 1.430 308.1 2012 2011 2010 --------------------.232 59.086 (4.519. 2012 2011 2010 --------------------.385 87.083) 4.045.934 million (2011: Rs 317.232 59.738 (4.984 11.528 11.757 308.399 2.232 59.715 31 148. 114 .Note 13 OTHER ASSETS Profit / return accrued in local currency Profit / return accrued in foreign currency Advances.234 57. deposits.4 Goodwill As at January 1 Impairment .468 14.653.812 million).133 6.227 7.232 59.238 1.439 1.410 39.833 13.738) 1. advance rent and other prepayments Advance taxation (payments less provision) Non-banking assets acquired in satisfaction of claims Branch adjustment account Unrealised gain on forward foreign exchange promises Goodwill Deferred costs Banca takaful Income receivable Insurance claim receivable Car Ijarah repossession Other receivables Less: Provision held against other assets Other assets (net of provisions) 13.169 (16.232 The carrying amount of goodwill allocated to the CGU is as follows: 2012 2011 2010 --------------------.361 (11.232 17.473 57.881 1.232 59.2 13.Rupees in '000 -------------------BankIslami Modaraba Investments Limited 59.238.483. using cash flow projections based on business plan approved by the management covering a five year period.086 12.528 13.232 Key assumptions used in value in use calculation The recoverable amount of the business operation of the cash generating unit has been determined based on a value in use calculation.Rupees in '000 -------------------- 13.3 Provision held against other assets Opening balance Charge for the year Reversals Closing balance 35.232 600 15.232 4.869 104.410 1.655 (30.2 Deferred costs Opening balance Less: Amortised during the year Closing balance 4.410 2.1 13.

621.415 800. Income from education division.1. Dividend income.5% per annum (2011: 10% per annum) and are secured against collateral.000 115 .010 798.853 798.010 1.1 Details of due to financial institutions secured / unsecured Secured Borrowings from State Bank of Pakistan under Islamic Export Refinance Scheme Unsecured Call borrowings 15.000 15.853 15.2 Particulars of due to financial institutions with respect to currencies In local currency In foreign currencies Note 2012 2011 ---------.415 800.621.000.251. These carry expected profit rate ranging from 8. Discount rate. This carries profit rate of 8.621.2 1.Rupees in '000 --------1.000 2012 2011 ---------.415 800.000 1.1.1 Represents Musharaka contributions by the State Bank of Pakistan against Islamic Export Refinance Scheme.251.000 800.1. Sensitivity to changes in assumptions Management believes that reasonable possible changes in other assumptions used to determine the recoverable amount of the entity will not result in an impairment of goodwill. Management fees Management fees have been assumed at 10 percent.621.415 1. based on prevailing industry trends and anticipated market conditions.Rupees in '000 --------1. Dividend income Dividend income on investment in Modaraba has been projected on the expected returns estimated on the basis of historical performance and prevailing industry trends. 15.415 1.415 800.621.1.95% per annum (2011: Nil).2 Represents Wakala acceptance by the Bank Alfalah Limited (Islamic Banking Branches). Discount rates are calculated by using the weighted average cost of capital of the company.1 621. Income from education division Fee levels are based on expected fees benchmarked against comparable educational institutions. Discount rate Discount rate reflects management estimates of the required rate of return for the business and are calculated using the capital asset pricing model. 15.000 800. Note 14 BILLS PAYABLE In Pakistan Outside Pakistan 15 DUE TO FINANCIAL INSTITUTIONS In Pakistan Outside Pakistan 1.The calculation of value in use for the business operation is most sensitive to the following assumptions: Management fees.000 15.

1 17.000 1.468.110.233 9.824.3 32 17.185 1.086.197 22.027 14.101.Commodity Murabaha Payable to defined benefit plan Payable to defined contribution plan Unearned rent Security deposits against Ijarah Branch adjustment account Sundry creditors Charity payable Retention money Withholding tax payable WWF payable Others 2012 2011 ---------.270 48.032 484.000 1.674 62.623 1.441 4.Financing and IERS Deferred Murabaha Income .239.non-remunerative Financial Institutions Remunerative deposits Non-remunerative deposits 16.1 Charity in excess of Rs 100.000 1.256.8.122 7.500 17.887 64.209 434.500) 5.000 1.110.185) 10.1.1 8.287 644.442.674 10.000 was paid to the following: Alamgir Welfare Trust International The Citizen Foundation The Indus Hospital The Memon Medical Akhuwat Charity Jamiat Taleem Ul Quran Mrs Saba Zulfiqar Shoukat Khanum Memorial Kharadar General Hospital Bait Ul Sukoon 100 Dining Chairs to Juvenile Prisoners 1.747 12.1.064 1.000 2.616 24.084.1 Particulars of deposits In local currency In foreign currencies 17 OTHER LIABILITIES Profit / return payable in local currency Profit / return payable in foreign currencies Unearned fees and commission Accrued expenses Deferred Murabaha Income .1 Opening balance Additions during the year Payments during the year Closing balance 17.914 146.934 69.000 1.616 49.635 (8.524.000 2.1.non-remunerative Margin accounts .716 46.611.000 1.2 Charity was not paid to any staff of the Group or to any individual / organisation in which a director or his spouse had any interest at any time during the year.307 62.325 142.151 109.494.899 116.000 1.228 26.163 4.894 50.Note 16 DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Savings deposits Current accounts .747 7.447 46.677 3.006 409 2.747 17.375 1.000 1.566 1.666 13.811 64.000 1.491 5.399 241 879 1.Rupees in '000 --------- 30. 116 .387 50.342.877 33.293.197 517.254 723 1.220 10.1 573.000 500 8.861 125.962 29 1.870.000 185 8.139 10.658 21.628 97.687 11.432 5.806 (8.468.233 2.517 34.805 1.145 2.447 1.278 1.000 1.180 118.897.576.

2012 and is required to raise it to Rs.679 5.1 SHARE CAPITAL Authorised capital 2012 2011 ------.000 13.Rupees in '000 ------5.Number of Shares ------527.2 Issued.180.898 527.493 6.120 (91. 2011 had given extension to the Holding Company in timeline for meeting MCR (free of losses) amounting to Rs 6 billion till June 30.000 18.Modaraba Certificates .Others 127.679 5.955 2.Number of Shares ------1.net of tax Opening balance Reversals during the year Closing balance Net Surplus arising during the year 169.145 117 . 2012.898 527. warranties.Rupees in '000 ------13. Thereafter.135 3.3 The State Bank of Pakistan through its BSD Circular No.967.078 136. bid bonds.967. Moreover.000 Ordinary shares of Rs.392 91.078 156.321. Note 2012 2011 ------.978 4 3 260. 9 billion by December 31.300.1 20 20.Government .812 (9.279. 7 dated April 2009 had revised the Minimum Capital Requirement (MCR) for banks.000. the Holding Company has been advised by SBP to submit concrete time bound capital plan by March 31.967.024 19. BPRD/CSD/2407/13 dated March 1.1 CONTINGENCIES AND COMMITMENTS Transaction-related contingent liabilities Contingent liabilities in respect of performance bonds.493 256.000.696 21 21.280 billion at December 31.042) 169.670 1.439 32. The paid-up capital (free of losses) of the Holding Company amounted to Rs.1 19. 2011.279.040 1.18 18. 2013.511.221 19 RESERVES Statutory Reserves 19. 10 billion by December 31. As per the circular the Holding Company was required to have a minimum issued.Rupees in '000 ------173. 2012 2011 ------.Rupees in '000 ------SURPLUS ON REVALUATION OF ASSETS Surplus on revaluation of available for sale securities Federal Government Securities .967.898 Ordinary shares of Rs.797 1.10 each 2012 2011 ------.300. etc.679 5.Units of Closed end Mutual Funds Related deferred tax liability 23. BSD/BAI-3/608/2773/2011 dated March 7.898 527.279.000 1.319) 19.Units of Open end Mutual Funds .639. subscribed and paid up capital 2012 2011 ------.105 1. 2013 to comply with the future and prevailing regulatory capital requirements.Ijarah Sukuk Bonds Sukuk certificates . 5.382 169. As more fully explained in note 1. The SBP vide its letter No.078 20.2 to these consolidated financial statements the SBP vide its letter no. given favoring . 2013 has further extended the timeline for meeting paid up capital (free of losses) of Rs 6 billion by March 31.000.1 Under section 21 of the Banking Companies Ordinance. an amount of not less than 10% of the profit is required to be transferred to such reserve fund.665 141.679 18.279. subscribed and paid-up capital (free of losses) of Rs. 2013.452 730 5 28.Sukuks unlisted Fully paid up ordinary shares / Units .000. 10 each Fully paid in cash 2012 2011 ------. 1962 an amount of not less than 20% of the profit of the Holding Company is to be transferred to create a reserve fund till such time the reserve fund and the share premium account equal the amount of the paid up capital of the Holding Company.2 Surplus on revaluation of available for sale securities .868 1.

950 626.690 2.264. wherein aggregate demand of federal excise duty of Rs.574 127.801. all dated September 25.1 118 . Note 21. 69.907 21.451 21.192.000 was raised against the Group mainly in respect of income from dealing in foreign currencies and certain dispute regarding deposit of the amount amongst Federal and Provincial government.870 8.868 2.677 562.694 9.479 5.546 19.725.8 Other commitments Bills for collection 22 PROFIT / RETURN EARNED On financings to: .6 21.304 5.279 3.873.051 18.040 4.663 738.431.229 1.495 46.681 3.913 4.385. pending in the High Court.739 11.779 21.3.666.Rupees in '000 ------459.270 4.1 These mainly represents counter claims filed by the borrowers for restricting the Group for disposal of assets (such as mortgaged / pledged assets kept as security).052 21. 2012 2011 ------.2.787 3.883 93. 2012 under Section 33 of the Federal Excise Duty Act 2005.699 39.027 3. 21.596 2.823 235.677. which the Group has not acknowledged as debt 865.7 Commitments for the acquisition of operating fixed assets Commitments in respect of financing facilities The Group makes commitments to extend financing 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.637.851 15.575 244.Customers .114.987 3.431 55.680 1.5 Commitments in respect of promises Purchases Sales 21.837 2.443 2.Rupees in '000 ------4.861 128.4 The Deputy Commissioner Inland Revenue (DCIR) has passed certain assessment orders against the group vide letter no 06/97/2012.Financial institutions On investments in available for sale securities On deposits / placements with financial institutions Others 23 PROFIT / RETURN EXPENSED Deposits Other short term fund generation Others 24 OTHER INCOME Rent on property Gain on termination of Ijarah financing Gain on sale of property and equipment Amount recovered from staff Reversal of SBP penalty 6.590 1.21. 07/97/2012 and 08/97/2012. cases where Group was proforma defendant for defending its interest in the underlying collateral kept by it at the time of financing.2 Trade-related contingent liabilities Import letter of Credit Acceptances 2012 2011 ------.961.485 12.268 10.284.976.Rupees in '000 ------276.307 24.631 2.497.119 2012 2011 ------.546.504.3 Suit filed by customers for recovery of alleged losses suffered.961 64.607 4.197 209.591 861.374 31.

19.631 1.892 83.621 28.144.170 24.103 32. allowances and other expenses Insurance on consumer car ijarah Rent.913 1.334 313. taxes.934 258 219. Securities: Sukuk Certificates Unlisted Securities: Mutual funds Listed Securities: Shares 26 ADMINISTRATIVE EXPENSES Salaries.705 4.2 Amortisation Intangible assets Deferred cost 11.850 650 900 517 3.917 23. the Group has paid Long Service Award (LSA) to eligible employees.933 25. insurance.903 19.320 9.550 31.574 5. Legal and professional charges Communications Repairs and maintenance Stationery and printing Advertisement and publicity Auditors' remuneration Depreciation Amortisation CDC and share registrar services Entertainment expense Security service charges Brokerage and commission Traveling and conveyance Remuneration to Shariah Board Fees and subscription Vehicle running and maintenance Others 26.930 38. 10.791 26. Only those employees were eligible for LSA who fulfilled time based condition.3 32 33 2012 2011 ------.760 2.917 311.969 412 12.284 84.292 million).072 60.207 27 OTHER CHARGES Penalties imposed by the State Bank of Pakistan Worker's Welfare Fund 119 .106 424.700 13.Rupees in '000 ------342 12.550 35.3 13.923 250 80.272 4.175 790. The amount under LSA relating to Key Management Personnel of the Group amounted to Rs.203 3.404 275.795 13. and other benefits Charge for defined benefit plan Contribution to defined contribution plan Non-executive directors' fees.223 2.136 21.2 918.927 29. electricity.980 250 78.419 150.627 12.3 During the year.663 24.944 26.577 15.083 23.322 25.086 33.892 - 26.566 1.1 Auditors' remuneration Audit fee Fee for the review of half yearly financial statements Special certifications and sundry advisory services Tax services Out-of-pocket expenses 26.474 33.159 18.276. 2012 2011 ------.409 51.188 66.884 6.2 26.900 700 971 833 4.927 23.578 25.492 83.1 11.404 1.Note 25 GAIN / LOSS ON SALE OF SECURITIES Federal Govt.110 million (2011: Rs.476 67.048 10.233 77.927 4. allowances.791 3. etc.2 26.Rupees in '000 ------- 205.

Rupees in '000 ------4.126 288 1.104) 22.1 29.8 120 .884 (82.436 208.28 TAXATION For the year .282 5.2 Reconciliation of payable to defined benefit plan Present value of defined benefit obligations Fair value of plan assets Net actuarial gains not recognised Liability recognised in the statement of financial position 32.831 549.4 32.112).118 2. the return of income for the tax years 2006.452 218 1.914 ------.Rupees in '000 ------415.816 1. Note 29 BASIC AND DILUTED EARNINGS PER SHARE Profit after taxation for the year 2012 2011 ------.938.262 59.Number of employees-----1.234.basic / diluted 29.411 5.242 30 CASH AND CASH EQUIVALENTS Cash and balances with treasury banks Balances with other banks 6 7 31 STAFF STRENGTH Permanent Contractual basis Bank's own staff strength at the end of the year Outsourced Total staff strength 2012 2011 -----.712 806. 2001 (Ordinance).Current .240 (107. Under Section 114 of the Income Tax Ordinance.116 336 1. The present value of obligation under the scheme at the Statement of Financial Position date were as follows: Note 2012 2011 ----------(Rupees in '000)---------87.967.436 182.898 527.426) 18. Permanent staff are eligible for such benefits starting from three years of service. The provision for current year income tax has been made under section 113 of the Income Tax Ordinance 2001 (minimum tax on turnover).Rupees in '000 ------- 34.Prior . 2011 Note 2012 2011 ------.6 32.783 241 32.7688 There were no convertible / dilutive potential ordinary shares outstanding as at December 31. The number of employees covered under the following defined fund scheme are 1.826 217.The fund entitles the members to lumpsum payment at the time of retirement.898 ------.652 1. 2009.414 238 1. 2007.744.1 DEFINED BENEFIT PLAN General description The Group has a gratuity fund for its employees ( members of the fund ).592 The numerical reconciliation between average tax rate and the applicable tax rate has not been presented in these consolidated financial statements due to available tax losses brought forward from prior years. 2008.670 32 32.340 147. 2010.122 (2011: 1. 2012 and December 31.Rupees ------Earning per share . The said returns were deemed completed under the provisions of the prevailing income tax laws as applicable in Pakistan during the relevant accounting years.254 63.Deferred 2012 2011 ------.7873 0. 2011and 2012 on due dates.967.994 4.659 405.1 0. resignation or death.684.Number of shares ------Weighted average number of ordinary shares in issue 527.

288 11.680 18.461 7.3 Amount charged to the consolidated profit and loss account Current service cost Finance cost Expected return on plan assets Actuarial losses recognised 2012 2011 --------(Rupees in '000)-------22.8 Unrecognised actuarial gain Unrecognised actuarial gains / (losses) at the beginning of the year Actuarial gains on obligation Actuarial gains on Plan assets Subtotal Actuarial gain recognised Unrecognised actuarial gains at the end of the year Principal actuarial assumptions used are as follows: Expected rate of increase in salary level Valuation discount rate Expected return on plan assets 11% 11.884 32.944 32.6 Movement in present value of defined benefit obligation Opening balance Current service cost Finance cost Benefits paid Actuarial gain Closing balance 63.783 8.117 7.074 5.680) 63.968 (185) 18.214 12 185 32.726) 241 32.074 7.608 4.330 107.117 7.783 1.621 19.566 (4.826) 2.684 (4.726 (1.735 19.461 7.621 (22.684 (4.426 32.104 83.012 (1.5% 8% 12% 12.076 (958) 22.944 (83.963 2.426 22.243 10.300) 82.023 25.7 Actuarial loss to be recognised Corridor limit The limits of the corridor at the beginning of the year 10% of obligations 10% of plan assets Which works out to Unrecognised actuarial gains at the beginning of the year Limit of corridor as at 1 January 2012 Excess Average expected remaining working lives in years Actuarial loss to be recognised 6.118 7.608) 2.5% 5% 18.32.783 121 .240 50.540 11 958 5.884 22.5 Movement in the liability recognised in the consolidated statement of financial position Opening balance Expense for the year Benefits paid Contributions during the year Closing balance 241 24.963) 87.330 23.074 2.566) (958) 24.4 Movement in fair value of plan assets Opening balance Contributions Expected return on plan assets Benefits paid Actuarial gain / (loss) on assets Closing balance 82.012 (185) 25.243 8.288 5.826) (1.254 58.300) (11.243 18.388 8.

5 to these consolidated financial statements.(Rupees in '000) -------------------------87.633 198. or a liability settled.Rupees in '000 ----------------------------------------- Fees Managerial remuneration* Bonus Charge for defined benefit plan Salary in lieu of provident fund* Contribution to defined contribution plan Rent and house maintenance* Utilities* Medical* Increment allowance Others 11.571) 34. The Group's President / Chief Executive is provided with free use of Group's maintained car in accordance with the Group’s service rules.418 20. The repricing.092 19.755 34. Fair values of all other financial assets and liabilities cannot be calculated with sufficient accuracy as active market does not exist for these instruments. Equal monthly contributions by employer and employees during the year amounted to Rs.500 8. The fair values of Islamic financing and related assets cannot be determined with reasonable accuracy due to absence of current and active market.207 1 14.568 9.755 (2. 34.632) 34.928) 19. In the opinion of the management.566 million) each.181 1.418 1. maturity profile and effective rates are stated in note 39 to these consolidated financial statements.428 9. 34 COMPENSATION OF DIRECTORS AND EXECUTIVES President / Chief Executive Directors Executives 2012 2011 2012 2011 2012 2011 ----------------------------------------. 3.279 8.28.2. fair value of these assets and liabilities are not significantly different from their carrying values since assets and liabilities are either short term in nature and in case of financings and deposits these are frequently repriced.680) 50.894 29. The fair value of quoted investments is based on quoted market prices.3 to these consolidated financial statements.691 9.184 1.884 63. 26. including the Chief Executive Officer of the Group are also entitled to certain short term employee benefits which are disclosed in note 26.913 million (2011: Rs.535 1. between knowledgeable willing parties in an arm's length transaction.2 35 FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the amount for which an asset could be exchanged. The provision for impairment in the value of investments has been determined in accordance with accounting policy as stated in note 5.184 18.144 13. 3.240 87.32.735 50.214 38.388 106 Number of persons * Included in this amount are arrears amounting to Rs.019 million).3 to these consolidated financial statements.550 1.381 million (2011: Rs.369 37.183 1. Unquoted equity securities are valued at cost less impairment losses.009 1 1.884 (11.184 1.214 10.550 4 1.322 114 94.1 The remuneration and other benefits paid to the Chief Executive Officer of the subsidiary company amounted to Rs.550 1. Nil (2011: 3.780 228.173 10.309 1.860 6. The provisions against Islamic financing and related assets have been calculated in accordance with the accounting policy as stated in note 5.428 36.240 (1. 122 .9 Historical information As at December 31 Present value of defined benefit obligation Fair value of plan assets Deficit Experience adjustments on plan liabilities 2012 2011 2010 2009 2008 -------------------------. The employer and employee both contribute 10% of basic salary to the funded scheme every month.184 327 1.092 (357) 33 DEFINED CONTRIBUTION PLAN (PROVIDENT FUND) The Group operates a contributory provident fund scheme for all permanent employees. In addition to the above all eligible Executives.418 391 1.550 4 102.735 (4.835 1.962) 63.

656 1. as those prevailing at the time for comparable transactions with unrelated parties and do not involve more than a normal risk.262 5.896 (842.142.921 74.991) 49.318.81% 1.090 892.279 7.777 53.985.241 183.905 632. These include financing and deposits transactions.1 Off-balance sheet financial instruments 2012 2011 Book value Fair value Book value Fair value ---------------------------.28% 8.193 632.performing Assets Segment Provision required Segment Liabilities Segment Return on Assets (ROA) (%) Segment Cost of funds (%) 685.718 42.452) 1.519 (3.335 452.390 - 1.835 68.469 1.609.731.596 3.861 93.757.738 4.654 212.021 31.459 1.579 127.713 - 2.684.290 1.116.877.273 - 6.126 884.002.35.876 1.297.042 536.510.performing Assets Segment Provision required Segment Liabilities Segment Return on Assets (ROA) (%) Segment Cost of funds (%) 571. directors and their close family members and staff retirement funds.610 331.821 183.163.467 1. retirement benefit funds.976 9.50% 7.216.588 2. 123 . The related parties of the Group comprise related group companies.206 459.999 17.53% 10.810 428.Rupees in '000 ---------------------------- Forward purchase of foreign currencies Forward sale of foreign currencies 36 458.309 505.048.355.14% Retail Banking Commercial Banking Support Centre Modaraba Management Total ------------------------------------Rupees in '000 --------------------------------- 3.54% 2.504 26.690 46.68% 12.885 614.268. These transactions are executed substantially on the same terms including profit rates and collateral.850.669 525.578 (840.695 (2.122. directors and their close family members.574 127.328.887 93.460 12 12 56.773.461 25.223 186.790 33.751 324.214 1.291 7.312 817.569 74.091.461 74. A number of banking transactions are entered into with related parties in the normal course of business. and key management personnel.099) 64.197 .183 935.826 5.559.017 1.76% Retail Banking Commercial Banking Support Centre Modaraba Management Total --------------------------------------Rupees in '000 ----------------------------------- 3.256 446. key management personnel. principal shareholders.234.806) 2.574 2.33% 44.69% 50.528 6.859.786 392.920 1.532 - Trading & Sales 2011 Total income Total expenses Net income (loss) Segment Assets (Gross) Segment non .073 3.760 - 37 RELATED PARTY TRANSACTIONS Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions and include a subsidiary company. associated companies with or without common directors.649 18.607 SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES The segment analysis with respect to business activities is as follows: Trading & Sales 2012 Total income Total expenses Net income / (loss) Segment Assets (Gross) Segment non .213 227.790 34.771.07% 6.992.232. 209.09% 6. companies where directors of the Group also hold directorship.873.790 618.506 59.391 5.650 53.849 34.045 405. principal shareholders.584 41.409.623 551.

529) 4.943) 221.805) 61.525 71. Transactions with related parties other than remuneration and benefits to key management personnel including Chief Executive Officer under the terms of the employment as disclosed in note 34 are as follows: 2012 2011 ----------.246 61. income and expenses Return on deposits expensed Administrative expense Advance against financing Sale of investment Key management personnel Financings and related assets At beginning of the year Disbursements Repaid during the year At the end of the year Deposits At beginning of the year Deposits Withdrawals during the year At the end of the year Transactions.794 4.400 (27.084 4.268 (658.149 (4.134 295 51.944 26.058 16.148 76.Contributions to staff retirement benefit plan are made in accordance with the terms of the contribution plan.311 167.663 66.468 4.989 49.848 - 5.944 29.913 25.716 32.565 3.136) 127.718) 100.975 (71.437 67.566 56.Rupees '000 ---------Associates Financings and related assets At beginning of the year Disbursements Repayments At the end of the year Deposits At beginning of the year Deposits during the year Withdrawals during the year At the end of the year Transactions.563 94.122 (11.167 21.621 28.442) 5.020 (5.268 595.769 364 58.842 127.929 2.115 Balances pertaining to parties that were related at the beginning of the year but ceased to be so related during any part of the current period are not reflected as part of the opening balance of the current year.771) 87.215 248. Remuneration to the executives are determined in accordance with the terms of their appointment.120 294 2. 124 .232) 78.531 (106. income and expenses Profit earned on financing Return on deposits expensed Remuneration Disposal of vehicle Employee benefit plans Contribution to Employees Gratuity Fund Contribution to Employees Provident Fund 24.662 (599.291 131.794 618.

creditor and market confidence and to sustain future development of the business. which includes general provisions for loan losses (up to a maximum of 1. 38. Moreover. reserves on revaluation of fixed assets and equity investments up to a maximum of 45% of the balance.e. 2012 and is required to raise it to Rs. 2013. For that the Group ensures strong capital position and efficient use of capital as determined by the underlying business strategy i. 5. 2011. liquidity constraints and capital adequacy and its implication on risk management policies. 2013 to comply with the future and prevailing regulatory capital requirements. 38. Tier 3 capital has also been prescribed by the State Bank of Pakistan.: Tier 1 capital. 38. The impact of the level of capital on shareholders’ return is also recognised and the Group recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position. 7 dated April 2009 had revised the Minimum Capital Requirement (MCR) for banks. The Group maintains a strong capital base so as to maintain investor. 2013 has further extended the timeline for meeting paid up capital (free of losses) of Rs 6 billion by March 31. - - The total of Tier II and Tier III capital has to be limited to Tier I capital. 38.280 billion at December 31. However the Group is not eligible for the Tier 3 capital. As per the circular the Holding Company was required to have a minimum issued. The objective of ALCO is to derive the most appropriate strategy in terms of the mix of assets and liabilities given its expectations of the future and the potential consequences of interest rate movement. BSD/BAI-3/608/2773/2011 dated March 7. general reserves as per the consolidated financial statements and net un-appropriated profits. Banking operations are categorised in either the trading book or the banking book and risk weighted assets are determined according to specified requirements that seek to reflect the varying levels of risk attached to assets and off balance sheet exposures. The SBP vide its letter No.4 Capital Structure The Group's Regulatory Capital has been analysed into three tiers i.38 38. Tier 2 capital. The total risk weighted exposures comprise the credit risk.2 Goals of managing capital The goals of managing capital of the Group are as follows: The objectives for a sound capital management are: 1) to ensure that the Holding Company complies with the regulatory Minimum Capital Requirement (MCR) 2) maintain a strong credit rating 3) maintain healthy capital ratios to support business and to maximize shareholder value and 4) to operate with a Revolving Planning Horizon and be able to take advantage of new investment opportunities when they appear.e. 2011 had given extension to the Holding Company in timeline for meeting MCR (free of losses) amounting to Rs 6 billion till June 30. maximizing growth on continuing basis. subscribed and paid-up capital (free of losses) of Rs. etc after 50% deduction for investments in the equity of subsidiary companies being commercial entities. BPRD/CSD/2407/13 dated March 1.25% of risk weighted assets).5 Capital adequacy ratio The capital to risk weighted assets ratio. the Holding Company has been advised by SBP to submit concrete time bound capital plan by March 31. foreign exchange translation reserves. This process is managed by the Asset Liability Committee (ALCO) of the Group.1 CAPITAL ASSESSMENT AND ADEQUACY Capital management Capital Management aims to safeguard the Group's ability to continue as a going concern so that it could continue to provide adequate returns to shareholders by pricing products and services commensurately with the level of risk. calculated in accordance with the SBP guidelines on capital adequacy using Basel II Standardised approach for credit and market risk and basic indicator approach for operational risk is presented below: 125 . 10 billion by December 31.3 Statutory minimum capital requirement and management of capital The State Bank of Pakistan through its BSD Circular No.2 to these consolidated financial statements the SBP vide its letter no. 2013. 2012. market risk and operational risk. etc after deductions for deficit on revaluation of available for sale investments and 50% deduction for investments in the equity of subsidiary companies being commercial entities and book value of goodwill and intangibles. which includes fully paid up capital. 9 billion by December 31. The paid-up capital (free of losses) of the Holding Company amounted to Rs. As more fully explained in note 1.

169.551 ---------.957.644.565 12.25% of Risk Weighted Assets Revaluation Reserves up to 45% Total Tier II Capital Eligible Tier III Capital Total Regulatory Capital Base Risk-weighted exposures Credit risk Portfolios subject to standardized approach (Simple Approach for CRM) Corporate Portfolio Retail non mortgages Mortgages – residential Past due Islamic financing and related assets Claims on Banks Fixed assets Others (a) 2012 2011 --------. However.181 22.308.429 2.266 474 165.268 174.383 162.198 2.100 61.410 3. 2013.209 2.279.Rupees in '000 ------------------------------ 1.972 117.440.205) 5.283 5.833.795 641.128 441.660 4.506 222.221 206.743.392 100.622.407.150.513 44.539 221.143 218.354 5.741 16.930.582 688.633.026 5.828 1.6 In accordance with the Revised Regulatory Capital Framework under Basel II issued by the SBP.463 1.455.357 35.323 616.765 195.859 29.695 (37.859 Capital Requirements Risk Weighted Assets 2012 2011 2012 2011 ---------------------------.382 81.651 1.107.918 2.872.321 1.449 1.118 56.762.510.Regulatory Capital Base Tier I Capital Shareholders Capital Reserves as disclosed on the Statement of Financial Position Unappropriated profit / (accumulated losses) Other deductions: Shortfall in provisions required against classified assets irrespective of any relaxation allowed Book value of goodwill and intangibles Total Tier I Capital Tier II Capital General provisions for loan losses-up to maximum of 1.965 46.221 (233.679 173.862) 5.485 11.408.827 (132.357 28. the Group has not made deductions on account of shortfall in provision against outstanding facilities extended to Agritech Limited based on the relaxation provided by the SBP vide its letter BPRD/BRD-(Policy) / 2013-1857 dated February 15.991) (106.Rupees in '000 --------- 5.144.410 15.444.54% 5.246 192.856 4.979 24.279.213 29.732 187.004.684 1.054 146.212. the Holding Company is required to deduct from Tier I Capital any shortfall in provisions required against classified assets irrespective of any relaxation allowed by the SBP.615 937.240.451 22.553.176 563.404.Rupees in '000 ---------5.471 383.106 16.061.530 5.388 2.740 476.911 1.862 93.833 33.445.321 2.551 17.150.455.679 91.215 3. 126 .158 68.137.536) 5.150 35.929.107.233 6.910 6.57% 38.308.403 Portfolios subject to off balance sheet exposure –non market/market related Market risk Capital requirement for portfolios subject to standardized approach Foreign Exchange risk Interest Rate Risk Equity Risk Operational risk Capital Requirement for operational risks subject to Basic Indicator Approach Total Capital adequacy ratio Total eligible regulatory capital held Total risk weighted assets Capital adequacy ratio (a) (b) [(a / b) x 100] (b) 163.824 819.182.280 64.

991 million has been deducted from Group's Tier-I Capital. Accordingly an amount of Rs 37. The Group's Risk Management Framework has been developed keeping in mind. Liquidity. ascertaining the institutions risk appetite. Periodical review of various portfolios. As a prelude to countering the financial debacle of the recent past. and conducts its business accordingly. RISK MANAGEMENT FRAMEWORK A well formulated policy and procedure is critical to an effective Risk Management framework. control activities should be an integral part of the regular activities of the Group. 127 .7 As more fully explained in note 10. it then needs to be reinforced through a strong control culture that promotes sound risk governance. setting parameters. This function if performed with diligence and understanding. Operational etc.3 to these consolidated financial statements. the risk related functions are approved by the senior management and the Board. essentially building on the three pillars of the Basel II structure. Detailed review of various processes and operating procedures. application of statistical tools and information in time series for developing strong inferences are all performed at this level. While the reward may well commensurate the level of risk. These include: defining risks. strong adherence to the credit and other related criteria. Micro Level Risk management at micro level. The reforms raise both the quality and quantity of the regulatory capital base and enhance the risk coverage of the capital framework. is reviewing the impact of Basel III (B3) guidelines on the capital structure and CAR (Capital Adequacy Ratio) through quantitative impact studies. for operational and other risk related assessments. The Group adheres to the regulatory requirement in this respect. Macro Level It encompasses risk management within a business area or across business lines. is of critical importance. 39 - Strategic Level At the strategic level.38. including Credit. Market. formulating strategy and policies for managing risks and establishing adequate systems and controls to ensure that overall risk remains within acceptable level and the reward compensates' for the risk taken. The risk management function is one of the most important areas of the banking business. the SBP has given a relaxation to the Group in maintaining provision against outstanding facilities extended to Gulshan Weaving Mills Limited. helping and promoting a better risk identification and mitigation. Generally the risk management activities performed by middle management or units devoted to risk reviews fall into this category. that: To be effective.14. Every loss or near miss event should provide some Key Learning Outcome (KLO). stress test and scenario analysis for portfolio resilience. Micro level risk management includes: Business line acquisition. and covers a wide spectrum of financial business risk class. proper analysis and effective communication within the Group.2. RISK MANAGEMENT The objective of Risk Management is to effectively manage uncertainties that arise in the normal course of business activities. The implementation of Basel II (B2) provides for a risk-based capital requirement. the Holding Company is required to deduct from Tier-I Capital any shortfall in provision required against classified assets irrespective of any relaxation allowed by the SBP. The SBP (State Bank of Pakistan) while being cognizant of the various reforms in the offing. the Basel Committee (Internationally) is raising the resilience of the banking sector by strengthening the regulatory capital framework. In accordance with Revised Capital Framework under Basel II issued by the SBP. and Critical decision making should be based on relevant research. Middle Office monitoring function for a sound risk assessment of various risks inherent in treasury operations. The Group follows effective risk governance which commensurate well with its current size and structure. it has to be viewed in entirety and not in isolation. can be of maximum benefit to the organization.

establishment of a structure that provides for authority. and development of control framework. Contingencies and Commitments. Business lines are equally responsible for the risks they are taking. Some specific risks e. Risk organization A strong organizational set-up. Business line accountability One of the most important features of the risk management process is the business line accountability. with clearly defined roles and responsibilities permits a higher level of articulation of the Group's risk mandate. Each business segment is responsible for the profit / loss of the business. the controls. available resources (size and business life cycle) and most significantly. Business has to understand the risk implication of specific transaction on the business / portfolio. political and social scenario which affects the ability of the country (or a borrower in that country) to repay its obligations. in order to be effective. with an explicit aim to mitigate / manage risk in line with the Groups objectives. along with the different committees including ALCO (Asset Liability Committee) and MCC (Management Credit Committee).g. collateral management and post disbursement monitoring so as to ensure prudent financing activities and sound financing portfolio under the umbrella of a comprehensive Credit Policy approved by the Board of Directors. 39. reputation risk affects the entire banking business and is not limited to one business line or the other. internal credit risk rating system. Country risk may be a combination of Transfer Risk and Sovereign Risk. iv) Country risk Country Risk can be defined as the risk of adverse impact of certain factors on a country’s specific economic. Risk management cannot live in a vacuum. approving and reviewing authorities. responsibility comes with accountability. 128 .1. iii) Settlement risk The risk that the counter-party does not meet its commitments at the maturity of the transaction after the Group has already met its commitments.). 39. As in any other reputable organization. ii) Counter party risk The risk that the counter-party defaults during the term of a transaction (Murabaha. Because line personnel understand the risks of the business. The risk management function at the Group. The Group believes in a cautious yet steady approach towards its business objectives and takes a holistic view of its investment and financing requirement.1 Credit Risk The Group manages credit risk by effective credit appraisal mechanism. Ijarah etc. delegation and accountability. The management of risk is as much a line function as it is supports'. economic profitability. Lack of an understanding of this by the line management may lead to risk management in isolation. limit structures. key consideration being the health of various portfolios. RMC (Risk Management Committee of the Board) manage and adhere to the risk management policies and procedures.1 Segmental information Segmental Information is presented in respect of the class of business and geographical distribution of Islamic financing and related assets.Risk appetite of the Group The risk appetite of the Group is an outcome of its corporate goal. Credit Risk has certain sub-categories as follows: i) Price risk There is a risk that the asset repossessed due to default of the lessee may be sold or leased out to another party at a price lower than the original contract price. Deposits. This approach is primarily based on a viable portfolio build-up with a long-term view. Risk governance must involve all relevant parties and should be sanctioned by the group's leadership. it has to be run at an enterprise level.

619 23.383 8.326.083 677.627.01% 0.326.74% 0.726.998.588 375.384 234.999 57.505 293.747 3.38% 0.704.177 6.95% 2.98% 0.40% 0.674 2% 98% 100% Contingencies and Commitments Rupees in '000 689.03% 0.639 440.03% 2.616 5% 95% 100% Contingencies and Commitments Rupees in '000 Percent 1.91% 0.358.549 706.33% 0.82% 39.859.965 27. Water.110.42% 5.118.087.026 217.022.928 15.064.42% 0.24% 1.950 551.67% 0.00% 3. Hunting and Fishing Mining and Quarrying Textile Chemical and Pharmaceuticals Cement Sugar Footwear and Leather garments Automobile and transportation equipment Education Electronics and electrical appliances Production and transmission of energy Construction Power (electricity).799 900.067 111.467 46.223 162.17% 0.468.55% 0.82% 4.54% 3.327 965.335 25.129 1.966.950 3.682 5.086 1.491 727.088 1.198 7.82% 2.22% 4.403 18.13% 0.188 52.318 68.446.674 4.455 81.00% 3.00% 1.660 Percent 0.95% 0.44% 1.340 245.789 1.00% 29.918 2.34% 1. Sanitary Wholesale and Retail Trade Exports/Imports Transport.083 1.323 54.00% 7.471.91% 11.795 274.55% 1.211 25.436 900.09% 1.000 86.933.95% 10.274 25.14% 2.62% 100.05% 7.043 1.575. Gas.86% 0.00% Contingencies and Commitments Rupees in '000 39.916 11.97% 0.832.168 325.118 404.61% 12.250.60% 5.365.616 4.977.1.646 341.02% 8. Sanitary Wholesale and Retail Trade Exports/Imports Transport.940.306.22% 0.83% 0.660 Percent 15% 85% 100% 129 .176.03% 2.651 64.441 67.68% 0.72% 0.01% 3.458. 2011 Islamic financing and related Deposits assets Restated Rupees in '000 Percent Rupees in '000 Percent Agriculture.743 421.39% 13.572.00% 0.18% 0.06% 6.793 0.585 1.00% * Others include Sole Proprietors.837 139.442.14% 100.52% 1.528.614.48% 0.756 79.829 9% 91% 100% 3.00% 25.34% 0.00% 0.88% 0.41% 0.000 1.66% 2.211 212.04% 26.135 144.39.871.65% 100.614.716 514.00% 2.131 1. fund accounts and Govt deposits etc.508.340.412 25.315 15.70% 0.11% 1.12% 100.05% 10.21% 1.954 8% 92% 100% 1.00% 0.08% 18.51% 1.92% 0.83% 100.455.23% 9.582 639.763 309.522 5.05% 0.395 2.26% 0.83% 0.00% 0.45% 0.220 969.74% 0.11% 0.02% 1.00% 5.596 226.926 90.768 20.718 543.37% 11.744.02% 27.810.30% 4.889 25.15% 0.33% 1.71% 1.44% 0.632 355.965 364536 1.2 Segment by sector 2012 Islamic financing and related Deposits assets Rupees in '000 Percent Rupees in '000 Percent 2.304 1.674 27.151.09% 1.969 25.430 203. Hunting and Fishing Mining and Quarrying Textile Chemical and Pharmaceuticals Cement Sugar Footwear and Leather garments Automobile and transportation equipment Education Electronics and electrical appliances Production and transmission of energy Construction Power (electricity).080 571.230 1.019.52% 2.990.140 248.00% Agriculture. Storage and Communication Financial Insurance Services Individuals Food and beverages Private Trust & NGO Packing and Paper products Others* 2.161.710 4.984 50. 39.00% 1.503 50.92% 0.435 1.889 561.08% 2.19% 0.820 3.425.55% 2.95% 0.733 2.1 Segments by class of business 2012 Islamic financing and related Deposits assets Rupees in '000 Percent Rupees in '000 Percent Contingencies and Commitments * Rupees in '000 Percent 2.363 13.19% 0.046 30.292 3.518 1.25% 2.17% 0.05% 100.1.082.000 1.793 17% 83% 100% Public / Government Private 2011 Islamic financing and related Deposits assets Restated Rupees in '000 Percent Rupees in '000 Percent Public / Government Private 1.377 271959 1. Storage and Communication Financial Insurance Services Individuals Food and Beverages Private Trust & NGO Packing and Paper products Others* 2.16% 0.348.344 69.46% 0.950 2.933 203.00% * Others include Sole Proprietors.625 1.393.221 8.148 130.582.83% 0.100 12.520 547.11% 0.1.81% 12.00% 2. Forestry.059 451.13% 0.542 55.50% 4.00% 2. Forestry.135 373. Water.218 685.00% 0.92% 0.924.302 2.57% 2.123 4.52% 0.158.58% 5.131.695 1.59% 6.916 1.53% 0.69% 0.02% 1.283 1.15% 0.591.054.84% 2. fund accounts and Govt deposits etc.02% 0.25% 1.273 3.02% 0.528 947.378.781 1.095.499 69.03% 1.872 136.80% 2.393 64.56% 0.26% 0.950 16.933.17% 7.00% 13.01% 0.706 2.037 3.304 242.49% 3.00% 9.87% 40.218.1.85% 0.85% 3.618 27.181 48.468.296.00% 34.328 2.171 49.894.110.805 432.08% 0.508 150.52% 3.732.054.035 16 27.954 11.00% 3.69% 0.318 500.795 803.121.276 10.983 4.965 61.783.55% 2.11% 7.888 97.489 2.605. Gas.713 152.225 6.572 6.829 10.00% 13.

2 Credit risk . Storage and Communication Individuals Others * Provision has been made under subjective evaluation 22.791 295 5.222 10.1.101 838.750 5.313 374.Rupees In ‘000 ------------------------------------Profit before taxation Total assets employed Net assets employed Pakistan 614.554 2. which is compatible to the rating guidelines of SBP.1 Credit Risk: Disclosures for portfolio subject to the Standardised Approach and supervisory risk weights in the IRB Approach The Group uses reputable and SBP approved rating agencies for deriving risk weight to specific credit exposures.363 150.205.274 23.Rupees In ‘000 ------------------------------------Wholesale and Retail trade Agriculture.Rupees In ‘000 ------------------------------------Public / Government Private 1.101 2.299 123.586 63.1.660 5.4 Details of non-performing Islamic financings related assets and specific provisions by sector: 2012 2011 Classified Classified Specific Specific financing and financing and provisions held provisions held related assets related assets Restated ------------------------------------.1.5 Geographical segment analysis 39.105 586 9.250 125.205.326 8.217 43. It uses CRM (Credit Risk Mitigation) technique where applicable.132.523 39.980 800 581 10.391 459.750 148.753 70 11.1.333 70.222 1.Rupees In ‘000 ------------------------------------Profit before taxation Total assets employed Net assets employed Pakistan 632.506 58.1.921 74.703 137.3 Details of non-performing Islamic financing and related assets and specific provisions by class of business segment: 2012 2011 Classified Classified Specific Specific financing and financing and provisions held provisions held related assets related assets Restated ------------------------------------. Water. The Group carries a strong desire to move towards the FIRB and Advanced approach.339 1. Sanitary Cement Automobile & Transportation equipment Construction Services Financial Paper Product* Transport.523 360.793 838.006 57.767 13. 39.523 39.068 2.848 200 73 17.101 360.523 360. The Group has also recently employed a credit rating model.971 18.533 5.222 467.1.598 161.716.1.572.326. which will support the Group in internally rating the credit clients. Gas.007 467.096 14. where available.306.205.002 467.39.614.838 160.002 2012 Contingencies and commitments* ------------------------------------.598 175.950 19.757 98.379 2011 Contingencies and commitments* ------------------------------------.2.980 1.773 703 23.Standardized Approach Credit risk arises due to the risk of a borrower defaulting on his commitment either in part or as a whole. Forestry.773 4. Hunting and Fishing Textile Chemical and Pharmaceuticals Power (electricity).001 838.847 8. 130 .1.750 3.997 2.796 1.000 261.002 22. The Group has currently employed standardized approach for evaluation of credit risk.139 1.

525.414 312.904 895.847.441.489 154.820.22. 14.473 3.344. The Group obtains capital relief for both on and off-balance sheet non-market related exposures by using simple approach for Credit risk mitigation (CRM). 15.027 million (2011: Rs.039 million) is subject to the CRM of Rs.2 Equity Position Risk in the Banking book –Basel II Specific Equity position includes the following: .Investment in equities for generating revenue in short term These equity investments are accounted for and disclosed as per the provisions and directives of SBP.465.221 3.21.023 million) was availed by the Group through CRM against total off-balance sheet.473 3.259 320.259 320.Strategic investments .1.398. Since eligible collaterals for CRM purposes are all in the form of cash collaterals.344.347 million (2011: Rs.033 159.VIS 3 3 2011 PACRA 3 3 Others N/A 3 Credit Exposures subject to Standardised approach Exposures Rating Category 0% 20% 50% 100% 150% Unrated 0% 20% 50% 75% 2012 2011 Amount Deduction Net amount Amount Deduction Net amount Outstanding CRM Outstanding CRM ---------------------------------------.637.287 3. in their value and charged to the consolidated profit and loss account.123 895. 579. 301.622 million) is subject to the CRM of Rs.221 million) was availed through CRM against total onbalance sheet exposure of Rs.847.776 588.412 1. non-market related exposure of Rs. 7.412 1.832 111.511 588.239.123.140.039 million). The total benefit of Rs.774.776 21.427 13. Provision for diminution in the value of securities is made after considering impairment.622 609. 266.580 million as against amount of Rs 586.867 15.The difference in the value of cash collateral is due to the changes in the exposure amounts and resultant amount of cash collateral obtained. During the year.807 312.023 million).423. Under off-balance sheet.393 306.867 million) is subject to CRM of Rs 306.Types of Exposures and ECAI's used Exposures Corporate Banks JCR .904 million (2011: Rs.393 million (2011: Rs.820.831.370. Off-balance sheet items under the simplified standardized approach are converted into credit exposure equivalents through the use of credit conversion factors.445 211.500 9.027 28.136 million (2011: Rs. 609.74 million (2011: Rs.123 22.489 million). 7.174 14.867 609. Valuation and management of eligible collaterals for CRM is being done in line with the conditions laid down by the SBP.123 million (2011: Rs. the corporate portfolio of Rs.807 579. the corporate portfolio of Rs 3. if any.582 266.414 million) whereas a claim on retail portfolio of Rs.565.Rupees in '000 --------------------------------------3. Hence total benefit of Rs 140. SECP and the requirements of approved International Accounting Standards as applicable in Pakistan.740 3.208 297.441.277 211. Under the standardized approach for on-balance sheet exposures.136 million (2011: Rs.895.173 21.992.3.840 million (2011: Rs. 39.240.423.840 million (2011: Rs. The Group takes the benefit of CRM against its claims on corporate and retail portfolio.240. 301. total amount of cash collateral used for CRM purposes was Rs.592 14. Under the standardized approach the Group has taken advantage of the cash collaterals available with the Group in the form of security deposits and cash margins. 159.060 14.084. 312.VIS 3 3 2012 PACRA 3 3 Others N/A 3 JCR . they generally do not pose risk to the Bank in terms of change in their valuation due to changes in the market conditions.060 297.438 2.737 2.2.347 465.268 Corporate Retail Total CRM = Credit Risk Mitigation 39.606.347 306.807 million).500 9.831.299 61 131.244 million in year 2011.2 Credit Risk Disclosures with respect to Credit Risk Mitigation for Standard and IRB Approaches.Basel II Specific.488 14.185.206 21. 131 .862. non-market related exposures.

086 118.605) (17.122 68.847 Assets Liabilities Off-balance Sheet Net foreign currency exposure ---------------------------------------. fluctuations in values in tradable.976. if exposed to various risk factors.765. and ultimately the residual foreign exchange risk of the Group. In the normal course of conducting commercial banking business. It includes current balances and contractual yield rates.336 - 5.351 60.498 426 7.806 2.344 502. Following is the summary of the assets of the Group subject to foreign exchange risk.Rupees in '000 ---------------------------------------- Pakistan rupee United States dollar Great Britain pound Deutsche mark Japanese yen Euro UAE Dirham ACU CHF AUD Saudi Riyal 57. 39.439.480 71.760 34.777 840 1.998 833 1. The Group uses various tools and techniques to assess market risk including but not limited to full valuation.777 840 1. These assessment methods enable the Group to estimate changes in the value of the portfolio.532 2011 (249.629 53.39. The Group does not have positions or forward exchange contracts giving mismatches of maturity unless such risks have been taken care of through some other mechanism.211 83.869 5.409.616 116.875 3. The Group also strictly adheres to all associated regulatory limits.615 74.3 Yield / Profit Rate Risk in the banking book – Basel II specific It includes all material yield risk positions of the Group taking into account all repricing and maturity data.171 3. scenario analysis.773 132 . 2012 Assets Liabilities Off-balance Sheet Net foreign currency exposure ---------------------------------------.524 3.998 833 1. The Group estimates changes in the economic value of equity due to changes in the yield rates on on-balance sheet positions by conducting duration gap analysis.1 Foreign Exchange Risk Currency risk is the risk of loss arising from the fluctuations of exchange rates.007. To control this risk.382 43.245. 39. since the Group does not deal in interest based products.306.379 67.716. the Group purchases or sells currencies in today / ready and gives or receives unilateral promises for sale or purchase of FX at future dates in a long or short position in different currency pairs.572.692 562.034 (16.738 84.615 5. stress testing.869 58.132.480 11.559.087 86. The risks relate to the current and future volatility of market values of specific assets and of foreign exchange rates and benchmark yields.985 2.171 3.429) - 5. which ranges from intermediation only to taking on principal risk as dealer or as counterparty.336) 249. the impact of the above risks will be very minimal. These positions expose the Group to foreign exchange risk.533 52.089 244 23.985 2.556 426 7. the Group understands that its Islamic financing and related assets shall be repriced as per their respective contracts.319.128 1.4 Market Risk Market risk is defined as the risk of losses in on-and-off balance sheet positions arising from movements in market prices e.4. marketable or leasable assets.211 244 23.521 1.521 77.443 1. the Group primarily uses notional principal limits at various levels to control the open position.866 901.576 58.922 552 1.Rupees in '000 ---------------------------------------- ` Pakistan rupee United States dollar Great Britain pound Deutsche mark Japanese yen Euro UAE Dirham ACU CHF AUD Saudi Riyal 73.g. Moreover.063. It also assesses yield rate risk on earnings of the Group by applying upward and downward shocks.

585 163.448 16.262 4.030.802.588.005.532 3.107 (11.229 2.411 244 4.82% On-balance sheet gap NON FINANCIAL ASSETS Operating fixed assets Deferred tax assets Other assets NON FINANCIAL LIABILITIES Other liabilities TOTAL NET ASSETS Total Yield / Profit Risk Sensitivity Gap Cumulative Yield/Profit Risk Sensitivity Gap (11.898.075.518.875 18.838.371) (2.347 10.883 36.275 5.229 7.224.847 8.907 350.701.350.888 17.433.407 71.244.451 (1.668.767.591.388.544 11.179 163.707 10.266 8.353.704.204 1.770) (3.704.00% 9.056.263 13.00% 11.545.474.449.939.290 392.474 56.467.288 12.563 1.245.898.587 (5.251.349) 113.770) (3.304) 1.427 2.794 6.773 Total Yield / Profit Risk Sensitivity Gap Cumulative Yield/Profit Risk Sensitivity Gap 9.000 2.083.776 4.674 1.266 113.359) 2011 (Restated) Exposed to Yield / Profit risk Effective Yield / Profit rate Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Over 5 to 10 Years Years Above 10 Years Non-profit bearing financial instruments ------------------------------------------------------------------------------------------------.423.544 1.722.459 8.938.415 3.902.179 6.116 197.295.813.166.889 1.840.585 3.591.148.680 1.Rupees in '000 ------------------------------------------------------------------------------------------------------ On-balance sheet financial instruments Assets Cash and balances with Treasury Banks Balances with other Banks Due from financial institutions Investments Islamic financing and related assets Other assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities 6.021.282 293 8.633.771 2.264 3.060.349) 27.707 8.255 12.693.999.633.428 14.060.572.255 1.816.919.306.442 461.513 87.719.251.769.672 8.379.672 28.092 5.944) (10.722.606.939.684.621) 1.463) 19.00% 4.474 1.202 3.707 8.866.802.701.427 9.776 304.542 1.148.928 563.475.744.863 188.891.190.815.862 5.643.291 24.358) 31.626 3.379.954 (4.222 1.379.104.264 13.180) 10.637 (4.171 3.769.729 8.288 53.881 2.637 4.01% - 4.339 381.130 68.186 159.465 (5.Rupees in '000 ------------------------------------------------------------------------------------------------------ On-balance sheet financial instruments Assets Cash and balances with Treasury Banks Balances with other Banks Due from financial institutions Investments Islamic financing and related assets Other assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities On-balance sheet gap NON FINANCIAL ASSETS Operating fixed assets Deferred tax assets Other assets NON FINANCIAL LIABILITIES Other liabilities TOTAL NET ASSETS 5.938.586 11.282 9.149 (643.290 304.010 11.071.853 10.379.528.677.180) 392.600 908.044.039 1.825.463) 132.278 (8.866.681.890 1.712 805.397 4.436.831 549.445.685 1.475.643 32.659.021 450.28% - 4.325.994.597 (8.586.005.4.582 17.415.000 50.423.583.542 4.769.291 1.295.840.579) (3.665.379.264 4.961.626 12.249.190.382.272.779.565 27.704.359) (1.663.175.353.249 (1.407 12.04% 9.295.693 20.908 965.303 13.415 64.207.586 3.182.600 3.249.542 4.304) 6.282 9.362 1.359) 8.167 2.163 9.491 4.362.370 1.282 6.631.2 MISMATCH OF YIELD / PROFIT RATE SENSITIVE ASSETS AND LIABILITIES 2012 Exposed to Yield / Profit risk Effective Yield / Profit rate Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year Over 1 to 2 Years Over 2 to 3 Years Over 3 to 5 Over 5 to 10 Years Years Above 10 Years Non-profit bearing financial instruments ------------------------------------------------------------------------------------------------.961.468.044.663.875 18.376.476 3.010 1.621.746.021 18.831 549.600 11.815 2.207.864.104.888 2.264 2.989 1.617) - 10.712 806.816.41% 13.148.681.821 (643.361 5.371) 20.853 800.817.484 798.889 3.808.765.588.684.617) (643.078 1.263.134 (8.473.945 5.972 13.175.307.436.037.278 8.288 50.847.542.226.264 20.347 13.62% 12.632 11.587 7.109 1.77% 5.938.621) 6.944) (10.586 798.110.052.816.182.358) 908.946 (4.288 4.902.542 1.813.600 6.39.569 1.729 (8.643 50.909 1.00% 7.000 2.060 4.77% 12.883 2.148.035.021.586.938.052.098 132.184 2.397 (4.379.272.617) 133 .579) (3.862 8.060 4.130 14.586 5.974.213 3.616 1.621.792 (2.098 8.376.633.932 4.802.767.202 9.

432 (27.017.863 188.787 440.842.883.919.975 3.060 4.982 1.908 4.684.432) 2.107 1.916.642 1.062 12.060 (698.009 512. 134 . ORAF is being effectively used to assess.5 Liquidity Risk Liquidity risk is the potential loss to the Group arising from its inability either to meet its obligations (financial) or to fund increases in assets as they fall due without incurring unacceptable costs or losses.312.265.755 3.533 798.111 973.554 1.320.369.394.760 5.283 4.355 58.244 11.674 48.807 2.339 306.847 5.342 5.989 4.352 10.950.864.216 960.672 28.327.938.486 1.601.924 331.555. depositor concentration. it serves as a part of the critical trio with risk management and treasury department.793 1.196) Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months 2011 (Restated) 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 Expected Contractual Expected Contractual Expected Contractual Expected Contractual Expected Contractual Expected Contractual Expected Contractual Expected Contractual Expected Contractual Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity ----------------------------------------------------------------------.340 621.866.354) 217.889 3.072 8.111 1.769.279.932 102.349 2.000 350.600 279.563) 39.866.466 8.712 806.982 8. The Group believes that (prudence) should be lived and breathed through the organizational culture.633 54.000 450.682 2.581.767.831 549.078 5.306.6 Operational Risk Operational Risk is defined as the risk of loss resulting from inadequate or failed internal processes.379. The risk is different from the others.522 53.759.844.996 1.136 4.546 191.415.207.416 721.436.720 7.961 341.674 1.572.39.913 137.504 316.215 4.491 1.993 2.479 7.769.186 14.681 7.817.272.583 3.262 1.671 74.411 4.493 5.507.261.380 248.831 973.107 6.902 50.653.834.173 7.916.340 108.415 2.025 1.032.110.589 7.000 9.576.g.679 173.656 672.442 4.183.428 2.750.463 4.534 96.650.679 91.339 1. Its role cannot be overemphasized here.837 10.000 2.290.409.044 6.323.222.394 973.241 928.367.831 549.621.518 82.248 15.036.853 798.847 1.068 7.979 488. mitigate and monitor possible risk that may arise in any of the Group’s financial product or department.737 (14.411 4.428 6.791. At a more formal level.433.038 492.369. reviewing contingency plans etc.793 8.864 69. the Group has strengthened its risk management framework by developing polices.916.662 1. short term.458.136 1.349 77.909 2.587 14.274.938.532 5.924 163.771.483.111 1.178.264 40.419.546 1.916.862.107) 1.828 (2.837 2.131.309.122 3.085.853 56.432 34.502 (2.004 4.996) 844.661 41.205) 3.554 928.Rupees in '000 ---------------------------------------------------------------------------Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Operating fixed assets Deferred tax assets Other assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities Net assets Share capital Reserves Accumulated loss Surplus on revaluation of assets 19.893 (1.889 548 3.703 319.265 7.371.600 10.207.269 94.Rupees in '000 ---------------------------------------------------------------------------Assets Cash and balances with treasury banks Balances with other banks Due from financial institutions Investments Islamic financing and related assets Operating fixed assets Deferred tax assets Other assets Liabilities Bills payable Due to financial institutions Deposits and other accounts Other liabilities Net assets Share capital Reserves Accumulated loss Surplus on revaluation of assets 169.282 4.338.757.204 525.132.174.946 8.367.264 20.350 26.077.376 14.554 1.233 53.181.720 107.228 563.223 3.794 5.992 9.568 2.626 4.028 59.196 50.600 846.000 24.609 5. Operational Loss Database (OLD) records all the internal / external potential operational losses which helps the management understand the causes and impact of these risks.415 64.350 8.342 1.420.812.758.891.924 34.394 4.559.251.270.837 492.150.436.616 1.399.342.667) 24.269. monitoring and maintaining key liquidity ratios.260 124.190 1.649.491 107.642 163.873.883) 680.170 (14.765.989 24.904 844.444.269 69.354.674 440.282 8.708 710.618.048 396.716.369.730 3.749 4.1 MATURITIES OF ASSETS AND LIABILITIES 2012 Over 1 to 2 Years Total Upto 1 Month Over 1 to 3 Months Over 3 to 6 Months Over 6 Months to 1 Year Over 2 to 3 Years Over 3 to 5 Years Over 5 to 10 Years Above 10 Years Expected Contractual Expected Contractual Expected Contractual Expected Contractual Expected Contractual Expected Contractual Expected Contractual Expected Contractual Expected Contractual Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity Maturity ----------------------------------------------------------------------.010 27. since it has a greater level of uncertainty and may be termed as a little difficult to measure.000 3.000 7. Liquidity at various levels (day to day.350) 69.232 680.000 12. 39.265 125.522.051) 4.175.112.268 18.513 87.004 800.139. which is one of the most important management level committees.797.916.122.467 3.198 2.512.761 182.387 (868.379 26.594 9.306.000 6.221 2.071. long term) is managed by the Treasury along with the Asset and Liability Management Committee (ALCO).572. a viable funding mix.392 100. people and systems or from external / internal events.415.358 35.154.930 54.323.993 2.665.683 87.251.353 4.828 721.367.442 1.633.112 (1. guidelines and manuals.606.288.420.888 176.179 47.468.260 (2.208 108.696 2.117.649.580 295.475.349) 1.773 5.390 2.757.712 806.353.280.154.684. Operational and other risk assessment tool e.916.738 (11.221 (233.037 12.773 50.816.325 2.437 928.037.340) 1.360 19.139) (11.694 9.560 908.311.187.088.710.616.523 262.837 6.498 781.000 8.852 14.5.847.491 68.862 10.227 274.010 1.721 11.338.244 11.340 (58.459 1.939.468 188.133.342 9.191.922 1.928 4.637 11.278 69.112 1.279.637 11.996 4.

Such a collapse could be due to technical factors or market driven (psychological reasons). 40 TRUST ACTIVITIES Holding Company's that are Banks commonly act as trustees and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals. Depositors are Rabb-ul-Maal as they are the provider of capital while group acts as Mudarib by investing these funds in business. ' Energy'.000 41 PROFIT / (LOSS) DISTRIBUTION TO DEPOSITOR'S POOL The Group maintained following pools for profit declaration and distribution during the year ended December 31. are not included in the consolidated statement of financial position.450. Whereas. 39.7 Strategic Risk Strategic risk arises due to wrong assumptions in strategic decision making or the failure to react correctly to longterm changes in strategic parameters.000 87. USD. The Group has a well established strategic planning and evaluation process which involves all levels of management and which is subject to regular review.000 1. therefore. Systemic risk is reduced by the activities of both national and international regulatory authorities.39. profit sharing among the depositors is based on pre-assigned weightages. 'Fertilizer'. Since there are more than one Rabb-ul-Maal (depositor). trusts. Loss. Key features and risk & reward characteristics of all pools The 'General Deposit Mudarabah Pool' for both local and foreign currency is catered for all depositors of the Group and provide profit / loss based on actual returns earned by the Pool.165 311.641.710. Musharakah investments from the SBP under Islamic Export Refinance Scheme (IERS) are channeled towards the export sector of the economy via different Islamic financing modes such as Murabaha. Pakistan Banks Association (“PBA”).8 Systemic Risk Systemic risk is the risk of a total or partial collapse of the financial system. The Group follows a deliberate low-risk strategy. of IPS Face Value account (Rs in '000) 1 22 8 8 21 60 220. 135 . 'Trading' ' Consumer Finance' and GOP Ijarah Sukuks'. It remains' the most important operational risk for Islamic entities. is borne by the Rabb-ul-Maal as per the principles of Mudarabah. Istisna etc. Compliance of Shariah guidelines must permeate throughout the organization and its adherence should be reflected in the products and activities. and Treasury Special Pools The deposits and funds accepted under the General Deposit Mudarabah Pool is provided to different sectors of economy mainly' to 'Textile and Allied'.370 3. Musharaka Pool under SBP's Islamic Export Refinance Scheme.465 5. retirement benefit plans and other institutions. their mutual relationship is that of Musharakah. Within the general constraints of its niche market the Group is aware of the need of reducing risk. Profit is shared among Mudarabah partners (Group and depositors) as per pre-agreed profit sharing ratio.e. 2012: i) ii) iii) General Deposit Mudarabah Pool (PKR.9 Shariah Non-compliance Shariah non-compliance risk is the risk that arises from an Islamic bank's failure to comply with the Shariah rules and principles prescribed by the State Bank of Pakistan and / or the Shariah Advisor. 39. The Group actively supports these organizations through its membership of the relevant banking industry association i. These are not assets of the group and. EUR & GBP). if any. The Group also takes account of systemic risk by means of careful management of counter party risks in the inter-bank market. Following is the list of assets held under trust: Category Insurance Companies Asset Management Companies Employee Funds / NGO's Individuals Others Type Sukuks Sukuks Sukuks Sukuks Sukuks No.

1 to these consolidated financial statements.00% 213.37% 11. The allocation of income and expenses to different pools shall be made based on pre-defined basis and accounting principles / standards. Treasury Pools are managed on the basis of Musharakah. along with a brief description of their major components: Gross income (Revenue less cost of goods sold and after deduction of other direct expenses). The risk characteristic of each pool mainly depends on the asset and liability profile of each pool. while indirect expenses are borne by Group as Mudarib. The income is shared between Group and the depositors as per agreed profit sharing ratio after deduction of commingled Group's equity share on pro rata basis. 136 . Salam.9 11. etc. Nevertheless since Islamic Banking is a nascent industry we believe that the process of further improvement will continue as the business grows. Ijarah.46% 0. General Deposit Mudarabah Pool Profit rate and Profit rate weightage return announcement earned period Depositor Share % Mudarib share % Mudarib share Profit rate return Percentage of Amount of distributed to Mudarib share Mudarib Share remunerative transferred transferred deposits through Hiba through Hiba (Savings and Term) (Rupees in '000) (Rupees in '000) PKR Pool USD Pool Monthly Monthly 12. charging expenses and provisions etc. etc. IERS Pool consists of blue chip companies to whom the Group has provided financing facilities on Shariah compliant modes including IERS facility.35% 63. Istisna. The Group also analyze transaction structure of each customer to further ensure proper safeguard of depositors' interest. Under the scheme. Profit is shared according to an agreed weightage and loss is shared according to the investment ratio.117.24% 64. Karobar Financing. generated from relevant assets is calculated at the end of the month.e. wherein Group and partner (Financial Institution) share actual return earned by the pool according to pre-defined profit sharing ratio.368 8.01% 36.99% 1. Direct expenses are charged to respective pool. The general and specific provisions created against non-performing Islamic financings and diminution in the value of investments as under prudential regulations and other SBP directives have been borne by Group as Mudarib. In this Scheme. DM.66% 49.20% 0.542 1.510 - Specific Pool Profit rate and Profit rate weightage return announcement earned period SBP Share Bank share Bank share % % Profit rate return distributed Percentage of Amount of Mudarib share Mudarib Share transferred transferred through Hiba through Hiba (Rupees in '000) (Rupees in '000) Islamic Export Refinance (IERS) Pool Monthly 12. The direct expenses charged to the pool are direct cost in financing / investment transactions (i.77% 0. SBP is required to share in profit and loss of the Group's IERS Musharakah pool. These weightages and profit sharing ratios are declared by the Group in compliance with the requirements of the SBP and Shariah.34% 50.00% - In addition to the above 85 short term Treasury Pools were created to meet liquidity management requirement of Treasury Department. Credit Risk: Financial Risk is the risk which is associated with financing that is mitigated through safeguards through available standards within Shariah guidelines as disclosed in note 39.53% 29. SBP enters into a Musharakah arrangement with the Group for onward financing to exporters and other blue chip companies on the basis of Shariah compliant modes such as Murabaha. The residual is shared among depositors as per agreed weightages.76% 70.The IERS Pool caters to the 'Islamic Export Refinance Scheme' requirements based on the guidelines issued by the SBP. The Pools were managed under the Shariah approved guidelines.813. Istisna. The Pools were dissolved after maturity of respective Treasury transaction. The review is done by experienced team of professional having considerable experience in the field of Islamic Banking and finance. The Group has prepared detailed product manuals in order to identify and properly mitigate such risk.) and depreciation of Ijarah assets.84% 1. Murabaha. 2 Parameters used for allocation of profit. The pool is exposed to following kinds of risks: 1 Asset Risk: The pool is exposed to Asset Risk which is the risk that is associated with Islamic mode of finance(s) applied / used under the transaction structure(s).

2013 by the Board of Directors of the Holding Company. 04 of 2006 dated February 17.Repairs and maintenance Administrative Expense .Fee. commission and brokerage income Administrative expense . The figures in the consolidated financial statements have been rounded off to the nearest thousand rupee. to facilitate comparisons.249 43 DATE OF AUTHORISATION FOR ISSUE These consolidated financial statements were authorised for issue on March 04.Salaries. in respect of which there are no amounts.Rent.039 13.953 52. and other benefits Administrative Expense .others Other Charges .Repairs and maintenance Other Income . wherever necessary.2 Corresponding figures Corresponding figures have been re-arranged and reclassified.42 42.Worker's Welfare Fund Administrative Expense .others Reclassified to Other charges . No significant reclassifications were made during the current year except for the following: Reclassified from Administrative Expense . taxes.968 4. insurance. 2006 issued by the SBP.795 19.1 GENERAL Captions. as prescribed by BSD Circular No. electricity.others Rupees in '000 12. have not been reproduced in these consolidated financial statements.Worker's Welfare Fund Administrative Expense . 42. etc. Chairman President / Chief Executive Director Director 137 . Other Income . except for captions of the consolidated statement of financial position and consolidated profit and loss account. allowances.

203 3.022 181 294 113 Mode of disposal Particulars of Buyer ATM Machine Mother Board CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CCTV Camera CISCO Router CISCO Router Desktop Desktop Desktop Electrical Work E-Queue Management System Hard Drive HP Server HP Server Motherboard IP Phones IP Phones Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop Laptop LCD Monitor LCD Monitor LCD Monitor Main Board of UPS Main Board of UPS Motorcycle Power Supply .Server Power Supply . are as follows.Annexure 1 to the Consolidated Financial Statements Details of amounts disposed off during the year including assets disposed off to Cheif Executive Ofiicer or to a Director or to Executives or to any related parties irrespective of the value.Naveed Rauf Auction . Asset description Asset Cost WDV Sale proceeds Gain/ (loss) on Accumulated disposal depreciation ---------------------------------------.Rupees in thousand --------------------------------------44 34 10 44 34 14 9 5 14 9 14 14 14 14 14 12 2 14 12 14 10 4 14 10 28 19 9 28 19 9 9 9 9 13 13 13 13 28 16 12 28 16 21 19 2 21 19 8 8 8 8 14 14 14 14 273 273 273 273 693 546 147 693 546 2 2 2 2 5 5 5 5 8 8 8 8 55 20 35 55 20 143 117 26 143 117 9 1 8 9 1 8 8 8 8 35 2 33 35 2 10 9 1 9 8 14 13 1 14 13 84 84 5 5 26 19 7 7 74 74 5 5 74 74 5 5 74 74 5 5 81 81 5 5 74 74 5 5 83 83 5 5 84 84 5 5 81 81 5 5 84 84 5 5 84 84 5 5 81 81 5 5 84 84 5 5 83 83 5 5 74 74 5 5 84 84 5 5 84 84 5 5 83 83 5 5 83 83 5 5 83 83 5 5 74 74 5 5 87 87 26 26 2 2 2 2 2 2 2 2 16 16 10 10 37 37 38 38 22 22 23 23 70 3 67 66 (1) 21 20 1 22 21 22 21 1 22 21 21 21 22 22 22 19 3 3 22 19 3 4 1 23 19 4 4 25 25 25 25 26 26 26 26 26 26 26 26 43 36 7 43 36 55 55 54 54 21 21 21 21 10 8 2 9 7 40 39 1 40 39 27 26 1 27 26 27 26 1 27 26 25 20 5 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Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Group's policy Insurance Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Negotiation Negotiation Negotiation Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Employment terms Employment terms Employment terms Auction Auction Takaful Claim Takaful Claim Takaful Claim Takaful Claim Employment terms Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Ahmed Mobeen Ahmed Mustafa Aleem Azimi Arbab Wadood Arsalan Vohra Ata Hussain Atika Khan Bilal Zuberi Farman Ahmed Farooq Anwar Hasan A Bilgrami Khawaja Ehrar ul Hasan M Faisal Sheikh M Furqan Mujtaba Hussain Rehan Shuja Sajid Hussain Sarfaraz Waris Sheba Matin Khan Syed Akhtar Ausaf Syed Tanveer Zahid Karim EFU General Insurance Company Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited AS Electronics AS Electronics AS Electronics Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Ayaz Chaudhry S Hamid Jawad Bukhari Fesal Omar Auction .

607 10.033 6.574 2.Rupees in thousand --------------------------------------11 11 11 11 15 15 15 15 10 10 10 10 11 11 11 11 17 17 17 17 425 399 26 425 399 10 8 2 10 8 19 18 1 20 19 265 265 265 265 26 26 26 26 473 473 473 473 12.Asset description Asset Cost UPS UPS UPS UPS UPS UPS UPS UPS UPS UPS Video Conferencing Equipment Total Accumulated WDV Sale proceeds Gain/ (loss) on depreciation disposal ---------------------------------------.680 Mode of disposal Particulars of Buyer Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Takaful Claim Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited Pak Qatar General Takaful Limited 139 .713 4.

084 5.999.494 0.587 1.272 4.369.062.934 19.927 7.386 Shareholding From 1 101 501 1001 5001 10001 100001 1000001 2000001 3000001 4000001 5000001 6000001 10000001 13000001 14000001 20000001 51000001 111000001 131000001 To 100 500 1000 5000 10000 100000 1000000 2000000 3000000 4000000 5000000 6000000 7000000 11000000 14000000 15000000 21000000 52000000 112000000 132000000 Total Shares Held 12.649 11.500 15.480 21.745.853 3.053.550 12.780.500 102.898 Total Shares Held % 0.984.351 6.688 3.000.002 1.284 11.822 100 140 .446 1.356.193 6.073 24.188.766 111.142 2.250 1.847.150.028 2.856 3.254 1.000 20.101. of Shareholders 328 16569 4038 2559 395 403 71 2 3 2 2 3 2 1 2 1 1 2 1 1 24.554 24.620.000 14.888.PATTERN OF SHAREHOLDING No.379 527.816 2.017 0.967.256.414 2.735 3.116 131.722 5.178.000 9.000 27.600.771.558 0.602 2.

TRUSTEE PAKISTAN STOCK MARKET FUND CDC .379 111.141.TRUSTEE MCB DYNAMIC STOCK FUND CDC .TRUSTEE AL MEEZAN MUTUAL FUND CDC .975 274.181 9. M.74 9.TRUSTEE NAFA ISLAMIC MULTI ASSET FUND CDC .346 14.000 200 1.000 4. NON BANKING FINANCIAL INSTITUTIONS. SAJ CAPITAL MANAGEMENT LTD JS VALUE FUND LIMITED EFU GENERAL INSURANCE LIMITED SUB TOTAL MODARABAS AND MUTUAL FUNDS CDC .674 19. AND THEIR SPOUSE AND MINOR CHILDREN Chief Justice (Retd.000 500 500 500 20.149. INSURANCE COMPANIES TAKAFUL. Randeree 24.482.423. FUND CDC .10 PUBLIC SECTOR COMPANIES AND CORPORATIONS: "BANKS DEVELOPMENT FINANCIAL INSTITUTIONS.000 4.883 499. 2012 FIVE % AND ABOVE Dubai Bank PJSC JAHANGIR SIDDIQUI & CO. Bilgrami Shabir Ahmed Randeree SUB TOTAL EXECUTIVE AND THEIR SPOUSE.82 5 130. ALIYA MUHAMMAD IMRAN SUB TOTAL 0 1 526.053.07 9.000 22.079 51.000 51.701 246.STOCK FUND CDC .182.TRUSTEE JS GROWTH FUND CDC .74 141 .952.526 52.603.309 150.883 103. Randeree Hasan A. M.TRUSTEE MEEZAN BALANCED FUND CDC .EQUITY SUB FUND CDC .883 24.TRUSTEE ATLAS STOCK MARKET FUND CDC-TRUSTEE PAKISTAN PREMIER FUND MCBFSL .829 5. PENSION FUNDS AND OTHERS" INDIVIDUALS: a: Local b: Foreign 95 51.470 16 500.TRUSTEE ALFALAH GHP ISLAMIC FUND CDC .379 111.423.500 6.80 24.LTD.500 944. CHIEF EXECUTIVE OFFICER.423.TRUSTEE MEEZAN ISLAMIC FUND SUB TOTAL DIRECTORS.867. 2012 PARTICULARS ASSOCIATED COMPANIES.014.256.82 21.116 51.CATEGORIES OF SHAREHOLDERS AS AT DECEMBER 31.500 975.840.04 TOTAL ADDITIONAL INFORMATION AS AT DECEMBER 31.053.771.TRUSTEE ATLAS ISLAMIC STOCK FUND CDC .000 6.LTD.TRUSTEE HBL .000 526.500 5.257 7 76.000 0 SHAREHOLDERS SHAREHOLDING PERCENTAGE 5 131.TRUSTEE NIT-EQUITY MARKET OPPORTUN MC FSL .000 500.) Mahboob Ahmed Ali Raza Siddiqui Ahmed G. MODARABAS. UNDERTAKING AND RELATED PARTIES Dubai Bank PJSC JAHANGIR SIDDIQUI & CO.940.386 527.TRUSTEE NAMCO BALANCED FUND CDC .000 20.743.58 0.116 20.TRUSTEE JS LARGE CAP.256.898 100 1 1 1 1 131.60 0.883 51. Shabir Ahmed Randeree Ahmed G.967.TRUSTEE APIF .06 3.517 100.423.

Correspondent Banking Network 142 .

143 .

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Karachi. Tel: (021). Tel: 022-3820301-2-3-4-5-6-7 Fax: 022-3820308 Nawabshah Branch Nawab Shah Branch City Survey No. Executive Tower.T. Tel: (021)-36950158-59-61-64-66 Fax: 36950167 Baloch Colony Branch (Karachi) Plot No.iii Situated at Nazimabad.7. Block 15. Plot No. Naval Colony. Al-Murtaza Commercial Lane-3. Tel#(021)-36707492-96 Fax# 36707497 Jodia Bazar Branch (Karachi) Jodia Bazar Branch Ibrahim Manzil. E-31-B. Tel# 021-36664031-34.62-C. Block 4 KDA Scheme #16 F. Telephone:(021)-34491481-2 Fax : (021)-34491483 North Nazimabad Block A. Block-5.I.S. Phone 0235. Tel: (021)-34686121-25 Fax: (021)-34686126 Shahra-e-Faisal Branch (Karachi) Shahra-e-Faisal Branch.6362278-6807782 Fax : (021). Tel: (021). Plot No C-1.36364659 Shaheed-e-Millat Branch (Karachi) Shop No.A Phase 4 Karachi. Ground Floor.A. 8 & 9. Hyderabad. Park View Apartment. Heerabad. LS-7. Defence Housing Authority.1.A & 9D.North Bond). 225 Ward A Masjid Road Nawab Shah. 408. Qadirpur Road. Tando Allahyar Tel:( 022). LS 55 & 56. Karachi Phone :021-35388403-408 Fax: 021-35388409 KARACHI. " Al Hilal Society Branch (Karachi) Shop No. Karachi. Tel: (021). Chowdhery Market. Fax (074)4059887 Mirpurkhas Branch New Town Station Road Mirpur Khas.C. Karachi Tel: 021-36722504-6 Fax: 36722507 Orangi Town Branch (Karachi) Plot No. Qazi Mohalla.S.H.10. AM 51 Burns Road. Deh Drigh Colony Shah Faisal Colony Karachi. Clifton Cantonment Board. Phone: (021)35245931 to (021)35245934 Fax: (021)35245935 147 .5. Plot No. SC-11.215 & 0235-571213 Fax: 0235-571215 KARACHI. Area. KDA Scheme No#7 Main University Road. Malir Cantt Karachi. Street No.11.1. 31-C. Haroon Bahria Cooperative Housing Society. 3892424. Ward-A. Karachi.102. Jawwad Court.C-6. 25/3 Survey Sheet No. Block-5 Cantt Bazar. Shaheed-e-Millat Road. 1. 3C.E. Iqbal Road. Pakistan. 3891442.35349244-5 Fax: (021)-35349243" Rashid Minhas Road Branch (Karachi) Rashid Minhas Road Branch.M) Sukkur Branch. Jail Road. Karachi. 36692257-59 Fax# 021-36662257 Sarwar B. Chandni Chowk. 3A. SC-11. North Nazimabad Karachi. 0244-330926-7 Fax: 0244-330928 Sukkur Branch (Anwar hussain .1 Phase V. Blcok A. Karachi. Karachi Ph: (021)-32215505(021)-32215592-32215505 Fax :(021)-32215480 Shadman Town Branch (Karachi) Shop No.DHA PHASE II 8C. Gharo No.947/16.A . Near Creek. 34860566-68 Fax : (021). Sector 14/B Shadman Town No.M. Karachi. 2636862 -3 Fax: 022-2636864 Larkana Branch Larkana Branch City Survey # 1806 Word-A Bank Square Road Larkana. Gulshan-e-Iqbal Karachi.S.M 26th Street D. 2B Unique Centre. Tel: (021)-32462488-9. Block-4.O Plot # 36-C Sunset Commercial Street # 2 D. Main National Highway.Karachi. Karachi Plot No. Commercial Area. Umar Welding Store City Survey No. Block D. 35/1 Block 7 & 8 Maqbool CHS Ltd. ST 11-A Sector 1.6. 3B. Tando Adam. Karachi. Karachi Land Survey.7. BRANCH (NEAR CREEK) KARACHI Plot No. Branch (Karachi) Shop Nos. 36901362 Fax: 021-36901364 Nazimabad #7 Sub Branch Plot No-4 Row No-1 sub block. Karachi Cloth Market Branch Shop-05 Cochinwala Market Laxmidas Street Karachi. Plot No.E.AYESHA MANZIL Rose Marry Apartment.Town Ship Karachi. Sector. Jodia Bazar Darya Lal Street Karachi. Marine Drive. 3892443 Fax: (022)-3891699 GHARO Jaryan/ Plot No. District Thatta. KDA Scheme No.B. B. Karachi. Pakistan. Dolmen City. Adam Arcade. Sheet No. # (021) 32462861-67 Fax: (021) 32462490 Malir Cantt Branch (Karachi) Plot No. Shop No. Block No-10.575213. SA-2/1 Block-3 Administrative Society.H.4. Tel: (021)-34818227-9 Fax: (021)-34818135 Burns Road Sub Branch. Hyderabad.H. Tel: 0244-330920-4.Karachi. North Nazimabad. Tehsil & District Gotki. Eastern Print Appt. Tel: 074-4059833-6.B Area Sub Branch.T. Tel: (0233) -875843 Fax(0233)875802 Tando Allahyar Branch Tando Allahyar Branch Mir Pur Khas Road. 520. Karachi. Tel: (021)-34145305-9 Fax: 34145310 Korangi Branch (Karachi) Korangi Branch. SB-3. 32462831-4 Fax: 32416368 Gulistan-e-Jauhar Branch (Karachi) Shop No. Tel: (021)-34555985-87 Fax: (021)-34555991 University Road Branch (Karachi) Shop No.(5 STAR) Tel: (021)-36676474-75 Fax: 36676488 UP More Branch (Karachi) UP More Branch. Phone : 021-32364411-14 Fax : 021-32364415 KARACHI. Main University Road Telephone: (021)-34801540-1 Fax : (021)-34839032 DHA Phase IV Branch (Karachi) Waqar. 51/9-B Sector 15 Korangi Industrial Area. Badar Commercial Street No. 135. New Karachi. 1. 34860728 Fax# (021)-34860704 Dhoraji Sub Branch. Baqai Medical Centre. Tehsil Mirpur Sakro.A. Branch (Karachi) Shop No. 1. Tel: (021)35114488-91 Fax: 35114494 Saddar Branch karachi Plot no 7/17 saddar bazar quarter Bohri bazar raja ghanzaefar ali khan road saddar karachi Tel#(021)-35219891-94 Fax#(021)-35219895 North Nazimabad Branch (Karachi) North Nazimabad Branch. Tel: (021)-32587661-2 Fax: (021)32587510 Shah Faisal Colony Branch (Karachi) Shop No 1 & 2 Plot No A/7 Surrey No. Tel: (021). Orangi Town.C. Karachi Telephone: (021). Super Highway.H.35839906 Fax: (021)-35378373 " Cloth Market Branch. Sector X-II Karachi. Tel: 022-2636768-70. W-9. Jawwad Court Plot No. 15 & 16.I. Tel: 021-36901356 . 214.3 Block C Auto Bhan Road.12.NAVAL COLONY Plot No 3-C. Phone : 0723-682544 Fax : 0723-682546 TANDO ADAM Plot No. Karachi Al Madina Heights Plot Survey No. Tel: (021)-32469031-35 Fax: (021)-32469030 Baqai Medical University Branch (Karachi) 51-DHTOR. Tel# (021)-34300036-42 Fax# (021)-3430004 S. Phase II. S.Branch Network* SINDH Main Branch Clifton (Karachi) 11th Floor. Clifton. 35. P Berar Cooperative Housing Society Telephone: (021)-34860407-10. 1-5 KDA Flats Phase # 3.9. Tel: (021)-34860713-16. Block-L. Tel: (021)-35313191-7 Fax: 35313190 Power House Branch (Karachi) St-3 As-28 Comm.C. Tel: (021)-36950027-33 Fax: (021)-36950034 F. Karachi. 5th Floor..34410201 Fax: (021)-34410294. Areeba Heaven. Ward-D. Area Sector 5-H Power House. Ghani Chowrangi. Faisal Tower. Tel: 071-5617322-8 Fax (071)5617329 Heerabad Branch (Hyderabad) A/113-261. Federal 'B' Area. Anum Trade Center. C-10. D. 8 Sub Sector 11-I.34410220 . Phase VIII.34619518-34619563-73 Fax: (021)-34619514 Auto Bahan Branch (Hyderabad) Hyderabad Branch Plot # C-10-8. KSE Building Karachi Tel.34860569 Gulshan-e-Maymar Branch (Karachi) Gulshan-e-Maymar Branch. Phone : (0298)760243 to (0298)760246 Fax : (0298)760247 GHOTKI SUB BRANCH Plot No. DHA. Tel: (02) -36833354-5 Fax: 36833445 Karachi Stock Exchange Branch (Karachi) Room No. D-5. Phone: 021-36365580-84 Fax : 021-36365585 DHA PHASE VIII. Opposite Municipal Park Town. Karachi. KDA Scheme 36 Gulistan-e-Johar Karachi. North Nazimabad Karachi. Shop No 4. 3/21 Station Road Sukkur. Branch (Karachi) 26th Street Branch. 35 C/449 C. Hub River Road.

Tel:(068)-5886972-77 Fax:(068)-5886978 Mainwali Branch Mouza urra khel Pacca. Lalamusa.T. Karachi. Mehran Garden. Thokar Niaz Baig.5440162. Phone: (051) 3413203 to (051)3413206 Fax: (051)3413207 ATTOCK Omair Arcade. Gulshan-e. Circular Road Bahawalpur. Block-G.13-C.4461688 Fax# 040-4462688 Gujranwala Branch Gujranwala BX-11-75-7S-10+12.M Tel:(061) 6210371-5 Fax : . Stadium Road D. Federal `B` Area.G. Garden East. Karachi. Civic Centre. Karachi.6.32359530-33 Fax : 021.7524327 Fax#(042)7524331 Walton Road Branch (Lahore) Plot 48-E Super Town. 699 Gate No. 4467688. Westridge Mall Road.(0423)6625849 Darogha wala gate Branch (Lahore) 326 G.24. Plot No.65 Fax: 051-5440166 MURREE Al Mustaf Plaza. Al-Asif Square.8. Tel: (0423)6603701-2 Fax : . G. Bahria Town. Akber Chowk. Plot No. KARACHI Plot No. KARACHI C-31. G-18-A & G-63. Ph:( 044)-2522901-6 Fax: (044)-2552907" Sadiqabad Branch Plot No 1 & 2 Allama Iqbal Road Opp Jhalla Mandi Sadiqabad. Kutchery Road. Main Sargodha Road. Lahore Telephone:(0423)-5790571-88 Fax : (0423)-5790573 DHA Branch.(061)6210376 Bhawalpur Branch Block No. Peco Road. Tehsil Murree. Murree. Walton Road Lahore. Model Town Khanpur. KDA Scheme No. Karachi. Rahim Yar Khan.G-17-A. Tel: 048-3768264-68 Fax: 048-3768269 Mian Channu Branch Ghazi Mor G. Karachi. Landhi.418 Fax: 021-34641419 RAWALPINDI.SOHRAB GOTH BRANCH. Phone : (021)35862556 to (021)35862559 Fax : (021)35862560 TRUCK STAND HAWKS BAY ROAD BRANCH KARACHI Plot No. KAMOKE G. Airport Road. North Karachi Township. Tel#(0423)5221731-37 Fax#(0423)5221738 Airport Road Branch (Lahore) Plot no 595/8. Bhains Colony. 3 & 4.25.G-17-B. Lahore Telephone: (0423)-5691066-72 Fax: (0423)-56910673 Ferozepur Road (Lahore) 174.1-to.A.2613425 Jail Road Branch. Near Lasbella Chowk. 352 Fax: 068-5571351 RAWALPINDI. Multan. D-41/A. Commercial plot No. Tel#(0423)7524321.BHAINS COLONY BRANCH KARACHI Commercial Plot No. Adjacent to Askari Bank. Rawind Road. Phone : 051.2 & 3.16. Rwalpindi. Phone : 055-6813227-30 Fax : 055-6813231 LAHORE. Lahore Tel: (0423)5315636-40 Fax : . Phone : (021)35081441-44 Fax : (021)35081445 BUFFER ZONE SUB BRANCH.42-B. 213 & 214.H. Tel No#. Phone : (021)36965105 to (021)36965108 Fax : (021)36965109 KARACHI. KARACHI Shop No. B-VIII/3.7723881 Fax#(0423)-7723882 Akber Chowk (Lahore) 883-D.T Road Mian Chunnu Tel: (065)-2664001-8 Fax(: 065)-2664008 Sahiwal Branch 418 High Street Sahiwal. Lahore Fayaz C. Phase I Block . Plot # 179. (Lahore) Plot No. Multan Saqib. Clifton.Commercial Area.11. Karachi. Karachi. Boulevard Corner. Tel# (0423)7670188-7670256 Fax# (0423)7658582 Circular Road (Lahore) Shop 3 38 105/h outside mochi darwaza Telephone: (0423)-7374009-15 Fax :(0423)7374016 DHA G Block Sub Branch.I.( 040)-4228284-88.T Road Kamoke. Opposite PSO Petrol Pump. Khan Branch Jampur Road Dera Ghazi Khan Tel#(064)2473201-07 Fax#(064)2473208 Okara Branch 69/1 M. Model Town. Lahore. 068-5800591-3-5 Fax:( 068)-5800598 Kashmir Road Branch (Sialkot) B-III-116/99/2 Kashmir Road Sialkot. Buffer Zone. Block-C. KDA Scheme No. The Mall Road. KARACHI Shop No. PATEL PARA Shop No. Southern Avenue. Block No. Phone : (021)35810250 to (021)35810253 Fax: (021)35810254 KARACHI. GRE 457/2. 8.House # 5 Near EFU House Jail Road. Phone: (021)34856601 to (021)34856604 Fax: (021)34856605 GULZAR-E-HIJRI SUB BRANCH. Lahore. Pakistan Tel:( 061)-4540350-56 Fax: (061)-4540357 Gulgusht Branch (Multan) Jalal Masjid Chowk.Ferozepur Road Lahore. Hawksbay Road. Tel: 047-7651401-05 Fax: 047-7651406 Vehari Road Branch (Multan) Vehari Road Multan.House # 5 Near EFU House Jail Road. Karachi. Sector 11-C/1.Ravi.33. (Lahore) 153 Block ""Y"" DHA. Pakistan.BAHRIA TOWN SUB Branch Zahra Icon.2. Sector 8. Sana Arcade. KARACHI Shop No. KDA Scheme No. Tel#( 0423)-7723865-68.10. Behind Gizri. Block No. Phone : 021. Phone : 021-34830780. Near Masjid-e-Siddique-e-Akbar. Tel: (055) 3820511-16 Fax: (055) 3820517 Gujrat Branch Danish metal works SIE-1 Gujrat Tel: (053)358010-13-3535555 Fax#(053) 3538016 D. 5 A. 4270429-30. Phone: (042)37404211 to (042)37404214 Fax : (042)37404215 LALAMUSA SUB BRANCH Property No. 5 A.LASBELLA. 1. Phone:(053)7511580 to (053)7511583 Fax: (053)7511584 KHANPUR SUB BRANCH Plot No. 2. Opposite Peoples Colony. Sector 14/A.T. Gulshan-e-Iqbal. GT Road. R-405 & 470. Phone: (057) 2700425. Ph: (041)-8728626-8. 825 & 261042.2732235-38 Fax :((062)2732240 Rahimyar khan Branch Model Town Branch 21-A.M Telephone:(042)-5790571-88 Fax : (042)-5790573 Jehlum Branch B-VIII-2-5-13 Tehsil Road Jehlum Tel: (0544)-620503-4-8-84-88 Fax:( 05440)-620498 PUNJAB KAMOKE. Lahore Cantt .15. Plot No. Gujranwala. Commercial Area. Karachi. Block No. Phone : (021)34715092 to (021)34715095 Fax :(021)34715096 GIZRI SUB BRANCH Shop No.GULSHAN-E-IQBAL. Cantt.GULSHAN-E-RAVI Plot No. 27 & 28.T ROAD. District Rawalpindi. Masood C.3 & 4. Plot No.WESTRIDGE Rafay Mall & Rafay Tower. Phone : (021)36370515 to (021)36370518 Fax : (021)36370519 KARACHI.1. Ground Floor.S. (Lahore) Plot No.S.(0423)5315641 Azam Cloth Market Lahore F-1207 Azam Cloth Market Lahore.SB/19. Attock. 8728631-08-31 Fax: (041)-8728671 Jhang Branch 95-A College Chowk Jhang. Rawalpindi.G.Jinnah Road Okara. Gulzar-e-Hijri. Road. Gulshan-e-Hadeed. Tel: (068)-5700594-7.5. Phone : 021-34641415. Lahore 0423)-5734709. Phase 4. Tel:(062). District Gujranwala. New Truck Stand.7524324.G.4270439-40 Fax# 052-4270426 Jail Road Branch. Pakistan.Nawab Town. Karachi. Phone: 068-5571350. Block-5. Phase. Main Attock Road. The Mall View Estate.83 Fax : 021-34830784 DASTAGIR SUB BRANCH. Johar Town. Block-2.1.13 Telephone: (0423)-5733841-44 Fax : (0423)-5692639 Thokar Niaz Baig Branch (Lahore) 3/D.A. Fax: 057. BLOCK 13 C.32359534 GULSHAN-E-HADEED SUB BRANCH. Ground Floor. 40 & 57 Fax: 021-36310458 DEHLI COLONY SUB BRANCH. Road No. 725. Karachi. Phone : 021-36310412-14. Clifton. KARACHI Shop No. Plot No. Lahore Tel #(0423)5741536-39 Fax : -(0423)5741540 Johar Town Branch (Lahore) M-Block. Mianwali Tel# (0459)237531 Fax# (0459)237532 Susan Road Branch (Faisalabad) Plot No S-8 Madina Town Main Susan Road Faisalabad. 915.Road(Link Shalimar Road) Tel# (0423)6530512-16 Fax# (0423)6530517 Badami Bagh Branch (Lahore) 23-peco Road Badami Bagh Lahore. (Lahore) 47-G. KDA Scheme NO. 1-B-1.10. Ph: (061)-6761900-6 Fax:( 061)-6761907 Sargodha Branch 65/2 Railway Road Sargodha. 10. 1. Lahore Tel: (0423)5315710 -16 / 5315722-23 Fax : -(0423) 5315711 Abdali Road Branch (Multan) Nawan Shaher Abdali Raod. Phone: (051)5732336 to (051)5732339 Fax: (051)5732345 148 . Matrovil-III. Tel:( 052)-4270419-20.

Rawalpindi. Satellite Town. District Malakand. District Diamer. Baluchistan. Phone: (0543)582475 to (0543)582477 Fax: (0543)582478 KHYBER PAKHTUNKHWA BOONI Booni Bazar.472. Branch A-12. Tel: (0822)-412130-31 Fax:0822-412136 Loralai Branch Bhagi Bazar Branch.610804-05 Fax: (0823) 610806 Pishin Branch Pashin Branch Bund Road Opp Madina Hardware. Phone : (081)2448701 to (081)2448704 Fax: (081)2448705 Chaman Branch Trench Road. 6 & 7 Haji Khan Building Ph (091) 2590341-7 Fax:( 091) 2590348 Mansehra Branch Swati Arcade.B/3 Sub Sector A/2 Mian MuhammadRoad Kashmir. Satellite Town.414550 Fax# (0943)-414580 MARDAN Shop No. Phone: (0826)427250 . 200 Khatooni No 234 Ward No 18 Urban No 1 Sharah-e-iqbal Quetta Tel: 081-2866510-13-36 Fax: 081-2829739 Jinnah Road Branch (Quetta) Jinnah Road Quetta. Dukki. Mall Road. Phone : (05812)450421 -24 Fax: (05812)450425 BALAKOT Plot.O Booni. QUETTA Shop No.4861117-18. Chillas. Ist Street. Pakistan. Phone: 081-2827037. Tel#( 051)-5120380-84 Fax#( 051)-5120385 Chaklala Scheme III Rawalpindi Building Plot# 111. Tel#: (0824)667301-05 Fax#: (0824)667306 ISLAMABAD & AZAD KASHMIR Blue Area Branch. Tel: (051) 4539046-7 Fax: (051) 4539044 Islamgarh Branch (Azad Kashmir) Ground Floor Main Kotli Road. Moza Balakot.7.561. Mutation No. Pakistan. District Chakwal. Tel: (05827)439700-04 Fax:( 05827)-39705 Wah Cantt. Moza-e-Tappa. I-9 Markaz Islamabad. Khatooni No. District Pishin. 59 Fax: 081-2827074 QUETTA.GAWALMANDI BRANCH. Phone: (0932) 412521. Tehsil Sawat Ranizai. Ranoi Road. Opposite Old Bus Adda. Islamabad Telephone: (051)-2217021-22 Fax :(051)-2217022 Satellite Town Branch (Rawalpindi) 69/B. Quetta. Tel#(0543)552739. Wah Cantt. Main Road Besham.1533. Shahwali Colony. Tel: 0826-618032-37 Fax: 0826-618038 Zhob Branch Market Road BranchZhob.No 06-C Markaz F-10 Islamabad. 413. Moza Butyal. Tel#( 051)-4858403-08. Tel#(051)2222961-65 Fax#(051)2222966 149 .1243 Khatooni No 1770 Moza Ghel. Quetta. QUETTA Gawal Mandi Chowk. Shahbaz Town. Thesil Mastaj. Timergara. District Shangla. Tel#(051)5766140-43 Fax#(051)5766144 Taxila Branch Khasra No. Phone: 0997-500701-0704 Fax: 0997-0500705 Haripur Branch Circular Road Haripur. Tehsil Balakot. Faisal Shaheed Road Taxila. 91 Fax: 0946-710395 BATKHELA Main Bazar Batkhela. Tel: 081-2821743-28-46 Fax (081)2821650" Qila Saifullah Branch Main Junction Road Qila Saifullah Tel : (0823) 610895. Tehsil Besham. Phone : (0937)876430 to (0937)876432 Fax: (0937)876433 BESHAM Plot Khasra No. Block-104-E F-7/G-7. Islam Garh Tehsil Distric Mirpur(AJK) Tel#(05827)423971-77 Fax#(05827)43977 F-10 Islamabad Plot.Turnol Sub Branch. Phone : (0996)400670 to (0996)400673 Fax : (0996)400674 BALOUCHISTAN KHANOZAI Khasra No. Bank Road Mardan Cantt.Tehsil Choa Saidan Shah.1242. Districtn Mansehra.45. Loralai. Tehsil & District Mansehra Tel:( 0997)-307761-4 Fax: Abottabad Branch Business Complex Aamir Shaheed Road Abbottabad. 38. No-60 Bank Road Cantt Rawalpindi.135. Phone: 0943-470812-15 Fax: 0943-470816 MINGORA (Swat) Madain Road.3626/1046. Tel: (051)4535055-58 Fax:( 051) 4534985 Hazro Branch Hazro Sub Branch Raitla Mandi Road Tel: (057)2310048-512310012-4 Fax: (057)-2310019 Chakwal Branch Khasra # 4516 Jhelum Road Chakwal.4445851 Fax(051)-4445852 Mirpur Branch (Azad Kashmir) Plot No # 2. Khewat No. Baluchistan Tel: (0823) 669823-29 Fax0823-669830 Iqbal Road Branch (Quetta) Shop No 605 Khewat No.Chaman. 251. Khanozai. 4th Road. Tel: 081-2864627-29. Pakistan. Village & P. 37. Khasra No. 51. DC Chowk. Peshawar. Quetta. Phone : (0945)825607-9 Fax: (0945)825610 CHILLAS Main Bazar. 081-2840121 Fax: 081-2840135 Kucklak Branch (Quetta) Chaman Raod Quetta Quetta Tel:081-2891591-2 Fax 081-2891580 Muslimbagh Branch Muslimbagh . Mingora Sawat.24 Fax: (0932) 412525 TIMERGARA Gurguri Chowk. 3. Khewat No. Chenab Center. Commercial Bazar Chaklala Scheme no 3 Rawalpindi. Tel#(0995)613570-73 Fax#(0995)613574 Dera Ismail Khan Branch Circular Road Dera Ismail Khan. Phone: 0946-710386-88. 4861038 Fax#( 051)-4861060 I-9 Branch (Islamabad) Plot No-2 E.44. Tel #: (0824)661696-661701 Fax 082-4661701 Airport Road Branch (Quetta) Airport Road Quetta Alam Khan Chowk Airport Road Quetta. Phase IV. Tel:( 051)-4572001-4 Fax: (051)-4572005 Saddar Branch (Rawalpindi) Compound bungalow. Mardan. 412. District Chitral.42. 412A. District Dir lower. District Sawat. Peshawar Shop No. 253 Fax: (0826)427254 QUETTA. Tel:( 091)-5711482-4 Fax:( 091)-5711489 Chitral Branch Main Shahi Bazar Chitral Tel# (0943)-414501.583. Jamrud Road.041. Islamabad Muhammad Ayub Plaza Main G.SHAHBAZ TOWN Plot No.4861029. Balambat Road. Tel: (0992)-343956-63 Fax:( 0992)-343964 Gilgit Branch Askari Bakers Gilgit Cantt Tel:(05811)-457832-6 Fax:(05811)457837 Jamrud Road Branch (Peshawar) Near Hotel Grand. Tel#(0966)715018-2 Fax#(0966)715021 Khyber Bazaar Branch. Dead Karez. Samungli Road. 39 Fax : 0812-834434 SATTELITE TOWN SUB BRANCH. Pashin Tel: 0826-421384 Fax082-642187 Dukki Branch Address: Masjid Road. 081-2840114. Jinnah Avenue Telephone: (051)-2804271-74 Fax : (051)-2804275 I-8 Branch (Islamabad) Plot No 24 Executive Centre I-8 Markaz Islamabad.414530.143. Islamabad Blue Area Branch 5-6.T Road Turnol. Tatral Kahun. Phone : 0812-834430. Abbottabad Road.56 Fax#(0543)552760 TATRAL KAHUN Khasra No.555. Tel#( 051)-4861017.

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Karachi. _____________________ do hereby appoint ________________________ of ______________________________________ or failing him / her ______________________ of ______________________ as my/our proxy to vote and act for me / us on my / our behalf at the 9th Annual General Meeting of BankIslami Pakistan Limited. _____________________ Notes: 1. ________________________________________ and / or CDC Investor Account No. No. 2013 at 8:00 am at Hotel Regent Plaza.PROXY FORM 9th Annual General Meeting The Company Secretary BankIslami Pakistan Limited 11th Floor. Clifton Karachi – Pakistan.D. Executive Tower. Marine Drive. 2. Proxies in order to be effective. ______________ and sub Account No. 149 . to be held on Saturday. Dolmen City. Shahra-e-Faisal./Participant I. March 30. Signed this ___________________ day of ______________ 2013 Witness: Name: Address: _____________________ _____________________ Signature of Member(s) CNIC or Passport No. CDC Shareholders and their Proxies are each requested to attach an attested photocopy of their Computerized National Identity Card or Passport with this proxy form before submission to the Company. must be received by the company not less than 48 hours before the meeting. Block – 4. and at any adjournment thereof. I/We ________________________________________ of __________________ being a member(s) of BankIslami Pakistan Limited and holder of __________________________ ordinary shares as per Share Register Folio No.

Marine Drive. Clifton Block .4. Karachi.Please affix correct postage The Company Secretary 11th Floor. Dolmen City. Executive Tower. Pakistan BankIslami Pakistan Limited .

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